UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 29, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____
Commission File Number 0-10943
RYAN'S FAMILY STEAK HOUSES, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0657895
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
405 Lancaster Avenue, Greer, South Carolina 29650
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (864) 879-1000
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of class) (Name of each exchange
on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 Par Value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates
(shareholders holding less than 20% of the outstanding common stock,
excluding directors and officers), computed by reference to the average
high and low prices of such stock, as of March 1, 2000, was $345,153,000.
The number of shares outstanding of the registrant's Common Stock,
$1.00 Par Value, was 35,743,100 at March 1, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Document Location in Form 10-K
Portions of 1999 Annual Report of Shareholders Parts I and II
Portions of Proxy Statement dated March 28, 2000 Part III
PART I
ITEM 1. BUSINESS.
General
Ryan's Family Steak Houses, Inc., the registrant (together with its
subsidiaries referred to hereafter as the "Company"), is a South
Carolina corporation that operates a chain of restaurants located
principally in the southern and midwestern United States. At December
29, 1999, 289 Company-owned and 23 franchised Ryan's Family Steakhouse
restaurants (restaurants using the Ryan's Family Steakhouse format are
referred to hereafter as "Ryan's" or "Ryan's restaurant") were in
operation. Systemwide sales, which include sales by franchised
restaurants, were approximately $704 million in 1999 and $675 million
in 1998. Sales by Company-owned restaurants amounted to approximately
$665 million in 1999 and $637 million in 1998. The Company,
headquartered in Greer, South Carolina, was organized in 1977, opened
its first restaurant in 1978 and completed its initial public offering
in 1982. It has no revenues or assets outside the U.S.
The following table indicates the number of Company-owned
restaurants opened each year, net of closings, and the total number of
Company-owned restaurants open at each year-end during the 5-year
period ending December 29, 1999:
Restaurant Total Open
Year Openings, Net at Year-End
1995 19 231
1996 30 261
1997 9 270
1998 10 280
1999 9 289
Restaurant Operations
General. A Ryan's restaurant is a family-oriented restaurant
serving a wide variety of foods from the centrally located scatter
bars known as the Mega Barr, as well as grilled entrees such as
charbroiled USDA Choice steaks, hamburgers, chicken and seafood. The
Mega Barr includes fresh and pre-made salad items, soups, cheeses, a
variety of hot meats and vegetables, and hot yeast rolls prepared and
baked daily on site. All entree purchases include a trip to a bakery
bar. Bakery bars feature hot and fresh-from-the-oven cookies,
brownies and other bakery products as well as various dessert
selections, such as ice cream, frozen yogurt, fresh fruit, cakes,
cobblers and several dessert toppings. All Ryan's also offer a
variety of non-alcoholic beverages. All restaurants have their Mega
Barsr in a scatter bar format. This format breaks the Mega Barr into
five island bars for easier customer access and more food variety.
Most Ryan's are open seven days a week. New restaurants are
generally closed on Mondays for their first two to three months of
operation. Typical hours of operation are 11:00 a.m. to 9:30 p.m.
Sunday through Thursday and 11:00 a.m. to 10:30 p.m. Friday and
Saturday. The average customer count per restaurant during 1999 was
approximately 6,800 per week, and the average meal price per person
was $6.59 (including beverage). Management believes that the average
table turns over every 30 to 45 minutes.
Each Company-owned Ryan's is located in a free-standing masonry
building that ranges in size from approximately 10,000 to 11,500
square feet. The interior of most restaurants contains two or three
dining rooms, seating approximately 300 to 500 persons in total, an
area where customers both order and pay for their meals and a kitchen.
The focal points of the main dining room are the Mega Barr and a
bakery bar. The parking lots at the restaurants vary in size, with
available parking ranging from 125 to 200 cars.
Restaurant Management and Supervision. The Company emphasizes
standardized operating and control systems together with comprehensive
recruiting and training programs in order to maintain food and service
quality. In each Ryan's restaurant, the management team typically
consists of a general manager or operating partner (under the
Operating Partner Program described below), a manager, an assistant
manager and an associate manager. Management personnel begin
employment at the manager trainee level and complete a formal four-
week training program at the Company's management training center in
Greer, South Carolina, prior to being placed in associate manager
positions. All restaurant managers continue their training through
various training manuals and classes developed by the Company.
Each restaurant management team reports to an area supervisor or
district partner (under the District Partner Program described below).
Individuals in these positions normally oversee the operations of four
to eight restaurants and report to one of eight regional directors, a
position that may be at the Vice President level and, in any case,
reports to the Vice President-Operations. Communication and support
from all corporate office departments are designed to assist all
restaurant supervisory personnel (collectively referred to hereafter
as "Restaurant Supervision") in responding promptly to local concerns.
All Restaurant Supervision as well as general managers, operating
partners and managers participate in incentive bonus programs.
Bonuses paid to general managers and managers are based on the monthly
sales volume of their individual restaurant with deductions for excess
spending in key expense items, such as food cost, payroll and cash
shortages. The bonus program for area supervisors and regional
directors is based principally upon same-store sales, profitability,
"hidden shopper" (service feedback) scores and certain qualitative
factors.
In 1997, the Company initiated an Operating Partner Program in
order to provide general managers with an additional career path and
an opportunity to share in the profitability of their stores. After
being selected and upon a $10,000 investment in Ryan's common stock, a
general manager is promoted to Operating Partner and then shares in
both the profit improvement and overall profitability of the
restaurant. At December 29, 1999, Operating Partners were managing
146 restaurants. The Company's goal is to have from 175 to 200
Operating Partners in place by December 2000.
In 1999, the Company initiated a District Partner Program in order
to reward top-performing area supervisors who were ready to assume
additional responsibilities. After being selected and upon a $15,000
investment in Ryan's common stock, an area supervisor is promoted to
District Partner and then shares in both the profit improvement and
overall profitability of the restaurants under his or her supervision.
At December 29, 1999, there were eight District Partners supervising
58 restaurants. The Company's goal is to have an additional three to
five District Partners in place by December 2000.
Advertising. The Company has not relied extensively on
advertising, expending less than one percent of restaurant sales
during each of the years 1999, 1998 and 1997. In 1999, the Company
ran advertising campaigns, consisting of both television and radio, in
30 markets covering 108 Ryan's. Newspaper ads and billboards were
used in various other markets. The Company's advertising plan for
2000 is similar in scope to the 1999 program and may be either
expanded or contracted depending on various factors such as the
Company's overall sales levels, the results of the advertising program
at the targeted restaurants and the costs associated with the
advertising.
Expansion of Company-Owned Restaurants
General. At December 29, 1999, the Company owned and operated 289
Ryan's restaurants. During 2000, current plans call for 12 to 14 new
Company-owned Ryan's. Target sites for these new restaurants are
spread throughout the Company's current 22-state operating area. The
Company also plans to relocate four to six restaurants during 2000.
Management defines a relocation as a restaurant opened within 12
months after closing another restaurant in the same marketing area. A
relocation represents a redeployment of assets within a market. The
following table summarizes the Company's openings, closings and
relocations during 1999, 1998 and 1997:
1999 1998 1997
Beginning of year 280 270 261
New restaurants 12 11 15
Relocations - opened 6 4 1
Relocations - closed (6) (4) (1)
Closings (3) (1) (6)
End of year 289 280 270
Site Selection. The Company employs a real estate manager and uses
independent real estate brokers to locate potential new sites and to
perform all preliminary site investigative work. Final approval is
made by the Company's executive management. Important factors in site
selection include population, demographics, proximity to both business
and residential areas, traffic count and site accessibility. Another
factor in site selection for a Ryan's restaurant is its proximity to
other Ryan's because this proximity improves the efficiency of the
Company's Restaurant Supervision, advertising programs and
distribution network.
Construction. The Company presently acts as the general contractor
for the construction of all of its restaurants. The Company's in-
house architectural staff draws up the detailed construction plans
that are used by subcontractors selected by a Ryan's project manager
to perform the actual construction work. In addition to selecting and
scheduling subcontractors, a Ryan's project manager also procures
materials, if necessary, and provides general oversight of the
construction project. A Ryan's construction superintendent is on site
during the construction of each restaurant and closely supervises the
progress and workmanship of the project. New restaurants are
generally completed approximately four to five months from the
commencement of construction. The average cost of a new Ryan's (land,
building and equipment) constructed in 1999 was approximately $2.2
million.
Restaurant Opening. When a new Ryan's is opened, all restaurant
management positions are staffed with personnel who have had prior
management experience in another of the Company's restaurants. Prior
to opening, all staff personnel at the new location undergo one week
of intensive training conducted by a new store opening team.
Franchising. While the Company has granted Ryan's franchises in
the past, management has not actively pursued new franchisees in
recent years in order to concentrate on the operation and development
of Company-owned restaurants. New franchises may be awarded to the
existing franchisee or to new franchisees proposing to operate in
regions significantly outside of the Company's existing or
contemplated operating areas.
The following table indicates the number of franchised restaurants
opened each year, net of closings, and the total number of franchised
restaurants open at each year-end during the 5-year period ending
December 29, 1999:
Net
Restaurants Total Open
Year Opened (Closed) at Year-End
1995 (4) 26
1996 (1) 25
1997 - 25
1998 1 26
1999 (3) 23
At December 29, 1999, the Company's sole franchise agreement was
with Family Steak Houses of Florida, Inc. ("Family") which, at that
date, operated 23 Ryan's in central and northern Florida. The present
franchise agreement expires in 2010. If Family is in compliance with
the franchise agreement at that time and agrees to certain remodeling
requirements, Family then has the option to extend the agreement for
up to two 10-year renewal periods. The agreement provides that the
Company will furnish Family with all the necessary information to
construct, equip, manage and operate restaurants under the Ryan's
Family Steakhouse name or derivative thereof. It further provides for
exclusive territorial protection in certain Florida counties as long
as Family operates a specified number of Ryan's restaurants. At
December 29, 1999, Family was required to have 21 restaurants in
operation and was therefore in compliance at that date. Under the
current agreement, the number of Ryan's required to be operated by
Family increases to 23 by year-end 2000 and then increases by two
restaurants per year thereafter.
The franchise agreement with Family was amended in August 1999 in
order to revise the number of Ryan's restaurants required to be in
operation by Family. A comparison of the old and current requirements
follow:
Restaurants in Operation
Old Current
Year-End Requirement Requirement
1999 27 21
2000 28 23
2001 29 25
2002 30 27
2003 31 29
Subsequent years +1/year +2/year
Sources and Availability of Raw Materials
The Company has a centralized purchasing program which is designed
to provide uniform product quality in all restaurants as well as
reduced food, beverage and supply costs. The Company's management
establishes contracts for approximately 90% of its food and other
products from a variety of major suppliers under competitive terms.
Purchases under these contracts are delivered to one of three
warehouses operated by the Company's principal distributor and then
delivered to the restaurants by the distributor. The remaining 10% of
the Company's products (principally fresh produce) are purchased
locally by restaurant management. The beef used by the Company is
obtained from four western suppliers based on price and availability
of product. To ensure against interruption in the flow of beef
supplies due to unforeseen or catastrophic events, the distributor
maintains four to eight weeks supply of sirloin at its warehouses.
The Company believes that satisfactory sources of supply are generally
available for all the items used regularly in its operations.
Working Capital Requirements
Working capital requirements for continuing operations are not
significant. The Company's restaurant sales are primarily derived
from cash sales, and inventories are purchased on credit and are
rapidly converted to cash. Therefore, the Company does not maintain
significant receivables or inventories.
Trademarks and Service Marks
The Company has registered various trademarks and service marks,
including "Ryan's Family Steak Houser" and "Mega Barr", and their
related designs with the United States Patent and Trademark Office.
All trademarks and service marks have stated expiration dates ranging
from December 2001 to October 2008. However, they are renewable for
an unlimited number of additional 10-year terms at the option of the
Company.
Competition
The food service business is highly competitive and is often
impacted by changes in the taste and eating habits of the public,
economic conditions affecting spending habits, population and traffic
patterns. The principal bases of competition in the industry are the
quality and price of the food products offered. Location, speed of
service and attractiveness of facilities are also important factors.
Ryan's restaurants compete with many units operated or franchised by
national, regional and local restaurant companies that offer steak or
buffet-style meals. Although the Company believes that its price/value
to its customers places it in an excellent competitive posture, during
the last few years many operators have upgraded their restaurants to
more closely match the Ryan's format and particularly the Mega Bar.
The Company also competes with many specialty food outlets and other
food vendors.
Seasonality
The Company's operations are subject to some seasonal fluctuations.
Average sales per restaurant run approximately 5% less than the
company-wide annual per restaurant average during the first and fourth
quarters and 5% more than the company-wide annual average during the
second and third quarters.
Research
The Company maintains ongoing research programs relating to the
development of new products and evaluation of marketing activities.
The Company's management staff includes a Director of Research and
Development, whose responsibilities include enhancing and updating the
Mega Barr and entree selections. While research and development
activities are important to the Company, past expenditures have not
been and future expenditures are not expected to be material to the
Company's financial results.
Customers
No material part of the Company's business is dependent upon a
single customer or a specific group of customers.
Regulation
The Company is subject to licensing and regulation by health,
sanitation, safety and fire agencies in the states and/or
municipalities in which its restaurants are located. The Company's
restaurants are constructed to meet local and state building code
requirements and are operated in material accordance with state and
local regulations relating to the preparation and service of food.
Generally the Company has not encountered significant obstacles to
opening new restaurants as a result of difficulties or failures in
obtaining the required licenses or approvals. However, more stringent
or varied requirements of local and state governmental bodies could
delay or prevent development of new restaurants in particular
locations.
The Company is subject to the Fair Labor Standards Act, which
regulates matters such as minimum wage requirements, overtime and
other working conditions, along with the Americans with Disabilities
Act and various family leave mandates. A significant number of the
Company's restaurant team members are paid at the federal minimum
wage, and, accordingly, legislated changes to the minimum wage affect
the Company's payroll costs. Although no additional increases have
been legislated, various proposals are presently being discussed and
voted upon in the U.S. Congress. Recent legislation in Congress
points to a potential $1.00 per hour increase to $6.15 per hour with a
phase-in period ending in either 2001 or 2002. The Company has
typically been able to increase menu prices to cover most of the
payroll rate increases.
Environmental Matters
While the Company is not aware of any federal, state or local
environmental regulations that will materially affect its operations
or competitive position or result in material capital expenditures, it
cannot predict the impact of possible future legislation or regulation
on its operations.
Employees
At March 1, 2000, the Company employed approximately 19,000
persons, of whom approximately 18,700 were restaurant personnel. The
Company strives to maintain low turnover by offering all full-time
employees a very competitive benefit package, which includes life and
health insurance, vacation pay and a defined contribution retirement
plan. Part-time employees who work at least 28 hours per week are
eligible to participate in the Company's life and health insurance
plans and also receive vacation pay.
None of the Company's employees are represented by a union. The
Company has experienced no work stoppages attributable to labor
disputes and considers its employee relations to be good.
Information as to Classes of Similar Products or Services
The Company operates in only one industry segment. All significant
revenues and pre-tax earnings relate to retail sales of food to the
general public through either Company-operated or franchised
restaurants. At December 29, 1999, the Company had no operations
outside the continental United States.
Information regarding the Company's restaurant sales and assets is
included in the Company's financial statements, which are incorporated
by reference into Part II, Item 8 of this Form 10-K.
ITEM 2. PROPERTIES.
The Company owns substantially all of its restaurant properties,
each of which is a free-standing masonry building that covers
approximately 10,000 to 11,500 square feet, with seating for
approximately 300 to 500 persons and parking for approximately 125 to
200 cars on sites of approximately 75,000 to 130,000 square feet. At
December 29, 1999, all restaurant sites, except 13 properties under
land leases, were owned by the Company.
A listing of the number of Ryan's restaurant locations by state as
of December 29, 1999 appears on page 4 of the Company's 1999 Annual
Report to Shareholders and is incorporated by reference. A detailed
listing of Ryan's restaurant locations may be obtained without charge
by writing to the Company's principal executive offices, Attention:
Corporate Secretary.
The Company's corporate offices consist of two office buildings
(30,000 square feet and 16,000 square feet) and a 10,000 square foot
warehouse facility, all of which are located in Greer, SC. The office
buildings (land and building) are owned by the Company. The warehouse
facility is leased with an initial term ending in October 2000 and
annual renewal terms ending in October 2005.
From time to time, the Company offers for sale excess land that was
acquired in connection with its restaurant properties. Also, at
December 29, 1999, seven closed restaurant properties were offered for
sale. The Company believes that the eventual disposition or non-
disposition of all such properties will not materially affect its
business or financial condition, taken as a whole.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, the Company is a defendant in legal actions
arising in the normal course of its business. Based on those legal
actions currently known to its management, the Company believes that,
as a result of its legal defenses and insurance arrangements, none of
these actions, if decided adversely, would have a material effect on
its business or financial condition, taken as a whole.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information regarding trading of the Company's common stock,
quarterly market prices and dividends appears under "Common Stock
Data" and "Market Price of Common Stock" on page 25 of the Company's
1999 Annual Report to Shareholders and is incorporated by reference.
At March 1, 2000, the Company's common stock was held by
approximately 10,500 stockholders of record through nominee or street
name accounts with brokers.
As further described in Item 7A, the Company is party to a long-
term credit agreement involving a revolving credit facility, expiring
in January 2005, that prohibits the payment of cash dividends.
However, the payment of dividends solely in the Company's common stock
is permitted under the terms of the agreement.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the last five years is included in the
"Five-Year Financial Summary" on page 13 of the Company's 1999 Annual
Report to Shareholders and is incorporated by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" is included on pages 5 through 12 of the
Company's 1999 Annual Report to Shareholders and is incorporated by
reference.
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's exposure to market risk relates primarily to changes
in interest rates. Foreign currencies are not used in the Company's
operations, and commodities used in the preparation of food at the
Company's restaurants are not under purchase contract for more than
one year in advance. On January 28, 2000, the Company closed on two
loan transactions that refinanced all existing debt balances and added
to the Company's credit availability. The first transaction involved
the private placement with several insurance companies of $75 million
of senior notes due in 2008 with principal payments commencing in
2005, bearing interest at 9.02%. The second transaction involved a
$200 million revolving credit facility with several banks due in 2005,
bearing interest at various floating interest rates plus a variable
spread currently set at 1.625%. Both loans are secured by the stock
of the Company's wholly-owned subsidiaries and affiliates.
While the Company has entered into financial instrument agreements
in the past, there were no such agreements outstanding as of December
29, 1999. The Company does not enter into financial instrument
agreements for trading or speculative purposes.
The following table presents information regarding the Company's
outstanding long-term debt based on total outstanding debt balances as
of December 29, 1999 and the terms of the loan agreements that closed
and refinanced all existing debt on January 28, 2000. The
contractually required principal repayments and their related average
interest rates by maturity date are presented in the table. For the
variable rate debt, average interest rate is based on the two-month
London Interbank Offered Rate ("LIBOR") as of January 28, 2000 plus
the applicable margin of 1.625%. The applicable margin could decrease
in future years depending upon changes to the Company's leverage
ratio.
<TABLE>
As of December 29, 1999
Expected Maturity Dates
<C> <C> <C> <C> <C> <C> <C> <C>
There- Fair
2000 2001 2002 2003 2004 after Total Value
Liabilities
(in millions)
Long-term debt -
Variable rate - - - - - $97.4 97.4 97.4
Average
interest rate 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5%
Fixed rate - - - - - $75.0 75.0 75.0
Average
interest rate 9.0% 9.0% 9.0% 9.0% 9.0% 9.0% 9.0%
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Company's financial statements, unaudited quarterly financial
information and the independent auditors' report are included on pages
14 through 23 of the Company's 1999 Annual Report to Shareholders and
are incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required under this item is incorporated by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 2000 under the
headings "Election of Directors", "Executive Officers" and "Section
16(a) Beneficial Ownership Reporting Compliance."
ITEM 11.EXECUTIVE COMPENSATION.
The information required under this item is incorporated by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 2000 under the
headings "Election of Directors - Compensation of Directors",
"Compensation Committee Interlocks, Insider Participation and Related
Party Transactions", "Executive Compensation and Other Information",
"Report of the Compensation Committee" and "Performance Graph."
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information required under this item is incorporated by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 2000 under the
headings "Election of Directors", "Certain Beneficial Owners of Common
Stock" and "Executive Officers."
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required under this item is incorporated by
reference to the Ryan's Family Steak Houses, Inc. Proxy Statement for
the Annual Meeting of Shareholders to be held April 27, 2000 under the
headings "Compensation Committee Interlocks, Insider Participation and
Related Party Transactions" and "Executive Compensation and Other
Information - Deferred Compensation - Salary Continuation Agreement."
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-
K.
(a)1-2Financial statements filed as part of this Form 10-K are
listed in the "Index to Financial Statements", at page 15.
(a)3 Exhibits (numbered in accordance with Item 601 of Regulation
S-K):
Exhibit # Description
3.1 Articles of Incorporation of the Company,
as amended through April 24, 1986: Incorporated by
reference to Exhibit 4(a) to the Registration
Statement of the Company filed with the SEC on Form S-
3 (Commission file no. 33-7245) (the "Form S-3").
3.1.1 Articles of Amendment to the Articles of
Incorporation, dated April 22, 1987: Incorporated by
reference to Exhibit 3.2 to the Annual Report on Form
10-K for the period ended January 1, 1992 (Commission
file no. 0-10943) (the "1991 10-K").
3.1.2 Articles of Amendment to the Articles of
Incorporation, dated May 25, 1989: Incorporated by
reference to Exhibit 4.3 to the Registration
Statement of the Company filed with the SEC on Form S-
8 (Commission file no. 33-53834).
3.2 Bylaws of the Company: Incorporated by
reference to Exhibit 4(b) to the Form S-3.
3.2.1 Amendment to By-Laws of the Company, dated
October 25, 1990: Incorporated by reference to
Exhibit 3.3 to the 1991 10-K.
3.2.2 Amendment to By-Laws of the Company, dated
January 28, 1999.
4.1 Specimen of Company common stock
certificate: Incorporated by reference to Exhibit
4.1 to the 1991 10-K.
4.2 See Exhibits 3.1, 3.1.1, 3.1.2, 3.2, 3.2.1
and 3.2.2.
4.3 See Exhibit 10.24.
*10.1 Ryan's Family Steak Houses, Inc. Incentive
Stock Option Plan: Incorporated by reference to the
Registration Statement of the Company filed with the
SEC on Form S-8 (Commission file no. 2-83987).
*10.2 Ryan's Family Steak Houses, Inc. 1987
Stock Option Plan: Incorporated by reference to
Exhibit 4 to the Registration Statement of the
Company filed with the SEC on Form S-8 (Commission
file no. 33-15924).
*10.3 Ryan's Family Steak Houses, Inc. 1991
Stock Option Plan: Incorporated by reference to
Exhibit 4.4 to the Registration Statement of the
Company filed with the SEC on Form S-8 (Commission
file no. 33-53834).
*10.4 Ryan's Family Steak Houses, Inc. 1998
Stock Option Plan: Incorporated by reference to
Exhibit 99.1 to the Registration Statement of the
Company filed with the SEC on Form S-8 (Commission
file no. 333-67165).
*10.5 Ryan's Employee Retirement Savings Plan,
dated March 1, 1992: Incorporated by reference to
Exhibit 10.4 to the 1991 10-K.
*10.6 Salary Continuation Agreement, dated April
22, 1987, between the Company and Alvin A. McCall,
Jr.; as amended on October 26, 1989: Incorporated by
reference to Exhibit 10.5 to the 1991 10-K.
*10.7 Deferred Compensation - Salary
Continuation Agreement, dated April 22, 1987, between
the Company and Charles D. Way: Incorporated by
reference to Exhibit 10.6 to the 1991 10-K.
*10.8 Agreement and Plan of Restructuring:
Incorporated by reference to Exhibit A to the Proxy
Statement of the Company, dated March 25, 1993, filed
with respect to the Annual Meeting of Shareholders to
be held on April 28, 1993 (Commission file no. 0-
10943).
*10.9 Split Dollar Agreement by and between the
Company and Charles D. Way dated September 1, 1993:
Incorporated by reference to Exhibit 10.8 to the
Annual Report on Form 10-K for the period ended
December 29, 1993 (Commission file no. 0-10943) (the
"1993 10-K").
*10.10 Split Dollar Agreement by and between the
Company and G. Edwin McCranie dated November 12,
1993: Incorporated by reference to Exhibit 10.9 to
the 1993 10-K.
*10.11 Split Dollar Agreement by and between the
Company and John C. Jamison dated November 12, 1993:
Incorporated by reference to Exhibit 10.10 to the
1993 10-K.
*10.12 Split Dollar Agreement by and between the
Company and James R. Hart dated August 8, 1993:
Incorporated by reference to Exhibit 10.11 to the
1993 10-K.
*10.13 Split Dollar Agreement by and between the
Company and Fred T. Grant, Jr. dated November 12,
1993: Incorporated by reference to Exhibit 10.12 to
the 1993 10-K.
*10.14 Split Dollar Agreement by and between the
Company and Alan E. Shaw dated November 12, 1993:
Incorporated by reference to Exhibit 10.13 to the
1993 10-K.
*10.15 Split Dollar Agreement by and between the
Company and Morgan A. Graham dated November 12, 1993:
Incorporated by reference to Exhibit 10.15 to the
Annual Report on Form 10-K for the period ended
December 31, 1997 (Commission file no. 0-10943) (the
"1997 10-K").
*10.16 Split Dollar Agreement by and between the
Company and Janet J. Gleitz dated November 12, 1993:
Incorporated by reference to Exhibit 10.16 to the
1997 10-K.
*10.17 Split Dollar Agreement by and between the
Company and Ilene T. Turbow dated November 12, 1995:
Incorporated by reference to Exhibit 10.17 to the
1997 10-K.
*10.18 Deferred Compensation Plan by and between
the Company and Morgan A. Graham dated November 1,
1997: Incorporated by reference to Exhibit 10.18 to
the 1997 10-K.
*10.19 Deferred Compensation Plan by and between
the Company and Janet J. Gleitz dated November 1,
1997: Incorporated by reference to Exhibit 10.19 to
the 1997 10-K.
*10.20 Deferred Compensation Plan by and between
the Company and Ilene T. Turbow dated November 1,
1997: Incorporated by reference to Exhibit 10.20 to
the 1997 10-K.
*10.21 Executive Bonus Plan, commencing in fiscal
year 1998: Incorporated by reference to Exhibit
10.23 to the 1997 10-K.
10.22 Agreement between Ryan's Properties, Inc.
and Family Steak Houses of Florida, Inc.:
Incorporated by reference to Exhibit 10.15 to the
Annual Report on Form 10-K for the period ended
December 28, 1994 (Commission file no. 0-10943).
10.22.1 Amendment dated October 3, 1996 to the Agreement between
Ryan's Properties, Inc. and Family Steak Houses of Florida,
Inc. dated July 11, 1994.
10.22.2 Amendment dated August 31, 1999 to the
Agreement between Ryan's Properties, Inc. and Family
Steak Houses of Florida, Inc. dated July 11, 1994 and
amended on October 17, 1994 and October 3, 1996.
10.23 Ryan's Family Steak Houses, Inc. and
Wachovia Bank of North Carolina, N.A., as Rights
Agent, Shareholder Rights Agreement dated as of
January 26, 1995: Incorporated by reference to
Exhibit 2 to the report on Form 8-K filed with the
Commission on February 9, 1995 (Commission file no. 0-
10943).
10.24 Credit Agreement dated as of January 28,
2000 among Ryan's Family Steak Houses, Inc. (the
"Borrower"), the domestic subsidiaries of the
Borrower, as Guarantors, Bank of America, N.A., as
Administrative Agent, First Union National Bank, as
Syndication Agent, Wachovia Bank, N.A., as
Documentation Agent, SunTrust Bank, Atlanta, as
Senior Managing Agent, and certain other banks
signatory thereto.
10.25 Note Purchase Agreement between Ryan's
Family Steak Houses, Inc. and various lenders for
$75,000,000 of 9.02% Senior Notes due January 28,
2008.
*10.26 Form of Split-Dollar Life Insurance
Agreement by and between the Company and each of
Messrs. Way, McCranie, Graham, Grant, Hart, Jamison
and Shaw and Ms. Gleitz and Ms. Turbow.
*10.27 Deferred Compensation Plan, effective as of
August 1, 1999.
13.1 Ryan's Family Steak Houses, Inc. 1999
Report to Shareholders (except for those portions
that are expressly incorporated by reference in this
Report on Form 10-K, this exhibit is furnished for
the information of the Commission and is not deemed
to be filed as a part hereof).
21.1 Subsidiaries of the Company.
23.1 Consent of Independent Auditors.
27 Financial Data Schedule (electronic filing
only).
99.1 Ryan's Family Steak Houses, Inc. Proxy
Statement for the Annual Meeting of Shareholders,
dated March 28, 2000.
* This is a management contract or
compensatory plan or arrangement.
(b) On October 4, 1999, November 8, 1999, December 6, 1999,
January 3, 2000, February 7, 2000 and March 6, 2000, the
Company filed reports on Form 8-K regarding sales information
for September 1999, October 1999, November 1999, December
1999, January 2000, and February 2000, respectively.
(c) The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) The response to this portion of Item 14 is submitted as a
separate section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
RYAN'S FAMILY STEAK HOUSES, INC.
March 28, 2000
By:/s/Fred T. Grant, Jr.
Fred T. Grant, Jr.
Vice President - Finance,
Treasurer and Assistant
Secretary (Principal
Financial and Accounting
Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
Signature Title Date
/s/Charles D. Way Chairman, President and March 28, 2000
Charles D. Way Chief Executive Officer
/s/G. Edwin McCranie Director and Executive March 28, 2000
G. Edwin McCranie Vice President
/s/James D. Cockman Director March 28, 2000
James D. Cockman
/s/Barry L. Edwards Director March 28, 2000
Barry L. Edwards
/s/Brian S. MacKenzie Director March 28, 2000
Brian S. MacKenzie
/s/Harold K. Roberts, Jr. Director March 28, 2000
Harold K. Roberts, Jr.
/s/James M. Shoemaker, Jr. Director March 28, 2000
James M. Shoemaker, Jr.
/s/Fred T. Grant, Jr. Vice President - Finance, March 28, 2000
Fred T. Grant, Jr. Treasurer and Assistant
Secretary (Principal Financial
and Accounting Officer)
RYAN'S FAMILY STEAK HOUSES, INC.
INDEX TO FINANCIAL STATEMENTS
The following financial statements of the Registrant included in
the Annual Report to Shareholders for the year ended December 29,
1999, are incorporated herein by reference. With the exception of the
pages listed below and other information incorporated in this report
on Form 10-K, the 1999 Annual Report to Shareholders is not deemed
"filed" as part of this report.
Page Reference
in Annual Report
Independent Auditors' Report 23
Consolidated Statements of Earnings 14
Consolidated Balance Sheets 15
Consolidated Statements of Cash Flows 16
Notes to Financial Statements 17-23
All financial statement schedules have been omitted since the
required information is not applicable or the information required is
included in the consolidated financial statements or the notes
thereto.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-29-1999
<PERIOD-END> DEC-29-1999
<CASH> 642
<SECURITIES> 0
<RECEIVABLES> 3,230
<ALLOWANCES> 203
<INVENTORY> 4,663
<CURRENT-ASSETS> 13,174
<PP&E> 666,218
<DEPRECIATION> 157,439
<TOTAL-ASSETS> 525,827
<CURRENT-LIABILITIES> 45,324
<BONDS> 172,375
0
0
<COMMON> 35,855
<OTHER-SE> 247,538
<TOTAL-LIABILITY-AND-EQUITY> 525,827
<SALES> 664,681
<TOTAL-REVENUES> 667,714
<CGS> 450,899
<TOTAL-COSTS> 593,369
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,986
<INCOME-PRETAX> 66,359
<INCOME-TAX> 24,742
<INCOME-CONTINUING> 41,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,617
<EPS-BASIC> 1.12
<EPS-DILUTED> 1.10
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Ryan's Family Steak Houses, Inc.:
We consent to incorporation by reference in the Registration
Statement (No. 0-10943) on Form S-8 of Ryan's Family Steak
Houses, Inc. and subsidiaries of our report dated January 26,
2000, except for Note 14, as to which the date is January 28,
2000, relating to the consolidated balance sheets of Ryan's
Family Steak Houses, Inc. as of December 29, 1999 and December
30, 1998, and the related consolidated statements of earnings and
cash flows for each of the years in the three-year period ended
December 29, 1999, which report is incorporated by reference in
the 1999 annual report on Form 10-K of Ryan's Family Steak
Houses, Inc.
/s/KPMG LLP
Greenville, South Carolina
March 27, 2000
Exhibit 21.1
RYAN'S FAMILY STEAK HOUSES, INC.
SUBSIDIARIES OF THE COMPANY
AS OF MARCH 28, 2000
Jurisdiction of % Owned by Company
Name of Subsidiary Organization (or Subsidiaries)
1.Big R Procurement
Company, LLC DE 100%
2.Ryan's Family Steak
Houses East, Inc. DE 100%
3.Ryan's Family Steak
Houses TLC, Inc. DE 100%
4.Ryan's Properties, Inc. DE 100%
5.Rymark Holdings, Inc. DE 100%
6.Ryan's Hoosier Group, LP SC 100%
7.Ryan's Mega Manufacturing
Group, LP SC 100%
Exhibit 10.22.2
August 31, 1999
Mr. Glen F. Ceiley
Chairman of the Board
Family Steak Houses of Florida, Inc.
2113 Florida Boulevard
Neptune Beach, FL 32266
Dear Glen:
This letter is to serve as an amendment to the Agreement between
Ryan's Properties, Inc. ("Ryan's") and Family Steak Houses of
Florida, Inc. ("FSH") dated July 11, 1994, and amended on October
17, 1994 and October 3, 1996 (the "Agreement"). The Agreement
itself constituted an amendment of the Franchise Agreement (as
defined in the Agreement)(as amended, the "Franchise Agreement").
This letter also serves to amend the Franchise Agreement.
1. Clause (b) of Section 7 (Store Requirements) of the
Agreement is deleted and replaced with the following:
"At the end of each calendar year, FSH agrees to have at least
the following number of Ryan's Family Steak House restaurants in
operation:
Number of Ryan's Family Steak House
End of Calendar Year restaurants Required to be in Operation
1999 21
2000 23
2001 25
2002 27
2003 29
Subsequent Years Increases by Two per Year"
The remaining provisions of Section 7 of the Agreement remain in
full force and effect.
August 31, 1999
Page 2
2. Section XV (TERMINATION AND DEFAULTS) of the Franchise
Agreement is amended by the addition at the end of paragraph B
thereof of a new subparagraph 5 of paragraph B, which new
subparagraph 5 is set forth on the attached Rider A.
3. Section XVIII (TRANSFERABILITY OF INTEREST) of the Franchise
Agreement is amended by the addition at the end thereof of new
subparagraphs 5 and 6 of paragraph B, which new subparagraphs 5
and 6 are set forth on the attached Rider B.
Except as explicitly modified herein, the Agreement and the
Franchise Agreement shall continue in full force and effect in
all respects.
RYAN'S PROPERTIES, INC.
Charles D. Way
President
The undersigned has read the above amendments and agrees to the
provisions contained therein.
FAMILY STEAK HOUSES OF FLORIDA, INC.
By: ________________________________________
Mr. Glen F. Ceiley
Chairman of the Board
Family Steak Houses of Florida, Inc.
amend-99.doc
Rider A
(Additional Event of Default)
5. If at the end of any calendar year the number of
Restaurants in operation is less than 80% of the number of
Restaurants required to be in operation as of that date pursuant
to the terms of this Agreement, as amended.
Rider B
(Additional Transferability Provisions)
5. For purposes of this paragraph XVIII.B, any of the
following shall be deemed to be an assignment and transfer
of this Agreement that requires FRANCHISOR's prior written
consent under this Paragraph XVIII.B:
(a) any person or group of persons (within the
meaning of the Securities Exchange Act of
1934, as amended (the "34 Act")) (other than
any person that beneficially owned 15% or
more of the issued and outstanding shares of
voting capital stock of FRANCHISEE as of
December 15, 1998) shall have acquired after
December 15, 1998 beneficial ownership
(within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission
(the "SEC") under the 34 Act) of 25% or more
of the issued and outstanding shares of
capital stock of FRANCHISEE (or FRANCHISEE's
direct or indirect parent) having the right
to vote for the election of directors of
FRANCHISEE (or such parent) under ordinary
circumstances, or
(b) during any period of twelve consecutive
calendar months ending after August 15, 1999,
individuals who at the beginning of such
period constituted the board of directors of
FRANCHISEE (or any direct or indirect parent
of FRANCHISEE) (together with any new
directors whose election by the board of
directors of FRANCHISEE (or such parent), or
whose nomination for election by the
stockholders of FRANCHISEE (or such parent),
was approved by a vote of at least two-thirds
of the directors then still in office who
either were directors at the beginning of
such period or whose election or nomination
for election was previously so approved)
cease for any reason other than death or
disability to constitute a majority of the
directors then in office, or
(c) FRANCHISEE, or any individual or entity that,
directly or indirectly, controls, is
controlled by or is under common control with
FRANCHISEE, directly or indirectly, owns,
maintains, engages in, participates in or has
any interest in, the operation of any other
family-oriented steak house restaurant. For
purposes of this subparagraph (c), the term
"control" has the meaning of that term under
the regulations promulgated by the SEC under
the 34 Act.
For purposes of this paragraph 5, any entity that, directly
or indirectly, controls (within the meaning of the
regulations promulgated by the SEC under the 34 Act)
FRANCHISEE shall be deemed a direct or indirect (as the case
may be) "parent" of FRANCHISEE.
6. In the event that FRANCHISOR declines to grant its
consent to any transaction requiring its consent under this
paragraph XVIII.B., the proposed transaction may nonetheless
be consummated (subject, in the case of an asset transfer,
to FRANCHISOR's right of first refusal) if the following
conditions are satisfied to the reasonable satisfaction of
FRANCHISOR:
(a) FRANCHISEE shall have paid or cause to be
paid to FRANCHISOR in immediately available
funds all amounts due and owing to FRANCHISOR
under this Agreement or accrued under this
Agreement with respect to any period prior to
the effective date of such transaction (the
"Transaction Effective Date");
(b) No event of default has occurred and is
continuing under this Agreement as of the
Transaction Effective Date;
(c) All documents and information in the
possession of FRANCHISEE that FRANCHISOR
deems to be confidential trade secrets shall
have been returned to FRANCHISOR prior to the
Transaction Effective Date;
(d) On or prior to the Transaction Effective
Date, FRANCHISEE or the transferee (as
applicable), on the one hand, and FRANCHISOR,
on the other hand, shall have executed and
delivered an amendment agreement pursuant to
which:
(i) This Agreement is modified
solely (except as provided in
clause (ii) below) to eliminate any
requirement that FRANCHISOR provide
to FRANCHISEE or such transferee
(as applicable) information deemed
confidential trade secrets by
FRANCHISOR;
(ii) The transferee (if applicable)
assumes all of FRANCHISEE's
obligations under this Agreement;
and
(iii) This Agreement shall otherwise
remain in full force and effect and
binding on FRANCHISEE or the
transferee (as applicable).
Exhibit 10.24
CHAR1\TCO\BANK\279009_ 6
CREDIT AGREEMENT
among
RYAN'S FAMILY STEAK HOUSES, INC.,
as Borrower,
THE DOMESTIC SUBSIDIARIES OF THE BORROWER,
as Guarantors,
THE LENDERS IDENTIFIED HEREIN
BANK OF AMERICA, N.A.,
as Administrative Agent,
FIRST UNION NATIONAL BANK,
as Syndication Agent,
WACHOVIA BANK, N.A.,
as Documentation Agent
AND
SUNTRUST BANK, ATLANTA,
as Senior Managing Agent
DATED AS OF JANUARY 28, 2000
Arranged by:
BANC OF AMERICA SECURITIES LLC,
as Lead Arranger and Book Manager
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS 1
1.1 Definitions. 1
1.2 Computation of Time Periods and Other Definitional
Provisions. 24
1.3 Accounting Terms. 24
SECTION 2 CREDIT FACILITIES 25
2.1 Revolving Loans. 25
2.2 Letter of Credit Subfacility. 27
2.3 Swingline Loans Subfacility. 32
2.4 Continuations and Conversions. 34
2.5 Minimum Amounts. 35
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS AND
LETTERS OF CREDIT 35
3.1 Interest. 35
3.2 Place and Manner of Payments. 36
3.3 Prepayments. 36
3.4 Termination and Reduction of Revolving Committed
Amount. 37
3.5 Fees. 38
3.6 Payment in full at Maturity. 39
3.7 Computations of Interest and Fees. 39
3.8 Pro Rata Treatment. 40
3.9 Sharing of Payments. 41
3.10 Capital Adequacy. 42
3.11 Inability To Determine Interest Rate. 43
3.12 Illegality. 43
3.13 Requirements of Law. 43
3.14 Taxes. 44
3.15 Compensation. 47
3.16 Evidence of Debt. 47
SECTION 4 GUARANTY 48
4.1 Guaranty of Payment. 48
4.2 Obligations Unconditional. 48
4.3 Modifications. 49
4.4 Waiver of Rights. 49
4.5 Reinstatement. 50
4.6 Remedies. 50
4.7 Limitation of Guaranty. 50
4.8 Rights of Contribution. 51
SECTION 5 CONDITIONS PRECEDENT 52
5.1 Closing Conditions. 52
5.2 Conditions to All Extensions of Credit. 55
SECTION 6 REPRESENTATIONS AND WARRANTIES 56
6.1 Financial Condition. 56
6.2 No Material Change. 57
6.3 Organization and Good Standing. 57
6.4 Due Authorization. 57
6.5 No Conflicts. 57
6.6 Consents. 58
6.7 Enforceable Obligations. 58
6.8 No Default. 58
6.9 Ownership. 58
6.10 Indebtedness. 58
6.11 Litigation. 59
6.12 Taxes. 59
6.13 Compliance with Law. 59
6.14 ERISA. 59
6.15 Subsidiaries. 60
6.16 Use of Proceeds. 61
6.17 Government Regulation. 61
6.18 Environmental Matters. 62
6.19 Intellectual Property. 63
6.20 Solvency. 63
6.21 Investments. 63
6.22 Location of Chief Executive Office/Principal Place of
Business. 63
6.23 Disclosure. 64
6.24 Licenses, etc. 64
6.25 No Burdensome Restrictions. 64
6.26 Collateral Documents. 64
6.27 Year 2000 Compliance. 64
6.28 Labor Contracts and Disputes. 65
6.29 Broker's Fees. 65
6.30 Indebtedness under Note Purchase Agreements. 65
SECTION 7 AFFIRMATIVE COVENANTS 65
7.1 Information Covenants. 65
7.2 Financial Covenants. 69
7.3 Preservation of Existence and Franchises. 69
7.4 Books and Records. 69
7.5 Compliance with Law. 70
7.6 Payment of Taxes, Claims and Other Indebtedness. 70
7.7 Insurance. 70
7.8 Maintenance of Property. 70
7.9 Collateral. 70
7.10 Use of Proceeds. 71
7.11 Performance of Obligations. 71
7.12 Additional Credit Parties. 71
7.13 Audits/Inspections. 72
7.14 Year 2000 Compliance. 72
SECTION 8 NEGATIVE COVENANTS 72
8.1 Indebtedness. 72
8.2 Liens. 73
8.3 Nature of Business. 74
8.4 Consolidation and Merger. 74
8.5 Sale or Lease of Assets. 74
8.6 Sale Leasebacks. 75
8.7 Investments. 75
8.8 Restricted Payments. 75
8.9 Transactions with Affiliates. 75
8.10 Fiscal Year; Organizational Documents. 76
8.11 No Limitations. 76
8.12 No Other Negative Pledges. 76
8.13 Capital Expenditures. 76
SECTION 9 EVENTS OF DEFAULT 78
9.1 Events of Default. 78
9.2 Acceleration; Remedies. 81
9.3 Allocation of Payments After Event of Default. 82
SECTION 10 AGENCY PROVISIONS 82
10.1 Appointment. 82
10.2 Delegation of Duties. 82
10.3 Exculpatory Provisions. 82
10.4 Reliance on Communications. 82
10.5 Notice of Default. 82
10.6 Non-Reliance on Agent and Other Lenders. 82
10.7 Indemnification. 82
10.8 Agent in Its Individual Capacity. 82
10.9 Successor Agent. 82
SECTION 11 MISCELLANEOUS 82
11.1 Notices. 82
11.2 Right of Set-Off. 82
11.3 Benefit of Agreement. 82
11.4 No Waiver; Remedies Cumulative. 82
11.5 Payment of Expenses; Indemnification. 82
11.6 Amendments, Waivers and Consents. 82
11.7 Counterparts/Telecopy. 82
11.8 Headings. 82
11.9 Defaulting Lender. 82
11.10 Survival of Indemnification and Representations
and Warranties. 82
11.11 Governing Law; Jurisdiction. 82
11.12 Waiver of Jury Trial; Waiver of Consequential
Damages. 82
11.13 Time. 82
11.14 Severability. 82
11.15 Further Assurances. 82
11.16 Entirety. 82
11.17 Binding Effect; Continuing Agreement. 82
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 1.1(b) Existing Letters of Credit
Schedule 1.1(c) Prior Credit Agreements
Schedule 6.10 Indebtedness
Schedule 6.12 Tax Assessment
Schedule 6.15 Subsidiaries
Schedule 6.22 Chief Executive Office/Principal Place of
Business
Schedule 8.5(d) 1999 Closed Stores
Schedule 10.1(b) Intercreditor Agreement
Schedule 11.1 Notices
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(d) Form of Revolving Note
Exhibit 2.3(b) Form of Swingline Loan Request
Exhibit 2.3(d) Form of Swingline Note
Exhibit 2.4 Form of Notice of Continuation/Conversion
Exhibit 7.1(c) Form of Officer's Certificate
Exhibit 7.12(a) Form of Joinder Agreement
Exhibit 7.12(b) Form of Pledge Joinder Agreement
Exhibit 11.3(b) Form of Assignment Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered
into as of January 28, 2000 among RYAN'S FAMILY STEAK HOUSES,
INC., a South Carolina corporation (the "Borrower"), each of the
Domestic Subsidiaries of the Borrower (individually a "Guarantor"
and collectively the "Guarantors"), the Lenders (as defined
herein), BANK OF AMERICA, N.A., as Administrative Agent for the
Lenders (in such capacity, the "Administrative Agent"), FIRST
UNION NATIONAL BANK, as Syndication Agent (in such capacity,
"Syndication Agent"), WACHOVIA BANK, N.A., as Documentation Agent
(in such capacity, the "Documentation Agent") and SUNTRUST BANK,
ATLANTA, as Senior Managing Agent (in such capacity, the "Senior
Managing Agent").
RECITALS
WHEREAS, the Borrower and the Guarantors have requested that
the Lenders provide a $200 million senior secured credit facility
for the purposes hereinafter set forth; and
WHEREAS, the Lenders party hereto have agreed to make the
requested senior secured credit facility available to the
Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings
herein specified unless the context otherwise requires. Defined
terms herein shall include in the singular number the plural and
in the plural the singular:
"Acquisition" by any Person means the acquisition by
such Person of the Capital Stock or all or substantially all
of the Property of another Person, whether or not involving
a merger or consolidation with such Person.
"Additional Credit Party" means each Person that
becomes a Guarantor after the Closing Date, as provided in
Section 7.12.
"Adjusted Base Rate" means the Base Rate plus the
Applicable Percentage.
"Adjusted CD Rate" means the Floating CD Rate plus the
Applicable Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate
plus the Applicable Percentage.
"Administrative Agent" shall have the meaning assigned
to such term in the heading hereof, together with any
successors and assigns.
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling (including
but not limited to all directors and officers of such
Person), controlled by or under direct or indirect common
control with such Person. A Person shall be deemed to
control a corporation if such Person possesses, directly or
indirectly, the power (a) to vote 10% or more of the
securities having ordinary voting power for the election of
directors or trustees of such corporation or (b) to direct
or cause direction of the management and policies of such
corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agency Services Address" means Bank of America, N.A.,
Independence Center, 15th Floor, NC1-001-15-04, 101 N. Tryon
Street, Charlotte, North Carolina 28255, Attn: Agency
Services, or such other address as may be identified by
written notice from the Administrative Agent to the
Borrower.
"Agents" means the Administrative Agent and the
Collateral Agent and any successors and assigns in such
capacity.
"Applicable Percentage" means, for Revolving Loans,
Swingline Loans, Letter of Credit Fees and Unused Fees, the
appropriate applicable percentages, in each case,
corresponding to the Leverage Ratio in effect as of the most
recent Calculation Date as shown below:
Applicable
Percentage
For
Eurodollar
Loans, Applicable Applicable
Prici CD Rate Percentage Percentage
ng Leverage Loans and For For
Level Ratio Letter of Base Rate Unused Fees
Credit Fees Loans
I <1.00 to 1.0 0.875% 0.0% 0.225%
II <1.50 to 1.0 1.125% 0.0% 0.275%
but
1.00 to 1.0
III < 2.0 to 1.0 1.375% 0.0% 0.325%
but
1.50 to 1.0
IV 2.00 to 1.0 1.625% 0.125% 0.375%
The Applicable Percentages shall be determined and
adjusted quarterly on the date (each a "Calculation Date")
five Business Days after the date on which the Borrower
delivers the officer's certificate in accordance with the
provisions of Section 7.1(c); provided that the initial
Applicable Percentages shall be based on Pricing Level IV
(as shown above) and shall remain at Pricing Level IV until
the first Calculation Date subsequent to March 29, 2000,
and, thereafter, the Applicable Percentages shall be
determined by the Leverage Ratio calculated as of the most
recent Calculation Date; and provided further that if the
Borrower fails to provide the officer's certificate required
by Section 7.1(c) on or before the most recent Calculation
Date, the Applicable Percentages from such Calculation Date
shall be based on Pricing Level IV until such time that an
appropriate officer's certificate is provided whereupon the
Applicable Percentages shall be determined by the then
current Leverage Ratio. Each Applicable Percentage shall be
effective from one Calculation Date until the next
Calculation Date except as set forth in the previous
sentence. Any adjustment in the Applicable Percentages
shall be applicable to all existing Eurodollar Loans, CD
Rate Loans, Base Rate Loans and Letters of Credit as well as
any new Eurodollar Loans, CD Rate Loans or Base Rate Loans
made or Letters of Credit issued.
The Borrower shall promptly deliver to the
Administrative Agent, at the address set forth on Schedule
11.1 and at the Agency Services Address, at the time the
officer's certificate is required to be delivered by Section
7.1(c), information regarding any change in the Leverage
Ratio that would change the existing Pricing Level pursuant
to the preceding paragraph.
"Bank of America" means Bank of America, N.A. and its
successors and assigns.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded
or replaced from time to time.
"BAS" means Banc of America Securities LLC and its
successors and assigns.
"Base Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest whole
multiple of 1/100 of 1%) equal to the greater of (a) the
Federal Funds Rate in effect on such day plus one half of 1% or (b)
the Prime Rate in effect on such day. If for any reason the
Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable after due inquiry to ascertain the Federal
Funds Rate for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms hereof, the Base
Rate shall be determined without regard to clause (a) of the
first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change
in the Base Rate due to a change in the Prime Rate or the
Federal Funds Rate shall be effective on the effective date
of such change in the Prime Rate or the Federal Funds Rate,
respectively.
"Base Rate Loan" means any Loan bearing interest at a
rate determined by reference to the Adjusted Base Rate.
"Big R Procurement" means Big R Procurement Company,
LLC, a Delaware limited liability company.
"Borrower" means Ryan's Family Steak Houses, Inc., a
South Carolina corporation, together with any successors and
permitted assigns.
"Business Day" means any day other than a Saturday, a
Sunday, a legal holiday or a day on which banking
institutions are authorized or required by law or other
governmental action to close in Charlotte, North Carolina;
provided that in the case of Eurodollar Loans, such day is
also a day on which dealings between banks are carried on in
U.S. dollar deposits in the London interbank market.
"Calculation Date" has the meaning set forth in the
definition of Applicable Percentage.
"Capital Expenditures" means all expenditures of the
Credit Parties and their Subsidiaries which, in accordance
with GAAP, would be classified as capital expenditures,
including, without limitation, Capital Leases.
"Capital Lease" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by
that Person as lessee which, in accordance with GAAP, is or
should be accounted for as a capital lease on the balance
sheet of that Person and the amount of such obligation shall
be the capitalized amount thereof determined in accordance
with GAAP.
"Capital Stock" means (a) in the case of a corporation,
all classes of capital stock of such corporation, (b) in the
case of a partnership, partnership interests (whether
general or limited), (c) in the case of a limited liability
company, membership interests and (d) any other interest or
participation that confers on a Person the right to receive
a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or
directly and fully guaranteed or insured by the United
States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United
States of America is pledged in support thereof) having
maturities of not more than twelve months from the date of
acquisition, (b) U.S. dollar denominated time and demand
deposits and certificates of deposit of (i) any Lender, (ii)
any domestic commercial bank having capital and surplus in
excess of $500,000,000 or (iii) any bank whose short-term
commercial paper rating from S&P is at least A-1 or the
equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Bank"),
in each case with maturities of not more than 270 days from
the date of acquisition, (c) commercial paper and variable
or fixed rate notes issued by any Approved Bank (or by the
parent company thereof) or any variable rate notes issued
by, or guaranteed by, any domestic corporation rated A-1 (or
the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within
six months of the date of acquisition, (d) repurchase
agreements with a bank or trust company (including any of
the Lenders) or recognized securities dealer having capital
and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States of
America in which a Credit Party shall have a perfected first
priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value
of at least 100% of the amount of the repurchase obligations
and (e) Investments, classified in accordance with GAAP as
current assets, in money market investment programs
registered under the Investment Company Act of 1940, as
amended, which are administered by reputable financial
institutions having capital of at least $500,000,000 and the
portfolios of which are limited to Investments of the
character described in the foregoing subdivisions (a)
through (d).
"Cash Taxes" means, for any period, the aggregate of
all income taxes of the Credit Parties and their
Subsidiaries on a consolidated basis for such period, as
determined in accordance with GAAP, to the extent the same
are paid in cash during such period.
"CD Rate Loan" means any Loan bearing interest at a
rate determined by the Adjusted CD Rate
"Change of Control" means, with respect to the
Borrower, any of the following: (i) any "person" or "group"
(within the meaning of Section 13(d) or 14(d) of the
Exchange Act) has become, directly or indirectly, the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a Person shall be deemed
to have "beneficial ownership" of all shares that any such
Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
by way of merger, consolidation or otherwise, of 20% or more
of the Voting Stock of the Borrower on a fully-diluted
basis, after giving effect to the conversion and exercise of
all outstanding warrants, options and other securities of
the Borrower (whether or not such securities are then
currently convertible or exercisable) other than Trimark
which may become the beneficial owner of up to 30% of the
Voting Stock of the Borrower as a result of the Share
Repurchase Program, or (ii) during any period of two
consecutive calendar years, individuals who at the beginning
of such period constituted the board of directors of the
Borrower cease for any reason to constitute a majority of
the directors of the Borrower then in office unless such new
directors were elected or designated by the directors of the
Borrower who constituted the board of directors of the
Borrower at the beginning of such period or such directors
were elected by shareholders to fill vacant seats for
resigning or retiring directors that were not replaced at
the time of such resignation or retirement.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986, as
amended, and any successor statute thereto, as interpreted
by the rules and regulations promulgated thereunder, in each
case as in effect from time to time. References to sections
of the Code should be construed to also refer to any
successor sections.
"Collateral" means a collective reference to the
collateral which is identified in, and at any time will be
covered by, the Collateral Documents.
"Collateral Agent" means Bank of America, N.A., in its
capacity as collateral agent for the Lenders and the
Noteholders under the Intercreditor Agreement and the Pledge
Agreement, together with any successor that becomes such in
accordance with the provisions of the Pledge Agreement and
the Intercreditor Agreement.
"Collateral Documents" means a collective reference to
the Pledge Agreement and such other documents executed and
delivered in connection with the attachment and perfection
of the Collateral Agent's security interests, for the
benefit of the Secured Parties, in the Capital Stock of each
Domestic and First-Tier Foreign Subsidiary of a Credit
Party, including without limitation, UCC financing
statements.
"Commitments" means (a) the commitment of each Lender
with respect to the Revolving Committed Amount, (b) the
commitment of the Issuing Lender with respect to the LOC
Committed Amount and (c) the commitment of the Swingline
Lender with respect to the Swingline Committed Amount.
"Consolidated Net Worth" means, as of any date with
respect to the Credit Parties and their Subsidiaries on a
consolidated basis, shareholders' equity or net worth, as
determined in accordance with GAAP.
"Credit Documents" means a collective reference to this
Credit Agreement, the Notes, any Joinder Agreement, the
Collateral Documents, the LOC Documents, the Fee Letter, the
Intercreditor Agreement and all other related agreements and
documents issued or delivered hereunder or thereunder or
pursuant hereto or thereto, in each case as the same may be
amended, modified, restated, supplemented, extended, renewed
or replaced from time to time, and "Credit Document" means
any one of them.
"Credit Parties" means the Borrower and the Guarantors
and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication,
(a) all of the obligations of the Credit Parties to the
Lenders (including the Issuing Lender) and the Agents,
whenever arising, under this Credit Agreement, the Notes,
the Collateral Documents or any of the other Credit
Documents to which any Credit Party is a party and (b) all
liabilities and obligations owing from any Credit Party to
any Lender, or any Affiliate of a Lender, arising under any
Hedging Agreement.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event
of Default.
"Defaulting Lender" means, at any time, any Lender that
(a) has failed to make a Loan or purchase a Participation
Interest required pursuant to the terms of this Credit
Agreement when due (but only for so long as such Loan is not
made or such Participation Interest is not purchased), (b)
other than as set forth in the preceding clause (a), has
failed to pay to any Agent or any Lender an amount owed by
such Lender pursuant to the terms of this Credit Agreement
when due (but only for so long as such amount has not been
paid) or (c) has been deemed insolvent or has become subject
to a bankruptcy or insolvency proceeding or with respect to
which (or with respect to any assets of which) a receiver,
trustee or similar official has been appointed.
"Documentation Agent" shall have the meaning assigned
to such term in the heading hereof, together with any
successors and assigns.
"Dollars" and "$" means dollars in lawful currency of
the United States of America.
"Domestic Subsidiaries" means all direct and indirect
Subsidiaries of the Borrower that are domiciled,
incorporated or organized under the laws of any state of the
United States or the District of Columbia (or have any
material assets located in the United States or the District
of Columbia) whether existing as of the date hereof or
hereafter created or acquired.
"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, all as determined in accordance with GAAP.
"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.
"Effective Date" means the date on which the conditions
set forth in Section 5.1 shall have been fulfilled (or
waived in the sole discretion of the Required Lenders) and
on which the initial Loans shall have been made and/or the
initial Letters of Credit shall have been issued.
"Eligible Assignee" means (a) any Lender; (b) an
Affiliate of a Lender; and (c) any other Person approved by
the Administrative Agent, the Issuing Lender and the
Borrower (such approval not to be unreasonably withheld or
delayed); provided that (i) the Borrower's consent is not
required during the existence and continuation of a Default
or an Event of Default, (ii) approval by the Borrower shall
be deemed given if no objection is received by the assigning
Lender and the Administrative Agent from the Borrower within
five Business Days after notice of such proposed assignment
has been received by the Borrower and (iii) neither the
Borrower nor an Affiliate of the Borrower shall qualify as
an Eligible Assignee.
"Environmental Claim" means, with respect to the Real
Properties, any investigation, written notice, notice of
violation, written demand, written allegation, action, suit,
injunction, judgment, order, consent decree, penalty, fine,
lien, proceeding, or written claim (whether administrative,
judicial, or private in nature) arising (a) pursuant to, or
in connection with, an actual or alleged violation of, any
Environmental Law, (b) in connection with any Hazardous
Material, (c) from any assessment, abatement, removal,
remedial, corrective, or other response action required by
an Environmental Law or other order of a Governmental
Authority or (d) from any actual or alleged damage, injury,
threat, or harm to health or safety, natural resources, or
the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a)
the protection of health or safety and the environment, (b)
the conservation, management, use or protection of natural
resources and wildlife, (c) the protection or use of surface
water and groundwater, (d) the management, manufacture,
possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release,
abatement, removal, remediation or handling of, or exposure
to, any hazardous or toxic substance or material or (e)
pollution (including any release to land surface water and
groundwater) and includes, without limitation, the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 USC 9601 et
seq., Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act of 1976 and Hazardous and
Solid Waste Amendments of 1984, 42 USC 6901 et seq., Federal
Water Pollution Control Act, as amended by the Clean Water
Act of 1977, 33 USC 1251 et seq., Clean Air Act of 1966, as
amended, 42 USC 7401 et seq., Toxic Substances Control Act
of 1976, 15 USC 2601 et seq., Hazardous Materials
Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et
seq., Oil Pollution Act of 1990, 33 USC 2701 et seq.,
Emergency Planning and Community Right-to-Know Act of 1986,
42 USC 11001 et seq., National Environmental Policy Act of
1969, 42 USC 4321 et seq., Safe Drinking Water Act of 1974,
as amended, 42 USC 300(f) et seq., any analogous
implementing or successor law, and any amendment, rule,
regulation, order, or directive issued thereunder.
"Equity Issuance" means any issuance by a Credit Party
to any Person of (a) shares of its Capital Stock or other
equity interests, (b) any shares of its Capital Stock or
other equity interests pursuant to the exercise of options
(other than Capital Stock issued to employees and directors
pursuant to employees or directors stock option plans and
Capital Stock issued to consultants) or warrants or (c) any
shares of its Capital Stock or other equity interests
pursuant to the conversion of any debt securities to equity.
The amount of any Equity Issuance shall be the net cash
proceeds derived therefrom, including, in the case of any
conversion of any debt securities into equity the principal
amount of such debt.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto,
as interpreted by the rules and regulations thereunder, all
as the same may be in effect from time to time. References
to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit
Party or any of its Subsidiaries within the meaning of
Section 4001(a)(14) of ERISA, or is a member of a group
which includes any Credit Party or any of its Subsidiaries
and which is treated as a single employer under Sections
414(b), (c), (m), or (o) of the Code.
"Eurodollar Loan" means a Loan bearing interest based
at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing
(including conversions, extensions and renewals), a per
annum interest rate determined pursuant to the following
formula:
Eurodollar Rate = London Interbank Offered Rate
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from
time to time under Regulation D, as such regulation may be
amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without
limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to Eurocurrency
liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes
deposits by reference to which the interest rate of
Eurodollar Loans is determined), whether or not a Lender has
any Eurocurrency liabilities subject to such reserve
requirement at that time. Eurodollar Loans shall be deemed
to constitute Eurocurrency liabilities and as such shall be
deemed subject to reserve requirements without benefits of
credits for proration, exceptions or offsets that may be
available from time to time to a Lender. The Eurodollar
Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurodollar Reserve
Percentage.
"Event of Default" means any of the events or
circumstances specified in Section 9.1.
"Exchange Act" means the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder,
as amended, modified, succeeded or replaced from time to
time.
"Existing Letters of Credit" means the letters of
credit described by date of issuance, letter of credit
number, undrawn amount, name of beneficiary and date of
expiry on Schedule 1.1(b).
"Extension of Credit" means, as to any Lender, the
making of a Loan by such Lender (or a participation therein
by a Lender) or the issuance of, or participation in, a
Letter of Credit by such Lender.
"Federal Funds Rate" means for any day the rate of
interest per annum (rounded upward, if necessary, to the
nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such
day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day and (b)
if no such rate is so published on such next preceding
Business Day, the Federal Funds Rate for such day shall be
the average rate quoted to the Administrative Agent on such
day on such transactions as determined by the Administrative
Agent.
"Fee Letter" means that certain Fee Letter dated as of
October 21, 1999 among the Borrower, Bank of America and
BAS.
"First Tier Foreign Subsidiary" means each Foreign
Subsidiary in which any one or more of the Credit Parties
owns directly more than 50%, in the aggregate, of the Voting
Stock of such Foreign Subsidiary.
"Fixed Charge Coverage Ratio" means the ratio of (a)
the sum of (i) EBITR for the prior twelve month period minus
(ii) Cash Taxes for the prior twelve month period (excluding
back taxes, interest and penalties associated therewith paid
by the Credit Parties in connection with any audit of a
prior year's tax filings during the prior twelve month
period in an amount not to exceed $4,000,000 in the
aggregate) to (b) the sum of (i) cash Interest Expense for
the prior twelve month period plus (ii) Scheduled Funded
Debt Payments for the prior twelve month period plus (iii)
Rent Expense for the prior twelve month period.
"Floating CD Rate" means the sum of (a) the product of
(i) the Three-Month Secondary CD Rate and (ii) a fraction,
the numerator of which is one and the denominator of which
is one minus the CD Reserve Percentage and (b) the CD
Assessment Rate. For purposes of this definition, the
following terms shall have the following meanings: "Three-
Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported
as being in effect on such day (or if such day is not a
Business Day, the next following Business Day) by the Board
of Governors of the Federal Reserve System (the "Board"),
through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under current
practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such
day), or, if such rate is not so reported, the average
(rounded upwards to the nearest 1/100th of 1%) of the
secondary market quotations for three-month certificates of
deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on
such day or next preceding Business Day by the Swingline
Lender from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it; "CD
Reserve Percentage" means for any day as applied to any
calculation of the Floating CD Rate, that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board for determining the maximum reserve
requirement for a Depositary Institution (as defined in
Regulation D of the Board) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or
more; and "CD Assessment Rate" means for any day the net
annual assessment rate (rounded upwards, if necessary, to
the next 1/100 of 1%) determined by the Swingline Lender to
be payable on such day to the Federal Deposit Insurance
Corporation or any successor ("FDIC") for FDIC's insuring
time deposits made in Dollars at offices of the Swingline
Lender in the United States.
"Foreign Subsidiary" means any Subsidiary of the
Borrower or any other Credit Party that is not a Domestic
Subsidiary.
"Funded Debt" means, without duplication, the sum of
(a) all outstanding Indebtedness (other than (i) Hedging
Agreements and (ii) Indebtedness owing from one Credit Party
to another Credit Party) of the Credit Parties and their
Subsidiaries for borrowed money, (b) all purchase money
Indebtedness of the Credit Parties and their Subsidiaries,
(c) the principal portion of all obligations of the Credit
Parties and their Subsidiaries under Capital Leases, (d) all
obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and
banker's acceptances created for the account of a Credit
Party or its Subsidiaries (it being understood that, to the
extent an undrawn letter of credit supports another
obligation consisting of Indebtedness, in calculating
aggregated Indebtedness only such other obligation shall be
included), (e) all Guaranty Obligations of the Credit
Parties and their Subsidiaries with respect to Funded Debt
of another Person, (f) all Funded Debt of another entity
secured by a Lien on any property of the Credit Parties and
their Subsidiaries whether or not such Funded Debt has been
assumed by a Credit Party or any of its Subsidiaries, (g)
all Funded Debt of any partnership or unincorporated joint
venture to the extent a Credit Party or one of its
Subsidiaries is legally obligated or has a reasonable
expectation of being liable with respect thereto, net of any
assets of such partnership or joint venture and (h) the
principal balance outstanding under any synthetic lease, tax
retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product where such transaction
is considered borrowed money indebtedness for tax purposes
but is classified as an operating lease in accordance with
GAAP.
"GAAP" means generally accepted accounting principles
in the United States applied on a consistent basis and
subject to Section 1.3.
"Governmental Authority" means any Federal, state,
local, provincial or foreign court, governmental agency,
authority, instrumentality or regulatory body, or any
securities exchange or self-regulatory organization.
"Guarantor" means each of the Domestic Subsidiaries of
the Borrower and each Additional Credit Party which has
executed a Joinder Agreement or otherwise become a Guarantor
hereunder, together with their successors and assigns.
"Guaranty Obligations" means, with respect to any
Person, without duplication, any obligations (other than
endorsements in the ordinary course of business of
negotiable instruments for deposit or collection)
guaranteeing or intended to guarantee any Indebtedness of
any other Person in any manner, whether direct or indirect,
and including without limitation any obligation, whether or
not contingent, (a) to purchase any such Indebtedness or
other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support
for the payment or purchase of such Indebtedness or
obligation or to maintain working capital, solvency or other
balance sheet condition of such other Person (including,
without limitation, maintenance agreements, comfort letters,
take or pay arrangements, put agreements or similar
agreements or arrangements) for the benefit of the holder of
Indebtedness of such other Person, (c) to lease or purchase
property, securities or services primarily for the purpose
of assuring the owner of such Indebtedness or (d) to
otherwise assure or hold harmless the owner of such
Indebtedness or obligation against loss in respect thereof.
The amount of any Guaranty Obligation hereunder shall
(subject to any limitations set forth therein) be deemed to
be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in
respect of which such Guaranty Obligation is made unless
such primary obligation in respect of which such Guaranty
Obligation is made is not stated or determinable, in which
case the amount of such Guaranty Obligation shall be the
maximum reasonably anticipated liability in respect thereof
(assuming the guaranteeing person is required to perform).
"Hazardous Materials" means any substance, material or
waste defined in or regulated under any Environmental Laws.
"Hedging Agreements" means any interest rate protection
agreements, foreign currency exchange agreements, currency
swap agreements, commodity purchase or option agreements or
other interest or exchange rate hedging agreements, in each
case, entered into or purchased by a Credit Party.
"Immaterial Subsidiary" means any Subsidiary of the
Borrower which accounted for less than (a) two percent (2%)
of the consolidated assets of the Borrower and its
Subsidiaries, on a consolidated basis, as of the end of the
most recent fiscal year of the Borrower and (b) two percent
(2%) of the consolidated revenues of the Borrower and its
Subsidiaries, on a consolidated basis, for the four fiscal
quarters ending as of the most recent fiscal year of the
Borrower.
"Indebtedness" of any Person means, without
duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, or upon
which interest payments are customarily made (c) all
obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by
such Person to the extent of the value of such property
(other than customary reservations or retentions of title
under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations, other than
intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by
such Person which would appear as liabilities on a balance
sheet of such Person, (e) all Indebtedness of others secured
by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by)
any Lien on, or payable out of the proceeds of production
from, property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed, (f)
all Guaranty Obligations of such Person, (g) the principal
portion of all obligations of such Person under (i) Capital
Leases and (ii) any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered
borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP,
(h) all obligations of such Person in respect of Hedging
Agreements, (i) the maximum amount of all performance and
standby letters of credit issued or bankers' acceptances
facilities created for the account of such Person and,
without duplication, all drafts drawn thereunder (to the
extent unreimbursed), (j) all preferred stock issued by such
Person and required by the terms thereof to be redeemed, or
for which mandatory sinking fund payments are due by a fixed
date, (k) the aggregate amount of uncollected accounts
receivable of such Person subject at such time to a sale of
receivables (or similar transaction) regardless of whether
such transaction is effected without recourse to such Person
or in a manner that would not be reflected on the balance
sheet of such Person in accordance with GAAP, and (l) all
obligations of such Person to repurchase any securities
which repurchase obligation is related to the issuance
thereof, including, without limitation, obligations commonly
known as residual equity appreciation potential shares. The
Indebtedness of any Person shall include the Indebtedness of
any partnership or unincorporated joint venture in which
such Person is legally obligated or has a reasonable
expectation of being liable with respect thereto.
"Intercreditor Agreement" means that certain
Intercreditor and Collateral Agency Agreement dated as of
the date hereof among the Collateral Agent, the
Administrative Agent and the Noteholders, as amended,
modified, supplemented or restated from time to time.
"Interest Expense" means, for any period, with respect
to the Credit Parties and their Subsidiaries on a
consolidated basis, all interest expense, including the
interest component under Capital Leases, as determined in
accordance with GAAP.
"Interest Payment Date" means (a) as to Base Rate Loans
and CD Rate Loans, the last day of each calendar quarter and
the Maturity Date and (b) as to Eurodollar Loans, the last
day of each applicable Interest Period and the Maturity
Date, and in addition, where the applicable Interest Period
for a Eurodollar Loan is greater than three months, then
also the date three months from the beginning of the
Interest Period and each three months thereafter.
"Interest Period" means, (i) as to Revolving Loans that
are Eurodollar Loans, a period of one, two, three or six
months' duration, as the Borrower may elect, commencing, in
each case, on the date of the borrowing (including
continuations and conversions thereof) and (ii) as to
Swingline Loans that are Eurodollar Loans, a period of
seven, fourteen or twenty-one days' duration as the Borrower
may elect, commencing, in each case, on the date of the
borrowing; provided, however, (a) if any Interest Period
would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding
Business Day (except that where the next succeeding Business
Day falls in the next succeeding calendar month, then on the
next preceding Business Day), (b) no Interest Period shall
extend beyond the Maturity Date and (c) where an Interest
Period begins on a day for which there is no numerically
corresponding day in the calendar month in which the
Interest Period is to end, such Interest Period shall end on
the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition
(whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of
Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of
such Person or (b) any deposit with, or advance, loan or
other extension of credit to, such Person (other than
deposits made in connection with the purchase of equipment
or other assets in the ordinary course of business) or (c)
any other capital contribution to or investment in such
Person, including, without limitation, any Guaranty
Obligation (including any support for a Letter of Credit
issued on behalf of such Person) incurred for the benefit of
such Person.
"Issuing Lender" means (a) with respect to any Existing
Letter of Credit, Wachovia Bank, N.A. and (b) with respect
to any Letter of Credit (other than any Existing Letter of
Credit), Bank of America, N.A. or any successor Issuing
Lender.
"Issuing Lender Fees" has the meaning set forth in
Section 3.4(c).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Exhibit 7.12.
"Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, the Swingline
Lender, the Issuing Lender and any Eligible Assignee which
may become a Lender by way of assignment in accordance with
the terms hereof, together with their successors and
permitted assigns.
"Letter of Credit" means (a) a letter of credit issued
for the account of a Credit Party by the Issuing Lender
pursuant to Section 2.2, as any such letter of credit may be
amended, modified, extended, renewed or replaced and (b) any
Existing Letter of Credit.
"Letter of Credit Fees" has the meaning set forth in
Section 3.4(b).
"Leverage Ratio" means, as of the end of each fiscal
quarter, the ratio of (a) total Funded Debt on such date to
(b) EBITDA for the twelve month period ending on such date.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest,
encumbrance, lien (statutory or otherwise), preference,
priority or charge of any kind, including, without
limitation, any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, and any
lease in the nature thereof.
"Loan" or "Loans" means the Revolving Loans and the
Swingline Loans (or a portion of any Revolving Loan or
Swingline Loan), individually or collectively, as
appropriate.
"LOC Committed Amount" has the meaning set forth in
Section 2.2(a).
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or
other documents (whether general in application or
applicable only to such Letter of Credit) governing or
providing for (a) the rights and obligations of the parties
concerned or at risk or (b) any collateral security for such
obligations.
"LOC Obligations" means, at any time, the sum of (a)
the maximum amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (b) the
aggregate amount of all drawings under Letters of Credit
honored by the Issuing Lender but not theretofore
reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to
any Eurodollar Loan for the Interest Period applicable
thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate
Page 3750 (or any successor page) as the London interbank
offered rate for deposits in Dollars at approximately 11:00
A.M. (London time) two Business Days prior to the first day
of such Interest Period for a term comparable to such
Interest Period; provided, however, if more than one rate is
specified on Telerate Page 3750, the applicable rate shall
be the arithmetic mean of all such rates. If, for any
reason, such rate is not available, the term "London
Interbank Offered Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London
time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates (rounded
upwards, if necessary, to the nearest 1/100 of 1%).
"Mandatory Borrowing" has the meaning set forth in
Section 2.2(e).
"Material Adverse Effect" means a material adverse
effect on (a) the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise)
or prospects of the Credit Parties and their Subsidiaries
taken as a whole, (b) the ability of the Credit Parties and
their Subsidiaries taken as a whole to perform their
obligations under this Credit Agreement or any of the other
Credit Documents, or (c) the validity or enforceability of
this Credit Agreement, any of the other Credit Documents, or
the rights and remedies of the Lenders hereunder or
thereunder taken as a whole.
"Maturity Date" means January 28, 2005.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
"Multiemployer Plan" means a Plan covered by Title IV
of ERISA which is a multiemployer plan as defined in Section
3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Single Employer Plan
to which any Credit Party or any of its Subsidiaries or any
ERISA Affiliate and at least one employer other than a
Credit Party or any of its Subsidiaries or any ERISA
Affiliate are contributing sponsors.
"Net Income" means, for any period, the net income
after taxes for such period of the Credit Parties and their
Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"Non-Excluded Taxes" has the meaning set forth in
Section 3.14.
"Non-Operating Subsidiaries" means the collective
reference to Big R, Ryan's TLC, Rymark and Ryan's
Properties.
"Note" or "Notes" means the Revolving Notes and the
Swingline Note, individually or collectively, as
appropriate.
"Noteholders" means the holders from time to time of
the 9.02% Senior Notes due January 28, 2008 (and any notes
issued in substitution thereof) issued pursuant to separate
Note Purchase Agreements.
"Note Purchase Agreements" means the collective
reference to those separate Note Purchase Agreements dated
as of January 28, 2000 among the Borrower and each of the
respective purchasers identified therein, as the same may be
amended, modified, supplemented or restated from time to
time.
"Notice of Borrowing" means a request by the Borrower
for a Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by
the Borrower to continue an existing Eurodollar Loan to a
new Interest Period or to convert a Eurodollar Loan to a
Base Rate Loan or a Base Rate Loan to a Eurodollar Loan, in
the form of Exhibit 2.4.
"Operating Leases" means, as applied to any Person, any
lease (including, without limitation, leases which may be
terminated by the lessee at any time) of any Property which
is not a Capital Lease other than any such lease in which
such Person is the lessor.
"Operating Partners Program" means the Borrower's
program whereby employees of the Borrower or its
Subsidiaries who hold the positions of restaurant general
manager, district manager or regional manager or positions
of like authority and similar responsibilities may purchase
Capital Stock of the Borrower and may obtain from the
Borrower a guarantee of loans received by such an employee
to enable such employee to purchase such Capital Stock
pursuant to the program.
"Participation Interest" means the Extension of Credit
by a Lender by way of a purchase of a participation in
Letters of Credit or LOC Obligations as provided in Section
2.2, in Swingline Loans as provided in Section 2.3(c) or in
any Loans as provided in Section 3.9.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and
any successor thereto.
"Permitted Acquisitions" means an Acquisition by the
Borrower for consideration no greater than the fair market
value; provided that (a) the Capital Stock or Property
acquired in such Acquisition are in, or used or useful in,
the same or similar or related line of business as the
Borrower is engaged in on the Closing Date, (b) the
Administrative Agent shall have received all items in
respect of the Capital Stock or Property acquired in such
Acquisition required to be delivered by the terms of Section
7.9 and/or Section 7.12, (c) in the case of an Acquisition
of the Capital Stock of another Person, the board of
directors (or other comparable governing body) of such other
Person shall have duly approved such Acquisition, (d) the
Borrower shall have delivered to the Administrative Agent a
Pro Forma Compliance Certificate demonstrating that, upon
giving effect to such Acquisition on a Pro Forma Basis, the
Credit Parties shall be in compliance with all of the
financial covenants set forth in Section 7.2, (e) the
representations and warranties made by the Credit Parties in
any Credit Document shall be true and correct in all
material respects at and as if made as of the date of such
Acquisition (after giving effect thereto) except to the
extent such representations and warranties expressly relate
to an earlier date, (f) after giving effect to such
Acquisition, no Default or Event of Default shall exist, (g)
after giving effect to such Acquisition, the amount of
availability existing under the Revolving Committed Amount
shall be greater than or equal to $20,000,000 and (h) the
cash consideration and non-cash consideration (including,
without limitation, assumed Indebtedness) paid in any single
Acquisition shall not exceed $20,000,000 and the cash
consideration and non-cash consideration (including, without
limitation, assumed Indebtedness) paid in the aggregate for
all Acquisitions shall not exceed $40,000,000 during the
term of this Credit Agreement.
"Permitted Investments" means Investments which are (a)
cash or Cash Equivalents, (b) accounts receivable created,
acquired or made in the ordinary course of business and
payable or dischargeable in accordance with customary trade
terms, (c) inventory, raw materials and general intangibles
(to the extent such general intangibles are not a Capital
Expenditure) acquired in the ordinary course of business,
(d) Investments by a Credit Party in or to another Credit
Party and (e) Permitted Acquisitions.
"Permitted Liens" means (a) Liens securing the
Obligations (as defined in the Intercreditor Agreement), (b)
Liens for taxes not yet due or Liens for taxes being
contested in good faith by appropriate proceedings for which
adequate reserves determined in accordance with GAAP have
been established (and as to which the property subject to
any such Lien is not yet subject to foreclosure, sale,
collection, levy or loss on account thereof), (c) Liens in
respect of property imposed by law arising in the ordinary
course of business such as materialmen's, mechanics',
warehousemen's, carrier's, landlords' and other
nonconsensual statutory Liens which are not yet due and
payable or which are being contested in good faith by
appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established
(and as to which the property subject to any such Lien is
not yet subject to foreclosure, sale or loss on account
thereof), (d) pledges or deposits made in the ordinary
course of business to secure payment of worker's
compensation insurance, unemployment insurance, pensions or
social security programs, (e) Liens arising from good faith
deposits in connection with or to secure performance of (i)
tenders, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations or (ii)
leases of real property, in each case incurred in the
ordinary course of business (other than obligations in
respect of the payment of borrowed money), (f) Liens arising
from good faith deposits in connection with or to secure
performance of statutory obligations and surety and appeal
bonds, (g) easements, rights-of-way, restrictions (including
zoning restrictions), matters of plat, minor defects or
irregularities in title and other similar charges or
encumbrances not, in any material respect, impairing the use
of the encumbered property for its intended purposes, (h)
judgment Liens that would not constitute an Event of
Default, (i) Liens in connection with Indebtedness permitted
by Section 8.1(c); provided that (i) any such Lien shall
extend solely to the item of such Property so acquired and
(ii) any such Lien shall attach or be created
contemporaneously with, or within 180 days after, the
acquisition of such Property, (j) Liens arising by virtue of
any statutory or common law provision relating to banker's
liens, rights of setoff or similar rights as to deposit
accounts or other funds maintained with a creditor
depository institution, (k) any precautionary filings of
financing statements under the UCC made in relation to
leases of equipment which leases are otherwise permitted by
this Credit Agreement and (l) Liens of a collecting bank
arising under Section 4-210 of the UCC on items in the
course of collection.
"Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company,
association, trust, fund or other enterprise (whether or not
incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with
respect to which any Credit Party or any of its Subsidiaries
or any ERISA Affiliate is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" within the meaning of Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement executed
and delivered by each of the Credit Parties in favor of the
Collateral Agent, for the benefit of the Lenders (and any
Affiliate of a Lender that enters into a Hedging Agreement
with a Credit Party) and the Noteholders, as amended,
modified, extended, supplemented, restated, renewed or
replaced from time to time.
"Prime Rate" means the per annum rate of interest
established from time to time by the Administrative Agent as
its prime rate in effect at its principal office in
Charlotte, North Carolina (or such other principal office of
the Administrative Agent as communicated in writing to the
Borrower and the Lenders). Any change in the interest rate
resulting from a change in the Prime Rate shall become
effective as of 12:01 a.m. of the Business Day on which each
change in the Prime Rate is announced by the Administrative
Agent. The Prime Rate is a reference rate used by the
Administrative Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any debtor.
"Prior Credit Agreements" means the collective
reference to (a) that certain Credit Agreement, dated as of
June 5, 1996, among the Borrower, Wachovia Bank, N.A., as
agent, and the lenders party thereto, as amended or modified
from time to time and (b) those certain credit agreements of
the Borrower identified on Schedule 1.1(b).
"Pro Forma Basis" means, for purposes of calculating
(utilizing the principles set forth in the second paragraph
of Section 1.3) compliance with each of the financial
covenants set forth in Section 7.2 in respect of a proposed
Acquisition as referred to in clause (d) of the definition
of "Permitted Acquisition" set forth in this Section 1.1,
that such Acquisition shall be deemed to have occurred as of
the first day of the four fiscal-quarter period ending as of
the most recent fiscal quarter end preceding the date of
such Acquisition with respect to which the Administrative
Agent has received the financial statements and officer's
certificate required to be delivered pursuant to Section
7.1(a) or (b), as applicable, and Section 7.1(c). In
connection with any calculation of the financial covenants
set forth in Section 7.2 and upon giving effect on a Pro
Forma Basis to any Acquisition, (a) any Indebtedness
incurred by any Credit Party or any of its Subsidiaries in
connection with such Acquisition (i) shall be deemed to have
been incurred as of the first day of the applicable period
and (ii) if such Indebtedness has a floating or formula
rate, such Indebtedness shall have an implied rate of
interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or
would be in effect with respect to such Indebtedness as at
the relevant date of determination and (b) income statement
items (whether positive or negative) attributable to the
Capital Stock or Property acquired in such Acquisition shall
be included to the extent relating to the relevant period
and to the extent, and in the same manner, as such items are
included for the Credit Parties.
"Pro Forma Compliance Certificate" means a certificate
of a Responsible Officer of the Borrower delivered to the
Administrative Agent in connection with any Acquisition as
referred to in clause (d) of the definition of "Permitted
Acquisition" set forth in this Section 1.1 and containing
reasonably detailed calculations, upon giving effect to such
Acquisition on a Pro Forma Basis, of each of the financial
covenants set forth in Section 7.2 as of the most recent
fiscal quarter end preceding the date of such Acquisition
with respect to which the Administrative Agent shall have
received the financial statements and officer's certificate
required to be delivered pursuant to Section 7.1(a) or (b),
as applicable, and Section 7.1(c).
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Real Properties" means the real properties that the
Credit Parties may own, operate or lease (as lessee or
sublessee) from third parties from time to time.
"Regulation D, O, T, U or X" means Regulation D, O, T,
U or X, respectively, of the Board of Governors of the
Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof.
"Rent Expense" means, for any period, the total rent
expense for Operating Leases of the Credit Parties and their
Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"Reportable Event" means a "reportable event" as
defined in Section 4043 of ERISA with respect to which the
notice requirements to the PBGC have not been waived.
"Required Holders" means, at any time, the holders of
at least a majority in principal amount of the Senior Notes
at the time outstanding (exclusive of Senior Notes then
owned by the Borrower or any of its Affiliates).
"Required Lenders" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes more than 50%
of the Credit Exposure of all Lenders at such time;
provided, however, that if any Lender shall be a Defaulting
Lender at such time then there shall be excluded from the
determination of Required Lenders the aggregate principal
amount of Credit Exposure of such Lender at such time. For
purposes of the preceding sentence, the term "Credit
Exposure" as applied to each Lender shall mean (a) at any
time prior to the termination of the Commitments, the
Revolving Loan Commitment Percentage of such Lender
multiplied by the Revolving Committed Amount, and (b) at any
time after the termination of the Commitments, the sum of
(i) the principal balance of the outstanding Loans of such
Lender plus (ii) such Lender's Participation Interests in
the face amount of the outstanding Letters of Credit and
Swingline Loans.
"Requirement of Law" means, as to any Person, the
articles or certificate of incorporation and by-laws or
other organizational or governing documents of such Person,
and any law, treaty, rule or regulation or final, non-
appealable determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material
property is subject.
"Responsible Officer" means the chief executive
officer, president, chief financial officer, treasurer, or
any other senior officer of a Credit Party designated as
such to the Administrative Agent by such Credit Party.
"Revolving Committed Amount" means TWO HUNDRED MILLION
DOLLARS ($200,000,000) or such lesser amount to which the
Revolving Committed Amount may be reduced pursuant to
Section 2.1(d) or Section 3.4.
"Revolving Loan Commitment Percentage" means, for each
Lender, the percentage identified as its Revolving Loan
Commitment Percentage on Schedule 1.1(a), as such percentage
may be modified in connection with any assignment made in
accordance with the provisions of Section 11.3.
"Revolving Loans" means the Revolving Loans made to the
Borrower by the Lenders pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the
promissory notes of the Borrower in favor of each of the
Lenders evidencing the Revolving Loans provided pursuant to
Section 2.1, individually or collectively, as appropriate,
as such promissory notes may be amended, modified,
supplemented, extended, renewed or replaced from time to
time and as evidenced in the form of Exhibit 2.1(e).
"Ryan's Properties" means Ryan's Properties, Inc., a
Delaware corporation.
"Ryan's TLC" means Ryan's Family Steak Houses TLC,
Inc., a Delaware corporation.
"Rymark" means Rymark Holdings, Inc., a Delaware
corporation.
"S&P" means Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc. or any successor
or assignee of the business of such division in the business
of rating securities.
"Scheduled Funded Debt Payments" means, as of the end
of each fiscal quarter of the Borrower, for the Credit
Parties and their Subsidiaries on a consolidated basis, the
sum of all scheduled payments of principal on Funded Debt
for the applicable period ending on such date (including the
principal component of payments due on Capital Leases during
the applicable period ending on such date); it being
understood that Scheduled Funded Debt Payments shall not
include voluntary prepayments or the mandatory prepayments
required pursuant to Section 3.3.
"Secured Parties" means a collective reference to the
Lenders and the Noteholders, and "Secured Party" means any
one of them.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated
thereunder.
"Senior Managing Agent" shall have the meaning assigned
to such term in the heading hereof, together with any
successors and assigns.
"Senior Notes" means the senior notes purchased by the
Noteholders pursuant to the Note Purchase Agreements.
"Share Repurchase Program" means the share repurchase
program authorized by the board of directors of the
Borrower.
"Single Employer Plan" means any Plan which is covered
by Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a
particular date, that on such date (a) such Person is able
to pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the
normal course of business, (b) such Person does not intend
to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such
debts and liabilities mature in their ordinary course, (c)
such Person is not engaged in a business or a transaction,
and is not about to engage in a business or a transaction,
for which such Person's assets would constitute unreasonably
small capital after giving due consideration to the
prevailing practice in the industry in which such Person is
engaged or is to engage, (d) the fair value of the assets of
such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of
such Person and (e) the present fair saleable value of the
assets of such Person is not less than the amount that will
be required to pay the probable liability of such Person on
its debts as they become absolute and matured. In computing
the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the
amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can
reasonably be expected to become an actual or matured
liability.
"Subsidiary" means, as to any Person, (a) any
corporation more than 50% of whose stock of any class or
classes having by the terms thereof ordinary voting power to
elect a majority of the directors of such corporation
(irrespective of whether or not at the time, any class or
classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through
Subsidiaries, and (b) any partnership, limited liability
company, association, joint venture or other entity in which
such person directly or indirectly through Subsidiaries has
more than a 50% equity interest at any time.
"Swingline Lender" means Bank of America, N.A. or any
successor Swingline Lender.
"Swingline Loans" means the loans made by the Swingline
Lender pursuant to Section 2.3.
"Swingline Committed Amount" means Ten Million Dollars
($10,000,000).
"Swingline Loan Request" means a request by the
Borrower for a Swingline Loan in substantially the form of
Exhibit 2.3(b).
"Swingline Note" means the promissory note of the
Borrower in favor of the Swingline Lender evidencing the
Swingline Loans provided pursuant to Section 2.3, as such
promissory note may be amended, modified, supplemented,
extended, renewed or replaced from time to time in and as
evidenced by the form of Exhibit 2.3(d).
"Syndication Agent" shall have the meaning assigned to
such term in the heading hereof, together with any
successors and assigns.
"Termination Event" means (a) with respect to any
Single Employer Plan, the occurrence of a Reportable Event
or the substantial cessation of operations (within the
meaning of Section 4062(e) of ERISA); (b) the withdrawal of
any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiple Employer Plan during a plan year
in which it was a substantial employer (as such term is
defined in Section 4001(a)(2) of ERISA), or the termination
of a Multiple Employer Plan; (c) the distribution of a
notice of intent to terminate or the actual termination of a
Plan pursuant to Section 4041(a)(2) or 4041A of ERISA; (d)
the institution of proceedings to terminate or the actual
termination of a Plan by the PBGC under Section 4042 of
ERISA; (e) any event or condition which might reasonably
constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan; or (f) the complete or partial
withdrawal of any Credit Party or any of its Subsidiaries or
any ERISA Affiliate from a Multiemployer Plan.
"Trimark" means Trimark Financial Corporation, a
corporation organized under the laws of Ontario, Canada.
"Unused Commitment" means, for any period, the amount
by which (a) the then applicable aggregate Revolving
Committed Amount exceeds (b) the daily average sum for such
period of the outstanding aggregate principal amount of all
Revolving Loans plus the aggregate amount of LOC Obligations
outstanding.
"Voting Stock" of a corporation means all classes of
the Capital Stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
"Year 2000 Compliant" shall have the meaning assigned
to such term in Section 6.27.
"Year 2000 Problem" means any risk (a) that any
computer hardware, software or other equipment used by a
Credit Party or any of its Subsidiaries (or by any
suppliers, vendors or customers that is material to the
business of such Credit Party or Subsidiary) will not
function as effectively and reliably on and after January 1,
2000 as it does prior to January 1, 2000 or (b) that any
computer applications used by a Credit Party or any of its
Subsidiaries may not be able to recognize and properly
perform date-sensitive functions after December 31, 1999, to
the extent any such risk specified in items (a) or (b) above
would have or be reasonably expected to have a Material
Adverse Effect.
1.2 Computation of Time Periods and Other Definitional
Provisions.
For purposes of computation of periods of time hereunder,
the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding." References in this
Agreement to "Articles", "Sections", "Schedules" or "Exhibits"
shall be to Articles, Sections, Schedules or Exhibits of or to
this Agreement unless otherwise specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all
financial statements and certificates and reports as to financial
matters required to be delivered to the Lenders hereunder shall
be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining
compliance with this Credit Agreement shall (except as otherwise
expressly provided herein) be made by application of GAAP applied
on a basis consistent with the most recent annual or quarterly
financial statements delivered pursuant to Section 7.1 (or, prior
to the delivery of the first financial statements pursuant to
Section 7.1, consistent with the financial statements described
in Section 5.1(d)); provided, however, if (a) the Borrower shall
object to determining such compliance on such basis at the time
of delivery of such financial statements due to any change in
GAAP or the rules promulgated with respect thereto or (b) the
Administrative Agent or the Required Lenders shall so object in
writing within 60 days after delivery of such financial
statements, then such calculations shall be made on a basis
consistent with GAAP as in effect as of the date of the most
recent financial statements delivered by the Borrower to the
Lenders to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and
agree that, for purposes of all calculations made under the
financial covenants set forth in Section 7.2 (including the
definitions used therein) and also for purposes of calculating
the Leverage Ratio in connection with the definition of
"Applicable Percentage" set forth in Section 1.1, income
statement items (whether positive or negative) attributable to
any Person or property acquired in any Acquisition contemplated
by the definition of "Permitted Acquisition" set forth in Section
1.1 and any Indebtedness incurred by the Credit Parties in order
to consummate such Acquisition shall, to the extent not otherwise
included in such income statement items for the Credit Parties in
accordance with GAAP or in accordance with any defined terms set
forth in Section 1.1, be included to the extent relating to any
period applicable in such calculations occurring after the date
of such Acquisition (and notwithstanding the foregoing, during
the first four fiscal quarters following the date of the such
Acquisition, such Acquisition and any Indebtedness incurred by
the Credit Parties in order to consummate such Acquisition (A)
shall be deemed to have occurred on the first day of the four
fiscal quarter period immediately preceding the date of such
Acquisition and (B) if such Indebtedness has a floating or
formula rate, then the implied rate of interest for such
Indebtedness for the applicable period shall be determined by
utilizing the rate which is or would be in effect with respect to
such Indebtedness as at the relevant date of determination).
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms
and conditions set forth herein, each Lender severally
agrees to make revolving loans (each a "Revolving Loan" and
collectively the "Revolving Loans") to the Borrower, in
Dollars, at any time and from time to time, during the
period from and including the Effective Date to but not
including the Maturity Date (or such earlier date if the
Revolving Committed Amount has been terminated as provided
herein); provided, however, that (i) the sum of the
aggregate amount of Revolving Loans outstanding plus the
aggregate amount of LOC Obligations outstanding plus the
aggregate amount of Swingline Loans outstanding shall not
exceed the Revolving Committed Amount and (ii) with respect
to each individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus such Lender's pro rata
share of outstanding LOC Obligations plus (other than the
Swingline Lender) such Lender's pro rata share of Swingline
Loans outstanding shall not exceed such Lender's Revolving
Loan Commitment Percentage of the Revolving Committed
Amount. Subject to the terms of this Credit Agreement
(including Section 3.3), the Borrower may borrow, repay and
reborrow Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no
later than 11:00 a.m. (i) on the date of the requested
borrowing of Revolving Loans that will be Base Rate Loans
or (ii) three Business Days prior to the date of the
requested borrowing of Revolving Loans that will be
Eurodollar Loans, the Borrower shall telephone the
Administrative Agent with the information described below as
well as submit a written Notice of Borrowing in the form of
Exhibit 2.1(b) to the Administrative Agent setting forth (A)
the amount requested, (B) whether such Revolving Loans shall
accrue interest at the Adjusted Base Rate or the Adjusted
Eurodollar Rate, (C) with respect to Revolving Loans that
will be Eurodollar Loans, the Interest Period applicable
thereto and (D) certification that the Borrower has complied
in all respects with Section 5.2. If the Borrower shall
fail to specify (x) an Interest Period in the case of a
Eurodollar Loan, then such Eurodollar Loan shall be deemed
to have an Interest Period of one month, or (y) the type of
Revolving Loan requested, then such Revolving Loan shall be
deemed to be a Base Rate Loan. All Revolving Loans made on
the Effective Date shall be Base Rate Loans unless the
Borrower delivers to the Administrative Agent at least three
Business Days prior to the Effective Date a funding
indemnity letter in form and substance reasonably
satisfactory to the Administrative Agent. Thereafter, all
or any portion of such Revolving Loans may be converted into
Eurodollar Loans in accordance with the terms of Section
2.5.
(c) Funding of Revolving Loans. Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly
inform the Lenders as to the terms thereof. Each Lender
shall make its Revolving Loan Commitment Percentage of the
requested Revolving Loans available to the Administrative
Agent by 1:00 p.m. on the date specified in the Notice of
Borrowing by deposit, in Dollars, of immediately available
funds at the offices of the Administrative Agent at its
principal office in Charlotte, North Carolina or at such
other address as the Administrative Agent may designate in
writing. The amount of the requested Revolving Loans will
then be made available to the Borrower by the Administrative
Agent by crediting the account of the Borrower on the books
of such office of the Administrative Agent, to the extent
the amount of such Revolving Loans are made available to the
Administrative Agent.
No Lender shall be responsible for the failure or delay
by any other Lender in its obligation to make Revolving
Loans hereunder; provided, however, that the failure of any
Lender to fulfill its obligations hereunder shall not
relieve any other Lender of its obligations hereunder.
Unless the Administrative Agent shall have been notified by
any Lender prior to the date of any such Revolving Loan that
such Lender does not intend to make available to the
Administrative Agent its portion of the Revolving Loans to
be made on such date, the Administrative Agent may assume
that such Lender has made such amount available to the
Administrative Agent on the date of such Revolving Loans,
and the Administrative Agent in reliance upon such
assumption, may (in its sole discretion but without any
obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not
in fact made available to the Administrative Agent, the
Administrative Agent shall be able to recover such
corresponding amount from such Lender. If such Lender does
not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative
Agent will promptly notify the Borrower, and the Borrower
shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also
be entitled to recover from the Lender or the Borrower, as
the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount
was made available by the Administrative Agent to the
Borrower to the date such corresponding amount is recovered
by the Administrative Agent at a per annum rate equal to (i)
from the Borrower at the applicable rate for such Revolving
Loan pursuant to the Notice of Borrowing and (ii) from a
Lender at the Federal Funds Rate if paid within two Business
Days of the date of drawing, and thereafter at a rate equal
to the Base Rate.
(d) Revolving Notes. The Revolving Loans made by each
Lender shall be evidenced by a duly executed promissory note
of the Borrower to such Lender in an original principal
amount equal to such Lender's Revolving Commitment
Percentage of the Revolving Committed Amount and in
substantially the form of Exhibit 2.1(d).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions
hereof and of the LOC Documents, if any, and any other terms
and conditions which the Issuing Lender may reasonably
require, the Issuing Lender shall from time to time upon
request issue (from the Effective Date to the Maturity Date
and in a form reasonably acceptable to the Issuing Lender),
in Dollars, and the LOC Participants shall participate in,
Letters of Credit for the account of a Credit Party;
provided, however, that (i) the aggregate amount of LOC
Obligations shall not at any time exceed TWENTY MILLION
DOLLARS ($20,000,000) (the "LOC Committed Amount"), (ii) the
sum of the aggregate amount of LOC Obligations outstanding
plus Revolving Loans outstanding plus Swingline Loans
outstanding shall not exceed the Revolving Committed Amount
and (iii) with respect to each individual LOC Participant,
the LOC Participant's pro rata share of outstanding
Revolving Loans plus its pro rata share of outstanding LOC
Obligations plus its (other than the Swingline Lender) pro
rata share of outstanding Swingline Loans shall not exceed
such LOC Participant's Revolving Loan Commitment Percentage
of the Revolving Committed Amount. The Issuing Lender may
require the issuance and expiry date of each Letter of
Credit to be a Business Day. Each Letter of Credit shall be
either (i) a standby letter of credit issued to support the
obligations (including pension or insurance obligations),
contingent or otherwise, of a Credit Party or any of its
Subsidiaries or (ii) a commercial letter of credit in
respect of the purchase of goods or services by a Credit
Party in the ordinary course of business. Except as
otherwise expressly agreed upon by all the LOC Participants,
no Letter of Credit shall have an original expiry date more
than one year from the date of issuance, or as extended,
shall have an expiry date extending beyond the Maturity
Date. Each Letter of Credit shall comply with the related
LOC Documents.
(b) Notice and Reports. The request for the issuance
of a Letter of Credit shall be submitted to the Issuing
Lender at least three Business Days prior to the requested
date of issuance (or such shorter period as may be
reasonably acceptable to the Issuing Lender). The Issuing
Lender will, at least quarterly and more frequently upon
request, provide to the Administrative Agent for
dissemination to the Lenders a detailed report specifying
the Letters of Credit which are then issued and outstanding
and any activity with respect thereto which may have
occurred since the date of the prior report, and including
therein, among other things, the account party, the
beneficiary, the face amount, and the expiry date as well as
any payments or expirations which may have occurred. The
Issuing Lender will further provide to the Administrative
Agent, promptly upon request, copies of the Letters of
Credit and the other LOC Documents.
(c) Participations.
(i) Each LOC Participant acknowledges and
confirms that it has a Participation Interest in the
liability of the Issuing Lender under each Existing
Letter of Credit in an amount equal to its Revolving
Loan Commitment Percentage of such Existing Letter of
Credit. The Borrower's reimbursement obligations in
respect of each Existing Letter of Credit, and each LOC
Participant's obligations in connection therewith,
shall be governed by the terms of this Credit
Agreement.
(ii) Each LOC Participant, upon issuance of a
Letter of Credit, shall be deemed to have purchased
without recourse a risk participation from the Issuing
Lender in such Letter of Credit and each LOC Document
related thereto and the rights and obligations arising
thereunder and any collateral relating thereto, in each
case in an amount equal to its Revolving Loan
Commitment Percentage of the obligations under such
Letter of Credit, and shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as
surety, and be obligated to pay to the Issuing Lender
therefor and discharge when due, its Revolving Loan
Commitment Percentage of the obligations arising under
such Letter of Credit. Without limiting the scope and
nature of each LOC Participant's participation in any
Letter of Credit, to the extent that the Issuing Lender
has not been reimbursed as required hereunder or under
any such Letter of Credit, each such LOC Participant
shall pay to the Issuing Lender its Revolving Loan
Commitment Percentage of such unreimbursed drawing in
same day funds on the day of notification by the
Issuing Lender of an unreimbursed drawing pursuant to
the provisions of subsection (d) or (e) hereof. The
obligation of each LOC Participant to so reimburse the
Issuing Lender shall be absolute and unconditional and
shall not be affected by the occurrence of a Default,
an Event of Default or any other occurrence or event.
Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower or any other
Credit Party to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter
provided.
(d) Reimbursement. In the event of any drawing under
any Letter of Credit, the Issuing Lender will promptly
notify the Borrower. Unless the Borrower shall, upon
receipt of such notice by the Issuing Lender, immediately
notify the Issuing Lender of its intent to otherwise
reimburse the Issuing Lender, the Borrower shall be deemed
to have requested a Revolving Loan at the Adjusted Base Rate
in the amount of the drawing as provided in subsection (e)
hereof, the proceeds of which will be used to satisfy the
reimbursement obligations. The Borrower shall reimburse the
Issuing Lender on the day it receives notice from the
Issuing Lender of a drawing under any Letter of Credit with
the proceeds of such Revolving Loan obtained hereunder or
otherwise in same day funds as provided herein or in the LOC
Documents. If the Borrower shall fail to reimburse the
Issuing Lender as provided hereinabove, the unreimbursed
amount of such drawing shall bear interest at a per annum
rate equal to the Adjusted Base Rate plus an additional two
percent (2%). The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all
circumstances irrespective of (but without waiver of) any
rights of set-off, counterclaim or defense to payment that
the applicable account party or the Borrower may claim or
have against the Issuing Lender, an Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other
Person, including without limitation, any defense based on
any failure of the applicable account party, the Borrower or
any other Credit Party to receive consideration or the
legality, validity, regularity or unenforceability of the
Letter of Credit. The Issuing Lender will promptly notify
the LOC Participants of the amount of any unreimbursed
drawing and each LOC Participant shall promptly pay to the
Administrative Agent for the account of the Issuing Lender,
in Dollars and in immediately available funds, the amount of
such LOC Participant's Revolving Loan Commitment Percentage
of such unreimbursed drawing. Such payment shall be made on
the day such notice is received by such Lender from the
Issuing Lender if such notice is received at or before 2:00
p.m., otherwise such payment shall be made at or before
12:00 Noon on the Business Day next succeeding the day such
notice is received. If such LOC Participant does not pay
such amount to the Issuing Lender in full upon such request,
such LOC Participant shall, on demand, pay to the
Administrative Agent for the account of the Issuing Lender
interest on the unpaid amount during the period from the
date the LOC Participant received the notice regarding the
unreimbursed drawing until such LOC Participant pays such
amount to the Issuing Lender in full at a rate per annum
equal to, if paid within two Business Days of the date of
drawing, the Federal Funds Rate and thereafter at a rate
equal to the Base Rate. Each LOC Participant's obligation
to make such payment to the Issuing Lender, and the right of
the Issuing Lender to receive the same, shall be absolute
and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this
Credit Agreement or the Commitments hereunder, the existence
of a Default or Event of Default or the acceleration of the
obligations hereunder and shall be made without any offset,
abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a LOC
Participant to the Issuing Lender, such LOC Participant
shall, automatically and without any further action on the
part of the Issuing Lender or such LOC Participant, acquire
a participation in an amount equal to such payment
(excluding the portion of such payment constituting interest
owing to the Issuing Lender) in the related unreimbursed
drawing portion of the LOC Obligation and in the interest
thereon and in the related LOC Documents, and shall have a
claim against the Borrower and the other Credit Parties with
respect thereto.
(e) Repayment with Revolving Loans. On any day on
which the Borrower shall have requested, or been deemed to
have requested, a Revolving Loan borrowing to reimburse a
drawing under a Letter of Credit (as set forth in subsection
(d) above), the Administrative Agent shall give notice to
the applicable Lenders that a Revolving Loan has been
requested or deemed requested in connection with a drawing
under a Letter of Credit, in which case a Revolving Loan
borrowing comprised solely of Base Rate Loans (each such
borrowing, a "Mandatory Borrowing") shall be immediately
made from all applicable Lenders (without giving effect to
any termination of the Commitments pursuant to Section 9.2
or otherwise) pro rata based on each Lender's respective
Revolving Loan Commitment Percentage and the proceeds
thereof shall be paid directly to the Issuing Lender for
application to the respective LOC Obligations. Each such
Lender hereby irrevocably agrees to make such Revolving
Loans immediately upon any such request or deemed request on
account of each such Mandatory Borrowing in the amount and
in the manner specified in the preceding sentence and on the
same such date notwithstanding (i) the amount of Mandatory
Borrowing may not comply with the minimum amount for
borrowings of Revolving Loans otherwise required hereunder,
(ii) whether any conditions specified in Section 5.2 are
then satisfied, (iii) whether a Default or Event of Default
then exists, (iv) failure of any such request or deemed
request for Revolving Loans to be made by the time otherwise
required hereunder, (v) the date of such Mandatory
Borrowing, or (vi) any reduction in the Revolving Committed
Amount or any termination of the Commitments. In the event
that any Mandatory Borrowing cannot for any reason be made
on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or
any other Credit Party), then each such Lender hereby agrees
that it shall forthwith fund (as of the date the Mandatory
Borrowing would otherwise have occurred, but adjusted for
any payments received from the Borrower on or after such
date and prior to such purchase) its Participation Interest
in the outstanding LOC Obligations; provided, further, that
in the event any Lender shall fail to fund its Participation
Interest on the day the Mandatory Borrowing would otherwise
have occurred, then the amount of such Lender's unfunded
Participation Interest therein shall bear interest payable
to the Issuing Lender upon demand, at the rate equal to, if
paid within two Business Days of such date, the Federal
Funds Rate, and thereafter at a rate equal to the Base Rate.
(f) Designation of Subsidiaries as Account Parties.
Notwithstanding anything to the contrary set forth in this
Credit Agreement, a Letter of Credit issued hereunder may
contain a statement to the effect that such Letter of Credit
is issued for the account of a Subsidiary of the Borrower;
provided that notwithstanding such statement, the Borrower
shall be the actual account party for all purposes of this
Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower's reimbursement
obligations hereunder with respect to such Letter of Credit.
(g) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions
to any Letter of Credit shall, for purposes hereof, be
treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
(h) Uniform Customs and Practices. The Issuing Lender
may have the Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits (the "UCP") or
the International Standby Practices 1998 (the "ISP98"), in
either case as published as of the date of issue by the
International Chamber of Commerce, in which case the UCP or
ISP98, as applicable, may be incorporated therein and deemed
in all respects to be a part thereof.
(i) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the
obligations of the Issuing Lender hereunder to the LOC
Participants are only those expressly set forth in this
Credit Agreement and that the Issuing Lender shall be
entitled to assume that the conditions precedent set forth
in Section 5.2 have been satisfied unless it shall have
acquired actual knowledge that any such condition precedent
has not been satisfied; provided, however, that nothing set
forth in this Section 2.2 shall be deemed to prejudice the
right of any LOC Participant to recover from the Issuing
Lender any amounts made available by such LOC Participant to
the Issuing Lender pursuant to this Section 2.2 in the event
that it is determined by a court of competent jurisdiction
that the payment with respect to a Letter of Credit
constituted gross negligence or willful misconduct on the
part of the Issuing Lender.
(j) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document,
this Credit Agreement shall govern.
(k) Indemnification of Issuing Lender.
(i) In addition to its other obligations under
this Credit Agreement, the Credit Parties hereby agree
to protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that
the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or (B) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit as a
result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or
omissions, herein called "Government Acts").
(ii) As between the Credit Parties and the Issuing
Lender, the Credit Parties shall assume all risks of
the acts, omissions or misuse of any Letter of Credit
by the beneficiary thereof. The Issuing Lender shall
not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of
any document submitted by any party in connection with
the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit
or the rights or benefits thereunder or proceeds
thereof, in whole or in part, that may prove to be
invalid or ineffective for any reason; (C) failure of
the beneficiary of a Letter of Credit to comply fully
with conditions required in order to draw upon a Letter
of Credit; (D) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or
not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (G) any consequences arising
from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts.
None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set
forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted
in good faith, shall not put the Issuing Lender under
any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that
this Credit Agreement shall be construed and applied to
protect and indemnify the Issuing Lender against any
and all risks involved in the issuance of the Letters
of Credit, all of which risks are hereby assumed by the
Credit Parties, including, without limitation, any and
all risks of the acts or omissions, whether rightful or
wrongful, of any present or future Government Acts.
The Issuing Lender shall not, in any way, be liable for
any failure by the Issuing Lender or anyone else to pay
any drawing under any Letter of Credit as a result of
any Government Acts or any other cause beyond the
control of the Issuing Lender.
(iv) Nothing in this subsection (k) is intended to
limit the reimbursement obligation of the Borrower
contained in this Section 2.2. The obligations of the
Borrower under this subsection (k) shall survive the
termination of this Credit Agreement. No act or
omission of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the
rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (k), the Borrower shall
have no obligation to indemnify the Issuing Lender in
respect of any liability incurred by the Issuing Lender
arising solely out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a
court of competent jurisdiction. Nothing in this
Credit Agreement shall relieve the Issuing Lender of
any liability to the Borrower in respect of any action
taken by the Issuing Lender which action constitutes
gross negligence or willful misconduct of the Issuing
Lender, as determined by a court of competent
jurisdiction.
2.3 Swingline Loans Subfacility.
(a) Swingline Loans. The Swingline Lender hereby
agrees, on the terms and subject to the conditions set forth
herein and in the other Credit Documents, to make loans to
the Borrower in Dollars at any time and from time to time
during the period from and including the Effective Date to
but not including the Maturity Date (each such loan, a
"Swingline Loan" and collectively, the "Swingline Loans");
provided that (i) the aggregate principal amount of the
Swingline Loans outstanding at any one time shall not exceed
the Swingline Committed Amount and (ii) the aggregate amount
of Swingline Loans outstanding plus the aggregate amount of
Revolving Loans outstanding plus the aggregate amount of LOC
Obligations outstanding shall not exceed the Revolving
Committed Amount. Prior to the Maturity Date, Swingline
Loans may be repaid and reborrowed by the Borrower in
accordance with the provisions hereof.
(b) Method of Borrowing and Funding Swingline Loans.
By no later than (i) 11:00 a.m. two Business Days prior to
the date of the requested borrowing of Swingline Loans that
will be Eurodollar Loans or (ii) 1:00 p.m., on the date of
the requested borrowing of Swingline Loans that will be Base
Rate Loans or CD Rate Loans, the Borrower shall telephone
the Swingline Lender as well as submit a Swingline Loan
Request to the Swingline Lender in the form of Exhibit
2.3(b) setting forth (A) the amount of the requested
Swingline Loan, (B) the date of the requested Swingline
Loan, (C) whether such Swingline Loan shall accrue interest
at the Adjusted Base Rate, the Adjusted CD Rate or the
Eurodollar Rate agreed to by the Borrower and the Swingline
Lender, (D) with respect to Swingline Loans that will be
Eurodollar Loans, the Interest Period applicable thereto and
(E) certification that the Borrower has in all respects
complied with Section 5.2. If the Borrower shall fail to
specify (x) an Interest Period in the case of a Swingline
Loan that will be a Eurodollar Loan, then such Swingline
Loan shall be deemed to have an Interest Period of seven
days, or (y) the type of Swingline Loan requested, then such
Swingline Loan shall be deemed to be a Base Rate Loan. The
Swingline Lender shall initiate the transfer of funds
representing the Swingline Loan advance to the Borrower by
3:00 p.m. on the Business Day of the requested borrowing.
Swingline Loans that are Eurodollar Loans shall convert to a
Base Rate Loan on the last day of the applicable Interest
Period unless repaid on such day.
(c) Repayment and Participations of Swingline Loans.
The Borrower agrees to repay all Swingline Loans that are
Base Rate Loans and all Swingline Loans that are CD Rate
Loans within one Business Day of demand therefor by the
Swingline Lender. The Borrower agrees to repay all
Swingline Loans that are Eurodollar Loans on the last day of
the Interest Period applicable thereto. Each repayment of a
Swingline Loan may be accomplished by requesting Revolving
Loans which request is not subject to the conditions set
forth in Section 5.2. In the event that the Borrower shall
fail to timely repay any Swingline Loan, and in any event
upon (i) a request by the Swingline Lender, (ii) the
occurrence of an Event of Default described in Section
9.1(f) or (iii) the acceleration of any Loan or termination
of any Commitment pursuant to Section 9.2, each other Lender
shall irrevocably and unconditionally purchase from the
Swingline Lender, without recourse or warranty, an undivided
interest and participation in such Swingline Loan in an
amount equal to such other Lender's Revolving Loan
Commitment Percentage thereof, by directly purchasing a
participation in such Swingline Loan in such amount
(regardless of whether the conditions precedent thereto set
forth in Section 5.2 are then satisfied, whether or not the
Borrower has submitted a Notice of Borrowing and whether or
not the Commitments are then in effect, any Event of Default
exists or all the Loans have been accelerated) and paying
the proceeds thereof to the Swingline Lender at the address
provided in Section 11.1, or at such other address as the
Swingline Lender may designate, in Dollars and in
immediately available funds. If such amount is not in fact
made available to the Swingline Lender by any Lender, the
Swingline Lender shall be entitled to recover such amount on
demand from such Lender, together with accrued interest
thereon for each day from the date of demand thereof, at the
Federal Funds Rate. If such Lender does not pay such amount
forthwith upon the Swingline Lender's demand therefor, and
until such time as such Lender makes the required payment,
the Swingline Lender shall be deemed to continue to have
outstanding Swingline Loans in the amount of such unpaid
participation obligation for all purposes of the Credit
Documents other than those provisions requiring the other
Lenders to purchase a participation therein. Further, such
Lender shall be deemed to have assigned any and all payments
made of principal and interest on its Loans, and any other
amounts due to it hereunder to the Swingline Lender to fund
Swingline Loans in the amount of the participation in
Swingline Loans that such Lender failed to purchase pursuant
to this Section 2.3(c) until such amount has been purchased
(as a result of such assignment or otherwise).
(d) Swingline Note. The Swingline Loans made by the
Swingline Lender shall be evidenced by a duly executed
promissory note of the Borrower to the Swingline Lender in
the face amount of the Swingline Committed Amount and in
substantially the form of Exhibit 2.3(d).
2.4 Continuations and Conversions.
The Borrower shall have the option, on any Business Day, to
continue existing Revolving Loans that are Eurodollar Loans for a
subsequent Interest Period, to convert Revolving Loans that are
Base Rate Loans into Eurodollar Loans or to convert Revolving
Loans that are Eurodollar Loans into Base Rate Loans; provided,
however, that (a) each such continuation or conversion must be
requested by the Borrower by telephone to the Administrative
Agent followed by prompt submission of a written Notice of
Continuation/Conversion, in the form of Exhibit 2.4, in
compliance with the terms set forth below, (b) except as provided
in Section 3.13, Eurodollar Loans may only be continued or
converted into Base Rate Loans on the last day of the Interest
Period applicable thereto, (c) Eurodollar Loans may not be
continued nor may Base Rate Loans be converted into Eurodollar
Loans during the existence and continuation of a Default or an
Event of Default, (d) any request to continue a Eurodollar Loan
that fails to comply with the terms hereof or any failure to
request a continuation of a Eurodollar Loan at the end of an
Interest Period shall constitute a conversion to a Base Rate Loan
on the last day of the applicable Interest Period and (e) any
request for continuation or conversion of a Eurodollar Loan which
shall fail to specify an Interest Period shall be deemed to be a
request for an Interest Period of one month. Each continuation
or conversion must be requested by the Borrower no later than
11:00 a.m. (i) on the date for a requested conversion of a
Eurodollar Loan to a Base Rate Loan or (ii) three Business Days
prior to the date for a requested continuation of a Eurodollar
Loan or conversion of a Base Rate Loan to a Eurodollar Loan, in
each case by telephone to the Administrative Agent followed by a
written Notice of Continuation/Conversion promptly submitted to
the Administrative Agent which shall set forth (A) whether the
Borrower intends to continue or convert such Loans and (B) if the
request is to continue a Eurodollar Loan or convert a Base Rate
Loan to a Eurodollar Loan, the Interest Period applicable
thereto.
2.5 Minimum Amounts.
Each request for a borrowing, conversion or continuation
shall be subject to the requirements that (a) each Eurodollar
Loan that is a Revolving Loan and each Base Rate Loan that is a
Revolving Loan shall be in a minimum amount of $3,000,000 and in
integral multiples of $500,000 in excess thereof or the remaining
amount available under the Revolving Committed Amount, if less
(b) each Swingline Loan shall be in a minimum amount of $250,000
and in integral multiples of $250,000 in excess thereof (or the
remaining amount of the Swingline Committed Amount, if less) and
(c) no more than ten (10) Eurodollar Loans that are Revolving
Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Revolving Loans that are Eurodollar
Loans with the same Interest Periods that begin and end on the
same date shall be considered as one Eurodollar Loan, but
Eurodollar Loans with different Interest Periods, even if they
begin on the same date, shall be considered as separate
Eurodollar Loans.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Interest. Subject to the provisions of Section
3.1(b):
(i) Base Rate Loans. During such periods as
the Revolving Loans shall be comprised in whole or in
part of Base Rate Loans, such Base Rate Loans shall
bear interest at a per annum rate equal to the Adjusted
Base Rate.
(ii) Eurodollar Loans. During such periods as
the Revolving Loans shall be comprised in whole or in
part of Eurodollar Loans, such Eurodollar Loans shall
bear interest at a per annum rate equal to the Adjusted
Eurodollar Rate.
(iii) Swingline Loans. Each Swingline Loan
shall bear interest at either the Adjusted Base Rate,
the Adjusted CD Rate or the Eurodollar Rate agreed to
by the Borrower and the Swingline Lender; provided,
however, that if a Swingline Loan bears interest at the
Eurodollar Rate or the Adjusted CD Rate, such
Eurodollar Rate or Adjusted CD Rate shall not be less
than the interest rate which would be obtainable with
respect to a Revolving Loan borrowing at such time.
(b) Default Rate of Interest. Upon the occurrence,
and during the continuance, of an Event of Default, the
principal of and, to the extent permitted by law, interest
on the Loans and any other amounts owing (but not timely
paid) hereunder or under the other Credit Documents
(including without limitation fees and expenses) shall bear
interest, payable on demand, at a per annum rate equal to 2%
plus the rate which would otherwise be applicable (or if no
rate is applicable, then the Adjusted Base Rate plus two
percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due
and payable in arrears on each Interest Payment Date. If an
Interest Payment Date falls on a date which is not a
Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day, except that in the case
of Eurodollar Loans where the next succeeding Business Day
falls in the next succeeding calendar month, then on the
next preceding Business Day.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and
other amounts to be made by a Credit Party under this Credit
Agreement shall be received not later than 2:00 p.m. on the date
when due, in Dollars and in immediately available funds, by the
Administrative Agent at its offices in Charlotte, North Carolina.
Payments received after such time shall be deemed to have been
received on the next Business Day. The Borrower shall, at the
time it makes any payment under this Credit Agreement, specify to
the Administrative Agent the Loans, Letters of Credit, fees or
other amounts payable by the Borrower hereunder to which such
payment is to be applied (and in the event that it fails to
specify, or if such application would be inconsistent with the
terms hereof, the Administrative Agent shall, subject to Section
3.8, distribute such payment to the Lenders in such manner as the
Administrative Agent may reasonably deem appropriate). The
Administrative Agent will distribute such payments to the
applicable Lenders on the same Business Day if any such payment
is received prior to 2:00 p.m.; otherwise the Administrative
Agent will distribute such payment to the applicable Lenders on
the next succeeding Business Day. Whenever any payment hereunder
shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding
Business Day (subject to accrual of interest and fees for the
period of such extension), except that in the case of Eurodollar
Loans, if the extension would cause the payment to be made in the
next following calendar month, then such payment shall instead be
made on the next preceding Business Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have
the right to prepay Loans in whole or in part from time to
time without premium or penalty; provided, however, that (i)
Eurodollar Loans may only be prepaid on three Business Days'
prior written notice to the Administrative Agent and (ii)
each such partial prepayment of Loans shall be in the
minimum principal amount of $3,000,000 and integral
multiples of $500,000 in excess thereof. All prepayments
under this Section shall be subject to Section 3.15, shall
be applied to the Loans and LOC Obligations as the Borrower
may elect and shall be accompanied by interest on the
principal amount prepaid through the date of prepayment;
provided that if the Borrower fails to specify how a
prepayment should be applied, then such prepayment shall be
applied first to Revolving Loans (first to Base Rate Loans
and then to Eurodollar Loans in direct order of Interest
Period maturities) and then to Swingline Loans.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any
time the sum of the aggregate amount of Revolving Loans
outstanding plus LOC Obligations outstanding plus
Swingline Loans outstanding exceeds the Revolving
Committed Amount, the Borrower shall immediately make a
principal payment to the Administrative Agent in the
manner and in an amount such that the sum of the
aggregate amount of Revolving Loans outstanding plus
LOC Obligations outstanding plus Swingline Loans
outstanding is less than or equal to the Revolving
Committed Amount (to be applied as set forth in Section
3.3(b)(ii) below).
(ii) Prepayments on Senior Notes.
Contemporaneously with any prepayment of the Senior
Notes pursuant to Section 8.3 of the Note Purchase
Agreements, the Borrower shall make a principal payment
to the Administrative Agent in an amount necessary to
prepay the Loans on a pro rata basis according to the
aggregate unpaid principal amount of the Senior Notes
and the aggregate unpaid principal amount of the Loans.
(iii) Application of Prepayments. All amounts
required to be paid pursuant to this Section 3.3(b)
shall be applied first to Revolving Loans, second to
Swingline Loans and third to a cash collateral account
in respect of LOC Obligations. Within the foregoing
parameters, prepayments shall be applied first to Base
Rate Loans and then to Eurodollar Loans in direct order
of Interest Period maturities. All prepayments
hereunder shall be subject to Section 3.15 and shall be
accompanied by interest on the principal amount prepaid
through the date of prepayment.
3.4 Termination and Reduction of Revolving Committed
Amount.
(a) Voluntary Reduction. The Borrower may from time
to time permanently reduce or terminate (without premium or
penalty) the Revolving Committed Amount in whole or in part
(in minimum aggregate amounts of $5,000,000 or in integral
multiples of $1,000,000 in excess thereof (or, if less, the
full remaining amount of the then applicable Revolving
Committed Amount)) upon three Business Days' prior written
notice to the Administrative Agent; provided, that, no such
termination or reduction shall be made which would cause the
sum of the aggregate outstanding principal amount of the
Revolving Loans plus the aggregate amount of outstanding LOC
Obligations plus the aggregate outstanding principal amount
of Swingline Loans to exceed the Revolving Committed Amount,
unless, concurrently with such termination or reduction, the
Loans are repaid to the extent necessary to eliminate such
excess. Any reduction in (or termination of) the Revolving
Committed Amount shall be permanent and may not be
reinstated. The Administrative Agent shall promptly notify
each affected Lender of receipt by the Administrative Agent
of any notice from the Borrower pursuant to this Section
3.4(a).
(b) Mandatory Reduction.
(i) Asset Dispositions. To the extent the asset
dispositions permitted by Section 8.5(d) of the Credit
Agreement exceed $40,000,000 in the aggregate during
the term of this Credit Agreement, the Revolving
Committed Amount shall be immediately and permanently
reduced by the amount by which such permitted asset
dispositions exceed $40,000,000 in the aggregate during
the term of this Credit Agreement.
(ii) Sale Leasebacks. To the extent the sale
leaseback transactions permitted hereunder exceed
$5,000,000 in the aggregate during any fiscal year, the
Revolving Committed Amount shall be immediately and
permanently reduced by the amount by which such sale
leaseback transactions exceed $5,000,000 in the
aggregate during any fiscal year.
(iii) Prepayments on Senior Notes.
Immediately upon the occurrence of any voluntary or
optional prepayment of the Senior Notes pursuant to
Section 8.2 of the Senior Note Purchase Agreements, the
Revolving Committed Amount shall be permanently reduced
on a pro rata basis according to the aggregate unpaid
principal amount of the Senior Notes and the amount of
the Revolving Committed Amount on the date of such
prepayment.
(iv) Notification. The Administrative Agent shall
promptly notify the Lenders of any reduction of the
Revolving Committed Amount pursuant to this Section
3.4(b).
3.5 Fees.
(a) Unused Fees. In consideration of the Revolving
Committed Amount being made available by the Lenders
hereunder, the Borrower agrees to pay to the Administrative
Agent, for the pro rata benefit of each applicable Lender
(based on each Lender's Revolving Loan Commitment Percentage
of the Revolving Committed Amount), a per annum fee equal to
the Applicable Percentage for Unused Fees multiplied by the
Unused Commitment (the "Unused Fees"). The Unused Fees
shall commence to accrue on the Effective Date and shall be
due and payable in arrears on the last Business Day of each
fiscal quarter of the Borrower (as well as on the Maturity
Date and on any date that the Revolving Committed Amount is
reduced) for the fiscal quarter then ending (or portion
thereof), beginning with the first of such dates to occur
after the Effective Date. For purposes of computation of
the Unused Fees, the Swingline Loans shall not be counted
toward or considered usage of the Revolving Committed
Amount.
(b) Letter of Credit Fees. In consideration of the
issuance of Letters of Credit hereunder, the Borrower agrees
to pay to the Issuing Lender for the pro rata benefit of the
applicable Lenders (based on each Lender's Revolving Loan
Commitment Percentage of the Revolving Committed Amount), a
per annum fee (the "Letter of Credit Fees") equal to the
Applicable Percentage for the Letter of Credit Fees on the
average daily maximum amount available to be drawn under
each such Letter of Credit from the date of issuance to the
date of expiration. The Letter of Credit Fees shall
commence to accrue on the Effective Date and shall be due
and payable in arrears on the last Business Day of each
fiscal quarter of the Borrower (as well as on the Maturity
Date) for the fiscal quarter then ending (or portion
thereof), beginning with the first of such dates to occur
after the Effective Date.
(c) Issuing Lender Fees. In addition to the Letter of
Credit Fees payable pursuant to subsection (b) above, the
Borrower shall pay to the Issuing Lender for its own
account, without sharing by the other Lenders, (i) a letter
of credit fronting fee equal to 0.125% of the face amount of
each Letter of Credit, such fee to be due and payable in
arrears on the last Business Day of each fiscal quarter of
the Borrower (as well as on the Maturity Date) for the
fiscal quarter then ending and for the Letters of Credit
issued during such fiscal quarter and (ii) the customary
charges from time to time to the Issuing Lender for its
services in connection with the issuance, amendment,
payment, transfer, administration, cancellation and
conversion of, and drawings under, Letters of Credit, and
(collectively, the "Issuing Lender Fees").
(d) Administrative Fees. The Borrower agrees to pay
to the Administrative Agent, for its own account, an annual
fee in accordance with the terms of the Administrative Agent
Fee Letter.
3.6 Payment in full at Maturity.
On the Maturity Date, the entire outstanding principal
balance of all Revolving Loans, all Swingline Loans and all LOC
Obligations, together with accrued but unpaid interest and all
other sums owing with respect thereto, shall be due and payable
in full, unless accelerated sooner pursuant to Section 9.2.
3.7 Computations of Interest and Fees.
(a) Except for Base Rate Loans, in which case interest
shall be computed on the basis of a 365 or 366 day year as
the case may be, all computations of interest and fees
hereunder shall be made on the basis of the actual number of
days elapsed over a year of 360 days. Interest shall accrue
from and include the date of borrowing (or continuation or
conversion) but exclude the date of payment.
(b) It is the intent of the Lenders and the Credit
Parties to conform to and contract in strict compliance with
applicable usury law from time to time in effect. All
agreements between the Lenders and the Borrower are hereby
limited by the provisions of this paragraph which shall
override and control all such agreements, whether now
existing or hereafter arising and whether written or oral.
In no way, nor in any event or contingency (including but
not limited to prepayment or acceleration of the maturity of
any obligation), shall the interest taken, reserved,
contracted for, charged, or received under this Credit
Agreement, under the Notes or otherwise, exceed the maximum
nonusurious amount permissible under applicable law. If,
from any possible construction of any of the Credit
Documents or any other document, interest would otherwise be
payable in excess of the maximum nonusurious amount, any
such construction shall be subject to the provisions of this
paragraph and such documents shall be automatically reduced
to the maximum nonusurious amount permitted under applicable
law, without the necessity of execution of any amendment or
new document. If any Lender shall ever receive anything of
value which is characterized as interest on the Loans under
applicable law and which would, apart from this provision,
be in excess of the maximum lawful amount, an amount equal
to the amount which would have been excessive interest
shall, without penalty, be applied to the reduction of the
principal amount owing on the Loans and not to the payment
of interest, or refunded to the Borrower or the other payor
thereof if and to the extent such amount which would have
been excessive exceeds such unpaid principal amount of the
Loans. The right to demand payment of the Loans or any
other indebtedness evidenced by any of the Credit Documents
does not include the right to accelerate the payment of any
interest which has not otherwise accrued on the date of such
demand, and the Lenders do not intend to charge or receive
any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with
respect to the Loans shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term (including any
renewal or extension) of the Loans so that the amount of
interest on account of such indebtedness does not exceed the
maximum nonusurious amount permitted by applicable law.
3.8 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including,
without limitation, each Mandatory Borrowing), each payment
or prepayment of principal of any Loan, each payment of fees
(other than the Issuing Lender Fees retained by the Issuing
Lender for its own account and the Administrative Fees
retained by the Administrative Agent for its own account),
each reduction of the Revolving Committed Amount, and each
conversion or continuation of any Loan, shall (except as
otherwise provided in Section 3.12) be allocated pro rata
among the relevant Lenders in accordance with the respective
Revolving Loan Commitment Percentages of such Lenders (or,
if the Commitments of such Lenders have expired or been
terminated, in accordance with the respective principal
amounts of the outstanding Loans and Participation Interests
of such Lenders); provided that, if any Lender shall have
failed to pay its applicable pro rata share of any Loan,
then any amount to which such Lender would otherwise be
entitled pursuant to this subsection (a) shall instead be
payable to the Administrative Agent until the share of such
Loan not funded by such Lender has been repaid; provided
further, that in the event any amount paid to any Lender
pursuant to this subsection (a) is rescinded or must
otherwise be returned by the Administrative Agent, each
Lender shall, upon the request of the Administrative Agent,
repay to the Administrative Agent the amount so paid to such
Lender, with interest for the period commencing on the date
such payment is returned by the Administrative Agent until
the date the Administrative Agent receives such repayment at
a rate per annum equal to, during the period to but
excluding the date two Business Days after such request, the
Federal Funds Rate, and thereafter, the Adjusted Base Rate
plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed
drawings in respect of LOC Obligations shall be allocated to
each LOC Participant pro rata in accordance with its
Revolving Loan Commitment Percentage; provided that, if any
LOC Participant shall have failed to pay its applicable pro
rata share of any drawing under any Letter of Credit, then
any amount to which such LOC Participant would otherwise be
entitled pursuant to this subsection (b) shall instead be
payable to the Issuing Lender until the share of such
unreimbursed drawing not funded by such Lender has been
repaid; provided further, that in the event any amount paid
to any LOC Participant pursuant to this subsection (b) is
rescinded or must otherwise be returned by the Issuing
Lender, each LOC Participant shall, upon the request of the
Issuing Lender, repay to the Administrative Agent for the
account of the Issuing Lender the amount so paid to such LOC
Participant, with interest for the period commencing on the
date such payment is returned by the Issuing Lender until
the date the Issuing Lender receives such repayment at a
rate per annum equal to, during the period to but excluding
the date two Business Days after such request, the Federal
Funds Rate, and thereafter, the Adjusted Base Rate plus two
percent (2%) per annum.
3.9 Sharing of Payments.
The Lenders agree among themselves that, except to the
extent otherwise provided herein, in the event that any Lender
shall obtain payment in respect of any Loan, unreimbursed drawing
with respect to any LOC Obligations or any other obligation owing
to such Lender under this Credit Agreement through the exercise
of a right of setoff, banker's lien or counterclaim, or pursuant
to a secured claim under Section 506 of the Bankruptcy Code or
other security or interest arising from, or in lieu of, such
secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment
as provided for in this Credit Agreement, such Lender shall
promptly pay in cash or purchase from the other Lenders a
participation in such Loans, LOC Obligations, and other
obligations in such amounts, and make such other adjustments from
time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable
shares as provided for in this Credit Agreement. The Lenders
further agree among themselves that if payment to a Lender
obtained by such Lender through the exercise of a right of
setoff, banker's lien, counterclaim or other event as aforesaid
shall be rescinded or must otherwise be restored, each Lender
which shall have shared the benefit of such payment shall, by
payment in cash or a repurchase of a participation theretofore
sold, return its share of that benefit (together with its share
of any accrued interest payable with respect thereto) to each
Lender whose payment shall have been rescinded or otherwise
restored. The Credit Parties agree that any Lender so purchasing
such a participation may, to the fullest extent permitted by law,
exercise all rights of payment, including setoff, banker's lien
or counterclaim, with respect to such participation as fully as
if such Lender were a holder of such Loan, LOC Obligation or
other obligation in the amount of such participation. Except as
otherwise expressly provided in this Credit Agreement, if any
Lender shall fail to remit to the any Agent or any other Lender
an amount payable by such Lender to such Agent or such other
Lender pursuant to this Credit Agreement on the date when such
amount is due, such payments shall be made together with interest
thereon for each date from the date such amount is due until the
date such amount is paid to such Agent or such other Lender, if
paid within two Business Days of the date when such amount is
due, at a rate per annum equal to the Federal Funds Rate and
thereafter at a rate per annum equal to the Base Rate. If under
any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this
Section 3.9 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim
in a manner consistent with the rights of the Lenders under this
Section 3.9 to share in the benefits of any recovery on such
secured claim.
3.10 Capital Adequacy.
(a) If, after the date hereof, any Lender has
determined that the adoption or the becoming effective of,
or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with
the interpretation or administration thereof in the
interpretation or administration of, any applicable law,
rule or regulation regarding capital adequacy, or compliance
by such Lender, or its parent corporation, with any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank
or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's (or parent
corporation's) capital or assets as a consequence of its
commitments or obligations hereunder to a level below that
which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or
compliance (taking into consideration such Lender's (or
parent corporation's) policies with respect to capital
adequacy), then, upon written notice from such Lender to the
Borrower (together with documentation supporting such claim;
provided that failure to provide such documentation shall
not impair a Lender's claim hereunder), the Borrower shall
be obligated to pay to such Lender such additional amount or
amounts as will compensate such Lender on an after-tax basis
(after taking into account applicable deductions and credits
in respect of the amount indemnified) for such reduction.
Each determination by any such Lender of amounts owing under
this Section shall, absent manifest error, be conclusive and
binding on the parties hereto. This covenant shall survive
the termination of this Credit Agreement and the payment of
the Loans and all other amounts payable hereunder.
(b) Each Lender shall promptly notify the Borrower and
the Administrative Agent of any event of which it has
knowledge, occurring after the Closing Date, which will
entitle such Lender to compensation pursuant to this Section
and will designate a different lending office if such
designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to it.
Any Lender claiming compensation under this Section shall
furnish to the Borrower and the Administrative Agent a
statement setting forth the additional amount or amounts to
be paid to it hereunder which shall be conclusive in the
absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution
methods.
3.11 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the
Administrative Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, the Administrative
Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter, and
will also give prompt written notice to the Borrower when such
conditions no longer exist. If such notice is given (a) any
Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Loans
that were to have been converted on the first day of such
Interest Period to or continued as Eurodollar Loans shall be
converted to or continued as Base Rate Loans and (c) any
outstanding Eurodollar Loans shall be converted, on the first day
of such Interest Period, to Base Rate Loans. Until such notice
is withdrawn by the Administrative Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrower
have the right to convert Base Rate Loans to Eurodollar Loans.
3.12 Illegality.
Notwithstanding any other provision herein, if the adoption
of or any change in any Requirement of Law or in the
interpretation or application thereof occurring after the Closing
Date shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Credit Agreement, (a)
such Lender shall promptly give written notice of such
circumstances to the Borrower and the Administrative Agent (which
notice shall be withdrawn whenever such circumstances no longer
exist), (b) the commitment of such Lender hereunder to make
Eurodollar Loans, continue Eurodollar Loans as such and convert a
Base Rate Loan to Eurodollar Loans shall forthwith be canceled
and, until such time as it shall no longer be unlawful for such
Lender to make or maintain Eurodollar Loans, such Lender shall
then have a commitment only to make a Base Rate Loan when a
Eurodollar Loan is requested and (c) such Lender's Loans then
outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of
the then current Interest Periods with respect to such Loans or
within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the
last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if
any, as may be required pursuant to Section 3.15.
3.13 Requirements of Law.
If the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof applicable to any
Lender, or compliance by any Lender with any request or directive
(whether or not having the force of law) from any central bank or
other Governmental Authority, in each case made subsequent to the
Closing Date (or, if later, the date on which such Lender becomes
a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any
Eurodollar Loans made by it or its obligation to make
Eurodollar Loans, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-
Excluded Taxes covered by Section 3.14 (including Non-
Excluded Taxes imposed solely by reason of any failure of
such Lender to comply with its obligations under Section
3.14(b)) and changes in taxes measured by or imposed upon
the overall net income, or franchise taxes, branch taxes,
taxes on doing business or taxes on capital or net worth
(imposed in lieu of such net income tax), of such Lender or
its applicable lending office, branch, or any affiliate
thereof);
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of
funds by, any office of such Lender which is not otherwise
included in the determination of the Eurodollar Rate
hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to
such Lender, by an amount which such Lender deems to be material,
of making, converting into, continuing or maintaining Eurodollar
Loans or issuing or participating in Letters of Credit or to
reduce any amount receivable hereunder in respect thereof, then,
in any such case, upon notice to the Borrower from such Lender,
through the Administrative Agent, in accordance herewith, the
Borrower shall be obligated to promptly pay such Lender, upon its
demand, any additional amounts necessary to compensate such
Lender on an after-tax basis (after taking into account
applicable deductions and credits in respect of the amount
indemnified) for such increased cost or reduced amount
receivable, provided that, in any such case, the Borrower may
elect to convert the Eurodollar Loans made by such Lender
hereunder to Base Rate Loans by giving the Administrative Agent
at least one Business Day's notice of such election, in which
case the Borrower shall promptly pay to such Lender, upon demand,
without duplication, such amounts, if any, as may be required
pursuant to Section 3.15. If any Lender becomes entitled to
claim any additional amounts pursuant to this Section 3.13, it
shall provide prompt notice thereof to the Borrower, through the
Administrative Agent, certifying (x) that one of the events
described in this Section 3.13 has occurred and describing in
reasonable detail the nature of such event, (y) as to the
increased cost or reduced amount resulting from such event and
(z) as to the additional amount demanded by such Lender and a
reasonably detailed explanation of the calculation thereof. Such
a certificate as to any additional amounts payable pursuant to
this Section 3.13 submitted by such Lender, through the
Administrative Agent, to the Borrower shall be conclusive and
binding on the parties hereto in the absence of manifest error.
This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.14 Taxes.
(a) Except as provided below in this Section 3.14, all
payments made by a Credit Party under this Credit Agreement
and any Notes shall be made free and clear of, and without
deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed
by any court, or governmental body, agency or other
official, excluding taxes measured by or imposed upon the
net income of any Lender or its applicable lending office,
or any branch or affiliate thereof, and all franchise taxes,
branch taxes, taxes on doing business or taxes on the
capital or net worth of any Lender or its applicable lending
office, or any branch or affiliate thereof, in each case
imposed in lieu of net income taxes: (i) by the jurisdiction
under the laws of which such Lender, applicable lending
office, branch or affiliate is organized or is located, or
in which its principal executive office is located, or any
nation within which such jurisdiction is located or any
political subdivision thereof; or (ii) by reason of any
connection between the jurisdiction imposing such tax and
such Lender, applicable lending office, branch or affiliate
other than a connection arising solely from such Lender
having executed, delivered or performed its obligations, or
received payment under or enforced, this Credit Agreement or
any Notes. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-
Excluded Taxes") are required to be withheld from any
amounts payable to any Agent or any Lender hereunder or
under any Notes, (A) the amounts so payable to such Agent or
such Lender shall be increased to the extent necessary to
yield to such Agent or such Lender (after payment of all Non-
Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this
Credit Agreement and any Notes, provided, however, that the
Credit Parties shall be entitled to deduct and withhold any
Non-Excluded Taxes and shall not be required to increase any
such amounts payable to any Lender that is not organized
under the laws of the United States of America or a state
thereof if such Lender fails to comply with the requirements
of paragraph (b) of this Section 3.14 whenever any Non-
Excluded Taxes are payable by a Credit Party, and (B) as
promptly as possible after requested such Credit Party shall
send to the Administrative Agent for its own account or for
the account of such other Agent or such Lender, as the case
may be, a certified copy of an original official receipt
received by such Credit Party showing payment thereof or
other documentation reasonably acceptable to the
Administrative Agent. If a Credit Party fails to pay any
Non-Excluded Taxes when due to the appropriate taxing
authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence,
the Borrower shall indemnify any Agent and any Lender for
any incremental Non-Excluded Taxes, interest or penalties
that may become payable by such Agent or any such Lender as
a result of any such failure. The agreements in this
subsection shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts
payable hereunder.
(b) Each Lender that is not incorporated under the
laws of the United States of America or a state thereof
shall:
(i) (A) on or before the date of any
payment by a Credit Party under this Credit Agreement
or Notes to such Lender, deliver to the Borrower and
the Administrative Agent (x) two duly completed copies
of United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be,
certifying that it is entitled to receive payments
under this Credit Agreement and any Notes without
deduction or withholding of any United States federal
income taxes and (y) an Internal Revenue Service Form W-
8 or W-9, or successor applicable form, as the case may
be, certifying that it is entitled to an exemption from
United States backup withholding tax;
(B) deliver to the Borrower and the
Administrative Agent two further copies of any such
form or certification on or before the date that any
such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a
change in the most recent form previously delivered by
it to the Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the
Administrative Agent; or
(ii) in the case of any such Lender that is
not a "bank" within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code, (A) represent to the
Borrower (for the benefit of the Borrower and the
Administrative Agent) that it is not a bank within the
meaning of Section 881(c)(3)(A) of the Internal Revenue
Code, (B) agree to furnish to the Borrower, on or
before the date of any payment by the Borrower, with a
copy to the Administrative Agent, two accurate and
complete original signed copies of Internal Revenue
Service Form W-8, or successor applicable form
certifying to such Lender's legal entitlement at the
date of such certificate to an exemption from U.S.
withholding tax under the provisions of Section 881(c)
of the Internal Revenue Code with respect to payments
to be made under this Credit Agreement and any Notes
(and to deliver to the Borrower and the Administrative
Agent two further copies of such form on or before the
date it expires or becomes obsolete and after the
occurrence of any event requiring a change in the most
recently provided form and, if necessary, obtain any
extensions of time reasonably requested by the Borrower
or the Administrative Agent for filing and completing
such forms), and (C) agree, to the extent legally
entitled to do so, upon reasonable request by the
Borrower, to provide to the Borrower (for the benefit
of the Borrower and the Administrative Agent) such
other forms as may be reasonably required in order to
establish the legal entitlement of such Lender to an
exemption from withholding with respect to payments
under this Credit Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or
regulation has occurred after the date such Person becomes a
Lender hereunder which renders all such forms inapplicable
or which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender
so advises the Borrower and the Administrative Agent, then
such Lender shall be exempt from such requirements. Each
Person that shall become a Lender or a participant of a
Lender pursuant to Section 11.3 shall, upon the
effectiveness of the related transfer, be required to
provide all of the forms, certifications and statements
required pursuant to this subsection (b); provided that in
the case of a participant of a Lender, the obligations of
such participant of a Lender pursuant to this subsection (b)
shall be determined as if the participant of a Lender were a
Lender except that such participant of a Lender shall
furnish all such required forms, certifications and
statements to the Lender from which the related
participation shall have been purchased.
3.15 Compensation.
The Credit Parties promise to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such
Lender may sustain or incur as a consequence of (a) default by
the Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Loans after the Borrower has given a
notice requesting the same in accordance with the provisions of
this Credit Agreement, (b) default by the Borrower in making any
prepayment of a Eurodollar Loan after the Borrower has given a
notice thereof in accordance with the provisions of this Credit
Agreement and (c) the making of a prepayment of Eurodollar Loans
on a day which is not the last day of an Interest Period with
respect thereto. Such indemnification may include an amount
equal to (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of
such failure to borrow, convert or continue to the last day of
the applicable Interest Period (or, in the case of a failure to
borrow, convert or continue, the Interest Period that would have
commenced on the date of such failure) in each case at the
applicable rate of interest for such Eurodollar Loans provided
for herein (excluding, however, the Applicable Percentage
included therein, if any) minus (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for
a comparable period with leading banks in the interbank
Eurodollar market. The agreements in this Section shall survive
the termination of this Credit Agreement and the payment of the
Loans and all other amounts payable hereunder.
3.16 Evidence of Debt.
(a) Each Lender shall maintain an account or accounts
evidencing each Loan made by such Lender to the Borrower
from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time
under this Credit Agreement. Each Lender will make
reasonable efforts to maintain the accuracy of its account
or accounts and to promptly update its account or accounts
from time to time, as necessary.
(b) The Administrative Agent shall maintain the
Register pursuant to Section 11.3(c), and a subaccount for
each Lender, in which Register and subaccounts (taken
together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount
of any principal or interest due and payable or to become
due and payable to each Lender hereunder, and (iii) the
amount of any sum received by the Administrative Agent
hereunder from or for the account of the Borrower and each
Lender's share thereof, if any. The Administrative Agent
will make reasonable efforts to maintain the accuracy of the
subaccounts referred to in the preceding sentence and to
promptly update such subaccounts from time to time, as
necessary.
(c) The entries made in the accounts, Register and
subaccounts maintained pursuant to subsection (b) of this
Section 3.16 (and, if consistent with the entries of the
Administrative Agent, subsection (a)) shall be prima facie
evidence of the existence and amounts of the obligations of
the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to
maintain such account, such Register, or such subaccount, as
applicable, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay the Loans
made by such Lender in accordance with the terms hereof.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Lender,
each Affiliate of Lender that enters into a Hedging Agreement and
the Administrative Agent the prompt payment of the Credit Party
Obligations in full when due (whether at stated maturity, as a
mandatory prepayment, by acceleration or otherwise). This
Guaranty is a guaranty of payment and not of collection and is a
continuing guaranty and shall apply to all Credit Party
Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or
the Hedging Agreements, or any other agreement or instrument
referred to therein, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge
or defense of a surety or guarantor. Each Guarantor agrees that
this Guaranty may be enforced by the Lenders without the
necessity at any time of resorting to or exhausting any other
security or collateral and without the necessity at any time of
having recourse to the Notes or any other of the Credit Documents
or any collateral, if any, hereafter securing the Credit Party
Obligations or otherwise and each Guarantor hereby waives the
right to require the Lenders to proceed against the Borrower or
any other Person (including a co-guarantor) or to require the
Lenders to pursue any other remedy or enforce any other right.
Each Guarantor further agrees that it shall have no right of
subrogation, indemnity, reimbursement or contribution against the
Borrower or any other Guarantor of the Credit Party Obligations
for amounts paid under this Guaranty until such time as the
Lenders (and any Affiliates of Lenders entering into Hedging
Agreements) have been paid in full, all Commitments under the
Credit Agreement have been terminated and no Person or
Governmental Authority shall have any right to request any return
or reimbursement of funds from the Lenders in connection with
monies received under the Credit Documents. Each Guarantor
further agrees that nothing contained herein shall prevent the
Lenders from suing on the Notes or any of the other Credit
Documents or any of the Hedging Agreements or foreclosing its
security interest in or Lien on any collateral, if any, securing
the Credit Party Obligations or from exercising any other rights
available to it under this Credit Agreement, the Notes, any other
of the Credit Documents, or any other instrument of security, if
any, and the exercise of any of the aforesaid rights and the
completion of any foreclosure proceedings shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it
being the purpose and intent of each Guarantor that its
obligations hereunder shall be absolute, independent and
unconditional under any and all circumstances. Neither any
Guarantor's obligations under this Guaranty nor any remedy for
the enforcement thereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification,
change, release or limitation of the liability of the Borrower or
by reason of the bankruptcy or insolvency of the Borrower. Each
Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and
notice of or proof of reliance of by any Agent or any Lender upon
this Guarantee or acceptance of this Guarantee. The Credit Party
Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guarantee. All dealings
between the Borrower and any of the Guarantors, on the one hand,
and the Agents and the Lenders, on the other hand, likewise shall
be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. The Guarantors further agree to
all rights of set-off as set forth in Section 11.2.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the
Collateral now or hereafter held for the Credit Party
Obligations, if any, may be exchanged, compromised or surrendered
from time to time; (b) the Lenders shall not have any obligation
to protect, perfect, secure or insure any such security
interests, liens or encumbrances now or hereafter held, if any,
for the Credit Party Obligations or the properties subject
thereto; (c) the time or place of payment of the Credit Party
Obligations may be changed or extended, in whole or in part, to a
time certain or otherwise, and may be renewed or accelerated, in
whole or in part; (d) the Borrower and any other party liable for
payment under the Credit Documents may be granted indulgences
generally; (e) any of the provisions of the Notes or any of the
other Credit Documents may be modified, amended or waived; (f)
any party (including any co-guarantor) liable for the payment
thereof may be granted indulgences or be released; and (g) any
deposit balance for the credit of the Borrower or any other party
liable for the payment of the Credit Party Obligations or liable
upon any security therefor may be released, in whole or in part,
at, before or after the stated, extended or accelerated maturity
of the Credit Party Obligations, all without notice to or further
assent by such Guarantor, which shall remain bound thereon,
notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or
release.
4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent
permitted by applicable law: (a) notice of acceptance of this
Guaranty by the Lenders and of all extensions of credit to the
Borrower by the Lenders; (b) presentment and demand for payment
or performance of any of the Credit Party Obligations; (c)
protest and notice of dishonor or of default (except as
specifically required in the Credit Agreement) with respect to
the Credit Party Obligations or with respect to any security
therefor; (d) notice of the Lenders obtaining, amending,
substituting for, releasing, waiving or modifying any security
interest, lien or encumbrance, if any, hereafter securing the
Credit Party Obligations, or the Lenders' subordinating,
compromising, discharging or releasing such security interests,
liens or encumbrances, if any; (e) all other notices to which
such Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall
be automatically reinstated if and to the extent that for any
reason any payment by or on behalf of any Person in respect of
the Credit Party Obligations is rescinded or must be otherwise
restored by any holder of any of the Credit Party Obligations,
whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and each Guarantor agrees that it
will indemnify the Agents and each Lender promptly upon demand
for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred by an Agent or
such Lender in connection with such rescission or restoration,
including any such costs and expenses incurred in defending
against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any
bankruptcy, insolvency or similar law. Upon the request of the
Borrower, an Agent or a Lender will provide written support for
any claim made pursuant to this Section 4.5; provided that
failure to provide such written support shall not impair a
Lender's or an Agent's claim hereunder.
4.6 Remedies.
The Guarantors agree that, to the fullest extent permitted
by law, as between the Guarantors, on the one hand, and the
Agents and the Lenders, on the other hand, the Credit Party
Obligations may be declared to be forthwith due and payable as
provided in Section 9.2 (and shall be deemed to have become
automatically due and payable in the circumstances provided in
Section 9.2) notwithstanding any stay, injunction or other
prohibition preventing such declaration (or preventing such
Credit Party Obligations from becoming automatically due and
payable) as against any other Person and that, in the event of
such declaration (or such Credit Party Obligations being deemed
to have become automatically due and payable), such Credit Party
Obligations (whether or not due and payable by any other Person)
shall forthwith become due and payable by the Guarantors. The
Guarantors acknowledge and agree that their obligations hereunder
are secured in accordance with the terms of the Collateral
Documents and that the Lenders may exercise their remedies
thereunder in accordance with the terms thereof.
4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained
herein or in any of the other Credit Documents, to the extent the
obligations of any Guarantor shall be adjudicated to be invalid
or unenforceable for any reason (including, without limitation,
because of any applicable state or federal law relating to
fraudulent conveyances or transfers) then the obligations of such
Guarantor hereunder shall be limited to the maximum amount that
is permissible under applicable law (whether federal or state and
including, without limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Guarantors hereby agree as among themselves that, if any
Guarantor shall make an Excess Payment (as defined below), such
Guarantor shall have a right of contribution from each other
Guarantor in an amount equal to such other Guarantor's
Contribution Share (as defined below) of such Excess Payment.
The payment obligations of any Guarantor under this Section 4.8
shall be subordinate and subject in right of payment to the
Credit Party Obligations until such time as the Credit Party
Obligations have been fully satisfied, and none of the Guarantors
shall exercise any right or remedy under this Section 4.8 against
any other Guarantor until such Credit Party Obligations have been
fully satisfied. For purposes of this Section 4.8, (a) "Excess
Payment" shall mean the amount paid by any Guarantor in excess of
its Pro Rata Share of any Credit Party Obligations; (b) "Pro Rata
Share" shall mean, for any Guarantor in respect of any payment of
Credit Party Obligations, the ratio (expressed as a percentage)
as of the date of such payment of Credit Party Obligations of (i)
the amount by which the aggregate present fair salable value of
all of its assets and properties exceeds the amount of all debts
and liabilities of such Guarantor (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of such Guarantor hereunder) to (ii)
the amount by which the aggregate present fair salable value of
all assets and other properties of all of the Credit Parties
exceeds the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of the Credit Parties
hereunder) of the Credit Parties; provided, however, that, for
purposes of calculating the Pro Rata Shares of the Guarantors in
respect of any payment of Credit Party Obligations, any Guarantor
that became a Guarantor subsequent to the date of any such
payment shall be deemed to have been a Guarantor on the date of
such payment and the financial information for such Guarantor as
of the date such Guarantor became a Guarantor shall be utilized
for such Guarantor in connection with such payment; and (c)
"Contribution Share" shall mean, for any Guarantor in respect of
any Excess Payment made by any other Guarantor, the ratio
(expressed as a percentage) as of the date of such Excess Payment
of (i) the amount by which the aggregate present fair salable
value of all of its assets and properties exceeds the amount of
all debts and liabilities of such Guarantor (including
contingent, subordinated, unmatured, and unliquidated
liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Credit
Parties other than the maker of such Excess Payment exceeds the
amount of all of the debts and liabilities (including contingent,
subordinated, unmatured, and unliquidated liabilities, but
excluding the obligations of the Credit Parties) of the Credit
Parties other than the maker of such Excess Payment; provided,
however, that, for purposes of calculating the Contribution
Shares of the Guarantors in respect of any Excess Payment, any
Guarantor that became a Guarantor subsequent to the date of any
such Excess Payment shall be deemed to have been a Guarantor on
the date of such Excess Payment and the financial information for
such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such
Excess Payment. This Section 4.8 shall not be deemed to affect
any right of subrogation, indemnity, reimbursement or
contribution that any Guarantor may have under applicable law
against the Borrower in respect of any payment of Credit Party
Obligations.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit
Agreement and make the initial Extension of Credit is subject to
satisfaction (or waiver by the Administrative Agent with the
consent of the Required Lenders) of the following conditions:
(a) Executed Credit Documents. Receipt by the
Administrative Agent of duly executed copies of: (i) this
Credit Agreement; (ii) the Notes; (iii) the Collateral
Documents; and (iv) all other Credit Documents, each in form
and substance reasonably acceptable to the Administrative
Agent and the Lenders; provided that, receipt by the
Administrative Agent of an executed signature page to this
Credit Agreement from a Lender shall be deemed approval by
such Lender of the form and substance of the Credit
Documents.
(b) Authority Documents. Receipt by the
Administrative Agent of the following:
(i) Charter Documents. Copies of the
articles or certificate of incorporation or other
charter documents of such Credit Party certified to be
true and complete as of a recent date by the
appropriate Governmental Authority of the state or
other jurisdiction of its incorporation and certified
by a secretary or assistant secretary of such Credit
Party to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of such
Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct
as of the Effective Date.
(iii) Resolutions. Copies of resolutions
of the Board of Directors of such Credit Party
approving and adopting the Credit Documents to which it
is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit
Party to be true and correct and in force and effect as
of the Effective Date.
(iv) Good Standing. Copies of certificates
of good standing, existence or its equivalent with
respect to such Credit Party certified as of a recent
date by the appropriate Governmental Authorities of the
state or other jurisdiction of incorporation and each
other jurisdiction in which the failure to so qualify
and be in good standing would have or be reasonably
expected to have a Material Adverse Effect on the
business or operations of such Credit Party in such
jurisdiction.
(v) Incumbency. An incumbency certificate
of such Credit Party certified by a secretary or
assistant secretary of such Credit Party to be true and
correct as of the Effective Date.
(c) Opinion of Counsel. Receipt by the Administrative
Agent of an opinion or opinions from legal counsel to the
Credit Parties (which shall cover, among other things,
authority, legality, validity, binding effect, and
enforceability of the Credit Documents and the attachment,
perfection, and validity of Liens), reasonably satisfactory
to the Administrative Agent, addressed to the Administrative
Agent and the Lenders and dated as of the Effective Date.
(d) Financial Statements. Receipt by the Lenders of
such financial information regarding the Credit Parties and
their Subsidiaries as they may request, including, but not
limited to, (i) the consolidated financial statements of the
Borrower and its Subsidiaries for their three most recently
ended fiscal years, including balance sheets, income
statements and cash flow statements audited by independent
public accountants of recognized national standing and
prepared in accordance with GAAP and (ii) unaudited
consolidated financial statements of the Borrower and its
Subsidiaries, prepared in accordance with GAAP as of the
fiscal quarter ending September 29, 1999 for the fiscal
quarter ending as of such date.
(e) Note Purchase Agreements. The Administrative
Agent shall have received (i) copies, certified by an
officer of the Borrower as true and complete, of the Note
Purchase Agreements (including all exhibits and schedules
thereto) as originally executed and delivered, together with
any amendments or modifications to such Note Purchase
Agreements as of the Closing Date, such Note Purchase
Agreements and amendments or modifications to be acceptable
to the Lenders, (ii) evidence that the Note Purchase
Agreements have been consummated in accordance with the
terms thereof and (iii) evidence that the Borrower has
received proceeds from the issuance of the Senior Notes of
at least $75 million.
(f) Personal Property Collateral. The Collateral
Agent shall have received, in form and substance reasonably
satisfactory to the Collateral Agent:
(i) searches of Uniform Commercial Code
("UCC") filings in the jurisdiction of the chief
executive office of each Credit Party copies of the
financing statements on file in such jurisdictions and
evidence that no Liens exist other than Permitted
Liens;
(ii) duly executed UCC financing statements
for each appropriate jurisdiction as is necessary, in
the Collateral Agent's sole discretion, to perfect the
Collateral Agent's security interest (for the benefit
of Secured Parties) in the Collateral; and
(iii) all stock certificates evidencing
the stock pledged to the Collateral Agent pursuant to
the Pledge Agreement, together with duly executed in
blank undated stock powers attached thereto.
(g) Consents. Receipt by the Administrative Agent of
evidence that (A) all governmental, shareholder and third
party consents and approvals necessary in connection with
the Note Purchase Agreements and the related financings and
transactions contemplated thereby and hereby have been
received and (B) no condition or Requirement of Law exists
which could reasonably be likely to restrain, prevent or
impose any material adverse conditions on the issuance of
the Senior Notes or the financings or other transactions
contemplated hereby.
(h) Litigation. There shall not exist any pending or,
to the knowledge of any Credit Party, threatened action,
suit, investigation or proceeding against a Credit Party or
any of their Subsidiaries that would have or be reasonably
expected to have a Material Adverse Effect.
(i) Officer's Certificates. The Administrative Agent
shall have received a certificate or certificates executed
by a Responsible Officer of the Borrower as of the Effective
Date stating that, among other things, (i) the Credit
Parties and each of their Subsidiaries are in compliance
with all existing material financial obligations after
giving effect to the issuance of the Senior Notes and the
transactions contemplated hereby, (ii) no action, suit,
investigation or proceeding is pending or, to the knowledge
of any Credit Party, threatened in any court or before any
arbitrator or governmental instrumentality that purports to
affect the Credit Parties, any of their Subsidiaries or any
transaction contemplated by the Credit Documents, if such
action, suit, investigation or proceeding would have or be
reasonably expected to have a Material Adverse Effect,
(iii) the financial statements and information delivered to
the Administrative Agent on or before the Effective Date
were prepared in good faith and in accordance with GAAP (iv)
since December 30, 1998, there has been no development or
event relating to or affecting a Credit Party or any of its
Subsidiaries which would have or be reasonably expected to
have a Material Adverse Effect, (v) the issuance of the
Senior Notes has been consummated in accordance with the
terms of the Note Purchase Agreements and is effective, and
(vi) immediately after giving effect to this Credit
Agreement, the other Credit Documents and all the
transactions contemplated therein to occur on such date, (A)
the Credit Parties, on a consolidated basis, are Solvent,
(B) no Default or Event of Default exists, (C) all
representations and warranties contained herein and in the
other Credit Documents are true and correct in all material
respects, and (D) the Credit Parties are in compliance with
each of the financial covenants set forth in Section 7.2.
(j) Fees and Expenses. Payment by the Credit Parties
of the fees and expenses owed by them as set forth in the
Fee Letter.
(k) Material Adverse Effect. No Material Adverse
Effect and no material adverse change in the facts and
information regarding the Credit Parties and their
Subsidiaries provided to the Agents and the Lenders shall
have occurred since December 30, 1998.
(l) Prior Credit Agreements. Receipt by the
Administrative Agent of evidence that (i) the Prior Credit
Agreements and all documents executed or delivered in
connection with the Prior Credit Agreements have been
terminated, and (ii) all amounts owing in connection with
the Prior Credit Agreements have been paid in full on the
Effective Date and all liens granted in connection therewith
have been or are agreed to be released upon such repayment
in full.
(m) Year 2000 Problem. The Administrative Agent shall
be satisfied that (i) the Credit Parties and their
Subsidiaries are taking all necessary and appropriate steps
to ascertain the extent of, and to quantify and successfully
address, business and financial risks facing the Credit
Parties and Subsidiaries as a result of the Year 2000
Problem, including risks resulting from the failure of key
vendors and customers of the Credit Parties and their
Subsidiaries to successfully address the Year 2000 Problem
and (ii) the Credit Parties' and their Subsidiaries'
material computer applications and those of its key vendors
and customers will, on a timely basis, adequately address
the Year 2000 Problem in all material respects.
(n) Other. Receipt and satisfactory review by the
Administrative Agent and its counsel of such other
documents, instruments, agreements or information as
reasonably and timely requested by the Administrative Agent
or its counsel or any Lender, including, but not limited to,
shareholder agreements and information regarding management
of the Credit Parties and their Subsidiaries, litigation,
tax, accounting, labor, insurance, pension liabilities
(actual or contingent), real estate leases, material
contracts, debt agreements, property ownership,
environmental matters and contingent liabilities of the
Credit Parties and their Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere
herein, the Lenders shall not be obligated to make Loans nor
shall the Issuing Lender be required to issue or extend a Letter
of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in
the case of any new Revolving Loan, a Notice of Borrowing to
the Administrative Agent, duly executed and completed, by
the time specified in Section 2.1, (ii) in the case of any
Letter of Credit, to the Issuing Lender an appropriate
request for issuance of a Letter of Credit in accordance
with the provisions of Section 2.2 and (iii) in the case of
any Swingline Loan, to the Swingline Lender a Swingline Loan
Request, duly executed and completed, by the time specified
in Section 2.3.
(b) Representations and Warranties. The
representations and warranties made by the Credit Parties in
any Credit Document are true and correct in all material
respects at and as if made as of such date except to the
extent they expressly relate to an earlier date;
(c) No Default. No Default or Event of Default shall
exist or be continuing either prior to or after giving
effect thereto;
(d) Material Adverse Effect. There shall not have
occurred any Material Adverse Effect; and
(e) Availability. Immediately after giving effect to
the making of a Loan (and the application of the proceeds
thereof) or to the issuance of a Letter of Credit, as the
case may be, (i) the sum of the Revolving Loans outstanding
plus LOC Obligations outstanding plus Swingline Loans
outstanding shall not exceed the Revolving Commitment
Amount, (ii) the sum of LOC Obligations outstanding shall
not exceed the LOC Committed Amount and (iii) the sum of
Swingline Loans outstanding shall not exceed the Swingline
Committed Amount.
The delivery of each Notice of Borrowing and each request for a
Letter of Credit shall constitute a representation and warranty
by the Borrower of the correctness of the matters specified in
subsections (b), (c), (d) and (e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Administrative
Agent and each Lender that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders
pursuant to Section 5.1(d) and Sections 7.1(a) and (b): (i)
have been prepared in accordance with GAAP (subject, in the
case of financial statements other than year-end financial
statements, to normal year-end adjustments and the absence
of footnotes), and (ii) present fairly in all material
respects (on the basis disclosed in the footnotes to such
financial statements, if any) the consolidated financial
condition, results of operations and cash flows of the
Credit Parties and their Subsidiaries as of such date and
for such periods.
(b) Since December 30, 1998, there has been no sale,
transfer or other disposition by any Credit Party or any of
its Subsidiaries of any material part of the business or
Property of the Credit Parties and their Subsidiaries taken
as a whole, and no purchase or other Acquisition by any of
them of any business or Property (including any Capital
Stock of any other Person) material in relation to the
consolidated financial condition of the Credit Parties taken
as a whole, in each case which is not (i) reflected in the
most recent financial statements delivered to the Lenders
pursuant to Section 7.1 or in the notes thereto or (ii)
otherwise permitted by the terms of this Credit Agreement
and communicated to the Administrative Agent.
6.2 No Material Change.
Since December 30, 1998, there has been no development or
event relating to or affecting a Credit Party or any of their
Subsidiaries which would have or be reasonably expected to have a
Material Adverse Effect. From and after the Closing Date, except
as otherwise permitted under this Credit Agreement, no dividends
or other distributions have been declared, paid or made upon the
Capital Stock or other equity interest in a Credit Party or any
of its Subsidiaries nor has any of the Capital Stock or other
equity interest in a Credit Party or any of its Subsidiaries been
redeemed, retired, purchased or otherwise acquired for value.
6.3 Organization and Good Standing.
Each Credit Party (a) is a corporation or limited liability
company duly incorporated or organized, validly existing and in
good standing under the laws of the State (or other jurisdiction)
of its incorporation or organization, (b) is duly qualified and
in good standing as a foreign corporation or a limited liability
company and authorized to do business in every jurisdiction where
the failure to be so qualified, in good standing or authorized
would have or be reasonably expected to have a Material Adverse
Effect and (c) has the requisite corporate or limited liability
company power and authority to own its properties and to carry on
its business as now conducted and as proposed to be conducted.
6.4 Due Authorization.
Each Credit Party (a) has the requisite corporate or limited
liability company power and authority to execute, deliver and
perform this Credit Agreement and the other Credit Documents to
which it is a party and to incur the obligations herein and
therein provided for and (b) is duly authorized to, and has been
authorized by all necessary corporate or limited liability
company action, to execute, deliver and perform this Credit
Agreement and the other Credit Documents to which it is a party.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents,
nor the consummation of the transactions contemplated therein,
nor performance of and compliance with the terms and provisions
thereof by such Credit Party will (a) violate or conflict with
any provision of its articles or certificate of incorporation,
operating agreement, articles of organization or bylaws, (b)
violate, contravene or materially conflict with any Requirement
of Law or any other law, regulation (including, without
limitation, Regulation U, Regulation T or Regulation X), order,
writ, judgment, injunction, decree or permit applicable to it,
(c) violate, contravene or conflict with contractual provisions
of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement
or instrument to which it is a party or by which it may be bound,
the violation of which would have or be reasonably expected to
have a Material Adverse Effect, or (d) result in or require the
creation of any Lien (other than those contemplated in or created
in connection with the Credit Documents) upon or with respect to
its properties.
6.6 Consents.
Except for consents, approvals, authorizations, orders,
filings, registrations and qualifications which have been
obtained, no consent, approval, authorization or order of, or
filing, registration or qualification with, any court or
Governmental Authority or third party in respect of any Credit
Party is required in connection with the execution, delivery or
performance of this Credit Agreement or any of the other Credit
Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have
been duly executed and delivered and constitute legal, valid and
binding obligations of each Credit Party enforceable against such
Credit Party in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, reorganization or
moratorium laws or similar laws relating to or affecting
creditors' rights generally or by general equitable principles.
6.8 No Default.
No Credit Party, nor any of its Subsidiaries, is in default
in any respect under any contract, lease, loan agreement,
indenture, mortgage, security agreement or other agreement or
obligation to which it is a party or by which any of its
properties is bound which default would have or be reasonably
expected to have a Material Adverse Effect. No Default or Event
of Default has occurred or exists except as previously disclosed
in writing to the Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the
owner of, and has good and marketable title to, or has a valid
license or lease to use all of its respective assets (including,
without limitation, its Intellectual Property (as defined in
Section 6.19)) and none of such assets is subject to any Lien
other than Permitted Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no
Indebtedness except (a) as disclosed in the financial statements
referenced in Section 6.1, (b) as set forth on Schedule 6.10 and
(c) as otherwise permitted by this Credit Agreement.
6.11 Litigation.
There are no actions, suits or legal, equitable, arbitration
or administrative proceedings, pending or, to the knowledge of
any Credit Party, threatened against, any Credit Party or any of
its Subsidiaries which would have or be reasonably expected to
have a Material Adverse Effect.
6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed,
or caused to be filed, all tax returns (federal, state, local and
foreign) required to be filed and paid or caused to be paid (a)
all amounts of taxes shown thereon to be due and payable
(including interest and penalties) and (b) all other taxes, fees,
assessments and other governmental charges (including mortgage
recording taxes, documentary stamp taxes and intangibles taxes)
that are due and payable, except for such taxes (i) which are not
yet delinquent or (ii) that are being contested in good faith and
by proper proceedings, and against which adequate reserves are
being maintained in accordance with GAAP. Except as disclosed on
Schedule 6.12, no Credit Party is aware as of the Closing Date of
any proposed tax assessments against it or any of its
Subsidiaries.
6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in
compliance with all Requirements of Law and all other laws,
rules, regulations, orders and decrees (including without
limitation Environmental Laws) applicable to it, or to its
properties, unless such failure to comply would not have or be
reasonably expected to have a Material Adverse Effect.
6.14 ERISA.
Except as would not have or be reasonably expected to have a
Material Adverse Effect:
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no
Termination Event has occurred and, to the knowledge of the
Credit Parties, no event or condition has occurred or exists
as a result of which any Termination Event could reasonably
be expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or
not waived, has occurred with respect to any Plan; (iii)
each Plan has been maintained, operated, and funded in
compliance with its own terms and in material compliance
with the provisions of ERISA, the Code, and any other
applicable federal or state laws; and (iv) no lien in favor
or the PBGC or a Plan has arisen or is reasonably expected
to arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" (within the meaning of Section 4001 of ERISA)
under each Single Employer Plan (determined, utilizing the
actuarial assumptions used to fund such Plans), whether or
not vested, did not, as of the last annual valuation date
prior to the date on which this representation is made or
deemed made, exceed the fair market current value as of such
date of the assets of such Plan allocable to such accrued
liabilities.
(c) Neither any Credit Party, nor any of its
Subsidiaries, nor any ERISA Affiliate has incurred, or, to
the knowledge of the Credit Parties, is reasonably expected
to incur, any withdrawal liability under ERISA to any
Multiemployer Plan or Multiple Employer Plan. Neither any
Credit Party, nor any of its Subsidiaries, nor any ERISA
Affiliate has received any notification that any
Multiemployer Plan is in reorganization (within the meaning
of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within
the meaning of Title IV of ERISA), and, to the knowledge of
the Credit Parties, no Multiemployer Plan is reasonably
expected to be in reorganization, insolvent, or terminated.
(d) No nonexempt prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code)
or breach of fiduciary responsibility has occurred with
respect to a Plan which has subjected or is reasonably
expected to subject any Credit Party or any of its
Subsidiaries or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section
4975 of the Code, or under any agreement or other instrument
pursuant to which any Credit Party or any of its
Subsidiaries or any ERISA Affiliate has agreed or is
required to indemnify any person against any such liability.
(e) The present value of the liability of the Credit
Parties and their Subsidiaries and each ERISA Affiliate for
post-retirement welfare benefits to be provided to their
current and former employees under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA), net of
all assets under all such Plans allocable to such benefits,
are reflected on the Financial Statements in accordance with
FASB 106.
(f) Each Plan which is a welfare plan (as defined in
Section 3(1) of ERISA) to which Sections 601-609 of ERISA
and Section 4980B of the Code apply has been administered in
material compliance with such sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list
of all Subsidiaries of each Credit Party. Information on
Schedule 6.15 includes the jurisdiction of incorporation or
organization, the number of shares of each class of Capital Stock
or other equity interests outstanding, the number and percentage
of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if
exercised, of all outstanding options, warrants, rights of
conversion or purchase and all other similar rights with respect
thereto. The outstanding Capital Stock and other equity
interests of all such Subsidiaries is validly issued, fully paid
and, with respect to any Subsidiary that is a corporation, non-
assessable and is owned by each such Credit Party, directly or
indirectly, free and clear of all Liens (other than those arising
under or contemplated in connection with the Credit Documents).
Other than as set forth in Schedule 6.15, neither any Credit
Party nor any Subsidiary thereof has outstanding any securities
convertible into or exchangeable for its Capital Stock nor does
any such Person have outstanding any rights to subscribe for or
to purchase or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to its
Capital Stock. Schedule 6.15 may be updated from time to time by
the Borrower by giving written notice thereof to the
Administrative Agent.
6.16 Use of Proceeds.
The proceeds of the Loans hereunder will be used solely for
the purposes specified in Section 7.10. No proceeds of the
Loans hereunder have been or will be used for the Acquisition of
another Person unless the board of directors (or other comparable
governing body) or stockholders, as appropriate, of such Person
has approved such Acquisition.
6.17 Government Regulation.
(a) No part of the Letters of Credit or proceeds of
the Loans will be used, directly or indirectly, for the
purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation U, or for the purpose of
purchasing or carrying or trading in any securities. If
requested by any Lender or the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each
Lender a statement to the foregoing effect in conformity
with the requirements of FR Form U-1 referred to in
Regulation U. No Indebtedness being reduced or retired out
of the proceeds of the Loans was or will be incurred for the
purpose of purchasing or carrying any margin stock within
the meaning of Regulation U or any "margin security" within
the meaning of Regulation T. "Margin stock" within the
meaning of Regulation U does not constitute more than 25% of
the value of the consolidated assets of the Credit Parties
and their Subsidiaries. None of the transactions
contemplated by the Credit Documents (including, without
limitation, the direct or indirect use of the proceeds of
the Loans) or the Note Purchase Agreements will violate or
result in a violation of (i) the Securities Act of 1933, as
amended, (ii) the Securities Exchange Act of 1934, as
amended, (iii) regulations issued pursuant to the
Securities Act of 1933 or the Securities Exchange Act of
1934, or (iv) Regulation T, U or X.
(b) No Credit Party, nor any of its Subsidiaries, is
subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act or the Investment
Company Act of 1940, each as amended. In addition, No
Credit Party, nor any of its Subsidiaries, is (i) an
"investment company" registered or required to be registered
under the Investment Company Act of 1940, as amended, and is
not controlled by an "investment company", or (ii) a
"holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary" of a "holding company", within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(c) No director, executive officer or principal
shareholder of any Credit Party or any of its Subsidiaries
has control of a company (i.e. such Credit Party or
Subsidiary) and is a director, executive officer or
principal shareholder of any Lender. For the purposes
hereof the terms "director", "executive officer" and
"principal shareholder" (when used with reference to any
Lender), and the phrase "control of a company", have the
respective meanings assigned thereto in Regulation O.
(d) Each Credit Party and each Subsidiary of a Credit
Party is current with all material reports and documents, if
any, required to be filed with any state or federal
securities commission or similar agency and is in full
compliance in all material respects with all applicable
rules and regulations of such commissions.
6.18 Environmental Matters.
(a) Each of the Credit Parties is in compliance with
all applicable Environmental Laws.
(b) Each of the Real Properties and all operations at
such Real Properties are in compliance with all applicable
Environmental Laws, and there is no violation of any
Environmental Law with respect to such Real Properties or
the businesses operated by the Credit Parties or any of
their Subsidiaries (the "Businesses"), and there are no
conditions relating to the Businesses or such Real
Properties that would reasonably be expected to give rise to
liability under any applicable Environmental Laws.
(c) No Credit Party nor any of its Subsidiaries has
received any written or oral notice of, or inquiry from any
Governmental Authority regarding, any violation, alleged
violation, non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with
Environmental Laws with regard to any of the Real Properties
or the Businesses, nor, to the knowledge of the Credit
Parties or their Subsidiaries, is any such notice being
threatened.
(d) Hazardous Materials have not been transported or
disposed of from the Real Properties, or generated, treated,
stored or disposed of at, on or under any of such Real
Properties or any other location, in each case by, or on
behalf or with the permission of, a Credit Party or any of
its Subsidiaries in a manner that could reasonably be
expected to give rise to liability under any applicable
Environmental Laws.
(e) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of a
Credit Party or any of its Subsidiaries, threatened, under
any Environmental Law to which a Credit Party or any of its
Subsidiaries is or will be named as a party, nor are there
any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other
administrative or judicial requirements outstanding under
any Environmental Law with respect to a Credit Party or any
of its Subsidiaries, the Real Properties or the Businesses.
(f) There has been no release (including, without
limitation, disposal) or threat of release of Hazardous
Materials at or from the Real Properties, or arising from or
related to the operations of a Credit Party or any of its
Subsidiaries in connection with such Real Properties or
otherwise in connection with the Businesses where such
release constituted a violation of, would give rise to
liability under, or would be required to be reported to a
Governmental Authority pursuant to, any applicable
Environmental Laws.
(g) None of the Real Properties that a Credit Party
owns or leases contains, or has previously contained, any
Hazardous Materials at, on or under such Real Properties in
amounts or concentrations that, if released, constitute or
constituted a violation of, or could give rise to liability
under, Environmental Laws.
(h) No Credit Party, nor any of its Subsidiaries, has
assumed any liability of any Person (other than another
Credit Party, or one of its Subsidiaries) under any
Environmental Law.
(i) The Credit Parties and their Subsidiaries have
adopted procedures that are designed to (i) ensure that each
Credit Party and its Subsidiaries, any of their operations
and each of the Real Properties remains in compliance with
applicable Environmental Laws and (ii) minimize any
liabilities or potential liabilities that each Credit Party
and its Subsidiaries, any of their operations and each of
the Real Properties may have under applicable Environmental
Laws.
6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all
trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of
them to conduct its business as currently conducted except for
those the failure to own or have such legal right to use could
not have a Material Adverse Effect.
6.20 Solvency.
The Credit Parties, on a consolidated basis, are, and after
consummation of the transactions contemplated by this Credit
Agreement, will be Solvent.
6.21 Investments.
All Investments of each Credit Party and its Subsidiaries
are Permitted Investments.
6.22 Location of Chief Executive Office/Principal Place of
Business.
Set forth on Schedule 6.22 is the chief executive office and
principal place of business of each Credit Party. Schedule 6.22
may be updated from time to time by the Borrower by giving
written notice thereof to the Administrative Agent.
6.23 Disclosure.
Neither this Credit Agreement nor any financial statements
delivered to an Agent or the Lenders nor any other document,
certificate or statement furnished to an Agent or the Lenders by
or on behalf of any Credit Party or any of its Subsidiaries in
connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein
or herein not misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and
effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals which are
necessary for the operation of their respective businesses as
presently conducted, except where the failure to obtain would not
have or be reasonably expected to have a Material Adverse Effect.
6.25 No Burdensome Restrictions.
No Credit Party, nor any of its Subsidiaries, is a party to
any agreement or instrument or subject to any other obligation or
any charter or corporate restriction or any provision of any
applicable law, rule or regulation which individually or in the
aggregate, would have or be reasonably expected to have a
Material Adverse Effect.
6.26 Collateral Documents.
The Collateral Documents create valid security interests in,
and Liens on, the Collateral purported to be covered thereby,
which security interests and Liens are currently perfected
security interests and Liens, prior to all other Liens other than
Permitted Liens.
6.27 Year 2000 Compliance.
Each of the Credit Parties has (i) initiated a review and
assessment of all areas within its and each of its Subsidiaries'
businesses and operations (including those affected by suppliers,
vendors and customers) that could be adversely affected by the
Year 2000 Problem, (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable.
Based on the foregoing, each Credit Party believes that all
computer applications (including those of its suppliers, vendors
and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on
a timely basis to be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 Compliant"), except to the extent that a
failure to do so could not reasonably be expected to have a
Material Adverse Effect.
6.28 Labor Contracts and Disputes.
(a) There is no collective bargaining agreement or other
labor contract covering employees of any Credit Party; (b) no
union or other labor organization is seeking to organize, or be
recognized as, a collective bargaining unit of employees of any
Credit Party; and (c) there is no pending, or to any Credit
Party's knowledge, threatened, strike, work stoppage, material
unfair labor practice claim or other material labor dispute
against or affecting any Credit Party or its employees.
6.29 Broker's Fees.
No Credit Party will, nor will it permit any of its
Subsidiaries to, pay or agree to pay, or reimburse any other
Person with respect to, any finder's, broker's, investment
banking or other similar fee in connection with any of the
transactions contemplated under the Credit Documents.
6.30 Indebtedness under Note Purchase Agreements.
The Credit Party Obligations and all other Indebtedness
under the Credit Agreement is pari passu with the Indebtedness
arising under the Note Purchase Agreements.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest and fees and other
obligations then due and payable hereunder, have been paid in
full and the Commitments and Letters of Credit hereunder shall
have terminated:
7.1 Information Covenants.
The Credit Parties will furnish, or cause to be furnished,
to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close
of each fiscal year of the Borrower, a consolidated balance
sheet of the Credit Parties and their Subsidiaries, as of
the end of such fiscal year, together with related
consolidated statements of earnings, of shareholder's equity
and of cash flows for such fiscal year, setting forth in
comparative form consolidated figures for the preceding
fiscal year, all such consolidated financial information
described above to be in reasonable form and detail and
audited by independent certified public accountants of
recognized national standing reasonably acceptable to the
Administrative Agent and whose opinion shall be to the
effect that such financial statements have been prepared in
accordance with GAAP (except for changes with which such
accountants concur) and shall not be limited as to the scope
of the audit or qualified in any manner; provided, that
delivery within the time period specified above of the
Borrower's Annual Report on Form 10-K for such fiscal year
(together with the Borrower's annual report to shareholders,
if any, prepared pursuant to Rule 14a-3 under the Securities
Exchange Act of 1934, as amended) prepared in accordance
with the requirements therefor and filed with the Securities
Exchange Commission, together with the accountant's
certificate described above, shall be deemed to satisfy the
requirements of this Section 7.1(a).
(b) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close
of each fiscal quarter of the Borrower (other than the
fourth fiscal quarter) a consolidated balance sheet of the
Credit Parties and their Subsidiaries as of the end of such
fiscal quarter, together with related consolidated
statements of earnings, of shareholder's equity and of cash
flows for such fiscal quarter, setting forth in comparative
form consolidated and consolidating figures for the
corresponding period of the preceding fiscal year, all such
financial information described above to be in reasonable
form and detail and reasonably acceptable to the
Administrative Agent, and accompanied by a certificate of
the chief financial officer of the Borrower to the effect
that such quarterly financial statements fairly present in
all material respects the financial condition of the Credit
Parties and their Subsidiaries and have been prepared in
accordance with GAAP (subject to changes resulting from
audit and normal year-end audit adjustments and the absence
of footnotes); provided, that delivery within the time
period specified above of the copies of the Borrower's
Quarterly Report on Form 10-Q prepared in compliance with
the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(b).
(c) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and
7.1(b) above, a certificate of the chief financial officer
of the Borrower substantially in the form of Exhibit 7.1(c),
(i) demonstrating compliance with the financial covenants
contained in Section 7.2 by calculation thereof as of the
end of each such period, (ii) demonstrating compliance with
any other terms of this Credit Agreement as reasonably
requested by the Administrative Agent and (iii) stating that
no Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and
extent thereof and what action the Borrower proposes to take
with respect thereto.
(d) Annual Business Plan and Budgets. At least 30
days prior to the end of each fiscal year of the Borrower
(or prior to the Closing Date in the case of the fiscal year
ending December 29, 1999), beginning with the fiscal year
ending December 29, 1999, a projected profit and loss
statement of the Credit Parties and their Subsidiaries on a
consolidated basis for the next fiscal year.
(e) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in
Section 7.1(a), a certificate of the accountants conducting
the annual audit stating that they have reviewed this Credit
Agreement and stating further whether, in the course of
their audit, they have become aware of any Default or Event
of Default and, if any such Default or Event of Default
exists, specifying the nature and extent thereof.
(f) Auditor's Reports. Promptly upon receipt thereof,
a copy of any other report or "management letter" submitted
by independent accountants to the Borrower in connection
with any annual, interim or special audit of the books of
such Person.
(g) Reports. Promptly upon transmission or receipt
thereof, (a) copies of any filings and registrations with,
and reports to or from, the Securities and Exchange
Commission, or any successor agency, and copies of all
financial statements, proxy statements, notices and reports
as the Credit Parties and their Subsidiaries shall send to
its shareholders generally in their capacity as shareholders
and (b) upon the written request of the Administrative
Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state
or local agency responsible for environmental matters, the
United States Occupational Health and Safety Administration,
or any state or local agency responsible for health and
safety matters, or any successor agencies or authorities
concerning material environmental, health or safety matters.
(h) Notices. Upon a Responsible Officer of a Credit
Party obtaining knowledge thereof, the Borrower will give
written notice to the Administrative Agent immediately of
(i) the occurrence of an event or condition consisting of a
Default or Event of Default, specifying the nature and
existence thereof and what action the Credit Parties propose
to take with respect thereto, and (ii) the occurrence of any
of the following with respect to the Credit Parties or any
of their Subsidiaries: (A) the pendency or commencement of
any litigation, arbitral or governmental proceeding against
a Credit Party or any of its Subsidiaries which if adversely
determined would have or be reasonably expected to have a
Material Adverse Effect, (B) the institution of any
proceedings against a Credit Party or any of its
Subsidiaries with respect to, or the receipt of written
notice by such Person of potential liability or
responsibility for violation, or alleged violation of any
federal, state or local law, rule or regulation (including
but not limited to, Environmental Laws) the violation of
which would have or be reasonably expected to have a
Material Adverse Effect, (C) any information that a Credit
Party may have a Year 2000 Problem and (D) any loss of or
damage to any Property of a Credit Party or its Subsidiaries
or the commencement of any proceeding for the condemnation
or other taking of any Property of a Credit Party or its
Subsidiaries, if such loss, damage or proceeding would have
or be reasonably expected to have a Material Adverse Effect.
(i) ERISA. Upon any of the Credit Parties or any of
their Subsidiaries or any ERISA Affiliate obtaining
knowledge thereof, the Borrower will give written notice to
the Administrative Agent promptly (and in any event within
five Business Days) of: (i) any event or condition,
including, but not limited to, any Reportable Event, that
constitutes, or is reasonably expected to result in, a
Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or
otherwise of any withdrawal liability assessed against the
Credit Parties or any of their Subsidiaries or any of their
ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both
within the meaning of Title IV of ERISA); (iii) the failure
to make full payment on or before the due date (including
extensions) thereof of all amounts which a Credit Party or
any of its Subsidiaries or any of its ERISA Affiliates is
required to contribute to each Plan pursuant to such Plan's
terms and as required to meet the minimum funding standard
set forth in Section 302 of ERISA and Section 412 of the
Code with respect thereto; or (iv) any change in the funding
status of any Plan that would have or be reasonably expected
to have a Material Adverse Effect; together, with a
description of any such event or condition or a copy of any
such notice and a statement by the principal financial
officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action,
if any, which has been or is being taken or is proposed to
be taken by the Credit Parties or any of their Subsidiaries
with respect thereto. Promptly upon request, the Credit
Parties or any of their Subsidiaries shall furnish the
Administrative Agent and each of the Lenders with such
additional information concerning any Plan as may be
reasonably requested by the Administrative Agent, including,
but not limited to, copies of each annual report/return
(Form 5500 series), as well as all schedules and attachments
thereto required to be filed with the Department of Labor
and/or the Internal Revenue Service pursuant to ERISA and
the Code, respectively, for each "plan year" (within the
meaning of Section 3(39) of ERISA).
(j) Environmental.
(i) Subsequent to a notice from any
Governmental Authority where the subject matter of such
notice would have or be reasonably expected to have a
Material Adverse Effect, or during the existence of an
Event of Default, upon the written request of
Administrative Agent, the Credit Parties will furnish
or cause to be furnished to the Administrative Agent,
at the Credit Parties' expense, a report of an
environmental assessment of reasonable scope, form and
depth, including, where appropriate, invasive soil or
groundwater sampling, by a consultant reasonably
acceptable to the Administrative Agent addressing the
subject of such notice or, if during the existence of
an Event of Default, regarding any release or threat of
release of Hazardous Materials on any Real Property and
the compliance by the Credit Parties with Environmental
Laws. If the Credit Parties fail to deliver such an
environmental report within sixty (60) days after
receipt of such written request, then the
Administrative Agent may arrange for same, and the
Credit Parties hereby grant to the Administrative Agent
and its representatives access to the Real Properties
and a license of a scope reasonably necessary to
undertake such an assessment (including, where
appropriate, invasive soil or groundwater sampling).
The reasonable cost of any assessment arranged for by
the Administrative Agent pursuant to this provision
will be payable by the Credit Parties on demand and
added to the obligations secured by the Collateral
Documents.
(ii) Each Credit Party will conduct and
complete all investigations, studies, sampling, and
testing and all remedial, removal, and other actions
required under the Environmental Laws to address all
Hazardous Materials on, from, or affecting any Real
Property to the extent necessary to be in compliance
with all Environmental Laws and all other applicable
federal, state and local laws, regulations, rules and
policies and with the orders and directives of all
Governmental Authorities exercising jurisdiction over
such real property to the extent any failure would have
or be reasonably expected to have a Material Adverse
Effect.
(k) Amendments to Note Purchase Agreements. Promptly
upon receipt thereof, a copy of any amendments,
modifications or supplements to any agreement or instrument
evidencing any obligation of the Borrower under the Note
Purchase Agreements or any agreement or instrument related
thereto.
(l) Notices provided to Noteholders. At the time of
delivery to the Noteholders pursuant to the Note Purchase
Agreements, copies of any notice provided to the Noteholders
(including without limitation any notice required pursuant
to Section 8.3 of the Note Purchase Agreements) pursuant to
the Note Purchase Agreements, to the extent any such notice
has not already been delivered to the Lenders pursuant to
the terms hereof.
(m) Other Information. With reasonable promptness
upon any such request, such other information regarding the
business, properties or financial condition of the Credit
Parties and their Subsidiaries as the Administrative Agent
may reasonably request.
7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio, as of the
last day of each fiscal quarter of the Borrower, shall be
less than or equal to 2.50 to 1.00.
(b) Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio, as of the last day of each fiscal quarter of
the Borrower, shall be greater than or equal to 2.25 to
1.00.
(c) Minimum Consolidated Net Worth. The Consolidated
Net Worth shall at all times be equal to or greater than
$213,000,000 increased on a cumulative basis as of the end
of each fiscal quarter of the Credit Parties, commencing
with the fiscal quarter ending September 29, 1999 by an
amount equal to 50% of the Net Income (with no deduction for
net losses) for the fiscal quarter then ended plus an amount
equal to 100% of the proceeds from any Equity Issuance.
7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, do all things necessary to preserve and keep in
full force and effect its existence, rights, franchises and
authority except as permitted by Section 8.4.
7.4 Books and Records.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, keep complete and accurate books and records of
its transactions in accordance with GAAP (including the
establishment and maintenance of appropriate reserves).
7.5 Compliance with Law.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and
orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its property
(including, without limitation, Environmental Laws), unless such
noncompliance would not have or be reasonably expected to have a
Material Adverse Effect.
7.6 Payment of Taxes, Claims and Other Indebtedness.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, pay, settle or discharge (a) all taxes,
assessments and governmental charges or levies imposed upon it,
or upon its income or profits, or upon any of its properties,
before they shall become delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which, if
unpaid, might give rise to a Lien upon any of its properties and
(c) except as prohibited hereunder, all of its other Indebtedness
as it shall become due; provided, however, that a Credit Party or
any of its Subsidiaries shall not be required to pay any such
tax, assessment, charge, levy, claim or Indebtedness which is
being contested in good faith by appropriate proceedings and as
to which adequate reserves therefor have been established in
accordance with GAAP, unless the failure to make any such payment
(i) would give rise to an immediate right to foreclose or collect
on a Lien securing such amounts or (ii) would have or be
reasonably expected to have a Material Adverse Effect.
7.7 Insurance.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect
insurance (including worker's compensation insurance, liability
insurance, casualty insurance and business interruption
insurance) from insurance companies acceptable to the
Administrative Agent, in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance
retentions as are in accordance with normal industry practice.
7.8 Maintenance of Property.
Each of the Credit Parties will, and will cause each of its
Subsidiaries to, maintain and preserve its properties and
equipment in good repair, working order and condition, normal
wear and tear excepted (subject to casualty events), and will
make, or cause to be made, in such properties and equipment from
time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed
or proper, to the extent and in the manner customary for
companies in similar businesses.
7.9 Collateral.
(a) If, subsequent to the Closing Date, a Credit Party
shall acquire any Capital Stock required to be delivered to
the Collateral Agent as Collateral hereunder or under any of
the Collateral Documents, the Borrower shall immediately
notify the Collateral Agent of same.
(b) Each Credit Party shall (within 30 days of such
request) take such action, as reasonably requested by the
Collateral Agent and at its own expense, to ensure that the
Secured Parties have a perfected Lien in all Collateral of
the Credit Parties as set forth in the Pledge Agreement
(whether now owned or hereafter acquired), subject only to
Permitted Liens. Such actions to be required by the
Collateral Agent may include, but are not limited to,
delivery of Capital Stock, stock powers or other appropriate
assignments in blank, UCC financing statements and legal
opinions with respect thereto which shall be satisfactory to
the Collateral Agent and the Required Holders.
7.10 Use of Proceeds.
The Credit Parties will use the proceeds of the Loans solely
(a) to refinance the existing Indebtedness of the Credit Parties,
(b) to make Capital Expenditures, (c) to provide working capital
for the Borrower and its Domestic Subsidiaries and (d) for
general corporate purposes of the Credit Parties (including,
without limitation, the repurchase of Capital Stock of the
Borrower pursuant to the Share Repurchase Program). The Credit
Parties will use the Letters of Credit solely for the purposes
set forth in Section 2.2(a).
7.11 Performance of Obligations.
Each of the Credit Parties will, and will cause its
Subsidiaries to, perform in all respects all of its obligations
under the terms of all agreements, indentures, mortgages,
security agreements or other debt instruments to which it is a
party or by which it is bound unless the failure to do so would
not have or be reasonably expected to have a Material Adverse
Effect.
7.12 Additional Credit Parties.
At the time any Person becomes a Subsidiary of a Credit
Party, the Borrower shall so notify the Administrative Agent and
promptly thereafter (but in any event within 30 days after the
date thereof) shall cause such Person to (a) if it is a Domestic
Subsidiary, execute a Joinder Agreement in substantially the same
form as Exhibit 7.12(a), (b) cause all of the Capital Stock of
such Person (if it is a Domestic Subsidiary) or 65% of the
Capital Stock of such Person (if it is a First Tier Foreign
Subsidiary) to be delivered to the Collateral Agent (together
with undated stock powers signed in blank) and pledged to the
Collateral Agent pursuant to a joinder to the existing Pledge
Agreement in substantially the same form as Exhibit 7.12(b), (c)
if such Person is a Domestic Subsidiary and has any Subsidiaries,
(A) deliver all of the Capital Stock of such Domestic
Subsidiaries owned by it and 65% of the stock of the First Tier
Foreign Subsidiaries owned by it (together with undated stock
powers signed in blank) to the Collateral Agent and (B) execute a
joinder to the existing Pledge Agreement in substantially the
same form as Exhibit 7.12(b), (d) deliver such other
documentation as the Collateral Agent may reasonably request in
connection with the foregoing, including, without limitation,
appropriate UCC-1 financing statements, certified resolutions and
other organizational and authorizing documents of such Person and
favorable opinions of counsel to such Person (which shall cover,
among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in
form, content and scope reasonably satisfactory to the Collateral
Agent and the Required Holders and (e) provide (i) to the
Administrative Agent a new Schedule 6.15 which shall reflect the
information regarding such new Subsidiary required by Section
6.15 and (ii) to the Collateral Agent, if applicable, a new
Schedule 2(a) to the appropriate Pledge Agreement which shall
reflect the pledge of the Capital Stock of such new Subsidiary.
7.13 Audits/Inspections.
Upon reasonable notice and during normal business hours,
each Credit Party will, and will permit each of its Subsidiaries
to, permit representatives appointed by the Administrative Agent,
including, without limitation, independent accountants, agents,
attorneys, and appraisers to visit and inspect its property,
including its books and records, its accounts receivable and
inventory, its facilities and its other business assets, and to
make photocopies or photographs thereof and to write down and
record any information such representative obtains and shall
permit the Administrative Agent or its representatives to
investigate and verify the accuracy of information provided to
the Lenders and to discuss all such matters with the officers,
employees and representatives of such Person.
7.14 Year 2000 Compliance.
The Credit Parties will promptly notify the Administrative
Agent in the event any Credit Party discovers or determines that
any computer application (including those of its suppliers,
vendors and customers) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000
Compliant, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long
as this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest, fees and other obligations
then due and payable hereunder have been paid in full and the
Commitments and Letters of Credit hereunder shall have
terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its
Subsidiaries to, contract, create, incur, assume or permit to
exist any Indebtedness, except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) Indebtedness existing as of the Closing Date as
referenced in Section 6.10 (and renewals, refinancings,
replacements or extensions thereof on terms and conditions
no more favorable, in the aggregate, to such creditor than
such existing Indebtedness and in a principal amount not in
excess of that outstanding as of the date of such renewal,
refinancing, replacement or extension);
(c) purchase money Indebtedness (including obligations
in respect of Capital Leases and Synthetic Leases) to
finance the purchase of fixed assets (including equipment);
provided that (i) the total of all such Indebtedness for all
such Persons taken together shall not exceed an aggregate
principal amount of $10,000,000 at any one time outstanding
(in addition to any such Indebtedness referred to in
subsection (b) above); (ii) such Indebtedness when incurred
shall not exceed the purchase price of the asset(s)
financed; and (iii) no such Indebtedness shall be refinanced
for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing;
(d) Indebtedness arising from Hedging Agreements
entered into in the ordinary course of business and not for
speculative purposes;
(e) Indebtedness in respect of current accounts
payable and accrued expenses incurred in the ordinary course
of business and to the extent not current, accounts payable
and accrued expenses that are subject to bona fide dispute;
(f) (i) Indebtedness of the Borrower arising under the
Note Purchase Agreements and the Senior Notes (and renewals,
refinancings and extensions thereof on terms and conditions
no less favorable to the Borrower than such existing
Indebtedness evidenced by the Note Purchase Agreements and
the Senior Notes) in an aggregate principal amount not to
exceed $75,000,000 at any one time and (ii) all Guaranty
Obligations of the Guarantors with respect to such
Indebtedness arising under the Note Purchase Agreements and
the Senior Notes;
(g) Indebtedness owing from one Credit Party to
another Credit Party; and
(h) Guaranty Obligations of the Borrower arising from
the Borrower's guarantee of loans taken out by participants
in the Operating Partner's Program the proceeds of which are
used to purchase Capital Stock of the Borrower pursuant to
the Operating Partners Program, provided that such Guaranty
Obligations of the Borrower shall at no time exceed
$5,000,000 in the aggregate during the term of this Credit
Agreement.
8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries
to, contract, create, incur, assume or permit to exist any Lien
with respect to any of its property or assets of any kind
(whether real or personal, tangible or intangible), whether now
owned or after acquired, except for Permitted Liens.
8.3 Nature of Business.
No Credit Party will, nor will it permit its Subsidiaries
to, alter the character of its business from that conducted as of
the Effective Date or engage in any business other than the
business conducted as of the Effective Date.
8.4 Consolidation and Merger.
No Credit Party will, nor will it permit its Subsidiaries
to, enter into any transaction of merger or consolidation or
liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution); provided that notwithstanding the foregoing
provisions of this Section 8.4, (i) any Credit Party may be
merged or consolidated with or into another Credit Party if (a)
the Administrative Agent is given prior written notice of such
action and the Credit Parties execute and deliver such documents,
instruments, certificates and opinions as the Administrative
Agent may request, including, without limitation, those necessary
in order to maintain the perfection and priority of the Liens on
the Collateral and (b) after giving effect thereto no Default or
Event of Default exists; provided, that if the transaction is
between the Borrower and another Credit Party the Borrower must
be the continuing or surviving entity and (ii) any Immaterial
Subsidiary of the Borrower may liquidate, wind up or dissolve
itself.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries
to, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its
business or assets whether now owned or hereafter acquired,
including, without limitation, inventory, receivables, equipment,
real property interests (whether owned or leasehold), and
securities, other than:
(a) any inventory sold or otherwise disposed of in the
ordinary course of business;
(b) the sale, lease or transfer by a Credit Party of
any or all of its assets to another Credit Party so long as
the Non-Operating Subsidiaries (after giving effect to such
sale, lease or transfer) shall not own, on a collective
basis, property, plant and equipment valued at more than
five percent (5%) of the consolidated assets of the Borrower
and its Subsidiaries on a consolidated basis;
(c) obsolete, slow-moving, idle or worn-out assets no
longer used or useful in its business or the trade in of
equipment for equipment in better condition or of better
quality;
(d) the sale of the real property and of the stores
and personal property associated therewith identified on
Schedule 8.5(d); and
(e) the sale of up to seven (7) stores in any fiscal
year provided that (i) no Default or Event of Default
exists before or after giving effect to any such sale, (ii)
each such store is sold pursuant to the terms and conditions
of an arms-length contract for fair market value and (iii)
to the extent such dispositions permitted under this
subclause (e) exceed $40,000,000 in the aggregate during the
term of this Credit Agreement, the Revolving Committed
Amount shall be immediately reduced by the amount by which
such dispositions permitted by this subclause (e) exceed
$40,000,000 in the aggregate during the term of this Credit
Agreement.
8.6 Sale Leasebacks.
The Credit Parties hereby agree that to the extent the
Credit Parties or any of their Subsidiaries directly or
indirectly become or remain liable as lessee or as guarantor or
other surety with respect to any lease of any property (whether
real or personal or mixed), whether now owned or hereafter
acquired, (a) which such Credit Party or its Subsidiary has sold
or transferred or is to sell or transfer to any other Person
other than a Credit Party or (b) which such Credit Party or its
Subsidiary intends to use for substantially the same purpose as
any other property which has been sold or is to be sold or
transferred by such Credit Party to any Person in connection with
such lease in an amount exceeding $5,000,000 in the aggregate
during any fiscal year, the Revolving Committed Amount shall be
immediately reduced by the amount by which such sale leaseback
transactions in any fiscal year exceed $5,000,000 in the
aggregate during such fiscal year.
8.7 Investments.
No Credit Party will, nor will it permit its Subsidiaries
to, make any Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries
to, directly or indirectly, (a) declare or pay any dividends or
make any other distribution upon any shares of its Capital Stock
of any class (other than dividends payable solely in Capital
Stock); provided that, any Subsidiary of the Borrower may pay
dividends to its parent or (b) 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, prior to the
date occurring three years from the Effective Date, the Borrower
may repurchase shares of its Capital Stock pursuant to the Share
Repurchase Program in an amount not to exceed during the term of
this Credit Agreement an aggregate amount equal to the sum of (i)
$55 million plus (ii) an amount equal to 50% of Net Income for
each fiscal quarter after September 29, 1999 so long as at the
time of such repurchase and after giving effect thereto, no
Default or Event of Default shall exist or be continuing.
8.9 Transactions with Affiliates.
No Credit Party will, nor will it permit its Subsidiaries
to, enter into any transaction or series of transactions, whether
or not in the ordinary course of business, with any officer,
director, shareholder, Subsidiary or Affiliate other than (a) any
transaction between one Credit Party and another Credit Party,
(b) without limiting subclause (a) of this Section 8.9,
intercompany transactions expressly permitted by Section 8.1,
Section 8.4, Section 8.5, or Section 8.7 and (c) other
transactions which are entered into on terms and conditions
substantially as favorable as would be obtainable in a comparable
arm's-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries
to, (a) change its fiscal year or (b) in any manner that would
reasonably be likely to materially adversely affect the rights of
the Lenders, change its articles or certificate of incorporation,
operating agreement, articles of organization or its bylaws.
8.11 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries
to, directly or indirectly, create or otherwise cause, incur,
assume, suffer or permit to exist or become effective any
consensual encumbrance or restriction of any kind on the ability
of any such Person to (a) pay dividends or make any other
distribution on any of such Person's Capital Stock, (b) pay any
Indebtedness owed to any other Credit Party, (c) make loans or
advances to any other Credit Party, (d) sell, lease or transfer
any of its properties or assets to any other Credit Party or (e)
act as a Credit Party and pledge its Collateral pursuant to the
Credit Documents or any renewals, refinancings, exchanges,
refundings or extensions thereof, except (in respect of any of
the matters referred to in subsections (a)-(d) above) for
encumbrances or restrictions existing under or by reason of (i)
applicable law, (ii) this Credit Agreement and the other Credit
Documents, (iii) the Note Purchase Agreements as in effect on the
Closing Date or as amended in accordance with Section 8.15, and
(iv) customary non-assignment or net worth provisions in any
lease governing a leasehold interest.
8.12 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries
to, enter into, assume or become subject to any agreement
prohibiting or otherwise restricting the creation or assumption
of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for
such obligation if security is given for some other obligation
except (a) as set forth in the Credit Documents, (b) agreements
entered into in connection with Indebtedness permitted by Section
8.1(c) so long as such agreements do not prohibit Liens in favor
of the Lenders and the restrictions contained in such agreements
relate only to the asset or assets acquired or constructed in
connection therewith and (c) as set forth in Section 10.7 of the
Note Purchase Agreement.
8.13 Capital Expenditures.
The Credit Parties will not permit Capital Expenditures (a)
from the Effective Date through December 29, 1999 to exceed
$20,000,000 in the aggregate, (b) for the fiscal year ending
January 3, 2001 to exceed $64,000,000 in the aggregate, (c) for
the fiscal year ending January 2, 2002 to exceed $65,000,000 in
the aggregate, (d) for the fiscal year ending January 1, 2003 to
exceed $71,000,000 in the aggregate, (e) for the fiscal year
ending December 31, 2003 to exceed $73,000,000 in the aggregate
and (f) for the fiscal year ending December 29, 2004 to exceed
$81,000,000 in the aggregate; provided, however, that up to
$10,000,000 of the unused allowance for Capital Expenditures in
any fiscal year subsequent to fiscal year 1999, if not expended
in the fiscal year for which it is permitted, may be carried over
for expenditure in the immediate succeeding fiscal year;
provided, further, that up to $10,000,000 of the unused allowance
for the Borrower's repurchase of its Capital Stock pursuant to
the Share Repurchase Program as permitted by Section 8.8 may be
expended in any fiscal year (including fiscal year 1999) for
Capital Expenditures in addition to the amounts permitted above,
it being understood and agreed that (x) such $10,000,000 of the
unused allowance for the Share Repurchase Program shall continue
to be available for Capital Expenditures by the Credit Parties in
any fiscal year after the date occurring three years from the
Effective Date and (y) such allowance for the Share Repurchase
Program shall continue to grow for purposes of this Section 8.13
pursuant to the terms of Section 8.8 after the date occurring
three years from the Effective Date.
8.14 Ownership of Subsidiaries.
The Borrower shall at all times own, directly or indirectly,
100% of the Capital Stock of any Subsidiary of the Borrower;
provided, that another Subsidiary of the Borrower may own Capital
Stock in any Subsidiary of the Borrower.
8.15 Modification of Indebtedness.
Other than with respect to (i) Indebtedness arising under
this Credit Agreement and the other Credit Documents and (ii) any
Indebtedness owing from one Credit Party to another Credit Party,
no Credit Party will, nor will it permit any of its Subsidiaries
to, after the issuance thereof, amend or modify (or permit the
amendment or modification of) any of the terms of any
Indebtedness if such amendment or modification would add or
change any terms in a manner adverse to the issuer of such
Indebtedness, or shorten the final maturity or average life to
maturity or require any payment to be made sooner than originally
scheduled or increase the interest rate applicable thereto or
change any subordination provision thereof; provided, that, the
Borrower may enter into an amendment or modification of the
Senior Note Purchase Agreements in a manner adverse to the
Borrower so long as the Borrower agrees to make amendments or
modifications to the Credit Documents in a manner consistent with
such amendments or modifications made to the Senior Note Purchase
Agreements.
8.16 Prepayment of Indebtedness.
Other than with respect to (i) Indebtedness arising under
this Credit Agreement and the other Credit Documents and (ii) any
Indebtedness owing from one Credit Party to another Credit Party,
no Credit Party will, nor will it permit any of its Subsidiaries
to, make (or give any notice with respect thereto) any voluntary
or optional payment or prepayment or redemption or acquisition
for value of (including without limitation, by way of depositing
money or securities with the trustee with respect thereto before
due for the purpose of paying when due), refund, refinance or
exchange of any Indebtedness except that (a) the Borrower may
make a voluntary or optional prepayment on the Senior Notes in
accordance with Section 8.2 of the Note Purchase Agreements;
provided that (I) the Borrower provides the Administrative Agent
with written notice of such prepayment five (5) Business Days
prior to the date of such prepayment and (II) the Revolving
Committed Amount is permanently reduced on a pro rata basis
according to the aggregate unpaid principal amount of the Senior
Notes and the amount of the Revolving Committed Amount on the
date of such prepayment in accordance with Section 3.4(b) and (b)
the Borrower may make a prepayment on the Senior Notes in
accordance with Section 8.3 of the Note Purchase Agreements;
provided that (I) the Borrower provides the Administrative Agent
with all notices related to such prepayment required by Section
7.1(l) and (II) the Loans are prepaid on a pro rata basis
according to the aggregate unpaid principal amount of the Senior
Notes and the aggregate unpaid principal amount of the Loans in
accordance with Section 3.3(b)(ii).
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence, and
during the continuance, of any of the following specified events
(each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the
payment (i) when due of any principal of any of the Loans or
any reimbursement obligation arising from drawings under
Letters of Credit or (ii) within three Business Days of when
due of any interest on the Loans or any fees or other
amounts owing hereunder, under any of the other Credit
Documents or in connection herewith.
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party
herein, in any of the other Credit Documents, or in any
statement or certificate delivered or required to be
delivered pursuant hereto or thereto shall prove untrue in
any material respect on the date as of which it was made or
deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or
observance of any term, covenant or agreement contained
in Sections 7.2, 7.3, 7.5, 7.10, 7.12 or 8.1 through
8.16 inclusive;
(ii) default in the due performance or
observance by it of any term, covenant or agreement
contained in Section 7.1 and such default shall
continue unremedied for a period of five Business Days;
(iii) default in the due performance or
observance by it of any term, covenant or agreement
(other than those referred to in subsections (a), (b)
or (c)(i) or (ii) of this Section 9.1) contained in
this Credit Agreement and such default shall continue
unremedied for a period of at least 30 days after the
earlier of a Credit Party becoming aware of such
default or notice thereof given by the Administrative
Agent.
(d) Other Credit Documents. (i) Any Credit Party
shall default in the due performance or observance of any
term, covenant or agreement in any of the other Credit
Documents and such default shall continue unremedied for a
period of at least 30 days after the earlier of a Credit
Party becoming aware of such default or notice thereof given
by the Administrative Agent, or (ii) other than because of
acts or failure to act by the Lenders, the Administrative
Agent or the Collateral Agent, any Credit Document shall
fail to be in full force and effect or any Credit Party
shall so assert or any Credit Document shall fail to give
the Collateral Agent and/or the Lenders the security
interests, liens, rights, powers and privileges purported to
be created thereby.
(e) Guaranties. The guaranty given by the Credit
Parties hereunder or by any Additional Credit Party
hereafter or any provision thereof shall cease to be in full
force and effect, or any guarantor thereunder or any Person
acting by or on behalf of such guarantor shall deny or
disaffirm such Guarantor's obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the
following: (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order
for relief in respect of any Credit Party or any of its
Subsidiaries in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appoint a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of any
Credit Party or any of its Subsidiaries or for any
substantial part of its property or ordering the winding up
or liquidation of its affairs; or (ii) an involuntary case
under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect is commenced against any
Credit Party or any of its Subsidiaries and such petition
remains unstayed and in effect for a period of 60
consecutive days; or (iii) any Credit Party or any of its
Subsidiaries shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consent to the entry of an order
for relief in an involuntary case under any such law, or
consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any
substantial part of its property or make any general
assignment for the benefit of creditors; or (iv) any Credit
Party or any of its Subsidiaries shall admit in writing its
inability to pay its debts generally as they become due or
any action shall be taken by such Person in furtherance of
any of the aforesaid purposes.
(g) Defaults under Other Agreements.
(i) A Credit Party or any of its Subsidiaries
shall default in the due performance or observance
(beyond the applicable grace period with respect
thereto) of any material obligation or condition of any
contract or lease to which it is a party (including,
without limitation, any Hedging Agreement, but
excluding the Credit Documents), if such default would
have or be reasonably expected to have a Material
Adverse Effect; or
(ii) With respect to any Indebtedness (other than
Indebtedness outstanding under this Credit Agreement)
of a Credit Party or any of its Subsidiaries in an
aggregate principal amount in excess of $1,000,000, (A)
such Person shall (x) default in any payment (beyond
the applicable grace period with respect thereto, if
any) with respect to any such Indebtedness, or (y)
default (after giving effect to any applicable grace
period) in the observance or performance relating to
such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or
any other event or condition shall occur or condition
exist, the effect of which default or other event or
condition is to cause or permit the holder or holders
of such Indebtedness (or trustee or agent on behalf of
such holders) to cause (determined without regard to
whether any notice or lapse of time is required) any
such Indebtedness to become due prior to its stated
maturity; or (B) any such Indebtedness shall be
declared due and payable, or required to be prepaid
other than by a regularly scheduled required prepayment
prior to the stated maturity thereof; or (C) any such
Indebtedness shall mature and remain unpaid.
(h) Judgments. One or more judgments, orders, or
decrees (including, without limitation, any judgment, order,
or decree with respect to any litigation disclosed pursuant
to the Credit Documents) shall be entered against any one or
more of the Credit Parties and its Subsidiaries involving a
liability of $1,000,000 or more, in the aggregate, (to the
extent not paid or covered by insurance provided by a
carrier who has acknowledged coverage) and such judgments,
orders or decrees (i) are the subject of any enforcement
proceeding commenced by any creditor, (ii) shall continue
unsatisfied, undischarged and unstayed for a period ending
on the first to occur of (A) the last day on which such
judgment, order or decree becomes final and unappealable or
(B) 60 days, or (iii) are stayed and are not discharged
within 60 days after the expiration of such stay.
(i) ERISA. The occurrence of any of the following
events or conditions which would have or be reasonably
expected to have a Material Adverse Effect: (A) any
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or
not waived, shall exist with respect to any Plan, or any
Lien shall arise on the assets of any Credit Party or any
ERISA Affiliate in favor of the PBGC or a Plan; (B) a
Termination Event shall occur with respect to a Single
Employer Plan, which is likely to result in the termination
of such Plan for purposes of Title IV of ERISA; (C) a
Termination Event shall occur with respect to a
Multiemployer Plan or Multiple Employer Plan, which is
likely to result in (i) the termination of such Plan for
purposes of Title IV of ERISA, or (ii) any Credit Party or
any ERISA Affiliate incurring any liability in connection
with a withdrawal from, reorganization of (within the
meaning of Section 4241 of ERISA), or insolvency (within the
meaning of Section 4245 of ERISA) of such Plan; or (D) any
prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) or breach of fiduciary
responsibility shall occur which may subject any Credit
Party or any ERISA Affiliate to any liability under Sections
406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the
Code, or under any agreement or other instrument pursuant to
which any Credit Party or any ERISA Affiliate has agreed or
is required to indemnify any person against any such
liability.
(j) Ownership. There shall occur a Change of Control.
(k) Note Purchase Agreements. There shall occur a
default or an event of default under (i) any of the Note
Purchase Agreements, (ii) the Senior Notes or (iii) any
other related agreement, document, or instrument issued or
delivered in connection with any of the Note Purchase
Agreements.
9.2 Acceleration; Remedies.
Upon the occurrence and during the continuance of an Event
of Default and at any time thereafter unless and until such Event
of Default has been waived in writing by the Required Lenders (or
the Lenders as may be required hereunder), the Administrative
Agent shall, upon the request and direction of the Required
Lenders, by written notice to the Borrower, take the following
actions without prejudice to the rights of the Agents or any
Lender to enforce its claims against the Credit Parties, except
as otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the
Commitments terminated whereupon the Commitments shall be
immediately terminated.
(b) Acceleration of Loans. Declare the unpaid
principal of and any accrued interest in respect of all
Loans, any reimbursement obligations arising from drawings
under Letters of Credit and any and all other indebtedness
or obligations of any and every kind owing by a Credit Party
to any of the Lenders hereunder to be due whereupon the same
shall be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which
are hereby waived by the Credit Parties.
(c) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice or upon
the occurrence of an Event of Default under Section 9.1(f),
it will immediately pay) to the Administrative Agent
additional cash to be held by the Administrative Agent, for
the benefit of the Lenders, in a cash collateral account as
additional security for the LOC Obligations in respect of
subsequent drawings under all then outstanding Letters of
Credit in an amount equal to the maximum aggregate amount
which may be drawn under all Letters of Credits then
outstanding.
(d) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit
Documents, including, without limitation, all rights and
remedies existing under the Collateral Documents, all rights
and remedies against a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified
in Section 9.1(f) shall occur, then the Commitments shall
automatically terminate and all Loans, all reimbursement
obligations under Letters of Credit, all accrued interest in
respect thereof, all cash necessary to collateralize the LOC
Obligations pursuant to Section 9.2(c), all accrued and unpaid
fees and other indebtedness or obligations owing to the Lenders
hereunder shall immediately become due and payable without the
giving of any notice or other action by the Agents or the
Lenders, which notice or other action is expressly waived by the
Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily
with the Administrative Agent, each Lender has, to the extent
permitted by law, a separate right of payment and shall be
considered a separate "creditor" holding a separate "claim"
within the meaning of Section 101(5) of the Bankruptcy Code or
any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit
Agreement, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by an Agent
or any Lender on account of amounts outstanding under any of the
Credit Documents or in respect of the Collateral shall be paid
over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Agents or any of the Lenders in
connection with enforcing the rights of the Lenders under
the Credit Documents and any protective advances made by any
Agent or any of the Lenders with respect to the Collateral
under or pursuant to the terms of the Collateral Documents;
SECOND, to payment of any fees owed to the Agents, the
Issuing Lender or any Lender;
THIRD, to the payment of all accrued interest payable
to the Lenders hereunder and all other obligations (other
than those obligations to be paid pursuant to clause
"FOURTH" below) which shall have become due and payable
under the Credit Documents and not repaid pursuant to
clauses "FIRST" and "SECOND" above;
FOURTH, to the payment of the outstanding principal
amount of the Loans and unreimbursed drawings under Letters
of Credit, to the payment or cash collateralization of the
outstanding LOC Obligations and to any principal amounts
outstanding under Hedging Agreements between a Credit Party
and a Lender, pro rata as set forth below; and
FIFTH, the payment of the surplus, if any, to whoever
may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be
applied in the numerical order provided until exhausted prior to
application to the next succeeding category; (b) each of the
Lenders shall receive an amount equal to its pro rata share
(based on the proportion that the then outstanding Loans, LOC
Obligations and obligations under Hedging Agreements held by such
Lender bears to the aggregate then outstanding Loans, LOC
Obligations and obligations under Hedging Agreements) of amounts
available to be applied; and (c) to the extent that any amounts
available for distribution pursuant to clause "FOURTH" above are
attributable to the issued but undrawn amount of outstanding
Letters of Credit, such amounts shall be held by the
Administrative Agent in a cash collateral account and applied (x)
first, to reimburse the Issuing Lender from time to time for any
drawings under such Letters of Credit and (y) then, following the
expiration of all Letters of Credit, to all other obligations of
the types described in clause "FOURTH" above in the manner
provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
(a) Each Lender hereby designates and appoints Bank of
America, N.A. as Administrative Agent and Collateral Agent
of such Lender to act as specified herein and the other
Credit Documents, and each such Lender hereby authorizes the
Agents, as the agents for such Lender, to take such action
on its behalf under the provisions of this Credit Agreement
and the other Credit Documents and to exercise such powers
and perform such duties as are expressly delegated by the
terms hereof and of the other Credit Documents, together
with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere
herein and in the other Credit Documents, the Agents shall
not have any duties or responsibilities, except those
expressly set forth herein and therein, or any fiduciary
relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or
liabilities shall be read into this Credit Agreement or any
of the other Credit Documents, or shall otherwise exist
against the Agents. The provisions of this Section are
solely for the benefit of the Agents and the Lenders and
none of the Credit Parties shall have any rights as a third
party beneficiary of the provisions hereof. In performing
its functions and duties under this Credit Agreement and the
other Credit Documents, each Agent shall act solely as an
agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation or relationship of
agency or trust with or for any Credit Party.
(b) Each Lender hereby consents to and approves the
terms of the Intercreditor Agreement, a copy of which is
attached hereto as Schedule 10.1(b). By execution hereof,
the Lenders acknowledge the terms of the Intercreditor
Agreement and agree to be bound by the terms thereof and
further authorize and direct the Administrative Agent to
enter into the Intercreditor Agreement on behalf of all the
Lenders.
10.2 Delegation of Duties.
Each Agent may execute any of its duties hereunder or under
the other Credit Documents by or through agents or attorneys-in-
fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. An Agent shall not be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10.3 Exculpatory Provisions.
Neither the Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be
liable for any action lawfully taken or omitted to be taken by it
or such Person under or in connection herewith or in connection
with any of the other Credit Documents (except for its or such
Person's own gross negligence or willful misconduct) or
responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any of the
Credit Parties contained herein or in any of the other Credit
Documents or in any certificate, report, document, financial
statement or other written or oral statement referred to or
provided for in, or received by an Agent under or in connection
herewith or in connection with the other Credit Documents, or
enforceability or sufficiency therefor of any of the other Credit
Documents, or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agents shall not be
responsible to any Lender for the effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this
Credit Agreement, or any of the other Credit Documents or for any
representations, warranties, recitals or statements made herein
or therein or made by a Borrower or any Credit Party in any
written or oral statement or in any financial or other
statements, instruments, reports, certificates or any other
documents in connection herewith or therewith furnished or made
by an Agent to the Lenders or by or on behalf of the Credit
Parties to an Agent or any Lender or be required to ascertain or
inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein
or therein or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or of the existence or possible
existence of any Default or Event of Default or to inspect the
properties, books or records of the Credit Parties. The Agents
are not trustees for the Lenders and owe no fiduciary duty to the
Lenders.
10.4 Reliance on Communications.
Each of the Agents shall be entitled to rely, and shall be
fully protected in relying, upon any note, writing, resolution,
notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order
or other document or conversation reasonably believed by it to be
genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal
counsel (including, without limitation, counsel to any of the
Credit Parties, independent accountants and other experts
selected by such Agent with reasonable care). The Agents may
deem and treat the Lenders as the owner of its interests
hereunder for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Administrative Agent in accordance with Section 11.3(b). Each of
the Agents shall be fully justified in failing or refusing to
take any action under this Credit Agreement or under any of the
other Credit Documents unless it shall first receive such advice
or concurrence of the Required Lenders as it deems appropriate or
it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
The Agents shall in all cases be fully protected in acting, or in
refraining from acting, hereunder or under any of the other
Credit Documents in accordance with a request of the Required
Lenders (or to the extent specifically provided in Section 11.6,
all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders
(including their successors and assigns).
10.5 Notice of Default.
An Agent shall not be deemed to have knowledge or notice of
the occurrence of any Default or Event of Default hereunder
unless such Agent has received notice from a Lender or a Credit
Party referring to the Credit Document, describing such Default
or Event of Default and stating that such notice is a "notice of
default." In the event that the Administrative Agent receives
such a notice, the Administrative Agent shall give prompt notice
thereof to the Lenders. The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders and as is
permitted by the Credit Documents.
10.6 Non-Reliance on Agent and Other Lenders.
Each Lender expressly acknowledges that neither the Agents,
BAS nor any of their officers, directors, employees, agents,
attorneys-in-fact or affiliates has made any representations or
warranties to it and that no act by an Agent or any affiliate
thereof hereinafter taken, including any review of the affairs of
any Credit Party, shall be deemed to constitute any
representation or warranty by such Agent to any Lender. Each
Lender represents to the Agents and BAS that it has,
independently and without reliance upon the Agents or BAS or any
other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property,
financial and other conditions, prospects and creditworthiness of
the Credit Parties and made its own decision to make its Loans
hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon
the Agents or BAS or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Credit
Agreement, and to make such investigation as it deems necessary
to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and
creditworthiness of the Credit Parties. Except for notices,
reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Agents and
BAS shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the
business, operations, assets, property, financial or other
conditions, prospects or creditworthiness of the Credit Parties
which may come into the possession of the Agents, BAS or any of
their officers, directors, employees, agents, attorneys-in-fact
or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without
limiting the obligation of the Borrower to do so), ratably
according to their respective Commitments (or if the Commitments
have expired or been terminated, in accordance with the
respective principal amounts of outstanding Loans and
Participation Interest of the Lenders), from and against any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of
any kind whatsoever which may at any time (including without
limitation at any time following payment in full of the Credit
Party Obligations) be imposed on, incurred by or asserted against
such Agent in its capacity as agent in any way relating to or
arising out of this Credit Agreement or the other Credit
Documents or any documents contemplated by or referred to herein
or therein or the transactions contemplated hereby or thereby or
any action taken or omitted by such Agent under or in connection
with any of the foregoing; provided that no Lender shall be
liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of such Agent as determined by a
court of competent jurisdiction. If any indemnity furnished to
an Agent for any purpose shall, in the opinion of such Agent, be
insufficient or become impaired, such Agent may call for
additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished.
The agreements in this Section shall survive the payment of the
Credit Party Obligations and all other amounts payable hereunder
and under the other Credit Documents.
10.8 Agent in Its Individual Capacity.
Each Agent and its affiliates may make loans to, accept
deposits from and generally engage in any kind of business with
the Borrower or any other Credit Party as though such Agent were
not an Agent hereunder. With respect to the Loans made and
Letters of Credit issued and all obligations owing to it, each
Agent shall have the same rights and powers under this Credit
Agreement as any Lender and may exercise the same as though it
was not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
10.9 Successor Agent.
Any Agent may, at any time, resign upon 20 days written
notice to the Lenders. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Agent;
provided, however, that in the absence of any continuing Event of
Default, such appointment of a successor Agent shall be consented
to by the Borrower, which consent shall not be unreasonably
withheld. Upon the acceptance of any appointment as an Agent
hereunder by a successor, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as an
Agent, as appropriate, under this Credit Agreement and the other
Credit Documents and the provisions of this Section 10.9 shall
inure to its benefit as to any actions taken or omitted to be
taken by it while it was an Agent under this Credit Agreement.
If no successor Administrative Agent has accepted appointment as
Administrative Agent within sixty (60) days after the retiring
Administrative Agent's giving notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless become
effective and the Lenders shall perform all duties of the
Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor Administrative Agent as
provided for above. Likewise, if no successor Collateral Agent
has accepted appointment as Collateral Agent within sixty (60)
days after the retiring Collateral Agent's giving notice of
resignation, the retiring Collateral Agent's resignation shall
nevertheless become effective and the Lenders shall perform all
duties of the Collateral Agent under the Collateral Documents
until such time, if any, as the Required Lenders appoint a
successor Collateral Agent as provided for above. Subject to the
foregoing terms of this Section 10.9, there shall at all times be
a Person or Persons serving as Administrative Agent and
Collateral Agent hereunder.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices
and other communications shall have been duly given and shall be
effective (a) when delivered, (b) when transmitted via telecopy
(or other facsimile device) to the number set out below, (c) the
Business Day following the day on which the same has been
delivered prepaid (or pursuant to an invoice arrangement) to a
reputable national overnight air courier service, or (d) the
third Business Day following the day on which the same is sent by
certified or registered mail, postage prepaid, in each case to
the respective parties at the address or telecopy numbers set
forth on Schedule 11.1, or at such other address as such party
may specify by written notice to the other parties hereto.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default and the
commencement of remedies described in Section 9.2, each Lender is
authorized at any time and from time to time, without
presentment, demand, protest or other notice of any kind (all of
which rights being hereby expressly waived), to set-off and to
appropriate and apply any and all deposits (general or special)
and any other indebtedness at any time held or owing by such
Lender (including, without limitation, branches, agencies or
Affiliates of such Lender wherever located) to or for the credit
or the account of any Credit Party against obligations and
liabilities of such Credit Party to the Lenders hereunder, under
the Notes, the other Credit Documents or otherwise, irrespective
of whether the Administrative Agent or the Lenders shall have
made any demand hereunder and although such obligations,
liabilities or claims, or any of them, may be contingent or
unmatured or otherwise fully secured, and any such set-off shall
be deemed to have been made immediately upon the occurrence of an
Event of Default even though such charge is made or entered on
the books of such Lender subsequent thereto. The Credit Parties
hereby agree that any Person purchasing a participation in the
Loans and Commitments hereunder pursuant to Section 11.3(e) or
3.9 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender
hereunder. Each Lender hereby agrees that any set-off affected
pursuant to this Section 11.2 shall be subject to the terms of
the Intercreditor Agreement.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto;
provided that none of the Credit Parties may assign and
transfer any of its interests (except as permitted by
Section 8.4 or 8.5) without the prior written consent of the
Lenders; and provided further that the rights of each Lender
to transfer, assign or grant participations in its rights
and/or obligations hereunder shall be limited as set forth
below in this Section 11.3.
(b) Assignments. Each Lender may assign to one or
more Eligible Assignees all or a portion of its rights and
obligations under this Credit Agreement (including, without
limitation, all or a portion of its Loans, its Notes, and
its Commitments); provided, however, that:
(i) each such assignment shall be to an Eligible
Assignee;
(ii) except in the case of an assignment to
another Lender or an assignment of all of a Lender's
rights and obligations under this Credit Agreement, any
such partial assignment shall be in an amount at least
equal to $5,000,000 (or, if less, the remaining amount
of the Commitment being assigned by such Lender) or an
integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall
be of a constant, and not varying, percentage of all of
its rights and obligations under this Credit Agreement
and the Notes; and
(iv) the parties to such assignment shall execute
and deliver to the Administrative Agent for its
acceptance an Assignment Agreement in substantially the
form of Exhibit 11.3(b), together with a processing fee
from the assignor of $3,500.
Upon execution, delivery and acceptance of such Assignment
Agreement, the assignee thereunder shall be a party hereto
and, to the extent of such assignment, have the obligations,
rights, and benefits of a Lender hereunder and the assigning
Lender shall, to the extent of such assignment, relinquish
its rights and be released from its obligations under this
Credit Agreement. Upon the consummation of any assignment
pursuant to this Section 11.3(b), the assignor, the
Administrative Agent and the Borrower shall make appropriate
arrangements so that, if required, new Notes are issued to
the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America
or a state thereof, it shall deliver to the Borrower and the
Administrative Agent certification as to exemption from
deduction or withholding of taxes in accordance with Section
3.14.
By executing and delivering an assignment agreement in
accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties
hereto as follows: (A) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and the
assignee warrants that it is an Eligible Assignee; (B)
except as set forth in clause (A) above, such assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit
Agreement, any of the other Credit Documents or any other
instrument or document furnished pursuant hereto or thereto,
or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement,
any of the other Credit Documents or any other instrument or
document furnished pursuant hereto or thereto or the
financial condition of any Credit Party or the performance
or observance by any Credit Party of any of its obligations
under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished
pursuant hereto or thereto; (C) such assignee represents and
warrants that it is legally authorized to enter into such
assignment agreement; (D) such assignee confirms that it has
received a copy of this Credit Agreement, the other Credit
Documents and such other documents and information as it has
deemed appropriate to make its own credit analysis and
decision to enter into such assignment agreement; (E) such
assignee will independently and without reliance upon the
Agents, such assigning Lender or any other Lender, and based
on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Credit
Agreement and the other Credit Documents; (F) such assignee
appoints and authorizes the Agents to take such action on
its behalf and to exercise such powers under this Credit
Agreement or any other Credit Document as are delegated to
the Agents by the terms hereof or thereof, together with
such powers as are reasonably incidental thereto; and (G)
such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this
Credit Agreement and the other Credit Documents are required
to be performed by it as a Lender.
(c) Register. The Administrative Agent shall maintain
a copy of each Assignment Agreement delivered to and
accepted by it and a register for the recordation of the
names and addresses of the Lenders and the Commitment of,
and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agents and the Lenders
may treat each Person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Credit
Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(d) Acceptance. Upon its receipt of an Assignment
Agreement executed by the parties thereto, together with any
Note subject to such assignment and payment of the
processing fee, the Administrative Agent shall, if such
Assignment Agreement has been completed and is in
substantially the form of Exhibit 11.3(b) hereto, (i) accept
such Assignment Agreement, (ii) record the information
contained therein in the Register and (iii) give prompt
notice thereof to the parties thereto.
(e) Participations. Each Lender may sell
participations to one or more Persons in all or a portion of
its rights, obligations or rights and obligations under this
Credit Agreement (including all or a portion of its
Commitments and its Loans); provided, however, that (i)
such Lender's obligations under this Credit Agreement shall
remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance
of such obligations, (iii) the participant shall be
entitled to the benefit of the yield protection provisions
contained in Sections 3.10 through 3.15, inclusive, and the
right of set-off contained in Section 11.2, (iv) the
Borrower shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and
obligations under this Credit Agreement, and such Lender
shall retain the sole right to enforce the obligations of
the Borrower relating to its Loans and its Notes and to
approve any amendment, modification, or waiver of any
provision of this Credit Agreement (other than amendments,
modifications, or waivers decreasing the amount of principal
of or the rate at which interest is payable on such Loans or
Notes, extending any scheduled principal payment date or
date fixed for the payment of interest on such Loans or
Notes, or extending its Commitments) and (v) such Lender
shall provide written notice of any participation to the
Borrower and the Administrative Agent.
(f) Nonrestricted Assignments. Notwithstanding any
other provision set forth in this Credit Agreement, any
Lender may at any time assign and pledge all or any portion
of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any
Operating Circular issued by such Federal Reserve Bank. The
foregoing assignments and pledges shall not be subject to
the provisions of Section 11.3(b). No such assignment or
pledge shall release the assigning Lender from its
obligations hereunder.
(g) Information. Any Lender may furnish any
information concerning the Borrower or any of its
Subsidiaries in the possession of such Lender from time to
time to assignees and participants (including prospective
assignees and participants).
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of an Agent or any Lender in
exercising any right, power or privilege hereunder or under any
other Credit Document and no course of dealing between the
Borrower or any Credit Party and any Agent or any Lender shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies provided herein
are cumulative and not exclusive of any rights or remedies which
any Agent or any Lender would otherwise have. No notice to or
demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the
Agents or the Lenders to any other or further action in any
circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
(a) The Credit Parties jointly and severally agree to:
(a) pay on demand all reasonable out-of-pocket costs and
expenses of (i) the Agents in connection with (A) the
syndication, negotiation, preparation, execution and
delivery and administration of this Credit Agreement and the
other Credit Documents and the other documents and
instruments referred to therein (including, without
limitation, the reasonable fees and expenses of Moore & Van
Allen, special counsel to the Agents and the fees and
expenses of counsel for the Agents in connection with
collateral or foreign issues but not the fees and expenses
of any other Lender's counsel), and (B) any amendment,
waiver or consent relating hereto and thereto including, but
not limited to, any such amendments, waivers or consents
resulting from or related to any work-out, renegotiation or
restructure relating to the performance by the Credit
Parties under this Credit Agreement and (ii) the Agents and
the Lenders in connection with (A) enforcement of the Credit
Documents and the documents and instruments referred to
therein, including, without limitation, in connection with
any such enforcement, the reasonable fees and disbursements
of counsel for the Agents and each of the Lenders, and (B)
any bankruptcy or insolvency proceeding of a Credit Party or
any of its Subsidiaries and (b) indemnify each Agent and
each Lender and their respective affiliates, controlling
persons, officers, directors, employees, representatives and
agents (each an "indemnitee") from and hold each of them
harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of,
or arising out of, or in any way related to, or by reason
of, any investigation, litigation or other proceeding
(whether or not any Agent or Lender or other indemnitee is a
party thereto) related to (i) the entering into and/or
performance of any Credit Document or the use of proceeds of
any Loans (including other Extensions of Credit) hereunder
or the consummation of any other transactions contemplated
in any Credit Document, including, without limitation, the
reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other
proceeding (but excluding any such losses, liabilities,
claims, damages or expenses to the extent incurred by reason
of gross negligence or willful misconduct on the part of the
Person to be indemnified), (ii) any Environmental Claim
(except to the extent such claim arises from the gross
negligence or willful misconduct of any indemnified party)
and (iii) any claims for Non-Excluded Taxes.
(b) Without prejudice to the survival of any other
agreement of the Credit Parties hereunder, the agreements
and obligations of the Credit Parties contained in this
Section 11.5 shall survive the repayment of the Loans, LOC
Obligations and other obligations under the Credit Documents
and the termination of the Commitments hereunder.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document
nor any of the terms hereof or thereof may be amended, changed,
waived, discharged or terminated unless such amendment, change,
waiver, discharge or termination is in writing and signed by the
Required Lenders and the Borrower; provided that no such
amendment, change, waiver, discharge or termination shall without
the consent of each Lender affected thereby:
(a) extend the Maturity Date or the time of payment of
any reimbursement obligation arising from drawings under
Letters of Credit;
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the
applicability of any post-default increase in interest
rates) thereon or fees hereunder;
(c) reduce or waive the principal amount of any Loan
or of any reimbursement obligation, or any portion thereof,
arising from drawings under Letters of Credit;
(d) increase or extend any Commitment of a Lender (it
being understood and agreed that a waiver of any Default or
Event of Default or a waiver of any mandatory reduction in
the Commitments shall not constitute a change in the terms
of any Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder;
(f) release the Borrower from its obligations or
release all or substantially all of the other Credit Parties
from their respective obligations under the Credit
Documents;
(g) amend, modify or waive any provision of this
Section 11.6, Sections 3.4(a), 3.4(b)(i), 3.7, 3.8, 9.2(a),
11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders; or
(i) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under (or in
respect of) the Credit Documents.
Notwithstanding the above, (i) no provisions of Section 10 may be
amended or modified without the consent of the Agents, (ii) no
provision of Sections 2.2 or 3.4(c) may be amended or modified
without the consent of the Issuing Lender or (iii) no provision
of Section 2.4 may be amended without the consent of the
Swingline Lender.
Notwithstanding the fact that the consent of all the Lenders is
required in certain circumstances as set forth above, (A) each
Lender is entitled to vote as such Lender sees fit on any
reorganization plan that affects the Loans or the Letters of
Credit, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersede the unanimous
consent provisions set forth herein and (B) the Required Lenders
may consent to allow a Credit Party to use cash collateral in the
context of a bankruptcy or insolvency proceeding.
11.7 Counterparts/Telecopy.
This Credit Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall
be an original, but all of which shall constitute one and the
same instrument. Delivery of executed counterparts by telecopy
shall be as effective as an original and shall constitute a
representation that an original will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the
meaning or construction of any provision of this Credit
Agreement.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a
Defaulting Lender then notwithstanding the provisions of Section
11.6 it shall not be entitled to vote on any matter requiring the
consent of the Required Lenders or to object to any matter
requiring the consent of all the Lenders; provided, however, that
all other benefits and obligations under the Credit Documents
shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations
and Warranties.
All indemnities set forth herein and all representations and
warranties made herein shall survive the execution and delivery
of this Credit Agreement, the making of the Loans, the issuance
of the Letters of Credit and the repayment of the Loans, LOC
Obligations and other obligations and the termination of the
Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
SOUTH CAROLINA. Any legal action or proceeding with respect
to this Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina or of
the United States for the Western District of North
Carolina, and, by execution and delivery of this Credit
Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each
Credit Party further irrevocably consents to the service of
process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to it at the
address for notices pursuant to Section 11.1, such service
to become effective 10 days after such mailing. Nothing
herein shall affect the right of a Lender to serve process
in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against a Credit Party
in any other jurisdiction. Each Credit Party agrees that a
final judgment in any action or proceeding shall be
conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law;
provided that nothing in this Section 11.11(a) is intended
to impair a Credit Party's right under applicable law to
appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any
objection which it may now or hereafter have to the laying
of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Credit Agreement
or any other Credit Document brought in the courts referred
to in subsection (a) hereof and hereby further irrevocably
waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
11.12 Waiver of Jury Trial; Waiver of Consequential
Damages.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT,
ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY. Each Credit Party agrees not to assert any
claim against the Agents, the Issuing Lender, any Lender, any of
their Affiliates, or any of their respective directors, officers,
employees, attorneys or agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out
of or otherwise relating to any of the transactions contemplated
herein.
11.13 Time.
All references to time herein shall be references to Eastern
Standard Time or Eastern Daylight time, as the case may be,
unless specified otherwise.
11.14 Severability.
If any provision of any of the Credit Documents is
determined to be illegal, invalid or unenforceable, such
provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed
without giving effect to the illegal, invalid or unenforceable
provisions.
11.15 Further Assurances.
The Credit Parties agree, upon the request of an Agent, to
promptly take such actions, as reasonably requested, as is
necessary to carry out the intent of this Credit Agreement and
the other Credit Documents, including, but not limited to, such
actions as are necessary to ensure that the Collateral Agent, for
the benefit of the Secured Parties, has a perfected security
interest in the Collateral subject to no Liens other than
Permitted Liens.
11.16 Entirety.
This Credit Agreement together with the other Credit
Documents and the Fee Letter represent the entire agreement of
the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including
any commitment letters or correspondence relating to the Credit
Documents or the transactions contemplated herein and therein.
11.17 Binding Effect; Continuing Agreement.
(a) This Credit Agreement shall become effective at
such time when all of the conditions set forth in Section
5.1 have been satisfied or waived by the Administrative
Agent (with the consent of the Required Lenders) and the
Administrative Agent shall have received copies hereof
(telefaxed or otherwise) which, when taken together, bear
the signatures of Borrower, the Guarantors and the Lenders,
and thereafter this Credit Agreement shall be binding upon
and inure to the benefit of the Borrower, the Guarantors,
the Agents and each Lender and their respective successors
and assigns.
(b) This Credit Agreement shall be a continuing
agreement and shall remain in full force and effect until
all Loans, LOC Obligations, interest, fees and other Credit
Party Obligations (other than any obligations which by the
terms thereof are stated to survive the termination of the
Credit Documents) have been paid in full and all Commitments
and Letters of Credit have been terminated. Upon
termination, the Credit Parties shall have no further
obligations (other than the indemnification provisions that
survive) under the Credit Documents and the Collateral Agent
shall, at the request and expense of the Borrower, deliver
all Collateral in its possession to the Borrower and release
all Liens on Collateral; provided that should any payment,
in whole or in part, of the Credit Party Obligations be
rescinded or otherwise required to be restored or returned
by an Agent or any Lender, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise,
then the Credit Documents shall automatically be reinstated
and all Liens of the Lenders shall reattach to the
Collateral and all amounts required to be restored or
returned and all costs and expenses incurred by an Agent or
Lender in connection therewith shall be deemed included as
part of the Credit Party Obligations.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Each of the parties hereto has caused a counterpart of this
Credit Agreement to be duly executed and delivered as of the
date first above written.
BORROWER:
RYAN'S FAMILY STEAK HOUSES, INC.,
a South Carolina corporation
By:
Name:
Title:
GUARANTORS:
BIG R PROCUREMENT COMPANY, LLC, a
Delaware limited liability company
By: RYAN'S FAMILY STEAK HOUSES,
INC., a South Carolina corporation,
its sole manager
By:
Name:
Title:
RYAN'S FAMILY STEAK HOUSES TLC, INC., a
Delaware corporation
By:
Name:
Title:
RYAN'S FAMILY STEAK HOUSES
EAST, INC., a Delaware corporation
By:
Name:
Title:
RYAN'S PROPERTIES, INC., a Delaware
corporation
By:
Name:
Title:
RYMARK HOLDINGS, INC., a Delaware
corporation
By:
Name:
Title:
RYAN'S HOOSIER GROUP, LP, a South
Carolina limited partnership
By: RYAN'S FAMILY STEAK HOUSES
TLC, INC., a Delaware corporation,
its sole
general partner
By:
Name:
Title:
RYAN'S MEGA MANUFACTURING GROUP, LP, a
South Carolina limited partnership
By: RYAN'S FAMILY STEAK HOUSES
TLC, INC., a Delaware corporation,
its sole
general partner
By:
Name:
Title:
LENDERS:
BANK OF AMERICA, N.A.,
in its capacity as
Administrative Agent
By:
Name:
Title:
BANK OF AMERICA, N.A., individually
in its capacity as a Lender
By:
Name:
Title:
FIRST UNION NATIONAL BANK, in its
capacity as Syndication Agent and in its
capacity as a Lender
By:
Name:
Title:
WACHOVIA BANK, N.A., in its capacity as
Documentation Agent and in its capacity
as a
Lender
By:
Name:
Title:
SUNTRUST BANK, ATLANTA, in its capacity
as Senior Managing Agent and in its
capacity
as a Lender
By:
Name:
Title:
SOUTHTRUST BANK, N.A.
By:
Name:
Title:
HIBERNIA NATIONAL BANK
By:
Name:
Title:
BANKBOSTON, N.A.
By:
Name:
Title:
Exhibit 10.25
CTDOCS2:1349920.13
RYAN'S FAMILY STEAK HOUSES, INC.
Note Purchase Agreement
Dated as of January 28, 2000
$75,000,000 9.02% Senior Notes due January 28, 2008
TABLE OF CONTENTS
1. AUTHORIZATION OF NOTES. 1
2. SALE AND PURCHASE OF NOTES. 1
3. CLOSING. 2
4. CONDITIONS TO CLOSING. 2
4.1. REPRESENTATIONS AND WARRANTIES. 2
4.2. PERFORMANCE; NO DEFAULT. 2
4.3. COMPLIANCE CERTIFICATES. 2
4.4. OPINIONS OF COUNSEL. 3
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC. 3
4.6. SALE OF OTHER NOTES. 3
4.7. PAYMENT OF SPECIAL COUNSEL FEES 3
4.8. PRIVATE PLACEMENT NUMBER. 3
4.9. CHANGES IN CORPORATE STRUCTURE. 4
4.10. PROCEEDINGS AND DOCUMENTS. 4
4.11. SUBSIDIARY GUARANTEE; CONTRIBUTION AGREEMENT. 4
4.12. INTERCREDITOR AGREEMENT. 4
4.13. PLEDGE AGREEMENT. 4
4.14. CREDIT FACILITY. 5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 5
5.1. ORGANIZATION; POWER AND AUTHORITY. 5
5.2. AUTHORIZATION, ETC. 5
5.3. DISCLOSURE. 6
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES;
AFFILIATES. 6
5.5. FINANCIAL STATEMENTS. 7
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. 7
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC. 8
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.8
5.9. TAXES. 8
5.10. TITLE TO PROPERTY; LEASES. 8
5.11. LICENSES, PERMITS, ETC. 9
5.12. COMPLIANCE WITH ERISA. 9
5.13. PRIVATE OFFERING BY THE COMPANY. 10
5.14. USE OF PROCEEDS; MARGIN REGULATIONS. 10
5.15. EXISTING DEBT AND LIENS; FUTURE LIENS. 11
5.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC. 11
5.17. STATUS UNDER CERTAIN STATUTES. 11
5.18. ENVIRONMENTAL MATTERS. 11
5.19. COLLATERAL. 12
5.20. YEAR 2000 MATTERS. 12
6. REPRESENTATIONS OF THE PURCHASER. 12
6.1. PURCHASE FOR INVESTMENT. 12
6.2. SOURCE OF FUNDS 13
7. INFORMATION AS TO COMPANY 14
7.1. FINANCIAL AND BUSINESS INFORMATION 14
7.2. OFFICER'S/ACCOUNTANT'S CERTIFICATE. 17
7.3. INSPECTION. 18
8. PREPAYMENT OF THE NOTES 19
8.1. REQUIRED PRINCIPAL PAYMENTS. 19
8.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT 19
8.3. CHANGE IN CONTROL. 19
8.4. ALLOCATION OF PARTIAL PREPAYMENTS. 21
8.5. MATURITY; SURRENDER, ETC. 21
8.6. NO OTHER OPTIONAL PREPAYMENTS OR PURCHASE OF NOTES. 21
8.7. MAKE-WHOLE AMOUNT. 21
9. AFFIRMATIVE COVENANTS. 23
9.1. COMPLIANCE WITH LAW. 23
9.2. INSURANCE. 23
9.3. MAINTENANCE OF PROPERTIES. 23
9.4. PAYMENT OF TAXES AND CLAIMS. 23
9.5. CORPORATE EXISTENCE, ETC. 24
9.6. COVENANT TO SECURE NOTES EQUALLY. 24
9.7 COVENANT RELATING TO ADDITIONAL SUBSIDIARIES. 24
9.8 OWNERSHIP OF SUBSIDIARY GUARANTORS. 26
9.9 PARI PASSU RANKING. 26
9.10 COLLATERAL. 27
9.11 YEAR 2000 COMPLIANT. 27
10. NEGATIVE COVENANTS. 27
10.1. CONSOLIDATED NET WORTH. 27
10.2. LEVERAGE RATIO. 28
10.3. PRIORITY DEBT. 28
10.4. FIXED CHARGE COVERAGE RAT IO. 28
10.5. RESTRICTED PAYMENTS AND RESTRICTED INVESTMENTS. 28
10.6. LIENS 28
10.7. TRANSACTIONS WITH AFFILIATES. 30
10.8. MERGER, CONSOLIDATION, SALES OF SUBSTANTIALLY ALL ASSETS. 30
10.9. SALES OF ASSETS. 31
10.10. NATURE OF BUSINESS. 32
10.11. DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES. 32
10.12. NO RESTRICTION ON AMENDMENTS OR PREPAYMENTS. 33
11. EVENTS OF DEFAULT. 33
12. REMEDIES ON DEFAULT, ETC. 36
12.1. ACCELERATION. 36
12.2. OTHER REMEDIES. 37
12.3. RESCISSION. 37
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. 38
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES. 38
13.1. REGISTRATION OF NOTES. 38
13.2. TRANSFER AND EXCHANGE OF NOTES. 38
13.3. REPLACEMENT OF NOTES. 39
14. PAYMENTS ON NOTES. 39
14.1. PLACE OF PAYMENT. 39
14.2. HOME OFFICE PAYMENT. 39
15. EXPENSES, ETC. 40
15.1. TRANSACTION EXPENSES. 40
15.2. SURVIVAL. 40
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.40
17. AMENDMENT AND WAIVER. 41
17.1. REQUIREMENTS. 41
17.2. SOLICITATION OF HOLDERS OF NOTES 41
17.3. BINDING EFFECT, ETC. 42
17.4. NOTES HELD BY COMPANY, ETC. 42
18. NOTICES. 42
19. REPRODUCTION OF DOCUMENTS. 43
20. CONFIDENTIAL INFORMATION. 43
21. SUBSTITUTION OF PURCHASER. 44
22. MISCELLANEOUS. 44
22.1. SUCCESSORS AND ASSIGNS. 44
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS. 44
22.3. SEVERABILITY. 44
22.4. CONSTRUCTION. 45
22.5. COUNTERPARTS. 45
22.6. GOVERNING LAW. 45
22.7. GENERAL INTEREST PROVISIONS. 45
22.8. WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION; ETC. 46
22.9. RIGHT OF SET-OFF. 47
22.10. ACCEPTANCE OF INTERCREDITOR AGREEMENT. 48
22.11. FURTHER ASSURANCES. 48
SCHEDULE A Information Relating to Purchasers
SCHEDULE B Defined Terms
SCHEDULE C Exclusions from Asset Sales
SCHEDULE D Payment Instructions at Closing
SCHEDULE 4.9 Changes in Corporate Structure
SCHEDULE 4.11 Initial Subsidiary Guarantors
SCHEDULE 5.3 Disclosure Materials
SCHEDULE 5.4 Subsidiaries of the Company and Ownership of
Subsidiary Stock
SCHEDULE 5.5 Financial Statements
SCHEDULE 5.8 Certain Litigation
SCHEDULE 5.11 Patents, etc.
SCHEDULE 5.14 Use of Proceeds
SCHEDULE 5.15 Existing Debt and Liens; Future Liens
SCHEDULE 5.20 Year 2000 Readiness Disclosure
EXHIBIT 1 Form of 9.02% Senior Note due January 28, 2008
EXHIBIT 4.4(a) Form of Opinion of Counsel to the Company
EXHIBIT 4.4(b) Form of Opinion of Special Counsel to the
Purchasers
EXHIBIT 4.11(a) Form of Subsidiary Guarantee
EXHIBIT 4.11(b) Form of Contribution Agreement
EXHIBIT 4.12 Form of Intercreditor Agreement
EXHIBIT 4.13 Form of Pledge Agreement
EXHIBIT 9.7 Form of Joinder Agreement
RYAN'S FAMILY STEAK HOUSES, INC.
405 Lancaster Avenue
Greer, South Carolina 29650
$75,000,000
9.02% Senior Notes due January 28, 2008
Dated as of January 28, 2000
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
RYAN'S FAMILY STEAK HOUSES, INC., a South Carolina
corporation (the "Company"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $75,000,000
aggregate principal amount of its 9.02% Senior Notes due January
28 2008 (the "Notes", such term to include any such notes issued
in substitution therefor pursuant to Section 13 of this Agreement
or the Other Agreements (as hereinafter defined)). The Notes shall
be substantially in the form set out in Exhibit 1, with such
changes therefrom, if any, as may be approved by you and the
Company. Certain capitalized terms used in this Agreement are
defined in Schedule B; references to "Sections" are, unless
otherwise specified, to Sections of this Agreement; and references
to a "Schedule" or an "Exhibit" are, unless otherwise specified,
to a Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and you will purchase from the
Company, at the Closing provided for in Section 3, Notes in the
principal amount specified opposite your name in Schedule A at the
purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the Company
is entering into separate Note Purchase Agreements (the "Other
Agreements") identical with this Agreement with each of the other
purchasers named in Schedule A (the "Other Purchasers"), providing
for the sale at such Closing to each of the Other Purchasers of
Notes in the principal amount specified opposite its name in
Schedule A. Your obligation hereunder and the obligations of the
Other Purchasers under the Other Agreements are several and not
joint obligations and you shall have no obligation under any Other
Agreement and no liability to any Person for the performance or
non-performance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and
the Other Purchasers shall occur at the offices of Bingham Dana
LLP, One State Street, Hartford, Connecticut 06103, at 10:00 a.m.,
Hartford time, at a closing (the "Closing") on January 28, 2000.
At the Closing the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may
request) dated the date of the Closing and registered in your name
(or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in the amount
of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to the account
number specified in Schedule D attached hereto. If at the Closing
the Company shall fail to tender such Notes to you as provided
above in this Section 3, or any of the conditions specified in
Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations
under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such non-fulfillment
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold
to you at the Closing is subject to the fulfillment to your
satisfaction, prior to or at the Closing, of the following
conditions:
4.1. Representations and Warranties.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the
Closing.
4.2. Performance; No Default.
The Company shall have performed and complied with all
agreements and conditions contained in this Agreement required to
be performed or complied with by it prior to or at the Closing and
after giving effect to the issue and sale of the Notes (and the
application of the proceeds thereof as contemplated by Schedule
5.14) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have
entered into any transaction since the date of the Memorandum that
would have been prohibited by Section 10 hereof had such Section
10 applied since such date.
4.3. Compliance Certificates.
(a) Company Officer's Certificate. The Company shall
have delivered to you an Officer's Certificate, dated the
date of the Closing, certifying that the conditions specified
in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Company Secretary's Certificate. The Company shall
have delivered to you a certificate certifying as to the
resolutions attached thereto and other corporate proceedings
relating to the authorization, execution and delivery of the
Notes, this Agreement and the other Financing Documents to
which the Company is a party.
(c) Subsidary Guarantor Secretary's Certificate. Each
Subsidiary Guarantor shall have delivered to you a
certificate certifying as to the resolutions attached thereto
and other corporate proceedings relating to the
authorization, execution and delivery of the Financing
Documents to which such Subsidiary Guarantor is a party.
4.4. Opinions of Counsel.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Wyche,
Burgess, Freeman & Parham, P.A., counsel for the Company,
substantially in the form set forth in Exhibit 4.4(a) and covering
such other matters incident to the transactions contemplated
hereby as you or your counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to
you) and (b) from Bingham Dana LLP, your special counsel in
connection with such transactions, substantially in the form set
forth in Exhibit 4.4(b) and covering such other matters incident
to such transactions as you may reasonably request.
4.5. Purchase Permitted By Applicable Law, etc.
On the date of the Closing your purchase of Notes shall
(a) be permitted by the laws and regulations of each jurisdiction
to which you are subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting
limited investments by insurance companies without restriction as
to the character of the particular investment, (b) not violate any
applicable law or regulation (including, without limitation,
Regulations T, U or X of the Board of Governors of the Federal
Reserve System) and (c) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer's Certificate
certifying as to such matters of fact as you may reasonably
specify to enable you to determine whether such purchase is so
permitted.
4.6. Sale of Other Notes.
Contemporaneously with the Closing the Company shall sell to
the Other Purchasers and the Other Purchasers shall purchase the
Notes to be purchased by them at the Closing as specified in
Schedule A.
4.7. Payment of Special Counsel Fees
Without limiting the provisions of Section 15.1, the Company
shall have paid on or before the Closing the reasonable fees,
charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the
Closing.
4.8. Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation
Office of the National Association of Insurance Commissioners)
shall have been obtained for the Notes.
4.9. Changes in Corporate Structure.
Except as specified in Schedule 4.9, the Company shall not
have changed its jurisdiction of incorporation or been a party to
any merger or consolidation and shall not have succeeded to all or
any substantial part of the liabilities of any other entity, at
any time following the date of the most recent financial
statements referred to in Schedule 5.5.
4.10. Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel
shall have received all such counterpart originals or certified or
other copies of such documents as you or they may reasonably
request.
4.11 Subsidiary Guarantee; Contribution Agreement.
(a) Subsidiary Guarantee. Each of the Subsidiaries
specified in Schedule 4.11 (collectively, together with each
other Subsidiary that shall from time to time become a party
to the Subsidiary Guarantee and their respective successors
and assigns, the "Subsidiary Guarantors"), which Subsidiaries
include all of the Domestic Subsidiaries existing on the date
of Closing and each other Subsidiary, if any, required by the
terms of the Credit Facility to Guaranty the obligations
arising under the Credit Facility, shall have executed and
delivered a subsidiary guarantee agreement in the form set
forth in Exhibit 4.11(a) (as may be amended, supplemented,
restated or otherwise modified from time to time, and
collectively with any subsidiary guarantee agreement executed
pursuant to Section 9.7, the "Subsidiary Guarantee").
(b) Contribution Agreement. The Company and each
Subsidiary Guarantor shall have executed and delivered a
contribution agreement in the form set forth in
Exhibit 4.11(b) (as may be amended, supplemented, restated or
otherwise modified from time to time, and collectively with
any contribution agreement executed pursuant to Section 9.7,
the "Contribution Agreement").
4.12. Intercreditor Agreement.
An intercreditor and collateral agency agreement
substantially in the form of Exhibit 4.12 (as amended,
supplemented, restated or otherwise modified from time to time,
the "Intercreditor Agreement") shall have been duly executed and
delivered by the Purchasers, the Collateral Agent and Bank of
America,, N.A., as administrative agent for the Lenders, and
acknowledged and agreed to by the Company and the Subsidiary
Guarantors, and a copy thereof evidencing such due execution and
delivery shall be delivered to you.
4.13. Pledge Agreement.
You shall have received a copy, certified as true and correct
by the Company, of a pledge agreement, dated as of the date
hereof, among the Company, the Subsidiary Guarantors and the
Collateral Agent, substantially in the form of Exhibit 4.13, duly
executed and delivered by each of the parties thereto. All stock
certificates, if any, and undated stock powers executed in blank
required to be executed (in the case of such stock powers) and
delivered to the Collateral Agent by the Company in accordance
with the terms of such pledge agreement on the date of Closing
shall have been so executed and delivered, and the Company shall
provide you with copies thereof, certified as true and correct by
the Company.
4.14. Credit Facility.
The Company shall have delivered to you a fully executed copy
of the Credit Facility, including all exhibits thereto, as in
effect on the date of Closing, certified as true, complete and
correct by a Responsible Officer of the Company, and such
agreement and exhibits shall be in form and substance reasonably
satisfactory to you.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to you that:
5.1. Organization; Power and Authority.
Each of the Company and its Subsidiaries
(a) is a corporation or other legal entity duly
organized, validly existing and in good standing under the
laws of its jurisdiction of organization, and
(b) (i) is duly qualified as a foreign corporation and
is in good standing, or (ii) has made all filings necessary
to become so qualified and be in good standing, in each
jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be
so qualified or in good standing could not, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Each of the Company and its Subsidiaries has the corporate power
and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it
transacts and proposes to transact, to execute and deliver the
Financing Documents to which it is a party and to perform the
provisions thereof.
5.2. Authorization, etc.
(a) The Company. The Financing Documents to which the
Company is a party have been duly authorized by all necessary
corporate action on the part of the Company, and such
Financing Documents constitute legal, valid and binding
obligations of the Company, enforceable against the Company
in accordance with their respective terms, except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(b) The Subsidiary Guarantors. The Financing Documents
to which each Subsidiary Guarantor is a party have been duly
authorized by all necessary corporate action on the part of
each such Subsidiary Guarantor, and such Financing Documents
constitute legal, valid and binding obligations of each such
Subsidiary Guarantor, enforceable against each such
Subsidiary Guarantor in accordance with their respective
terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors'
rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.3. Disclosure.
The Company, through its agent, Wachovia Securities, Inc.,
has delivered to you and each Other Purchaser a copy of a Private
Placement Memorandum, dated November 1999 (the "Memorandum"),
relating to the transactions contemplated hereby. The Memorandum
fairly describes, in all material respects, the general nature of
the business and principal properties of the Company and its
Subsidiaries. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other
writings delivered to you by or on behalf of the Company in
connection with the transactions contemplated hereby and the
financial statements listed in Schedule 5.5, taken as a whole, do
not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein
not misleading in light of the circumstances under which they were
made. Except as disclosed in the Memorandum or as expressly
described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 30,
1998 there has been no change in the financial condition,
operations, business, properties or prospects of the Company or
any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material
Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has
not been set forth herein or in the Memorandum or in the other
documents, certificates and other writings delivered to you by or
on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
5.4. Organization and Ownership of Shares of Subsidiaries;
Affiliates.
(a) Subsidiaries and Affiliates. Schedule 5.4 contains
(except as noted therein) complete and correct lists: (i) of
the Company's Subsidiaries, showing, as to each Subsidiary,
(A) the correct name thereof, (B) the jurisdiction of its
organization, (C) the number and percentage of shares of each
class of its Capital Stock or similar equity interests
outstanding owned (directly or indirectly) by the Company and
each other Subsidiary, and the number and effect, if
exercised, of all outstanding options, warrants, rights of
conversion or purchase and all other similar rights with
respect thereto, (D) whether such Subsidiary is a Domestic
Subsidiary or Foreign Subsidiary and (E) whether such
Subsidiary is a Material Subsidiary; (ii) of the Company's
Affiliates, other than Subsidiaries; and (iii) of the
Company's directors and senior officers.
(b) Capital Stock. All of the outstanding shares of
Capital Stock or similar equity interests of each Subsidiary
shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and non-
assessable and are owned by the Company or another Subsidiary
free and clear of any Lien (except for Liens permitted by
Section 10.6(i)). The Subsidiaries listed on Schedule 4.11
are the only Domestic Subsidiaries as of the date of Closing,
and no Foreign Subsidiaries exist as of the date of Closing.
(c) No Payment Limitations. No Subsidiary is a party
to, or otherwise subject to any legal restriction or any
agreement (other than this Agreement, the documents
evidencing the Credit Facility and customary limitations
imposed by corporate law statutes) restricting the ability of
such Subsidiary to pay dividends out of profits or make any
other similar distributions of profits to the Company or any
of its Subsidiaries that owns outstanding shares of Capital
Stock or similar equity interests of such Subsidiary.
5.5. Financial Statements.
The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on
Schedule 5.5. All of said financial statements (including in each
case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified
in such Schedule and the consolidated results of their operations
and cash flows for the respective periods so specified and have
been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes
thereto (subject, in the case of any interim financial statements,
to normal year-end adjustments).
5.6. Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company and
its Subsidiaries of the Financing Documents to which each such
Person is a party will not
(a) contravene, result in any breach of, or constitute
a default under, or result in the creation of any Lien in
respect of any property of the Company or any Subsidiary
under, any indenture, mortgage, deed of trust, loan, purchase
or credit agreement, lease, corporate charter or by-laws, or
any other agreement or instrument to which the Company or any
Subsidiary is bound or by which the Company or any Subsidiary
or any of their respective properties may be bound or
affected,
(b) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment,
decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Subsidiary, or
(c) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to the
Company or any Subsidiary.
5.7. Governmental Authorizations, etc.
No consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required
in connection with the execution, delivery or performance by the
Company or any Subsidiary of the Financing Documents to which it
is a party.
5.8. Litigation; Observance of Agreements, Statutes and
Orders.
(a) Litigation. Except as disclosed in Schedule 5.8,
there are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the
Company or any Subsidiary or any property of the Company or
any Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
(b) Defaults and Violations. Neither the Company nor
any Subsidiary is in default under any term of any agreement
or instrument to which it is a party or by which it is bound,
or any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of
any applicable law, ordinance, rule or regulation (including
without limitation Environmental Laws) of any Governmental
Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material
Adverse Effect.
5.9. Taxes.
The Company and its Subsidiaries have filed all tax returns
that are required to have been filed in any jurisdiction, and have
paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties,
assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have
become delinquent, except for any taxes and assessments (a) the
amount of which is not individually or in the aggregate Material
or (b) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be,
has established adequate reserves in accordance with GAAP. The
Company knows of no basis for any other tax or assessment that
could reasonably be expected to have a Material Adverse Effect.
The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of Federal, state or other taxes for
all fiscal periods are adequate. The Federal income tax
liabilities of the Company and its Subsidiaries have been audited
by the Internal Revenue Service and paid for all fiscal years up
to and including the fiscal year ended December 29, 1993.
5.10. Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient
title to their respective properties that individually or in the
aggregate are Material, including all such properties reflected in
the most recent audited balance sheet referred to in Section 5.5
or purported to have been acquired by the Company or any
Subsidiary after said date (except as sold or otherwise disposed
of in the ordinary course of business), in each case free and
clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and
subsisting and are in full force and effect in all material
respects.
5.11. Licenses, Permits, etc.
Except as disclosed in Schedule 5.11:
(a) the Company and its Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or
rights thereto, that individually or in the aggregate are
Material, without known conflict with the rights of others;
(b) no product of the Company infringes in any material
respect any license, permit, franchise, authorization,
patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
(c) there is no Material violation by any Person of any
right of the Company or any of its Subsidiaries with respect
to any patent, copyright, service mark, trademark, trade name
or other right owned or used by the Company or any of its
Subsidiaries.
5.12. Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated
and administered each Plan in compliance with all applicable
laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in
a Material Adverse Effect. Neither the Company nor any ERISA
Affiliate has incurred any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to
result in the incurrence of any such liability by the Company
or any ERISA Affiliate, or in the imposition of any Lien on
any of the rights, properties or assets of the Company or any
ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to
Section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the
aggregate Material.
(b) The present value of the aggregate benefit
liabilities under each of the Plans (other than Multiemployer
Plans), determined as of the end of such Plan's most recently
ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent
actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such
benefit liabilities, in the case of any single Plan, and in
the aggregate for all Plans, by more than $3,000,000. The
term "benefit liabilities" has the meaning specified in
section 4001 of ERISA and the terms "current value" and
"present value" have the meaning specified in section 3 of
ERISA.
(c) The Company and its ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to
contingent withdrawal liabilities) under section 4201 or 4204
of ERISA in respect of Multiemployer Plans that individually
or in the aggregate are Material.
(d) The expected post-retirement benefit obligation
(determined as of the last day of the Company's most recently
ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its
Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and
the issuance and sale of the Notes hereunder will not involve
any transaction that is subject to the prohibitions of
section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)-(D) of the Code.
The representation by the Company in the first sentence of
this Section 5.12(e) is made in reliance upon and subject to
(i) the accuracy of your representation in Section 6.2 as to
the sources of the funds used to pay the purchase price of
the Notes to be purchased by you and (ii) the assumption,
made solely for the purpose of making such representation,
that Department of Labor Prohibited Transaction Exemption 95-
60 (60 FR 35925) with respect to prohibited transactions
remains valid in the circumstances of the transactions
contemplated herein.
5.13. Private Offering by the Company.
Neither the Company nor any Person acting on its behalf has
offered the Notes or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, any Person other
than you, the Other Purchasers and not more than 75 other
Institutional Investors (as defined in paragraph (c) of the
definition of such term), each of which has been offered the Notes
at a private sale for investment. Neither the Company nor any
Person acting on its behalf has taken, or will take, any action
that would subject the issuance or sale of the Notes to the
registration requirements of Section 5 of the Securities Act.
5.14. Use of Proceeds; Margin Regulations.
The Company will apply the proceeds of the sale of the Notes
as set forth in Schedule 5.14. No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly,
for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System (12 CFR 221), or for the purpose of buying or
carrying or trading in any securities under such circumstances as
to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin
stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the
Company does not have any present intention that margin stock will
constitute more than 5% of the value of such assets. As used in
this Section, the terms "margin stock" and "purpose of buying or
carrying" shall have the meanings assigned to them in said
Regulation U.
5.15. Existing Debt and Liens; Future Liens.
(a) Existing Debt and Liens. Except as described
therein, Schedule 5.15 sets forth a complete and correct list
of all outstanding Debt of the Company and its Subsidiaries
as of the date hereof (indicating as to any such Debt the
collateral, if any, securing such Debt). Neither the Company
nor any Subsidiary is in default and no waiver of default is
currently in effect, in the payment of any principal or
interest on any Debt of the Company or such Subsidiary and no
event or condition exists with respect to any Debt of the
Company or any Subsidiary that would permit (or that with
notice or the lapse of time, or both, would permit) one or
more Persons to cause such Debt to become due and payable
before its stated maturity or before its regularly scheduled
dates of payment.
(b) Future Liens. Except as disclosed in Schedule
5.15, neither the Company nor any Subsidiary has agreed or
consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its property,
whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.6.
5.16. Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor
its use of the proceeds thereof will violate the Trading with the
Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.
5.17. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended,
the Public Utility Holding Company Act of 1935, as amended, the
Transportation Acts, as amended, or the Federal Power Act, as
amended.
5.18. Environmental Matters.
Neither the Company nor any Subsidiary has knowledge of any
claim or has received any notice of any claim, and no proceeding
has been instituted raising any claim against the Company or any
of its Subsidiaries or any of their respective real properties now
or formerly owned, leased or operated by any of them or other
assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not
reasonably be expected to result in a Material Adverse Effect.
Except as otherwise disclosed to you in writing:
(a) neither the Company nor any Subsidiary has
knowledge of any facts which would give rise to any claim,
public or private, of violation of Environmental Laws or
damage to the environment emanating from, occurring on or in
any way related to real properties now or formerly owned,
leased or operated by any of them or to other assets or their
use, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or
formerly owned, leased or operated by any of them and has not
disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse
Effect; and
(c) all buildings on all real properties now owned,
leased or operated by the Company or any of its Subsidiaries
are in compliance with applicable Environmental Laws, except
where failure to comply could not reasonably be expected to
result in a Material Adverse Effect.
5.19. Collateral.
The Pledge Agreement creates (upon delivery of the Collateral
to the Collateral Agent) a valid and perfected first priority Lien
in and to the Collateral in favor of the Collateral Agent, for the
benefit of the Secured Parties, subject to no Liens, except to the
extent permitted by Section 10.6. All certificates and documents
constituting Collateral have been delivered to the Collateral
Agent, together with all related undated blank stock powers.
5.20. Year 2000 Matters.
In accordance with section 7(b) of the Year 2000 Information
and Readiness Disclosure Act, 15 USC 1, the Company designates
the statement made in Schedule 5.20 as its "Year 2000 Readiness
Disclosure." The Company has complied in all material respects
with the disclosure requirements of Interpretation: Disclosure of
Year 2000 Issues and Consequences by Public Companies, Investment
Advisors, Investment Companies and Municipal Securities Issuers,
SEC Concept Release Nos. 33-7558; 34-40277; IA-1738; International
Series No. 1149 (http://www.sec.gov/rules/concept/33-7558.htm).
6. REPRESENTATIONS OF THE PURCHASER.
6.1. Purchase for Investment.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or
for the account of one or more pension or trust funds and not with
a view to the distribution thereof, provided that the disposition
of your or their property shall at all times be within your or
their control. You understand that the Notes have not been
registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if
an exemption from registration is available, except under
circumstances where neither such registration nor such an
exemption is required by law, and that the Company is not required
to register the Notes. You represent that you (or any advisor on
your behalf) are experienced in evaluating and investing in
companies such as the Company, have such knowledge and experience
in financial and business matters that you are capable of
evaluating the merits and risks of your investment and have the
ability to bear the economic risks of your investment. You
further represent that you are a "qualified institutional buyer"
as such term is defined in Rule 144A promulgated under the
Securities Act.
6.2. Source of Funds
You represent that at least one of the following statements
is an accurate representation as to each source of funds (a
"Source") to be used by you to pay the purchase price of the Notes
to be purchased by you hereunder:
(a) General Account -- the Source is an "insurance
company general account" as defined in Department of Labor
Prohibited Transaction Exemption ("PTE") 95-60 and in respect
thereof you represent that there is no "employee benefit
plan" (as defined in section 3(3) of ERISA and section
4975(e)(1) of the Code, treating as a single plan all plans
maintained by the same employer or employee organization or
affiliate thereof) with respect to which the amount of the
general account reserves and liabilities of all contracts
held by or on behalf of such plan exceed 10% of the total
reserves and liabilities of such general account (exclusive
of separate account liabilities) plus surplus, as set forth
in the National Association of Insurance Commissioners'
Annual Statement filed with your state of domicile;
(b) Separate Account -- the Source is either
(i) an insurance company pooled separate account,
within the meaning of PTE 90-1, or
(ii) a bank collective investment fund, within the
meaning of the PTE 91-38,
and, except as you have disclosed to the Company in writing
pursuant to this Section 6.2(b), no employee benefit plan or
group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective
investment fund;
(c) QPAM -- the Source constitutes assets of an
"investment fund" (within the meaning of Part V of the QPAM
Exemption) in respect of which each of the following is true:
(i) such investment fund is managed by a
"qualified professional asset manager" or "QPAM" (within
the meaning of Part V of the QPAM Exemption),
(ii) no employee benefit plan's assets that are
included in such investment fund, when combined with the
assets of all other employee benefit plans established
or maintained by the same employer or by an affiliate
(within the meaning of section V(c)(1) of the QPAM
Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the
total client assets managed by such QPAM,
(iii) the conditions of Part I(c) and Part I(g)
of the QPAM Exemption are satisfied, neither the QPAM
nor a Person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the
Company, and
(iv) (A) the identity of such QPAM, and
(B) the names of all employee benefit plans
whose assets are included in such investment fund
have been disclosed to the Company in writing pursuant
to this Section 6.2(c);
(d) Government Plan, etc. -- the Source is a
governmental plan;
(e) Identified Plans -- the Source is one or more
employee benefit plans, or a separate account or trust fund
comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant
to this Section 6.2(e); or
(f) Exempt Plans -- the Source does not include the
assets of any employee benefit plan that is subject to Title
I of ERISA or any "plan" which is subject to Section 4975 of
the Code.
As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan" and "separate account" shall have the
respective meanings assigned to such terms in section 3 of ERISA.
7. INFORMATION AS TO COMPANY
7.1. Financial and Business Information
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 45 days after the
end of each quarterly fiscal period in each fiscal year of
the Company (other than the last quarterly fiscal period of
each such fiscal year), copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries as at the end of such quarter,
setting forth in comparative form the figures for the
previous fiscal year-end, and
(ii) consolidated statements of earnings and cash
flows of the Company and its Subsidiaries, for such
quarter and (in the case of the second and third
quarters) for the portion of the fiscal year ending with
such quarter, setting forth in each case in comparative
form the figures for the corresponding periods in the
previous fiscal year,
all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting,
in all material respects, the financial position of the
companies being reported on and their results of operations
and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period
specified above of copies of the Company's Quarterly Report
on Form 10-Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of
this Section 7.1(a);
(b) Annual Statements -- within 90 days after the end
of each fiscal year of the Company, copies of,
(i) a consolidated balance sheet of the Company
and its Subsidiaries, as at the end of such year, and
(ii) consolidated statements of earnings and cash
flows of the Company and its Subsidiaries, for such
year,
setting forth in each case in comparative form the figures
for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied by an
opinion thereon of independent certified public accountants
of recognized national standing, which opinion shall state
that such financial statements present fairly, in all
material respects, the financial position of the companies
being reported upon and their results of operations and cash
flows and have been prepared in conformity with GAAP, and
that the examination of such accountants in connection with
such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the
circumstances, provided that the delivery within the time
period specified above of the Company's Annual Report on Form
10-K for such fiscal year (together with the Company's annual
report to shareholders, if any, prepared pursuant to Rule 14a-
3 under the Exchange Act) prepared in accordance with the
requirements therefor and filed with the Securities and
Exchange Commission, together with the accountant's
certificate described in Section 7.2(b), shall be deemed to
satisfy the requirements of this Section 7.1(b);
(c) SEC and Other Reports -- promptly upon their
becoming available, one copy of (i) each financial statement,
report, notice or proxy statement sent by the Company or any
Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by
such holder), and each prospectus and all amendments thereto
filed by the Company or any Subsidiary with the Securities
and Exchange Commission and of all press releases and other
statements made available generally by the Company or any
Subsidiary to the public concerning developments that are
Material;
(d) Notice of Default or Event of Default -- promptly,
and in any event within five Business Days after a
Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any
notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken
any action with respect to a claimed default of the type
referred to in Section 11(f), a written notice specifying the
nature and period of existence thereof and what action the
Company is taking or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within
five days after a Responsible Officer becoming aware of any
of the following, a written notice setting forth the nature
thereof and the action, if any, that the Company or an ERISA
Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any reportable
event, as defined in section 4043(b) of ERISA and the
regulations thereunder, for which notice thereof has not
been waived pursuant to such regulations as in effect on
the date hereof; or
(ii) the taking by the PBGC of steps to institute,
or the threatening by the PBGC of the institution of,
proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with
respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that
could result in the incurrence of any liability by the
Company or any ERISA Affiliate pursuant to Title I or IV
of ERISA or the penalty or excise tax provisions of the
Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing,
could reasonably be expected to have a Material Adverse
Effect;
(f) Notices from Governmental Authority -- promptly,
and in any event within 30 days of receipt thereof, copies of
any notice to the Company or any Subsidiary from any Federal
or state Governmental Authority relating to any order,
ruling, statute or other law or regulation that could
reasonably be expected to have a Material Adverse Effect;
(g) Actions, Proceedings - promptly after a Responsible
Officer becomes aware of the commencement thereof, notice of
any action or proceeding relating to the Company or any
Subsidiary in any court or before any Governmental Authority
or arbitration board or tribunal as to which there is a
reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected to have
a Material Adverse Effect;
(h) Management Reports -- promptly upon receipt
thereof, a copy of each report (including, without
limitation, management letters) submitted to the Company or
any Subsidiary by independent accountants in connection with
any annual audit made by them of the books of the Company or
any Subsidiary or special audit by them of the books of the
Company;
(i) Amendments to Credit Facility -- promptly, copies
of any amendments, modifications or supplements to any
agreement or instrument evidencing any obligation of the
Company in respect of the Credit Facility;
(j) Annual Business Plan and Budgets -- at least 30
days prior to the end of each fiscal year of the Company (or
at Closing in the case of the fiscal year ending December 29,
1999), beginning with the fiscal year ending December 29,
1999, a projected profit and loss statement of the Obligors
and their Subsidiaries on a consolidated basis for the next
fiscal year;
(k) Information Provided to Lenders - at any time
during the existence of any "Default" or "Event of Default"
under and as defined in the Credit Facility or during the
existence of any Default or Event of Default, promptly upon
their becoming available, copies of any statement, report,
notice or certificate furnished to the Lenders or any agent
for the Lenders under the Credit Facility, to the extent that
the information contained therein has not already been
delivered to each holder of Notes; and
(l) Requested Information -- with reasonable
promptness, such other data and information relating to the
business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its
obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes,
including, without limitation, any information regarding the
Company required to satisfy the requirements of 17 C.F.R.
230.144A, as amended from time to time, in connection with
any contemplated transfer of the Notes.
7.2. Officer's/Accountant's Certificate.
(a) Officer's Certificate. Each set of financial
statements delivered to a holder of Notes pursuant to Section
7.1(a) or Section 7.1(b) shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(i) Covenant Compliance -- the information
(including detailed calculations) required in order to
establish whether the Company was in compliance with the
requirements of Sections 10.1 through 10.6, inclusive,
and Section 10.9, during the quarterly or annual period
covered by the statements then being furnished
(including with respect to each such Section, where
applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the
calculation of the amount, ratio or percentage then in
existence); and
(ii) Event of Default -- a statement that such
officer has reviewed the relevant terms hereof and has
made, or caused to be made, under his or her
supervision, a review of the transactions and conditions
of the Company and its Subsidiaries from the beginning
of the quarterly or annual period covered by the
statements then being furnished to the date of the
certificate and that such review shall not have
disclosed the existence during such period of any
condition or event that constitutes a Default or an
Event of Default or, if any such condition or event
existed or exists (including, without limitation, any
such event or condition resulting from the failure of
the Company or any Subsidiary to comply with any
Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have
taken or proposes to take with respect thereto; and
(iii) Subsidiaries - a list of all of the
Company's Subsidiaries on the date of such financial
statements, specifying as to each whether it is (A) a
Domestic Subsidiary or Foreign Subsidiary and (B) a
Material Subsidiary.
(b) Accountant's Certificate. Together with each
delivery of financial statements required by Section 7.1(b),
the Company will deliver to each holder of Notes a
certificate of the accountants preparing such statements
stating that, in making the audit necessary for their report
on such financial statements, they have obtained no knowledge
of any Event of Default or Default, or, if they have obtained
knowledge of any Event of Default or Default, specifying the
nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone for any failure to
obtain knowledge of any Event of Default or Default unless
such accountants (i) should have obtained knowledge thereof
in the course of an audit conducted in accordance with
generally accepted auditing standards or (ii) did not conduct
such an audit.
7.3. Inspection.
The Company shall permit the representatives of each holder
of Notes that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default
then exists, at the expense of such holder and upon
reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the
affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the
consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants,
and (with the consent of the Company, which consent will not
be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such
reasonable times as may be reasonably requested in writing
(but in any event no more frequently than once per fiscal
quarter); and
(b) Default -- if a Default or Event of Default then
exists, at the expense of the Company to visit and inspect
any of the offices or properties of the Company or any
Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and
independent public accountants (and by this provision the
Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries),
all at such times and as often as may be requested.
8. PREPAYMENT OF THE NOTES
8.1. Required Principal Payments.
Until the Notes are paid in full, the Company shall apply to
the payment of the Notes, at par and without payment of the Make-
Whole Amount, the sum of $18,750,000 (or such lesser principal
amount of the Notes as shall then be outstanding) on January 29 in
each of the years 2005, 2006, 2007 and 2008, together with
interest accrued thereon to the date of payment; provided that
upon any partial payment of the Notes pursuant to Section 8.2 the
principal amount of each required payment of the Notes becoming
due under this Section 8.1 on and after the date of such payment
shall be reduced in the same proportion as the aggregate unpaid
principal amount of the Notes is reduced as a result of such
payment.
8.2. Optional Prepayments with Make-Whole Amount
The Company may, at its option, upon notice as provided
below, prepay at any time all, or from time to time any part of,
the Notes, in an amount not less than 10% of the aggregate
principal amount of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid,
plus the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Company will give each
holder of Notes written notice of each optional prepayment under
this Section 8.2 not less than 30 days and not more than 60 days
prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each
Note held by such holder to be prepaid (determined in accordance
with Section 8.4), and the interest to be paid on the prepayment
date with respect to such principal amount being prepaid, and
shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection
with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of
such computation. Two Business Days prior to such prepayment, the
Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-
Whole Amount as of the specified prepayment date.
8.3. Change in Control.
(a) Notice of Change in Control or Control Event. The
Company will, prior to the occurrence of any Change in
Control or Control Event, if possible, but in no event later
than the date of such occurrence, give written notice of such
Change in Control or Control Event (including a description
of the terms thereof in sufficient detail to enable a holder
of Notes to evaluate the merits thereof) to each holder of
Notes unless notice in respect of such Change in Control (or
the Change in Control contemplated by such Control Event)
shall have been given pursuant to Section 8.3(b). If a
Change in Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in Section
8.3(c) and shall be accompanied by the certificate described
in Section 8.3(f).
(b) Condition to Company Action. The Company will not
take any action that consummates or finalizes a Change in
Control unless at least 30 days prior to such action it shall
have given to each holder of Notes written notice (including
a description of the terms of such Change in Control in
sufficient detail to enable a holder of Notes to evaluate the
merits thereof) containing and constituting an offer to
prepay Notes as described in Section 8.3(c), accompanied by
the certificate described in Section 8.3(f).
(c) Offer to Prepay Notes. The offer to prepay Notes
contemplated by Section 8.3(a) and Section 8.3(b) shall be an
offer to prepay, in accordance with and subject to this
Section 8.3, all, but not less than all, the Notes held by
each holder (in this case only, "holder" in respect of any
Note registered in the name of a nominee for a disclosed
beneficial owner shall mean such beneficial owner) on the
date of the Change in Control referred to in such Sections or
on any other day within 60 days thereafter.
(d) Acceptance. A holder of Notes may accept the offer
to prepay made pursuant to this Section 8.3 by causing a
notice of such acceptance to be delivered to the Company at
any time within 60 days following the later of (x)
consummation of a Change in Control or (y) such holder's
receipt of the Company's notice thereof. A failure by a
holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3 shall be deemed to constitute an
acceptance of such offer by such holder on such 60th day.
(e) Prepayment. Prepayment of the Notes of any holder
to be prepaid pursuant to this Section 8.3 shall be at 101%
of the principal amount of such Notes, together with interest
on such Notes accrued to the date of prepayment. The
prepayment shall be made on the date the Company receives
notice of acceptance of its prepayment offer from such
holder.
(f) Officer's Certificate. Each offer to prepay the
Notes pursuant to this Section 8.3 shall be accompanied by a
certificate, executed by a Senior Financial Officer of the
Company and dated the date of such offer, specifying:
(i) the expected date of consummation of the
Change in Control;
(ii) that such offer is made pursuant to this
Section 8.3;
(iii) the principal amount of each Note offered
to be prepaid;
(iv) the last date upon which the offer can be
accepted or rejected, and setting forth the consequences
of failing to provide an acceptance or rejection, as
provided in Section 8.3(d);
(v) that such prepayment shall be at 101% of the
principal amount of such Notes being prepaid, setting
forth the details of such computation;
(vi) the interest that would be due on each Note
offered to be prepaid, accrued to the date of
prepayment;
(vii) that the conditions of this Section 8.3
have been fulfilled; and
(viii) in reasonable detail, the nature and date
or proposed date of the Change in Control.
8.4. Allocation of Partial Prepayments.
In the case of each required payment of the Notes pursuant to
Section 8.1 and in the case of each partial prepayment of the
Notes pursuant to Section 8.2, the principal amount of the Notes
to be paid shall be allocated among all of the Notes at the time
outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called
for payment.
8.5. Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this
Section 8 (except as provided in Section 8.3(f)), the principal
amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date,
unless the Company shall fail to pay such principal amount when so
due and payable, together with the interest and Make-Whole Amount,
if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be
surrendered to the Company and cancelled and shall not be
reissued, and no Note shall be issued in lieu of any prepaid
principal amount of any Note.
8.6. No Other Optional Prepayments or Purchase of Notes.
The Company will not and will not permit any Affiliate to,
purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment
or prepayment of the Notes in accordance with the terms of this
Section 8. The Company will promptly cancel all Notes acquired by
it or any Affiliate pursuant to any payment, prepayment or
purchase of Notes pursuant to any provision of this Section 8 and
no Notes may be issued in substitution or exchange for any such
Notes.
8.7. Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note,
an amount equal to the excess, if any, of the Discounted Value of
the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal,
provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the
following terms have the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context
requires.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment
Yield with respect to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.50% over the yield to maturity
implied by (a) the yields reported, as of 10:00 A.M. (New
York City time) on the second Business Day preceding the
Settlement Date with respect to such Called Principal, on
page 678 of Bridge Telerate (or, if not available, any other
nationally recognized trading screen reporting on-line intra-
day trading in United States government securities) for ac
tively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal
as of such Settlement Date, or (b) if such yields are not
reported as of such time or the yields reported as of such
time are not ascertainable, the Treasury Constant Maturity
Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519)
(or any comparable successor publication) for actively traded
U.S. Treasury securities having a constant maturity equal to
the Remaining Average Life of such Called Principal as of
such Settlement Date. Such implied yield will be determined,
if necessary, by (x) converting U.S. Treasury bill quotations
to bond-equivalent yields in accordance with accepted
financial practice and (y) interpolating linearly between (1)
the actively traded U.S. Treasury security with the duration
closest to and greater than the Remaining Average Life and
(2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any
Called Principal, the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (a) such
Called Principal into (b) the sum of the products obtained by
multiplying (i) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by
(ii) the number of years (calculated to the nearest one-
twelfth year) that will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to
the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the
Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is
not a date on which interest payments are due to be made
under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to
Section 8.2 or Section 12.1.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 8.2 or has
become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. Compliance with Law.
The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without
limitation, Environmental Laws, and will obtain and maintain in
effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such
licenses, certificates, permits, franchises and other governmental
authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.2. Insurance.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms
and in such amounts (including deductibles, coinsurance and self-
insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and
similarly situated.
9.3. Maintenance of Properties.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all times,
provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of
any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
9.4. Payment of Taxes and Claims.
The Company will and will cause each of its Subsidiaries to
file all tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such
returns and all other taxes, assessments, governmental charges, or
levies imposed on them or any of their properties, assets, income
or franchises, to the extent such taxes and assessments have
become due and payable and before they have become delinquent and
all claims for which sums have become due and payable that have or
might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary
need pay any such tax or assessment or claims if (a) the amount,
applicability or validity thereof is contested by the Company or
such Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (b) the nonpayment of all such
taxes, assessments and claims in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5. Corporate Existence, etc.
Subject to Sections 10.8 and 10.9, the Company will at all
times preserve and keep in full force and effect its corporate
existence. Subject to Sections 10.8 and 10.9, the Company will
at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries (unless merged
into the Company or a Subsidiary) and all rights and franchises of
the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve
and keep in full force and effect such corporate existence, right
or franchise could not, individually or in the aggregate, have a
Material Adverse Effect.
9.6. Covenant to Secure Notes Equally.
The Company covenants that, if it or any Subsidiary shall
create or assume any Lien upon any of its property or assets,
whether now owned or hereafter acquired, other than Liens
permitted by the provisions of Section 10.6 (unless prior written
consent to the creation or assumption thereof shall have been
obtained pursuant to Section 17.1), it will make or cause to be
made effective provision whereby the Notes will be secured by such
Lien equally and ratably with any and all other Debt thereby
secured so long as any such other Debt shall be so secured.
However, the compliance by the Company with this Section 9.6 shall
not constitute a waiver of, or cure for, any violation of
Section 10.6.
9.7 Covenant Relating to Additional Subsidiaries.
At the time any Person becomes a Subsidiary of an Obligor,
the Company shall so notify the holders of the Notes and promptly
thereafter (but in any event within 30 days after the date
thereof) shall cause such Person to:
(a) if it is a Domestic Subsidiary, become a party to
(i) the Subsidiary Guarantee, by executing and
delivering a subsidiary guarantee agreement in
substantially the form of Exhibit 4.11(a), and
(ii) the Contribution Agreement, by executing
a contribution agreement in substantially the form of
Exhibit 4.11(b);
(b) cause all of the Capital Stock of such Person (if
it is a Domestic Subsidiary) or 65% of the Capital Stock of
such Person (if it is a First Tier Foreign Subsidiary) to be
delivered to the Collateral Agent (together with undated
stock powers signed in blank) and pledged to the Collateral
Agent pursuant to a joinder to the existing Pledge Agreement
in substantially the form of Exhibit 9.7;
(c) if such Person is a Domestic Subsidiary and has any
Subsidiaries,
(i) deliver all of the Capital Stock of such
Domestic Subsidiaries owned by it and 65% of the Capital
Stock of the First Tier Foreign Subsidiaries owned by it
(together with undated stock powers signed in blank) to
the Collateral Agent, and
(ii) execute a joinder to the existing Pledge
Agreement in substantially the form of Exhibit 9.7;
(d) deliver such other documentation as the Collateral
Agent may reasonably request in connection with the
foregoing, including, without limitation, appropriate, UCC-1
financing statements, certified resolutions and other
organizational and authorizing documents of such Person and
favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to
above), all in form, content and scope reasonably
satisfactory to the Collateral Agent;
(e) provide to the Collateral Agent, if applicable, a
new Schedule 2(a) to the appropriate Pledge Agreement which
shall reflect the pledge of the Capital Stock of such new
Subsidiary; and
(f) provide to the holders of the Notes a new Schedule
5.4 which shall reflect the information regarding such new
Subsidiary required by Section 5.4.
Notwithstanding the foregoing, so long as no Default or Event of
Default shall then exist, and
(A) all of the obligations of the Company and its
Subsidiaries in respect of the Credit Facility, together with
any and all extensions, renewals or refundings of any such
obligations, shall have been indefeasibly satisfied in full
in cash, or
(B) the holders of all such obligations have released
(i) any and all of the Collateral from the Lien of
any Pledge Agreement and
(ii) any and all Guaranties of such obligations
given by any Subsidiary,
in a manner and pursuant to documentation which, in the reasonable
opinion of the holders of all of the Notes, fully releases such
Collateral as security for all such obligations and fully releases
all such Guaranties, then (subject to the next succeeding
sentence) each of the holders of the Notes shall thereupon release
such Collateral from the Lien of such Pledge Agreement and such
Guaranties so long as no holder of any Debt of the Company or its
Subsidiaries shall have been, or shall at any time be,
(x) given a pledge of or granted a security interest in
any Capital Stock of a Subsidiary, or
(y) given a Guaranty of such Debt by any Subsidiary.
If at any time after such releases, any holder of Debt of the
Company or its Subsidiaries shall be,
(1) given a pledge of or granted a security interest in
any Capital Stock of a Subsidiary, or
(2) given a Guaranty of such Debt by any Subsidiary,
then
(Y) in the case of clause (1) above, the pledgor or
grantor with respect to such Capital Stock shall
contemporaneously execute and deliver, to each of the holders
of the Notes, a pledge agreement, joinder agreement or
amendment to a Pledge Agreement, and take all further action
(including, without limitation, delivery of stock
certificates, if any, and undated stock powers executed in
blank) that is necessary or that otherwise may be reasonably
requested by the Required Holders, in order to grant to or
for the equal and ratable benefit of the holders of the Notes
and such holder or holders of Debt (subject to intercreditor
terms among such parties that shall be no less favorable to
the holders of the Notes than the Intercreditor Agreement), a
perfected security interest in all such Stock pledged by such
Person, together with a certificate of such Person's
Secretary or another responsible officer, and an opinion of
counsel to such Person, regarding the authorization,
execution and delivery of such documents and instruments, and
their enforceability, which certificate and opinion shall be
reasonably satisfactory in all respects to the Required
Holders, and
(Z) in the case of clause (2) above, such Subsidiary
shall contemporaneously execute and deliver, to each of the
holders of the Notes, a duly authorized Subsidiary Guarantee
substantially in the form of Exhibit 4.11(a), a certificate
of such Subsidiary's secretary or another responsible officer
certifying such Subsidiary's constitutive documents and
relevant resolutions, and an opinion of counsel to such
Person regarding the authorization, execution and delivery of
such Subsidiary Guarantee, and its enforceability, which
opinion shall be satisfactory in all respects to the Required
Holders.
9.8 Ownership of Subsidiary Guarantors.
The Company shall maintain, directly or indirectly, its
percentage of ownership existing as of the date hereof of all
Material Subsidiaries that are parties to the Subsidiary Guarantee
on the date of Closing. The Company shall not decrease its
collective direct or indirect ownership percentage in each
Material Subsidiary that becomes a party to the Subsidiary
Guarantee after the date of Closing, as such ownership exists at
the time such Subsidiary becomes such a party; provided, however,
that this Section 9.8 shall not prohibit any of the transactions
described in paragraphs (a) or (b) of Section 10.8.
9.9 Pari Passu Ranking.
To the extent that proceeds from the Collateral would not at
any time be sufficient to satisfy in full all obligations owing in
respect of the Notes and the Subsidiary Guarantee at such time,
the portion of such obligations which would not be so satisfied
shall rank pari passu, without preference or priority, with all
other outstanding, unsecured, unsubordinated obligations of the
Company and the Subsidiary Guarantors (as the case may be),
present and future, that have not been accorded by law
preferential rights. Without limitation of the foregoing, all
obligations of the Company and the Subsidiaries owing in respect
of this Agreement, the Notes and the Subsidiary Guarantee shall
rank pari passu, without preference or priority, with all
obligations of the Company and the Subsidiaries owing in respect
of the Credit Facility and all Guaranties of such obligations
executed by any Subsidiaries in connection therewith.
9.10 Collateral.
(a) If, subsequent to the date of Closing, an Obligor
shall acquire any Capital Stock required to be delivered to
the Collateral Agent as Collateral hereunder or under any of
the Collateral Documents, the Company shall immediately
notify the holders of the Notes and the Collateral Agent of
same.
(b) Each Obligor shall (within 30 days of such request)
take such action, as reasonably requested by the Collateral
Agent and at its own expense, to ensure that the Secured
Parties have a perfected Lien in all Collateral of the Credit
Parties as set forth in the Pledge Agreement (whether now
owned or hereafter acquired), subject only to Liens permitted
under Section 10.6. Such actions to be required by the
Collateral Agent may include, but are not limited to,
delivery of Capital Stock, stock powers or other appropriate
assignments in blank, UCC financing statements and legal
opinions with respect thereto, which shall be satisfactory in
all respects to the Required Holders.
9.11 Year 2000 Compliant.
The internal computing systems of the Company and its
Subsidiaries, and, to the extent the Company and its Subsidiaries
would be materially and adversely affected thereby, the internal
computing systems of their respective customers and suppliers,
will be Year 2000 Compliant as of January 1, 2000, and to the
Company's knowledge the advent of the year 2000 and its impact on
such computing systems will not have a Material Adverse Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. Consolidated Net Worth.
The Company will not, at any time, permit Consolidated Net
Worth to be less than the sum of:
(a) $213,000,000; plus
(b) for each fiscal quarter of the Company ended at or
prior to such time, beginning with the fiscal quarter ending
September 29, 1999, the greater of
(i) 50% of Net Income, and
(ii) Zero dollars; plus
(c) an amount equal to 100% of the proceeds from any
Equity Issuance.
10.2. Leverage Ratio.
The Company shall not permit the Leverage Ratio, determined
as of the last day of any fiscal quarter of the Company ending in
either period specified below, to be greater than the ratio set
forth below opposite such period:
Period Maximum Ratio
Closing Date through December 31, 2.75 to 1.00
2002
January 1, 2003 and at all times 2.50 to 1.00
thereafter
10.3. Priority Debt.
The Company shall not, as of the end of each fiscal quarter,
permit the aggregate outstanding amount of Priority Debt to exceed
15% of Consolidated Net Worth at such time.
10.4. Fixed Charge Coverage Ratio.
The Company shall not permit the Fixed Charge Coverage Ratio,
as of the last day of each fiscal quarter of the Company, to be
less than 2.25 to 1.00.
10.5. Restricted Payments and Restricted Investments.
The Company will not, and will not permit any of its
Subsidiaries to, declare, make or incur any liability to declare
or make any Restricted Payment or any Restricted Investment
unless, immediately prior, and immediately after giving effect, to
the making of such Restricted Payment or Restricted Investment, no
Default or Event of Default would exist and, with respect to
Restricted Payments, immediately after giving effect to such
action, the aggregate amount of such Restricted Payments of the
Company and its Subsidiaries declared or made during the period
commencing on January 1, 2000, and ending on the date such
Restricted Payment is declared or made, inclusive, would not
exceed the sum of
(a) $55,000,000, plus
(b) 50% of Net Income for such period (or minus 100% of
Net Income for such period if Net Income for such period is a
loss), plus
(c) the aggregate amount of net proceeds arising from
sales of the Company's Capital Stock during such period.
10.6. Liens
The Company shall not, and shall not permit any Subsidiary
to, create, assume or suffer to exist (upon the happening of a
contingency or otherwise) any Lien upon any of its respective
property or assets, whether now owned or hereafter acquired,
except:
(a) Liens existing on the date of the Closing and
described on Schedule 5.15 securing Debt outstanding at
Closing in an aggregate principal or face amount not
exceeding $800,000;
(b) Liens for taxes, assessments or other governmental
charges the payment of which is not at the time required by
Section 9.4;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens,
in each case, incurred in the ordinary course of business for
sums not yet due or the payment of which is not at the time
required by Section 9.4;
(d) any Lien existing on any fixed asset of any Person
at the time such Person is acquired by the Company or a
Subsidiary or is merged or consolidated with or into the
Company or a Subsidiary and, in each case, not created in
contemplation of such event;
(e) any Lien created to secure all or any part of the
purchase price, or to secure Debt incurred or assumed to pay
all or any part of the purchase price or cost of
construction, of fixed assets (or any improvement thereon)
acquired or constructed by the Company or a Subsidiary after
the date of the Closing, provided that:
(i) any such Lien shall extend solely to the item
or items of such property (or improvement thereon) so
acquired or constructed and, if required by the terms of
the instrument originally creating such Lien, other
property (or improvement thereon) which is an
improvement to or is acquired for specific use in
connection with such acquired or constructed property
(or improvement thereon) or which is real property being
improved by such acquired or constructed property (or
improvement thereon, or the proceeds thereof),
(ii) the principal amount of the Debt secured by
any such Lien shall at no time exceed an amount equal to
the cost to the Company or such Subsidiary of the
property (or improvement thereon) so acquired or
constructed, and
(iii) any such Lien shall attach or be created
contemporaneously with, or within 180 days after, the
acquisition or construction of such property; provided,
however, that, in the case of the construction of
improvements on real property, the real property upon
which such construction is located may be owned for more
than 180 days prior to the attachment of such Lien;
(f) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or
encumbrances, in each case incidental to, and not interfering
with, the ordinary conduct of the business of the Company or
any of its Subsidiaries, provided that such Liens do not, in
the aggregate, materially detract from the value of the
property of the Company and its Subsidiaries taken as a
whole;
(g) Liens on property or assets of the Company or any
of its Subsidiaries securing Debt owing to the Company or to
another Subsidiary;
(h) any interest or title of a lessor under, and Liens
arising from Uniform Commercial Code financing statements (or
equivalent filings, registrations or agreements in foreign
jurisdictions) relating to, Operating Leases not prohibited
by this Agreement;
(i) Liens consisting solely of the pledge by the
Company and its Subsidiaries of the Capital Stock of the
Subsidiaries of the Company (and proceeds thereof) to secure
the Obligations (as defined in the Intercreditor Agreement);
(j) Liens not otherwise permitted by clauses (a)
through (i) of this Section, provided that, immediately
after, and immediately after giving effect to, the incurrence
of any Debt secured by any such Lien, Priority Debt will not
exceed 15% of Consolidated Net Worth; and
(k) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt that is permitted to be
incurred hereunder secured by any Lien permitted by clauses
(a), (d), (e) and (j) of this Section, provided that (i) the
principal amount of Debt secured by such Lien immediately
prior to such refinancing, extension, renewal or refunding is
not increased or the maturity thereof reduced, (ii) such Lien
is not extended to any additional property, and (iii)
immediately after giving effect to such refinancing,
extension, renewal or refunding, no Default or Event of
Default would exist.
A violation of this Section 10.6 will constitute an Event of
Default, whether or not any provision is made for an equal and
ratable Lien pursuant to Section 9.6.
10.7. Transactions with Affiliates.
The Company will not, and will not permit any Subsidiary to,
enter into directly or indirectly any transaction or group of
related transactions (including without limitation the purchase,
lease, sale or exchange of properties of any kind or the rendering
of any service) with any Affiliate (other than such transactions
between or among the Company or any Wholly-Owned Subsidiary or
between or among Wholly-Owned Subsidiaries), except in the
ordinary course and pursuant to the reasonable requirements of the
Company's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such
Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
10.8. Merger, Consolidation, Sales of Substantially All
Assets.
The Company shall not, and shall not permit any Subsidiary
to, merge, consolidate or exchange shares with any other Person or
sell, assign, convey, transfer or lease all or substantially all
of its assets in a single transaction or series of transactions to
any Person, except that:
(a) any Subsidiary may merge or consolidate with and
into the Company or with a Wholly-Owned Subsidiary;
(b) a Subsidiary may sell or transfer all or
substantially all of its assets to the Company or to a Wholly-
Owned Subsidiary;
(c) the Company may sell or transfer substantially all
of its assets to one or more Wholly-Owned Subsidiaries that
are Subsidiary Guarantors which, substantially concurrently
with such sale or transfer, comply with, or are then in
compliance with, the provisions of Section 9.7 hereof,
provided that no such Wholly-Owned Subsidiaries need be
Subsidiary Guarantors if, as contemplated by Section 9.7
hereof, no Subsidiary is a Subsidiary Guarantor;
(d) the Company and any Subsidiary may sell inventory
in the ordinary course of business; and
(e) the Company may merge or consolidate with any other
corporation, or sell, assign, convey, transfer or lease all
or substantially all of the assets of the Company, so long
as:
(i) the surviving corporation (or the corporation
to which such sale, assignment, transfer, conveyance or
lease is made (the "transferee")) shall be the Company
or another corporation organized under the laws of the
United States or a State thereof or the District of
Columbia;
(ii) the surviving (or transferee) corporation (if
not the Company) shall assume the due and punctual
performance and observance of the obligations of the
Company under this Agreement, the Notes and the other
Financing Documents pursuant to such agreements and
instruments as shall be reasonably satisfactory to the
Required Holders, and the Company shall have caused to
be delivered to each holder of Notes an opinion of
nationally recognized counsel, or other independent
counsel reasonably satisfactory to the Required Holders,
to the effect that all agreements or instruments
effecting such assumption are enforceable in accordance
with their terms and comply with the terms hereof; and
(iii) immediately after giving effect to such
merger, consolidation or sale or transfer of assets, no
Default or Event of Default shall have occurred or
exist.
10.9. Sales of Assets.
The Company shall not, and shall not permit any of its
Subsidiaries to, engage in Asset Sales unless:
(a) in the case of any Asset Sale having a Disposition
Value of $10,000,000 or more, the Board of Directors of the
Company or such Subsidiary (or the executive committee
thereof), as the case may be, shall have, in good faith (i)
determined that the Asset Sale is in the best interest of the
Company or such Subsidiary, (ii) determined that the
consideration to be received in connection with such Asset
Sale is satisfactory and adequate and (iii) otherwise
approved such Asset Sale;
(b) the Company or such Subsidiary, as the case may be,
receives consideration at the time of any such Asset Sale at
least equal to the Fair Market Value of the assets sold or
otherwise disposed of;
(c) in the case of an Asset Sale constituting the sale
of Equity Interests of a Subsidiary (or Subsidiary thereof):
(i) all Equity Interests of such Subsidiary (or Subsidiary
thereof) then owned by the Company and its Subsidiaries shall
be sold or otherwise disposed of simultaneously and (ii) the
Subsidiary (or Subsidiary thereof) that is sold or disposed
of shall not own or hold any Equity Interests or Debt of the
Company or any other Subsidiary that is not also then being
simultaneously sold or disposed of;
(d) the Asset Sale does not constitute the sale of a
Substantial Amount of the assets of the Company and its
Subsidiaries; and
(e) immediately before and immediately after giving
effect to such Asset Sale, no Default or Event of Default
shall exist.
Notwithstanding the foregoing, the Company and any Subsidiary may
engage in Asset Sales constituting the sale of a Substantial
Amount of the Assets of the Company and its Subsidiaries so long
as (i) the requirements set forth in clauses (a) through (c) and
clause (e) above are satisfied, (ii) at least 80% of the
consideration therefor received by the Company or such Subsidiary
is in cash, and (iii) within 365 days after the receipt by the
Company or such Subsidiary of any Net Proceeds from such Asset
Sale, the Company shall apply, or shall cause such Subsidiary to
apply, the amount of such Net Proceeds in excess of the amount
constituting a Substantial Amount, to the acquisition of a
controlling interest in another business, the making of a capital
expenditure or the acquisition of other long-term assets, in each
case, in the same or a similar line of business as the Company was
engaged in on the date of such Asset Sale.
10.10. Nature of Business.
The Company will not, and will not permit any of its
Subsidiaries to, engage in any business if, as a result, when
taken as a whole, the general nature of the business then engaged
in by the Company and its Subsidiaries would be substantially
changed from the operation of restaurants.
10.11. Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company shall not permit any of its Subsidiaries to
create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary to
(x)(i) pay dividends or make any other distributions to the
Company or any of its Subsidiaries with respect to, or on account
of, its Equity Interests or (ii) pay any Debt owed to the Company
or any of its Subsidiaries, (y) make loans or advances to the
Company or any of its Subsidiaries or (z) transfer or encumber any
of its properties or assets to the Company or any of its
Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of:
(a) agreements evidencing Debt as in effect on the date
of the Closing and described on Schedule 5.15 hereof
(including, without limitation, the documents evidencing the
Credit Facility) and any agreement which evidences any
renewal, extension, substitution or refinancing of such Debt
so long as the provisions relating to such encumbrance or
restriction contained in any such agreement are no more
restrictive or onerous to the Company or such Subsidiary than
such provisions as in existence prior to such renewal,
extension, substitution or refinancing,
(b) agreements evidencing Priority Debt of Subsidiaries
permitted to be incurred under this Agreement that impose
restrictions of the nature described in clause (z) above (but
not of the type or nature described in clauses (x) or (y)
above),
(c) applicable law,
(d) customary non-assignment provisions in leases
entered into in the ordinary course of business and
consistent with past practices,
(e) purchase money obligations for property acquired in
the ordinary course of business that impose restrictions of
the nature described in clause (z) above on the property so
acquired, and
(f) an agreement that has been entered into for the
sale or disposition of the Equity Interests or property or
assets of a Subsidiary that is permitted by Section 10.8 or
10.9.
10.12. No Restriction on Amendments or Prepayments.
(a) Amendments. The Company shall not enter into, or
otherwise be or become a party to or obligated under, any
agreement, document or instrument that includes any covenant
or other provision that requires or would require, as a
condition to the amendment or waiver of any term or provision
of this Agreement, the approval or consent of any creditor of
the Company (or of any agent or trustee acting on such
creditor's behalf).
(b) Prepayments. The Company shall not enter into, or
otherwise be or become a party to or obligated under, any
agreement, document or instrument that includes any covenant
or other provision that requires or would require, as a
condition to the making of any required or optional payment
or prepayment of the Notes pursuant to any of the terms and
provisions of Section 8, the approval or consent of any
creditor of the Company (or of any agent or trustee acting on
such creditor's behalf).
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) Principal or Make-Whole Amount -- the Company
defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for
prepayment or by declaration or otherwise; or
(b) Interest Payment -- the Company defaults in the
payment of any interest on any Note for more than five
Business Days after the same becomes due and payable; or
(c) Specified Covenants -- the Company defaults in the
performance of or compliance with any term contained in
Section 10 or Section 7.1(d); or
(d) Other Covenants -- the Company defaults in the
performance of or compliance with any term contained herein
(other than those referred to in paragraphs (a), (b) and (c)
of this Section 11) and such default is not remedied within
30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as
a "notice of default" and to refer specifically to this
paragraph (d) of Section 11); or
(e) Warranties and Representations -- any
representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which
made; or
(f) Cross-Default -
(i) the Company or any Subsidiary is in default
(as principal or as guarantor or other surety) in the
payment of any principal of or premium or make-whole
amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount of at least
$5,000,000 beyond any period of grace provided with
respect thereto, or
(ii) the Company or any Subsidiary is in default in
the performance of or compliance with any term of any
evidence of any Indebtedness in an aggregate outstanding
principal amount of at least $5,000,000 or of any
mortgage, indenture or other agreement relating thereto
or any other condition exists, and as a consequence of
such default or condition such Indebtedness has become,
or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its
regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or
continuation of any event or condition (other than the
passage of time or the right of the holder of
Indebtedness to convert such Indebtedness into equity
interests),
(A) the Company or any Subsidiary has become
obligated to purchase or repay Indebtedness before
its regular maturity or before its regularly
scheduled dates of payment in an aggregate
outstanding principal amount of at least
$5,000,000, or
(B) one or more Persons have the right to
require the Company or any Subsidiary so to
purchase or repay such Indebtedness,
except for the purchase or repayment of Indebtedness
outstanding under the Credit Facility from time to time
to the extent required by Section 3.4(b) thereof as in
effect on the date of the Closing; or
(g) Insolvency -- the Company or any Subsidiary (i) is
generally not paying, or admits in writing its inability to
pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition
for relief or reorganization or arrangement or any other
petition in bankruptcy, for liquidation or to take advantage
of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to
the appointment of a custodian, receiver, trustee or other
officer with similar powers with respect to it or with
respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) Appointment of a Receiver -- a court or
governmental authority of competent jurisdiction enters an
order appointing, without consent by the Company or any of
its Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with
respect to any substantial part of its property, or
constituting an order for relief or approving a petition for
relief or reorganization or any other petition in bankruptcy
or for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any
of its Subsidiaries, or any such petition shall be filed
against the Company or any of its Subsidiaries and such
petition shall not be dismissed within 60 days; or
(i) Final Judgment -- a final judgment or judgments for
the payment of money aggregating in excess of $5,000,000 are
rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 60 days
after entry thereof, bonded, discharged or stayed pending
appeal or review, or are not discharged within 60 days after
the expiration of such stay; or
(j) ERISA -- if (i) any Plan shall fail to satisfy the
minimum funding standards of ERISA or the Code for any plan
year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint
a trustee to administer any Plan or the PBGC shall have
notified the Company or any ERISA Affiliate that a Plan may
become a subject of any such proceedings, (iii) the aggregate
"amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed
$3,000,000, (iv) the Company or any ERISA Affiliate shall
have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee
benefit plans, (v) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan, or (vi) the Company or
any Subsidiary establishes or amends any employee welfare
benefit plan that provides post-employment welfare benefits
in a manner that would increase the liability of the Company
or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either
individually or together with any other such event or events,
could reasonably be expected to have a Material Adverse
Effect (as used in this Section 11(j), the terms "employee
benefit plan" and "employee welfare benefit plan" shall have
the respective meanings assigned to such terms in Section 3
of ERISA); or
(k) Subsidiary Guarantee -- (i) the Subsidiary
Guarantee shall cease to be in full force and effect or shall
be declared by a court or Governmental Authority of competent
jurisdiction to be void, voidable or unenforceable against
any Subsidiary party thereto, or (ii) the validity or
enforceability of the Subsidiary Guarantee shall be contested
by the Company or any Subsidiary or Affiliate thereof, or
(iii) the Company, or any Subsidiary or Affiliate thereof,
shall deny that any Subsidiary has any further liability or
obligation under the Subsidiary Guarantee; or
(l) Other Financing Documents -- (i) the Company, any
Subsidiary Guarantor, or any pledgor under the Pledge
Agreement, shall default in the due performance or observance
of any term, covenant or agreement in any one or more of the
Subsidiary Guarantee, the Contribution Agreement, the
Intercreditor Agreement and the Pledge Agreement, as the case
may be (subject to applicable grace or cure periods, if any),
or (ii) any such documents shall fail to be in full force or
effect or to give the Collateral Agent or the holders of the
Notes any material part of the Liens, rights, powers and
privileges purported to be created thereby; or
(m) Credit Facility -- there shall occur an Event of
Default under and as defined in the Credit Facility.
12. REMEDIES ON DEFAULT, ETC.
12.1. Acceleration.
(a) If an Event of Default with respect to the Company
or any Subsidiary described in paragraph (g) or (h) of
Section 11 (other than an Event of Default described in
clause (i) of Section 11(g) or described in clause (vi) of
Section 11(g) by virtue of the fact that such clause
encompasses clause (i) of Section 11(g)) has occurred, all
the Notes then outstanding shall automatically become
immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, the Required Holders may at any time at their
option, by notice or notices to the Company, declare all the
Notes then outstanding to be immediately due and payable.
(c) If any Event of Default described in Section 11(a)
or Section 11(b) has occurred and is continuing, any holder
or holders of Notes at the time outstanding affected by such
Event of Default may at any time, at its or their option, by
notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable.
Upon any Notes becoming due and payable under this
Section 12.1, whether automatically or by declaration, such Notes
will forthwith mature and the entire unpaid principal amount of
such Notes, plus (x) all accrued and unpaid interest thereon and
(y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all
be immediately due and payable, in each and every case without
presentment, demand, protest or further notice, all of which are
hereby waived. The Company acknowledges, and the parties hereto
agree, that each holder of a Note has the right to maintain its
investment in the Notes free from repayment by the Company (except
as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company in the event that
the Notes are prepaid or are accelerated as a result of an Event
of Default, is intended to provide compensation for the
deprivation of such right under such circumstances.
12.2. Other Remedies.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or
have been declared immediately due and payable under Section 12.1,
the holder of any Note at the time outstanding may proceed to
protect and enforce the rights of such holder by an action at law,
suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms
hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.
12.3. Rescission.
At any time after any Notes have been declared due and
payable pursuant to clause (b) or (c) of Section 12.1, the
Required Holders, by written notice to the Company, may rescind
and annul any such declaration and its consequences if (a) the
Company has paid all overdue interest on the Notes, all principal
of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration,
and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any
overdue interest in respect of the Notes, at the Default Rate,
(b) all Events of Default and Defaults, other than non-payment of
amounts that have become due solely by reason of such declaration,
have been cured or have been waived pursuant to Section 17, and
(c) no judgment or decree has been entered for the payment of any
monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right
consequent thereon.
12.4. No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder
of any Note in exercising any right, power or remedy shall operate
as a waiver thereof or otherwise prejudice such holder's rights,
powers or remedies. No right, power or remedy conferred by this
Agreement or by any Note upon any holder thereof shall be
exclusive of any other right, power or remedy referred to herein
or therein or now or hereafter available at law, in equity, by
statute or otherwise. Without limiting the obligations of the
Company under Section 15, the Company will pay to the holder of
each Note on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including,
without limitation, reasonable attorneys' fees, expenses and
disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. Registration of Notes.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of
Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee
of one or more Notes shall be registered in such register. Prior
to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof,
and the Company shall not be affected by any notice or knowledge
to the contrary. The Company shall give to any holder of a Note
that is an Institutional Investor, promptly upon request therefor,
a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2. Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in
the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly
executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for
notices of, and a contact name and telephone number for, each
transferee of such Note or part thereof), the Company shall
execute and deliver (not later than five (5) Business Days after
the Company's receipt of the foregoing items, regardless of
whether the Company shall have yet received payment of any sum
referred to below), one or more new Notes (as requested by the
holder thereof) in exchange therefor, in an aggregate principal
amount equal to the unpaid principal amount of the surrendered
Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of
Exhibit 1. Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require
payment of a sum sufficient to cover (i) any stamp tax or
governmental charge imposed in respect of any such transfer of
Notes and (ii) any costs of delivery (not exceeding $50 in the
aggregate) of such new Notes. Notes shall not be transferred in
denominations of less than $100,000, provided that if necessary to
enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee, by its acceptance of a Note registered
in its name (or the name of its nominee), shall be deemed to have
made the representations set forth in Section 6.1 (other than the
first sentence thereof) and in Section 6.2.
13.3. Replacement of Notes.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note (which evidence shall be, in
the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided, that if
the holder of such Note is, or is a nominee for, an original
Purchaser or another holder of a Note with a minimum net
worth of at least $100,000,000, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory),
or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to
which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost,
stolen, destroyed or mutilated Note if no interest shall have been
paid thereon.
14. PAYMENTS ON NOTES.
14.1. Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes
shall be made in New York, New York at the principal office of The
Chase Manhattan Bank, N.A. in such jurisdiction. The Company may
at any time, by notice to each holder of a Note, change the place
of payment of the Notes so long as such place of payment shall be
either the principal office of the Company in such jurisdiction or
the principal office of a bank or trust company in such
jurisdiction.
14.2. Home Office Payment.
So long as you or your nominee shall be the holder of any
Note, and notwithstanding anything contained in Section 14.1 or in
such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, Make-Whole Amount, if any, and
interest by the method and at the address specified for such
purpose below your name in Schedule A, or by such other method or
at such other address as you shall have from time to time
specified to the Company in writing for such purpose, without the
presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company
made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of
payment most recently designated by the Company pursuant to
Section 14.1. Prior to any sale or other disposition of any Note
held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last
date to which interest has been paid thereon or surrender such
Note to the Company in exchange for a new Note or Notes pursuant
to Section 13.2. The Company will afford the benefits of this
Section 14.2 to any Institutional Investor that is the direct or
indirect transferee of any Note purchased by you under this
Agreement and that has made the same agreement relating to such
Note as you have made in this Section 14.2.
15. EXPENSES, ETC.
15.1. Transaction Expenses.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses
(including reasonable attorneys' fees of your special counsel and,
if reasonably required, local or other counsel) incurred by you
and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes
(whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and
expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this
Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in
connection with this Agreement or the Notes, or by reason of being
a holder of any Note, and (b) the costs and expenses, including
financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of the Company or any Subsidiary or in
connection with any work-out or restructuring of the transactions
contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of
brokers and finders (other than those retained by you).
15.2. Survival.
The obligations of the Company under this Section 15 will
survive the payment or transfer of any Note, the enforcement,
amendment or waiver of any provision of this Agreement or the
Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall
survive the execution and delivery of this Agreement and the
Notes, the purchase or transfer by you of any Note or portion
thereof or interest therein and the payment of any Note, and may
be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the
Company pursuant to this Agreement shall be deemed representations
and warranties of the Company under this Agreement. Subject to
the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the
subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. Requirements.
This Agreement and the Notes may be amended, and the
observance of any term hereof or of the Notes may be waived
(either retroactively or prospectively), with (and only with) the
written consent of the Company and the Required Holders, except
that (a) no amendment or waiver of any of the provisions of
Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to
by you in writing, and (b) no such amendment or waiver may,
without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or
reduce the rate or change the time of payment or method of
computation of interest or of the Make-Whole Amount on, the Notes,
(ii) change the percentage of the principal amount of the Notes
the holders of which are required to consent to any such amendment
or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17
or 20.
17.2. Solicitation of Holders of Notes
(a) Solicitation. The Company will provide each holder
of the Notes (irrespective of the amount of Notes then owned
by it) with sufficient information, sufficiently far in
advance of the date a decision is required, to enable such
holder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof or of the Notes. The
Company will deliver executed or true and correct copies of
each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding
Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the
requisite holders of Notes.
(b) Payment. The Company will not directly or
indirectly pay or cause to be paid any remuneration, whether
by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as
consideration for or as an inducement to the entering into by
any holder of Notes of any waiver or amendment of any of the
terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on
the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such
waiver or amendment.
(c) Consent in Contemplation of Transfer. Without
limiting the generality of Section 8.6, any consent made
pursuant to this Section 17 by a holder of Notes that has
transferred or has agreed to transfer its Notes to the
Company, any Subsidiary or any Affiliate of the Company and
has provided or has agreed to provide such written consent as
a condition to such transfer shall be void and of no force or
effect except solely as to such holder, and any amendments
effected or waivers granted or to be effected or granted that
would not have been or would not be so effected or granted
but for such consent (and the consents of all other holders
of Notes that were acquired under the same or similar
conditions) shall be void and of no force or effect except
solely as to such holder.
17.3. Binding Effect, etc.
Any amendment or waiver consented to as provided in this
Section 17 applies equally to all holders of Notes and is binding
upon them and upon each future holder of any Note and upon the
Company without regard to whether such Note has been marked to
indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement,
Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between
the Company and the holder of any Note nor any delay in exercising
any rights hereunder or under any Note shall operate as a waiver
of any rights of any holder of such Note. As used herein, the
term "this Agreement" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
17.4. Notes held by Company, etc.
Solely for the purpose of determining whether the holders of
the requisite percentage of the aggregate principal amount of
Notes then outstanding approved or consented to any amendment,
waiver or consent to be given under this Agreement or the Notes,
or have directed the taking of any action provided herein or in
the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes
then outstanding, Notes directly or indirectly owned by the
Company or any of its Affiliates shall be deemed not to be
outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall
be in writing and sent (a) by facsimile if the sender on the same
day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered
or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the
address specified for such communications in Schedule A, or
at such other address as you or it shall have specified to
the Company in writing,
(ii) if to any other holder of any Note, to such holder
at such address as such other holder shall have specified to
the Company in writing, or
(iii) if to the Company, to the Company at its
address set forth at the beginning hereof to the attention of
the Vice President of Finance and/or Chief Financial Officer,
or at such other address as the Company shall have specified
to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when
actually received. Notwithstanding the foregoing provisions of
this Section 18, service of process in any suit, action or
proceeding arising out of or relating to any of the Financing
Documents or any transaction contemplated thereby shall be
delivered in the manner provided in Section 22.8(c).
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that
may hereafter be executed, (b) documents received by you at the
Closing (except the Notes themselves), and (c) financial
statements, certificates and other information previously or
hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and you may destroy any
original document so reproduced. The Company agrees and
stipulates that, to the extent permitted by applicable law, any
such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made by you in the regular course of business)
and any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence. This
Section 19 shall not prohibit the Company or any other holder of
Notes from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential
Information" means information delivered to you by or on behalf of
the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was
publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act
or omission by you or any Person acting on your behalf,
(c) otherwise becomes known to you other than through disclosure
by the Company or any Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise
publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by
you in good faith to protect confidential information of third
parties delivered to you provided that you may deliver or disclose
Confidential Information to (i) your directors, officers,
employees, agents, attorneys and affiliates (to the extent such
disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial
advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other
holder of any Note, (iv) any Institutional Investor to which you
sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (v) any Person from which you
offer to purchase any Security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20),
(vi) any federal or state regulatory authority having jurisdiction
over you, (vii) the National Association of Insurance
Commissioners or any similar organization, or any nationally
recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to
effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which you are a
party or (z) if an Event of Default has occurred and is
continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under
your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by
and to be entitled to the benefits of this Section 20 as though it
were a party to this Agreement. On reasonable request by the
Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this
Agreement or requested by such holder (other than a holder that is
a party to this Agreement or its nominee), such holder will enter
into an agreement with the Company embodying the provisions of
this Section 20.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your
Affiliates as the purchaser of the Notes that you have agreed to
purchase hereunder, by written notice to the Company, which notice
shall be signed by both you and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall
contain a confirmation by such Affiliate of the accuracy with
respect to it of the representations set forth in Section 6. Upon
receipt of such notice, wherever the word "you" is used in this
Agreement (other than in this Section 21), such word shall be
deemed to refer to such Affiliate in lieu of you. In the event
that such Affiliate is so substituted as a purchaser hereunder and
such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of
such transfer, wherever the word "you" is used in this Agreement
(other than in this Section 21), such word shall no longer be
deemed to refer to such Affiliate, but shall refer to you, and you
shall have all the rights of an original holder of the Notes under
this Agreement.
22. MISCELLANEOUS.
22.1. Successors and Assigns.
All covenants and other agreements contained in this
Agreement by or on behalf of any of the parties hereto bind and
inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note)
whether so expressed or not.
22.2. Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount
or interest on any Note that is due on a date other than a
Business Day shall be made on the next succeeding Business Day
without including the additional days elapsed in the computation
of the interest payable on such next succeeding Business Day.
22.3. Severability.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not
invalidate or render unenforceable such provision in any other
jurisdiction.
22.4. Construction.
Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each
other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with any other covenant. Where any
provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly
by such Person.
22.5. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto.
22.6. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE
LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS
OF A JURISDICTION OTHER THAN SUCH STATE.
22.7. General Interest Provisions.
It is the intention of the Company and the holders of the
Notes to conform strictly to the Applicable Interest Law.
Accordingly, it is agreed that, notwithstanding any provisions to
the contrary in this Agreement or in the Notes, the aggregate of
all interest, and any other charges or consideration constituting
interest under the Applicable Interest Law that is taken,
reserved, contracted for, charged or received pursuant to this
Agreement or the Notes shall under no circumstances exceed the
maximum amount of interest allowed by the Applicable Interest Law.
If any such excess interest is ever charged, received or collected
on account of or relating to this Agreement and the Notes
(including any charge or amount which is not denominated as
"interest" but is legally deemed to be interest under Applicable
Interest Law), then in such event:
(a) the provisions of this Section 22.7 shall govern
and control;
(b) the Company shall not be obligated to pay the
amount of such interest to the extent that it is in excess of
the maximum amount of interest allowed by the Applicable
Interest Law;
(c) any excess shall be deemed a mistake and cancelled
automatically and, if theretofore paid, shall be credited to
the principal amount of the Notes by the holders thereof, and
if the principal balance of the Notes is paid in full, any
remaining excess shall be forthwith paid to the Issuer; and
(d) the effective rate of interest shall be
automatically subject to reduction to the Maximum Legal Rate
of Interest.
If at any time thereafter, the Maximum Legal Rate of Interest is
increased then, to the extent that it shall be permissible under
the Applicable Interest Law, the Company shall forthwith pay to
the holders of the Notes, on a pro rata basis, all amounts of such
excess interest that the holders of the Notes would have been
entitled to receive pursuant to the terms of this Agreement and
the Notes had such increased Maximum Legal Rate of Interest been
in effect at all times when such excess interest accrued. To the
extent permitted by the Applicable Interest Law, all sums paid or
agreed to be paid to the holders of the Notes for the use,
forbearance or detention of the indebtedness evidenced thereby
shall be amortized, prorated, allocated and spread throughout the
full term of the Notes.
22.8. Waiver of Jury Trial; Consent to Jurisdiction; Etc.
(a) Waiver of Jury Trial; Waiver of Consequential
Damages. THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER FINANCING
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
THE COMPANY, ON BEHALF OF ITSELF AND THE OTHER OBLIGORS,
AGREES NOT TO ASSERT ANY CLAIM AGAINST ANY HOLDER OF NOTES,
ITS AFFILIATES, OR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS, ON ANY THEORY OF
LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES ARISING OUT OF OR OTHERWISE RELATING TO ANY OF THE
TRANSACTIONS CONTEMPLATED HEREIN.
(b) Consent to Jurisdiction. ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR
ANY OTHER FINANCING DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY OR ANY ACTION OR PROCEEDING TO EXECUTE OR
OTHERWISE ENFORCE ANY JUDGMENT IN RESPECT OF ANY BREACH UNDER
THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT MAY BE BROUGHT
BY SUCH PARTY IN ANY FEDERAL DISTRICT COURT LOCATED IN NEW
YORK, NEW YORK, OR ANY NEW YORK STATE COURT LOCATED IN NEW
YORK, NEW YORK AS SUCH PARTY MAY IN ITS SOLE DISCRETION
ELECT, AND BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO
THE NONEXCLUSIVE IN PERSONAM JURISDICTION OF EACH SUCH COURT,
AND EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES AND AGREES
NOT TO ASSERT IN ANY PROCEEDING BEFORE ANY TRIBUNAL, BY WAY
OF MOTION, AS A DEFENSE OR OTHER-WISE, ANY CLAIM THAT IT IS
NOT SUBJECT TO THE IN PERSONAM JURISDICTION OF ANY SUCH
COURT. IN ADDITION, EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE IN
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER FINANCING DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY BROUGHT IN ANY
SUCH COURT, AND HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) Service of Process. EACH PARTY HERETO IRREVOCABLY
AGREES THAT PROCESS PERSONALLY SERVED OR SERVED BY U.S.
REGISTERED MAIL AT THE ADDRESSES PROVIDED HEREIN FOR NOTICES
SHALL CONSTITUTE, TO THE EXTENT PERMITTED BY LAW, ADEQUATE
SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER FINANCING
DOCUMENT OR TRANSACTION CONTEMPLATED HEREBY OR THEREBY, OR
ANY ACTION OR PROCEEDING TO EXECUTE OR OTHERWISE ENFORCE ANY
JUDGMENT IN RESPECT OF ANY BREACH HEREUNDER OR UNDER ANY
OTHER FINANCING DOCUMENT. RECEIPT OF PROCESS SO SERVED SHALL
BE CONCLUSIVELY PRESUMED AS EVIDENCED BY A DELIVERY RECEIPT
FURNISHED BY THE UNITED STATES POSTAL SERVICE OR ANY
COMMERCIAL DELIVERY SERVICE.
(d) Other Forums. NOTHING HEREIN SHALL IN ANY WAY BE
DEEMED TO LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY
WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY
APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER ANY OTHER PARTY
HERETO IN SUCH OTHER JURISDICTION, AND IN SUCH OTHER MANNER,
AS MAY BE PERMITTED BY APPLICABLE LAW.
22.9. Right of Set-Off.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default and the
commencement of remedies described in Section 12.1 or 12.2, each
holder of Notes is authorized at any time and from time to time,
without presentment, demand, protest or other notice of any kind
(all of which rights being hereby expressly waived), to set-off
and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by
such holder (including, without limitation, branches, agencies or
Affiliates of such holder wherever located) to or for the credit
or the account of any Obligor against obligations and liabilities
of such Obligor to the holders of the Notes under this Agreement
and the Notes, the other Financing Documents or otherwise,
irrespective of whether the holders of Notes shall have made any
demand hereunder and although such obligations, liabilities or
claims, or any of them, may be contingent or unmatured, and any
such set-off shall be deemed to have been made immediately upon
the occurrence of an Event of Default even though such charge is
made or entered on the books of such holder subsequent thereto.
Each holder of Notes hereby agrees that any set-off effected
pursuant to this Section 22.9 shall be subject to the terms of the
Intercreditor Agreement and, if the Intercreditor Agreement shall
no longer be in effect, shall be shared among all holders of Notes
at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore
prepaid.
22.10. Acceptance of Intercreditor Agreement.
By its acceptance of any Note the holder thereof shall be
deemed to have agreed to the terms of the Intercreditor Agreement.
22.11. Further Assurances.
The Company agrees, upon the request of the Required Holders
or the Collateral Agent, promptly to take such actions, as
reasonably requested, as are necessary to carry out the intent of
this Agreement and the other Financing Documents, including, but
not limited to, such actions as are necessary to ensure that the
Secured Parties have a perfected security interest in the
Collateral subject to no Liens other than Liens permitted by
Section 10.6.
* * * * * *
[Signatures on following page]
If you are in agreement with the foregoing, please sign the
form of agreement on the accompanying counterpart of this
Agreement and return it to the Company, whereupon the foregoing
shall become a binding agreement between you and the Company.
Very truly yours,
RYAN'S FAMILY STEAK HOUSES, INC.
By:
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
[ADD PURCHASER SIGNATURE BLOCKS]
SCHEDULE A TO NOTE PURCHASE AGREEMENT
INFORMATION RELATING TO PURCHASERS
Purchaser Name THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
Name in Which Note is THE PRUDENTIAL INSURANCE COMPANY OF
Registered AMERICA
Note Registration R-1; $40,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
The Bank of New York
Account New York, NY
Information ABA No.: 021-000-018
Account No.: 890-0304-391
Account Name: The Prudential Insurance
Company of America
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices The Prudential Insurance Company of
Related to Payments America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Attention: Manager, Investment
Operations Group
Tel: (973) 802-5260
Fax: (973) 802-8055
Address for All other The Prudential Insurance Company of
Notices America
c/o Prudential Capital Group
Two Ravinia Drive, Suite 1400
Atlanta, GA 30346
Attention: Managing Director
Tel: (770) 395-8424
Fax: (770) 395-8421
Other Instructions THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By_______________________
Name:
Title:
Instructions re Robert Lawrence, Esq.
Delivery of Notes Assistant General Counsel
Prudential Capital Group
1114 Avenue of the Americas, Floor 30
New York, NY 10036
Tel: (212) 626-2067
Tax Identification 22-1211670
Number
Purchaser Name MONY LIFE INSURANCE COMPANY
Name in Which Note is J. ROMEO & CO.
Registered
Note Registration R-2; $15,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
Chase Manhattan Bank
Account ABA #021000021
Information For credit to: Private Income Processing
Account No. 544-755102
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices If by Registered Mail, Certified Mail or
Related to Payments Federal Express:
The Chase Manhattan Bank
4 New York Plaza, 13th Floor
New York, NY 10004
Attn: Income Processing - J. Piperato,
13th Floor
If by Regular Mail:
The Chase Manhattan Bank
Dept. 3492
P.O. Box 50000
Newark, NJ 07101-8006
With a Second Copy to:
Telecopy Confirms and Notices
(212) 708-2152
Attention: Securities Custody, MD 6-
39A
Mailing Confirms and Notices:
MONY Life Insurance Company
1740 Broadway
New York, NY 10019
Attention: Securities Custody, MD 6-
39A
Address for All other MONY Life Insurance Company
Notices 1740 Broadway
New York, NY 10019
Attention: Capital Management Unit
Fax: (212) 708-2491
Other Instructions MONY LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re Patti Hartnett, Esq.
Delivery of Notes MONY Life Insurance Company
1740 Broadway
Law Department
New York, NY 10019
Tel: (212) 708-2240
Tax Identification 13-1632487
Number
Purchaser Name UNITED OF OMAHA LIFE INSURANCE COMPANY
Name in Which Note is UNITED OF OMAHA LIFE INSURANCE COMPANY
Registered
Note Registration R-3; $4,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
Chase Manhattan Bank
Account ABA #021000021
Information Private Income Processing
For credit to: United of Omaha Life
Insurance Company
Account # 900-9000200
a/c: G07097
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices The Chase Manhattan Bank
Related to Payments 4 New York Plaza, 13th Floor
New York, NY 10004
Attn: Income Processing - J. Pipperato
a/c: G07097
Address for All other 4 - Investment Loan Administration
Notices United of Omaha Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175-1011
Other Instructions UNITED OF OMAHA LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re The Chase Manhattan Bank
Delivery of Notes North America Insurance, 6th Floor
Attn: Christine Alonzo
3 Chase Metrotech Center
Brooklyn, NY 11245
Tax Identification 47-0322111
Number
Purchaser Name MUTUAL OF OMAHA INSURANCE COMPANY
Name in Which Note is MUTUAL OF OMAHA INSURANCE COMPANY
Registered
Note Registration R-4; $4,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
Chase Manhattan Bank
Account ABA #021000021
Information Private Income Processing
For credit to: Mutual of Omaha Insurance
Company
Account # 900-9000200
a/c: G07096
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices The Chase Manhattan Bank
Related to Payments 4 New York Plaza, 13th Floor
New York, NY 10004
Attn: Income Processing - J. Pipperato
a/c: G07096
Address for All other 4 - Investment Loan Administration
Notices Mutual of Omaha Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175-1011
Other Instructions MUTUAL OF OMAHA INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re The Chase Manhattan Bank
Delivery of Notes North America Insurance, 6th Floor
Attn: Christine Alonzo
3 Chase Metrotech Center
Brooklyn, NY 11245
Tax Identification 47-0246511
Number
Purchaser Name COMPANION LIFE INSURANCE COMPANY
Name in Which Note is COMPANION LIFE INSURANCE COMPANY
Registered
Note Registration R-5; $2,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
Chase Manhattan Bank
Account ABA #021000021
Information Private Income Processing
For credit to: Companion Life Insurance
Company
Account # 900-9000200
a/c: G07903
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices The Chase Manhattan Bank
Related to Payments 4 New York Plaza, 13th Floor
New York, NY 10004
Attn: Income Processing - J. Pipperato
a/c: G07903
Address for All other 4 - Investment Loan Administration
Notices Companion Life Insurance Company
Mutual of Omaha Plaza
Omaha, NE 68175-1011
Other Instructions COMPANION LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re The Chase Manhattan Bank
Delivery of Notes North America Insurance, 6th Floor
Attn: Christine Alonzo
3 Chase Metrotech Center
Brooklyn, NY 11245
Tax Identification 13-1595128
Number
Purchaser Name NATIONWIDE LIFE INSURANCE COMPANY
Name in Which Note is NATIONWIDE LIFE INSURANCE COMPANY
Registered
Note Registration R-6; $3,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
The Bank of New York
Account ABA #021-000-018
Information BNF: IOC566
F/A/O Nationwide Life Insurance Company
Attn: P & I Department
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices Nationwide Life Insurance Company
Related to Payments c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
with a copy to:
Nationwide Life Insurance Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Address for All other Nationwide Life Insurance Company
Notices One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income
Securities
Fax: (614) 249-4553
Other Instructions NATIONWIDE LIFE INSURANCE COMPANY
By_______________________
Name:
Title:
Instructions re The Bank of New York
Delivery of Notes One Wall Street
3rd Floor, Window A
New York, NY 10286
F/A/O Nationwide Life Insurance Co. Acct
#267829
Tax Identification 31-4156830
Number
Purchaser Name NATIONWIDE LIFE AND ANNUITY INSURANCE
COMPANY
Name in Which Note is NATIONWIDE LIFE AND ANNUITY INSURANCE
Registered COMPANY
Note Registration R-7; $2,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
The Bank of New York
Account ABA #021-000-018
Information BNF: IOC566
F/A/O Nationwide Life and Annuity
Insurance Company
Attn: P & I Department
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices Nationwide Life and Annuity Insurance
Related to Payments Company
c/o The Bank of New York
P.O. Box 19266
Attn: P & I Department
Newark, NJ 07195
with a copy to:
Nationwide Life and Annuity Insurance
Company
Attn: Investment Accounting
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Address for All other Nationwide Life and Annuity Insurance
Notices Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income
Securities
Fax: (614) 249-4553
Other Instructions NATIONWIDE LIFE AND ANNUITY INSURANCE
COMPANY
By_______________________
Name:
Title:
Instructions re The Bank of New York
Delivery of Notes One Wall Street
3rd Floor, Window A
New York, NY 10286
F/A/O Nationwide Life Insurance Co. Acct
#267961
Tax Identification 31-1000740
Number
Purchaser Name BANKBOSTON, N.A.
Name in Which Note is BANKBOSTON, N.A.
Registered
Note Registration R-8; $5,000,000
Number; Principal
Amount
Payment on Account of
Note
Federal Wire Funds Transfer
Method
BankBoston, N.A.
Account ABA 011-000-390
Information Attn: Angela Moore, Admin 57
Commercial Loan Services
Accompanying Name of Company:Ryan's Family Steak
Information Houses, Inc.
Description of
Security: 9.02% Senior Notes due
2008
Security Number:783519 A* 2
Due Date and Application (as among
principal, premium and interest) of the
payment being made:
Address for Notices Susan M. Santos
Related to Payments BankBoston
100 Federal St., 01-09-04
Boston, MA 02110
Phone: (617) 434-3496
Fax: (617) 434-9933
Address for All other Susan M. Santos
Notices BankBoston
100 Federal St., 01-09-04
Boston, MA 02110
Phone: (617) 434-3496
Fax: (617) 434-9933
Other Instructions BANKBOSTON, N.A.
By_______________________
Name: Suzanne Smore
Title: VP
Instructions re Suzanne Smore
Delivery of Notes BankBoston
100 Federal St., 01-09-05
Boston, MA 02110
Phone: (617) 434-0019
Fax: (617) 434-0637
Tax Identification 042-472499
Number
SCHEDULE B TO NOTE PURCHASE AGREEMENT
DEFINED TERMS
As used herein, the following terms have the respective
meanings set forth below or set forth in the Section hereof
following such term:
"Affiliate" shall mean, with respect to any Person, any
other Person (i) directly or indirectly controlling or controlled
by or under direct or common control with such Person or
(ii) directly or indirectly owning or holding ten percent (10%)
or more of any class of voting or other equity interests in such
Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. Unless the context
otherwise clearly requires, any reference to an "Affiliate" is a
reference to an Affiliate of the Company.
"Agreement, this" is defined in Section 17.3.
"Agreements" means, collectively, this Agreement and the
Other Agreements.
"Applicable Interest Law" means any present or future law
(including, without limitation, the laws of the State of New York
and the United States of America) which has application to the
interest and other charges pursuant to this Agreement and the
Notes.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or Debt (including, without limitation,
by way of a sale and leaseback) in one transaction (or series of
related transactions), other than sales of obsolete equipment and
(ii) the issue or sale by the Company or any of its Subsidiaries
of Equity Interests of any of the Company's Subsidiaries or
Subsidiaries of Subsidiaries. Notwithstanding the foregoing,
(a) a transfer of assets or Debt by the Company to a Wholly-Owned
Subsidiary or by a Subsidiary to the Company or a Wholly-Owned
Subsidiary, (b) an issuance or sale of Equity Interests by a
Subsidiary to the Company or a Wholly-Owned Subsidiary, (c) a
disposition of the types of investments described in
subparagraphs (a), (b) and (c) of the definition of "Restricted
Investments" in the ordinary course of business; (d) the issuance
of Equity Interests of a Subsidiary to an individual for the sole
purpose of qualifying such individual as a director of such
Subsidiary; (e) the issuance of Equity Interests of Subsidiaries
to minority shareholders of Subsidiaries to satisfy the rights of
such shareholders to receive issuances of stock which, in each
case, do not dilute the ownership interest of the Company (or
Subsidiary) in such Subsidiary, (f) sales of inventory in the
ordinary course of business, (g) the sale or transfer of up to 5%
of the Equity Interests of a Subsidiary in connection with the
formation of a real estate investment trust relating to such
Subsidiary, and (h) the sale of the real and personal property
associated with the locations listed on the attached Schedule C
will not be deemed to be an Asset Sale.
"Business Day" means (a) for the purposes of Section 8.7
only, any day other than a Saturday, a Sunday or a day on which
commercial banks in New York, New York are required or authorized
to be closed, and (b) for the purposes of any other provision of
this Agreement, any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York or Greenville,
South Carolina are required or authorized to be closed.
"Capital Lease" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person
as lessee which, in accordance with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that
Person and the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.
"Capital Stock" means (a) in the case of a corporation,
corporate stock, (b) in the case of an association or business
entity, any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, (c) in
the case of a partnership, partnership interests (whether general
or limited) and (d) any other interest or participation that is
not Indebtedness and confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets
of, the issuing Person.
"Change in Control" means, with respect to the Company, any
of the following:
(i) any "person" or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act) has become,
directly or indirectly, the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire,
whether such right is exercisable immediately or only after
the passage of time), by way of merger, consolidation or
otherwise, of 20% or more of the Voting Stock of the Company
on a fully-diluted basis, after giving effect to the
conversion and exercise of all outstanding warrants, options
and other securities of the Company (whether or not such
securities are then currently convertible or exercisable)
other than Trimark which may become the beneficial owner of
up to 30% of the Voting Stock of the Company as a result of
the Share Repurchase Program, or
(ii) during any period of two consecutive calendar
years, individuals who at the beginning of such period
constituted the board of directors of the Company cease for
any reason to constitute a majority of the directors of the
Company then in office unless such new directors were
elected or designated by the directors of the Company who
constituted the board of directors of the Company at the
beginning of such period or such directors were elected by
shareholders to fill vacant seats for resigning or retiring
directors that were not replaced at the time of such
resignation or retirement.
"Closing" is defined in Section 3.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations promulgated
thereunder from time to time.
"Collateral" means any and all property that at any time is
granted to the Collateral Agent or any other Person, pursuant to
the Pledge Agreement or any other document, agreement or
instrument, as security for the payment of any or all of the
obligations of the Company under this Agreement and the Notes.
"Collateral Agent" means Bank of America, N.A., solely in
its capacity as collateral agent under the Pledge Agreement and
the Intercreditor Agreement, and together with any successor or
co-agent that becomes such in accordance with the provisions of
the Pledge Agreement and the Intercreditor Agreement.
"Collateral Documents" means a collective reference to the
Pledge Agreement and such other documents as are executed and
delivered in connection with the attachment and perfection of the
Secured Parties' security interests in the Capital Stock of each
Domestic Subsidiary and First-Tier Foreign Subsidiary of an
Obligor, including without limitation, UCC financing statements.
"Company" means Ryan's Family Steak Houses, Inc., a South
Carolina corporation, together with any successor or assign
thereof.
"Confidential Information" is defined in Section 20.
"Consolidated Net Assets" means, for the Company and its
Subsidiaries on a consolidated basis, total assets less all
Restricted Investments less current liabilities.
"Consolidated Net Worth" means, as of any date with respect
to the Obligors and their Subsidiaries on a consolidated basis,
shareholders' equity or net worth, as determined in accordance
with GAAP; provided that, solely for purposes of calculating
Consolidated Net Worth as such term is used in Section 10.1, such
computation shall not take into account any non-cash losses that
may result from (i) the adoption after the date of the Closing of
FAS 133 (Accounting for Derivative Instruments and Hedging
Activities) or (ii) any other change after the Closing Date in
GAAP that requires either the writing down of assets or the
writing up of liabilities.
"Contribution Agreement" is defined in Section 4.11(b).
"Control Event" means:
(a) the execution by the Company or any of its
Subsidiaries or Affiliates of any agreement or letter of
intent with respect to any proposed transaction or event or
series of transactions or events which, individually or in
the aggregate, may reasonably be expected to result in a
Change in Control;
(b) the execution of any written agreement which, when
fully performed by the parties thereto, would result in a
Change in Control, or
(c) the making of any written offer by any person (as
such term is used in section 13(d) and section 14(d)(2) of
the Exchange Act as in effect on the date of the Closing) or
related persons constituting a group (as such term is used
in Rule 13d-5 under the Exchange Act as in effect on the
date of the Closing) to the holders of the Voting Stock of
the Company, which offer, if accepted by the requisite
number of holders, would result in a Change in Control.
"Credit Facility" means the revolving credit, letter of
credit and swingline facility extended to the Company pursuant to
that certain Credit Agreement dated as of January 28, 2000 by and
among the Company, certain Subsidiaries, as guarantors, the
Lenders (as defined therein) from time to time party thereto,
Bank of America, N.A., as Administrative Agent, First Union
National Bank, as syndication agent, Wachovia Bank, N.A., as
documentation agent, and SunTrust Bank, Atlanta, as senior
managing agent, together with (except as otherwise provided
herein) all amendments, restatements, extensions, renewals,
refinancings and substitutions thereof, in whole or in part.
"Debt" means, with respect to any Person, without
duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable
arising in the ordinary course of business but including, without
limitation, all liabilities created or arising under any
conditional sale or other title retention agreement with respect
to any such property);
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such liabilities);
and
(e) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person
of the character described in clauses (a) through (d) to the
extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Default" means an event or condition the occurrence or
existence of which would, with the lapse of time or the giving of
notice or both, become an Event of Default.
"Default Rate" means that rate of interest that is 2% per
annum above the rate of interest stated in clause (a) of the
first paragraph of the Notes.
"Disposition Value" means, at any time, with respect to any
property
(a) in the case of property that does not constitute
the Equity Interests of a Subsidiary, the book value
thereof, valued at the time of such disposition in good
faith by the Company, and
(b) in the case of property that constitutes the
Equity Interests of a Subsidiary, an amount equal to that
percentage of the book value of the assets of the Subsidiary
that issued such stock as is equal to the percentage that
the book value of such Subsidiary Stock represents of the
book value represented by all of the outstanding Capital
Stock of such Subsidiary (assuming, in making such
calculations, that all Securities convertible into such
Capital Stock are so converted and giving full effect to all
transactions that would occur or be required in connection
with such conversion) determined at the time of the
disposition thereof, in good faith by the Company.
"Distribution" means, in respect of any corporation,
association or other business entity:
(a) dividends or other distributions or payments on
Capital Stock or other Equity Interest of such corporation,
association or other business entity (except distributions
in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or
other Equity Interests (except when solely in exchange for
such stock or other Equity Interests) unless made,
contemporaneously, from the net proceeds of a sale of such
stock or other Equity Interests.
"Dollars" and "$" means dollars in lawful currency of the
United States of America.
"Domestic Subsidiaries" means all direct and indirect
Subsidiaries of the Company that are domiciled, incorporated or
organized under the laws of any state of the United States of
America or the District of Columbia (or have any material assets
located in the United States of America or the District of
Columbia) whether existing as of the date hereof or hereafter
created or acquired.
"EBITDA" means, for any period with respect to the Obligors
and their Subsidiaries on a consolidated basis, an amount equal
to the sum of (a) Net Income for such period (excluding the
effect of non-cash losses or any extraordinary or other non-
recurring gains) 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, all as determined in accordance
with GAAP.
"EBITR" means, for any period with respect to the Obligors
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 non-cash losses or extraordinary or other non-
recurring gains) 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) Rent Expense for
such period.
"Environmental Laws" means any and all Federal, state,
local, and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions
relating to pollution and the protection of the environment or
the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes,
air emissions and discharges to waste or public systems.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock.
"Equity Issuance" means any issuance by any Obligor to any
Person of (a) shares of its Capital Stock or other equity
interests, (b) any shares of its Capital Stock or other equity
interests pursuant to the exercise of options (other than Capital
Stock issued to employees and directors pursuant to employees or
directors stock option plans and Capital Stock issued to
consultants) or warrants or (c) any shares of its Capital Stock
or other equity interests pursuant to the conversion of any debt
securities to equity. The amount of any Equity Issuance shall be
the net cash proceeds derived therefrom, including, in the case
of any conversion of any debt securities into equity, the
principal amount of such debt.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) that is treated as a single employer together
with the Company under section 414 of the Code.
"Event of Default" is defined in Section 11.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, at any time, the sale value of
property that would be realized in an arm's length sale at such
time between an informed and willing buyer and an informed and
willing seller, under no compulsion to buy or sell, respectively.
"Financing Documents" means, collectively, each of this
Agreement, the Other Agreements, the Notes, the Subsidiary
Guarantee, the Contribution Agreement, the Intercreditor
Agreement, the Collateral Documents, and all other related
agreements, documents and instruments issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"First Tier Foreign Subsidiary" means each Foreign
Subsidiary in which any one or more of the Obligors owns directly
more than 50%, in the aggregate, of the Voting Stock of such
Foreign Subsidiary.
"Fixed Charge Coverage Ratio" means, at any time, the ratio
of:
(a) EBITR for the prior twelve month period to
(b) the sum of (i) cash Interest Expense for the prior
twelve month period plus (ii) Scheduled Funded Debt Payments
for the prior twelve month period plus (iii) Rent Expense
for the prior twelve month period.
"Foreign Subsidiary" means any Subsidiary of the Company or
any other Obligor that is not a Domestic Subsidiary.
"Funded Debt" means, without duplication, the sum of:
(a) all outstanding Indebtedness (other than (i)
Hedging Agreements and (ii) Indebtedness owing from one
Obligor to another Obligor) of the Obligors and their
Subsidiaries for borrowed money;
(b) all purchase money Indebtedness of the Obligors
and their Subsidiaries;
(c) the principal portion of all obligations of the
Obligors and their Subsidiaries under Capital Leases;
(d) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit, whether or not
drawn, and banker's acceptances created for the account of
an Obligor or its Subsidiaries (it being understood that, to
the extent an undrawn letter of credit supports another
obligation consisting of Indebtedness, in calculating
aggregate Indebtedness only such other obligation shall be
included);
(e) all Guaranties of the Obligors and their
Subsidiaries with respect to Funded Debt of another Person;
(f) all Funded Debt of another entity secured by a
Lien on any property of the Obligors and their Subsidiaries
whether or not such Funded Debt has been assumed by an
Obligor or any of its Subsidiaries;
(g) all Funded Debt of any partnership or
unincorporated joint venture to the extent an Obligor or one
of its Subsidiaries is legally obligated or has a reasonable
expectation of being liable with respect thereto, net of any
assets of such partnership or joint venture; and
(h) the principal balance outstanding under any
synthetic lease, tax retention operating lease, off-balance
sheet loan or similar off-balance sheet financing product
where such transaction is considered borrowed money
indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States of America.
"Governmental Authority" means:
(a) the government of (i) the United States of America
or any State or other political subdivision thereof, or (ii)
any jurisdiction in which the Company or any Subsidiary
conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"Guaranty" means, with respect to any Person, any
obligation (except the endorsement in the ordinary course of
business of negotiable instruments for deposit or collection) of
such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in
any manner, whether directly or indirectly, including (without
limitation) obligations incurred through an agreement, contingent
or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet
condition or any income statement condition of any other
Person or otherwise to advance or make available funds for
the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness
or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be
assumed to be direct obligations of such obligor.
"Hazardous Material" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard
to health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing,
treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any
applicable law (including, without limitation, asbestos, urea
formaldehyde foam insulation and polycholorinated biphenyls).
"Hedging Agreements" means any interest rate protection
agreements, foreign currency exchange agreements, currency swap
agreements, commodity purchase or option agreements or other
interest or exchange rate hedging agreements, in each case,
entered into or purchased by an Obligor.
"holder" means, with respect to any Note, the Person in
whose name such Note is registered in the register maintained by
the Company pursuant to Section 13.1.
"Indebtedness" with respect to any Person means, at any
time, without duplication,
(a) its Debt;
(b) all its liabilities in respect of letters of
credit or instruments serving a similar function issued or
accepted for its account by banks and other financial
institutions (whether or not representing obligations for
borrowed money);
(c) Swaps of such Person; and
(d) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a)
through (c) hereof.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (c) to
the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be
extinguished under GAAP.
"Institutional Investor" means (a) any original purchaser of
a Note, (b) any holder of a Note holding more than 5% of the
aggregate principal amount of the Notes then outstanding, and (c)
any bank, trust company, savings and loan association or other
financial institution, any pension plan, any investment company,
any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Intercreditor Agreement" is defined in Section 4.12.
"Interest Expense" means, for any period, with respect to
the Obligors and their Subsidiaries on a consolidated basis, all
interest expense, including the interest component under Capital
Leases, as determined in accordance with GAAP.
"Lender" has the meaning assigned to such term in the
Intercreditor Agreement.
"Leverage Ratio" means, as of the end of each fiscal
quarter, the ratio of (a) total Funded Debt on such date to (b)
EBITDA for the twelve month period ending on such date.
"Lien" means, with respect to any Person, any mortgage,
lien, pledge, charge, security interest or other encumbrance, or
any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or
other title retention agreement (other than an operating lease)
or Capital Lease, upon or with respect to any property or asset
of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business,
operations, affairs, financial condition, assets, properties, or
prospects of the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, operations, affairs, financial condition,
assets or properties of the Company and its Subsidiaries taken as
a whole, or (b) the ability of the Company or any Subsidiary to
perform its obligations under any one or more of this Agreement,
the Other Agreements, the Notes, the Subsidiary Guarantee, the
Contribution Agreement, the Pledge Agreement or the Intercreditor
Agreement, as the case may be, or (c) the validity or
enforceability of any one or more of such documents.
"Material Subsidiary" shall mean (i) each Subsidiary set
forth on Schedule 4.11, (ii) each other Subsidiary of the
Company, now existing or hereinafter established or acquired,
that has or acquires Consolidated Net Assets in excess of
$1,000,000 or that accounted for or produced more than 5% of
EBITDA on a consolidated basis during any of the three most
recently completed fiscal years of the Company, and (iii) any
Subsidiary that owns, licenses or sublicenses any intellectual
property (such as trademarks, trade names and patents) in
connection with the operation of the business of the Company
and/or any of its Subsidiaries.
"Maximum Legal Rate of Interest" means the maximum rate of
interest that a holder of Notes may from time to time legally
charge the Company by agreement and in regard to which the
Company would be prevented successfully from raising the claim or
defense of usury under the Applicable Interest Law as now or
hereafter construed by courts having appropriate jurisdiction.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Net Income" means, for any period, the net income after
taxes for such period of the Obligors and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Subsidiaries in respect of any Asset
Sale (including, without limitation, any cash received upon the
sale or other disposition of any non-cash consideration received
in any Asset Sale), net of the direct costs relating to such
Asset Sale (including, without limitation, legal, accounting and
investment banking fees, sales commissions), taxes paid or
payable as a result thereof (after taking into account any
available tax credits or deductions in respect of such Asset Sale
or the property subject to the Asset Sale and any tax sharing
arrangements), amounts required to be applied to the repayment of
Debt (other than intercompany Indebtedness) secured by a Lien on
the asset or assets that were the subject of such Asset Sale and
any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP.
"Note" and "Notes" are defined in Section 1.
"Obligor" means and includes each of the Company and the
Subsidiary Guarantors.
"Officer's Certificate" means a certificate of a Senior
Financial Officer or of any other officer of the Company whose
responsibilities extend to the subject matter of such
certificate.
"Operating Leases" means, as applied to any Person, any
lease (including, without limitation, leases which may be
terminated by the lessee at any time) of any property which is
not a Capital Lease other than any such lease in which such
Person is the lessor.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Person" means an individual, partnership, corporation,
limited liability company, association, trust, unincorporated
organization, or a government or agency or political subdivision
thereof.
"Plan" means an "employee benefit plan" (as defined in
section 3(3) of ERISA) that is or, within the preceding five
years, has been established or maintained, or to which
contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA
Affiliate or with respect to which the Company or any ERISA
Affiliate may have any liability.
"Pledge Agreement" means a pledge agreement substantially in
the form of Exhibit 4.13, as amended, supplemented, restated or
otherwise modified from time to time.
"Preferred Stock" means any class of capital stock of a
corporation that is preferred over any other class of capital
stock of such corporation as to the payment of dividends or the
payment of any amount upon liquidation or dissolution of such
corporation.
"Priority Debt" shall mean, with respect to the Company, at
any time, without duplication, the sum of:
(a) all Debt of Subsidiaries (other than such Debt
held by the Company or a Wholly-Owned Subsidiary thereof and
other than the Credit Facility);
(b) Debt of the Company and any Subsidiary (other than
such Debt held by the Company or a Wholly-Owned Subsidiary
thereof and other than the Credit Facility) secured by any
Lien other than Liens described in paragraphs (a), (b), (c),
(e), (f), (g) ,(h) and (i) of Section 10.6 hereof, except
that Liens described in paragraph 10.6(i) shall be excluded
from this calculation to the extent that such Liens consist
of pledges by the Company and its Subsidiaries of Capital
Stock pursuant to the Credit Facility; and
(c) all Preferred Stock of Subsidiaries owned by a
Person other than the Company or a Wholly-Owned Subsidiary
thereof.
"property" or "properties" means, unless otherwise
specifically limited, real or personal property of any kind,
tangible or intangible, choate or inchoate.
"Proposed Prepayment Date" is defined in Section 8.3(c).
"PTE" is defined in Section 6.2(a).
"Purchasers" means and includes you and each of the Other
Purchasers.
"QPAM Exemption" means Prohibited Transaction Class
Exemption 84-14 issued by the United States Department of Labor.
"Rent Expense" means, for any period, the total rent expense
for Operating Leases of the Obligors and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"Required Holders" means, at any time, the holders of at
least a majority in principal amount of the Notes at the time
outstanding (exclusive of Notes then owned by the Company or any
of its Affiliates).
"Responsible Officer" means the chief financial officer, the
controller, the general counsel or any other officer of the
Company who is directly responsible for the administration by the
Company of this Agreement.
"Restricted Investments" shall mean any investments in
securities or extensions of credit by the Company and its
Subsidiaries other than:
(a) direct obligations of the United States of America
or any agency or instrumentality of the United States of
America, the payment or guarantee of which constitutes a
full faith and credit obligation of the United States of
America, in each case maturing no later than one year from
the date of acquisition;
(b) certificates of deposit maturing no later than one
year from the date of acquisition issued by U.S. commercial
banks having a combined capital and surplus of over
$200,000,000 and having a long-term debt rating of at least
A- by Standard & Poor's Ratings Group, a Division of McGraw
Hill, Inc. or at least A3 by Moody's Investors Service,
Inc.;
(c) commercial paper of a domestic issuer rated at
least A-1 by Standard & Poor's Ratings Group, a Division of
McGraw Hill, Inc. or at least P-1 by Moody's Investors
Service, Inc. and maturing not more than 270 days after the
date of acquisition;
(d) investments in or loans to Subsidiary Guarantors
or to any Person that concurrently with such investment
becomes a Subsidiary Guarantor, provided, however, that
investments may be made in any Wholly-Owned Subsidiary if,
as contemplated by Section 9.7 hereof, no Subsidiary is
required to be a Subsidiary Guarantor;
(e) investments or extensions of credit made in the
ordinary course of business and consistent with past
practice; and
(f) other investments or extensions of credit not
exceeding, at any time, 15% of Consolidated Net Worth at
such time.
"Restricted Payments" means:
(a) any Distribution in respect of the Company or any
Subsidiary (other than on account of Capital Stock or other
equity interests of a Subsidiary owned legally and
beneficially by the Company or another Subsidiary),
including, without limitation, any Distribution resulting in
the acquisition by the Company of Securities which would
constitute treasury stock; and
(b) any payment, repayment, redemption, retirement,
repurchase or other acquisition, direct or indirect, by the
Company or any Subsidiary of, on account of, or in respect
of, the principal of any Subordinated Debt (or any
instalment thereof) prior to the regularly scheduled
maturity date thereof (as in effect on the date such
Subordinated Debt was originally incurred).
"Secured Parties" means and includes the Lenders and the
holders from time to time of the Notes.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Security" has the meaning set forth in section 2(l) of the
Securities Act of 1933, as amended.
"Senior Financial Officer" means the chief financial
officer, chief accounting officer, treasurer or comptroller of
the Company.
"Scheduled Funded Debt Payments" means, as of the end of
each fiscal quarter of the Company, for the Obligors and their
Subsidiaries on a consolidated basis, the sum of all scheduled
payments of principal on Funded Debt for the applicable period
ending on such date (including the principal component of
payments due on Capital Leases during the applicable period
ending on such date, but excluding scheduled payments on
termination of the Credit Facility); it being understood that
Scheduled Funded Debt Payments shall not include the voluntary
prepayments or the mandatory prepayments required pursuant to
Section 3.3 of the Credit Facility and Section 8.2 and Section
8.3 hereof.
"Share Repurchase Program" means the share repurchase
program authorized by the board of directors of the Company.
"Source" is defined in Section 6.2.
"Subordinated Debt" means any Debt that is in any manner
subordinated in right of payment or security in any respect to
Debt evidenced by the Notes.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one
or more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable
it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons
performing similar functions) of such entity, and any partnership
or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its
Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one
or more of its Subsidiaries). Unless the context otherwise
clearly requires, any reference to a "Subsidiary" is a reference
to a Subsidiary of the Company.
"Subsidiary Guarantee" is defined in Section 4.11(a).
"Subsidiary Guarantor" is defined in Section 4.11(a).
"Substantial Amount" means, with respect to any Asset Sale
during a fiscal year, any portion of property of the Company and
its Subsidiaries, if (a) the Disposition Value of such property,
when added to the Disposition Value of all other property of the
Company and its Subsidiaries that was subject to an Asset Sale
during such fiscal year, exceeds an amount equal to 15% of
Consolidated Net Assets determined as of the last day of the
immediately preceding fiscal year of the Company or (b) such
property and all other property of the Company and its
Subsidiaries that was subject to an Asset Sale during such fiscal
year accounts, in the aggregate, for more than 15% of Net Income
determined as of the last day of the immediately preceding fiscal
year of the Company. Notwithstanding the foregoing, the Company
may from time to time elect to exclude from each determination of
Substantial Amount one or more Asset Sales specified in
reasonable detail in one or more certificates delivered pursuant
to Section 7.2(a), provided that the aggregate of the Disposition
Values of all Asset Sales in each fiscal year of the Company so
excluded pursuant to this sentence after the date of the Closing
shall not exceed $10,000,000.
"Swaps" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments,
whether periodically or upon the happening of a contingency. For
the purposes of this Agreement, the amount of the obligation
under any Swap shall be the amount determined in respect thereof
as of the end of the then most recently ended fiscal quarter of
such Person, based on the assumption that such Swap had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such Swap provides
for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case,
the amount of such obligation shall be the net amount so
determined.
"Trimark" means Trimark Financial Corporation, a corporation
organized under the laws of Ontario, Canada.
"Voting Stock" means Capital Stock of any class or classes
of a Person the holders of which are ordinarily, in the absence
of contingencies, entitled to elect corporate directors (or
Persons performing similar functions).
"Wholly-Owned Subsidiary" means, at any time, any Subsidiary
one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are
owned by any one or more of the Company and the Company's other
Wholly-Owned Subsidiaries at such time.
"Year 2000 Compliant" means all computer applications
(including those affected by information received from its
suppliers and vendors) that are material to the Company's and its
Subsidiaries' business and operations will on a timely basis be
able to perform properly date-sensitive functions involving dates
on or after January 1, 2000.
SCHEDULE C
RYAN'S
FAMILY
STEAK
HOUSES
, INC.
CLOSED
STORES
(UNSOL
D)
AS OF: 12/29/1999
ITEM RYAN'S NAME NET BOOK VALUE
# # ADDRESS AT 9/29/1999
1 702 Norcross - 1 1,272,889
1158 Rockbridge Road
Norcross, GA 30093
2 703 Memphis - 1 983,822
2835 S. Mendelhall Road
Memphis, TN 38115
3 704 Mabelton 1,178,449
1440 Bankhead Hwy. S.
Mabelton, GA 30059
4 174 Kentwood 1,029,086
3005 Broadmoor
Kentwood, MI 49508
5 706 Indianapolis - 2 889,597
3570 Lafayette Road
Indianapolis, IN 46222
6 708 Greenville - 2 (old) 647,267
6513 White Horse Road
Greenville, SC 29611
7 707 Baton Rouge - 3 1,490,468
7473 Perkins Road
Baton Rouge, LA 70808
TOTAL 7,491,578
RYAN'S
FAMILY
STEAK
HOUSES
, INC.
PROPER
TIES
(LAND
ONLY)
FOR
SALE
AS OF: 12/29/1999
ITEM NET BOOK VALUE
# LOCATION AT 12/29/1999
1 Harlingen, 382,434
TX
2 I-85 728,403
Property
(SC)
3 Bradley, IL 672,113
4 Kirksville, 446,133
MO
5 Siloam 320,063
Springs, AR
6 Brookhaven, 420,057
MS
7 Moberly, MO 391,583
8 Winchester, 410,523
TN
9 Campbellsvil 417,761
le, KY
10 Madison, IN 314,269
11 Mayfield, KY 321,585
12 Texas City, 640,489
TX
13 Batesville, 420,947
AR
14 Athens, AL 339,288
15 Lawrenceburg 453,477
, TN
16 Fayetteville 542,906
, TN
17 S. Boston, 328,836
VA
TOTAL 7,550,867
SCHEDULE D
PAYMENT INSTRUCTIONS AT CLOSING
Wachovia Bank, N.A.
400 S. Tryon Street
Charlotte, NC 28202
ABA # 053100494
Account # 1867-023324
SCHEDULE 4.9
CHANGES IN CORPORATE STRUCTURE
The Company has dissolved its former subsidiary, Big R
Procurement Company, Inc., and has succeeded to all of the
liabilities of such entity. These liabilities are
immaterial to the Company and its subsidiaries taken as a
whole.
SCHEDULE 4.11
INITIAL GUARANTEEING SUBSIDIARIES
Big R Procurement Company, LLC, a Delaware limited liability
company
Ryan's Family Steak Houses East, Inc., a Delaware
corporation
Ryan's Properties, Inc. , a Delaware corporation
Ryan's Family Steak Houses TLC, Inc. , a Delaware
corporation
Rymark Holdings, Inc. , a Delaware corporation
Ryan's Hoosier Group, LP, a South Carolina limited
partnership
Ryan's Mega Manufacturing Group, LP, a South Carolina
limited partnership
SCHEDULE 5.3
DISCLOSURE MATERIALS
Nothing to disclose.
SCHEDULE 5.4
SUBSIDIARIES OF THE COMPANY AND OWNERSHIP OF SUBSIDIARY
STOCK
(a)(i) The Company's Subsidiaries
Jurisdiction % Owned by
Name of Company (or
Organizatio Subsidiaries)
n
Big R Procurement Company, DE 100%
LLC*
Ryan's Family Steak Houses DE 100%
TLC, Inc.*
Ryan's Family Steak Houses DE 100%
East, Inc.*
Ryan's Properties, Inc.* DE 100%
Rymark Holdings, Inc.* DE 100%
Ryan's Hoosier Group, LP* SC 100%
Ryan's Mega Manufacturing SC 100%
Group, LP*
* Domestic Subsidiary
Pursuant to clause (i) of the definition of "Material
Subsidiary" in Schedule B to the Agreement, all Subsidiaries
listed on Schedule 4.11 (which list is identical to the list
above on this Schedule) are Material Subsidiaries.
(a)(ii) The Company's Affiliates (Other than Subsidiaries)
Based on Schedules 13G filed in February, 1999, Mellon Bank
Corporation is the beneficial owner of 5.16% of the
Company's common stock; and Trimark Financial Corporation is
the beneficial owner of 11.8% of such common stock.
(a)(iii) The Company's Directors and Executive Officers
Directors
Charles D. Way
G. Edwin McCranie
Barry L. Edwards
James M. Shoemaker, Jr.
Harold K. Roberts, Jr.
James D. Cockman
Brian S. MacKenzie
Executive Officers
Charles D. Way
G. Edwin McCranie
Janet J. Gleitz
Morgan A. Graham
Fred T. Grant, Jr.
James R. Hart
John C. Jamison
Alan E. Shaw
Ilene T. Turbow
SCHEDULE 5.5
FINANCIAL STATEMENTS
Audited financial statements for fiscal year ended December
30, 1998
Unaudited financial statements for fiscal quarters ended
March 31, 1999, June 30, 1999 and September 29, 1999.
SCHEDULE 5.8
CERTAIN LITIGATION
None.
SCHEDULE 5.11
PATENTS, ETC.
Nothing to disclose.
SCHEDULE 5.14
USE OF PROCEEDS
The Company will apply the proceeds of the sale of the Notes
to refinance existing debt.
SCHEDULE 5.15
EXISTING DEBT AND LIENS
(a) Upon payoff of facilities contemporaneous with the
closing, the Company and its Subsidiaries will have the
following Debt and Liens:
Debt under the Credit Facility and Liens on the Capital
Stock of Subsidiaries pursuant to the Credit Facility.
Capital leases with respect to 11 copiers or fax
machines in an aggregate unpaid amount (as of December
29, 1999) of $314,148. These leases are secured by
liens on such copiers.
9 letters of credit in an aggregate face amount of
$7,632,000. As of January 20, 2000, no amounts were
drawn with respect to these letters of credit.
Guaranties by the Company of loans from First Union
National Bank for purchases by operating partners of
the Company's stock pursuant to the operating partner
and related programs. As of January 19, 2000, there
were 112 such loans, in an aggregate outstanding amount
of $938,348.
(b) Nothing to disclose.
SCHEDULE 5.20
YEAR 2000 READINESS DISCLOSURE
1. What is the company doing to prepare its internal
computer systems and software for the year 2000? Ryan's has
been preparing for Y2K since 1997. See the attached excerpt
("Exhibit 1") from the Company's 3Q99 10-Q for a more
complete description of the Company's Y2K efforts.
2. What is the company doing to prepare its internal
operating systems and equipment with embedded chip
technology for the year 2000? A review of internal
operating systems and equipment at both the Company's
restaurants and corporate office did not reveal any issues
involving embedded chip technology. This review was proven
accurate as 2000 operations have not been affected by such
issues.
3. Will the year 2000 problem affect the company's
products, services and/or business activities (e.g.,
disruption of service or discontinuance of product lines)?
Year 2000 issues are not believed to be a significant threat
to the delivery of the Company's products, services and/or
business activities.
4. Who in the company is responsible for directing its
year 2000 efforts and what has been the Board of Directors'
role in reviewing and approving the company's year 2000
plan? The Company's Vice President - Finance (CFO) was
responsible for directing Company's Y2K efforts. The
Information Technology ("IT") department was responsible for
implementing the efforts. Reports concerning Y2K progress
were made quarterly to the Company's Board of Directors.
5. What is the company's schedule for fixing and testing
its systems? Can I obtain a copy of that schedule? Please
identify any third party or industry-wide testing in which
the company plans to participate. The Company did not have
a detailed schedule for Y2K testing and remediation. See
Exhibit 1 for a general discussion regarding Y2K timing.
6. If the company does not plan to do all its year 2000
work itself, please identify whether any outside consultants
or vendors have been or will be employed to do all or part
of the work. If the company plans to obtain a certificate
of year 2000 compliance from any outside organization,
please identify. The Company used a combination of outside
consultants and internal personnel for its Y2K work. All
efforts were under the close supervision of the Company's
Director - IT. It was not considered necessary to obtain a
certificate of year 2000 compliance from any outside
organization.
7. What has the company done to survey its vendors,
suppliers, trading partners, service providers or other
third parties with whom it interacts to ascertain what their
status is with respect to year 2000 readiness? See Exhibit
1 for a description of the Company's efforts regarding the
Y2K readiness of its principal vendors and service
providers.
8. What is the company's contingency plan if some or all
of the company's systems will not be remediated in time for
the year 2000? Contingency plans were developed by various
departmental and operations personnel in the event of system
failures at either the Company's corporate office or
restaurants. Fortunately these plans did not have to be
implemented, because to our knowledge there have been no
such failures to date.
9. How do the company's costs to address the year 2000
problem affect its bottom line? Do these costs have a
material financial effect? Can I see something in the
company's recent reports or other public statements in which
the company discusses its approach to the year 2000 problem?
The costs incurred in the Company's Y2K remediation efforts
were not material to the Company's overall financial
condition. See Exhibit 1 for a discussion of the Company's
Y2K efforts and related costs.
10. Even if the company does not believe that the costs or
potential effects of the year 2000 are material, can you
tell me how much the year 2000 problem will cost the
company? See Exhibit 1 for a cost breakdown as of September
29, 1999 (end of 3rd quarter 1999). Costs incurred in the
4th quarter 1999 were not significant.
11. Please identify any additional insurance the company
has obtained, including any directors and officers personal
liability insurance, specifically for the year 2000 problem?
The Company did not obtain any additional insurance for the
Y2K problem.
12. If your company is a manufacturer or supplier of any
hardware, software or equipment systems, what are your
concerns about the potential liabilities associated with the
company's products or services? What is your best
assessment of corporate exposure to legal actions arising
from equipment or software failures associated with the
company's products or services? The Company is not a
manufacturer or supplier of any hardware, software or
equipment systems. Based on experience through January 10,
2000, there does not appear to be any corporate exposure to
legal actions arising from equipment or software failures
associated with the Company's products or services.
THE FOLLOWING DISCUSSION OF THE YEAR 2000 ACTIVITIES OF
RYAN'S FAMILY STEAK HOUSES, INC. (THE "COMPANY") HAS BEEN
EXCERPTED FROM THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 29, 1999 AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1999.
YEAR 2000
The Company recognizes the need to ensure that its
operations will not be adversely impacted by software
failures associated with programming incompatibilities with
the year 2000 ("Y2K"). In 1997, the Company identified
those systems that were not Y2K-compliant and began
researching conversion and replacement options. Further
investigation, including a review by an outside consultant
of the operating environment related to the Company's
principal financial applications, continued throughout much
of 1998. Costs associated with the Y2K plan that represent
significant functional or technology improvements are
capitalized. Other costs related principally to Y2K
compatibility are charged to expense as incurred. The total
cost of the Y2K remediation project is estimated at
$512,000, consisting of approximately $259,000 of capital
and $253,000 of expense costs. All funding is expected to
come from operating cash flows. At September 29, 1999,
approximately $139,000 of capital and $188,000 of expense
had been spent on the project.
The Company's Information Technology department is leading
the Company's Y2K efforts. Reports on Y2K remediation
efforts are made periodically to the Company's senior
management and quarterly to the Company's Board of
Directors. At December 30, 1998, conversion of all major
corporate office financial systems (general ledger, accounts
payable, payroll and benefits) was complete. Upgrades to
critical store-level systems were completed by the end of
the third quarter of 1999, and remediation steps for the
corporate office's personal computers were also completed by
the end of the third quarter. In July 1999, a multi-
functional team tested the Y2K-readiness of the Company's
current software and hardware solutions by performing
critical store operations and corporate financial functions
with systems set with a year 2000 date. The test was very
successful with only minor issues identified, and all such
issues were subsequently corrected. As of September 29,
1999, the only remaining software remediation work involved
several non-critical corporate applications. The re-
programming of these applications is expected to be
completed by the end of November 1999.
As part of its Y2K planning, the Company has identified
vendors whose goods and services are believed to be critical
to the Company's ability to operate its restaurants. The
Company's principal food distributor has informed the
Company that all of its systems related to the procurement
and delivery of food and other products to the Company's
restaurants were fully Y2K-compliant at the end of 1998.
The Company's credit card processor has also informed the
Company that its systems are now fully Y2K-compliant.
Furthermore, the credit card terminals used in the Company's
restaurants are already processing credit cards with post-
1999 expiration dates, and the processor has indicated that
no additional software modifications to the terminals will
be necessary. Finally, the Company has sent questionnaires
to its numerous depository and disbursement banks and
utility providers in order to ascertain their ability to
deliver services on January 1, 2000 and beyond. Responses
to these questionnaires were very guarded and therefore not
adequately informative. Corporate personnel are currently
contacting these providers or reviewing their web sites in
order to ascertain their degree of Y2K compliance. Due to
the computer systems used to manage the operations of the
Company's restaurants, electrical and telephone service to
the Company's corporate office is considered critical. The
utility company providing electricity and water to the
corporate office has assured Company management that its
systems as well as those of its suppliers are Y2K-compliant.
The web sites of the corporate office's local and long-
distance providers indicate that service will not be
interrupted on January 1, 2000.
The Company's stores depend upon computers for point-of-
sale ("POS") transactions, data and purchase order
transmissions, labor scheduling and payroll processes, and
inventory and food cost records. Other technology-dependent
functions at the stores are not significant. Management
believes that its Y2K efforts have addressed the stores'
critical technology-dependent functions. The Company is
developing contingency plans in the event of the failure of
critical support systems, including banking and utility
services, and expects such plans to be completed during the
fourth quarter of 1999. In addition, any material
disruption in the general economy as a result of Y2K issues
could adversely affect the Company's operations.
EXHIBIT 1 TO NOTE PURCHASE AGREEMENT
[Form of Note]
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR QUALIFIED PURSUANT TO ANY APPLICABLE STATE SECURITIES
LAW. THIS NOTE MAY BE RESOLD ONLY IF REGISTERED PURSUANT TO THE
PROVISIONS OF THE ACT AND QUALIFIED PURSUANT TO APPLICABLE STATE
SECURITIES LAWS OR IF AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION IS AVAILABLE, EXCEPT UNDER CIRCUMSTANCES WHERE
NEITHER SUCH REGISTRATION, QUALIFICATION NOR EXEMPTION IS
REQUIRED BY LAW.
RYAN'S FAMILY STEAK HOUSES, INC.
9.02% Senior Note Due January 28, 2008
No. [_____]
[Date]
$[_______] PPN 783519 A* 2
FOR VALUE RECEIVED, the undersigned, RYAN'S FAMILY STEAK
HOUSES, INC. (herein called the "Company"), a corporation
organized and existing under the laws of the State of South
Carolina, hereby promises to pay to [___ ], or
registered assigns, the principal sum of [
] DOLLARS on [ , ], with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on
the unpaid balance thereof at the rate of 9.02% per annum from
the date hereof, payable semiannually, on the 28th day of January
and July in each year, commencing with the January 28th or July
28th next succeeding the date hereof, until the principal hereof
shall have become due and payable, and (b) to the extent
permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note
Purchase Agreements referred to below), payable semiannually as
aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to 11.02 %.
Payments of principal of, interest on and any Make-Whole
Amount with respect to this Note are to be made in lawful money
of the United States of America at [ ]
or at such other place as the Company shall have designated by
written notice to the holder of this Note as provided in the Note
Purchase Agreements referred to below.
This Note is one of a series of Senior Notes (herein called
the "Notes") issued pursuant to separate Note Purchase
Agreements, dated as of January 28, 2000 (as from time to time
amended, the "Note Purchase Agreements"), between the Company and
the respective Purchasers named therein and is entitled to the
benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality
provisions set forth in Section 20 of the Note Purchase
Agreements and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreements.
Each holder of this Note will be deemed, by its acceptance
hereof, to have agreed to the terms of the Intercreditor
Agreement (as such term is defined in the Note Purchase
Agreement).
This Note is a registered Note and, as provided in the Note
Purchase Agreements, upon surrender of this Note for registration
of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder
hereof or such holder's attorney duly authorized in writing, a
new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due
presentment for registration of transfer, the Company may treat
the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other
purposes, and the Company will not be affected by any notice to
the contrary.
The Company will make required prepayments of principal on
the dates and in the amounts specified in the Note Purchase
Agreements. This Note is subject to optional prepayment, in
whole or from time to time in part, at the times and on the terms
specified in the Note Purchase Agreements, but not otherwise.
If an Event of Default, as defined in the Note Purchase
Agreements, occurs and is continuing, the principal of this Note
may be declared or otherwise become due and payable in the
manner, at the price (including any applicable Make-Whole Amount)
and with the effect provided in the Note Purchase Agreements.
THIS NOTE AND THE NOTE PURCHASE AGREEMENTS SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW
OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A
JURISDICTION OTHER THAN SUCH STATE.
RYAN'S FAMILY STEAK HOUSES, INC.
By:
Name:
Title:
EXHIBIT 4.4(a) TO NOTE PURCHASE AGREEMENT
[FORM OF OPINION OF COUNSEL TO THE COMPANY]
EXHIBIT 4.4(b) TO NOTE PURCHASE AGREEMENT
[FORM OF OPINION OF COUNSEL TO THE PURCHASERS]
EXHIBIT 4.11(a) TO NOTE PURCHASE AGREEMENT
[Form of Subsidiary Guarantee]
SUBSIDIARY GUARANTEE AGREEMENT
This SUBSIDIARY GUARANTEE AGREEMENT, dated as of January
28, 2000 (as amended, supplemented, restated or otherwise
modified from time to time, this "Guarantee"), made by the
undersigned signatories hereto as Guarantors (each of the
undersigned, together with their respective successors and
assigns, individually a "Guarantor" and collectively the
"Guarantors"), in favor of each of the holders of the Notes (as
defined below) (collectively, together with their respective
successors and assigns, individually a "Guaranteed Party" and
collectively the "Guaranteed Parties");
W I T N E S S E T H:
WHEREAS, Ryan's Family Steak Houses, Inc., a corporation
organized and existing under the laws of the State of South
Carolina ("Parent") and the initial Guaranteed Parties have
entered into those certain identical (except for the names of
the purchasers) Note Purchase Agreements dated as of January
28, 2000 (collectively, as amended, supplemented, restated or
otherwise modified from time to time, the "Agreements," and
individually, an "Agreement"), pursuant to which Parent has
issued to the Guaranteed Parties its 9.02% Senior Notes due
January 28 2008 (collectively, as amended, supplemented,
restated or otherwise modified from time to time, the "Notes,"
such term to include any such notes issued in substitution
therefor pursuant to Section 13 of the Agreements), in the
aggregate principal amount of $75,000,000;
WHEREAS, Parent owns, directly or indirectly, all or a
majority of the outstanding capital stock or other equity
interests of each of the Guarantors;
WHEREAS, Parent and Guarantors share an identity of
interest as members of a consolidated group of companies
engaged in substantially similar businesses with Parent
providing certain centralized financial, accounting and
management services to each of the Guarantors by virtue of
intercompany advances and loans such that financial
accommodations extended to Parent shall inure to the direct and
material benefit of Guarantors; and
WHEREAS, consummation of the transactions pursuant to the
Agreements will facilitate expansion and enhance the overall
financial strength and stability of Parent's entire corporate
group, including the Guarantors; and
WHEREAS, the Guarantors' ability to carry on their
respective business operations is dependent on the ability of
the Parent to obtain financing; and
WHEREAS, it is a condition precedent to the initial
Guaranteed Parties' obligations to enter into the Agreements
and to purchase the Notes thereunder that Guarantors execute
and deliver this Guarantee, and Guarantors desire to execute
and deliver this Guarantee to satisfy such condition precedent;
and
WHEREAS, capitalized terms used and not defined herein
have the respective meanings ascribed thereto in the
Agreements;
NOW, THEREFORE, in consideration of the premises and in
order to induce the Guaranteed Parties to enter into and
perform their obligations under the Agreements, the Guarantors
hereby jointly and severally agree as follows:
SECTION 1. Guarantee. The Guarantors hereby, jointly and
severally, irrevocably, absolutely and unconditionally
guarantee the due and punctual payment of all principal of, and
Make-Whole Amount, if any, and interest on, the Notes and all
other obligations owing by Parent to the Guaranteed Parties, or
any of them, jointly or severally under the Agreements, the
Notes and the other documents, instruments and agreements
relating to the transactions contemplated by the Agreements,
and all renewals, extensions, modifications and refinancings
thereof, now or hereafter owing, whether for principal,
interest, Make-Whole Amount, fees, expenses or otherwise,
including, without limitation, any and all reasonable out-of-
pocket expenses (including reasonable attorneys' fees and
expenses actually incurred) incurred by the Guaranteed Parties
in enforcing any rights under this Guarantee (collectively, the
"Guaranteed Obligations") including, without limitation, all
interest which, but for the filing of a petition in bankruptcy
with respect to Parent (or any receivership, liquidation,
reorganization or similar case or proceeding in connection
therewith, relative to the Company or its property), would
accrue on any principal portion of the Guaranteed Obligations.
Any and all payments by the Guarantors hereunder shall be made
free and clear of and without deduction for any set-off,
counterclaim or withholding, so that, in each case, each
Guaranteed Party will receive, after giving effect to any
taxes, (but excluding taxes imposed on overall net income of
any Guaranteed Party), the full amount that it would otherwise
be entitled to receive with respect to the Guaranteed
Obligations (but without duplication of amounts for taxes
already included in the Guaranteed Obligations). Each
Guarantor acknowledges and agrees that this is a guarantee of
payment when due, and not of collection, and that, subject to
Section 13 hereof, this Guarantee may be enforced up to the
full amount of the Guaranteed Obligations without proceeding
against Parent, against any security for the Guaranteed
Obligations, against any other Guarantor or under any other
guaranty covering any portion of the Guaranteed Obligations.
SECTION 2. Guarantee Absolute. The Guarantors guarantee
that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the documents, instruments and
agreements evidencing any Guaranteed Obligations, regardless of
any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of any
Guaranteed Party with respect thereto. The liability of each
Guarantor under this Guarantee shall be absolute and
unconditional in accordance with its terms and shall remain in
full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise
affected by, any circumstance or occurrence whatsoever,
including, without limitation, the following (whether or not
such Guarantor consents thereto or has notice thereof):
(a) any change in the time, place or manner of
payment of, or in any other term of, all or any of the
Guaranteed Obligations, any waiver, indulgence, renewal,
extension, amendment or modification of or addition,
consent or supplement to or deletion from or any other
action or inaction under or in respect of the Agreements,
or any other documents, instruments or agreements relating
to the Guaranteed Obligations or any other instrument or
agreement referred to therein or any assignment or
transfer of any thereof;
(b) any lack of validity or enforceability of the
Agreements or any other document, instrument or agreement
referred to therein or any assignment or transfer of any
thereof;
(c) any furnishing to the Guaranteed Parties of any
additional security for the Guaranteed Obligations, or any
sale, exchange, release or surrender of, or realization
on, any security for the Guaranteed Obligations;
(d) any settlement or compromise of any of the
Guaranteed Obligations, any security therefor, or any
liability of any other party with respect to the
Guaranteed Obligations, or any subordination of the
payment of the Guaranteed Obligations to the payment of
any other liability of Parent;
(e) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other
like proceeding relating to any Guarantor or Parent, or
any action taken with respect to this Guarantee by any
trustee or receiver, or by any court, in any such
proceeding;
(f) failure to preserve the validity or perfection
of any security interest or lien on any collateral, or any
amendment or waiver of or consent to departure from any
guaranty or security, for all or any of the Guaranteed
Obligations;
(g) any application of sums paid by Parent or any
other Person with respect to the liabilities of Parent to
the Guaranteed Parties, regardless of what liabilities of
Parent remain unpaid;
(h) any act or failure to act by any Guaranteed
Party which may adversely affect a Guarantor's subrogation
rights, if any, against Parent to recover payments made
under this Guarantee; and
(i) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any
Guarantor.
If claim is ever made upon any Guaranteed Party for repayment
or recovery of any amount or amounts received in payment or on
account of any of the Guaranteed Obligations, and any
Guaranteed Party repays all or part of said amount by reason of
(a) any judgment, decree or order of any court or
administrative body having jurisdiction over the Guaranteed
Party or any of its property, or (b) any settlement or
compromise of any such claim effected by the Guaranteed Party
with any such claimant (including Parent or a trustee in
bankruptcy for Parent), then and in such event each Guarantor
agrees that any such judgment, decree, order, settlement or
compromise shall be binding on it, notwithstanding any
revocation hereof or the cancellation of the Agreements or the
other documents, instruments and agreements evidencing any
Guaranteed Obligations, and each of the Guarantors shall be and
remain liable to the Guaranteed Party for the amounts so repaid
or recovered to the same extent as if such amount had never
originally been paid to the Guaranteed Party.
This Guarantee shall remain in effect and shall be
enforceable against each Guarantor notwithstanding any sale,
transfer or other disposition by Parent of all or any portion
of the Equity Interests of any Guarantor. Further, the
obligations of each Guarantor shall be joint and several and
the release or discharge of the obligations of one Guarantor
shall not modify, affect, release or discharge the obligations
of the other Guarantors hereunder. Further, this Guarantee
shall be enforceable against the Guarantors notwithstanding the
existence of any counterclaim that may be alleged by the Parent
against the Guaranteed Parties.
SECTION 3. Waiver. Each Guarantor hereby waives notice
of acceptance of this Guarantee, notice of any liability to
which it may apply, and further waives presentment, demand of
payment, protest, notice of dishonor or nonpayment of any such
liabilities, suit or taking of other action by the Guaranteed
Parties against, and any other notice to, Parent or any other
party liable with respect to the Guaranteed Obligations
(including the Guarantors or any other Person executing a
guaranty of the obligations of Parent).
SECTION 4. Waiver of Subrogation. Each Guarantor hereby
waives irrevocably and forever any rights against Parent which
it may acquire by way of subrogation or contribution, by any
payment made hereunder or otherwise. Each Guarantor hereby
expressly waives any claim, right or remedy which such
Guarantor may now have or hereafter acquire against Parent that
arises hereunder and/or from the performance by any Guarantor
hereunder, including, without limitation, any claim, right or
remedy of the Guaranteed Parties against Parent or any security
which the Guaranteed Parties now have or hereafter acquire,
whether or not such claim, right or remedy arises in equity,
under contract, by statute, under color of law or otherwise.
SECTION 5. Severability. Any provision of this Guarantee
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 6. Amendments, Etc. No amendment or waiver of
any provision of this Guarantee nor consent to any departure by
a Guarantor therefrom shall in any event be effective unless
the same shall be in writing executed by the Guarantor and the
Guaranteed Parties.
SECTION 7. Notices. All notices and other communications
provided for hereunder shall be given in the manner specified
in the Agreements (i) in the case of the Guaranteed Parties, at
the address specified for the Guaranteed Parties in the
Agreements, and (ii) in the case of the Guarantors, at the
respective addresses specified for such Guarantors in this
Guarantee.
SECTION 8. No Waiver; Remedies. No failure on the part
of the Guaranteed Parties to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the
exercise of any other right. No notice to or demand on any
Guarantor in any case shall entitle such Guarantor to any other
further notice or demand in any similar or other circumstances
or constitute a waiver of the rights of the Guaranteed Parties
to any other or further action in any circumstances without
notice or demand. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 9. Right of Set-Off. In addition to and not in
limitation of all rights of offset that the Guaranteed Parties
may have under applicable law, the Guaranteed Parties shall,
upon the occurrence of any Event of Default and whether or not
the Guaranteed Parties have made any demand or the Guaranteed
Obligations are matured, have the right to appropriate and
apply to the payment of the Guaranteed Obligations, all
indebtedness or property then or thereafter owing by the
Guaranteed Parties to any Guarantor, whether or not related to
this Guarantee or any transaction hereunder. The Guaranteed
Parties shall promptly notify the relevant Guarantor of any
offset hereunder.
SECTION 10. Continuing Guarantee; Transfer of
Obligations. This Guarantee is a continuing guaranty and shall
(i) remain in full force and effect until payment in full of
the Guaranteed Obligations and all other amounts payable under
this Guarantee and the termination of the Agreements, (ii) be
binding upon each Guarantor, its successors and assigns, and
(iii) inure to the benefit of and be enforceable by the
Guaranteed Parties.
SECTION 11. Governing Law. THIS GUARANTEE AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF).
SECTION 12. Subordination of Parent's Obligations to the
Guarantors. As an independent covenant, each Guarantor hereby
expressly covenants and agrees for the benefit of the
Guaranteed Parties that all obligations and liabilities of
Parent to such Guarantor of whatever description, including,
without limitation, all intercompany receivables of such
Guarantor from Parent ("Junior Claims") shall be subordinate
and junior in right of payment to all obligations of Parent to
the Guaranteed Parties under the terms of the Agreements and
the other documents, instruments and agreements evidencing any
Guaranteed Obligations ("Senior Claims").
If an Event of Default shall occur, then, unless and until
such Event of Default shall have been cured, waived, or shall
have ceased to exist, no direct or indirect payment (in cash,
property, securities by setoff or otherwise) shall be made by
Parent to any Guarantor on account of or in any manner in
respect of any Junior Claim except such payments and
distributions the proceeds of which shall be applied to the
payment of Senior Claims.
In the event of a Proceeding (as hereinafter defined), all
Senior Claims shall first be paid in full before any direct or
indirect payment or distribution (in cash, property, securities
by setoff or otherwise) shall be made to any Guarantor on
account of or in any manner in respect of any Junior Claim
except such payments and distributions the proceeds of which
shall be applied to the payment of Senior Claims. For the
purposes of the previous sentence, "Proceeding" means Parent or
any Guarantor shall commence a voluntary case concerning itself
under the Bankruptcy Code of 1978, as amended (the "Bankruptcy
Code"), or any other applicable bankruptcy laws; or any
involuntary case is commenced against Parent or any Guarantor;
or a custodian (as defined in the Bankruptcy Code or any other
applicable bankruptcy laws) is appointed for, or takes charge
of, all or any substantial part of the property of Parent or
any Guarantor, or Parent or any Guarantor commences any other
proceedings under any reorganization, arrangement, adjustment
of debt, relief of debtor, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Parent or any Guarantor, or any
such proceeding is commenced against Parent or any Guarantor,
or Parent or any Guarantor is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or Parent or any Guarantor
suffers any appointment of any custodian or the like for it or
any substantial part of its property; or Parent or any
Guarantor makes a general assignment for the benefit of
creditors; or Parent or any Guarantor shall fail to pay, or
shall state that it is unable to pay, or shall be unable to
pay, its debts generally as they become due; or Parent or any
Guarantor shall call a meeting of its creditors with a view to
arranging a composition or adjustment of its debts; or Parent
or any Guarantor shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the
foregoing; or any corporate action shall be taken by Parent or
any Guarantor for the purpose of effecting any of the
foregoing.
In the event any direct or indirect payment or
distribution is made to a Guarantor in contravention of this
Section 12, such payment or distribution shall be deemed
received in trust for the benefit of the Guaranteed Parties and
shall be immediately paid over to the Guaranteed Parties for
application against the Guaranteed Obligations in accordance
with the terms of the Agreements.
Each Guarantor agrees to execute such additional documents
as the Guaranteed Parties may reasonably request to evidence
the subordination provided for in this Section 12.
SECTION 13. Savings Clause. (a) It is the intent of each
Guarantor and the Guaranteed Parties that each Guarantor's
maximum obligations hereunder shall be, but not in excess of:
(i) in a case or proceeding commenced by or against
such Guarantor under the Bankruptcy Code on or within one
year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would
not otherwise cause the Guaranteed Obligations (or any
other obligations of such Guarantor to the Guaranteed
Parties) to be avoidable or unenforceable against such
Guarantor under (A) Section 548 of the Bankruptcy Code or
(B) any state fraudulent transfer or fraudulent conveyance
act or statute applied in such case or proceeding by
virtue of Section 544 of the Bankruptcy Code; or
(ii) in a case or proceeding commenced by or against
such Guarantor under the Bankruptcy Code subsequent to one
year from the date on which any of the Guaranteed
Obligations are incurred, the maximum amount which would
not otherwise cause the Guaranteed Obligations (or any
other obligations of the Guarantor to the Guaranteed
Parties) to be avoidable or unenforceable against such
Guarantor under any state fraudulent transfer or
fraudulent conveyance act or statute applied in any such
case or proceeding by virtue of Section 544 of the
Bankruptcy Code; or
(iii) in a case or proceeding commenced by or
against such Guarantor under any law, statute or
regulation other than the Bankruptcy Code (including,
without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt,
dissolution, liquidation or similar debtor relief laws),
the maximum amount which would not otherwise cause the
Guaranteed Obligations (or any other obligations of such
Guarantor to the Guaranteed Parties) to be avoidable or
unenforceable against such Guarantor under such law,
statute or regulation including, without limitation, any
state fraudulent transfer or fraudulent conveyance act or
statute applied in any such case or proceeding.
(The substantive laws under which the possible avoidance or
unenforceability of the Guaranteed Obligations (or any other
obligations of such Guarantor to the Guaranteed Parties) shall
be determined in any such case or proceeding shall hereinafter
be referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 13(a), but only
to the extent that the Guaranteed Obligations would
otherwise be subject to avoidance under the Avoidance
Provisions if (i) such Guarantor is not deemed to have
received valuable consideration, fair value or reasonably
equivalent value for the Guaranteed Obligations, and
(ii) if the Guaranteed Obligations would render the
Guarantor insolvent, or leave the Guarantor with an
unreasonably small capital to conduct its business, or
cause the Guarantor to have incurred debts (or to have
intended to have incurred debts) beyond its ability to pay
such debts as they mature, in each case as of the time any
of the Guaranteed Obligations are deemed to have been
incurred under the Avoidance Provisions and after giving
effect to contribution as among Guarantors, the maximum
Guaranteed Obligations for which such Guarantor shall be
liable hereunder shall be reduced to that amount which,
after giving effect thereto, would not cause the
Guaranteed Obligations (or any other obligations of such
Guarantor to the Guaranteed Parties), as so reduced, to be
subject to avoidance under the Avoidance Provisions. This
Section 13(b) is intended solely to preserve the rights of
the Guaranteed Parties hereunder to the maximum extent
that would not cause the Guaranteed Obligations of any
Guarantor to be subject to avoidance under the Avoidance
Provisions, and neither such Guarantor nor any other
Person shall have any right or claim under this Section 13
as against the Guaranteed Parties that would not otherwise
be available to such Person under the Avoidance
Provisions.
SECTION 14. Information. Each of the Guarantors assumes
all responsibility for being and keeping itself informed of
Parent's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Guaranteed Obligations and the nature, scope and extent of the
risks that such Guarantor assumes and incurs hereunder, and
agrees that none of the Guaranteed Parties will have any duty
to advise any of the Guarantors of information known to it or
any of them regarding such circumstances or risks.
SECTION 15. Survival of Agreement. All agreements,
representations and warranties made herein shall survive the
execution and delivery of this Guarantee.
SECTION 16. Counterparts. This Guarantee and any
amendments, waivers, consents or supplements may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument.
SECTION 17. Additional Guarantors. Upon execution and
delivery by any Subsidiary of Parent of an instrument in the
form of this Guarantee, such Subsidiary of Parent shall become
a Guarantor hereunder with the same force and effect as if
originally named a Guarantor herein (each an "Additional
Guarantor"). The execution and delivery of any such instrument
shall not require the consent of any Guarantor hereunder. The
rights and obligations of each Guarantor hereunder shall remain
in full force and effect notwithstanding the addition of any
Additional Guarantor as a party to this Guarantee.
SECTION 18. Successors and Assigns. This Guarantee shall
be binding upon the respective successors and assigns of the
Guarantors. This Guarantee shall inure to the benefit of the
respective successors and assigns of the Guaranteed Parties,
including any subsequent holder of any Notes. No Guarantor may
assign its obligations hereunder to any other Person.
[Signatures on Next Page]
IN WITNESS WHEREOF, each Guarantor and Parent caused this
Guarantee to be duly executed and delivered by their respective
duly authorized officers as of the date first above written.
[GUARANTOR]
By:
Name:
Title:
Address for Notices:
c/o Ryan's Family Steak Houses, Inc.
405 Lancaster Avenue
Greer, South Carolina 29650
Attention: Vice President, Finance/
Chief Financial Officer
SECTION 12 OF THE
FOREGOING GUARANTEE
ACKNOWLEDGED AND
AGREED TO:
RYAN'S FAMILY STEAK HOUSES, INC.
By:
Name:
Title:
EXHIBIT 4.11(b) TO NOTE PURCHASE AGREEMENT
[Form of Contribution Agreement]
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT, dated as of January 28,
2000 (as amended, supplemented, restated or otherwise modified
from time to time, this "Contribution Agreement"), by and among
RYAN'S FAMILY STEAK HOUSES, INC. (together with its successors
and permitted assigns, "Parent"), a corporation organized and
existing under the laws of the State of South Carolina, and each
of the undersigned signatories hereto as Guarantors (each of the
undersigned (other than Parent), together with their respective
successors and assigns, individually a "Guarantor" and
collectively the "Guarantors") for the purpose of establishing
rights and obligations of contribution among the Guarantors in
connection with the Guarantee Agreement (as such term is defined
below).
R E C I T A L S
WHEREAS, Parent has entered into those certain identical
(except for the names of the purchasers) Note Purchase Agreements
dated as of January 28, 2000 (collectively, as amended,
supplemented, restated or otherwise modified from time to time,
the "Agreements," and individually, an "Agreement") (together the
"Agreements" and separately each an "Agreement") with the
investors party thereto (collectively, together with their
respective successors and assigns, individually a "Guaranteed
Party" and collectively the "Guaranteed Parties"), pursuant to
which Parent has issued to the Guaranteed Parties its 9.02%
Senior Notes due January 28, 2008 (collectively, as amended,
supplemented, restated or otherwise modified from time to time,
the "Notes," such term to include any such notes issued in
substitution therefor pursuant to Section 13 of the Agreements),
in the aggregate principal amount of $75,000,000;
WHEREAS, the obligation of Guaranteed Parties to purchase
the Notes under the Agreements is conditioned on, among other
things, the provision of a Contribution Agreement in the form
hereof;
WHEREAS, the Guarantors have entered into the Subsidiary
Guarantee Agreement dated as of even date herewith (the
"Guarantee Agreement"), pursuant to which such Guarantors have
agreed to guarantee all the obligations of Parent pursuant to the
Agreements and all other Guaranteed Obligations; and
WHEREAS, as a result of transactions contemplated by the
Agreements, Guarantors will benefit from the Guaranteed
Obligations and in consideration thereof desire to enter into
this Contribution Agreement to provide a fair and equitable
arrangement to make contributions in the event payments are made
under the Guarantee Agreement.
NOW, THEREFORE, in consideration of the foregoing premises
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Parent and each
Guarantor hereby agree as follows:
SECTION 1. Contribution and Subrogation. Each Guarantor
agrees (subject to Section 2) that in the event a payment shall
be made by any Guarantor under the Guarantee Agreement or assets
of any Guarantor shall be sold to satisfy a claim of any
Guaranteed Party, and such Guarantor (the "Claiming Guarantor")
shall not have been indemnified by Parent, each other Guarantor
(a "Contributing Guarantor") shall indemnify the Claiming
Guarantor in an amount equal to the amount of such payment or the
greater of the book value or the fair market value of such
assets, as the case may be, multiplied by a fraction, the
numerator of which shall be the net worths of the Contributing
Guarantor on the date hereof, and the denominator of which shall
be the sum of the net worth of all the Guarantors on the date
hereof. Any Contributing Guarantor making any payment to a
Claiming Guarantor pursuant to this Section 1 shall be subrogated
to the rights of such Claiming Guarantor under this Section 1 to
the extent of such payment.
SECTION 2. Subordination. Notwithstanding any provision
of this Agreement to the contrary, (i) all rights of the
Guarantors under Section 1 and all other rights of indemnity or
contribution under applicable law or otherwise shall be fully
subordinated to the indefeasible payment in full in cash of the
Guaranteed Obligations, and (ii) no such rights shall be
exercised until all of the Guaranteed Obligations shall have been
irrevocably paid in full in cash and the Agreements shall have
been irrevocably terminated. If any amount shall be paid to any
Guarantor on account of such indemnity or contribution rights at
any time when all of the Guaranteed Obligations shall not have
been paid in full in cash, such amount shall be held in trust for
the benefit of the Guaranteed Parties and shall forthwith be paid
to the Guaranteed Parties to be credited and applied upon the
Guaranteed Obligations in accordance with the terms of the
Agreements. No failure on the part of any Guarantor to make the
payments required by Section 1 (or any other payments required
under applicable law or otherwise) shall in any respect limit the
obligations and liabilities of any Guarantor with respect to the
Guarantee Agreement, and each Guarantor shall remain liable for
the full amount of the obligations of such Guarantor under the
Guarantee Agreement.
SECTION 3. Allocation. If at any time there exists more
than one Claiming Guarantor with respect to the Guarantee
Agreement, then payment from other Guarantors pursuant to this
Contribution Agreement shall be allocated among such Claiming
Guarantors in proportion to the total amount of money paid for or
on account of the Guaranteed Obligations by each such Claiming
Guarantor pursuant to the Guarantee Agreement.
SECTION 4. Preservation of Rights. This Contribution
Agreement shall not limit or affect any right which any Guarantor
may have against any other Person that is not a party hereto.
SECTION 5. Subsidiary Payment. The amount of
contribution payable under this Contribution Agreement by any
Guarantor with respect to the Guarantee Agreement shall be
reduced by the amount of any contribution paid hereunder by a
Subsidiary of such Guarantor with respect to the Guarantee
Agreement.
SECTION 6. Asset Sale. If all of the stock of any
Guarantor shall be sold or otherwise disposed of (including by
merger or consolidation) in an asset sale not prohibited by the
Agreements or otherwise consented to by the Guaranteed Parties
under the Agreements, the agreements of such Guarantor hereunder
shall automatically be discharged and released without any
further action by such Guarantor and shall be assumed in full by
the corporation which prior to such asset sale or consent owned
the stock of such Guarantor, effective as of the time of such
asset sale or consent. Parent shall cause any such corporation
which is not a Guarantor to become a party to this Contribution
Agreement and the Guarantee Agreement unless otherwise agreed in
writing by the Guaranteed Parties.
SECTION 7. Equitable Allocation. If as a result of any
reorganization, recapitalization or other corporate change in
Parent or any of its Subsidiaries, or as a result of any
amendment, waiver or modification of the terms and conditions
governing the Guarantee Agreement or any of the Guaranteed
Obligations, or for any other reason, the contributions under
this Contribution Agreement become inequitable, the parties
hereto shall promptly modify and amend this Contribution
Agreement to provide for an equitable allocation of
contributions. All such modifications and amendments shall be in
writing and signed by all parties hereto.
SECTION 8. Asset of Party to Which Contribution and
Indemnification Are Owing. The parties hereto acknowledge that
the right to contribution and indemnification hereunder shall
each constitute an asset in favor of the party to which such
contribution or indemnification is owing.
SECTION 9. Successors and Assigns; Amendments. This
Contribution Agreement shall be binding upon each party hereto
and its respective successors and assigns and shall inure to the
benefit of the parties hereto and their respective successors and
assigns. None of any Guarantor's rights or any interest therein
under this Contribution Agreement may be assigned or transferred
without the written consent of the Guaranteed Parties. In the
event of any such transfer or assignment of rights by any
Guarantor, the rights and privileges herein conferred upon that
Guarantor shall automatically extend to and be vested in such
transferee or assignee, all subject to the terms and conditions
hereof. This Contribution Agreement shall not be amended without
the prior written consent of the Guarantors and the Guaranteed
Parties.
SECTION 10. Termination. This Contribution Agreement, as
it may be modified or amended from time to time, shall remain in
effect, and shall not be terminated as to the Guarantee
Agreement, until the Guarantee Agreement has been discharged or
otherwise satisfied in accordance with its terms.
SECTION 11. CHOICE OF LAW. THIS CONTRIBUTION AGREEMENT
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 12. Counterparts. This Contribution Agreement
and any amendments, waivers, consents or supplements may be
executed in any number of counterparts and by the different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
SECTION 13. Additional Guarantors. Upon execution and
delivery, after the date hereof, by a Subsidiary of Parent of an
instrument in the form of this Contribution Agreement, such
Subsidiary of Parent shall become a Guarantor hereunder with the
same force and effect as if originally named as a Guarantor
hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Contribution
Agreement.
SECTION 14. Severability. In case any provision in or
obligation under this Contribution Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality or enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 15. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic or telecopy communication) and mailed,
telegraphed, telecopied or delivered, if to any Guarantor,
addressed to it at the address set forth for such party in the
Guarantee Agreement, and if to any other party, at the address
set forth for such party in the Agreements. All such notices and
other communications shall be given and deemed to have been
received as provided by the terms of the Agreements.
SECTION 16. Defined Terms. All capitalized terms used
herein and not defined herein shall have their respective defined
meanings as set forth or used in the Guarantee Agreement.
[Signatures on Next Page]
IN WITNESS WHEREOF, Parent and the Guarantors have duly
executed this Contribution Agreement as of the day and year first
above written.
RYAN'S FAMILY STEAK HOUSES, INC.
By:
Title:
THE GUARANTORS:
[GUARANTOR]
By:
Title:
Address for Notices:
c/o Ryan's Family Steak Houses, Inc.
405 Lancaster Avenue
Greer, South Carolina 29650
Attn: Vice President, Finance/Chief
Financial Officer
EXHIBIT 4.12
[FORM OF INTERCREDITOR AGREEMENT]
EXHIBIT 4.13
[FORM OF PLEDGE AGREEMENT]
EXHIBIT 9.7
[FORM OF JOINDER AGREEMENT]
THIS JOINDER AGREEMENT (this "Agreement"), dated as of
___________, is entered into between _________________, a
________________ (the "New Subsidiary") and BANK OF AMERICA,
N.A., in its capacity as Collateral Agent (the "Collateral
Agent") under that certain Pledge Agreement dated as of January
28, 2000 (as amended, modified, extended, renewed or restated
from time to time, the "Pledge Agreement") among RYAN'S FAMILY
STEAK HOUSES, INC., a South Carolina Corporation (the "Company"),
the Domestic Subsidiaries of the Company (individually, a
"Pledgor" and together with the Company, the "Pledgors") and the
Collateral Agent. All capitalized terms used herein, unless
otherwise defined, shall have the meanings set forth in the
Pledge Agreement.
The New Subsidiary and the Collateral Agent, for the benefit
of the Purchasers, hereby agree as follows:
1. The New Subsidiary hereby (a) acknowledges, agrees and
confirms that, by its execution of this Agreement, the New
Subsidiary will be deemed a party to the Pledge Agreement as a
Pledgor, (b) acknowledges and agrees that its obligations under
the Note Purchase Agreement are secured in accordance with the
terms of the Pledge Agreement and the other Collateral Documents
and that the Purchasers may exercise their remedies thereunder in
accordance with the terms thereof and (c) pledges and grants to
the Collateral Agent, for the benefit of the Purchasers, a
security interest in the Pledged Capital Stock (as defined in the
Pledge Agreement) identified on Schedule A attached hereto and
all of the Pledged Collateral (as defined in the Pledge
Agreement). The New Subsidiary hereby represents and warrants to
the Administrative Agent and the Purchasers that (a) set forth on
Schedule B attached hereto are the chief executive offices and
principal place of business of the New Subsidiary, (b) set forth
on Schedule C attached hereto is a complete and accurate list of
all Subsidiaries of the New Subsidiary and (d) set forth on
Schedule D attached hereto are any tradenames of the New
Subsidiary. Each of Schedule 4.9 and Schedule 5.4 of the Note
Purchase Agreement and Schedule 2(a) of the Pledge Agreement are
hereby deemed amended to include the information on Schedule A
through Schedule D attached hereto, as applicable.
2. If required, the New Subsidiary is, simultaneously with the
execution of this Agreement, executing and delivering such
Collateral Documents (and such other documents and instruments)
as reasonably requested by the Collateral Agent in accordance
with Section 9.7 of the Note Purchase Agreement.
3. The address of the New Subsidiary for purposes of Section 18
of the Note Purchase Agreement is as follows:
____________________________
____________________________
____________________________
____________________________
4. This Agreement 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.
5. THIS AGREEMENT 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.
IN WITNESS WHEREOF, the New Subsidiary has caused this
Agreement to be duly executed by its authorized officer, as of
the day and year first above written.
[NEW SUBSIDIARY]
By:___________________________
_____
Name:_________________________
____
Title:________________________
______
Acknowledged and Accepted:
BANK OF AMERICA, N.A., as Collateral Agent
By:________________________________
Name:_____________________________
Title:______________________________
SCHEDULE A
PLEDGED CAPITAL STOCK
SCHEDULE B
LOCATION OF OFFICES
SCHEDULE C
SUBSIDIARIES
SCHEDULE D
TRADENAMES
Exhibit 10.26
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
This Agreement is entered into as of ____________ by
and between Ryan's Family Steak Houses, Inc. and (First_Name)
(MI) (Last_Name) ("Employee") in reference to the following
facts:
1. Employee is a valued employee of Ryan's Family
Steak Houses, Inc..
2. Ryan's Family Steak Houses, Inc. has
simultaneously with the execution of this Agreement caused Sun
Life Assurance Company of Canada (U.S.), a wholly-owned
subsidiary of Sun Life Assurance Company of Canada [the
"Insurance Company"], to issue policy number __________________
(the "Policy") on the life of (First_Name) (MI) (Last_Name)
(Employee). The necessary premium to bind the policy has been
paid by Ryan's Family Steak Houses, Inc. as of the date of this
Agreement.
3. For purposes of this Agreement, Ryan's Family
Steak Houses, Inc. and its subsidiaries shall constitute the
"Employer." For this purpose, a subsidiary is a corporation
which is a member of a controlled group of corporations (within
the meaning of Section 1563(a) of the Internal Revenue Code of
1986, as amended (the "Code"), determined without regard to
Section 1563(a)(4) and (e)(3)(C) thereof and by substituting the
phrase "at least 50 percent" for the phrase "at least 80 percent"
each time it appears in Section 1563(a)(1)) of which Ryan's
Family Steak Houses, Inc. is a member. If Employee is employed
by a corporation which, as a result of a sale or other corporate
reorganization, ceases to be a member of such controlled group,
such sale or other corporate reorganization shall be treated as a
termination of Employee by Employer without Cause (as defined in
Section 8) unless immediately following the event and without any
break in employment the Employee remains employed by Ryan's
Family Steak Houses, Inc. or another corporation which is a
member of the controlled group of corporations.
NOW THEREFORE, in consideration of the facts set forth
above and the various promises and covenants set forth below, the
parties to this Agreement agree as follows:
1. Ownership of Policy.
Ryan's Family Steak Houses, Inc. acknowledges that Employee
is the owner of the Policy and that Employee is entitled to
exercise all of his or her ownership rights granted by the terms
of the Policy, except to the extent that the power of the
Employee to exercise those rights is specifically limited by this
Agreement. Except as so limited, it is the expressed intention
of the parties to reserve to Employee all rights in and to the
Policy granted to its owner by the terms thereof, including, but
not limited to, the right to change the beneficiary and the right
to exercise settlement options.
2. Ryan's Family Steak Houses, Inc.'s Security Interest.
Ryan's Family Steak Houses, Inc.'s security interest in the
Policy is conditioned upon its satisfactorily performing all of
the covenants under this Agreement. Each period covered by any
individual premium payment described in Section 3 shall be
considered a discrete extension of Ryan's Family Steak Houses,
Inc.'s security interest in the Policy. Ryan's Family Steak
Houses, Inc. shall not have nor exercise any right in and to the
Policy which could, in any way, endanger, defeat, or impair any
of the rights of Employee in the Policy, including by way of
illustration any right to collect the proceeds of the Policy in
excess of the amount due Ryan's Family Steak Houses, Inc. as
provided in this Agreement and in the Policy. The only rights in
and to the Policy granted to Ryan's Family Steak Houses, Inc. in
this Agreement shall be limited to Ryan's Family Steak Houses,
Inc.'s security interest in and to the cash value of the Policy,
as defined herein, (the "Security Interest"). Ryan's Family
Steak Houses, Inc. shall not assign any of its Security Interest
in the Policy to anyone other than Employee.
3. Premium payments.
For so long as the Ryan's Family Steak Houses, Inc.'s
Security Interest has not been released, Ryan's Family Steak
Houses, Inc. agrees to pay the scheduled premium on the Policy on
or before the last day of each "policy year" (as such term is
used in the Policy) in an amount equal to the sum of (a) the
compensation deferred by Employee under the Ryan's Family Steak
Houses, Inc. Deferred Compensation Plan (the "Plan") during the
pay periods ending during such policy year plus (b) the
Employer's discretionary matching contributions credited to
Employee's account under the Plan for the calendar year ending
during such policy year plus (c) the excess, if any, of (i) the
"cost of insurance" (as defined in the Policy) for the excess, if
any, of the minimum death benefit required under Section 4 hereof
(determined in compliance with the 7-pay test set forth in
Section 7702A of the Code) over (ii) the minimum death benefit
(determined in compliance with such 7-pay test) which could be
provided by that portion of the accumulated premiums actually
paid under the Policy which were paid pursuant to clauses (a) and
(b) of this sentence. The premium payment shall be transmitted
directly by Ryan's Family Steak Houses, Inc. to the Insurance
Company. During the period of time that this Agreement is in
effect, Employee irrevocably agrees that all dividends paid on
the Policy shall be applied to purchase from the Insurance
Company additional paid-up life insurance on the life of
Employee.
4. Death of Employee while employed by Employer.
(a) If Employee dies prior to termination of employment
with Employer and prior to his or her Security Release Date (as
defined in Section 10 below), Employee's designated beneficiary
shall be entitled to receive the entire death benefit under the
Policy, which shall be two times the sum of Employee's annual
base salary at the time of death, plus the last paid annual
bonus.
(b) Employee agrees that, during the period of this
Agreement, Employee will obtain and provide to Ryan's Family
Steak Houses, Inc. and/or the Insurance Company the written
consent of the spouse of the Employee, in the form attached
hereto as Exhibit A, to any designation by Employee of anyone
other than the Employee's spouse as the beneficiary to receive
the benefits under this Section 4.
5.Employee's attaining his or her Security Release Date or
termination of Employee's employment on account of a
Qualifying Termination.
(a) By making timely payment of the premiums described in
Section 3, Ryan's Family Steak Houses, Inc. may renew its
Security Interest in the Policy for the period commencing with
the due date of such payment until the later of (1) the due date
of the next scheduled premium described in Section 3, or (2) the
date that Employee attains his or her Security Release Date or
terminates employment with the Employer on account of a
Qualifying Termination (either of which events described in this
clause 2 is referred to herein as a "Qualifying Event"). Ryan's
Family Steak Houses, Inc. may not extend its Security Interest in
the Policy under the Collateral Security Assignment Agreement
attached as Exhibit B after the occurrence of a Qualifying Event.
After such Qualifying Event, Employee shall be entitled to
exercise all of his or her ownership rights in the Policy without
any limitation, and this Agreement and its accompanying
Collateral Security Assignment Agreement shall no longer
constitute a restriction on Employee's rights.
(b) Notwithstanding paragraph (a), Ryan's Family Steak
Houses, Inc. shall continue to have its Security Interest in the
Policy to the extent required to satisfy its withholding
obligations as described in Section 12 and to recover any amounts
owed by Employee as described in paragraph (c) below.
(c) Employee agrees that if, at the time of the occurrence
of a Qualifying Event, Employee has any outstanding balances on
any loans made by Ryan's Family Steak Houses, Inc. to Employee,
then, unless Employee otherwise repays such outstanding balances,
Employee shall cause, either by withdrawing from or borrowing on
a nonrecourse basis against the Policy, to be transferred to
Ryan's Family Steak Houses, Inc. that portion of the cash value
of the Policy which is equal to the sum of the outstanding
balances on all such loans.
6.Termination of an Employee for a reason other than a Qualifying
Termination.
If the employment of Employee with Employer is terminated
prior to his or her Security Release Date for a reason other than
a Qualifying Termination (as described below), Employee shall
cause, either by withdrawing from or borrowing against the
Policy, on a nonrecourse basis, to be transferred to Ryan's
Family Steak Houses, Inc. an amount equal to the maximum amount
that may then be obtained under the Policy; provided that, the
amount to be transferred to Ryan's Family Steak Houses, Inc.
shall be reduced to the extent the Employee has previously
transferred to Ryan's Family Steak Houses, Inc. an amount equal
to any difference that then exists between the cash value of the
Policy and the amount that may be borrowed against the Policy.
In no event shall Employee's voluntary resignation prior to
attaining his or her Security Release Date (as such concept is
further defined below) ever constitute a Qualifying Termination,
except in certain situations following a Change in Control (see
Section 9).
7.Definition of a Qualifying Termination.
A Qualifying Termination is either of the following events:
the termination of Employee by Employer for any reason other than
"Cause," as described in Section 8; or the termination of
Employee after a Change in Control under the circumstances
described in Section 9(a). Both of these concepts are further
defined below.
8.Qualifying Termination because Employee is terminated for a
reason other than "Cause".
For purposes of this Section, "Cause" shall mean an act or
acts of dishonesty or moral turpitude (including but not limited
to conviction of a felony) taken by Employee which materially
injures or damages the Employer.
9.Qualifying Termination on account of termination after a Change
in Control.
(a) A Qualifying Termination shall be treated as occurring
after a "Change in Control" (as defined below) if there is first
a "Change in Control" and then, within three years following such
Change in Control, either (1) Employee's employment with the
Employer is terminated without "Cause" (as defined in Section 8)
or (2) Employee terminates his or her employment with the
Employer for "Good Reason" (as defined in subsection (c) below).
(b) For purposes of this Section, a "Change in Control"
shall mean (1) the dissolution or liquidation of Ryan's Family
Steak Houses, Inc., (2) a reorganization, merger, or
consolidation of Ryan's Family Steak Houses, Inc. with one or
more corporations as a result of which Ryan's Family Steak
Houses, Inc. is not the surviving corporation, (3) the
acquisition of beneficial ownership, directly or indirectly, of
more than 25% of the voting power of the outstanding stock of
Ryan's Family Steak Houses, Inc. by one person, group,
association, corporation, or other entity, coupled with the
election to the Board of Directors of new members who were not
originally nominated by the Board at the last annual meeting and
who constitute a new majority of the Board or (4) upon the sale
of all or substantially all the property of Ryan's Family Steak
Houses, Inc.. The term "Change in Control" shall not apply to
any reorganization or merger initiated voluntarily by Ryan's
Family Steak Houses, Inc. in which Ryan's Family Steak Houses,
Inc. is the surviving entity.
(c) For purposes of this Section, "Good Reason" shall mean
the occurrence of one of the following events without Employee's
consent:
(1)An adverse and significant change in the Employee's
position, duties, responsibilities, or status with
the Employer, or a change in business location to
a point which is more than 50 miles from his or
her location prior to the Change in Control,
except for required travel on Employer business to
an extent substantially consistent with his or her
business travel obligations prior to the Change in
Control.
(2)A reduction by the Employer in Employee's base
salary or opportunity for Bonus; and
(3)The taking of any action by the Employer to
eliminate benefit plans without providing
substitutes therefor, to reduce benefits
thereunder or to substantially diminish the
aggregate value of incentive awards or other
fringe benefits including insurance and vacation
days.
(d) A termination of employment by Employee within the 36-
month period following a Change in Control shall be for Good
Reason if one of the occurrences specified in paragraph (c) shall
have occurred, notwithstanding that Employee may have other
reasons for terminating employment, including employment by
another employer which Employee desires to accept.
10. Employee's attaining his or her Security Release Date.
(a) Employee's "Security Release Date" shall mean the date
which is two years following the date on which Ryan's Family
Steak Houses, Inc. receives from Employee a completed notice in
the form attached hereto as Exhibit B, provided that Employee
continues to be employed by Employer until such date. Employee's
election of a Security Release Date shall be irrevocable.
(b) Ryan's Family Steak Houses, Inc.'s Security Interest in
the Policy is contingent upon the timely payment of premiums
under Section 3 of this Agreement. Each period covered by any
individual premium payment shall be considered an independent
extension of Ryan's Family Steak Houses, Inc.'s Security Interest
in the Policy. In the event that Ryan's Family Steak Houses,
Inc. waives its rights by reason of failure to make payments
under Section 3 of this Agreement, Employee shall immediately
attain his or her Security Release Date. Ryan's Family Steak
Houses, Inc.'s failure to extend its rights in no way affects
Ryan's Family Steak Houses, Inc.'s duties and obligations under
this Agreement.
11. Limitation on Employee's rights prior to a Qualifying Event.
In order to protect Ryan's Family Steak Houses, Inc.'s
Security Interest and notwithstanding any other provisions in
this Agreement, prior to a Qualifying Event, Employee agrees that
he or she will not modify the death benefit under the Policy,
direct the investment of the cash surrender value of the Policy,
borrow against the Policy, assign the Policy, or obtain any
portion of the cash value of the Policy. Notwithstanding the
preceding sentence, if Section 6 applies to a termination,
Employee may borrow or withdraw from the Policy, so long as the
borrowing or withdrawal request is submitted to the Insurance
Company along with a directive that the borrowed or withdrawn
amount be transferred directly to Ryan's Family Steak Houses,
Inc. Prior to the release of Ryan's Family Steak Houses, Inc.'s
Security Interest in the Policy, Employee and Ryan's Family Steak
Houses, Inc. agree that Ryan's Family Steak Houses, Inc. shall
from time to time appoint one or more individuals (the
"Designee"), who may be officers of Ryan's Family Steak Houses,
Inc., who shall be entitled to administer the investments under
the Policy; provided, however, that, the Designee may only direct
the investments under the Policy in funds offered by the
Insurance Company under the Policy.
12. Tax Withholding.
It is recognized by the parties that the rights of Employee
in the Policy (as modified by the Agreement) may cause Employee
to be treated under certain circumstances as in receipt of gross
income. These circumstances may also impose upon Ryan's Family
Steak Houses, Inc., an obligation to deduct and withhold federal,
state or local taxes. Unless Employee otherwise provides Ryan's
Family Steak Houses, Inc. the amounts it is required to withhold,
Employee shall cause, either by withdrawing from or borrowing on
a nonrecourse basis against the Policy, to be transferred to
Ryan's Family Steak Houses, Inc. that portion of the cash value
of the Policy which is equal to the amount of any federal, state
or local taxes required to be withheld.
13.Disputes.
(a) The Ryan's Family Steak Houses, Inc.'s Compensation and
Stock Option Committee of the Board of Directors (the
"Administrator") shall administer this Agreement. The
Administrator (either directly or through its designees) will
have power and authority to interpret, construe, and administer
this Agreement (for the purpose of this section, the Agreement
shall include the Collateral Security Assignment Agreement);
provided that, the Administrator's authority to interpret this
Agreement shall not cause the Administrator's decisions in this
regard to be entitled to a deferential standard of review in the
event that Employee or his or her beneficiary seeks review of the
Administrator's decision as described below.
(b) Neither the Administrator, its designee nor its
advisors, shall be liable to any person for any action taken or
omitted in connection with the interpretation and administration
of this Agreement.
(c) Any claims or disputes pertaining to this Agreement or
to any matter arising therefrom not resolved by the claims
procedures set forth in Section 29 of the Employee's Executive
Life Insurance Plan's Summary Plan Description ("SPD"), shall be
resolved by arbitration in the State of South Carolina. The
Participant, any Beneficiary, and the Company will be bound to
this mandatory arbitration rule as the exclusive remedy for all
disputes under this Plan. There must be full compliance with the
rules of the American Arbitration Association in order to resolve
any legal disputes regarding this Plan. The exclusive choice of
forum set forth in this Section 29 of the SPD shall not be deemed
to preclude the enforcement of any judgment obtained in such
forum or the taking of any action under this Plan to enforce such
judgment in any appropriate jurisdiction.
(d) All costs and expenses (exclusive of attorney's fees)
incurred in connection with any arbitration relating to a claim
or dispute pertaining to this Plan shall be paid by the Company.
The Company shall bear the cost of all attorneys' fees incurred
by the Company. The attorneys' fees incurred by the Participant
or Beneficiary shall be paid by the party to whom the arbitrator
determines should bear the attorneys' fees incurred by the
Participant or Beneficiary in pursuing the claim. In allocating
the attorneys' fees under this Section 29 of the SPD, the
arbitrator should consider the relative merits of each party's
position and the manner and means the party undertook to assert
the party's case.
14. Collateral Security Assignment of Policy to Ryan's Family
Steak Houses, Inc.
In consideration of the promises contained herein, the
Employee has contemporaneously herewith granted the Security
Interest in the Policy to Ryan's Family Steak Houses, Inc. as
collateral, under the form of Collateral Security Assignment
attached hereto, which Collateral Security Assignment gives
Ryan's Family Steak Houses, Inc. the limited power to enforce its
rights to recover the cash value of the Policy under the
circumstances defined herein. Ryan's Family Steak Houses, Inc.'s
Security Interest in the Policy shall be specifically limited to
the rights set forth above in this Agreement, notwithstanding the
provisions of any other documents including the Policy. Employee
agrees to execute any notice prepared by Ryan's Family Steak
Houses, Inc. requesting a withdrawal or non-recourse loan in an
amount equal to the amount to which Ryan's Family Steak Houses,
Inc. is entitled under Sections 5, 6 or 12 of this Agreement.
15. Employee's beneficiary rights and security interest.
(a) Ryan's Family Steak Houses, Inc. and Employee intend
that in no event shall Ryan's Family Steak Houses, Inc. have any
power or interest related to the Policy or its proceeds, except
as provided herein and in the Collateral Security Assignment. In
the event that Ryan's Family Steak Houses, Inc. ever receives or
may be deemed to have received any right or interest in the
Policy or its proceeds beyond the limited rights described herein
and in the Collateral Security Assignment, such right or interest
shall be held in trust for the benefit of Employee and be held
separate from the property of Ryan's Family Steak Houses, Inc.
(b) In order to further protect the rights of the Employee,
Ryan's Family Steak Houses, Inc. agrees that its rights to the
Policy and proceeds thereof shall serve as security for Ryan's
Family Steak Houses, Inc.'s obligations as provided in this
Agreement to Employee. Ryan's Family Steak Houses, Inc. grants
to Employee a security interest in and collaterally assigns to
Employee any and all rights Ryan's Family Steak Houses, Inc. has
in the Policy, and products and proceeds thereof whether now
existing or hereafter arising pursuant to the provisions of the
Policy, this Agreement, the Collateral Security Assignment or
otherwise, to secure any and all obligations owed by Ryan's
Family Steak Houses, Inc. to Employee under this Agreement. In
no event shall this provision be interpreted to reduce Employee's
rights to the Policy or expand in any way the rights or benefits
of Ryan's Family Steak Houses, Inc. under this Agreement, the
Policy or the Collateral Security Assignment. This security
interest granted to Employee from Ryan's Family Steak Houses,
Inc. shall automatically expire and be deemed waived if Employee
terminates employment with Employer prior to a Qualifying Event.
Nothing in this provision shall prevent Ryan's Family Steak
Houses, Inc. from receiving its share of the death benefits under
the Policy as provided in Section 4 of this Agreement.
16. Amendment of Agreement.
Except as provided in a written instrument signed by Ryan's
Family Steak Houses, Inc. and Employee, this Agreement may not be
cancelled, amended, altered, or modified.
17. Notice under Agreement.
Any notice, consent, or demand required or permitted to be
given under the provisions of this Agreement by one party to
another shall be in writing, signed by the party giving or making
it, and may be given either by delivering it to such other party
personally or by mailing it, by United States Certified mail,
postage prepaid, to such party, addressed to its last known
address as shown on the records of Ryan's Family Steak Houses,
Inc. The date of such mailing shall be deemed the date of such
mailed notice, consent, or demand.
18. Binding Agreement.
This Agreement shall bind the parties hereto and their
respective successors, heirs, executor, administrators, and
transferees, and any Policy beneficiary.
19. Controlling law and characterization of Agreement.
(a) To the extent not governed by federal law, this
Agreement and the right to the parties hereunder shall be
controlled by the laws of the State of South Carolina.
(b) If this Agreement is considered a "plan" under the
Employee Retirement Income Security Act of 1974 (ERISA), both
Ryan's Family Steak Houses, Inc. and Employee acknowledge and
agree that for all purposes the Agreement shall be treated as a
"welfare plan" within the meaning of section 3(1) of ERISA.
Consistent with the preceding sentence, Employee further
acknowledges that his or her rights to the Policy and the release
of Ryan's Family Steak Houses, Inc.'s Security Interest are
strictly limited to those rights set forth in this Agreement. In
furtherance of this acknowledgement and in consideration of
Ryan's Family Steak Houses, Inc.'s payment of the initial
premiums for this Policy, Employee voluntarily and irrevocably
relinquishes and waives any additional rights in the Policy or
any different restrictions on the release of Ryan's Family Steak
Houses, Inc.'s Security Interest that he or she might otherwise
argue to exist under either state, federal, or other law.
Employee further agrees that he or she will not argue that any
such additional rights or different restrictions exist in any
judicial or arbitration proceeding. Similarly, Ryan's Family
Steak Houses, Inc. acknowledges that its Security Interest is
strictly limited as set forth in this Agreement and voluntarily
and irrevocably relinquishes and waives any additional interests
or different interests or advantages that Ryan's Family Steak
Houses, Inc. would have or enjoy if the Agreement were not
treated as a "welfare plan" within the meaning of section 3(1) of
ERISA.
20.Execution of Documents.
Ryan's Family Steak Houses, Inc. and Employee agree to
execute any and all documents necessary to effectuate the terms
of this Agreement.
Ryan's Family Steak Houses, Inc.
By: _____________________________
Executive Officer
Title: _____________________________
EMPLOYEE
_______________________________
Employee's Signature
Exhibit 10.27
RYAN'S FAMILY STEAK HOUSES, INC.
DEFERRED COMPENSATION PLAN
RYAN'S FAMILY STEAK HOUSES, INC.
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
Page
ARTICLE I
TITLE AND DEFINITIONS
1.1
Title . . . . . . . . . . . . . . . . . . . . . . .2
1.2
Definitions . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PARTICIPATION
2.1
Participation . . . . . . . . . . . . . . . . . . 6
ARTICLE III
DEFERRAL ELECTIONS
3.1
Elections to Defer Compensation . . . . . . . . .7
3.2
Investment Elections . . . . . . . . . . . . . . 9
ARTICLE IV
PARTICIPANT ACCOUNTS
4.1
Deferral Account . . . . . . . . . . . . . . . . . 10
4.2
Company Matching Account . . . . . . . . . . . . 11
ARTICLE V
VESTING
5.1
Deferral Account . . . . . . . . . . . . . . . . . 12
5.2
Company Matching Account . . . . . . . . . . . . . 12
5.3
Forfeiture of Matching Account . . . . . . . . . . 12
ARTICLE VI
DISTRIBUTIONS
6.1
Amount and Time of Distributions . . . . . . . . . . 13
6.2
Form of Distribution . . . . . . . . . . . . . . 13
6.3
Forfeitures . . . . . . . . . . . . . . . . . . . . 14
Payment of Special Term Deferrals . . . . . . . . . .14
ARTICLE VII
HARDSHIPS
7.1
Hardships . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VIII
ADMINISTRATION
8.1
Committee Action . . . . . . . . . . . . . . . . . . 16
8.2
Powers and Duties of the Committee . . . . . . . . 16
8.3
Construction and Interpretation . . . . . . . . . 17
8.4
Information . . . . . . . . . . . . . . . . . . . 17
8.5
Compensation, Expenses and Indemnity . . . . . . . 17
8.6
Quarterly Statement . . . . . . . . . . . . . . . . 18
8.7
Structure of Committee . . . . . . . . . . . . . . . 18
8.8
Claims for Benefits . . . . . . . . . . . . . . . . . 18
8.9
Arbitration and Arbitration Expenses . . . . . . . . 19
ARTICLE IX
MISCELLANEOUS
9.1
Unsecured General Creditor . . . . . . . . . . . . 20
9.2
Restriction Against Assignment . . . . . . . . . . 20
9.3
Withholding . . . . . . . . . . . . . . . . . . . . 20
9.4
Amendment, Modification, Suspension or Termination . 21
9.5
Governing Law . . . . . . . . . . . . . . . . . . . 21
9.6
Receipt or Release . . . . . . . . . . . . . . . 21
9.7
Payments on Behalf of Minors . . . . . . . . . . . 21
9.8
Headings, etc. Not Part of Agreement . . . . . . . 21
ARTICLE X
BENEFIT OFFSET
10.1 Offset for Certain Benefits Payable Under Split Dollar
Life Insurance Policies . . . . . . . . . . . . 22
RYAN'S FAMILY STEAK HOUSES, INC.
DEFERRED COMPENSATION PLAN
WHEREAS, RYAN'S FAMILY STEAK HOUSES, INC. (the "Company")
desires to establish a deferred compensation plan to provide
supplemental retirement income benefits through deferrals of
salary and bonuses effective as of August 1, 1999; and
WHEREAS, it is believed that the adoption of this plan
providing for deferred compensation at the election of each
executive will be in the best interests of the Company;
NOW, THEREFORE, it is hereby declared as follows:
ARTICLE I
TITLE AND DEFINITIONS
1.1 Title.
This Plan shall be known as the RYAN'S FAMILY STEAK HOUSES,
INC. Deferred Compensation Plan.
1.2 Definitions.
Whenever the following words and phrases are used in this
Plan, with the first letter capitalized, they shall have the
meanings specified below.
"Account" or "Accounts" shall mean a Participant's Deferral
Account and/or Company Matching Account.
"Beneficiary" or "Beneficiaries" shall be the person or
persons, trustee, or other legal entity or entities last
designated by the Participant to receive the benefits specified
hereunder in the event of the Participant's death or, if there is
no such designated beneficiary, the Participant's Beneficiary
shall mean the person or persons who can verify by affidavit or
court order to the satisfaction of the Committee that they are
entitled to receive the benefit specified hereunder pursuant to
the laws of intestate succession or other statutory provision in
effect at the Participant's death in the state in which the
Participant resided.
"Board of Directors" or "Board" shall mean the Board of
Directors of the Company.
"Bonus" shall mean the regular award or awards payable under
the RYAN'S FAMILY STEAK HOUSES, INC. Management Incentive Program
(or any successor program) and any other special bonus or
incentive compensation payable to a Participant.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Committee" shall mean the Compensation Committee of the
Board of Directors.
"Company" shall mean RYAN'S FAMILY STEAK HOUSES, INC., any
successor corporation and each corporation which is a member of a
controlled group of corporations (within the meaning of Section
1563(a) of the Code, determined without regard to Section
1563(a)(4) and (e)(3)(C) thereof and by substituting the phrase
"at least 50 percent: for the phrase "at least 80 percent" each
time it appears in Section 1563(a)(1) of which RYAN'S FAMILY
STEAK HOUSES, INC. is a component member.
"Company Matching Account" shall mean the bookkeeping
account maintained by the Committee for each Participant that is
credited with a certain amount (the "Company Matching Amount"),
determined by the Company in its sole discretion each Plan Year,
for each dollar of Compensation deferred by the Participant. The
Company Matching Amount shall range from zero to $1.00 per $1.00
of a Participant's deferrals up to a maximum of 6% of Total
Compensation; provided, however, that in no event shall the
Company Matching Amount for a Plan Year exceed an amount that
when combined with the matching contributions made by the Company
with respect to a participant's salary deferrals under any plan
subject to Sections 401(k) and/or 401(m) of the Code, exceed the
maximum amount of matching contributions that the Company would
have made on behalf of that Participant for the Plan Year under
such plan, assuming that the Participant made the maximum
permissible salary deferrals under such plan for the Plan Year,
in the absence of the limitations imposed by Sections 401(k) and
401(m) of the Code.
"Compensation" shall mean the Salary and Bonus that the
Participant is entitled to for services rendered to the Company.
"Deferral Account" shall mean the bookkeeping account
maintained by the Committee for each Participant that is credited
with amounts equal to (1) the portion of the Participant's Salary
that he or she elects to defer (2) the portion of the
Participant's Bonus that he or she elects to defer and (3) gains
and losses pursuant to Section 4.1.
"Director" shall mean a member of the Board of Directors.
"Disability" shall mean the inability to render substantial
services to the Company by reason of mental or physical
disability, as determined by the Committee based on competent
medical advice.
"Early Retirement" shall mean a voluntary termination of
employment prior to normal retirement but after the Participant
is 55 years of age and has completed at least 20 Years of
Employment.
"Effective Date" shall mean August 1, 1999.
"Eligible Employee" shall mean each member of the executive
office, regional officers or directors groups who earned at least
the "highly compensated employee" amount within the meaning of
Section 414(q)(1)(B) as indexed, in Total Compensation in the
calendar year preceding the Plan Year for which the determination
is being made and who is designated in writing by the Committee
as eligible.
"Fund" or "Funds" shall mean one of more of the mutual funds
or contracts selected by the Committee pursuant to Section
3.2(b).
"Initial Election Period" for an Eligible Employee shall
mean the later of (1) August 1, 1999 or (2) the 60-day period
ending on December 1 of the calendar year in which the individual
becomes an Eligible Employee.
"Normal Retirement" shall mean a voluntary termination of
employment after the Participant is 65 years of age.
"Participant" shall mean any Eligible Employee who elects to
defer Compensation in accordance with Section 3.1.
"Payment Eligibility Date" shall mean on or about the first
day of the month following the end of the calendar year quarter
in which a Participant terminated employment.
"Plan" shall mean the RYAN'S FAMILY STEAK HOUSES, INC.
Deferred Compensation Plan set forth herein, now in effect, or as
amended from time to time.
"Plan Year" shall mean the 12 consecutive month period
beginning on January 1; provided, however that the first Plan
Year shall be a short year beginning on August 1, 1999 and ending
December 31, 1999.
"Rate of Return" shall mean, for each Fund, an amount equal
to the gross rate of gain or loss on the assets of such Fund for
each business day reduced by all fund level expenses and charges
charged to investors in such Fund.
"Salary" shall mean the Participant's base pay.
"Tax Adjustment Factor" shall mean a number, determined by
the Committee, which is equal to one minus the sum of (1) the
highest marginal federal personal income tax rate then in effect
and (2) the effective highest marginal state income tax rate in
which the Participant resides, net after the effect of the
deduction for such state income tax for federal income tax
purposes.
"Total Compensation" shall mean all cash compensation paid
to a Participant by the Company during a Plan Year.
"Years of Employment" shall mean the number of full calendar
years beginning on the employee's original date of hire in which
a Participant is continuously employed by the Company on a full-
or part-time basis until the last day of such calendar year.
ARTICLE II
PARTICIPATION
2.1 Participation.
An Eligible Employee, after first being designated eligible
by the Committee, shall become a Participant in the Plan by
electing to defer a portion of his or her Salary or Bonus in
accordance with Section 3.1.
ARTICLE III
DEFERRAL ELECTIONS
3.1 Elections to Defer Compensation.
(a) Initial Election Period. Each Eligible Employee may
elect to defer Salary or Bonus by filing with the Committee
an election, on a form provided by the Committee, no later
than the last day of his or her Initial Election Period.
(b) General Rule. Subject to the limitations set forth in
paragraph (c) below, the amount of Compensation which an
Eligible Employee may elect to defer is as follows:
(1) Up to 100% of annual base salary above the Social
Security Taxable Wage Base; and
(2)
Any percentage or dollar amount of Bonus up to 100%.
(c) Minimum Deferrals. As a condition to becoming a
Participant, Eligible Employee must commit to defer an
aggregate amount of Salary or Bonus of at least $5,000 per
Plan Year. In the event that a Participant files a deferral
election which will result in deferral of less that $5,000
for a Plan Year or the Participant files an election to
terminate Salary or Bonus deferrals for such a Plan Year,
then the Participant shall nevertheless be deemed to have
elected to defer Salary or Bonus in an amount equal to
$5,000 for that Plan Year.
(d) Effect of Initial Election. An election to defer
Salary or Bonus during an Initial Election Period shall be
effective with respect to Salary or Bonus that would
otherwise be paid during the first pay period beginning no
earlier that 30 days after the Initial Election Period.
(e) Duration of Salary Deferral Election. Any Salary
deferral election made under paragraph (a) or paragraph (g)
of this Section 3.1 shall remain in effect, notwithstanding
any change in the Participant's Salary, until changed or
terminated in accordance with the terms of this paragraph
(e); provided, however, that such election shall terminate
for any Plan Year for which the Participant is not an
Eligible Employee. Subject to the provisions of paragraph
(c) of this Section 3.1, a Participant may increase,
decrease or terminate his or her Salary deferral election,
effective for Salary earned during pay periods beginning
after any January 1, by filing a new election, in accordance
with the terms of this Section 3.1, with the Committee on or
before the preceding December 1.
(f) Duration of Bonus Deferral Election. Any Bonus
deferral election made under paragraph (a) of this Section
3.1 shall remain in effect, notwithstanding any change in
the Participant's Bonus until changes or terminated in
accordance with the terms of this paragraph (f); provided,
however, that such election shall terminate for any Plan
Year for which the Participant is not an Eligible Employee.
Subject to the provisions of paragraph (c) of this Section
3.1, a Participant may increase, decrease or terminate his
or her Bonus deferral election, effective for Bonus earned
during pay periods beginning after any January 1, by filing
a new election, in accordance with the terms of this Section
3.1, with the Committee on or before the preceding December
1.
(g) Elections other than Elections during the Initial
Election Period. Subject to the limitations of paragraph
(c) above, any Eligible Employee who fails to elect to defer
compensation during his or her Initial Election Period may
subsequently become a Participant, and any Eligible Employee
who has terminated a prior Salary or Bonus deferral election
may elect to again defer Salary or Bonus by filing an
election, on a form provided by the Committee, to defer
Compensation as described in paragraph (b) above. An
election to defer Salary or Bonus must be filed on or before
December 1 and will be effective for Salary or Bonus earned
during pay periods beginning after the following January 1.
(h) Special Designation of Deferral Period.
Notwithstanding and in addition to the preceding, a
Participant may specifically designate an "annual deferral
period" for "specific term deferral." All deferrals made
during an "annual deferral period" will be subject to
"specific term deferral" "Annual deferral period" means
each Plan Year. "Specific term deferral" means a deferral
election made by a Participant that identifies the future
date on which all deferrals (including gains and losses
thereon) made during an annual deferral period will be paid
to the Participant. Company Matching Amounts are not
subject to payout under this Section 3.1(h).
3.2 Investment Elections.
(a) At the time of making the deferral elections described
in Section 3.1, the Participant shall designate, on a form
provided by the Committee, which of the following types of
mutual funds or contracts the Participant's Accounts will be
deemed to be invested in for purposes of determining the
amount of earnings to be credited to those Accounts:
AIM V.I. Value Fund MFS/Sun Life Government
Securities Series
Dreyfus Variable Capital MFS/Sun Life MA Investors
Appreciation Fund Growth Stock Fund
Dreyfus Variable Small Cap MFS/Sun Life Money Market
Portfolio Series
Dreyfus Stock Index Fund MFS/Sun Life Research
Series
Fidelity VIP High-Income MFS/Sun Life Utilities
Portfolio Series
Fidelity VIP II Asset Manager: Neuberger Berman AMT Mid-
Growth Portfolio Cap Growth Fund
Fidelity VIP II Contrafund Sun Capital Advisers Real
Portfolio Estate Fund
MFS/Sun Life Emerging Growth T. Rowe Price New America
Series Growth
MFS/Sun Life Global Growth
Series
In making the designation pursuant to this Section 3.2, the
Participant may specify that all or any 5% multiple of his
Deferral Account or Company Match Account be deemed to be
invested in one or more of the types of mutual funds or contract
listed above. A Participant may change the designation made
under this Section 3.2 by filing an election, on a form provided
by the Committee. Participant may request a change in
designation any business day no more than 12 times per calendar
year and providing a minimum separation of 5 business days
between requests. If a Participant fails to elect a type of fund
under this Section 3.2, he or she shall be deemed to have elected
the MFS/Sun Life Money Market Series.
(b) Although the Participant may designate the type of
mutual funds in paragraph (a) above, the Committee shall
select from time to time, in its sole discretion, a
commercially available fund or contract of each of the types
described in paragraph (a) above to be the Funds. The Rate
of Return of each such commercially available fund or
contract shall be used to determine the amount of earnings
to be credited to Participant's Accounts under Article IV.
ARTICLE IV
PARTICIPANT ACCOUNTS
4.1 Deferral Account.
The Committee shall establish and maintain a Deferral
Account for each Participant under the Plan. Each Participant's
Deferral Account shall be further divided into separate
subaccounts ("mutual fund subaccount"), each of which corresponds
to a mutual fund or contract elected by the Participant in
Section 3.2(a). A Participant's Deferral Account shall be
credited as follows:
(a) As of the last day of each month the Committee shall
credit the mutual fund subaccounts of the Participant's
Deferral Account with an amount equal to Salary deferred by
the Participant during each pay period ending in that month
in accordance with the Participant's election under Section
3.2(a); that is, the portion of the Participant's deferred
Salary that the Participant has elected to be deemed to be
invested in a certain type of mutual fund shall be credited
to the mutual fund subaccount corresponding to that mutual
fund;
(b) As of the last day of the month in which the Bonus or
partial Bonus would have been paid, the Committee shall
credit the mutual fund subaccounts of the Participant's
Deferral Account with an amount equal to the portion of the
Bonus deferred by the Participant's election under Section
3.2(a); that is, the portion of the Participant's deferred
Bonus that the participant has elected to be deemed to be
invested in a particular type of mutual fund shall be
credited to the mutual fund subaccount corresponding to that
mutual fund; and
(c) As of each business day, each mutual fund subaccount of
a Participant's Deferral Account shall be credited with gains and
losses in an amount equal to that determined by multiplying the
balance credited to such mutual fund subaccount as of the
preceding business day by the Rate of Return for the
corresponding Fund selected by the Company pursuant to Section
3.2(b).
4.2 Company Matching Account.
The Committee shall establish and maintain a Company
Matching Account for each Participant under the Plan. Each
Participant's Company Matching Account shall be further divided
into separate mutual fund subaccounts corresponding to the mutual
fund contract elected by the Participant in Section 3.2(a). A
Participant's Company Matching Account shall be credited as
follows:
(a) As of the date on which the Company makes its matching
contribution under the Company's qualified defined
contribution plan for a Plan Year, or as of such earlier
date as the Committee shall determine, the Committee shall
credit the mutual fund subaccounts of the Participant's
Company Matching Account with an amount equal to RYAN'S
FAMILY STEAK HOUSES, INC.'s discretionary Company Matching
Amount for the Plan Year in accordance with the
Participant's election under Section 3.2(a); that is, the
portion of the Company Matching Amount which the Participant
elected to be deemed to be invested in a certain type of
mutual fund shall be credited to the corresponding mutual
fund subaccount.
(b) As of each business day, each mutual fund subaccount of
a Participant's Company Matching Account shall be credited
with gains and losses in an amount equal to that determined
by multiplying the balance credited to such mutual fund
subaccount as of preceding business day the Rate of Return
for the corresponding Fund selected by the Company pursuant
to Section 3.2(b).
ARTICLE V
VESTING
5.1 Deferral Account.
A Participant's Deferral Account shall be 100% vested at all
times.
5.2 Company Matching Account.
A Participant's interest in his or her Company Matching
Account shall vest and become nonforfeitable up to a maximum of
100% in accordance with the following schedule:
Years of
Employment Percentage Vested
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
A Participant's interest in his or her Company Matching
Account shall become 100% vested if, while an Employee of the
Company, he or she attains age 65, incurs a Disability or dies.
5.3 Forfeiture of Matching Account
Notwithstanding any provision in the Plan to the contrary,
any benefit to be paid to or on behalf of any Participant related
to his or her Company Matching Account (including gains and
losses thereon) shall be forfeited in its entirety if the
Participant commits an act or acts of dishonesty or moral
turpitude (including but not limited to conviction of a felony)
which materially injures or damages the Company.
ARTICLE VI
DISTRIBUTIONS
6.1 Amount and Time of Distributions.
Each Participant (or, in the case of his or her death,
Beneficiary) shall be entitled to receive a distribution of
benefits under this Plan as soon as practicable following his or
her Payment Eligibility Date. The amount payable to the
Participant shall be the vested portions of his or her Deferral
Account and Company Matching Account as of his or her Payment
Eligibility Date.
6.2 Form of Distribution.
The form of the distribution of benefits to a Participant
(or his or her Beneficiary) at Early Retirement or Normal
Retirement shall be a cash lump sum payment, or in equal annual
installments over a term certain of five, ten or fifteen years.
The Participant must select the form of distribution in the year
prior to retirement. The form of the distribution of benefits
to a Participant who terminates prior to Early Retirement or
Normal Retirement shall be a cash lump sum. If benefit is paid
in installments, the amount of the annual installments payable
during each succeeding twelve calendar month period (or such
lesser period, if applicable) shall be adjusted, as of each year-
end allocation date during the period that installment payments
are made, for additions to the Participant's Accounts pursuant
to Article IV by dividing the aggregate of his or her account
balance as of such date (following adjustment as of such date)
by the number of annual installments remaining to be paid
hereunder; provided, that the last annual installment due
hereunder shall be the entire amount credited to the
Participant's Account on the date of payment. If the
Participant dies prior to the complete distribution of benefits,
the Participant's beneficiary will receive a lump sum
distribution of the remaining balance. Notwithstanding the
foregoing, the Committee may, in its sole and absolute
discretion, elect to accelerate and pay any unpaid benefits in a
single lump sum payment on any date following a Participant's
Payment Eligibility Date. In addition and notwithstanding the
foregoing, the Committee shall be required to accelerate and pay
any unpaid benefit in a single lump sum payment on any date
following a Participant's Payment Eligibility Date if any one of
the following financial statement conditions exist at the end of
any calendar quarter:
(a) Debt to Total Capitalization Ratio equals or exceeds
55%; or
(b) Net Worth is less than $225,000,000; or
(c) Fixed Charge Coverage Ratio is less than 2.0.
The foregoing financial statement tests shall be computed
in the same manner as required under the Company's debt
covenants in effect on August 1, 1999.
6.3 Forfeitures.
When a Participant receives a distribution of benefits
under this Plan, the portion of his or her Company Matching
Account which is not vested shall be forfeited, and the Company
shall have no obligation to the Participant with respect to such
forfeited amount.
6.4 Payment of Special Term Deferrals.
Notwithstanding and in addition to the preceding, a
Participant shall be entitled to receive a distribution of
benefits under this Plan as soon as practicable after the
expiration of a specific term deferral, if any, elected under
Section 3.1(h). The amount payable to the Participant shall be
the vested portion of his or her Deferral Account (including
gains and losses) related to such specific term deferral. The
payment of a specific term deferral shall be a cash lump sum
payment within 90 days of the expiration of the specific term
deferral.
ARTICLE VII
HARDSHIPS
7.1 Hardships.
In the event a Participant incurs a "financial hardship" as
a result of an "unforeseeable emergency" (as such terms are
defined in Department of the Treasury Regulations Section 1.457-
2(h)(4) or any successor regulations), the Participant may
request that the Company accelerate payment of the Participant's
benefits under the Plan. Such request shall be filed with the
Committee and provide such information and be in such form as
the Committee shall require. The Committee, in the exercise of
its sole and absolute discretion, shall approve or deny the
request in whole or in part, and shall direct the Company
accordingly. Notwithstanding any provision in the Plan to the
contrary, any payment made pursuant to this Article VII shall
comply with Code Section 457(d)(1)(A)(iii) and the regulations
promulgated thereunder (or any successor provisions). The
amount available for payment to a Participant under this Article
VII shall be limited to balance in the Participant's Account as
of the first day of the month following the end of the calendar
year quarter next preceding the payment of the Hardship Payment.
ARTICLE VIII
ADMINISTRATION
8.1 Committee Action.
The Committee shall act at meetings by affirmative vote of a
majority of the members of the Committee. Any action permitted
to be taken at a meeting may be taken without a meeting if, prior
to such action, a written consent to the action is signed by all
members of the Committee and such written consent is filed with
the minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which related
solely to himself or herself as a Participant. The Chairman or
any other member or members of the Committee designated by the
Chairman may execute any certificate or other written direction
on behalf of the Committee.
8.2 Powers and Duties of the Committee.
(a) The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its
terms, shall be charged with the general administration of
the Plan, and shall have all powers necessary to accomplish
its purposes, including, but not by way of limitation, the
following:
(1) To determine all questions relating to the eligibility
of employees to participate;
(2) To select the funds or contracts to be the Funds in
accordance with Section 3.2(b) hereof;
(3) To construe and interpret the terms and provisions of
this Plan;
(4) To compute and certify to the amount and kind of
benefits payable to Participants and their Beneficiaries;
(5) To maintain all records that may be necessary for the
administration of the Plan;
(6) To provide for the disclosure of all information and
the filing or provision of all reports and statement to
Participants, beneficiaries or governmental agencies as
shall be required by law;
(7) To make and publish such rules for the regulation of
the Plan and procedures for the administration of the Plan
as are not inconsistent with the terms hereof; and
(8) To appoint a plan administrator or any other agent, and
to delegate to them such powers and duties in connection
with the administration of the plan as the Committee may
from time to time prescribe.
8.3 Construction and Interpretation.
The Committee shall have full discretion to construe and
interpret the terms and provisions of this Plan, which
interpretation or construction shall be final and binding on all
parties, including but not limited to the Company and any
Participant or Beneficiary. The Committee shall administer such
terms and provisions in a uniform and nondiscriminatory manner
and in full accordance with any and all laws applicable to the
Plan.
8.4 Information.
To enable the Committee to perform its functions, the
Company shall supply full and timely information to the Committee
on all matters relating to the Compensation of all Participants,
their death or other cause of termination, and such other
pertinent facts as the Committee may require.
8.5 Compensation, Expenses and Indemnity.
(a) The members of the Committee shall serve without
compensation for their services hereunder.
(b) The Committee is authorized at the expense of the
Company to employ such legal counsel as it may deem
advisable to assist in the performance of its duties
hereunder. Expenses and fees in connection with the
administration of the Plan shall be paid by the Company.
(c) To the extent permitted by applicable state law, the
Company shall indemnify and save harmless the Committee and
each member thereof, the Board of Directors and any delegate
of the Committee who is an employee of the Company against
any and all expenses, liabilities and claims, including
legal fees to defend against such liabilities and claims
arising out of their discharge in good faith or
responsibilities under or incident to the Plan, other than
expenses and liabilities arising out of willful misconduct.
This indemnity shall not preclude such further indemnities
as may be available under insurance purchased by the Company
or provided by the Company under any bylaw, agreement, or
otherwise, as such indemnities are permitted under state
law.
8.6 Quarterly Statement.
Under procedures established by the Committee, a Participant
shall receive a statement with respect to such Participant's
Accounts at least once for each Calendar Quarter.
8.7 Structure of Committee.
The Committee shall be the Compensation Committee of the
Board of Directors as such committee is constituted from time to
time. The members of the Committee shall not receive any special
compensation for serving in the capacity as members of the
Committee but shall be reimbursed for any reasonable expenses
incurred in connection therewith. No bond or other security
shall be required of the Committee or any member thereof in any
jurisdiction. Any member of the Committee, any subcommittee or
agent to whom the Committee delegates any authority, and any
other person or group of persons, may serve in more than one
fiduciary capacity with respect to the Plan.
8.8 Claims for Benefits.
All claims for benefits under the Plan shall be submitted in
writing to the Committee. Within a reasonable period time, the
Committee shall decide the claim by majority vote. Written
notice of the decision on each such claim shall be furnished
within 30 days after receipt of the claim. If the claim is
wholly or partially denied, such written notice shall set forth
an explanation of the specific findings and conclusions on which
such denial is based. A claimant may review all pertinent
documents and may request a review by the Committee of such a
decision denying the claim. Such a request shall be made in
writing and filed with the Committee within 60 days after
delivery to said claimant of written notice of said decision.
Such written request for review shall contain all additional
information which the claimant wishes the Committee to consider.
The Committee may hold any hearing or conduct any independent
investigation which it deems necessary to render its decision,
and the decision on review shall be made as soon as possible
after the Committee's receipt of the request for review. Written
notice of the decision on review shall be furnished to the
claimant within 30 days after receipt by the Committee of a
request for review. Written notice of the decision on review
shall be a final decision and shall include specific reasons for
such decision.
8.9 Arbitration and Arbitration Expenses.
(a) Arbitration. Any claims or disputes pertaining to this
Plan or to any matter arising therefrom not resolved by the
claims procedures set forth in Section 8.8, shall be resolved by
arbitration in the State of South Carolina. The Participant, any
Beneficiary, and the Company will be bound to this mandatory
arbitration rule as the exclusive remedy for all disputes under
this Plan. There must be full compliance with the rules of the
American Arbitration Association in order to resolve any legal
disputes regarding this Plan. The exclusive choice of forum set
forth in this Section 8.9 shall not be deemed to preclude the
enforcement of any judgment obtained in such forum or the taking
of any action under this Plan to enforce such judgment in any
appropriate jurisdiction.
(b) Payment of Expenses. All costs and expenses (exclusive
of attorney's fees) incurred in connection with any arbitration
relating to a claim or dispute pertaining to this Plan shall be
paid by the Company. The Company shall bear the cost of all
attorneys' fees incurred by the Company. The attorneys' fees
incurred by the Participant or Beneficiary shall be paid by the
party to whom the arbitrator determines should bear the
attorneys' fees incurred by the Participant or Beneficiary in
pursuing the claim. In allocating the attorneys' fees under this
Section 8.9, the arbitrator should consider the relative merits
of each party's position and the manner and means the party
undertook to assert the party's case.
ARTICLE IX
MISCELLANEOUS
9.1 Unsecured General Creditor.
Participants and their Beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, claims, or
interest in any specific property or assets of the Company. Any
and all of the Company's assets shall be, and remain, the general
unpledged, unrestricted assets of the Company. The Company's
obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and
the rights of the Participants and Beneficiaries shall be no
greater than those of unsecured general creditors.
9.2 Restriction Against Assignment.
The Company shall pay all amounts payable hereunder only to
the person or persons designated by the Plan and not to any other
person or corporation. No part of a Participant's Accounts shall
be liable for the debts, contracts, or engagements of any
Participant, his or her Beneficiary, or successors in interest,
nor shall a Participant's Accounts be subject to execution by
levy, attachment or garnishment or by any other legal or
equitable proceeding, nor shall any such person have any right to
alienate, anticipate, commute, pledge, encumber, or assign any
benefits or payments hereunder in any manner whatsoever. If any
Participant, Beneficiary or successor in interest is adjudicated
bankrupt or purports to anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge any distribution or payment
from the Plan, voluntarily or involuntarily, the Committee, in
its discretion, may cancel such distribution or payment (or any
part thereof) to or for the benefit of such Participant,
Beneficiary or successor in interest in such manner as the
Committee shall direct.
9.3 Withholding.
There shall be deducted from each payment made under the
Plan all taxes which are required to be withheld by the Company
in respect to such payment. The Company shall have the right to
reduce any payment by the amount of cash sufficient to provide
the amount of said taxes.
9.4 Amendment, Modification, Suspension or Termination.
The Company may amend, modify, suspend or terminate the Plan
in whole or in part, except that no amendment, modification,
suspension or termination shall reduce any amounts then allocated
previously to a Participant's Accounts, or to be credited in the
future based on amounts then allocated to a Participant.
9.5 Governing Law.
This Plan shall be construed, governed and administered in
accordance with the laws of the State of South Carolina.
9.6 Receipt or Release.
Any payment to a Participant or the Participant's
Beneficiary in accordance with the provisions of the Plan shall,
to the extent thereof, be in full satisfaction of all claims
against the Committee and the Company. The Committee may require
such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.
9.7 Payments on Behalf of Minors.
In the event that any amount becomes payable under the Plan
to a minor or a person who, in the sole judgment of the
Committee, is considered by reason of physical or mental
condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person
found by the Committee, in its sole judgment, to have assumed the
care of such minor or other person. Any payment made pursuant to
such determination shall constitute a full release and discharge
of the Committee and the Company.
9.8 Headings, etc. Not Part of Agreement.
Headings and subheadings in this Plan are inserted for
convenience of reference only and are not to be considered in the
construction of the provisions hereof.
ARTICLE X
BENEFIT OFFSET
10.1 Offset for Certain Benefits Payable Under Split-Dollar
Life Insurance Policies.
(a) Notwithstanding anything contained herein to the
contrary, any benefits payable under this Plan shall be offset by
the value of benefits received by the Participants under certain
life insurance policies as set forth in this Section.
Participants in this Plan may own life insurance policies (the
"Policies") purchased on their behalf by the Company. The
exercise of ownership rights under these Policies by each
Participant is, however, subject to certain conditions (set forth
in a "Split-Dollar Life Insurance Agreement" between each
Participant and the Company, pursuant to which the Company holds
a security interest on the Policy) and, if the Participant fails
to meet the conditions set forth in the Split-Dollar Life
Insurance Agreement, the Company may exercise its security
interest in the Policy and cause the Participant to lose certain
benefits under the Policy. In the event that a Participant
satisfies the conditions specified in Section 4 or 5 of the Split-
Dollar Life Insurance Agreement, or the Company's security
interest in the Policy is otherwise released, so that the
Participant or his or her beneficiary under the Policy becomes
entitled to exercise rights free from the Company's security
interest under one of those sections, the value of those benefits
shall constitute an offset to any benefits otherwise payable
under this Plan. As the case may be, this offset (the "Offset
Value") shall be equal to the value of benefits payable under the
Split-Dollar Life Insurance Agreement, that is, the cash
surrender value of the Policy. The Offset Value shall then be
compared to the Participant's Accounts, and the amounts credited
to the Accounts shall be reduced, but not to less than zero, by
the Offset Value. This offset shall first be applied to the
Participant's Deferral Account and then to the Participant's
Company Matching Account.
(b) If the Policy in subsection (a) is not on the life of
the Participant and the insured dies prior to distribution
of benefits under this Plan, then the value of the benefits
received by the Participant under the Policy will offset the
Participant's Accounts under this Plan. This offset
("Offset Value") shall be equal to the amount of death
benefit payable to the Participant divided by the Tax
Adjustment Factor. This Offset Value shall then be compared
to the Participant's Accounts, and the amounts credited to
the Accounts shall be reduced, but not to be less than zero,
by the Offset Value. This offset shall first be applied to
the Participant's Deferral Accounts and then to the
Participant's Company Matching Account.
IN WITNESS WHEREOF, the Company has caused this document to
be executed by its duly authorized officers on this
___________ day of ________________, 1999.
RYAN'S FAMILY STEAK HOUSES, INC.
By_________________________
Title:_____________________
By_________________________
Title:_____________________
Exhibit 10.22.1
AMENDMENT NO. 2
This Amendment is made as of the 3rd day of October,
1996, to that certain Agreement between Ryan's Properties,
Inc. and Family Steak Houses of Florida, Inc., dated July
11, 1994, and amended on October 17, 1994 (as amended to
date, the "Agreement"):
The second sentence of Section 5 entitled "Royalty
Fees" shall be deleted and replaced with the following:
The three percent (3%) rate will remain in effect
through December 31, 2001, at which time the rate will
change to four percent (4%).
In all other respects the Agreement shall remain
unchanged.
IN WITNESS WHEREOF, the parties have caused this
Amendment to be executed on their behalf by a person
thereunto duly authorized, as of the date first above
written.
RYAN'S PROPERTIES, INC.
/s/ Charles D. Way
By: Charles D. Way
Title: President and Chief
Executive Officer
FAMILY STEAK HOUSES OF
FLORIDA, INC.
/s/ Lewis E. Christman, Jr.
By: Lewis E. Christman, Jr.
Title: President and Chief
Executive Officer
