SECOND AMENDMENT TO PARTICIPATION AGREEMENT
THIS SECOND AMENDMENT TO PARTICIPATION AGREEMENT (this "Amendment"), is
entered into as of August 14, 1998, among (i) APPLE SOUTH, INC., a corporation
organized and existing under the laws of Georgia (herein, together with its
successors and assigns permitted hereunder, called the "Lessee"), (ii) FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association ("First
Security"), not in its individual capacity except as expressly provided herein,
but solely as Owner Trustee under Apple South Trust No. 97-1 (herein in such
capacity, together with its successors and assigns permitted hereunder, called
the "Owner Trustee"), (iii) STI CREDIT CORPORATION, a Nevada corporation, as
assignee of SunTrust Bank, Atlanta, in its capacity as the holder of the
beneficial interest in the trust estate established under Apple South Trust No.
97-1 (in such capacity as of the date hereof, the "Holder", and together with
its successors and assigns permitted hereunder, called the "Holders"), (iv) the
financial institutions now parties to the Participation Agreement (as defined
below) as Lenders (each herein in such capacity, together with its successors
and assigns permitted hereunder, called a "Lender" and collectively, the
"Lenders"), and (v) SUNTRUST BANK, ATLANTA, a banking corporation organized and
existing under the laws of Georgia, ("SunTrust"), as collateral agent and
administrative agent for the Lenders and the Holders (in such capacity, the
"Administrative Agent").
W I T N E S S E T H
WHEREAS, the Lessee, the Owner Trustee, the Holder, the Lenders and the
Administrative Agent are parties to that certain Participation Agreement, dated
as of September 24, 1997, as amended by the First Amendment to the Participation
Agreement, dated as of March 27, 1998 (as so amended, the "Participation
Agreement");
WHEREAS, the Lessee, the Owner Trustee, the Holder, the Lenders and the
Administrative Agent have agreed to amend the Participation Agreement in certain
respects, as described more particularly below;
NOW, THEREFORE, in consideration of the sum of TEN DOLLARS ($10.00), the
foregoing premises, to induce the Holder and the Lenders to amend the
Participation Agreement and to continue to perform their obligations thereunder,
and for other good and valuable consideration, the sufficiency and receipt of
all of which are acknowledged, the Lessee, the Owner Trustee, the Holder, the
Lenders and the Administrative Agent agree as follows:
A. DEFINITIONS
Unless the context otherwise requires, all capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in Appendix A
to the Participation Agreement for all purposes of this Amendment. The General
Provisions of Appendix A to the Participation Agreement are hereby incorporated
by reference herein.
B. AMENDMENTS
1. Section 5.11 of the Participation Agreement is amended by deleting
clause (g) thereof in its entirety and substituting in its place the following
revised clause (g):
(g) Subsidiaries. Make investments in Consolidated Subsidiaries of the
Lessee in the ordinary course of, and pursuant to the reasonable requirements
of, the Lessee's and such Subsidiaries' respective businesses, provided that the
aggregate amount of such investments which may be outstanding at any one time
hereafter, as to all such Subsidiaries, other than any which are Subsidiary
Guarantors (as to which no limitation shall apply), shall not exceed five
percent (5%) of consolidated total assets of Lessee and its Consolidated
Subsidiaries; it being understood and agreed that (a) there shall be excluded
from such calculation any investment deemed made by the Lessee in DF&R
Restaurants, Inc., a Texas corporation which is a wholly-owned, Consolidated
Subsidiary of the Lessee, pursuant to the accounting for the prior acquisition
of such corporation by the Lessee as a pooling of interests; (b) there shall be
deducted in any event from the amount of investments in Subsidiaries which may
be made pursuant to this clause (g) the aggregate amount of Capitalized Lease
Obligations of all Subsidiaries which are at any time outstanding, if and to the
extent not already counted against such amount as an investment of Lessee; i.e.,
as a Capitalized Lease Obligation owing to Lessee as lessor or sublessor; and
(c) the provisions of this clause (g) shall be the exclusive means by which the
Lessee (or any Subsidiary) may make investments in any Subsidiaries (whether or
not wholly-owned Subsidiaries) and shall override any other provisions of this
Section 5.11 (including, particularly, clauses (j), (k) and (l) below) which may
be construed otherwise to permit such investments.
2. Section 5.19 of the Participation Agreement is amended by adding thereto
immediately after the words "any of the following" and before the colon in the
fourth line thereof, these words:
, unless such Subsidiary has executed and delivered to the Administrative
Agent a Subsidiary Guaranty and all related documents required by Section 5.27
such that Section 5.19, as so amended, shall read in its entirety as follows:
SECTION 5.19. Subsidiary Debt.
Except to the extent expressly permitted in clause(g) of Section 5.11 of
this Agreement, the Lessee will not permit any Consolidated Subsidiary of the
Lessee which is a wholly owned Subsidiary, directly or indirectly, of the
Lessee, to create, incur or suffer to exist any of the following, unless such
Subsidiary has executed and delivered to the Administrative Agent a Subsidiary
Guaranty and all other Subsidiary Guaranty Documents required by Section 5.27:
(i) indebtedness for borrowed funds; (ii) Capitalized Lease Obligations,
provided, however, that DF&R Restaurants, Inc. and its Subsidiaries may incur
Capitalized Lease Obligations in an aggregate amount not to exceed $10,000,000
at any one time outstanding; (iii) Guarantees; (iv) debts, liabilities or
obligations to any seller incurred to pay the deferred purchase price of
property or services having a deferred purchase price of $1,000,000 or more,
excepting, in any event, trade accounts payable arising in the ordinary course
of business and purchase options prior to their exercise; and (v) debts,
liabilities or obligations in respect of Synthetic Leases.
3. The Participation Agreement is further amended by adding the following
as a new Section 5.27 thereto:
SECTION 5.27 Subsidiary Guaranties.
Effective as of August 14, 1998, Lessee shall cause each Consolidated
Subsidiary of the Lessee which is a wholly owned Subsidiary, directly or
indirectly, of Lessee then existing or thereafter acquired or coming into
existence (excepting therefrom any having total assets of less than Ten Thousand
Dollars ($10,000)) to execute a Subsidiary Guaranty, together with all other
such documents which the Administrative Agent may reasonably request in
connection therewith, including a secretary's certificate, confirming the
existence of enabling authorization in respect of such Subsidiary Guarantor and
signing officer incumbency, and an opinion of counsel, confirming that such
Subsidiary Guaranty is a valid, binding and enforceable obligation of the
Subsidiary party thereto, subject to customary assumptions, exceptions and
limitations acceptable to Administrative Agent (herein called, collectively,
together with the Subsidiary Guaranties, the "Subsidiary Guaranty Documents").
As to all such Subsidiaries in existence on August 14, 1998, Lessee shall cause
all such Subsidiary Guaranty Documents in respect thereof to have been executed
and delivered as soon as practicable but in any event by August 14, 1998. As to
all such Subsidiaries acquired or coming into existence subsequent to August 14,
1998, Lessee shall cause all such Subsidiary Guaranty Documents in respect
thereof to have been executed and delivered as soon as practicable after, but in
any event within thirty (30) days after, its acquisition or creation.
4. Appendix A of the Participation Agreement is amended by adding the
following definitions to Appendix A in proper alphabetical order:
"Subsidiary Guarantor" shall mean any wholly-owned Subsidiary of Lessee
which has executed a Subsidiary Guaranty pursuant to Section 5.27.
"Subsidiary Guaranty" shall mean a guaranty, in substantially the form of
Exhibit A attached hereto, pursuant to which a wholly-owned Subsidiary of Lessee
shall guarantee all debts, liabilities and obligations of the Lessee hereunder,
all in accordance with Section 5.27.
C. MISCELLANEOUS
1. Upon the Administrative Agent's receipt of executed signature pages from
all parties to this Amendment, all amendments to the Participation Agreement
made herein shall become effective as of August 14, 1998; provided, however,
that the following shall have been executed and delivered to the Administrative
Agent on or before such date, in form and substance satisfactory to the Owner
Trustee, the Holder, the Lenders and the Administrative Agent, to-wit: (i) a
Secretary's (or Assistant Secretary's) Certificate for the Lessee; (ii) this
Amendment; (iii) Subsidiary Guaranties and corresponding Subsidiary Guaranty
Documents for each wholly-owned Subsidiary of Lessee existing on the date of
this Amendment.
2. Except as expressly set forth herein, this Amendment shall be deemed not
to waive or modify any provision of the Participation Agreement or the other
Operative Agreements, and all terms of the Participation Agreement, as amended
hereby, shall be and shall remain in full force and effect and shall constitute
a legal, valid, binding and enforceable obligations of the Lessee, the Owner
Trustee, the Holder, the Lenders and the Administrative Agent. All references to
the Participation Agreement shall hereinafter be references to the Participation
Agreement as amended by this Amendment. To the extent any terms and conditions
in any of the Operative Agreements shall contradict or be in conflict with any
terms or conditions of the Participation Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified and amended
accordingly to reflect the terms and conditions of the Participation Agreement
as modified and amended hereby. It is not intended by the parties that this
Amendment constitute, and this Amendment shall not constitute, a novation or
accord and satisfaction.
3. To induce the Owner Trustee, the Holder, the Lenders and the
Administrative Agent to enter into this Amendment (A) Lessee hereby restates and
renews each and every representation and warranty heretofore made by it under,
or in connection with, the execution and delivery of, the Participation
Agreement; (B) Lessee hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Participation Agreement, as amended hereby,
and in the Operative Agreements as amended hereby, and in the Operative
Agreements, effective as of the date hereof; and (C) Lessee hereby certifies
that no Lease Event of Default has occurred and is continuing.
4. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF GEORGIA AND ALL APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
5. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.
6. This Amendment shall be binding on, and shall inure to the benefit of,
the successors and assigns of the parties hereto.
7. In the event that any part of this Agreement shall be found to be
illegal or in violation of public policy, or for any reason unenforceable at
law, such finding shall not invalidate any other part thereof.
8. TIME IS OF THE ESSENCE UNDER THIS AGREEMENT.
9. The parties agree that their signatures by telecopy or facsimile shall
be effective and binding upon them as though executed in ink on paper but that
the parties shall exchange original ink signatures promptly following any such
delivery by telecopy or facsimile.
10. Lessee agrees to pay all costs and expenses of Administrative Agent
incurred in connection with the preparation, execution, delivery and enforcement
of this Amendment and all other Operative Agreements executed in connection
herewith, including the reasonable fees and out-of-pocket expenses of
Administrative Agent's counsel.
11. This Amendment shall constitute a Operative Agreement for all purposes
of the Participation Agreement and shall be governed accordingly.
IN WITNESS WHEREOF, the Lessee, the Owner Trustee, the Holder, each Lender
and the Administrative Agent have set their hands as of the day and year first
above written.
"LESSEE"
APPLE SOUTH, INC.
By:_________________________________
Erich J. Booth, Chief Financial
Officer and Treasurer
Attest:_____________________________
Tonya Benjamin, Assistant Secretary
"OWNER TRUSTEE"
FIRST SECURITY BANK, N.A.
By:_________________________________
Name:____________________________
Title:_____________________________
"HOLDER"
STI CREDIT CORPORATION
By:_________________________________
Name:____________________________
Title:_____________________________
"LENDERS"
SUNTRUST BANK, ATLANTA, as the Administrative
Agent and as a Lender
By:_________________________________
Name:____________________________
Title:_____________________________
By:_________________________________
Name:____________________________
Title:_____________________________
BANCBOSTON LEASING, INC.
By:_________________________________
Name:____________________________
Title:_____________________________
SOUTHTRUST BANK, N.A.
By:_________________________________
Name:____________________________
Title:________________