EXECUTION COPY
THIRD AMENDMENT TO NOTE PURCHASE AGREEMENTS
This
THIRD
AMENDMENT
TO NOTE PURCHASE AGREEMENTS
(hereinafter, the "Amendment") is entered
into as of November
7,
2005 among Ryan's Restaurant Group, Inc.
(formerly known as
Ryan's Family Steak Houses, Inc.), a
South Carolina
corporation
(the "Company") and the Purchasers.
WHEREAS,
the Company issued and sold Seventy
Five Million
Dollars ($75,000,000) in aggregate
principal amount of its 9.02%
Senior Notes due January 28, 2008 (as they may be amended,
restated or otherwise modified from time to
time, the "Notes")
pursuant to separate Note Purchase
Agreements, each dated
as of
January 28, 2000, between the Company and the purchasers
identified on Schedule A thereto, (as amended by
the Amendment
Agreement dated as of July 25, 2003 and by
the Second
Amendment
to Note Purchase Agreements dated as of
December 20, 2004,
the
"Note Agreements"; capitalized terms used and not otherwise
defined herein shall have the same meaning
as ascribed to
such
terms in the Note Agreements).
WHEREAS,
the register for the
registration and transfer of
the Notes indicates that the Persons
named in Annex 1 hereto are
currently the holders of the entire
outstanding principal
amount
of the Notes.
NOW,
THEREFORE,
in consideration of
the premises and
the
mutual covenants contained herein, and for other good and
valuable consideration, the receipt and
sufficiency of which
are
hereby acknowledged, the parties hereto
agree as follows:
1. Amendments.
Each Note Agreement is
hereby amended in
the following respects:
(a) Section
10.4 of each Note Agreement
is hereby
amended and
restated in its entirety to read as follows:
"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 (i) 1.55:1.00 for each fiscal
quarter
period ending on or before September 27, 2006
(including,
without limitation, for the fiscal quarter
period
ended September 28,
2005), (ii) 1.60:1.00
for each
fiscal
quarter period ending
after September, 27, 2006 and
on or before January 3, 2007, (iii)
1.65:1.00 for each
fiscal quarter
period ending after January 3, 2007 and on or
before April 4,
2007, (iv) 1.75:1.00 for each fiscal quarter
period
ending after April 4,
2007 and on or before July 4,
2007,
and (v) 2.25:1.00 for
each fiscal quarter thereafter;
provided,
however, that if scheduled principal payments are
due and payable with respect to both
the Notes and the 2003
Senior
Notes during the four
fiscal quarter period
of the
Company
included in any calculation of the Fixed Charge
Coverage Ratio
for a fiscal quarter period ending after July
4, 2007, the
minimum Fixed Charge Coverage Ratio required by
this
clause (v) of Section
10.4 as of the last day of such
four fiscal
quarter period shall be 2.00:1.00."
(b) Section
10.5 of each Note Agreement
is hereby
amended and
restated in its entirety to read as follows:
"10.5. Restricted
Payments
and
Restricted
Investments.
(a) 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
except that (i) any
Subsidiary may declare and make Restricted Payments to
its parent
and (ii) the Company may make
Restricted
Payments and
Restricted Investments
if, 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 any
fiscal
year would not exceed
$15,000,000 minus the amount of
the aggregate
Unused Restricted Payment Allowance
allocated to
the Carryforward Capital Expenditure
Basket as provided in subsection (b) below,
provided,
however, if the Company is in compliance with the Fixed
Charge Coverage
Ratio for the
fiscal quarter ended
October 3,
2007 set forth in Section 10.4, the
aggregate amount of
such Restricted
Payments of
the
Company and
its Subsidiaries
declared or made
during
the period commencing with the first day of fiscal year
2008 and ending on the date such Restricted Payment is
declared or made, inclusive, shall not exceed the sum
of:
(1) $25,000,000,
plus
(2) 50%
of Net Income for each
quarter in
such period (or minus
100% of Net Income for such
period if Net Income
for such period is a
loss),
plus
(3) the
aggregate amount of
net proceeds
arising from sales of the Company's Capital Stock
during such period, plus
(4) the
Carryforward
Restricted
Payment
Basket, minus
(5) the
amount of the aggregate Unused
Restricted Payment
Allowance allocated to the
Carryforward
Capital
Expenditure
Basket as
provided in subsection (b) below.
(b) Within 90
days after the end of each fiscal
year of the Company, commencing with 90 days after the
end of fiscal year
2006, after or with delivery of the
audited annual financial statements in respect of the
immediately preceding
fiscal year of the Company, the
Company shall notify
the holders of Notes of (i) the
Unused
Restricted
Payment
Allowance for
such
immediately preceding fiscal year and (ii) whether or
not the Company will allocate any portion of such
Unused Restricted Payment Allowance to the Carryforward
Capital Expenditure
Basket, whereupon the Carryforward
Capital
Expenditure Basket
shall be immediately
increased
by the
amounts
allocated
thereto.
Notwithstanding the foregoing, the Carryforward Capital
Expenditure Basket may not be increased in any fiscal
year by more than $10,000,000.
(c) If
the Company is in compliance
with the
Fixed Charge
Coverage Ratio for
the fiscal quarter
ended October 3, 2007 set forth in Section 10.4, within
90 days after the end of each fiscal year of the
Company, commencing
with 90 days
after the end of
fiscal year 2007, after or with delivery of the audited
annual financial
statements
in respect of the
immediately preceding
fiscal year of the Company, the
Company shall notify
the holders of Notes of (i) the
Unused Capital
Expenditure
Allowance
for such
immediately
preceding fiscal
year and (ii) the
Company's allocation of such Unused Capital Expenditure
Allowance in
whole or in part to the Carryforward
Capital Expenditure
Basket and/or the Carryforward
Restricted Payment
Basket, whereupon the
Carryforward
Capital Expenditure
Basket and Carryforward Restricted
Payment Basket shall
be immediately increased by the
amounts allocated
thereto. If the
Company fails to
deliver such notice to the holders of Notes in the time
required, the
Unused Capital Expenditure Allowance
shall be allocated first to the Carryforward Restricted
Payment Basket
and then to the Carryforward
Capital
Expenditure Basket.
Notwithstanding the foregoing, (x)
the Carryforward Capital Expenditure Basket may not be
increased in any
fiscal year by more than $10,000,000,
and (y) if the Company
is in compliance with the Fixed
Charge Coverage
Ratio for the
fiscal quarter ended
October 3,
2007 set forth in
Section 10.4,
(i) the
Carryforward Restricted Payment Basket, if any, may not
be increased
in any fiscal year by more than
$25,000,000, and (ii)
no increase in the
Carryforward
Restricted Payment
Basket shall be
permitted if
the
aggregate amount of
Capital Expenditures made in the
immediately preceding
fiscal year was less than
$40,000,000."
(c) Schedule
B of each Note Agreement is hereby
amended as
follows:
(i) by amending and
restating in its entirety the
definition of "EBITDA" as follows:
"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 plus (c) costs
and charges incurred during
such period associated with the settlement of the
wage and hour lawsuit in the Middle District Court
of Tennessee
in the aggregate
amount of up to
$12,000,000 to
the extent accrued during such
period, all as determined in accordance with GAAP.
(ii) by amending
and restating in its entirety the
definition of
