O'Charley's Inc.

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TnA8M4vDmNlUJlG6/IOZZZQOm7kSzrYhZwbNpa8HldF+aHNw1qCCz16WZ3QiJ+ir mQSn1zFPca7sl0YdufJhgQ== 0000950144-03-013139.txt : 20031119 0000950144-03-013139.hdr.sgml : 20031119 20031119164542 ACCESSION NUMBER: 0000950144-03-013139 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20031005 FILED AS OF DATE: 20031119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: O CHARLEYS INC CENTRAL INDEX KEY: 0000864233 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 621192475 STATE OF INCORPORATION: TN FISCAL YEAR END: 1227 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18629 FILM NUMBER: 031013336 BUSINESS ADDRESS: STREET 1: 3038 SIDCO DR CITY: NASHVILLE STATE: TN ZIP: 37204 BUSINESS PHONE: 6152568500 MAIL ADDRESS: STREET 1: 3038 SIDEO DR CITY: NASHVILLE STATE: TN ZIP: 37204 10-Q 1 g85963e10vq.htm O'CHARLEY'S INC. O'Charley's Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended October 5, 2003

Commission file number 0-18629

O’Charley’s Inc.

(Exact name of registrant as specified in its charter)


Tennessee		62-1192475

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


3038 Sidco Drive, Nashville, Tennessee		37204

(Address of principal executive offices)		(Zip Code)

(615) 256-8500

(Registrant’s telephone number, including area code)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class		Outstanding as of November 14, 2003

Common Stock, no par value		20,824,569 shares

TABLE OF CONTENTS


		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF EARNINGS
		CONSOLIDATED STATEMENTS OF EARNINGS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II - OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Ex-10.1 Purchase Agreement
Ex-10.2 Registration Rights Agreement
Ex-10.3 Indenture
Ex-10.4 Amended and Restated Credit Agreement
Ex-10.5 Form of Amend. & Restated Credit Note
Ex-10.6 Form of Amend & Restated Swingline Note
Ex-31.1 Section 302 Certification of the CEO
Ex-31.2 Section 302 Certification of the CFO
Ex-32.1 Section 906 Certification of the CEO
Ex-32.2 Section 906 Certification of the CFO

O’Charley’s Inc.
Form 10-Q
For the Quarter Ended October 5, 2003

Index


			Page No.

Part I - Financial Information
	Item 1.	Consolidated financial statements (unaudited):
		Consolidated balance sheets as of October 5, 2003 and December 29, 2002	3
		Consolidated statements of earnings for the 12 weeks ended October 5, 2003 and October 6, 2002	4
		Consolidated statements of earnings for the 40 weeks ended October 5, 2003 and October 6, 2002	5
		Consolidated statements of cash flows for the 40 weeks ended October 5, 2003 and October 6, 2002	6
		Notes to unaudited consolidated financial statements	7
	Item 2.	Management’s discussion and analysis of financial condition and results of operations	13
	Item 3.	Quantitative and qualitative disclosures about market risk	24
	Item 4.	Controls and procedures	24
Part II - Other Information
	Item 1.	Legal proceedings	25
	Item 6.	Exhibits and reports on Form 8-K	25
	Signatures		27

O’CHARLEY’S INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

(Unaudited)


			October 5,			December 29,
			2003			2002

Assets
Current Assets:
	Cash and cash equivalents		$	3,175		$	8,311
	Accounts receivable			7,376			4,800
	Inventories			20,667			18,300
	Deferred income taxes			4,249			4,255
	Short-term notes receivable			3,070			2,950
	Other current assets			6,947			2,288

		Total current assets		45,484			40,904

	Property and Equipment, net			465,072			381,553
	Goodwill			93,353			—
	Other Intangible Assets			25,921			—
	Other Assets			15,412			6,334

			$	645,242		$	428,791

Liabilities and Shareholders’ Equity
Current Liabilities:
	Accounts payable		$	21,179		$	13,284
	Accrued payroll and related expenses			12,382			13,328
	Accrued expenses			17,542			10,387
	Deferred revenue			5,259			8,712
	Federal, state and local taxes			4,789			8,595
	Current portion of long-term debt and capitalized leases			9,094			8,015

		Total current liabilities		70,245			62,321

Deferred Income Taxes				10,474			7,796
Other Liabilities				8,629			4,623
Long-Term Debt, less current portion				223,212			98,164
Capitalized Lease Obligations, less current portion				33,757			25,923
Shareholders’ Equity:
	Common stock - No par value; authorized, 50,000,000 shares; issued and outstanding, 22,173,257 in 2003 and 18,838,826 in 2002			168,692			116,171
	Accumulated other comprehensive loss, net of tax			(628	)		(931	)
	Unearned compensation			(2,279	)		—
	Retained earnings			133,140			114,724

		Total shareholders’ equity		298,925			229,964

			$	645,242		$	428,791

See notes to unaudited consolidated financial statements.

O’CHARLEY’S INC.
CONSOLIDATED STATEMENTS OF EARNINGS
12 Weeks Ended October 5, 2003 and October 6, 2002
(In thousands, except per share data)

(Unaudited)


			2003		2002

Revenues:
	Restaurant sales		$	180,528	$	115,565
	Commissary sales			1,192		1,057

				181,720		116,622

Costs and Expenses:
	Cost of restaurant sales:
		Cost of food and beverage		54,646		32,849
		Payroll and benefits		61,321		35,872
		Restaurant operating costs		34,088		20,970
	Cost of commissary sales			1,131		992
	Advertising, general and administrative expenses			12,324		8,492
	Depreciation and amortization			8,817		5,976
	Pre-opening costs			1,579		1,194

				173,906		106,345

Income from Operations				7,814		10,277
Other Expense:
	Interest expense, net			3,264		1,221
	Other, net			25		11

				3,289		1,232

Earnings Before Income Taxes				4,525		9,045
Income Taxes				1,118		3,143

Net Earnings			$	3,407	$	5,902

Basic Earnings per Common Share:
		Net earnings	$	0.15	$	0.31

		Weighted average common shares outstanding		22,162		18,751

Diluted Earnings per Common Share:
		Net earnings	$	0.15	$	0.30

		Weighted average common shares outstanding		22,539		19,726

See notes to unaudited consolidated financial statements.

O’CHARLEY’S INC.
CONSOLIDATED STATEMENTS OF EARNINGS
40 Weeks Ended October 5, 2003 and October 6, 2002
(In thousands, except per share data)

(Unaudited)


				2003			2002

Revenues:
	Restaurant sales			$	571,821		$	377,691
	Commissary sales				4,197			3,704

					576,018			381,395

Cost and Expenses:
	Cost of restaurant sales:
		Cost of food and beverage			165,486			108,707
		Payroll and benefits			189,605			118,050
		Restaurant operating costs			104,775			65,202
	Cost of commissary sales				3,954			3,466
	Advertising, general and administrative expenses				41,385			27,858
	Depreciation and amortization				27,423			19,300
	Pre-opening costs				5,535			4,143

					538,163			346,726

Income from Operations					37,855			34,669
Other (Income) Expense:
	Interest expense, net				10,425			4,205
	Other, net				(98	)		(87	)

					10,327			4,118

Earnings Before Income Taxes and Cumulative Effect of Change in Accounting Principle					27,528			30,551
Income Taxes					9,112			10,616

Earnings Before Cumulative Effect of Change in Accounting Principle					18,416			19,935
Cumulative Effect of Change in Accounting Principle, net of tax					—			(6,123	)

Net Earnings				$	18,416		$	13,812

Basic Earnings per Share:
			Earnings Before Cumulative Effect of Change in Accounting Principle	$	0.86		$	1.07
			Cumulative Effect of Change in Accounting Principle, net of tax		—			(0.33	)

			Net Earnings	$	0.86		$	0.74

			Weighted Average Common Shares Outstanding		21,507			18,645

Diluted Earnings per Share:
			Earnings Before Cumulative Effect of Change in Accounting Principle	$	0.83		$	1.01
			Cumulative Effect of Change in Accounting Principle, net of tax		—			(0.31	)

			Net Earnings	$	0.83		$	0.70

			Weighted Average Common Shares Outstanding		22,222			19,795

See notes to unaudited consolidated financial statements.

O’CHARLEY’S INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
40 Weeks Ended October 5, 2003 and October 6, 2002
(In thousands)
(Unaudited)


			2003			2002

Cash Flows from Operating Activities:
	Net earnings		$	18,416		$	13,812
	Cumulative effect of change in accounting principle, net of tax			—			6,123
	Adjustments to reconcile net earnings to net cash provided by operations:
		Depreciation and amortization, property and equipment		27,423			19,300
		Amortization of debt issuance costs		878			176
		Compensation expense related to restricted stock plans		543			—
		Provision for deferred income taxes		3,299			2,577
		Loss (gain) on the sale and disposal of assets		21			(34	)
	Changes in assets and liabilities, net of acquisition:
		Accounts receivable		(1,288	)		(307	)
		Inventories		689			(1,407	)
		Other current assets		(2,995	)		(1,429	)
		Accounts payable		5,411			2,343
		Deferred revenue		(7,148	)		(2,562	)
		Accrued payroll and other accrued expenses		(4,269	)		2,789
	Tax benefit derived from exercise of stock options			3,630			960

		Net cash provided by operating activities		44,610			42,341

Cash Flows from Investing Activities:
	Capital expenditures for property and equipment			(54,596	)		(60,017	)
	Proceeds from the sale of assets			1,934			1,637
	Acquisition of company, net of cash acquired			(114,271	)		—
	Note receivable			(120	)		(925	)
	Other, net			434			418

		Net cash used in investing activities		(166,619	)		(58,887	)

Cash Flows from Financing Activities:
	Proceeds from long-term debt			241,563			14,100
	Payments on long-term debt and capitalized lease obligations			(124,380	)		(6,377	)
	Debt issuance costs			(4,767	)		—
	Exercise of incentive stock options and issuances under stock purchase plan			4,457			3,635

		Net cash provided by financing activities		116,873			11,358

Net decrease in cash and cash equivalents				(5,136	)		(5,188	)
Cash and cash equivalents at beginning of the period				8,311			6,369

Cash and cash equivalents at end of the period			$	3,175		$	1,181

Supplemental disclosures:
	Cash paid for interest		$	14,513		$	4,542

	Cash paid for income taxes		$	7,994		$	8,417

	Additions to capitalized lease obligations		$	16,778		$	3,498

Effect of acquisition:
	Fair value of assets acquired		$	42,440
	Purchase price in excess of the net assets acquired (goodwill)			93,353
	Other intangible assets			25,921
	Less fair value of liabilities assumed			(770	)

	Purchase price of acquisition			160,944
	Less value of stock issued			(41,153	)
	Less cash acquired			(5,520	)

	Net cash paid for acquisition and related transaction costs		$	114,271

See notes to unaudited consolidated financial statements.

O’CHARLEY’S INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
12 and 40 Weeks Ended October 5, 2003 and October 6, 2002

A. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and in accordance with Rule 10-01 of Regulation S-X. The Company’s fiscal year ends on the last Sunday in December with its first quarter consisting of sixteen weeks and the remaining three quarters consisting of twelve weeks each. Both fiscal 2003 and 2002 consist of fifty-two weeks each.

In the opinion of management, the unaudited interim consolidated financial statements contained in this report reflect all adjustments, consisting of only normal recurring accruals, which are necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year.

These unaudited consolidated financial statements, footnote disclosures and other information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2002.

B. NET EARNINGS PER COMMON SHARE AND STOCK BASED COMPENSATION

Basic earnings per common share have been computed on the basis of the weighted average number of common shares outstanding, and diluted earnings per common share have been computed on the basis of the weighted average number of common shares outstanding plus the dilutive effect of options outstanding.

Following is a reconciliation of the weighted average common shares used in the Company’s basic and diluted earnings per share calculation.


	12 Weeks Ended				40 Weeks Ended

	October 5,		October 6,		October 5,		October 6,
	2003		2002		2003		2002

Weighted average common shares outstanding		22,162		18,751		21,507		18,645
Incremental stock option shares outstanding		377		975		715		1,150

Weighted average diluted common shares outstanding		22,539		19,726		22,222		19,795

Options for approximately 1.9 million and 1.3 million shares were excluded from the 2003 12 and 40-week diluted weighted average common share calculation, respectively, due to these shares being anti-dilutive. Options for approximately 285,000 and 42,000 shares were excluded from the 2002 12 and 40-week diluted weighted average common share calculation, respectively, due to these shares being anti-dilutive.

The Company has elected to continue to apply the intrinsic-value-based method of accounting pursuant to APB Opinion 25, and has adopted only the disclosure requirements of Statement of Financial Accounting Standards No. 123 (“SFAS No. 123”), “Accounting for Stock-Based Compensation” as amended by SFAS 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of Financial Accounting Standards Board Statement No. 123”. The following table illustrates the effect on net earnings for the 12 and 40-week periods ended October 5, 2003 and October 6, 2002 if the fair-value-based method had been applied to awards that were granted in each period:


		12 Weeks Ended						40 Weeks Ended

		October 5,			October 6,			October 5,			October 6,
		2003			2002			2003			2002

		(in thousands, except per share data)
Net earnings, as reported		$	3,407		$	5,902		$	18,416		$	13,812
Add stock-based employee compensation expense included in reported net earnings, net of tax			130			100			363			299
Deduct total stock-based employee compensation expense determined under fair-value-based method for all rewards, net of tax			(724	)		(627	)		(2,344	)		(2,057	)

Pro forma net earnings		$	2,813		$	5,375		$	16,435		$	12,054

Earnings per share:
	Basic-as reported	$	0.15		$	0.31		$	0.86		$	0.74
	Basic-pro forma	$	0.13		$	0.29		$	0.76		$	0.65
	Diluted-as reported	$	0.15		$	0.30		$	0.83		$	0.70
	Diluted-pro forma	$	0.12		$	0.27		$	0.74		$	0.61

During the first 40 weeks of 2003, the Company granted approximately 1.2 million stock options to various employees within the Company. These options have vesting periods ranging from two to five years and have a weighted average exercise price of $20.69.

C. ACQUISITION OF NINETY NINE RESTAURANT & PUB AND SENIOR CREDIT FACILITY

On January 27, 2003, the Company acquired Ninety Nine Restaurant and Pub (“Ninety Nine”), a family-owned and operated casual dining chain based in Woburn, Massachusetts with operations in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The Company acquired Ninety Nine for $116 million in cash and approximately 2.35 million shares of its common stock, plus the assumption of certain liabilities. The cash portion of the purchase price is subject to adjustment based on the consolidated net book value of Ninety Nine on the closing date. Of the stock portion of the purchase price, the Company delivered approximately 941,000 shares at closing, and will deliver approximately 408,000 shares on each of the first, second, and third anniversaries of the closing and 94,000 shares on each of the fourth and fifth anniversaries of the closing. As the passage of time is the only condition for the ultimate issuance of the common shares, all shares are assumed issued for purposes of basic and diluted earnings per share, and were valued in determining the purchase price of the acquisition. The results of operations for Ninety Nine are included in the consolidated results from January 27, 2003, the date of the acquisition.

The transaction was accounted for using the purchase method of accounting as required by SFAS No. 141. Ninety Nine is being operated through indirect wholly owned subsidiaries of the Company.

In order to retain and incentivize certain key employees of Ninety Nine, the Company agreed to pay a total of $1 million per year, plus interest, on each of January 1, 2004, 2005, 2006 and 2007 to those key employees of Ninety Nine who continue to be employed at such dates. Compensation cost recognized by the Company in the 12 and 40-week periods ended October 5, 2003 approximated $261,000 and $751,000, respectively.

On January 27, 2003, the Company entered into a new senior secured credit facility for the purpose of funding the cash portion of the purchase price of Ninety Nine, retiring the previous revolving credit facility and providing capital for future growth. As discussed in Note J below, on November 4, 2003, the Company amended and restated its senior secured credit facility.

The purchase price paid for the acquisition of Ninety Nine was $160.9 million, calculated as follows:


(in thousands)
Cash paid to sellers	$	116,000
Fair value of shares issued to sellers		41,153
Closing and other transaction costs		3,791

Total purchase price	$	160,944

The following table sets forth the preliminary purchase price allocation in accordance with SFAS No. 141. The information set forth below is management’s preliminary purchase price allocation, and is subject to change:


(in thousands)
Net working capital (deficit)	$	(2,106	)
Property and equipment		41,990
Other		1,981
Purchase price in excess of the net assets acquired (goodwill)		93,353
Other indefinite life intangible assets – trademarks		25,921
Favorable operating leases		575
Estimated fair value of liabilities assumed		(770	)

Purchase price of acquisition		160,944
Less value of stock issued		(41,153	)
Less cash acquired		(5,520	)

Net cash paid for acquisition and related transaction costs	$	114,271

The following unaudited pro forma condensed results of operations give effect to the acquisition of Ninety Nine as if such transaction had occurred at the beginning of fiscal 2002:


	Third Quarter				First 40 Weeks
Third Quarter and First 40 weeks 2003 and 2002
Pro Forma Earnings:	2003		2002		2003		2002

	(in thousands, except per share date)
Total revenues	$	181,720	$	161,937	$	592,201	$	532,449
Earnings before income taxes and cumulative effect of change in accounting principle		4,525		11,954		27,911		39,594
Earnings before cumulative effect of change in accounting principle		3,407		7,800		18,666		25,835
Cumulative effect of change in accounting principle		—		—		—		(6,123	)

Net earnings	$	3,407	$	7,800	$	18,666	$	19,712

Basic earnings per share
Earnings before cumulative effect of change in accounting principle	$	0.15	$	0.37	$	0.84	$	1.23
Cumulative effect of change in accounting principle		—		—		—		(0.29	)

Net earnings	$	0.15	$	0.37	$	0.84	$	0.94

Basic weighted average common shares outstanding		22,162		21,104		22,095		20,998

Diluted earnings per share
Earnings before cumulative effect of change in accounting principle	$	0.15	$	0.35	$	0.82	$	1.17
Cumulative effect of change in accounting principle		—		—		—		(0.28	)

Net earnings	$	0.15	$	0.35	$	0.82	$	0.89

Diluted weighted average common shares outstanding		22,539		22,079		22,810		22,148

The foregoing unaudited pro forma amounts are based upon certain assumptions and estimates, including, but not limited to the recognition of interest expense on debt incurred to finance the acquisition and the issuance of shares associated with the purchase price. The unaudited pro forma amounts do not necessarily represent results which would have occurred if the acquisition had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.

D. ASSET IMPAIRMENT AND EXIT COSTS

As discussed in Note 16 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K/A for the year ended December 29, 2002, the Company incurred charges during the third quarter of fiscal 2001 for asset impairment of approximately $5.0 million and exit costs totaling approximately $800,000 related to our decision to close five restaurants. We closed one store during the fourth quarter of 2001, two stores during the first quarter of 2002, one store during the third quarter of 2002 and one store during the first quarter of 2003. During the quarter ended October 5, 2003, the Company paid exit costs totaling approximately $42,000. During the first 40 weeks of 2003, the Company paid exit costs totaling approximately $275,000. The remaining balance of the accrual at October 5, 2003, which primarily represents the Company’s estimate of its remaining net lease obligations related to the closed stores, was approximately $260,000.

E. DERIVATIVE INSTRUMENTS

At October 5, 2003, the Company’s derivative financial instruments consisted of interest rate swaps with a combined notional amount of $20 million that effectively convert an equal portion of the Company’s debt from a floating rate to a fixed rate. The Company’s purpose for holding such instruments is to hedge its exposure to cash flow fluctuations due to changes in market interest rates. The fair value of the Company’s derivative financial instruments at October 5, 2003 is a liability of $939,000 compared to a liability of $1.4 million at December 29, 2002, which is included in other long-term liabilities on the consolidated balance sheets. The fair value adjustment resulted in the recognition of an unrealized gain of $488,000, net of related income taxes of $185,000, in accumulated other comprehensive loss in 2003.

F. COMPREHENSIVE INCOME

Comprehensive income consists of net earnings and other comprehensive income/loss items attributable to unrealized gains and losses on derivative financial instruments and unrealized gains and losses on available for sale securities. The components of total comprehensive income for all periods presented are as follows:


	12 Weeks Ended					40 Weeks Ended

	October 5,		October 6,			October 5,		October 6,
	2003		2002			2003		2002

	(in thousands)
Net income	$	3,407	$	5,902		$	18,416	$	13,812
Other comprehensive income (loss), net of tax		180		(176	)		303		(445	)

Total comprehensive income	$	3,587	$	5,726		$	18,719	$	13,367

G. RESTRICTED STOCK UNIT GRANTS

In the first quarter of 2002, the Company granted approximately 84,000 restricted stock units to certain executive officers and members of senior management in order to provide retention incentives and to incentivize them to meet and exceed budgeted increases in targeted performance criteria. Each restricted stock unit represents the right to receive one share of the Company’s common stock. For each of fiscal years 2002, 2003, and 2004, the compensation committee of the board of directors will establish performance criteria related to targeted earnings per share. If the annual performance targets are achieved, one-third of the restricted stock units will vest in that year and the Company will issue the corresponding number of common shares to the individuals. In the event the performance criteria are not achieved, the restricted stock units that would have vested related to that fiscal year shall not vest and all rights thereto shall terminate. In the event that the employment of the individual by the Company is terminated for any reason, no further vesting of restricted stock units shall occur. The 2002 restricted stock unit tranche vested in 2002 due to the attainment of the applicable performance targets. No compensation cost attributable to the 2003 restricted

stock units was recognized in the 12 and 40-week periods ended October 5, 2003 due to the Company’s earnings being below the established performance criteria.

During the first quarter of 2003, the Company granted approximately 135,000 shares of restricted stock to certain executives and members of senior management associated with a performance accelerated restricted stock plan in order to provide retention incentives for these individuals. The grantee’s rights in the restricted stock shall become fully vested on the sixth anniversary of the grant date. Vesting can be accelerated on the attainment of certain stock performance criteria that are measured against the total shareholder return for the Standard and Poor’s 500 Restaurant Index for the period from the grant date to the measurement date. The awards may vest as early as three years from the grant date if the stock performance criteria are met at that time. In the event that the employment of the individual by the Company is terminated for any reason, no further vesting of restricted stock units shall occur. Upon issuance of restricted stock awards, unearned compensation is charged to shareholders’ equity for the fair value of the restricted stock and recognized as compensation expense ratably over the vesting periods, as applicable. Compensation cost related to these restricted stock awards recognized by the Company during the 12 and 40-week periods ended October 5, 2003 approximated $194,000 and $543,000, respectively.

H. NEW ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies immediately to variable interests in variable interest entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31, 2003. It applies in the first fiscal year, or interim period ending after December 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The application of this Interpretation is not expected to have an impact on the Company’s consolidated financial statements.

On May 15, 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity”. SFAS No. 150 requires issuers to classify as liabilities (or assets in some circumstances) three classes of freestanding financial instruments that embody obligations for the issuer. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. The Company adopted the provisions of SFAS No. 150 on July 14, 2003. The adoption of SFAS No. 150 did not have an impact on the Company’s consolidated financial statements or the disclosures thereto.

I. CONTINGENCIES

While we intend to vigorously defend the litigation that has been filed against us, we are not able to predict the outcome of the litigation that has been filed against us or that may be filed against us in the future relating to the Hepatitis A outbreak or the amounts that we may be required to pay to settle any such litigation or

to satisfy any adverse judgments that may be rendered against us. We have liability insurance; however, we cannot assure you that our insurance carriers will reimburse us for any loss or liability we suffer in connection with this litigation or that our insurance will be sufficient to cover such loss or liability. We do not believe that any of the legal proceedings pending against us will have a material adverse effect on our financial condition. We may incur or accrue expenses in a particular quarterly period relating to the Hepatitis A litigation or other legal proceedings that may adversely affect our results of operations for such period.

J. SUBSEQUENT EVENTS

In the fourth quarter of 2003, we amended and restated our credit facility and issued $125 million aggregate principal amount of our 9.0% senior subordinated notes due 2013. Interest on the notes accrues at the stated rate and is payable semi-annually on May 1 and November 1 of each year commencing May 1, 2004. The notes mature on November 1, 2013. The notes are unsecured, senior subordinated obligations and rank junior in right of payment to all of our existing and future senior debt (as defined in the indenture governing the notes). At any time before November 1, 2006, we may redeem up to 35% of the original aggregate principal amount of the notes at a redemption price equal to 109% of the principal amount of the notes, plus accrued and unpaid interest, with the cash proceeds of certain equity offerings. We may also redeem all or a portion of the notes on or after November 1, 2006 at the redemption prices set forth in the indenture governing the notes. The notes are guaranteed on an unsecured, senior subordinated basis by certain of our subsidiaries.

The indenture governing the notes contains certain customary covenants that, subject to certain exceptions and qualifications, limit our ability to, among other things: incur additional debt or issue preferred stock; pay dividends or make other distributions on, redeem or repurchase capital stock; make investments or other restricted payments; engage in sale and leaseback transactions; create or permit to exist certain liens; consolidate, merge or transfer all or substantially all of our assets; and enter into transactions with affiliates. In addition, if we sell certain assets (and generally do not use the proceeds of such sales for certain specified purposes) or experience specific kinds of changes in control, we must offer to repurchase all or a portion of the notes. The notes are also subject to certain cross-default provisions with the terms of our other indebtedness.

The proceeds from the note offering were used to pay off the term loan and to repay a portion of the revolving credit loan under our existing bank credit facility. Our amended and restated bank credit facility consists of a revolving credit facility in a maximum principal amount of $125.0 million and does not provide for a term loan facility. The facility has a four-year term maturing in 2007, and bears interest, at our option, at either LIBOR plus a specified margin ranging from 1.25% to 2.25% based on certain financial ratios or the base rate, which is the higher of the lender’s prime rate and the federal funds rate plus 0.5%, plus a specified margin from 0.0% to 1.0% based on certain financial ratios. The amended and restated credit facility imposes restrictions on us with respect to the incurrence of additional indebtedness, sales of assets, mergers, acquisitions, joint ventures, investments, repurchases of stock and the payment of dividends. In addition, the amended and restated credit facility requires us to comply with certain specified financial covenants, including covenants and ratios relating to our senior secured leverage, maximum adjusted leverage, minimum fixed charge coverage, minimum asset coverage and maximum capital expenditures. The amended and restated credit facility contains certain events of default, including an event of default resulting from certain changes in control. In the consolidated balance sheet at October 5, 2003, we have reclassified $10.0 million from current portion of long-term debt to long-term debt based on these refinancings and the extension of the maturity date of the debt.

During the fourth quarter of 2003, we also completed two sale and leaseback transactions. The first transaction, completed on October 17, 2003, involved the sale of 23 of our O’Charley’s restaurant properties for aggregate gross proceeds of approximately $50.0 million. The second transaction, completed on November 7, 2003, involved the sale of five of our O’Charley’s restaurants for aggregate gross proceeds of approximately $9.1 million. Both of these sales were made to an unrelated entity who then leased the properties back to us. The leases that we entered into in connection with these transactions require us to make additional future minimum lease payments aggregating approximately $98.1 million over the 20-year term of the leases, or an average of approximately $4.9 million annually. The leases also provide for the payment of additional rent beginning in the sixth year of the lease term based on increases in the Consumer Price Index. The net proceeds from these transactions were used to pay down indebtedness under our existing bank credit facility.

In October 2003, we announced an authorization to repurchase up to $25.0 million of our common stock. Any repurchases will be made from time to time in open market transactions or privately negotiated transactions at our discretion. To date, we have not repurchased any shares of our common stock under this authorization. Any repurchases will be funded

with borrowings under our amended and restated bank credit facility.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

RESULTS OF OPERATIONS

Note Regarding Forward Looking Statements

This report contains certain forward-looking statements within the meaning of the federal securities laws, which are intended to be covered by the safe harbors created thereby. Those statements include, but may not be limited to, all statements regarding our intent, belief and expectations such as statements concerning our future profitability, operating and growth strategy, and financing plans. These forward-looking statements may be affected by certain risks and uncertainties, including, but not limited to, the Company’s ability to implement successfully sales growth initiatives at the O’Charley’s concept and reverse decreases in same store sales; the possible adverse effect on our sales of any decrease in consumer spending; the effect of increased competition; the effect that any increases in food, labor and other expenses, including those associated with the sales growth initiatives, may have on our results of operations; the adverse affect that a recent outbreak of Hepatitis A, and the resulting litigation will have on our results of operations and financial position; and the other risks described in our Annual Report on Form 10-K/A for the fiscal year ended December 29, 2002, under the caption “Forward-looking Statements/Risks Factors” and in our other filings with the Securities and Exchange Commission. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. We undertake no obligation to publicly release any revisions to any forward-looking statements contained herein to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.

General

At October 5, 2003, we operated 205 O’Charley’s restaurants in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, Ohio, South Carolina, Tennessee, Virginia, and West Virginia, 85 Ninety Nine Restaurant and Pub restaurants in Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont, and six Stoney River restaurants in suburban Atlanta, Georgia, Chicago, Illinois, Louisville, Kentucky, and Nashville, Tennessee. O’Charley’s are casual dining restaurants that are intended to appeal to mainstream casual dining customers as well as upscale casual dining and value-oriented customers by offering high quality, freshly prepared food at moderate prices with friendly and attentive customer service. Ninety Nine Restaurant and Pub restaurants are casual dining restaurants that have earned a reputation for providing high quality food at moderate prices in a comfortable, relaxed atmosphere. Stoney River restaurants are upscale steakhouses that are intended to appeal to both upscale casual dining and fine dining customers by offering hand-cut, premium mid-western beef along with fresh seafood and other gourmet entrees with attentive service in a warm, friendly and relaxed environment.

As discussed in Note C to the unaudited consolidated financial statements, on January 27, 2003, we completed the acquisition of the Ninety Nine Restaurant and Pub concept for $116 million in cash and approximately 2.35 million shares of our common stock, plus the assumption of certain liabilities. The year to date consolidated results for 2003 include the earnings of Ninety Nine Restaurant and Pub since January 27, 2003.

We operate a commissary in Nashville, Tennessee through which we purchase and distribute a substantial majority of the food products and supplies for our O’Charley’s and Stoney River restaurants and manufacture certain O’Charley’s brand food products for sale to other customers, including retail grocery chains, mass merchandisers and wholesale clubs. In addition, the Nashville commissary operates a USDA-approved and inspected facility at which we cut beef for our O’Charley’s and Stoney River restaurants and a production facility at which we manufacture the signature yeast rolls and salad dressings served in our O’Charley’s restaurants. We also operate a commissary and purchasing operation located in Woburn, Massachusetts through which we purchase and distribute a portion of the food products and supplies for our Ninety Nine restaurants, primarily “center of the plate” items including red meat, poultry and seafood. Our Woburn commissary operates a USDA-approved and inspected facility at which we cut beef for our Ninety Nine restaurants and a production facility at which we prepare the soups, sauces and marinades served in our Ninety Nine restaurants. We believe our commissaries enhance restaurant operations by helping to maintain consistent food quality, ensure reliable distribution services to our restaurants, simplify our restaurant managers’ food cost management responsibilities, and reduce costs through purchasing volumes and operating efficiencies.

The following table reflects information regarding the number of O’Charley’s and Stoney River restaurants during the first 40 weeks of 2003 and 2002 and Ninety Nine restaurants since their acquisition on January 27, 2003.


O’Charley’s Restaurants	2003			2002

In operation, beginning of period		182			161
Restaurants opened, first quarter		10			8
Restaurants opened, second quarter		8			6
Restaurants opened, third quarter		7			6
Restaurants closed		(2	)		(3	)

In operation, end of period		205			178


Ninety Nine Restaurants	2003

In operation, at date of acquisition		78
Restaurants opened, first quarter		2
Restaurants opened, second quarter		2
Restaurants opened, third quarter		3

In operation, end of period		85


Stoney River Restaurants	2003		2002

In operation, beginning of period		6		3
Restaurants opened, first quarter		—		1
Restaurants opened, second quarter		—		—
Restaurants opened, third quarter		—		1

In operation, end of period		6		5

During the fourth quarter of 2003, we completed two sale and leaseback transactions. The first transaction, completed on October 17, 2003, involved the sale of 23 of our O’Charley’s restaurant properties for aggregate gross proceeds of approximately $50.0 million. The second transaction, completed on November 7, 2003, involved the sale of five of our O’Charley’s restaurants for aggregate gross proceeds of approximately $9.1 million. Both of these sales were made to an unrelated entity who then leased the properties back to us. The leases that we entered into in connection with these transactions require us to make additional future minimum lease payments aggregating approximately $98.1 million over the 20-year term of the leases, or an average of approximately $4.9 million annually. The leases also provide for the payment of additional rent beginning in the sixth year of the lease term based on increases in the Consumer Price Index. The net proceeds from these transactions were used to pay down indebtedness under our existing bank credit facility. We expect to enter into additional sale and leaseback transactions totaling aggregate gross proceeds of approximately $25 million before the end of the first quarter in 2004. We plan to use the proceeds from any additional sale and leaseback transactions to reduce indebtedness under our bank credit facility.

In the fourth quarter of 2003, we amended and restated our bank credit facility and issued $125.0 million aggregate principal amount of our 9.0% senior subordinated notes due 2013. See “-Liquidity and Capital Resources”. We expect to recognize a charge in the fourth quarter of 2003 of approximately $1.9 million for the unamortized portion of debt issuance costs from our prior revolving credit facility.

In the first quarter of 2002, we recorded a non-cash pretax charge of $9.9 million ($6.1 million net of tax, or $0.31 per diluted share) as a cumulative effect of a change in accounting principle as a result of our evaluation of the goodwill carrying value of the Stoney River reporting unit. We were required to perform this evaluation upon the adoption of a new accounting standard, Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangibles”, that dictates how companies must account for goodwill. We adopted SFAS No. 142 at December 31, 2001 and we determined that the goodwill was impaired based upon our valuation of the fair value of the Stoney River reporting unit and the fair value of its net assets, exclusive of goodwill. The write-off represented the total unamortized goodwill associated with the Stoney River acquisition. Additionally, in accordance with SFAS No. 142, beginning in 2002, we ceased amortizing goodwill.

We have completed our feasibility study on franchising our O’Charley’s restaurant concept and are reviewing franchising opportunities. We will continue to incur legal and administrative expenses during the development stage of this program and we cannot predict when or if we will generate revenue from franchising. The establishment of franchising operations could have an adverse effect on our operating results until such time, if ever, as those operations begin to generate revenues in excess of their related expenses. We anticipate approximately $665,000 in expenses for this program in fiscal 2003.

Following is an explanation of certain items in the Company’s unaudited consolidated statement of earnings:

Revenues consist of restaurant sales and to a lesser extent commissary sales. Restaurant sales include food and beverage sales and are net of applicable state and local sales taxes. Commissary sales represent sales to outside parties consisting primarily of sales of O’Charley’s branded food items, primarily salad dressings, to retail grocery chains, mass merchandisers and wholesale clubs.

Cost of Food and Beverage primarily consists of the costs of beef, poultry, seafood, produce and alcoholic and non-alcoholic beverages. We believe our menus offer a broad selection of menu items and as a result there is not a high concentration of our food costs in any one product category. Various factors beyond our control, including adverse weather, cause periodic fluctuations in food and other costs. Generally, temporary increases in these costs are not passed on to customers; however, we have in the past generally adjusted menu prices to compensate for increased costs of a more permanent nature.

Payroll and Benefits includes payroll and related costs and expenses directly relating to restaurant level activities including restaurant management salaries and bonuses, hourly wages for store level employees, payroll taxes, workers’ compensation, various health, life and dental insurance programs, vacation expense and sick pay. We have an incentive bonus plan that compensates restaurant management for achieving and exceeding certain restaurant level financial targets and performance goals.

Restaurant Operating Costs includes occupancy and other expenses at the restaurant level, except property and equipment depreciation and amortization. Supplies, rent, supervisory salaries and bonuses, management training salaries, general liability and property insurance, property taxes, utilities, repairs and maintenance, outside services and credit card fees account for the major expenses in this category.

Advertising, General and Administrative Expenses includes all advertising and home office administrative functions that support the existing restaurant base and provide the infrastructure for future growth. Advertising, executive management and support staff salaries, bonuses and related expenses, data processing, legal and accounting expenses and office expenses account for the major expenses in this category.

Depreciation and Amortization includes depreciation and amortization on property and equipment calculated on a straight-line basis over an estimated useful life.

Pre-opening Costs include operating costs and expenses incurred prior to a new restaurant opening. The amount of pre-opening costs incurred in any one period includes costs incurred during the period for restaurants opened and under development. Our pre-opening costs may vary significantly from quarter to quarter primarily due to the timing of restaurant openings. We typically incur average pre-opening costs of approximately $200,000 for each new O’Charley’s and Stoney River restaurant and approximately $130,000 for each new Ninety Nine restaurant.

The following section should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto included elsewhere herein. The following table highlights the operating results for the third quarter and the first 40 weeks of 2003 and 2002 as a percentage of total revenues unless specified otherwise.


			Third Quarter						First 40 Weeks

			2003			2002			2003			2002

Revenues:
	Restaurant sales			99.3	%		99.1	%		99.3	%		99.0	%
	Commissary sales			0.7			0.9			0.7			1.0

				100.0			100.0			100.0			100.0
Costs and Expenses:
	Cost of restaurant sales: (1)
		Cost of food and beverage		30.3			28.4			28.9			28.8
		Payroll and benefits		34.0			31.0			33.2			31.3
		Restaurant operating costs		18.9			18.1			18.3			17.3
	Cost of commissary sales (2)			0.6			0.9			0.7			0.9
	Advertising, general and administrative expenses			6.8			7.3			7.2			7.3
	Depreciation and amortization			4.9			5.1			4.8			5.1
	Pre-opening costs			0.9			1.0			1.0			1.1
Income from Operations				4.3			8.8			6.6			9.1
Other Expense:
	Interest expense, net			1.8			1.0			1.8			1.1

Earnings Before Income Taxes and Cumulative Effect of Change in Accounting Principle				2.5			7.8			4.8			8.0
Income Taxes				0.6			2.7			1.6			2.8

Earnings Before Cumulative Effect of Change in Accounting Principle				1.9			5.1			3.2			5.2
Cumulative Effect of Change in Accounting Principle, Net of Tax				—			—			—			(1.6	)

Net Earnings				1.9	%		5.1	%		3.2	%		3.6	%

(1)		Shown as a percentage of restaurant sales.

(2)		Cost of commissary sales as a percentage of commissary sales was 94.9% and 93.9% for the 12 weeks ended October 5, 2003 and October 6, 2002, respectively. Cost of commissary sales as a percentage of commissary sales was 94.2% and 93.6% for the 40 weeks ended October 5, 2003 and October 6, 2002, respectively.

Third Fiscal Quarter and First 40 Weeks of 2003 Versus Third Fiscal Quarter and First 40 Weeks of 2002

Total Revenues increased $65.1 million, or 55.8%, to $181.7 million for the 12 weeks ended October 5, 2003, compared to $116.6 million in the same prior-year period. This increase is primarily attributable to the inclusion of $53.2 million of sales from the operations of Ninety Nine restaurants. Excluding the revenues of Ninety Nine restaurants, revenues increased $11.9 million, or 10.2%, to $128.5 million. Revenues for the quarter were adversely affected by a decrease in same store sales at the O’Charley’s concept.

For the first 40 weeks of 2003, total revenues increased $194.6 million, or 51.0%, to $576.0 million, compared to $381.4 million in the same prior-year period. This increase is primarily attributable to the inclusion of $152.8 million of sales from the operations of Ninety Nine restaurants since its acquisition on January 27, 2003. Excluding the revenues of Ninety Nine restaurants, revenues increased $41.8 million, or 11.0%, to $423.2 million.

O’Charley’s Restaurant Sales increased $10.5 million, or 9.4%, to $122.4 million for the third quarter of 2003 compared to $112.0 million in the same prior-year period. The increase resulted primarily from the net addition of 27 restaurants during the past 12 months, comprised of 29 new restaurants opened and the closure of two restaurants. Same store sales for the comparable O’Charley’s restaurants decreased 3.3% in the third quarter of 2003, consisting of a 1.3% decline in customer counts and a 2.0% decrease in the check average. For the first six weeks of the third quarter, we experienced average declines in same store sales and customer counts of approximately 4%. During the last six weeks of the third quarter, we implemented certain sales-building initiatives designed to increase our sales and customer counts at the O’Charley’s restaurants. These initiatives included, among other things, increased advertising and certain menu price reductions. During the last five weeks of the third quarter, with the support of increased advertising, our customer traffic increased approximately 3.0%, while our check average decreased approximately 4.8%. The check average decrease was the result of a shift in mix from higher-priced entrees to the lower introductory price of certain promotional items and the reduction in price of certain other menu items that resulted in a menu price decrease of approximately 1.0%. To date in the fourth quarter, we have increased the price of certain promotional items and have begun promoting a higher priced combo entree designed to increase our check average while maintaining positive customer counts. Sales at our O’Charley’s restaurants were also adversely affected in the third quarter when customers and employees at one of our O’Charley’s restaurants were exposed to the Hepatitis A virus. See “Legal Proceedings.” We believe that the Hepatitis A incident affected sales at our nine Knoxville stores during the third quarter by approximately 50% since the outbreak as compared to the prior year period and affected same store sales for the third quarter by approximately 0.5%. For the first four weeks of the fourth quarter, same store sales in the Knoxville market are down approximately 25% as compared to the prior year period and are affecting overall same store sales for the O’Charley’s concept by approximately 1%. We expect the negative publicity surrounding the Hepatitis A outbreak to continue to adversely affect sales at our O’Charley’s restaurants for at least the remainder of 2003.

For the first 40 weeks of 2003, O’Charley’s restaurant sales increased $36.0 million, or 9.8%, to $402.5 million, compared with $366.5 million in the same prior-year period. The increase resulted from the net addition of 27 restaurants during the past 12 months, comprised of 29 new restaurants opened and the closure of two restaurants. Same store sales for the comparable O’Charley’s decreased 2.6% in the first 40 weeks of 2003 as compared to the same prior-year period, due to a 3.3% decline in customer counts partially offset by an increase in the check average.

Ninety Nine Restaurant Sales were $53.2 million for the third quarter of 2003. During that period, three new Ninety Nine restaurants opened, bringing the total restaurant base to 85 Ninety Nine restaurants. Same store sales for comparable Ninety Nine restaurants increased 3.8% compared with the same prior-year period.

For the period since its acquisition on January 27, 2003, Ninety Nine restaurant sales were $152.8 million. Same store sales for comparable Ninety Nine restaurants were up 1.7% for the 36 weeks ended October 5, 2003 compared with the same prior-year period.

Stoney River Restaurant Sales increased $1.3 million, or 36.4%, to $4.9 million for the third quarter of 2003 compared to $3.6 million in the same prior-year period. The increase primarily resulted from one new restaurant opened during the past 12 months. Same store sales for the comparable Stoney River restaurants, which represents a base of only three stores, increased 5.1% in the third quarter of 2003, as compared to the same prior-year period. For the first 40 weeks, Stoney River restaurant sales increased $5.3 million, or 47.3%, to $16.5 million compared to $11.2 million in the same prior-year period.

Commissary Sales increased $100,000, or 12.8%, to $1.2 million for the third quarter compared to the same prior-year period. For the first 40 weeks of 2003, commissary sales increased approximately $500,000 to $4.2 million from $3.7 million for the same prior-year period.

Cost of Food and Beverage in the third quarter of 2003 increased $21.8 million, or 66.4%, to $54.6 million from $32.8 million in the third quarter of 2002. As a percentage of restaurant sales, cost of food and beverage increased to 30.3% in the third quarter of 2003 from 28.4% in the same prior-year period. The higher food and beverage cost percentage in the third quarter is primarily attributable to a change in our O’Charley’s concept product mix to menu items that carried higher costs and an increase in certain commodity costs, primarily red meat, poultry and cheese. We implemented certain sales-building initiatives during the last half of the third quarter at our O’Charley’s restaurants that included the promotion of certain lower priced items, and we reduced the price on certain menu items, both of which increased our food cost as a percentage of restaurant sales. The promotions carried a higher food cost, and during the last few weeks of the third quarter, the sales of these items accounted for approximately 25% of the total sales for our O’Charley’s restaurants. We expect continued food cost pressures in the fourth quarter of 2003 and continuing in 2004 due to higher commodity costs and certain promotional menu items that carry higher food cost.

For the first 40 weeks of 2003, cost of food and beverage increased $56.8 million, or 52.2%, to $165.5 million from $108.7 million in the same prior-year period. As a percentage of restaurant sales, cost of food and beverage increased to 28.9% in the first 40 weeks of 2003 from 28.8% in the same prior-year period. The higher food and beverage cost percentage is primarily attributable to an increase in red meat costs, coupled with the promotion of lower priced entrees in the third quarter of 2003 versus the first 40 weeks of 2002.

Payroll and Benefits in the third quarter of 2003 increased $25.4 million, or 70.9%, to $61.3 million from $35.9 million in the third quarter of 2002. As a percentage of restaurant sales, payroll and benefits increased to 34.0% in the third quarter of 2003 compared to 31.0% during the same prior-year period. For the first 40 weeks of 2003, payroll and benefits increased $71.6 million, or 60.6%, to $189.6 million from $118.1 million for the same prior-year period. As a percentage of restaurant sales, payroll and benefits increased to 33.2% for the first 40 weeks of 2003 compared to 31.3% in the same prior-year period. The increase in payroll and benefit costs in the third quarter and first 40 weeks is primarily attributable to higher insurance costs for hourly employees, overall higher average wage rates for the Ninety Nine managers and hourly co-workers and lower average weekly sales which increased the percentage of fixed payroll costs. Partially offsetting these increases was a decrease in store level bonus expense. In 2003, we implemented enhanced medical insurance for our hourly employees at our O’Charley’s restaurants and believe this investment will result in an improvement in hourly employee turnover. These enhancements have resulted in an increase to payroll and related costs and expenses as a percentage of restaurant sales in 2003.

Restaurant Operating Costs in the third quarter of 2003 increased $13.1 million, or 62.6%, to $34.1 million from $21.0 million in the third quarter of 2002. Restaurant operating costs, as a percentage of restaurant sales, increased to 18.9% in the third quarter of 2003 from 18.1% in the same prior-year period. For the first 40 weeks of 2003, restaurant operating costs increased $39.6 million, or 60.7%, to $104.8 million from $65.2 million in the same prior year period. As a percentage of restaurant sales, restaurant operating costs increased to 18.3% for the first 40 weeks of 2003 from 17.3% in the same prior year period. The increase in the third quarter and the first 40 weeks was primarily attributable to the higher base of stores that are leased by the Ninety Nine concept, and from higher utilities, primarily natural gas. Additionally, we incurred approximately $500,000 in expenses in the third quarter due to costs associated with our sales building initiatives. These increases were partially offset by lower supervisory bonus expense. The sale and leaseback transactions completed in the fourth quarter will increase rent expense by approximately $4.1 million on an annual basis, which consists of the average annual lease payments of $4.9 million, partially offset by the amortization of the related deferred gain over the lease term. The leases provide for the payment of additional rent beginning in the sixth year of the lease based on increases in the Consumer Price Index. We expect to enter into additional sale and leaseback transactions totaling aggregate gross proceeds of approximately $25.0 million before the end of the first quarter of 2004 which would further increase rent expense in 2004.

Advertising, General and Administrative Expenses for the third quarter increased approximately $3.8 million, or 45.1%, to $12.3 million in 2003 from $8.5 million in 2002. As a percentage of total revenues, advertising, general and administrative expenses decreased to 6.8% in the third quarter of 2003 from 7.3% in 2002. Advertising expenditures were $6.0 million in the third quarter of 2003, an increase of 46.7% from the $4.1 million expended in the same prior-year period. As a percentage of total revenues, advertising decreased to 3.3% in the third quarter of 2003 from 3.5% in the third quarter of 2002. General and administrative expenses were $6.3 million in the third quarter of 2003, an increase of 43.4% from the $4.4 million expended in the same prior-year period. As a percentage of total revenues, general and administrative expenses decreased to 3.5% in the third quarter of 2003 from 3.8% in the same prior-year period, due primarily to lower bonus expenses.

For the first 40 weeks of 2003, advertising, general and administrative expenses increased approximately $13.5 million, or 48.6%, to $41.4 million in 2003 from $27.9 million in 2002. As a percentage of total revenues, advertising, general and

administrative expenses decreased to 7.2% in 2003 from 7.3% in 2002. Advertising expenditures were $18.7 million in the first 40 weeks of 2003, an increase of 48.8% from the $12.5 million expended in the same prior-year period. As a percentage of total revenues, advertising decreased to 3.2% from 3.3% in the same prior year period. We plan on spending approximately 3.3% to 3.5% on advertising for the remainder of 2003. General and administrative expenses were $22.7 million in the first 40 weeks of 2003, an increase of 48.3% from the $15.3 million expended in the same prior-year period. As a percentage of total revenues, general and administrative expenses decreased to 3.9% in the first 40 weeks of 2003 from 4.0% in the same prior-year period. During the first quarter of 2003, we adopted a deferred compensation plan for the senior management of Ninety Nine that increased general and administrative costs. Moreover, we incurred additional organizational costs, primarily in salaries and related expenses, associated with operating multiple concepts, which increased general and administrative expense. These increases were offset by a decrease in bonus expense.

Depreciation and Amortization in the third quarter of 2003 increased $2.8 million, or 47.5%, to $8.8 million from $6.0 million in the same prior-year period. As a percentage of total revenues, depreciation and amortization was 4.9% in the third quarter of 2003 compared to 5.1% during the same prior-year period. For the first 40 weeks of 2003, depreciation and amortization increased $8.1 million, or 42.1%, to $27.4 million from $19.3 million in the same prior-year period. As a percentage of total revenues, depreciation and amortization decreased to 4.8% in the first 40 weeks of 2003 from 5.1% in the same prior year period. The decrease in depreciation and amortization expense as a percentage of total revenues in the third quarter and first 40 weeks of 2003 is primarily attributable to the acquisition of Ninety Nine, which leases all of its existing restaurants. The sale and leaseback transactions completed in the fourth quarter will reduce depreciation expense by approximately $1.1 million on an annual basis beginning in the fourth quarter of 2003. We expect to enter into additional sale and leaseback transactions totaling aggregate gross proceeds of approximately $25.0 million before the end of the first quarter of 2004 which would further decrease depreciation expense in 2004.

Pre-opening Costs were $1.6 million in the third quarter of 2003 compared to $1.2 million during the same prior-year period. As a percentage of total revenues, pre-opening costs decreased to 0.9% during the third quarter of 2003 compared to 1.0% in the same prior-year period. For the first 40 weeks of 2003, pre-opening costs were $5.5 million compared to $4.1 million in the same prior-year period. As a percentage of total revenues, pre-opening costs were 1.0% in the first 40 weeks of 2003 compared to 1.1% in the same prior-year period.

Income from Operations in the third quarter decreased $2.5 million, or 24.0%, to $7.8 million in 2003 from $10.3 million in 2002. For the first 40 weeks of 2003, income from operations increased $3.2 million, or 9.2%, to $37.9 million from $34.7 million in the same prior-year period. The decrease in income from operations in the third quarter is primarily attributable to the lower same store sales at the O’Charley’s restaurants, costs associated with the O’Charley’s restaurants sales building initiatives and higher overall labor costs. We anticipate that the sales building initiatives will continue to adversely affect income from operations during at least the remainder of 2003. Additionally, we estimate the impact from the Hepatitis A incident was approximately $500,000 in the third quarter, which consists of approximately $300,000 attributable to the loss of income from the affected stores and approximately $200,000 associated with our insurance deductibles. Currently, we estimate that income from operations will be adversely affected by approximately $900,000 to $1.0 million in the fourth quarter of 2003 due to the anticipated continuing impact of the Hepatitis A incident on our O’Charley’s restaurants. We have loss of income insurance that we believe will reimburse us for certain costs and loss of income resulting from the Hepatitis A incident; however, we cannot assure you that our insurance carriers will reimburse us for such costs and losses or the amount of any such reimbursement.

Interest Expense, net increased approximately $2.0 million in the third quarter of 2003 to $3.3 million from $1.2 million in 2002. For the first 40 weeks of 2003, interest expense, net increased approximately $6.2 million to $10.4 million from $4.2 million in the same prior-year period. Interest expense increased due to increased borrowings primarily incurred to finance the acquisition of Ninety Nine coupled with higher average interest rates under our credit facility. We expect interest expense to increase beginning in the fourth quarter of 2003 due to higher interest rates associated with the recently completed offering of our 9.0% senior subordinated notes due 2013, partially offset by lower interest rates and amounts outstanding on the amended and restated bank credit facility. See “Liquidity and Capital Resources.”

Earnings before Income Taxes for the third quarter of 2003 decreased approximately $4.5 million, or 50.0%, to $4.5 million from $9.0 million in the same prior-year period. For the first 40 weeks of 2003, earnings before income taxes and cumulative effect of change in accounting principle decreased $3.0 million, or 9.9%, to $27.5 million from $30.6 million for the same prior year period. We expect to recognize a pre tax charge of approximately $1.9 million during the fourth quarter of 2003 for the unamortized portion of debt issuance costs associated with the repayment of the term loan and the reduced capacity under the revolving credit facility resulting from the amendment and restatement of our bank credit facility. See “Liquidity and Capital Resources.”

Income Taxes for the third quarter of 2003 decreased $2.0 million, or 64.4%, to $1.1 million from $3.1 million in the same prior year period. For the first 40 weeks of 2003, income taxes decreased $1.5 million, or 14.2%, to $9.1 million from $10.6 million in the same prior year period. Our effective tax rate in 2002 was 34.8%. During the third quarter of 2003, we lowered our expected annual effective tax rate to 33.1% on a year to date basis. This reduction was due to our lower earnings in 2003 coupled with tax credits remaining at expected levels.

Cumulative Effect of Change in Accounting Principle, net of tax was a charge of $6.1 million, or $0.31 per diluted share, for the first 40 weeks of 2002. This was related to our evaluation of the goodwill carrying value of the Stoney River reporting unit in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets.”

Diluted Weighted Shares outstanding were 22.5 million shares in the third quarter of 2003, compared to 19.7 million shares in the same prior-year period. For the first 40 weeks of 2003, diluted weighted shares outstanding were 22.2 million shares compared to 19.8 million shares in 2002. This increase relates to the shares issued and committed to be issued in connection with the Ninety Nine acquisition. We issued approximately 941,000 shares at the closing of the acquisition and will issue the remaining approximately 1.4 million shares over the next five years. Since the remaining shares to be issued are not contingent on any future event other than the passage of time, they are included in the weighted share calculations.

Liquidity and Capital Resources

Our primary sources of capital have historically been cash provided by operations, borrowings under our bank credit facility, capitalized lease obligations and sales of common stock. Our principal capital needs have historically arisen from the purchase and development of new restaurants, equipment replacement, improvements to existing restaurants and acquisitions. In addition, we lease a substantial number of our restaurants under operating leases and, as described below, therefore have substantial operating lease obligations.

Our working capital historically has had current liabilities in excess of current assets due to cash reinvestments in long-term assets, mostly property and equipment additions, and does not indicate a lack of liquidity. As of October 5, 2003, the working capital deficiency was $24.8 million compared to $21.4 million at December 29, 2002. The total net decrease in cash and cash equivalents was $5.1 million during the first 40 weeks of 2003.

Net cash provided by operations for the first 40 weeks of 2003 was $44.6 million compared to $42.3 million in the same prior-year period. Other sources of cash during the first 40 weeks of 2003 came from incremental borrowings of $117.2 million under our credit facility and $4.5 million of proceeds from the exercise of stock options. Additionally, we financed $16.8 million in new restaurant equipment through capitalized lease obligations.

Property and equipment expenditures were $54.6 million in the first 40 weeks of 2003, excluding new restaurant equipment financed through capitalized lease obligations. These expenditures were associated primarily with 25 new O’Charley’s restaurants and seven new Ninety Nine restaurants opened during the first 40 weeks of 2003, restaurants under construction at October 5, 2003, improvements to existing restaurants, property purchases for stores expected to open later in 2003 and in 2004, a new USDA-inspected meat facility at our Nashville commissary and technological improvements at our home office.

Our capital budget includes approximately $10 to $15 million for capital expenditures, excluding new restaurant equipment financed through capitalized lease obligations, for the fourth quarter of 2003. These expenditures are for one additional O’Charley’s restaurant and one additional Ninety Nine restaurant opened during the fourth quarter of 2003 and approximately two additional Ninety Nine restaurants which are expected to open in the fourth quarter, and improvements to existing O’Charley’s and Ninety Nine restaurants. As of October 5, 2003, we had seven O’Charley’s restaurants and two Ninety Nine restaurants under construction. There can be no assurance that actual capital expenditures for the remainder of 2003 will not vary significantly from budgeted amounts based upon a number of factors, including the timing of additional purchases of restaurant sites. Our anticipated new store opening schedule for 2004 includes approximately 15 new O’Charley’s restaurants, 12 to 14 new Ninety Nine restaurants and up to two new Stoney River restaurants.

On January 27, 2003, we consummated the acquisition of Ninety Nine Restaurant and Pub for $116.0 million in cash and approximately 2.35 million shares of our common stock, plus the assumption of certain liabilities of Ninety Nine. Of the stock portion of the purchase price, we delivered approximately 941,000 shares at closing, and will deliver approximately 408,000 shares on each of the first, second and third anniversaries of the closing and 94,000 shares on each of the fourth and fifth anniversaries of the closing.

In conjunction with the acquisition of Ninety Nine, we entered into a $300 million senior secured credit facility, comprised of a $200 million revolving credit facility and a $100 million term loan, to fund the cash portion of the purchase price of Ninety Nine, repay the previous revolving credit facility and provide capital for future growth. These credit facilities remained in place through the first four weeks of the fourth quarter of 2003 and were secured by all our tangible and intangible assets and the capital stock of our subsidiaries. The revolving credit facility had outstanding borrowings of $128.1 million at October 5, 2003 which accrued interest at a rate of LIBOR plus 2.75%. The term loan balance at the end of the third quarter of 2003 was $95.0 million which accrued interest at a rate of LIBOR plus 4.0%. During the third quarter of 2003, the effective interest rate was 5.1% on the revolving credit facility and 5.5% on the term loan. The weighted average interest rate on the outstanding borrowings under this credit facility at the end of the third quarter of 2003 was 5.8%, compared to 3.4% during the same prior-year period.

We expect to enter into additional sale and leaseback transactions totaling aggregate gross proceeds of approximately $25 million before the end of the first quarter in 2004. We plan to use the proceeds from these sale and leaseback transactions to reduce indebtedness under our amended and restated credit facility. We cannot assure you that these proposed sale and leaseback transactions will be completed or, if we do complete these transactions, that their terms will not differ, perhaps substantially, from those of the recently completed transactions described above.

From time to time, we have entered into interest rate swap agreements with certain financial institutions. These swap agreements historically have effectively converted some of our obligations that bear interest at variable rates into fixed rate obligations. As of October 5, 2003, we had interest rate swap agreements with commercial banks, which effectively fixed the interest rate on $20.0 million of our outstanding debt at a weighted-average interest rate of approximately 5.6%. The corresponding floating rates of interest received on those notional amounts are based on one month LIBOR rates and are typically reset on a monthly basis, which is intended to coincide with the pricing adjustments on our bank credit facility. The swap agreements expire as follows: $10.0 million in January 2004 and $10.0 million in January 2006. We are currently evaluating our relative amounts of fixed rate versus variable rate indebtedness as a result of our amended and restated bank

credit facility and issuance of $125.0 million of our 9.0% senior subordinated notes due 2013 and may enter into one or more interest rate swap agreements to convert some of our obligations that bear interest at fixed rates into variable rate obligations.

We are the subject of litigation against us relating to an outbreak of the Hepatitis A virus affecting certain of our employees and customers. We are not able to predict the outcome of the litigation that has been filed against us or that may be filed against us in the future relating to the Hepatitis A outbreak or the amounts that we may be required to pay to settle that litigation or to satisfy any adverse judgments that may be rendered against us. We have liability insurance; however, we cannot assure you that our insurance carriers will reimburse us for any loss or liability we suffer in connection with this litigation or that our insurance will be sufficient to cover such loss or liability. See “Legal Proceedings.”

Based upon the current level of operations and anticipated growth, we believe that available cash flow from operations, combined with the available borrowings under our amended and restated bank credit facility and capitalized lease arrangements, will be adequate to meet the anticipated future requirements for working capital and capital expenditures through at least the next 12 months. We have historically produced insufficient cash flow from operations to fund our working capital and capital expenditures and, accordingly, our ability to meet our anticipated capital needs is dependent on our ability to continue to access external financing, particularly borrowings under our credit facility. In addition, our growth strategy includes possible acquisitions or strategic joint ventures. Any acquisitions, joint ventures or other growth opportunities may require additional external financing. There can be no assurances that such sources of financing will be available to us or that any such financing would not negatively impact our earnings.

Critical Accounting Policies

In our Form 10-K/A for the year ended December 29, 2002, we identified our critical accounting policies related to property and equipment, excess of cost over fair value of net assets acquired (goodwill), and impairment of long-lived assets. We consider an accounting policy to be critical if it is most important to the portrayal of our financial condition and results, and it requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. During the first 40 weeks of fiscal 2003, our previously identified critical accounting policies have not changed, except that our accounting policies related to goodwill also now encompass the $25.9 million indefinite life intangible asset of trademarks resulting from our acquisition of Ninety Nine.

Contractual Obligations

The tables below set forth our contractual obligations and commercial commitments at October 5, 2003.


	Payment Due by Period

Contractual			Less than 1		1-3		3-5		More than 5
Obligations	Total		Year		Years		Years		Years

	(in thousands)
Long-term debt, including current portion	$	223,230	$	10,018	$	20,039	$	148,111	$	45,062
Capitalized lease obligations (1)		47,169		11,263		20,325		14,247		1,334


	Amount of Commitment Expiration per Period

Other Commercial			Less than 1		1-3		3-5		More than 5
Commitments	Total Committed		Year		Years		Years		Years

	(in thousands)
Line of credit(2)	$	200,000	$	—	$	—	$	200,000	$	—
Term loan(3)		95,000		10,000		20,000		48,000		17,000

Total commercial commitments	$	295,000	$	10,000	$	20,000	$	248,000	$	17,000

(1) Capitalized lease obligations include the interest expense component of approximately $4.3 million.

(2) This pertains to the revolving credit portion of our previous bank credit facility, of which $128.1 million is included in long-term debt above.

(3) This pertains to the term loan portion of our previous bank credit facility, of which $95.0 million is included in long-term debt above.

The tables below set forth our contractual obligations and commercial commitments at October 5, 2003, after giving effect to the consummation of the issuance of our $125.0 million 9.0% senior subordinated note offering as well as the amendment and restatement of our bank credit facility, which occurred during the fourth quarter of 2003, as discussed in Note J to the unaudited consolidated financial statements.


	Payment Due by Period

Contractual			Less than 1		1-3		3-5		More than 5
Obligations	Total		Year		Years		Years		Years

	(in thousands)
Long-term debt, including current portion	$	179,167	$	18	$	39	$	54,048	$	125,062
Capitalized lease obligations (1)		47,169		11,263		20,325		14,247		1,334


	Amount of Commitment Expiration per Period

Other Commercial			Less than 1		1-3		3-5		More than 5
Commitments	Total Committed		Year		Years		Years		Years

	(in thousands)
Line of credit(2)	$	125,000	$	—	$	—	$	125,000	$	—
9.0% Senior Subordinated Notes due 2013(3)		125,000		—		—		—		125,000

Total commercial commitments	$	250,000	$	—	$	—	$	125,000	$	125,000

(1) Capitalized lease obligations include the interest expense component of approximately $4.3 million.

(2) This pertains to our amended and restated credit facility, of which $54.0 million is included in long-term debt above.

(3) This pertains to our 9.0% senior subordinated notes due 2013, of which $125.0 million is included in long-term debt above.

The minimum aggregate operating lease commitments shown in our Annual Report on Form 10-K/A for the year ended December 29, 2002 were $85.1 million. We also presented pro forma minimum operating lease commitments assuming the consummation of the acquisition of Ninety Nine Restaurant and Pub as of December 29, 2002 of $270.6 million. Our operating lease commitments at December 29, 2002 assuming the consummation at such date of the sale and leaseback transactions described in Note J to the unaudited consolidated financial statements would be approximately $368.7 million.

Other Accounting Matters

As discussed in Note 1 to the Consolidated Financial Statements included in our Annual Report on Form 10-K/A for the year ended December 29, 2002, we account for our stock option plans in accordance with Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of Financial Accounting Standards Board Statement No. 123”. SFAS 123 encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, SFAS 123 also allows an entity to continue

to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principle Board Opinion No. 25 (“APB 25”), whereby compensation cost is the excess, if any, of the quoted market price of the stock on the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. We currently apply the provisions of APB 25 to account for our stock option plans. Stock options issued to date pursuant to our stock option plans have had no intrinsic value at the grant date, and under Opinion No. 25, no compensation cost is recognized for them. We have provided in Note B in the notes to the unaudited consolidated financial statements pro forma net earnings and pro forma earnings per share disclosures for employee stock compensation in the third quarter and year to date periods of 2003 and 2002 as if the fair-value-based method defined in SFAS 123 had been applied.

As of October 5, 2003, we had outstanding options to purchase approximately 3.8 million shares of common stock at an average exercise price of $16.43 per share. In the event that accounting rules associated with stock options were to change to require all entities to use the fair value based method of accounting prescribed by SFAS 123, or were we to voluntarily elect to apply such methods, our consolidated statement of earnings would be impacted. The Financial Accounting Standards Board is currently considering a new accounting model for stock based compensation under which the value of such instruments would be reflected in the income statement.

IMPACT OF INFLATION

The impact of inflation on the cost of food, labor, equipment, land and construction costs could adversely affect our operations. A majority of our employees are paid hourly rates related to federal and state minimum wage laws. As a result of increased competition and the low unemployment rates in the markets in which our restaurants are located, we have continued to increase wages and benefits in order to attract and retain management personnel and hourly coworkers. In addition, most of our leases require us to pay taxes, insurance, maintenance, repairs and utility costs, and these costs are subject to inflationary pressures. We attempt to offset the effect of inflation through periodic menu price increases, economies of scale in purchasing and cost controls and efficiencies at our restaurants.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Disclosure about Interest Rate Risk. We are subject to market risk from exposure to changes in interest rates based on our financing, investing, and cash management activities. We utilize a balanced mix of debt maturities along with both fixed-rate and variable-rate debt to manage our exposures to changes in interest rates. Our fixed-rate debt consists primarily of capitalized lease obligations and our variable-rate debt consists primarily of our revolving credit facility.

As an additional method of managing our interest rate exposure on our revolving credit facility, at certain times we enter into interest rate swap agreements whereby we agree to pay over the life of the swaps a fixed interest rate payment on a notional amount and in exchange we receive a floating rate payment calculated on the same amount over the same time period. The fixed interest rates are dependent upon market levels at the time the swaps are consummated. The floating interest rates are generally based on the monthly LIBOR rate and rates are typically reset on a monthly basis, which is intended to coincide with the pricing adjustments on our revolving credit facility. At October 5, 2003, we had in effect $20.0 million in swaps at an average fixed rate of 5.6%, $10.0 million of which matures in January 2004 and $10.0 million of which matures in January 2006.

Item 4. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures effectively and timely provide them with material information relating to us and our consolidated subsidiaries required to be disclosed in the reports we file or submit under the Exchange Act.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In September 2003, we became aware that customers and employees at one of our O’Charley’s restaurants located in Knoxville, Tennessee were exposed to the Hepatitis A virus, which resulted in a number of our employees and customers becoming infected. We have worked closely with the Knox County Health Department and the Centers for Disease Control and Prevention since we became aware of this incident and have cooperated fully with their directives and recommendations. We are aware of 81 individuals who have contracted the Hepatitis A virus in the Knoxville area, most of whom have been linked to our Knoxville restaurant during the time of the outbreak. We are also aware of 14 lawsuits filed against us to date, all of which have been filed in the Circuit Court for Knox County, Tennessee, that allege injuries or fear of injuries from the Hepatitis A incident. A number of these lawsuits seek substantial damages, including treble damages under certain Tennessee consumer protection laws and punitive damages, and certain of which seek to be certified as class actions. One of the lawsuits was filed by an individual who contracted the Hepatitis A virus and died following the filing of his lawsuit. This suit has been amended to seek compensatory damages not to exceed $7.5 million and punitive damages not to exceed $10.0 million alleging wrongful death. Certain other plaintiffs have alleged significant health concerns, including ailments requiring hospitalization. We are also aware of an outbreak of Hepatitis A linked to numerous independent restaurants and restaurant chains located in Georgia, including two of our O’Charley’s restaurants. We have received the preliminary report of the Georgia Division of Public Health indicating that ten persons who contracted the Hepatitis A virus in Georgia stated that they had eaten at the Centerville, Georgia or Macon, Georgia O’Charley’s restaurant. Each of the Knox County Health Department, the Georgia Division of Public Health, the Centers for Disease Control and Prevention and the Food and Drug Administration have tentatively associated the recent outbreaks of the Hepatitis A virus affecting a number of restaurants, including O’Charley’s, to eating green onions (scallions).

While we intend to vigorously defend the litigation that has been filed against us, we are not able to predict the outcome of the litigation that has been filed against us or that may be filed against us in the future relating to the Hepatitis A outbreak or the amounts that we may be required to pay to settle any such litigation or to satisfy any adverse judgments that may be rendered against us. We have liability insurance; however, we cannot assure you that our insurance carriers will reimburse us for any loss or liability we suffer in connection with this litigation or that our insurance will be sufficient to cover such loss or liability. We do not believe that any of the legal proceedings pending against us will have a material adverse effect on our financial condition. We may incur or accrue expenses in a particular quarterly period relating to the Hepatitis A litigation or other legal proceedings that may adversely affect our results of operations for such period.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits


No.		Description

10.1		Purchase Agreement, dated as of October 30, 2003, by and among O’Charley’s Inc., various direct and indirect subsidiaries of O’Charley’s Inc., Wachovia Capital Markets, LLC and Morgan Joseph & Co. Inc.

10.2		Registration Rights Agreement, dated as of November 4, 2003, by and among O’Charley’s Inc., various direct and indirect subsidiaries of O’Charley’s Inc., Wachovia Capital Markets, LLC and Morgan Joseph & Co. Inc.

10.3		Indenture, dated as of November 4, 2003, by and among O’Charley’s Inc., various direct and indirect subsidiaries of O’Charley’s Inc. and The Bank of New York (including Form of 144A


No.		Description

		Global Note and Form of Regulation S Temporary Global Note).

10.4		Amended and Restated Credit Agreement, dated as of November 4, 2003, by and among O’Charley’s Inc., as Borrower, the Lenders referred to therein, Wachovia Bank, National Association, as Administrative Agent, Bank of America, N.A. and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. “Rabobank International”, New York Branch, as Co-Syndication Agents, and AmSouth Bank and SunTrust Bank, as Co-Documentation Agents.

10.5		Form of Amended and Restated Revolving Credit Note.

10.6		Form of Amended and Restated Swingline Note.

31.1		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Gregory L. Burns, Chief Executive Officer of O’Charley’s Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of A. Chad Fitzhugh, Chief Financial Officer of O’Charley’s Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

On July 16, 2003, the Company furnished to the Securities and Exchange Commission a Current Report on Form 8-K (Items 7, 9 and 12) which contained its press release announcing that it had revised its outlook for the second quarter ended July 13, 2003.

On August 8, 2003, the Company furnished to the Securities and Exchange Commission a Current Report on Form 8-K (Items 7 and 12) which contained its press release announcing the Company’s second quarter 2003 earnings results.

Notwithstanding the foregoing, information furnished under Item 9 and Item 12 of our Current Reports on Form 8-K, including the related exhibits, shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements 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.


O’Charley’s Inc. (Registrant)

Date: November 19, 2003	By:	/s/ Gregory L. Burns

	Gregory L. Burns Chairman and Chief Executive Officer

Date: November 19, 2003	By:	/s/ A. Chad Fitzhugh

	A. Chad Fitzhugh Chief Financial Officer, Secretary and Treasurer

27 EX-10.1 3 g85963exv10w1.txt EX-10.1 PURCHASE AGREEMENT EXHIBIT 10.1 EXECUTION COPY ================================================================================ O'CHARLEY'S INC. (a Tennessee corporation) $125,000,000 9% Senior Subordinated Notes due 2013 PURCHASE AGREEMENT Dated: October 30, 2003 ================================================================================ O'CHARLEY'S INC. $125,000,000 9% Senior Subordinated Notes due 2013 PURCHASE AGREEMENT October 30, 2003 WACHOVIA CAPITAL MARKETS, LLC MORGAN JOSEPH & CO. INC. c/o WACHOVIA CAPITAL MARKETS, LLC 12 East 49th Street New York, New York 10017 Ladies and Gentlemen: O'Charley's Inc., a Tennessee corporation (the "Company"), and the Company's subsidiaries listed on Schedule A hereto (the "Guarantors"), confirm their agreement with Wachovia Capital Markets, LLC ("Wachovia") and Morgan Joseph & Co. Inc. (collectively, the "Initial Purchasers," which term shall also include any initial purchaser substituted as hereinafter provided in Section 11 hereof), with respect to the issue and sale by the Company, and the purchase by the Initial Purchasers, acting severally and not jointly, of the respective principal amounts set forth in Schedule B hereto, of $125,000,000 aggregate principal amount of the Company's 9% Senior Subordinated Notes due 2013 (the "Securities"). The Securities will be unconditionally guaranteed on a senior subordinated basis by each of the Guarantors (collectively, the "Guarantees"). The Securities, the Guarantees, the Exchange Securities (as defined below) and the Exchange Guarantees (as defined below) are to be issued pursuant to an indenture (the "Indenture") to be dated as of the Closing Time (as hereinafter defined) among the Company, the Guarantors and The Bank of New York, as trustee (the "Trustee"), and will be entitled to the benefits of a Registration Rights Agreement in the form attached hereto as Exhibit A (the "Registration Rights Agreement") to be dated as of the Closing Time among the Company, the Guarantors and the Initial Purchasers. Contemporaneously with the issuance and sale of the Securities to the Initial Purchasers at the Closing Time, the Company will enter into an amended and restated credit agreement (the "Amended and Restated Credit Agreement," which term, as used herein, includes all pledge agreements, guarantees, security agreements, promissory notes and other instruments or agreements entered into by the Company or any of its subsidiaries pursuant thereto or in 1 connection therewith) by and among the Company, as Borrower, the lenders referred to therein, and Wachovia Bank, National Association, as Administrative Agent, and the Co-Syndication and Co-Documentation Agents named within, which will amend and restate the Company's Credit Agreement, dated as of January 27, 2003, by and among the Company, as Borrower, the lenders referred to therein, Wachovia Bank, National Association, as Administrative Agent, Bank of America, N.A., as Syndication Agent, and SunTrust Bank and AmSouth Bank, as Co-Documentation Agents (the "Existing Credit Agreement"). The Company and the Guarantors understand that the Initial Purchasers propose to make an offering of the Securities on the terms and in the manner set forth herein and agree that the Initial Purchasers may resell, subject to the conditions set forth herein, all or a portion of the Securities to investors ("Subsequent Purchasers") at any time after this Agreement has been executed and delivered. The Securities are to be offered and sold through the Initial Purchasers without being registered under the Securities Act of 1933, as amended (the "1933 Act"), in reliance upon exemptions therefrom and in reliance upon Regulation S under the 1933 Act ("Regulation S"). In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum dated October 21, 2003 (the "Preliminary Memorandum") and will prepare a final offering memorandum dated October 30, 2003 (the "Final Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") including or incorporating by reference a description of the terms of the Securities and the Guarantees, the terms of the offering and a description of the Company. As used herein, the terms "Preliminary Memorandum," "Final Memorandum" and "Memorandum" shall include in each case the documents incorporated by reference therein. The terms "supplement," "amendment" and "amend" as used herein with respect to a Memorandum shall include all documents deemed to be incorporated by reference in such Memorandum that are filed subsequent to the date of such Memorandum with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in a Memorandum (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated or deemed to be incorporated by reference therein. Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree, among other things, to use their reasonable best efforts to file (i) a registration statement (the "Exchange Offer Registration Statement") with the Commission under the 1933 Act relating to the Company's offer (the "Exchange Offer") to issue its 9% Senior Subordinated Notes due 2013 (the "Exchange Securities"), which will be registered under the 1933 Act and unconditionally guaranteed on a senior subordinated basis (the "Exchange Guarantees") by the Guarantors and/or such other subsidiaries of the Company that at the time are required pursuant to the Indenture to guarantee the Exchange Securities (the "Exchange Guarantors"), in exchange for the Securities and/or (ii) in certain circumstances, file a shelf registration statement pursuant to Rule 415 of the 1933 Act (the "Shelf Registration Statement and, together with the Exchange Offer Registration Statement, the "Registration Statements") covering resales of the Securities and the Guarantees. 2 The Securities, the Exchange Securities, the Indenture, the Registration Rights Agreement and the Amended and Restated Credit Agreement are hereinafter sometimes referred to, collectively, as the "Operative Documents" and, individually, as an "Operative Document." All references herein to a "subsidiary" or "subsidiaries" of the Company shall include, without limitation, the Guarantors. SECTION 1. Representations and Warranties. (a) Representations and Warranties by the Company and the Guarantors. The Company and the Guarantors, jointly and severally, represent and warrant to each Initial Purchaser as of the date hereof and as of the Closing Time referred to in Section 2(b) hereof, and agree with each Initial Purchaser, as follows: (i) Final Memorandum. Neither the Final Memorandum nor any amendments or supplements thereto (at the time the Final Memorandum or any such amendment or supplement was issued or at the Closing Time) included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties in this subsection shall not apply to statements in or omissions from the Preliminary Memorandum or the Final Memorandum, or any amendment or supplement thereto, made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchasers through Wachovia expressly for use in the Preliminary Memorandum, or any amendment or supplement thereto, or the Final Memorandum, as the case may be. (ii) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Final Memorandum, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations"), and, when read together with the other information in the Final Memorandum, at the time the Final Memorandum was issued and at the Closing Time, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (iii) Independent Accountants. The accountants who certified the financial statements and supporting schedules included in the Final Memorandum are independent public accountants with respect to the Company and each of its subsidiaries as required by the 1933 Act and the rules and regulations of the Commission thereunder (the "1933 Act Regulations"). (iv) Financial Statements. The financial statements of the Company included in the Final Memorandum, together with the related schedules (if any) and notes, present fairly the financial position of the Company and its consolidated subsidiaries at the dates indicated and the results of operations, changes in shareholders' 3 equity and cash flows of the Company and its consolidated subsidiaries for the periods specified, and the combined financial statements of Ninety Nine Restaurant and Pub ("Ninety Nine") included in the Final Memorandum, together with the related schedules (if any) and notes, present fairly the financial position of Ninety Nine at the dates indicated and the results of operations, changes in shareholders' equity and comprehensive income and cash flows of Ninety Nine for the periods specified on a combined basis, and all such financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved. The supporting schedules, if any, included in the Final Memorandum present fairly in accordance with GAAP the information required to be stated therein. The historical financial data appearing in the Final Memorandum under the captions "Offering Memorandum Summary--Summary Consolidated Financial Information" and "Selected Consolidated Financial Information" present fairly the information shown therein and have been compiled on an accounting basis consistent with that of the audited financial statements of the Company included in the Final Memorandum; and the pro forma financial statements and related notes thereto included in the Final Memorandum, and the pro forma financial information included in the Final Memorandum under the caption "Offering Memorandum Summary--Summary Consolidated Financial Information," have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. (v) No Material Adverse Change in Business. Since the respective dates as of which information is given in the Final Memorandum, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect"), (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise, and (C) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. (vi) Good Standing of the Company. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Tennessee and has power and authority to own, lease and operate its properties and to conduct its business as described in the Final Memorandum and to enter into and perform its obligations under the Operative Documents to which it is or will be a party; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. 4 (vii) Good Standing of Subsidiaries. Each subsidiary of the Company has been duly organized and is validly existing as a corporation, limited partnership, business trust or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its organization, has power and authority to own, lease and operate its properties and to conduct its business as described in the Final Memorandum and to enter into and to perform its obligations under the Operative Documents to which it is or will be a party and is duly qualified as a foreign corporation, limited partnership, business trust or limited liability company, as the case may be, to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; all of the issued and outstanding capital stock of each such subsidiary that is a corporation, all of the issued and outstanding partnership interests of each such subsidiary that is a limited partnership, all of the issued and outstanding trust interests, beneficial interests or other similar interests of each such subsidiary that is a business trust, and all of the issued and outstanding limited liability company interests, membership interests or other similar interests of each such subsidiary that is a limited liability company have been duly authorized and validly issued, are fully paid and, with respect to the capital stock of each subsidiary that is a corporation, non-assessable, and are owned by the Company, directly or through subsidiaries (except in the case of certain subsidiaries, which subsidiaries are accurately identified on Schedule D hereto, in which the Company indirectly owns 94% of the outstanding membership interests and in respect of which the Company or one of its wholly-owned subsidiaries is the manager), free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity, other than liens securing borrowings and other amounts due under the Existing Credit Agreement or, from and after the Closing Time, the Amended and Restated Credit Agreement; and none of the outstanding shares of capital stock, partnerships interests, trust interests, beneficial interests or other similar interests, or limited liability company interests, membership interests or other similar interests of any such subsidiary was issued in violation of any preemptive rights, rights of first refusal or other similar rights of any securityholder of such subsidiary. The only subsidiaries of the Company are the subsidiaries listed on Schedule D hereto and Schedule D accurately sets forth whether each such subsidiary is a corporation, limited partnership, business trust or limited liability company and the jurisdiction of organization of each such subsidiary and, in the case of any subsidiary which is a partnership, its partners, and, in the case of any subsidiary that is not wholly-owned by the Company, directly or through subsidiaries, the percentage ownership interest in such subsidiary that is owned by the Company, directly or through subsidiaries. (viii) Capitalization. The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of capital stock of the Company was issued in violation of any preemptive rights, rights of first refusal or other similar rights of any securityholder of the Company. (ix) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors. 5 (x) Authorization of the Securities. The Securities have been duly authorized by the Company and, at Closing Time, will have been duly executed and delivered by the Company and will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other similar laws affecting enforcement of creditor's rights generally and except as enforcement thereof may be subject to general principles of equity, and will be in the form contemplated by, and entitled to the benefits of, the Indenture; the Exchange Securities have been duly authorized by the Company and, when issued in exchange for a like principal amount of Securities pursuant to the Exchange Offer, will have been duly executed and delivered by the Company and will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof may be subject to general principles of equity, and will be in the form contemplated by, and entitled to the benefits of, the Indenture. (xi) Absence of Defaults and Conflicts. Neither the Company nor any of its subsidiaries is in violation of its Organizational Documents (as defined below) or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, pledge agreement, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries are subject (collectively, "Agreements and Instruments"), except, solely in the case of Specified Agreements and Instruments (as defined below), for such defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance of the Operative Documents and the consummation of the transactions contemplated in the Operative Documents and in the Final Memorandum (including the issuance and sale of the Securities, the issuance of the Guarantees and the use of the proceeds from the sale of the Securities as described in the Final Memorandum under the caption "Use of Proceeds") and compliance by the Company and the Guarantors with their respective obligations under the Operative Documents have been duly authorized by all necessary action, corporate or other, and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, any Agreements and Instruments (except, solely in the case of Specified Instruments and Agreements, for such conflicts, breaches or defaults or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the Organizational Documents of the Company or any of its subsidiaries or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their respective assets, properties or operations. As used herein, "Organizational Documents" means, in the case of a corporation, its charter and by-laws; in the case of a 6 limited or general partnership, (a) its partnership certificate, certificate of formation or similar organizational document and (b) its partnership agreement; in the case of a limited liability company, (c) its articles of organization, certificate of formation or similar organizational document and (d) its operating agreement, limited liability company agreement, membership agreement or other similar agreement; in the case of a business trust, (e) its declaration of trust or similar organizational document and (f) its trust by-laws; and, in the case of any other entity, the organizational documents of such entity; a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries; and "Specified Agreements and Instruments" means all Agreements and Instruments other than (x) indentures, loan or credit agreements, notes, leases, reimbursement agreements, participation agreements and other agreements and instruments relating to or evidencing indebtedness for borrowed money or capital lease agreements that include financial or similar restrictive covenants and (y) mortgages, pledge agreements, deeds of trust or other security agreements or guarantees entered into in connection with or pursuant to any of instruments, agreements and other documents referred to in clause (x) above. (xii) Absence of Labor Dispute. No labor dispute with the employees of the Company or any subsidiary of the Company exists or, to the knowledge of the Company, is imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of the principal suppliers, manufacturers, customers or contractors of the Company or any of its subsidiaries which, in any such case, may reasonably be expected to result in a Material Adverse Effect. (xiii) Absence of Proceedings. There is no action, suit, proceeding, inquiry or investigation before or brought by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company or any of its subsidiaries, which is required to be disclosed in the Final Memorandum or any document incorporated or deemed to be incorporated by reference in the Final Memorandum (other than as disclosed therein), or which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the properties or assets thereof or the consummation of the transactions contemplated in any of the Operative Documents or the performance by the Company or any of the Guarantors of their respective obligations under the Operative Documents; the aggregate of all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or of which any of their respective property or assets is the subject which are not described in the Final Memorandum, including ordinary routine litigation incidental to the business, would not reasonably be expected to result in a Material Adverse Effect. (xiv) Accuracy of Exhibits. There are no contracts or documents that would be required to be described in any document incorporated or deemed to incorporated by reference in the Final Memorandum or to be filed as exhibits to any such documents which have not been so described and filed as required. 7 (xv) Possession of Intellectual Property. Except as described in the Final Memorandum, the Company and its subsidiaries own or possess, or can acquire on reasonable terms, adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names or other intellectual property (collectively, "Intellectual Property") necessary to carry on the business now operated by them, and neither the Company nor any of its subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly or in the aggregate, would result in a Material Adverse Effect. (xvi) Absence of Further Requirements. (A) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, (B) no authorization, approval, vote or other consent of any shareholder of the Company or of any shareholder, limited or general partner or member of, or holder of a trust interest, beneficial interest or other similar interest or a limited liability company interest, membership interest or other similar interest in, any Guarantor, and (C) no authorization, approval, vote or other consent of any other person or entity, is necessary or required for the performance by the Company or any Guarantor of their respective obligations under the Operative Documents, for the offering, issuance, sale or delivery of the Securities or the Guarantees hereunder, or for the consummation of any of the other transactions contemplated by the Operative Documents, except such as may be required under the 1933 Act, the 1933 Act Regulations and the Trust Indenture Act of 1939, as amended (the "1939 Act"), in connection with the performance by the Company and the Guarantors of their respective obligations under the Registration Rights Agreement, such as may be required under state securities laws and the consent to amend the Existing Credit Agreement, which has been obtained. (xvii) Possession of Licenses and Permits. The Company and its subsidiaries possess such permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them; the Company and its subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. 8 (xviii) Title to Property. The Company and its subsidiaries have good and marketable title in fee simple to all real property owned by any of them and good title to all other properties owned by any of them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (a) are described in the Final Memorandum or (b) do not, singly or in the aggregate, materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or its subsidiaries; all real property, buildings and other improvements, and equipment and other property, held under lease or sublease by the Company or any of its subsidiaries is held by them under valid, subsisting and enforceable leases or subleases, as the case may be, with, solely in the case of leases or subleases relating to real property and buildings or other improvements, such exceptions as are not material and do not interfere with the use made or proposed to be made of such property and buildings or other improvements by the Company and its subsidiaries, and all such leases and subleases are in full force and effect; and neither the Company nor any of its subsidiaries has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases or subleases mentioned above or affecting or questioning the rights of the Company or any of its subsidiaries to the continued possession of the leased or subleased premises under any such lease or sublease except for such claims which, if successfully asserted against the Company or any of its subsidiaries, would not singly or in the aggregate have a Material Adverse Effect. (xix) Investment Company Act. Neither the Company nor any Guarantor is, and upon the issuance and sale of the Securities and the Guarantees as herein contemplated and the application of the net proceeds therefrom as described in the Final Memorandum neither the Company nor any Guarantor will be, an "investment company" or an entity "controlled" by an "investment company" as such terms are defined in the Investment Company Act of 1940, as amended (the "1940 Act"). (xx) Environmental Laws. Except as described in the Final Memorandum and except as would not, singly or in the aggregate, result in a Material Adverse Effect, (A) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the Company and its subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against the Company or 9 any of its subsidiaries and (D) there are no events or circumstances that might reasonably be expected to form the basis of an order for clean-up or remediation, or an action, suit or proceeding by any private party or governmental body or agency, against or affecting the Company or any of its subsidiaries relating to Hazardous Materials or any Environmental Laws. (xxi) Absence of Registration Rights. There are no persons with registration rights or other similar rights to have any securities (debt or equity) registered pursuant to any Registration Statement or included in any offering contemplated by the Registration Rights Agreement. (xxii) Indenture. The Indenture has been duly authorized by the Company and each of the Guarantors and, at the Closing Time, will have been duly executed and delivered by the Company and each of the Guarantors and will constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof may be subject to general principles of equity. (xxiii) Guarantees. The Guarantees have been duly authorized by each of the Guarantors and, at the Closing Time, will constitute valid and binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting enforcement of creditors' rights generally (and, solely with respect to Guarantors that are corporations organized under the laws of Tennessee, Section 48-16-401 of the Tennessee Business Corporation Act) and except as enforcement thereof may be subject to general principles of equity, and will be in the form contemplated by, and entitled to the benefits of, the Indenture; the Exchange Guarantees have been duly authorized by each of the Guarantors and, when the Exchange Securities have been issued in exchange for a like principal amount of Securities pursuant to the Exchange Offer, the Exchange Guarantees will constitute valid and binding obligations of each of the Exchange Guarantors, enforceable against each of the Exchange Guarantors in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting enforcement of creditors' rights generally (and, solely with respect to Guarantors that are corporations organized under the laws of Tennessee, Section 48-16-401 of the Tennessee Business Corporation Act) and except as enforcement thereof may be subject to general principles of equity, and will be in the form contemplated by, and entitled to the benefits of, the Indenture. (xxiv) Registration Rights Agreement. The Registration Rights Agreement has been duly authorized by the Company and each of the Guarantors and, at the Closing Time, will have been duly executed and delivered by the Company and each of the Guarantors and will constitute a valid and binding agreement of the Company and each of the Guarantors, enforceable against the Company and each of the Guarantors in 10 accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof may be subject to general principles of equity, and except as rights to indemnity and contribution under the Registration Rights Agreement may be limited by applicable law. (xxv) Description of Operative Documents. The Operative Documents conform and will conform in all material respects to the respective descriptions thereof and statements relating thereto contained in the Final Memorandum. (xxvi) Internal Controls. Each of the Company and its subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management's general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xxvii) Solvency. The Company and each of the Guarantors is, and immediately after the Closing Time will be, Solvent. As used herein, the term "Solvent" means, with respect to the Company or any Guarantor, as the case may be, on any particular date, that on such date (A) the fair market value of the assets of the Company or such Guarantor, as the case may, is greater than the total amount of liabilities (including contingent liabilities) of the Company or such Guarantor, as the case may be, (B) the present fair saleable value of the assets of the Company or such Guarantor, as the case may be, is greater than the amount that will be required to pay the probable liabilities of the Company or such Guarantor, as the case may be, on its debts as they become absolute and matured, (C) the Company or such Guarantor, as the case may be, is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature, and (D) the Company or such Guarantor, as the case may be, does not have unreasonably small capital. (xxviii) Offering Materials. Neither the Company nor any of its subsidiaries nor any of their respective Affiliates (as defined below) has distributed or will distribute any offering material in connection with the offering and sale of the Securities other than copies of the Preliminary Memorandum and Final Memorandum distributed through the Initial Purchasers. (xxix) Similar Offerings. Neither the Company nor any of its subsidiaries nor any of their respective "affiliates," as such term is defined in Rule 501 under the 1933 Act (each, an "Affiliate"), nor any person acting on behalf of the Company or any of its subsidiaries has, directly or indirectly, sold, offered for sale, solicited any offer to buy or otherwise negotiated in respect of, or will sell, offer for sale, solicit any offer to buy or otherwise negotiate in respect of, any security (as defined in the 1933 Act) which 11 is or would be integrated with the sale of the Securities or the Guarantees in a manner that would require the Securities or the Guarantees to be registered under the 1933 Act (it being understood that no representation or warranty is made by the Company and the Guarantors as to the Initial Purchasers and their agents). (xxx) Rule 144A Eligibility. The Securities and the Guarantees are eligible for resale pursuant to Rule 144A and will, when issued, satisfy the requirements set forth in Rule 144A(d)(3) under the 1933 Act. (xxxi) No General Solicitation. Neither the Company nor any of its subsidiaries nor any of their respective Affiliates nor any person acting on behalf of the Company or any of its subsidiaries (it being understood that no representation or warranty is made by the Company and the Guarantors as to the Initial Purchasers and their agents) has engaged or will engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502 under the 1933 Act or in any manner involving a public offering within the meaning of Section 4(2) of the 1933 Act. (xxxii) No Directed Selling Efforts. Neither the Company nor any of its subsidiaries nor any of their respective Affiliates nor any person acting on behalf of the Company or any of its subsidiaries has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the Guarantees, and the Company and its subsidiaries and their respective Affiliates and any person acting on behalf of the Company or any of its subsidiaries has complied, and will comply, with the offering restriction requirements of Regulation S (it being understood that no representation or warranty is made by the Company and the Guarantors as to the Initial Purchasers and their agents). (xxxiii) No Registration Required. Assuming the accuracy of the representations and warranties of the Initial Purchasers in Section 6 and compliance by the Initial Purchasers with the covenants set forth in Section 6, it is not necessary, in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to Subsequent Purchasers in the manner contemplated by this Agreement and the Final Memorandum, to register the Securities or the Guarantees under the 1933 Act or to qualify the Indenture under the 1939 Act. (xxxiv) Usury Laws. None of the Operative Documents is or will be, and no payment by the Company or any of the Guarantors or Exchange Guarantors of any amounts payable under or pursuant to any of the Operative Documents (including, without limitation, any principal, interest or Additional Interest (as defined in the Registration Rights Agreement)) is or will be, subject to any usury law or other limitation on the rate or amount of interest or other amounts payable thereunder or the yield thereon (collectively, "Usury Laws"), or violates, contravenes or breaches, or will violate, contravene or breach, any Usury Laws. (xxxv) Upstream Guarantees. No subsidiary of the Company is a guarantor of, or is a party to or bound by any instruments or agreements pursuant to 12 which it is or may be required to guarantee or cause another subsidiary of the Company to guarantee, any borrowing, bonds, notes, debentures or other indebtedness or lease obligations of the Company, except for the Existing Credit Agreement or, from and after the Closing Time, the Amended and Restated Credit Agreement and the Indenture. The Company is not party to or bound by any instrument or agreement pursuant to which it is or may be required to cause any of its subsidiaries to guarantee any borrowing, bonds, notes, debentures or other indebtedness or lease obligations of the Company, other than the Existing Credit Agreement or, from and after the Closing Time, the Amended and Restated Credit Agreement and the Indenture. (xxxvi) Amended and Restated Credit Agreement. At the Closing Time, the Amended and Restated Credit Agreement will have been duly authorized, executed and delivered by, and will constitute a valid and binding agreement of, the Company and each subsidiary of the Company party thereto, enforceable against the Company and each subsidiary of the Company party thereto in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and except as enforcement thereof may be subject to general principles of equity, all conditions precedent to the effectiveness of the Amended and Restated Credit Agreement, and all conditions precedent to the right of the Company to make borrowings under the Amended and Restated Credit Agreement in the amount contemplated by the Final Memorandum, will have been satisfied or waived. (b) Officer's Certificates. Any certificate signed by any officer of the Company or any of the Guarantors and delivered to the Initial Purchasers or counsel for the Initial Purchasers shall be deemed a joint and several representation and warranty by the Company and the Guarantors to each Initial Purchaser as to the matters covered thereby. SECTION 2. Sale and Delivery to Initial Purchasers; Closing. (a) Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Initial Purchaser, severally and not jointly, and each Initial Purchaser, severally and not jointly, agrees to purchase from the Company, at the price set forth in Schedule C, the principal amount of Securities set forth in Schedule B opposite the name of such Initial Purchaser, plus any additional principal amount of Securities that such Initial Purchaser may become obligated to purchase pursuant to the provisions of Section 11 hereof. (b) Payment. Payment of the purchase price for, and delivery of certificates for, the Securities shall be made at the offices of Sidley Austin Brown & Wood LLP, 787 Seventh Avenue, New York, New York 10019, or at such other place as shall be agreed upon by Wachovia and the Company, at 10:00 A.M. (Eastern time) on November 4, 2003 (unless postponed in accordance with the provisions of Section 11) or such other time not later than ten business days after such date as shall be agreed upon by Wachovia and the Company (such time and date of payment and delivery being herein called "Closing Time"). 13 Payment shall be made to the Company by wire transfer of immediately available funds to a bank account in the State of New York designated by the Company, against delivery to Wachovia of certificates for the Securities to be purchased by the Initial Purchasers. (c) Denominations; Registration. Certificates for the Securities shall be in such denominations ($1,000 or integral multiples of $1,000 in excess thereof) and registered in such names as Wachovia may request in writing at least one full business day before Closing Time. The certificates representing the Securities shall be made available for examination and packaging by the Initial Purchasers in The City of New York not later than 10:00 A.M. Eastern Time on the business day prior to the Closing Time. SECTION 3. Covenants of the Company. The Company and each Guarantor, jointly and severally, covenant with each Initial Purchaser as follows. (a) Amendment to Offering Memorandum and Supplement. During the period beginning on the date of this Agreement through and including the date on which all of the Securities shall have been sold by the Initial Purchasers as evidenced by a notice in writing from Wachovia to the Company, the Company will give the Initial Purchasers notice of its intention to file pursuant to the 1934 Act, or to use or issue, any amendment or supplement to any Memorandum, will furnish the Initial Purchasers with copies of any such document in a reasonable amount of time prior to such proposed filing, use or issuance, as the case may be, and will not file, use or issue any such document to which the Initial Purchasers or counsel for the Initial Purchasers shall object. (b) Delivery of Final Memorandum. The Company, as promptly as possible, will furnish to each Initial Purchaser, without charge, such number of copies of the Final Memorandum and any amendments and supplements thereto and documents incorporated by reference therein as such Initial Purchaser may reasonably request; and the Company and each Guarantor consent to the use of each Memorandum and any amendments or supplements thereto in connection with the offering of the Securities and the Guarantees. (c) Notice and Effect of Material Events. If, during the period beginning on the date of this Agreement through and including the date on which all of the Securities shall have been sold by the Initial Purchasers as evidenced by a notice in writing from Wachovia to the Company, there shall occur any material change in or affecting the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, which makes any statement in the Final Memorandum false or misleading, or if, during such period, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Initial Purchasers or the Company, to amend or supplement the Final Memorandum in order that the Final Memorandum will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a Subsequent Purchaser, the Company will, subject to Section 3(b), promptly prepare and furnish to each Initial Purchaser an amendment or amendments of, or a supplement or supplements to, the Final Memorandum so that, as so amended or supplemented, the Final Memorandum will not include an untrue statement of a material fact or omit to state a 14 material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a Subsequent Purchaser, not misleading. (d) Blue Sky Qualifications. The Company will use its best efforts, in cooperation with the Initial Purchasers, to qualify the Securities and the Guarantees for offering and sale under the applicable securities laws of such states and other jurisdictions (domestic or foreign) as Wachovia may designate and to maintain such qualifications in effect as long as required for the sale of the Securities and the Guarantees; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject. (e) Use of Proceeds. The Company will use the net proceeds received by it from the sale of the Securities in the manner specified in the Final Memorandum under "Use of Proceeds." (f) Restriction on Sale of Securities. During a period of 90 days from the date of this Agreement, the Company and the Guarantors will not, without the prior written consent of Wachovia, directly or indirectly, issue, sell, offer or agree to sell, grant any option for the sale of, or otherwise dispose of, any debt securities of the Company or any securities of the Company that are convertible into, or exchangeable or exercisable for debt securities of the Company, other than the Securities sold to the Initial Purchasers pursuant to this Agreement. (g) Rating of Securities. The Company will use its best efforts to have Standard & Poor's Ratings Services, a division of McGraw Hill, Inc. ("S&P"), and Moody's Investors Service Inc. ("Moody's") to provide their respective credit ratings of the Securities and the Exchange Securities. (h) DTC. The Company will cooperate with the Initial Purchasers and use its best efforts to permit the Securities to be eligible for clearance and settlement through the facilities of DTC. (i) PORTAL Designation. The Company will use its best efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL Market. (j) Reporting Requirements. Until the offering of the Securities is complete as evidenced by a notice in writing from Wachovia to the Company, the Company will file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. (k) Investment Company Act. For so long as any Securities are outstanding, the Company and each of its subsidiaries will conduct its operations in a manner that will not subject the Company or such subsidiary to registration as an investment company under the 1940 Act. 15 SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation of each Memorandum (including financial statements) and of each amendment or supplement thereto, (ii) the word processing, printing and delivery to the Initial Purchasers of any Agreement among Initial Purchasers, and the Operative Documents (excluding the Amended and Restated Credit Agreement) and such other documents as may be required in connection with the offering, purchase, sale, issuance or delivery of the Securities, (iii) the preparation, issuance and delivery of the certificates for the Securities to the Initial Purchasers, including any transfer taxes, any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Initial Purchasers and any charges of DTC in connection therewith, (iv) the fees and disbursements of the counsel, accountants and other advisors to the Company and the Guarantors, (v) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(d) hereof, including filing fees and the reasonable fees and disbursements of counsel for the Initial Purchasers in connection therewith and in connection with the preparation of the Blue Sky Survey and any supplements thereto, (vi) the printing and delivery to the Initial Purchasers of copies of each Memorandum and any amendments or supplements thereto, (vii) the fees and disbursements of the Trustee and of counsel to the Trustee in connection with the Indenture, Securities and Exchange Securities, (viii) the preparation, printing and delivery to the Initial Purchasers of copies of the Blue Sky Survey and any supplements thereto, (ix) fees payable in connection with the rating of the Securities and the Exchange Securities and (x) any fees and expenses payable in connection with the initial and continued designation of the Securities as PORTAL securities. (b) Termination of Agreement. If this Agreement is terminated by Wachovia in accordance with the provisions of Section 5 or Section 10(a)(i) hereof, the Company shall reimburse the Initial Purchasers for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Initial Purchasers. SECTION 5. Conditions of Initial Purchasers' Obligations. The obligations of the several Initial Purchasers hereunder are subject to the accuracy of the representations and warranties of the Company and the Guarantors contained in Section 1 hereof or in certificates of any officer of the Company or any subsidiary of the Company delivered pursuant to the provisions hereof, to the performance by the Company and the Guarantors of their covenants and other obligations hereunder, and to the following further conditions: (a) Opinion of Counsel for Company and the Guarantors. At Closing Time, the Initial Purchasers shall have received the favorable opinion, dated as of Closing Time, of (i) Bass, Berry & Sims PLC, counsel for the Company and the Guarantors that are organized under the laws of Delaware or Tennessee, in form and substance satisfactory to counsel for the Initial Purchasers, to the effect set forth in Exhibit B hereto and to such further effect as counsel to the Initial Purchasers may reasonably request, (ii) Maynard, Cooper & Gale, P.C., special Alabama counsel to the applicable Guarantor, Gorsuch Kirgis LLP, special Colorado counsel to the applicable Guarantor, Seyfarth Shaw LLP, special Georgia counsel to the applicable Guarantor, Foley Hoag LLP, special Massachusetts counsel to the applicable Guarantor, and Downs Rachlin Martin PLLC, 16 special Vermont counsel to the applicable Guarantor, each, in form and substance satisfactory to counsel for the Initial Purchasers, to the effect set forth in Exhibit C hereto and to such further effect as counsel for the Initial Purchasers may reasonably request and (iii) Winston & Strawn LLP, special New York counsel to the Company and the Guarantors, in form and substance satisfactory to counsel for the Initial Purchasers, to the effect set forth in Exhibit D hereto, and to such further effect as counsel for the Initial Purchasers may reasonably request. (b) Opinion of Counsel for the Initial Purchasers. At Closing Time, the Initial Purchasers shall have received the favorable opinions, dated as of Closing Time, of Sidley Austin Brown & Wood LLP, counsel to the Initial Purchasers, and Shearman & Sterling LLP, counsel to the Initial Purchasers, with respect to this Agreement, the Indenture, the Securities, the Registration Rights Agreement, the Final Memorandum and such other matters as the Initial Purchasers may request. In giving such opinions, each such counsel may state that such opinion is limited to matters arising under the laws of the State of New York and the federal laws of the United States of America. (c) Officers' Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Final Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries, considered as one enterprise, whether or not arising in the ordinary course of business, and the Initial Purchasers shall have received a certificate signed by the Chairman, Chief Executive Officer, President or a Vice President of the Company and by the chief financial or chief accounting officer of the Company, and by the Chairman, Chief Executive Officer or President and a Vice President of each Guarantor, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties of the Company and the Guarantors in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, and (iii) the Company and the Guarantors have complied with all agreements and satisfied all conditions on their part to be performed or satisfied at or prior to Closing Time. (d) Accountant's Comfort Letter. At the time of the execution of this Agreement, the Initial Purchasers shall have received from KPMG LLP a letter, dated the date of this Agreement and in form and substance satisfactory to the Initial Purchasers, containing statements and information of the type ordinarily included in accountants' "comfort letters" to Initial Purchasers with respect to the financial statements and certain financial information of the Company and Ninety Nine contained in the Final Memorandum. (e) Bring-down Comfort Letter. At Closing Time, the Initial Purchasers shall have received from KPMG LLP a letter, dated as of Closing Time and in form and substance satisfactory to the Initial Purchasers, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (d) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time. 17 (f) Maintenance of Rating. At Closing Time, the Securities shall be rated at least Ba3 by Moody's and B by S&P, and the Company shall have delivered to the Initial Purchasers a letter dated the Closing Time, from each such rating agency, or other evidence satisfactory to the Initial Purchasers, confirming that the Securities have such ratings; and since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any of the Company's other debt securities by any "nationally recognized statistical rating agency," as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such securities rating agency shall have publicly announced that it has under surveillance or review, with possible negative implications or with no indication of the direction of possible change, its rating of the Securities or any of the Company's other debt securities. (g) PORTAL. At Closing Time, the Securities shall have been designated for trading on PORTAL. (h) Amended and Restated Credit Agreement. At Closing Time, the Amended and Restated Credit Agreement shall have been duly executed and delivered by the parties thereto and the Initial Purchasers shall have received a copy of a fully executed counterpart thereof; and, contemporaneously with the issuance of the Securities, the Company shall have made borrowings under the Amended and Restated Credit Agreement in the amount contemplated by the Final Memorandum. (i) Additional Documents. At Closing Time, counsel for the Initial Purchasers shall have been furnished with such other documents and opinions as they may require for the purpose of enabling them to pass upon the issuance and sale of the Securities and the Guarantees as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, contained in this Agreement; and all proceedings taken by the Company and the Guarantors in connection with the issuance and sale of the Securities and the Guarantees as herein contemplated and in connection with the other transactions contemplated by this Agreement shall be satisfactory in form and substance to Wachovia and counsel for the Initial Purchasers. (j) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by Wachovia by notice to the Company at any time at or prior to Closing Time, as the case may be, and such termination shall be without liability of any party to any other party except as provided in Section 4 and except that Sections 1, 7, 8 and 9 shall survive any such termination and remain in full force and effect. SECTION 6. Offers and Resales of the Securities. (a) Each Initial Purchaser, severally and not jointly, represents and warrants to the Company that such Initial Purchaser is a "qualified institutional buyer" as defined in Rule 144A under the 1933 Act (a "QIB"). Each Initial Purchaser, severally and not jointly, represents and warrants to, and agrees with, the Company that (i) it has not solicited and will not solicit offers for, and has not offered or sold and will not offer or 18 sell, the Securities or the Guarantees by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the 1933 Act) or in any manner involving a public offering within the meaning of Section 4(2) of the 1933 Act and (ii) it has not offered or sold and will not offer or sell any Securities or Guarantees except to persons that it reasonably believes to be (A) QIBs or (B) in the case of offers outside the United States to persons other than U.S. persons ("foreign purchasers," which term shall include any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a non-U.S. person by a dealer or other professional fiduciary organized, incorporated or (if an individual) resident in the United States acting on a discretionary basis) in reliance upon Regulation S that, in each case, in purchasing the Securities are deemed to have represented and agreed as provided in the Final Memorandum under the caption "Notice to Investors." (b) Each Initial Purchaser, severally and not jointly, represents and warrants to, and agrees with, the Company that, with respect to offers and sales of Securities and Guarantees outside the United States: (i) such Initial Purchaser understands that no action has been or will be taken in any jurisdiction by the Company or any Guarantor that would permit a public offering of the Securities or the Guarantees, or possession or distribution of the Preliminary Memorandum or the Final Memorandum or any other offering or publicity material relating to the Securities or the Guarantees, in any country or jurisdiction where action for that purpose is required; (ii) such Initial Purchaser will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or distributes the Preliminary Memorandum or the Final Memorandum or any such other material, in all cases at its own expense; (iii) such Initial Purchaser understands that the Securities and the Guarantees have not been registered under the 1933 Act and agrees that the Securities and the Guarantees may not be offered or sold within the United States to, or for the account or benefit of, U.S. persons except in accordance with Rule 144A or pursuant to another exemption from the registration requirements of the 1933 Act; (iv) such Initial Purchaser has offered the Securities and the Guarantees and will offer and sell the Securities and the Guarantees (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering and the Closing Time, only in accordance with Rule 903 of Regulation S or pursuant to another available exception from the registration requirements of the 1933 Act as permitted in Section 6(a); accordingly, neither such Initial Purchaser nor any of its Affiliates nor any persons acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities or the Guarantees, and such Initial Purchaser, its Affiliates and any such persons 19 have complied and will comply with the offering restrictions requirements of Regulation S; (v) such Initial Purchaser (A) has not offered or sold and, prior to the expiry of a period of six months from the Closing Time, will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995 (as amended); (B) has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act (the "FSMA")) received by it in connection with the issue or sale of any Securities in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and (C) has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to such Securities in, from or otherwise involving the United Kingdom; (vi) such Initial Purchaser agrees that, at or prior to confirmation of sales of the Securities, it will have sent to each distributor, dealer (as defined in Section 2(a)(12) of the 1933 Act) or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the 40-day distribution compliance period (as defined in Regulation S) a confirmation or notice to substantially the following effect: "The securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S"; (vii) without limitation of the other agreements of such Initial Purchaser set forth herein, such Initial Purchaser agrees that all offers and sales of the Securities prior to the expiration of the 40-day distribution compliance period under Regulation S shall be made only in accordance with the provisions of Section 903 or 904 of Regulation S, pursuant to registration of the Securities and the Guarantees under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act. 20 As used in this Section 6, the terms "offering restrictions", "U.S. person", and "United States" have the respective meanings given to them by Regulation S. (c) The Company and the Guarantors, jointly and severally, covenant with each Initial Purchaser as follows: (i) Neither the Company nor any of its subsidiaries nor any of their respective Affiliates will, directly or through any agent (it being understood that no covenant is made by the Company and the Guarantors with respect to the Initial Purchasers and their agents), sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the 1933 Act) that could be integrated with the sale of the Securities or the Guarantees in a manner that would require registration of the Securities or the Guarantees under the 1933 Act. (ii) Neither the Company nor any of its subsidiaries nor any of their respective Affiliates will solicit any offer to buy or offer or sell any of the Securities or Guarantees by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the 1933 Act) or in any manner involving a public offering within the meaning of Section 4(2) of the 1933 Act. (iii) While any of the Securities or Guarantees remain "restricted securities" within the meaning of Rule 144 under the 1933 Act, the Company and the Guarantors will make available, promptly upon request, to any holder or beneficial owner of such Securities and any prospective purchaser designated by such holder or beneficial owner, the information specified in Rule 144A(d)(4) under the 1933 Act, unless the Company and all of the then guarantors of the Securities are subject to Section 13 or 15(d) of the 1934 Act. (iv) None of the Company nor any of its subsidiaries nor any their respective Affiliates nor any person acting on its or their behalf (it being understood that no covenant is made by the Company and the Guarantors with respect to the Initial Purchasers and their agents) will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities or the Guarantees, and the Company and its subsidiaries and their respective Affiliates and each person acting on its or their behalf (it being understood that no covenant is made by the Company and the Guarantors with respect to the Initial Purchasers and their agents) will comply with the offering restrictions requirement of Regulation S. (v) So long as any of the Securities or Guarantees are "restricted securities" (as defined in Rule 144 under the 1933 Act), the Company and the Guarantors will not resell or otherwise transfer, and will not permit any of their respective subsidiaries or other Affiliates to resell or otherwise transfer, any of the Securities that have been reacquired by any of them. SECTION 7. Indemnification. (a) Indemnification of Initial Purchasers. The Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser and each person, if 21 any, who controls any Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Memorandum or the Final Memorandum (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 7(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by Wachovia), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Initial Purchaser through Wachovia expressly for use in the Preliminary Memorandum or the Final Memorandum (or any amendment or supplement thereto); and provided, further, that this indemnity agreement with respect to the Preliminary Memorandum shall not inure to the benefit of any Initial Purchaser from whom the person asserting any such losses, liabilities, claims, damages or expenses purchased Securities, or any person controlling such Initial Purchaser, if a copy of the Final Memorandum (as then amended or supplemented if the Company shall have furnished any such amendments or supplements thereto, but excluding documents incorporated or deemed to be incorporated by reference therein) was not sent or given by or on behalf of such Initial Purchaser to such person, if such is required by law, at or prior to the written confirmation of the sale of such Securities to such person and if the Final Memorandum (as so amended or supplemented, if applicable) would have corrected the defect giving rise to such loss, liability, claim, damage or expense, except that this proviso shall not be applicable if such defect shall have been corrected in a document which is incorporated or deemed to be incorporated by reference in the Final Memorandum. (b) Indemnification of Company and Guarantors. Each Initial Purchaser severally agrees to indemnify and hold harmless the Company, each Guarantor and each person, if any, 22 who controls the Company or any Guarantor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section 7, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Preliminary Memorandum or Final Memorandum (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Initial Purchaser through Wachovia expressly for use in the Preliminary Memorandum or Final Memorandum (or any amendment or supplement thereto). (c) Actions Against Parties; Notification. Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. In the case of parties indemnified pursuant to Section 7(a) above, counsel to the indemnified parties shall be selected by Wachovia, and, in the case of parties indemnified pursuant to Section 7(b) above, counsel to the indemnified parties shall be selected by the Company. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 7 or Section 8 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) Settlement Without Consent if Failure to Reimburse. If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 7(a)(ii) effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least 30 days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. The obligations of the Company and the Guarantors under this paragraph are joint and several. 23 SECTION 8. Contribution. If the indemnification provided for in Section 7 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Initial Purchasers on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantors on the one hand and of the Initial Purchasers on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Initial Purchasers on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Company and the Guarantors and the total discounts and commissions received by the Initial Purchasers, in each case as set forth in Schedule C hereto, bear to the aggregate initial offering price of the Securities as set forth on Schedule C hereto. The relative fault of the Company and the Guarantors on the one hand and the Initial Purchasers on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or any of the Guarantors or by the Initial Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, each Guarantor and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Initial Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 8, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Securities purchased by it pursuant to this Agreement and distributed to investors were offered to investors exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. 24 No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person, if any, who controls an Initial Purchaser within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as such Initial Purchaser, and each person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The Initial Purchasers' respective obligations to contribute pursuant to this Section 8 are several in proportion to the principal amount of Securities set forth opposite their respective names in Schedule B hereto and not joint. The obligations of the Company and the Guarantor to contribute pursuant to this Section 8 are joint and several. SECTION 9. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company or any of its subsidiaries submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Initial Purchaser or controlling person, or by or on behalf of the Company or any of the Guarantors, and shall survive delivery of the Securities to the Initial Purchasers. SECTION 10. Termination of Agreement. (a) Termination; General. Wachovia may terminate this Agreement, by notice to the Company, at any time at or prior to Closing Time (i) if there has been, since the time of execution of this Agreement or since the respective dates as of which information is given in the Final Memorandum, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or the international financial markets, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development involving a prospective change in national or international political, financial or economic conditions, in each case the effect of which is such as to make it, in the judgment of Wachovia, impracticable or inadvisable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in any securities of the Company has been suspended or materially limited by the Commission or the Nasdaq Stock Market's National Market, or if trading generally on the American Stock Exchange or the New York Stock Exchange or in the Nasdaq Stock Market's National Market has been suspended or materially limited, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices have been required, by any of said exchanges or by such system or by order of the Commission, the National Association of Securities Dealers, Inc. or any other governmental authority, or (iv) if a banking moratorium has been declared by either Federal or New York authorities. (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in 25 Section 4 hereof, and provided further that Sections 1, 7, 8 and 9 shall survive such termination and remain in full force and effect. SECTION 11. Default by One of the Initial Purchasers. If one of the Initial Purchasers shall fail at Closing Time to purchase the Securities that it is obligated to purchase under this Agreement (the "Defaulted Securities"), Wachovia shall have the right, within 24 hours thereafter, to make arrangements for the non-defaulting Initial Purchaser, or any other initial purchasers, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, Wachovia shall not have completed such arrangements within such 24-hour period, then: (a) if the number of Defaulted Securities does not exceed 10% of the aggregate principal amount of Securities to be purchased on such date, the non-defaulting Initial Purchaser shall be obligated to purchase the full amount thereof, or (b) if the number of Defaulted Securities exceeds 10% of the aggregate principal amount of Securities to be purchased hereunder, this Agreement shall terminate without liability on the part of the non-defaulting Initial Purchaser. No action taken pursuant to this Section shall relieve any defaulting Initial Purchaser from liability in respect of its default. In the event of any such default that does not result in a termination of this Agreement, either Wachovia or the Company shall have the right to postpone Closing Time for a period not exceeding seven days in order to effect any required changes in the Final Memorandum or in any other documents or arrangements. As used herein, the term "Initial Purchaser" includes any person substituted for an Initial Purchaser under this Section 11. SECTION 12. Tax Disclosure. Notwithstanding any other provision of this Agreement, immediately upon commencement of discussions with respect to the transactions contemplated hereby, the Company and each Guarantor (and each employee, the Initial Purchasers or other agent of the Company and such Guarantor) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to the Company and such Guarantor relating to such tax treatment and tax structure. For purposes of the foregoing, the term "tax treatment" is the purported or claimed federal income tax treatment of the transactions contemplated hereby, and the term "tax structure" includes any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transactions contemplated hereby. SECTION 13. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to any Initial Purchaser shall be directed to it c/o Wachovia Capital Markets, LLC, 12 East 49th Street, New York, New York 10017, attention High Yield Capital Markets; and notices to the Company and the Guarantors shall be directed to it at 3038 Sidco Drive, Nashville, Tennessee 37204, attention of Chief Financial Officer. 26 SECTION 14. Parties. This Agreement shall inure to the benefit of and be binding upon the Initial Purchasers, the Guarantors and the Company and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Initial Purchasers, the Guarantors and the Company and their respective successors and the controlling persons referred to in Sections 7 and 8, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Initial Purchasers and the Company, the Guarantors and their respective successors, and said controlling persons, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Initial Purchaser shall be deemed to be a successor by reason merely of such purchase. SECTION 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 16. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof. [SIGNATURE PAGE FOLLOWS] 27 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company and the Guarantors a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Initial Purchasers, the Company and the Guarantors in accordance with its terms. Very truly yours, O'CHARLEY'S INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Chief Financial Officer, Secretary and Treasurer AIR TRAVEL SERVICES, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer DFI, INC. By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S FINANCE COMPANY, INC. By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S MANAGEMENT COMPANY, INC. By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer 28 O'CHARLEY'S RESTAURANT PROPERTIES, LLC By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary O'CHARLEY'S SERVICE COMPANY, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S SPORTS BAR, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: President OCI, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer OPI, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer 99 COMMISSARY, LLC By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary 29 99 RESTAURANTS, LLC By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS OF BOSTON, LLC By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS OF MASSACHUSETTS, A MASSACHUSETTS BUSINESS TRUST By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer 99 RESTAURANTS OF VERMONT, LLC By: 99 WEST, INC., its Sole Member By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Clerk and Treasurer 99 WEST, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Clerk and Treasurer STONEY RIVER MANAGEMENT COMPANY, INC. By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer 30 STONEY RIVER LEGENDARY MANAGEMENT, L.P. By: STONEY RIVER, LLC, its General Partner By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary STONEY RIVER, LLC By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary CONFIRMED AND ACCEPTED, as of the date first above written: WACHOVIA CAPITAL MARKETS, LLC By: /s/ --------------------------------- Authorized Signatory MORGAN JOSEPH & CO. INC. By: /s/ --------------------------------- Authorized Signatory 31 SCHEDULE A List of Guarantors 1. Air Travel Services, Inc., a Tennessee corporation 2. DFI, Inc., a Tennessee corporation 3. O'Charley's Finance Company, Inc., a Tennessee corporation 4. O'Charley's Management Company, Inc., a Tennessee corporation 5. O'Charley's Restaurant Properties, LLC, a Delaware limited liability company 6. O'Charley's Service Company, Inc., a Tennessee corporation 7. O'Charley's Sports Bar, Inc., an Alabama corporation 8. OCI, Inc., a Delaware corporation 9. OPI, Inc., a Colorado corporation 10. 99 Commissary, LLC, a Delaware limited liability company 11. 99 Restaurants, LLC, a Delaware limited liability company 12. 99 Restaurants of Boston, LLC, a Delaware limited liability company 13. 99 Restaurants of Massachusetts, a Massachusetts Business Trust 14. 99 Restaurants of Vermont, LLC, a Vermont limited liability company 15. 99 West, Inc., a Massachusetts corporation 16. Stoney River Management Company, Inc., a Delaware corporation 17. Stoney River Legendary Management, L.P., a Georgia limited partnership 18. Stoney River, LLC, a Delaware limited liability company Sch A-1 SCHEDULE B
Name of Initial Purchasers: Principal Amount of Securities: - -------------------------- ------------------------------ Wachovia Capital Markets, LLC $113,000,000 Morgan Joseph & Co. Inc. $ 12,000,000 ------------ Total: $125,000,000
Sch B-1 SCHEDULE C 1. The initial offering price of the Securities shall be 100% of the principal amount thereof, plus accrued interest, if any, from November 4, 2003. 2. The purchase price to be paid by the Initial Purchasers for the Securities shall be 98.318% of the principal amount thereof. 3. For purposes of the second paragraph of Section 8 of the Purchase Agreement to which this Schedule C is attached, the total net proceeds from the offering of the Securities are $122,897,500, the total discounts and commissions received by the Initial Purchasers are $2,102,500 and the aggregate initial offering price of the Securities is $125,000,000. Sch C-1 SCHEDULE D Subsidiaries of the Company
Name Jurisdiction of Organization Type of Entity ---- ---------------------------- -------------- Air Travel Services, Inc. Tennessee Corporation DFI, Inc. Tennessee Corporation O'Charley's Finance Company, Inc. Tennessee Corporation O'Charley's Management Company, Inc. ("OCMC") Tennessee Corporation O'Charley's Restaurant Properties, LLC Delaware Limited Liability Company O'Charley's Service Company, Inc. Tennessee Corporation O'Charley's Sports Bar, Inc. Alabama Corporation OCI, Inc. Delaware Corporation OPI, Inc. Colorado Corporation Stoney River, LLC Delaware Limited Liability Company Stoney River Legendary Management, L.P. Georgia Limited Partnership ("Stoney River") Stoney River Management Company, Inc. ("SRMC") Delaware Corporation SRLS LLC 5001* Delaware Limited Liability Company SRLS LLC 5002* Delaware Limited Liability Company SRLS LLC 5003* Delaware Limited Liability Company SRLS LLC 5004* Delaware Limited Liability Company SRLS LLC 5005 Delaware Limited Liability Company SRLS LLC 5006* Delaware Limited Liability Company
- ----------------------- * The Company owns, directly or through wholly-owned subsidiaries, a 94% membership interest in each of these subsidiaries and the Company or one of its wholly-owned subsidiaries is the manager of each of these subsidiaries. Sch D-1 99 Commissary, LLC Delaware Limited Liability Company 99 Restaurants of Massachusetts, a Massachusetts Massachusetts Business Trust Massachusetts Business Trust 99 Restaurants of Vermont, LLC Vermont Limited Liability Company 99 Restaurants, LLC Delaware Limited Liability Company 99 Restaurants of Boston, LLC Delaware Limited Liability Company 99 West, Inc. Massachusetts Corporation

~~Sch D-2~~ EX-10.2 4 g85963exv10w2.txt EX-10.2 REGISTRATION RIGHTS AGREEMENT Exhibit 10.2 EXECUTION COPY O'Charley's Inc. $125,000,000 9% Senior Subordinated Notes due 2013 REGISTRATION RIGHTS AGREEMENT November 4, 2003 Wachovia Capital Markets, LLC Morgan Joseph & Co. Inc. c/o Wachovia Capital Markets, LLC 12 East 49th Street 44th Floor New York, New York 10017 Ladies and Gentlemen: O'Charley's Inc., a Tennessee corporation (the "Company"), and the Company's subsidiaries listed on Schedule I hereto (the "Guarantors") confirm their agreement with Wachovia Capital Markets, LLC ("Wachovia") and Morgan Joseph & Co. Inc. (together with Wachovia, the "Initial Purchasers") on the terms set forth herein. This agreement (the "Registration Rights Agreement" or this "Agreement") is being entered into in connection with a certain note purchase agreement, dated October 30, 2003, by and among the Company, the Guarantors and the Initial Purchasers (the "Purchase Agreement"), which provides for the issuance and sale by the Company to the Initial Purchasers of $125,000,000 aggregate principal amount of the Company's 9% Senior Subordinated Notes due 2013 (the "Notes") to be unconditionally guaranteed on an unsecured senior subordinated basis by the Guarantors (the "Note Guarantees"). In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company and the Guarantors have agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchasers and their direct and indirect transferees. The parties hereby agree as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Additional Interest" has the meaning set forth in Section 4 hereto. "Affiliate" means, with respect to any specified person, any other person that, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agreement" has the meaning set forth in the preamble hereto. "Business Day" means any day excluding Saturday, Sunday or any other day which is a legal holiday under the laws of the City of New York, New York or is a day on which banking institutions therein located are authorized or required by law or other governmental action to close. "Commission" means the Securities and Exchange Commission. "Consummate" means, with respect to a Registered Exchange Offer, the occurrence of (a) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Registered Exchange Offer, (b) the maintenance of such Registration Statement continuously effective and the keeping of the Registered Exchange Offer open for a period not less than the minimum period required pursuant to Section 2(c)(ii) hereof, (c) the Company's acceptance for exchange of all Transfer Restricted Notes duly tendered and not validly withdrawn pursuant to the Registered Exchange Offer and (d) the delivery of Exchange Notes by the Company to the registrar under the Indenture in the same aggregate principal amount as the aggregate principal amount of Transfer Restricted Notes duly tendered and not validly withdrawn by Holders thereof pursuant to the Registered Exchange Offer and the delivery of such Exchange Notes to such Holders. The term "Consummation" has a meaning correlative to the foregoing. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Exchange Notes" means debt securities of the Company, guaranteed by the Guarantors, substantially identical in all material respects to the Notes other than issue date (except that the Additional Interest provisions and the transfer restrictions pertaining to the Notes will be modified or eliminated, as appropriate), to be issued under the Indenture in connection with the Registered Exchange Offer. "Exchange Offer Registration Period" means the 180-day period following the Consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement or during which the Company has suspended the use of the Prospectus contained therein pursuant to Section 2(d); provided, however, that in the event that all resales of Exchange Notes (including, subject to the time periods set forth herein, any resales by Participating Broker-Dealers) covered by such Exchange Offer Registration Statement have been made, the Exchange Offer Registration Statement need not thereafter remain continuously effective for such period. "Exchange Offer Registration Statement" means a registration statement of the Company and the Guarantors on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Filing Date" has the meaning set forth in Section 2 hereto. "Holder" means any holder from time to time of Transfer Restricted Notes or Exchange Notes (including any of the Initial Purchasers). "Indenture" means the indenture relating to the Notes and the Exchange Notes, dated as of November 4, 2003, among the Company, the Guarantors and The Bank of New York, trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof. "Initial Purchasers" has the meaning set forth in the preamble hereto. "Issue Date" means November 4, 2003. "Losses" has the meaning set forth in Section 8(d) hereto. "Majority Holders" means the Holders of a majority of the aggregate principal amount of Transfer Restricted Notes registered under a Registration Statement. "Managing Underwriters" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering under a Shelf Registration Statement. "Notes" has the meaning set forth in the preamble hereto. "Participating Broker-Dealer" means any Holder (which may include any of the Initial Purchasers) that is a broker-dealer electing to exchange Notes acquired for its own account as a result of market-making activities or other trading activities for Exchange Notes. "Private Exchange Notes" has the meaning set forth in Section 2(g) hereof. "Prospectus" means the prospectus included in any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act or any similar rule that may be adopted by the Commission), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Transfer Restricted Notes covered by such Registration Statement, and all amendments and supplements to the Prospectus. "Purchase Agreement" has the meaning set forth in the preamble hereto. "Registered Exchange Offer" means the proposed offer to the Holders to issue and deliver to such Holders, in exchange for the Notes, a like aggregate principal amount of Exchange Notes. "Registration Statement" means any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Transfer Restricted Notes (including the Note Guarantee) pursuant to the provisions of this Agreement, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto, and all material incorporated by reference therein. "Shelf Registration" means a registration of Transfer Restricted Notes with the Commission effected pursuant to Section 3 hereof. "Shelf Registration Period" has the meaning set forth in Section 3(c) hereof. "Shelf Registration Statement" means a "shelf" registration statement of the Company and the Guarantors filed pursuant to the provisions of Section 3 hereof, which covers some or all of the Transfer Restricted Notes, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, and which may be in the format of an amendment to the Exchange Offer Registration Statement if permitted by the Commission, all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Transfer Restricted Notes" means each Note upon original issuance thereof and at all times subsequent thereto, each Private Exchange Note as to which Section 3(a)(iii) or Section 3(a)(iv) applies upon original issuance and at all times subsequent thereto, until in the case of any such Note or Exchange Note, as the case may be, the earliest to occur of (i) the date on which such Note has been exchanged by a person other than a Participating Broker-Dealer for an Exchange Note (other than with respect to an Exchange Note as to which Section 3(a)(iii) or Section 3(a)(iv) apply), (ii) with respect to Exchange Notes received by Participating Broker-Dealers in the Registered Exchange Offer, the date on which such Exchange Note has been sold by such Participating Broker-Dealer by means of the Prospectus contained in the Exchange Offer Registration Statement, (iii) a Shelf Registration Statement covering such Note or Exchange Note, as the case may be, has been declared effective by the Commission and such Note or Exchange Note, as the case may be, has been disposed of in accordance with such effective Shelf Registration Statement, (iv) the date on which such Note or Exchange Note, as the case may be, can be sold without any limitations under Rule 144 under the Act or any similar rule that may be adopted by the Commission, (v) the date on which such Note or Exchange is transferred to the public pursuant to Rule 144 under the Act or (vi) such Note or Exchange Note, as the case may be, ceases to be outstanding for purposes of the Indenture. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. "Trustee" means the trustee with respect to the Notes or Exchange Notes, as applicable, under the Indenture. 2. Registered Exchange Offer; Resales of Exchange Notes by Participating Broker-Dealers; Private Exchange. (a) The Company and the Guarantors shall prepare and, not later than 90 days from the Issue Date (or, if such 90th day is not a Business Day, by the first Business Day thereafter), shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer (the date of such filing hereinafter referred to as the "Filing Date"). The Company and the Guarantors shall use their reasonable best efforts (i) to cause the Exchange Offer Registration Statement to be declared effective under the Act within 180 days from the Issue Date (or, if such 180th day is not a Business Day, by the first Business Day thereafter), and (ii) to Consummate the Registered Exchange Offer within 210 days from the Issue Date (or, if such 210th day is not a Business Day, by the first Business Day thereafter). (b) The objective of such Registered Exchange Offer is to enable each Holder electing to exchange Transfer Restricted Notes for Exchange Notes (assuming that such Holder (x) is not an "affiliate" of the Company or the Guarantors within the meaning of the Act, (y) is not a broker-dealer that acquired the Transfer Restricted Notes in a transaction other than as a part of its market-making or other trading activities and (z) if such Holder is not a broker-dealer, acquires the Exchange Notes in the ordinary course of such Holder's business, is not participating in the distribution of the Exchange Notes and has no arrangements or intentions with any person to make a distribution of the Exchange Notes) to resell such Exchange Notes from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company and the Guarantors that at the time of the Consummation of the Registered Exchange Offer each of the items listed in subsections (x), (y) and (z) of this Section 2(b) is true. (c) In connection with the Registered Exchange Offer, the Company and the Guarantors shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (ii) keep the Registered Exchange Offer open for acceptance for not less than 20 Business Days (or longer if required by applicable law) after the date notice thereof is mailed to Holders; (iii) permit Holders to withdraw tendered Notes at any time prior to 5:00 p.m. New York City time on the last Business Day on which the Registered Exchange Offer shall remain open; (iv) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, the City of New York; and (v) comply in all material respects with all applicable laws relating to the Registered Exchange Offer. (d) The Company and the Guarantors may suspend the use of the Prospectus for a period not to exceed 30 days in any six-month period or an aggregate of 45 days in any twelve-month period for valid business reasons (not including avoidance of their obligations hereunder) or to avoid premature public disclosure of a pending corporate transaction, including pending acquisitions or divestitures of assets, mergers and combinations and similar events; provided that (i) the Company and the Guarantors promptly thereafter comply with the requirements of Section 5(k) hereof, if applicable, (ii) the Exchange Offer Registration Period shall be extended by the number of days during which such Registration Statement was not effective or usable pursuant to the foregoing provisions and (iii) the Additional Interest shall accrue on the Notes as provided in Section 4 hereof. (e) As soon as practicable after the Consummation of the Registered Exchange Offer, the Company and the Guarantors shall: (i) accept for exchange all the Notes validly tendered and not withdrawn pursuant to the Registered Exchange Offer; (ii) deliver to the Trustee for cancellation all of the Notes so accepted for exchange; and (iii) cause the Trustee promptly to authenticate and deliver to each Holder Exchange Notes equal in principal amount to the Transfer Restricted Notes of such Holder so accepted for exchange. (f) The Initial Purchasers, the Company and the Guarantors acknowledge that, pursuant to interpretations by the staff of the Commission of Section 5 of the Act, and in the absence of an applicable exemption therefrom, each Participating Broker-Dealer is required to deliver a Prospectus in connection with a sale of any Exchange Notes received by such Participating Broker-Dealer pursuant to the Registered Exchange Offer in exchange for Transfer Restricted Notes acquired for its own account as a result of market-making activities or other trading activities. Accordingly, the Company and the Guarantors will allow Participating Broker-Dealers and other persons, if any, with similar prospectus delivery requirements to use the Prospectus contained in the Exchange Offer Registration Statement during the Exchange Offer Registration Period in connection with the resale of such Exchange Notes and shall: (i) include the information set forth in (a) Annex A hereto on the cover of the Prospectus forming a part of the Exchange Offer Registration Statement; (b) Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Registered Exchange Offer; (c) Annex C hereto in the plan of distribution section of the Prospectus forming a part of the Exchange Offer Registration Statement, and (d) Annex D hereto in the letter of transmittal delivered pursuant to the Registered Exchange Offer; and (ii)use reasonable best efforts to keep the Exchange Offer Registration Statement continuously effective (subject to Section 2(d)) under the Act during the Exchange Offer Registration Period for delivery of the Prospectus included therein by Participating Broker-Dealers in connection with sales of Exchange Notes received pursuant to the Registered Exchange Offer, as contemplated by Section 5(h) below. (g) In the event that any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Transfer Restricted Notes constituting any portion of an unsold allotment, upon the effectiveness of the Shelf Registration Statement as contemplated by Section 3 hereof and at the request of such Initial Purchaser, the Company and the Guarantors shall issue and deliver to such Initial Purchaser, or to the party purchasing Transfer Restricted Notes registered under the Shelf Registration Statement from such Initial Purchaser, in exchange for such Transfer Restricted Notes, a like principal amount of Exchange Notes to the extent permitted by applicable law (the "Private Exchange Notes"). The Company and the Guarantors shall use their reasonable best efforts to cause the CUSIP Service Bureau to issue the same CUSIP number for such Private Exchange Notes as for Exchange Notes issued pursuant to the Registered Exchange Offer. 3. Shelf Registration. (a) If (i) the Company and the Guarantors are not permitted to file the Exchange Offer Registration Statement or to Consummate the Registered Exchange Offer because the Registered Exchange Offer is not permitted by applicable law or Commission policy, (ii) for any other reason the Registered Exchange Offer is not Consummated within 210 days (or if such 210th day is not a Business Day, by the first Business Day thereafter) of the Issue Date, (iii) an Initial Purchaser so requests with respect to Notes acquired by it directly from the Company or one of its Affiliates, which have not been resold on or prior to the 30th day (or if such 30th day is not a Business Day, by the first Business Day thereafter) following the Consummation of the Registered Exchange Offer, (iv) any Holder notifies the Company and the Guarantors on or prior to the 30th day (or if such 30th day is not a Business Day, by the first Business Day thereafter) following the Consummation of the Registered Exchange Offer that (A) such Holder is not eligible to participate in the Registered Exchange Offer, due to applicable law or Commission policy, (B) such Holder is a Participating Broker-Dealer that cannot publicly resell the Exchange Notes that it acquires in the Registered Exchange Offer without delivering a Prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for resales following the completion of the Registered Exchange Offer, or (C) the Holder is a broker-dealer and owns Notes it has not exchanged and that it acquired directly from the Company or one of its Affiliates, or (v) in the case where an Initial Purchaser participates in the Registered Exchange Offer or acquires Private Exchange Notes pursuant to Section 2(g) hereof, such Initial Purchaser does not receive freely tradable Exchange Notes in exchange for Notes constituting any portion of an unsold allotment and such Initial Purchaser notifies the Company and the Guarantors on or prior to the 30th day following the Consummation of the Registered Exchange Offer (it being understood that, for purposes of this Section 3, (x) the requirement that the Initial Purchaser deliver a Prospectus containing the information required by Items 507 and/or 508 of Regulation S-K under the Act in connection with sales of Exchange Notes acquired in exchange for such Transfer Restricted Notes shall result in such Exchange Notes being not "freely tradable" and (y) the requirement that a Participating Broker-Dealer deliver a Prospectus in connection with sales of Exchange Notes acquired in the Registered Exchange Offer in exchange for Transfer Restricted Notes acquired as a result of market-making activities or other trading activities shall not result in such Exchange Notes being not "freely tradable"), the following provisions shall apply: (b) The Company and the Guarantors shall use their reasonable best efforts to prepare and file with the Commission a Shelf Registration Statement prior to the 30th day (or if such 30th day is not a Business Day, by the first Business Day thereafter) following the earliest to occur of (i) the date on which the Company and the Guarantors determine that they are not permitted to file the Exchange Offer Registration Statement or to Consummate the Exchange Offer; (ii) 30 days (or if such 30th day is not a Business Day, by the first Business Day thereafter) after the Exchange Offer Registration Statement has been declared effective if the Registered Exchange Offer has not been Consummated by such date and (iii) the date notice is given pursuant to Section (a)(iii), (iv) or (v) above (or if either such 30th day is not a Business Day, by the first Business Day thereafter), and shall use their reasonable best efforts to cause the Shelf Registration Statement to be declared effective by the Commission within 60 days after the Company and the Guarantors become obligated to file the Shelf Registration Statement (or if such 60th day is not a Business Day, by the first Business Day thereafter). With respect to Exchange Notes received by any of the Initial Purchasers in exchange for Notes constituting any portion of an unsold allotment, the Company and the Guarantors may, if permitted by current interpretations by the Commission's staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Regulation S-K Items 507 and/or 508, as applicable, in satisfaction of their obligations under this paragraph (b) with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. (c) The Company and the Guarantors shall use their reasonable best efforts to keep such Shelf Registration Statement continuously effective (subject to Section 3(d)) in order to permit the Prospectus forming a part thereof to be usable by Holders until the earliest of (i) such time as the Notes or Exchange Notes covered by the Shelf Registration Statement can be sold without any limitations under Rule 144(k) of the Securities Act or similar rule adopted by the Commission and (ii) such date as of which all the Transfer Restricted Notes have been sold pursuant to the Shelf Registration Statement (in any such case, such period being called the "Shelf Registration Period"). The Company and the Guarantors shall be deemed not to have used their reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period if they voluntarily take any action that would result in Holders of Transfer Restricted Notes covered thereby not being able to offer and sell such notes during that period, unless such action is (x) required by applicable law or (y) pursuant to Section 3(d) hereof, and, in either case, so long as the Company and the Guarantors promptly thereafter comply with the requirements of Section 5(k) hereof, if applicable. (d) The Company and the Guarantors may suspend the use of the Prospectus for a period not to exceed 30 days in any six-month period or an aggregate of 45 days in any twelve-month period for valid business reasons (not including avoidance of their obligations hereunder) or to avoid premature public disclosure of a pending corporate transaction, including pending acquisitions or divestitures of assets, mergers and combinations and similar events; provided that (i) the Company and the Guarantors promptly thereafter comply with the requirements of Section 5(k) hereof, if applicable; (ii) the Shelf Registration Statement Period shall be extended by the number of days during which such Registration Statement was not effective or usable pursuant to the foregoing provisions; and (iii) the Additional Interest shall accrue on the Notes as provided in Section 4 hereof. (e) No Holder of Transfer Restricted Notes may include any of its Transfer Restricted Notes in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company and the Guarantors in writing, within 15 days after receipt of a request therefor, such information relating to such Holder as the Company and the Guarantors may reasonably request, that is required to be included in the Shelf Registration Statement, for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Notes shall be entitled to Additional Interest pursuant to Section 4 hereof unless and until such Holder shall have provided all such reasonably requested information. Each Holder of Transfer Restricted Notes as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company and the Guarantors all information required to be disclosed in order to make the information previously furnished to the Company and the Guarantors by such Holder not misleading. 4. Additional Interest. (a) The parties hereto agree that Holders of Transfer Restricted Notes will suffer damages if the Company or the Guarantors fail to perform their obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages. Accordingly, in the event that (i) the applicable Registration Statement is not filed with the Commission on or prior to the date specified herein for such filing, (ii) the applicable Registration Statement has not been declared effective by the Commission on or prior to the date specified herein for such effectiveness after such obligation arises, (iii) if the Registered Exchange Offer is required to be Consummated hereunder, the Registered Exchange Offer has not been Consummated by the Company and the Guarantors within the time period set forth in Section 2(a) hereof, (iv) prior to the end of the Exchange Offer Registration Period or the Shelf Registration Period, the Commission shall have issued a stop order suspending the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement, as the case may be, or proceedings have been initiated with respect to the Registration Statement under Section 8(d) or 8(e) of the Act, or (v) the Company and the Guarantors shall have initiated and/or maintained a suspension period longer than the periods specified in Section 2(d) or 3(d) (each such event referred to in clauses (i) through (v), a "Registration Default"), then additional interest with respect to the Transfer Restricted Notes ("Additional Interest") will accrue with respect to the first 90-day period immediately following the occurrence of such Registration Default in an amount equal to 0.25% per annum per $1,000 principal amount of such Notes and will increase by an additional 0.25% per annum per $1,000 principal amount of such Notes for each subsequent 90-day period until such Registration Default has been cured, up to an aggregate maximum amount of Additional Interest of 1.0% per annum per $1,000 principal amount of Notes for all Registration Defaults. Following the cure of a Registration Default, the accrual of Additional Interest with respect to such Registration Default will cease and upon the cure of all Registration Defaults the accrual of all Additional Interest will cease and the interest rate on the Notes will revert immediately to the original interest rate. Notwithstanding anything to the contrary in this Section 4(a), the Company and the Guarantors shall not be required to pay Additional Interest to a Holder of Restricted Transfer Notes if such Holder failed to comply with its obligations to make the representations set forth in the second sentence of Section 2(b) or provide the requested information pursuant to Section 3(e). (b) The Company shall notify the Trustee and paying agent under the Indenture (or the trustee and paying agent under such other indenture under which any Transfer Restricted Notes are issued) immediately upon the happening of each and every Registration Default. The Company and the Guarantors shall pay the Additional Interest due on the Transfer Restricted Notes by depositing with the paying agent (which shall not be the Company or the Guarantors) for the Transfer Restricted Notes, in trust, for the benefit of the Holders thereof, prior to 11:00 a.m. on the next interest payment date specified in the Indenture (or such other indenture), sums sufficient to pay the Additional Interest then due. The Additional Interest due shall be payable on each interest payment date specified by the Indenture (or such other indenture) to the record holders entitled to receive the interest payment to be made on such date. Each obligation to pay Additional Interest shall be deemed to accrue from and include the date of the applicable Registration Default to, but excluding, the relevant interest payment date. (c) The parties hereto agree that the Additional Interest provided for in this Section 4 constitutes a reasonable estimate of the damages that will be suffered by Holders of Transfer Restricted Notes by reason of the happening of any Registration Default and are intended to and shall constitute the sole remedy for damages that will be suffered by the Holders of the Transfer Restricted Notes by reason of any of the failures listed in Section 4(a). (d) All of the Company's and the Guarantors's obligations set forth in this Section 4 which are outstanding with respect to any Transfer Restricted Note shall survive until such time as all such obligations with respect to such Note have been satisfied in full (notwithstanding termination of this Agreement or consummation of the Registered Exchange Offer). 5. Registration Procedures. In connection with any Exchange Offer Registration Statement, and, to the extent applicable, any Shelf Registration Statement, the following provisions shall apply: (a) The Company and the Guarantors shall furnish to Wachovia, prior to the filing thereof with the Commission, a copy of any Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall use their reasonable best efforts to reflect in each such document, when so filed with the Commission, such comments as Wachovia reasonably may propose. (b) The Company and the Guarantors shall ensure that: (i) any Registration Statement and any amendment thereto and any Prospectus contained therein and any amendment or supplement thereto complies in all material respects with the Act; (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) any Prospectus forming part of any Registration Statement, including any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that no representation or agreement is made hereby with respect to information with respect to any of the Initial Purchasers, any Underwriter or any Holder required to be included in any Registration Statement or Prospectus pursuant to the Act or provided by any of the Initial Purchasers, any Holder or any Underwriter specifically for inclusion in any Registration Statement or Prospectus. (c) (1) The Company and the Guarantors shall advise Wachovia and, in the case of a Shelf Registration Statement, the Holders of Transfer Restricted Notes covered thereby, and, if requested by Wachovia or any such Holder, confirm such advice in writing: (i) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus included therein or for additional information. (2) The Company and the Guarantors shall advise Wachovia and, in the case of a Shelf Registration Statement, the Holders of Transfer Restricted Notes covered thereby, and, in the case of an Exchange Offer Registration Statement, any Participating Broker-Dealer that has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by Wachovia or any such Holder or Participating Broker-Dealer, confirm such advice in writing: (i) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (ii) of the receipt by the Company or the Guarantors of any notification with respect to the suspension of the qualification of the Transfer Restricted Notes included in any Registration Statement for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (iii) of the happening of any event that requires the making of any changes in the Registration Statement or the Prospectus so that, as of the date of the issuance of such advice, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). (d) The Company and the Guarantors shall use their reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement at the earliest possible time. (e) The Company and the Guarantors shall furnish to each Holder of Transfer Restricted Notes included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those incorporated by reference). (f) The Company and the Guarantors shall, during the Shelf Registration Period, deliver to each Holder of Transfer Restricted Notes included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including any preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company and the Guarantors consent to the use of the Prospectus (including any preliminary prospectus) or any amendment or supplement thereto by each of the selling Holders of Transfer Restricted Notes in connection with the offering and sale of the Transfer Restricted Notes covered by the Prospectus or any amendment or supplement thereto. (g) The Company and the Guarantors shall furnish to each Participating Broker-Dealer that so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, any documents incorporated by reference therein and, if the Participating Broker-Dealer so requests in writing, all exhibits thereto (including those incorporated by reference). (h) The Company and the Guarantors shall, during the Exchange Offer Registration Period and pursuant to the requirements of the Act for the resale of the Exchange Notes during the period in which a prospectus is required to be delivered under the Act (including any Commission no-action letters relating to the Registered Exchange Offer), deliver to each Participating Broker-Dealer, without charge, as many copies of the Prospectus (including any preliminary Prospectus) included in such Exchange Offer Registration Statement and any amendment or supplement thereto as such Participating Broker-Dealer may reasonably request; and the Company and the Guarantors consent to the use of the Prospectus (including any preliminary prospectus) or any amendment or supplement thereto by any such Participating Broker-Dealer in connection with the offering and sale of the Exchange Notes, as provided in Section 2(f) above. (i) Prior to the Registered Exchange Offer or any other offering of Transfer Restricted Notes pursuant to any Registration Statement, the Company and the Guarantors shall use reasonable best efforts to register, qualify or cooperate with the Holders of Transfer Restricted Notes included therein and their respective counsel in connection with the registration or qualification of such Transfer Restricted Notes for offer and sale under the securities or blue sky laws of such states as any such Holders reasonably request in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Transfer Restricted Notes covered by such Registration Statement; provided, however, neither the Company nor the Guarantors will be required to qualify generally to do business in any jurisdiction in which it is not then so qualified, to file any general consent to service of process or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject. (j) The Company and the Guarantors shall cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Notes to be sold pursuant to any Registration Statement free of any restrictive legends and in denominations and registered in such names as Holders may appropriately request prior to sales of Transfer Restricted Notes pursuant to such Registration Statement. (k) Upon the occurrence of any event contemplated by Section 2(d), 3(d) or paragraph (c)(2)(iii) of this Section 5, the Company and the Guarantors shall promptly prepare and file a post-effective amendment to any Registration Statement or an amendment or supplement to the related Prospectus or any other required document so that, as thereafter delivered to purchasers of the Transfer Restricted Notes included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (l) The Company and the Guarantors shall use their reasonable best efforts to cause The Depository Trust Company ("DTC") on the first Business Day following the effective date of any Registration Statement hereunder or as soon as possible thereafter to remove (i) from any existing CUSIP number assigned to the Transfer Restricted Notes or Exchange Notes, as the case may be, any designation indicating that such notes are "restricted securities," which efforts shall include delivery to DTC of a letter executed by the Company substantially in the form of Annex E hereto and (ii) any other stop order or restriction on DTC's system with respect to the Transfer Restricted Notes or Exchange Notes, as the case may be. In the event the Company and the Guarantors are unable to cause DTC to take actions described in the immediately preceding sentence, the Company and the Guarantors shall take such actions as the Initial Purchasers may reasonably request to provide, as soon as practicable, a new CUSIP (if not already obtained) number for the Transfer Restricted Notes or Exchange Notes registered under such Registration Statement and to cause such CUSIP number to be assigned to the Transfer Restricted Notes or Exchange Notes (or to the maximum aggregate principal amount of the securities to which such number may be assigned). (m) The Company and the Guarantors shall use their reasonable best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to the security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Act and Rule 158 promulgated thereunder. (n) The Company and the Guarantors shall use reasonable best efforts to cause the Indenture to be qualified under the Trust Indenture Act in a timely manner. (o) The Company and the Guarantors may require each Holder of Transfer Restricted Notes to be sold pursuant to any Shelf Registration Statement to furnish to the Company and the Guarantors such information regarding the Holder and the distribution of such Transfer Restricted Notes as may, from time to time, be reasonably required by the Act, and the obligations of the Company and the Guarantors to any Holder hereunder shall be expressly conditioned on the compliance of such Holder with such request. (p) The Company and the Guarantors shall, if requested, promptly incorporate in a Prospectus supplement or post-effective amendment to a Shelf Registration Statement (i) such information as the Majority Holders or, if the Transfer Restricted Notes are being sold in an underwritten offering, as the Managing Underwriters and the Majority Holders, reasonably provide to the Company or the Guarantors in writing for inclusion in the Shelf Registration Statement, or Prospectus, and (ii) such information as a Holder may reasonably provide from time to time to the Company or the Guarantors in writing for inclusion in a Prospectus or any Shelf Registration Statement, in the case of clause (i) or (ii) above, concerning such Holder and/or underwriter and the distribution of such Holder's Transfer Restricted Notes and, in either case, shall make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after being notified in writing of the matters to be incorporated in such Prospectus supplement or post-effective amendment. (q) In the case of any Shelf Registration Statement, the Company and the Guarantors shall enter into such agreements (including underwriting agreements) and take all other customary and appropriate actions as may be reasonably requested in order to expedite or facilitate the registration or the disposition of any Transfer Restricted Notes, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 8 (or such other provisions and procedures reasonably acceptable to the Majority Holders and the Managing Underwriters, if any, with respect to all parties to be indemnified pursuant to Section 8). (r) In the case of any Shelf Registration Statement, the Company and the Guarantors shall: (i) make reasonably available for inspection by the Holders of Transfer Restricted Notes to be registered thereunder, any Managing Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such Managing Underwriter, all relevant financial and other records, pertinent corporate documents and properties of the Company and any of its subsidiaries reasonably requested by such persons; (ii) cause the Company's and the Guarantors' officers, directors and employees to supply all relevant information reasonably requested by the Holders or any such Managing Underwriter, attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Company and the Guarantors as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such Managing Underwriter, attorney, accountant or agent, unless (x) disclosure thereof is made in connection with a court proceeding or required by law; provided that each Holder and any such Managing Underwriter, attorney, accountant or agent will, upon learning that disclosure of such information is sought in a court proceeding or required by law, give notice to the Company and the Guarantors with enough time to allow the Company and the Guarantors to undertake appropriate action to prevent disclosure at the Company's and the Guarantors' sole expense, or (y) such information has previously been made or becomes available to the public generally through the Company, the Guarantors or through a third party without an accompanying obligation of confidentiality or failure to safeguard such disclosure; (iii) make such representations and warranties to the Holders of Transfer Restricted Notes registered thereunder and the Managing Underwriters, if any, in form, substance and scope as are customarily made by the Company and the Guarantors to Managing Underwriters and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Company and the Guarantors and updates thereof (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the Managing Underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and Managing Underwriters; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company and the Guarantors (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder of the Transfer Restricted Notes covered by such Shelf Registration Statement (provided such Holder furnishes the accountants with such representations as the accountants customarily require in similar situations) and the Managing Underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 5(i) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company and the Guarantors. The foregoing actions set forth in this Section 5(r) shall be performed at (i) the effectiveness of such Shelf Registration Statement and each post-effective amendment thereto and (ii) each closing under any underwriting or similar agreement as and to the extent required thereunder. (s) The Company and the Guarantors shall, if and to the extent required under the Act and/or the Trust Indenture Act and the rules and regulations thereunder in order to register the Note Guarantee under the Act and qualify the Indenture under the Trust Indenture Act, cause each guarantor, if any, to sign any Registration Statement and take all other action necessary to register the Note Guarantee under the applicable Registration Statement. 6. Registration Expenses. The Company and the Guarantors shall bear all reasonable fees and expenses (including the reasonable fees and expenses, if any, of Shearman & Sterling LLP, counsel for the Initial Purchasers, incurred in connection with the Registered Exchange Offer) incurred in connection with the performance of their obligations under Sections 2, 3, 4 and 5 hereof (other than brokers', dealers' and underwriters' discounts and commissions and brokers', dealers' and underwriters' counsel fees) and, in connection with the Shelf Registration Statement, shall reimburse the Holders for the reasonable fees and disbursements of Shearman & Sterling LLP or such other counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith. 7. Rules 144 and 144A. The Company shall use reasonable best efforts to file the reports required to be filed by it under the Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Transfer Restricted Notes, make publicly available the applicable information necessary to permit sales of their securities pursuant to Rules 144 and 144A (or any successor rule adopted by the Commission). The Company covenants that it will take such further action as any Holder of Transfer Restricted Notes may reasonably request, all to the extent required from time to time to enable such Holder to sell Transfer Restricted Notes without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4) if applicable). The Company will provide a copy of this Agreement to prospective purchasers of Transfer Restricted Notes identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Transfer Restricted Notes, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. 8. Indemnification and Contribution. (a) (i) In connection with any Registration Statement, the Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless each Holder of Transfer Restricted Notes covered thereby, the directors, officers, employees and agents of each such Holder and each person who controls any such Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, including legal or other expenses reasonably incurred in connection with investigating or defending such losses, claims, damages or liabilities (collectively, "Losses"), joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, in any preliminary Prospectus or Prospectus or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agree to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company and the Guarantors will not be liable in any case to the extent that any such Loss arises out of or is based upon (A) any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information relating to the Holder furnished to the Company and the Guarantors by or on behalf of any such Holder specifically for inclusion therein, or (B) improper use of a Registration Statement or the related Prospectus during a period when a stop order has been issued in respect of such Registration Statement or any proceedings for that purpose have been initiated or use of a Prospectus when use of such Prospectus has been suspended pursuant to Section 2(d), 3(d) or 5(c)(2); provided that, in each case, such Holder received prior notice of such stop order, initiation of proceedings or suspension and such Holder is required to, but does not, deliver a Prospectus. This indemnity agreement will be in addition to any liability that the Company and the Guarantors may otherwise have. (ii) The Company and the Guarantors also agree to indemnify or contribute to Losses, as provided in Section 8(d), of any Managing Underwriters of Transfer Restricted Notes registered under a Registration Statement, their officers and directors and each person who controls such Managing Underwriters on substantially the same basis as that of the indemnification of the selling Holders provided in Section 8(a)(i) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 5(q) hereof. (b) Each Holder of Transfer Restricted Notes covered by a Registration Statement severally agrees to indemnify and hold harmless the Company and the Guarantors and their respective directors, officers, partners, members, managers, employees and agents and each person who controls either of the Company or the Guarantors within the meaning of either the Act or the Exchange Act to the same extent as the foregoing indemnity from the Company and the Guarantors to each such Holder, but only with reference to written information relating to such Holder furnished to the Company and the Guarantors by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity, or the improper use by the Holder of a Registration Statement or the related Prospectus during a period when a stop order has been issued in respect of such Registration Statement or any proceedings for that purpose have been initiated or use of a Prospectus when use of such Prospectus has been suspended pursuant to Section 2(d), 3(d) or 5(c)(2); provided that, in each case, such Holder received prior notice of such stop order, initiation of proceedings or suspension. This indemnity agreement will be in addition to any liability which any such Holder or person may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel (and local counsel) if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded, based on the advice of outside counsel, that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall have authorized the indemnified party to employ separate counsel at the expense of the indemnifying party; provided further, that the indemnifying party shall not be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) representing all the indemnified parties under paragraph (a) or paragraph (b) above. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable, or insufficient, to hold harmless an indemnified party for any reason, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall have a joint and several obligation to contribute to the aggregate Losses to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified person, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The relative benefits received by the Company and the Guarantors on the one hand and the Holders on the other with respect to the offering and such sale shall be deemed to be in the same proportion as the net proceeds from the original issuance of the Notes received by the Company, on the one hand, bear to the total proceeds received by the Holder with respect to its sale of Transfer Restricted Securities, on the other. Benefits received by any Managing Underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses. The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 8(d), the Holders of the Transfer Restricted Notes shall in no case be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Transfer Restricted Notes pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission and in no case shall any Managing Underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the Transfer Restricted Notes purchased by such Managing Underwriter under the Registration Statement which resulted in such Losses pursuant to the terms of this Agreement. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take into account the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls an indemnified party within the meaning of either the Act or the Exchange Act and each director, officer, partner, member, manager, employee and agent of such indemnified party shall have the same rights to contribution as such indemnified party, and each person who controls the Company or the Guarantors within the meaning of either the Act or the Exchange Act and each director, officer, partner, member, manager, employee and agent of the Company or the Guarantors shall have the same rights to contribution as the Company and the Guarantors, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 8 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder, the Company, the Guarantors or any of the officers, directors or controlling persons referred to in Section 8 hereof, and will survive the sale by a Holder of Transfer Restricted Notes covered by a Registration Statement. 9. Underwritten Registrations. If any of the Transfer Restricted Notes covered by any Shelf Registration statement are to be sold in an underwritten offering, the Managing Underwriter that will administer the offering will be selected by the Majority Holders of such Transfer Restricted Notes included in such offering, subject to the consent of the Company not to be unreasonably withheld; it being expressly agreed that Wachovia is an acceptable Managing Underwriter to the Company and such Holders shall be responsible for all underwriting commissions and discounts in connection therewith. No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Notes on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 10. Miscellaneous. (a) No Inconsistent Agreements. The Company and the Guarantors have not, as of the date hereof, entered into nor shall they, on or after the date hereof, enter into any agreement that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company and the Guarantors have obtained the written consent of the Majority Holders; provided that additional Guarantors may become parties to this Agreement pursuant to Section 10(h) hereof by executing an amendment hereto, which need not be signed by any of the other parties hereto to become effective. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Holders whose securities are being sold pursuant to an Exchange Offer Registration Statement or a Shelf Registration Statement and that does not directly or indirectly adversely affect, impair, limit or compromise the rights of other Holders may be given by Holders of at least a majority in aggregate principal amount of the applicable notes being sold pursuant to such registration statement. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (i) if to the Initial Purchasers, as follows: Wachovia Capital Markets, LLC 12 East 49th Street 44th Floor New York, New York 10017 Attention: High Yield Origination (ii) if to any other Holder, at the most current address given by such Holder to the Company and the Guarantors in accordance with the provisions of this Section 10(c), which address initially is, with respect to each Holder, the address of such Holder maintained by the registrar under the Indenture, with a copy in like manner to the Initial Purchasers; and (iii) if to the Company or the Guarantors, as follows: O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Attention: Chief Financial Officer with a copy to: Bass, Berry & Sims PLC 315 Deaderick Street, Suite 2700 Nashville, Tennessee 37238 Attention: J. Page Davidson All such notices and communications shall be deemed to have been duly given when received, if delivered by hand or air courier, and when sent, if sent by first-class mail, telex or telecopier. The Company and the Guarantors by notice to the others may designate additional or different addresses for subsequent notices or communications. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Company or the Guarantors thereto, subsequent Holders. The Company and the Guarantors hereby agree to extend the benefits of this Agreement to any Holder that acquired the applicable Notes from a Holder and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law and Consent to Jurisdiction. This agreement shall be governed by and construed in accordance with the laws of the State of New York. The Company and the Guarantors (x) submit to the nonexclusive jurisdiction of the courts of the State of New York and of the United States sitting in the Borough of Manhattan in respect of any action, claim or proceeding ("Proceeding") arising out of or relating to this Agreement or the transactions contemplated hereby, (y) irrevocably waive, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any Proceeding in the Supreme Court of the State of New York, County of New York, or the United States District Court for the Southern District of New York, and any claim that any Proceeding in any such court has been brought in an inconvenient forum, and (z) agree that any service of process or other legal summons in connection with any Proceeding may be served on it by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, postage prepaid, addressed to the served party at its address as provided for in Section 10(c). Nothing in this section shall affect the right of the parties to serve process in any other manner permitted by law. (h) Obligations of New Subsidiary Guarantors. If any person becomes a Subsidiary Guarantor (as defined in the Indenture) after the date hereof and while the Company has continuing obligations under this Agreement, the Company will cause such person to become a party hereto including for purposes of registration obligations, the guarantee of Additional Interest on a joint and several basis and indemnification and contribution pursuant to Section 8. (i) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (j) Notes Held by the Company, Etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Transfer Restricted Notes or Exchange Notes is required hereunder, Transfer Restricted Notes or Exchange Notes held by the Company, the Guarantors or any of their respective Affiliates (other than subsequent Holders of Transfer Restricted Notes or Exchange Notes if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Notes) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. Please confirm that the foregoing correctly sets forth the agreement between and among the Company, the Guarantors and the Initial Purchasers. Very truly yours, O'CHARLEY'S INC. By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Chief Financial Officer, Secretary and Treasurer AIR TRAVEL SERVICES, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer DFI, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S FINANCE COMPANY, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S MANAGEMENT COMPANY, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S RESTAURANT PROPERTIES, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary O'CHARLEY'S SERVICE COMPANY, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S SPORTS BAR, INC., an Alabama corporation By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: President OCI, INC., a Delaware corporation By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary and Treasurer OPI, INC., a Colorado corporation By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer 99 COMMISSARY, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh -------------------------------------- Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS OF BOSTON, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS OF MASSACHUSETTS, a Massachusetts Business Trust By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer 99 RESTAURANTS OF VERMONT, LLC, a Vermont limited liability company By: 99 WEST, INC., its Sole Member By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Clerk and Treasurer 99 WEST, INC., a Massachusetts corporation By: /s/ A. Chad Fitzhugh ------------------------------------ Name: A. Chad Fitzhugh Title: Clerk and Treasurer STONEY RIVER MANAGEMENT COMPANY, INC., a Delaware corporation By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer STONEY RIVER, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Secretary STONEY RIVER LEGENDARY MANAGEMENT, L.P., a Georgia limited partnership By: STONEY RIVER, LLC, its General Partner By: /s/ A. Chad Fitzhugh ------------------------------------- Name: A. Chad Fitzhugh Title: Secretary The foregoing Agreement is hereby acknowledged and accepted as of the date first written above. WACHOVIA CAPITAL MARKETS, LLC By: /s/ Lewis S. Morris III ----------------------------------- Name: Lewis S. Morris III Title: Vice President MORGAN JOSEPH & CO. INC. By: /s/ Paul J. Huffman, III ----------------------------------- Name: Paul J. Huffman, III Title: Managing Director SCHEDULE I Guarantors Air Travel Services, Inc., a Tennessee corporation DFI, Inc., a Tennessee corporation O'Charley's Finance Company, Inc., a Tennessee corporation O'Charley's Management Company, Inc., a Tennessee corporation O'Charley's Restaurant Properties, LLC, a Delaware limited liability company O'Charley's Service Company, Inc., a Tennessee corporation O'Charley's Sports Bar, Inc., an Alabama corporation OCI, Inc., a Delaware corporation OPI, Inc., a Colorado corporation 99 Commissary, LLC, a Delaware limited liability company 99 Restaurants, LLC, a Delaware limited liability company 99 Restaurants of Boston, LLC, a Delaware limited liability company 99 Restaurants of Massachusetts, a Massachusetts Business Trust 99 Restaurants of Vermont, LLC, a Vermont limited liability company 99 West, Inc., a Massachusetts corporation Stoney River Management Company, Inc., a Delaware corporation Stoney River, LLC, a Delaware limited liability company Stoney River Legendary Management, L.P., a Georgia limited partnership ANNEX A Each broker-dealer that receives Exchange Notes for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer during the Exchange Offer Registration Period in connection with resales of Exchange Notes received in exchange for Notes where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company and the Guarantors have agreed that, during the Exchange Offer Registration Period, it will make this Prospectus available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." ANNEX B Each broker-dealer that receives Exchange Notes for its own account in exchange for Notes, where such Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes during the Exchange Offer Registration Period. See "Plan of Distribution." ANNEX C Plan Of Distribution Each broker-dealer that receives Exchange Notes for its own account pursuant to the Registered Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes during the Exchange Offer Registration Period. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Notes received in exchange for Notes where such Notes were acquired as a result of market-making activities or other trading activities. The Company and the Guarantors have agreed that, during the Exchange Offer Registration Period, it will make this Prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until ____________, 2003, all dealers effecting transactions in the Exchange Notes may be required to deliver a prospectus. The Company and the Guarantors will not receive any proceeds from any sale of Exchange Notes by broker-dealers. Exchange Notes received by broker-dealers for their own account pursuant to the Registered Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange Notes that were received by it for its own account pursuant to the Registered Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Notes may be deemed to be an "underwriter" within the meaning of the Act and any profit from any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Act. During the Exchange Offer Registration Period, the Company and the Guarantors will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company and the Guarantors have agreed to pay all expenses incident to the Registered Exchange Offer (including the expenses of one counsel for the holders of the Notes) other than dealers' and brokers' discounts, commissions and counsel fees and will indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Act. [If applicable, add information required by Regulation S-K Items 507 and/or 508 of the Act.] ANNEX D CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. [ ] Name:___________________________________ Address:________________________________ ________________________________ The undersigned represents that it is not an Affiliate of the Company or the Guarantors, that any Exchange Notes to be received by it will be acquired in the ordinary course of business and that at the time of the commencement of the Registered Exchange Offer it had no arrangement with any person to participate in a distribution of the Exchange Notes. In addition, if the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes for its own account in exchange for Notes, it represents that the Notes to be exchanged for Exchange Notes were acquired by it as a result of market-making activities or other trading activities and acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Act. ANNEX E FORM OF LETTER TO BE PROVIDED BY THE COMPANY TO THE DEPOSITORY TRUST COMPANY The Depository Trust Company 55 Water Street, 50th Floor New York, NY 10041 Re: 9% Senior Subordinated Notes due 2013 (the "Notes") of O'Charley's Inc. Ladies and Gentlemen: Please be advised that the Securities and Exchange Commission has declared effective a Registration Statement on Form S-4 under the Securities Act of 1933, as amended, with regard to all of the Notes referenced above. Accordingly, there is no longer any restriction as to whom such Notes may be sold and [any restrictions on the CUSIP designation are no longer appropriate and may be removed] [the new CUSIP number for the Notes provided should be used]. I understand that upon receipt of this letter, DTC will remove any stop or restriction on its system with respect to this issue. As always, please do not hesitate to call if we can be of further assistance. Very truly yours, O'CHARLEY'S INC. By:_______________________ Authorized Officer EX-10.3 5 g85963exv10w3.txt EX-10.3 INDENTURE EXHIBIT 10.3 EXECUTION COPY O'CHARLEY'S INC., as Issuer, SUBSIDIARY GUARANTORS, as Guarantors, and THE BANK OF NEW YORK, as Trustee INDENTURE DATED AS OF NOVEMBER 4, 2003 9% SENIOR SUBORDINATED NOTES DUE 2013 TABLE OF CONTENTS
PAGE ---- ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions.......................................................................... 1 Section 1.02. Other Definitions.................................................................... 20 Section 1.03. Incorporation by Reference of Trust Indenture Act.................................... 21 Section 1.04. Rules of Construction................................................................ 21 ARTICLE TWO THE NOTES Section 2.01. Form and Dating...................................................................... 22 Section 2.02. Execution and Authentication......................................................... 23 Section 2.03. Methods of Receiving Payments on the Notes........................................... 23 Section 2.04. Registrar and Paying Agent........................................................... 24 Section 2.05. Paying Agent to Hold Money in Trust.................................................. 24 Section 2.06. Lists of Holders of Notes............................................................ 25 Section 2.07. Transfer and Exchange................................................................ 25 Section 2.08. Replacement Notes.................................................................... 40 Section 2.09. Outstanding Notes; Treasury Notes.................................................... 40 Section 2.10. Temporary Notes...................................................................... 41 Section 2.11. Cancellation......................................................................... 41 Section 2.12. Defaulted Interest................................................................... 41 Section 2.13. CUSIP Number......................................................................... 41 Section 2.14. Persons Deemed Owners................................................................ 41 Section 2.15. Issuance of Additional Notes......................................................... 42 ARTICLE THREE REDEMPTION Section 3.01. Rights of Redemption................................................................. 42 Section 3.02. Notice to Trustee.................................................................... 42 Section 3.03. Selection of Notes to Be Redeemed.................................................... 42 Section 3.04. Notice of Redemption................................................................. 43 Section 3.05. Effect of Notice of Redemption....................................................... 44 Section 3.06. Deposit of Redemption Price.......................................................... 44 Section 3.07. Notes Redeemed in Part............................................................... 44
ARTICLE FOUR COVENANTS Section 4.01. Payment of Notes..................................................................... 44 Section 4.02. Commission Reports................................................................... 45 Section 4.03. Compliance Certificates.............................................................. 46 Section 4.04. Maintenance of Office or Agency...................................................... 46 Section 4.05. Corporate Existence.................................................................. 47 Section 4.06. Waiver of Stay, Extension or Usury Laws.............................................. 47 Section 4.07. Payment of Taxes and Other Claims.................................................... 47 Section 4.08. Business Activities.................................................................. 48 Section 4.09. Limitation on Incurrence of Additional Indebtedness and Issuance of Preferred Stock.. 48 Section 4.10. Limitation on Restricted Payments.................................................... 50 Section 4.11. Limitation on Sale of Assets......................................................... 54 Section 4.12. Limitation on Liens.................................................................. 55 Section 4.13. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries............ 56 Section 4.14. Limitation on Transactions with Affiliates........................................... 57 Section 4.15. Limitation on Senior Subordinated Indebtedness....................................... 59 Section 4.16. Change of Control.................................................................... 59 Section 4.17. Designation of Restricted and Unrestricted Subsidiaries.............................. 60 Section 4.18. Limitation on Issuances and Sales of Equity Interests of Restricted Subsidiaries..... 62 Section 4.19. Payments for Consent................................................................. 62 Section 4.20. Limitations on Issuances of Guarantees by Restricted Subsidiaries; Merger, Consolidation and Sale of Assets by Subsidiary Guarantors; Release of Subsidiary Guarantees..................................................... 62 Section 4.21. Sale and Leaseback Transactions...................................................... 64 Section 4.22. Additional Subsidiary Guarantees..................................................... 64 ARTICLE FIVE SUCCESSOR CORPORATION Section 5.01. Merger, Consolidation or Sale of Assets.............................................. 64 Section 5.02. Successor Corporation Substituted.................................................... 65 ARTICLE SIX DEFAULTS AND REMEDIES Section 6.01. Events of Default.................................................................... 66 Section 6.02. Acceleration......................................................................... 67 Section 6.03. Other Remedies....................................................................... 69

2 Section 6.04. Waiver of Past Defaults.............................................................. 69 Section 6.05. Control by Majority.................................................................. 69 Section 6.06. Limitation on Remedies............................................................... 69 Section 6.07. Rights of Holders to Receive Payment................................................. 70 Section 6.08. Collection Suit by Trustee........................................................... 70 Section 6.09. Trustee May File Proofs of Claim..................................................... 70 Section 6.10. Priorities........................................................................... 71 Section 6.11. Undertaking for Costs................................................................ 71 ARTICLE SEVEN TRUSTEE Section 7.01. Duties of Trustee.................................................................... 71 Section 7.02. Rights of Trustee.................................................................... 72 Section 7.03. Individual Rights of Trustee......................................................... 73 Section 7.04. Trustee's Disclaimer................................................................. 74 Section 7.05. Notice of Defaults................................................................... 74 Section 7.06. Reports by Trustee to Holders........................................................ 74 Section 7.07. Compensation and Indemnity........................................................... 74 Section 7.08. Replacement of Trustee............................................................... 75 Section 7.09. Successor Trustee by Merger, Etc..................................................... 76 Section 7.10. Eligibility; Disqualification........................................................ 76 Section 7.11. Preferential Collection of Claims Against Company.................................... 77 ARTICLE EIGHT SATISFACTION AND DISCHARGE OF INDENTURE Section 8.01. Termination of Company's Obligations................................................. 77 Section 8.02. Application of Trust Money........................................................... 78 Section 8.03. Repayment to the Company............................................................. 78 Section 8.04. Survival............................................................................. 78 Section 8.05. Reinstatement........................................................................ 79 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.01. Without Consent of Holders........................................................... 79 Section 9.02. With Consent of Holders.............................................................. 80 Section 9.03. Compliance with Trust Indenture Act.................................................. 82 Section 9.04. Revocation and Effect of Consents.................................................... 82 Section 9.05. Notation on or Exchange of Notes..................................................... 82 Section 9.06. Trustee Protected.................................................................... 83

3 ARTICLE TEN SUBORDINATION OF NOTES Section 10.01. Agreement to Subordinate............................................................. 83 Section 10.02. Liquidation; Dissolution; Bankruptcy................................................. 83 Section 10.03. Default on Designated Senior Debt.................................................... 84 Section 10.04. Acceleration of Notes................................................................ 84 Section 10.05. When Distribution Must Be Paid Over.................................................. 85 Section 10.06. Notice by the Company................................................................ 85 Section 10.07. Subrogation.......................................................................... 85 Section 10.08. Relative Rights...................................................................... 85 Section 10.09. Subordination May Not Be Impaired by the Company..................................... 86 Section 10.10. Distribution or Notice to Representative............................................. 86 Section 10.11. Rights of Trustee and Paying Agent................................................... 86 Section 10.12. Authorization to Effect Subordination................................................ 86 Section 10.13. Amendments........................................................................... 86 ARTICLE ELEVEN GUARANTEES Section 11.01. Unconditional Guarantee.............................................................. 87 Section 11.02. Limitation of Subsidiary Guarantor's Liability....................................... 88 Section 11.03. Contribution......................................................................... 88 Section 11.04. Execution and Delivery of Subsidiary Guarantees...................................... 89 Section 11.05. Severability......................................................................... 89 ARTICLE TWELVE SUBORDINATION OF SUBSIDIARY GUARANTEES Section 12.01. Guarantees Subordinated to Senior Debt............................................... 89 Section 12.02. Liquidation; Dissolution; Bankruptcy................................................. 90 Section 12.03. Default on Designated Senior Debt.................................................... 90 Section 12.04. Guarantees Unconditional............................................................. 91 Section 12.05. When Distribution Must Be Paid Over.................................................. 91 Section 12.06. Notice by the Company................................................................ 92 Section 12.07. Subrogation.......................................................................... 92 Section 12.08. Relative Rights...................................................................... 92 Section 12.09. Subordination May Not Be Impaired by the Company..................................... 93 Section 12.10. Distribution or Notice to Representative............................................. 93 Section 12.11. Rights of Trustee and Paying Agent................................................... 93 Section 12.12. Authorization to Effect Subordination................................................ 93 Section 12.13. Amendments........................................................................... 99

4 ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE Section 13.01. Option to Effect Legal Defeasance or Covenant Defeasance............................. 94 Section 13.02. Legal Defeasance and Discharge....................................................... 94 Section 13.03. Covenant Defeasance.................................................................. 95 Section 13.04. Conditions to Legal or Covenant Defeasance........................................... 95 Section 13.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions....................................................... 97 Section 13.06. Repayment to the Company............................................................. 97 Section 13.07. Reinstatement........................................................................ 98 ARTICLE FOURTEEN MISCELLANEOUS Section 14.01. Trust Indenture Act Controls......................................................... 98 Section 14.02. Notices.............................................................................. 98 Section 14.03. Communication by Holders with Other Holders.......................................... 99 Section 14.04. Certificate and Opinion as to Conditions Precedent................................... 99 Section 14.05. Statements Required in Certificate or Opinion........................................ 100 Section 14.06. Rules by Trustee and Agents.......................................................... 100 Section 14.07. Legal Holidays....................................................................... 100 Section 14.08. No Personal Liability of Directors, Officers, Employees and Stockholders............. 100 Section 14.09. Governing Law........................................................................ 100 Section 14.10. No Adverse Interpretation of Other Agreements........................................ 101 Section 14.11. Successors........................................................................... 101 Section 14.12. Duplicate Originals.................................................................. 101 Section 14.13. Severability......................................................................... 101

Exhibit A-1 Form of 144A Global Note Exhibit A-2 Form of Regulation S Temporary Global Note Exhibit B Form of Certificate of Transfer Exhibit C Form of Certificate of Exchange Exhibit D Form of Certificate from Acquiring Institutional Accredited Investor Exhibit E Form of Supplemental Indenture 5 CROSS-REFERENCE TABLE
TRUST INDENTURE INDENTURE ACT SECTION SECTION - --------------- --------- 310 (a)(1)............................................................................... 7.10 (a)(2).............................................................................. 7.10 (a)(3) ............................................................................. 7.10 (a)(5) ............................................................................. 7.08 (b) ................................................................................ 7.10 (c) ................................................................................ 7.11 311 (a).................................................................................. 7.11 (b)................................................................................. 7.11 312 (a) ................................................................................. 2.06 (b) ................................................................................ 14.03 (c) ................................................................................ 14.03 313 (a) ................................................................................. 7.06 (b)(2) ............................................................................. 7.06 (c) ................................................................................ 7.06 314 (a) ................................................................................. 4.03; 4.04 (c)(1) ............................................................................. 14.04 (c)(2) ............................................................................. 14.04 (e) ................................................................................ 14.05 315 (e) ................................................................................. 6.05 316 (a)(1)(A) ........................................................................... 6.04 317 (a)(1) .............................................................................. 6.08 318 (c) ................................................................................. 14.01
- ------------------------ NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. 6 INDENTURE, dated as of November 4, 2003, by and among O'CHARLEY'S INC., a Tennessee corporation (the "Company"), the SUBSIDIARY GUARANTORS (as defined below) and THE BANK OF NEW YORK, a New York banking corporation, Trustee (the "Trustee"). The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance, initially, of up to $125,000,000 aggregate principal amount of the Company's 9% Senior Subordinated Notes due 2013 issuable as provided in this Indenture. All actions necessary to make this Indenture a valid and legally binding agreement of the Company and each Subsidiary Guarantor, in accordance with its terms, have been taken. Each party agrees hereto as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined herein) ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01.Definitions. "144A Global Note" means a global note substantially in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that shall be issued in a denomination equal to the outstanding principal amount at maturity of the Notes sold in reliance on Rule 144A. "Acquired Debt" means, with respect to any specified Person, (i) Indebtedness of any other Person existing at the time such other Person is merged with or into, or becomes a Subsidiary of, such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person, and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means (i) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any executive officer or director of such specified Person. For purposes of this definition, "control," as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" shall have correlative meanings. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange. "Asset Sale" means (i) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole shall be governed by Section 4.16 and/or Section 5.01 and not by Section 4.11 hereof; and (ii) the issuance of Equity Interests by any of the Company's Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary of Equity Interests in any of its Subsidiaries. Notwithstanding the preceding, the following items shall be deemed not to be Asset Sales: (i) any single transaction or series of related transactions that involves assets having a fair market value of less than $1.0 million; (ii) a transfer of assets between or among the Company and its Restricted Subsidiaries; (iii) an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (iv) (a) the sale or lease of equipment (other than in connection with an Expansion Equipment Sale-Leaseback Transaction), inventory, accounts receivable or other assets in the ordinary course of business and (b) the lease of any excess real property acquired in the ordinary course of business, consistent with past practices, in connection with the opening of a new store; (v) the sale or other disposition of Cash Equivalents; (vi) a Permitted Investment or Restricted Payment that is permitted by Section 4.10; (vii) any transfer of assets by the Company and/or any of its Restricted Subsidiaries effected pursuant to and in accordance with the agreements entered into in respect to the Permitted Sale and Leaseback Transaction; (viii) any sale or disposition of any property equipment that has become damaged, worn out, obsolete or otherwise unsuitable for use in connection with the business of the Company or its Restricted Subsidiaries; (ix) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements; and (x) any sale or disposition deemed to occur in connection with creating or granting a Permitted Lien. "Attributable Debt" in respect of a Sale and Leaseback Transaction by the Company or a Restricted Subsidiary means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale and Leaseback Transaction, including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP. "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning. 2 "Board of Directors" means (i) with respect to a corporation, the board of directors of the corporation; (ii) with respect to a partnership, the board of directors of the general partner of the partnership; and (iii) with respect to any other Person, the board or committee of such Person serving a similar function. "Board Resolution" means, with respect to any Person, a copy of a resolution certified by the Secretary or an Assistant Secretary of such Person to have been duly adopted by the Board of Directors of such Person and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Build-to-Suit Sale-Leaseback Transaction" means, in respect of any real property acquired and improved by the Company or any of its Restricted Subsidiaries (whether before or after the date of the Indenture) solely in connection with a new store opening, any transaction occurring after the Issue Date whereby such real property is sold by and leased back to the Company or such Restricted Subsidiary within a period ending not later than the date that is the earlier of (i) two years after the date such real property was acquired and (ii) 270 days after the date that construction work to improve such real property commenced. "Business Day" means any day on which the New York Stock Exchange, Inc. is open for trading and which is not a Legal Holiday. "Capital Lease" means any lease of any property by the Company or any of the Restricted Subsidiaries, as lessee, that should, in accordance with GAAP, be classified and accounted for as a capital lease on the consolidated balance sheet of the Company and its Subsidiaries. "Capital Lease Obligation" means, at the time any determination thereof is to be made, the amount of the liability in respect of a Capital Lease. "Capital Stock" means (i) in the case of a corporation, corporate stock; (ii) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (iii) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (iv) 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 (i) United States dollars and, to the extent received by the Company or any of its Restricted Subsidiaries in the ordinary course of business, foreign currency; (ii) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition; (iii) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial 3 institution meeting the qualifications specified in clause (iii) above; (v) commercial paper having a rating of "P-2" or better from Moody's Investors Service, Inc. or "A-2" or better from Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and in each case maturing within six months after the date of acquisition; (vi) securities issued and fully-guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, rated at least "A" by Moody's Investors Service, Inc. and Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc., and having maturities of not more than six months from the date of acquisition; and (vii) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (i) through (v) of this definition. "Change of Control" means the occurrence of any of the following: (i) the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act); (ii) the approval by the holders of the Voting Stock of the Company of a plan relating to the liquidation or dissolution of the Company or, if no such approval is required, the adoption of a plan relating to the liquidation or dissolution of the Company; (iii) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate Beneficial Owner, directly or indirectly, of 50% or more of the voting power of the Voting Stock of the Company; (iv) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or (v) the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where (A) the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) becomes, directly or indirectly, the beneficial owner (as defined above) of 30% or more of the voting power of all classes of Voting Stock of the Company. "Clearstream" means Clearstream Banking, societe anonyme, Luxembourg. "Commission" means the Securities and Exchange Commission. "Company" means the party named as such above, until a successor replaces such Person in accordance with the terms of this Indenture, and thereafter means such successor. "Consolidated Cash Flow" means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus: (i) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus (ii) 4 Fixed Charges to the extent deducted in computing such Consolidated Net Income; plus (iii) depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income; minus (iv) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue consistent with past practice, in each case, on a consolidated basis and determined in accordance with GAAP. Notwithstanding the preceding sentence, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary of the Company shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Company only to the extent that a corresponding amount would be permitted at the date of determination to be dividended to the Company by such Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Subsidiary or its stockholders. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (i) the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Wholly Owned Restricted Subsidiary thereof; (ii) the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders; (iii) the Net Income of any Person acquired during the specified period for any period prior to the date of such acquisition shall be excluded; (iv) the cumulative effect of a change in accounting principles shall be excluded; and (v) the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the specified Person or one of its Subsidiaries. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (i) was a member of such Board of Directors on the date hereof; or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office" means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at 101 Barclay Street, Floor 8W, New York, New York 10286, Attention: Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to 5 the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Holders and the Company). "Credit Agreement" means that certain Amended and Restated Senior Credit Agreement, dated as of November 4, 2003, by and among the Company, the lenders named therein or who may become party thereto, Wachovia Bank, National Association, as Administrative Agent, Bank of America, N.A. and Cooperatieve Centrale Raiffeisenboerenleenbank B.A. "Rabobank International", New York Branch, as Co-Syndication Agents, and Amsouth Bank and Suntrust Bank, as Co-Documentation Agents, including any related notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and in each case as amended, restated, modified, renewed, refunded, replaced or refinanced from time to time by one or more credit facilities. "Credit Facilities" means, one or more debt facilities (including, without limitation, the Credit Agreement) or commercial paper facilities, in each case with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time by one or more of such facilities. "Default" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.07 hereof, substantially in the form of Exhibit A-1 hereto, except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.04 hereof as the depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Designated Senior Debt" means (i) any Indebtedness outstanding under the Credit Agreement, and (ii) after payment in full of all Obligations under the Credit Agreement, any other Senior Debt permitted under this Indenture the principal amount of which is $25.0 million or more and that has been designated by the Company as "Designated Senior Debt." "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder thereof), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is one year after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute 6 Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless and until the Company first complies with Section 4.10. The term "Disqualified Stock" shall also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the date that is 91 days after the date on which the Notes mature. "Domestic Subsidiary" means any Subsidiary of the Company that was formed under the laws of the United States or any state thereof or the District of Columbia. "Equipment" has the meaning ascribed to it in the UCC. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Equity Offering" means an offer and sale of Equity Interests (other than Disqualified Stock) however designated and whether voting or non-voting, and any and all rights or options to acquire such Equity Interests (other than Disqualified Stock). "Euroclear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euroclear System. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission thereunder. "Exchange Notes" means the Notes issued in the Exchange Offer in accordance with Section 2.07(f) hereof. "Exchange Offer" has the meaning set forth in the Registration Rights Agreement. "Exchange Offer Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Existing Indebtedness" means the aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement and the Notes) in existence on the date hereof, until such amounts are repaid. "Expansion Equipment Sale-Leaseback Transaction" means, in respect of any Equipment acquired by the Company or any of its Restricted Subsidiaries (whether before or after the date of this Indenture) solely in connection with a new store opening, any transaction occurring after the Issue Date whereby such Equipment is sold by and leased back under a Capital Lease to the Company or such Restricted Subsidiary within a period ending not later than the date that is 120 days after the date that such new store commences operations. 7 "fair market value" means the price that would be paid in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined, except as specifically provided in Section 4.11(2), in good faith by the Board of Directors, whose determination shall be conclusive if evidenced by a Board Resolution. "Fixed Charge Coverage Ratio" means with respect to any specified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period. In addition, for purposes of calculating the Fixed Charge Coverage Ratio: (i) acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated on a pro forma basis in accordance with Regulation S-X under the Exchange Act; (ii) the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP shall be excluded; (iii) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Subsidiaries following the Calculation Date; and (iv) consolidated interest expense attributable to interest on any Indebtedness (whether existing or being incurred) computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the Calculation Date (taking into account any interest rate option, swap, cap or similar agreement applicable to such Indebtedness if such agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period. "Fixed Charges" means, with respect to any specified Person for any period, the sum, without duplication, of: (i) the consolidated interest expense of such Person and its Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers' acceptance financings, and net of the effect of all payments made or received pursuant to Hedging Obligations; plus (ii) the consolidated interest of such Person and its Restricted Subsidiaries that 8 was capitalized during such period; plus (iii) any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus (iv) the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Stock or preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the opinions and pronouncements of the Public Company Accounting Oversight Board and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Note Legend" means the legend set forth in Section 2.07(g)(ii), which is required to be placed on all Global Notes issued under this Indenture. "Global Notes" means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, as appropriate, issued in accordance with this Indenture. "Government Securities" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (i) or (ii) are not callable or redeemable at the option of the issuer thereof. "Guarantee" means a guarantee, other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (i) interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates (or, in the case of swaps of fixed-rate to floating-rate Indebtedness, to benefit from decreases in interest rates); (ii) commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements designed to protect such Person against fluctuations in commodity prices; and (iii) foreign exchange contracts, currency 9 swap agreements and other agreements or arrangements designed to protect such Person against fluctuations in foreign currency exchange rates. "Holder" means a Person in whose name a Note is registered on the Registrar's books. "incur" means, with respect to any Indebtedness, to incur, create, issue, assume, Guarantee or otherwise become directly or indirectly liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness; provided that (i) any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary shall be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary and (ii) neither the accrual of interest nor the accretion of original issue discount nor the payment of interest in the form of additional Indebtedness (to the extent provided for when the Indebtedness on which such interest is paid was originally issued) shall be considered an incurrence of Indebtedness. "Indebtedness" means, without duplication, with respect to any specified Person, any indebtedness of such Person, whether or not contingent, in respect of: (i) borrowed money; (ii) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations described in clause (v) below entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement; (iii) banker's acceptances; (iv) Capital Lease Obligations; (v) the balance deferred and unpaid of the purchase price of any property which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except any such balance that constitutes an accrued expense or trade payable; (vi) Hedging Obligations, other than Hedging Obligations that are incurred for the purpose of protecting the Company or its Restricted Subsidiaries against fluctuations in interest rates (or, in the case of swaps of fixed-rate to floating-rate Indebtedness, to benefit from decreases in interest rates), commodity prices or foreign currency exchange rates, and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; or (vii) Disqualified Stock valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends, if and to the extent any of the preceding items (other than letters of credit, Hedging Obligations and Disqualified Stock) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes (x) all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person), provided that the amount of such Indebtedness shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness, and (y) to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which 10 Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Disqualified Stock. The amount of any Indebtedness outstanding as of any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, and shall be: (i) the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and (ii) the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness; provided that the obligation to repay money borrowed and set aside at the time of the incurrence of any Indebtedness in order to pre-fund the payment of the interest on such Indebtedness shall be deemed not to be "Indebtedness" so long as such money is held to secure the payment of such interest. "Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof. "Indirect Participant" means a Person who holds a beneficial interest in a Global Note through a Participant. "Initial Purchasers" means Wachovia Capital Markets, LLC and Morgan Joseph & Co. Inc. "Institutional Accredited Investor" means an institution that is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans or other extensions of credit (including Guarantees or other arrangements, but excluding advances to customers or suppliers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of the Company or its Restricted Subsidiaries and endorsements for collection or deposit arising in the ordinary course of business), advances (excluding commission, travel and similar advances to officers and employees made consistent with past practices), capital contributions (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Investment in such Restricted Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.10. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person shall be deemed to be an Investment by the Company or such Restricted Subsidiary 11 in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person in an amount determined as provided in the final paragraph of Section 4.10. "Issue Date" means the date hereof, which is the date on which the Notes are originally issued under this Indenture. "Letter of Transmittal" means the Letter of Transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Net Income" means, with respect to any specified Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however (1) any gain or loss, together with any related provision for taxes on such gain (or loss), realized in connection with (a) any asset sale outside the ordinary course of business or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and (2) any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss. "Net Proceeds" means the aggregate cash proceeds received by the Company or any of its Restricted 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, and sales commissions, and any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of 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 or any liabilities associated with the assets disposed of in such transaction, including, without limitation, pension and other post-employment liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction, in each case, in accordance with GAAP. "Non-U.S. Person" means a Person who is not a U.S. Person. "Notes" means the 9% Senior Subordinated Notes due 2013 of the Company issued on the date hereof. For all purposes of this Indenture, the term "Notes" shall include the Notes initially issued on the Issue Date, any Exchange Notes to be issued and exchanged for any Notes 12 pursuant to the Registration Rights Agreement and this Indenture and any other Notes issued after the Issue Date under this Indenture. For purposes of this Indenture, all Notes shall vote together as one series of Notes under this Indenture. "Notes Custodian" means the custodian with respect to a Global Note (as appointed by the Depository), or any successor person thereto and shall initially be the Trustee. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the President, any Vice President, the Chief Financial Officer or the Treasurer of such Person. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Officers, one of which must be the principal executive, principal financial or principal accounting officer of such Person. "Opinion of Counsel" means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company (or any Subsidiary Guarantor, if applicable). "Participant" means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and with respect to DTC, shall include Euroclear and Clearstream). "Participating Broker-Dealer" has the meaning set forth in the Registration Rights Agreement. "Permitted Business" means any business conducted or proposed to be conducted (as described in the Company's Offering Memorandum dated October 30, 2003 related to the Notes) by the Company and its Restricted Subsidiaries on the date hereof and other businesses reasonably related, ancillary or complementary thereto. "Permitted Investments" means (i) any Investment in the Company or in a Restricted Subsidiary of the Company; (ii) any Investment in Cash Equivalents; (iii) any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment, (a) such Person becomes a Restricted Subsidiary of the Company; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company; (iv) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.11 hereof; (v) Investments acquired solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (vi) Hedging Obligations that are incurred for the purpose of protecting the Company or its Restricted Subsidiaries against fluctuations in interest rates (or, in the case of swaps of fixed-rate to floating-rate Indebtedness, to benefit from decreases in interest rates), commodity prices or foreign currency exchange rates, and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of 13 fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; (vii) stock, obligations or securities received in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement under the bankruptcy or insolvency of any debtor; (viii) any acquisition of assets solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company; (ix) payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business; (x) loans or advances to employees made in the ordinary course of business of the Company or any Restricted Subsidiary not to exceed $1.0 million outstanding at any one time for all loans or advances under this clause (x); (xi) Investments in existence on the date of the Indenture; (xii) Guarantees issued in accordance with Section 4.09; (xiii) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (xiii) at that time outstanding, not to exceed $15.0 million; and (xix) investments in "rabbi trusts" made by the Company or a Restricted Subsidiary in connection with executive deferred compensation arrangements entered into by the Company or such Restricted Subsidiary in the ordinary course of business consistent with past practice. "Permitted Junior Securities" means (i) Equity Interests in the Company or any Subsidiary Guarantor or any other business entity provided for by a plan of reorganization, or (ii) debt securities of the Company or any Subsidiary Guarantor or any other business entity provided for by a plan of reorganization, in each case, that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to the same extent as, or to a greater extent than, the Notes and the Subsidiary Guarantees are subordinated to Senior Debt under this Indenture. "Permitted Liens" means (i) Liens on the assets of the Company and any Restricted Subsidiary securing Senior Debt that was permitted by the terms of this Indenture to be incurred; (ii) Liens in favor of the Company or any Restricted Subsidiary; (iii) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary; (iv) Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Company or the Restricted Subsidiary; (v) Liens existing on the Issue Date; (vi) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (4) of the second paragraph of Section 4.09 covering only the assets acquired with such Indebtedness; (vii) statutory and common law Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other similar Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate legal proceedings promptly instituted and diligently conducted and for which a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made; (viii) (a) Liens on cash or Cash Equivalents securing Hedging Obligations of the Company or any of its Restricted Subsidiaries that do not constitute Indebtedness or securing letters of 14 credit that support such Hedging Obligations and (b) Liens securing Hedging Obligations of the Company or any of its Restricted Subsidiaries that do not constitute Indebtedness and that fix, hedge or swap interest-rate risk on the Notes; (ix) Liens for taxes, assessments and governmental charges not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by GAAP; (x) Liens incurred or deposits made in the ordinary course of business in connection with worker's compensation, unemployment insurance or other social security obligations; (xi) Liens, deposits or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of Indebtedness), leases, or other similar obligations arising in the ordinary course of business; (xii) survey exceptions, encumbrances, easements or reservations of, or rights of others for, rights of way, zoning or other restrictions as to the use of properties, and defects in title which, in the case of any of the foregoing, were not incurred or created to secure the payment of Indebtedness, and which in the aggregate do not materially adversely affect the value of such properties or materially impair the use for the purpose of which such properties are held by the Company or any Restricted Subsidiaries; (xiii) judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made; (xiv) Liens, deposits or pledges to secure public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds or obligations, and Liens, deposits or pledges in lieu of such bonds or obligations, or to secure letters of credit in lieu of our supporting the payment of such bonds or obligations; (xv) Liens on property or assets used to defease Indebtedness that was not Incurred in violation of the Indenture; (xvi) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary on deposit with or in possession of such banks; (xvii) any interest or title or a lessor, licensor or sublicensor in the property subject to any lease, license or sublicense entered into in the ordinary course of business; (xviii) Liens arising from precautionary UCC financing statements regarding operating leases or consignments; and (xix) Liens (other than Liens permitted by clauses (i) through (xviii)) incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations (other than Indebtedness) that do not exceed $5.0 million at any one time outstanding. "Permitted Refinancing Indebtedness" means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that: (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity date the same as or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Subsidiary Guarantees, such 15 Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (iv) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is pari passu in right of payment to the Notes or the Subsidiary Guarantees, such Permitted Refinancing Indebtedness is pari passu or subordinated in right of payment to the Notes; and (v) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Permitted Sale and Leaseback Transaction" means the sale and leaseback transactions to be consummated among the Company, O'Charley's Restaurant Properties, LLC and CNL Funding 2001-A LP or any affiliate thereof after the Issue Date pursuant to purchase agreements and leases to be entered into effectuating a letter of intent dated September 2, 2003 between the Company and CNL Restaurant Capital, LP, as amended pursuant to a letter agreement dated October 29, 2003, and as such letter of intent may be further amended to provide for additional sale and leaseback transactions, provided that the total number of O'Charley's restaurant properties to be sold and leased back pursuant to such transactions after the Issue Date shall not exceed 20 and the total gross proceeds derived therefrom shall not exceed $35 million. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Private Placement Legend" means the legend set forth in Section 2.07(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Redemption Date" when used with respect to any Note to be redeemed means the date fixed for such redemption pursuant to Article Three of the this Indenture and paragraphs 7 and 10 of the form of Note attached hereto as Exhibit A-1 and Exhibit A-2. "Redemption Price" when used with respect to any Note to be redeemed pursuant to any provision of this Indenture means the price at which it is to be redeemed pursuant to this Indenture, which shall include, in each case, any accrued and unpaid interest to the Redemption Date. "Registration Rights Agreement" means the Registration Rights Agreement dated November 4, 2003 among the Company, the Subsidiary Guarantors and the Initial Purchasers, or any other Registration Rights Agreement executed in connection with the issuance of Initial Notes after the Issue Date, as the case may be. "Regulation S" means Regulation S under the Securities Act, as amended from time to time. 16 "Regulation S Global Note" means a Regulation S Temporary Global Note or a Regulation S Permanent Global Note, as appropriate. "Regulation S Permanent Global Note" means a permanent global Note in the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount at maturity of the Regulation S Temporary Global Note upon expiration of the Restricted Period. "Regulation S Temporary Global Note" means a temporary global Note in the form of Exhibit A-2 hereto bearing the Global Note Legend, the Private Placement Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount at maturity of the Securities initially sold in reliance on Rule 903 of Regulation S. "Regulation S Temporary Global Note Legend" means the legend set forth in Section 2.07(g)(iii), which is required to be placed on all Regulation S Temporary Global Notes issued under this Indenture. "Representative" means the indenture trustee or other trustee, agent or representative in respect of any Senior Debt; provided that if, and for so long as, any such Indebtedness lacks such representative, then the Representative for such Senior Debt shall at all times constitute the holders of a majority in outstanding principal amount of such Indebtedness in respect of any Senior Debt. "Replacement Assets" means (1) non-current tangible assets that will be used or useful in a Permitted Business, (2) substantially all the assets of a Permitted Business or a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary or (3) Investments to the extent permitted under Section 4.10 (other than Investments described in clause (iv) of the definition of "Permitted Investments"). "Restricted Definitive Note" means a Definitive Note bearing the Private Placement Legend. "Restricted Global Note" means a Global Note bearing the Private Placement Legend. "Restricted Investment" means an Investment other than a Permitted Investment. "Restricted Period" means the 40-day restricted period as defined in Regulation S. "Restricted Subsidiary" of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. "Rule 144" means Rule 144 promulgated under the Securities Act. 17 "Rule 144A" means Rule 144A promulgated under the Securities Act. "Rule 903" means Rule 903 promulgated under the Securities Act. "Rule 904" means Rule 904 promulgated under the Securities Act. "Sale and Leaseback Transaction" means, with respect to any Person, any transaction involving any of the assets or properties of such Person whether now owned or hereafter acquired, whereby such Person sells or transfers such assets or properties and then or thereafter leases such assets or properties or any part thereof or any other assets or properties which such Person intends to use for substantially the same purpose or purposes as the assets or properties sold or transferred, but excluding the Permitted Sale and Leaseback Transaction, any Build-to-Suit Sale-Leaseback Transaction and any Expansion Equipment Sale-Leaseback Transaction. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Senior Debt" means (i) all Indebtedness of the Company or any Subsidiary Guarantor outstanding under the Credit Facilities and all Hedging Obligations with respect thereto, (ii) any other Indebtedness of the Company or any Subsidiary Guarantor permitted to be incurred under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes or any Subsidiary Guarantee, and (iii) all other Obligations with respect to the items listed in the preceding clauses (i) and (ii). Notwithstanding anything to the contrary in the preceding sentence, Senior Debt shall not include (i) any liability for federal, state, local or other taxes owed or owing by the Company or any Subsidiary Guarantor, (ii) any Indebtedness of the Company or any Subsidiary Guarantor to any Subsidiaries or other Affiliates of the Company, (iii) any trade payables; (iv) the portion of any Indebtedness that is incurred in violation of this Indenture, (v) any Indebtedness of the Company or any Subsidiary Guarantor that, when incurred, was without recourse to the Company or such Subsidiary Guarantor, (vi) any repurchase, redemption or other obligation in respect of Disqualified Stock or any rights with respect thereto, or (vii) any Indebtedness owed to any employee of the Company or any of its Subsidiaries. "Shelf Registration Statement" has the meaning set forth in the Registration Rights Agreement. "Significant Subsidiary" means any Subsidiary that would constitute a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the date hereof. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. 18 "Subsidiary" means, with respect to any specified Person: (i) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof). "Subsidiary Guarantor" means: (i) Air Travel Services, Inc., DFI, Inc., O'Charley's Finance Company, Inc., O'Charley's Management Company, Inc., O'Charley's Restaurant Properties, LLC, O'Charley's Service Company, Inc., O'Charley's Sports Bar, Inc., OCI, Inc., OPI, Inc., 99 Commissary, LLC, 99 Restaurants, LLC, 99 Restaurants of Boston, LLC, 99 Restaurants of Massachusetts, a Massachusetts Business Trust, 99 Restaurants of Vermont LLC, 99 West, Inc., Stoney River Management Company, Inc., Stoney River, LLC and Stoney River Legendary Management, L.P.; and (ii) any other Subsidiary that executes a Subsidiary Guarantee in accordance with the provisions of this Indenture; and their respective successors and assigns until released from their obligations under their Subsidiary Guarantees and this Indenture in accordance with the terms of this Indenture. "TIA" means the Trust Indenture Act of 1939 as in effect on the date hereof, except as provided in Section 9.03. "Trust Officer" means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor. "UCC" means the Uniform Commercial Code as in effect in the State of New York, as amended, from time to time. "Unrestricted Definitive Note" means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend. "Unrestricted Global Note" means a permanent Global Note substantially in the form of Exhibit A-1 attached hereto that bears the Global Note Legend and that has the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing a series of Notes that do not bear the Private Placement Legend. 19 "Unrestricted Subsidiary" means any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution in compliance with Section 4.17 hereof and any Subsidiary of such Subsidiary. "U.S. Person" means a U.S. person as defined in Rule 902(k) under the Securities Act. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (ii) the then outstanding principal amount of such Indebtedness. "Wholly Owned Restricted Subsidiary" of any specified Person means a Restricted Subsidiary of such Person all of the outstanding Capital Stock or other ownership interests of which (other than directors' qualifying shares or Investments by foreign nationals mandated by applicable law) shall at the time be owned by such Person or by one or more Wholly Owned Restricted Subsidiaries of such Person. Section 1.02.Other Definitions. Term Defined in Section "Additional Notes"................................................................................... 2.15 "Affiliate Transaction".............................................................................. 4.14 "Asset Sale Offer"................................................................................... 4.11 "Authentication Order"............................................................................... 2.02 "Bankruptcy Law"..................................................................................... 6.01 "Change of Control Offer"............................................................................ 4.16 "Change of Control Payment".......................................................................... 4.16 "Change of Control Payment Date"..................................................................... 4.16 "Covenant Defeasance"................................................................................ 13.03 "Custodian".......................................................................................... 6.01 "DTC"................................................................................................ 2.04 "Event of Default"................................................................................... 6.01 "Excess Proceeds".................................................................................... 4.11 "Funding Guarantor".................................................................................. 11.03 "interest"........................................................................................... 4.01 "Legal Defeasance"................................................................................... 13.02 "Legal Holiday"...................................................................................... 14.07 "nonpayment default"................................................................................. 10.03 "Note Register"...................................................................................... 2.04

20 "Paying Agent"....................................................................................... 2.04 "Payment Blockage Notice"............................................................................ 10.03 "Permitted Debt"..................................................................................... 4.09 "Registrar".......................................................................................... 2.04 "Restricted Payments"................................................................................ 4.10 "Subsidiary Guarantee"............................................................................... 11.01

Section 1.03.Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms, if used in this Indenture, have the following meanings: "Commission" means the Commission. "indenture securities" means the Notes and the Subsidiary Guarantees. "indenture trustee" means the Trustee. "obligor" on the indenture securities means the Company, the Subsidiary Guarantors and any other obligor on the Notes or the Subsidiary Guarantees. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meanings assigned to them therein. Section 1.04 .Rules of Construction. Unless the context otherwise requires: (1) a term has the meaning assigned to it; (2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (3) "or" is not exclusive; (4) words in the singular include the plural, and words in the plural include the singular; (5) any gender used in this Indenture shall be deemed to include the neuter, masculine or feminine genders; (6) provisions apply to successive events and transactions; (7) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other Subdivision; and 21 (8) references to sections and articles refer to sections and articles of this Indenture unless the context indicates otherwise. ARTICLE TWO THE NOTES Section 2.01.Form and Dating. The Initial Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 or Exhibit A-2 hereto, the terms of which are incorporated in and made a part of this Indenture. To the extent any provision of any Note conflicts with the express provision of this Indenture, the provisions of this Indenture shall control. The Notes may have such notations, legends or endorsements approved as to form by the Company and required, as applicable, by law, stock exchange rule, agreements to which the Company is subject and/or usage. Each Note shall be dated the date of its authentication. The Notes shall be issuable only in denominations of $1,000 and integral multiples thereof. The terms of the Notes set forth in Exhibit A-1 and Exhibit A-2 are part of the terms of this Indenture. (a) Global Notes. Notes issued in global form shall be substantially in the form of Exhibits A-1 and A-2 attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A-1 attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.07 hereof. (b) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for The Depository Trust Company in New York, New York, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period shall be terminated upon the receipt by the Trustee of (i) a written certificate from Euroclear and Clearstream certifying that they have received certification of non-U.S. Person beneficial ownership of 100% of the aggregate principal amount at maturity of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who shall take delivery of a beneficial 22 ownership interest in a 144A Global Note bearing a Private Placement Legend, all as contemplated by (Section 2.07(a)(ii) hereof)), and (ii) an Officers' Certificate from the Company. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in Regulation S Permanent Global Note pursuant to the Applicable Procedures. Simultaneously with the authentication of Regulation S Permanent Global Note, the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided. (c) Euroclear and Clearstream Procedures Applicable. The provisions of the "Operating Procedures of the Euroclear System" and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and Conditions of Clearstream" and "Customer Handbook" of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream. Section 2.02. Execution and Authentication. Two Officers of the Company shall sign the Notes for the Company, by manual or facsimile signature. If an Officer of the Company whose signature is on a Note no longer holds that office at the time such Note is authenticated such Note shall be valid nevertheless. A Note shall not be valid until authenticated by the manual signature of the Trustee. The signature of the Trustee shall be conclusive evidence that a Note has been authenticated in accordance with the terms of this Indenture. The Trustee, upon a written order of the Company signed by two Officers of the Company (an "Authentication Order"), shall authenticate and deliver Notes for original issue in an aggregate principal amount specified in such order. Such Authentication Order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated. The aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is unlimited. The Trustee may appoint an authenticating agent acceptable to the Company to authenticate the Notes. Unless limited by the terms of such appointment, any such authenticating agent may authenticate the Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such authenticating agent of the Trustee. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. Section 2.03. Methods of Receiving Payments on the Notes. If a Holder has given wire transfer instructions to the Company, the Company shall pay all principal, interest and premium, if any, on that Holder's Notes to an account maintained by 23 the Trustee or the Paying Agent in the State of New York, and such Trustee or Paying Agent will make the payments in accordance with those instructions, provided such payment is in excess of $5,000,000. All other payments on the Notes or Subsidiary Guarantees shall be made at the office or agency of the Paying Agent and Registrar within the State of New York. Section 2.04. Registrar and Paying Agent. The Company shall maintain (i) an agency where the Notes may be presented for registration of transfer or for exchange (including any co-registrar, the "Registrar"); and (ii) an agency where the Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Holders of Notes and of the transfer and exchange of such Notes (the "Note Register"). The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Paying Agent" shall include any such additional paying agent. The Company may change any Paying Agent, Registrar or co-registrar without prior notice to any Holder of a Note. However, the Paying Agent, the Registrar and any co-registrar or co-paying agent shall at all times have and maintain their respective principal places of business in the State of New York. The Company shall notify the Trustee and the Trustee shall, at the Company's expense, notify the Holders of the Notes of the name and address of any Agent not a party to this Indenture. Neither the Company nor any of its Subsidiaries may act as Paying Agent, Registrar or co-registrar or co-paying agent. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture, which shall incorporate the provisions of the TIA. Any such agency agreement shall implement the provisions of this Indenture that relate to such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as such, as appropriate, and shall be entitled to appropriate compensation in accordance with Section 7.07. The Company initially appoints The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes. The Company initially appoints the Trustee to act as (i) Registrar and Paying Agent, (ii) Note Custodian with respect to the Global Notes and (iii) agent for service of notices and demands in connection with the Notes. Section 2.05. Paying Agent to Hold Money in Trust. On or prior to 11:00 am Eastern Time on each due date of the principal of, premium, if any, and interest on any Note, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal, premium, if any, and interest when so becoming due. Any funds provided by the Company or any Subsidiary Guarantor to the Trustee or any Paying Agent for the purpose of making any payments on the Notes or the Subsidiary Guarantees (as the case may be), whether pursuant to the Indenture or the Registration Rights Agreement, must be held in an account maintained by the Trustee or such Paying Agent in the State of New York. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders of the Notes or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, and interest on the Notes, and shall notify the Trustee of any Default by the Company in making any such payment. While any 24 such Default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee and accounting for any funds disbursed, the Paying Agent shall have no further liability for the money delivered to the Trustee. Section 2.06. Lists of Holders of Notes. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders of Notes. If the Trustee is not the Registrar, the Company shall furnish or cause to be furnished to the Trustee at least ten Business Days before each interest payment date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes, including the aggregate principal amount of Notes held by each such Holder of Notes. Section 2.07. Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes shall be exchanged by the Company for Definitive Notes if: (i) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days after the date of such notice from the Depositary; (ii) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or (iii) there shall have occurred and be continuing a Default or Event of Default with respect to the Notes. Upon the occurrence of either of the preceding events in (i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.10 hereof. Except as otherwise provided above in this Section 2.07(a), every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.07 or Section 2.08 or 2.10 hereof, shall be authenticated and delivered in the form of, 25 and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.07(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.07(b), (c) or (f) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable: (i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.07(b)(i). (ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.07(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (B)(1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903 under the Securities Act. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.07(f) hereof, the requirements of this Section 2.07(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests 26 in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount at maturity of the relevant Global Notes pursuant to Section 2.07(h) hereof. (iii) Transfer of Beneficial Interests in a Restricted Global Note to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.07(b)(ii) above and the Registrar receives the following: (A) if the transferee shall take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; and (B) if the transferee shall take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof. (iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in the Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.07(b)(ii) above and: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder of the beneficial interest to be transferred, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Participating Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a 27 certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or (2) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. If any such transfer is effected pursuant to subparagraph (B) or (D) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to subparagraph (B) or (D) above. Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note. (c) Transfer or Exchange of Beneficial Interests for Definitive Notes. (i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any Holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof; (B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; (C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the 28 Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; (D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof; (E) if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable; (F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or (G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.07(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.07(c) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.07(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein. (ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.07(c)(i)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (x) the expiration of the Restricted Period and (y) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904. 29 (iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A Holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if: (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder of such beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Participating Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Private Placement Legend, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or (2) if the Holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note that does not bear the Private Placement Legend, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any Holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, 30 then, upon satisfaction of the conditions set forth in Section 2.07(b) (ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.07(h) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.07(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.07(c)(iv) shall not bear the Private Placement Legend. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests. (i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation: (A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof; (B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof; or (C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904 under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof; the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, and in the case of clause (C) above, the Regulation S Global Note. (ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if: 31 (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Participating Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or (2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.07(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note. (iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes. 32 If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.07(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.07(e). (i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following: (A) if the transfer is being made to a QIB in accordance with Rule 144A under the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; (B) if the transfer is being made to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; (C) if the transfer is being made to an Institutional Accredited Investor pursuant to an exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable; and (D) if the transfer is being made to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certification, certificates and Opinion of Counsel required by item 3(b) thereof, if applicable. (ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if: 33 (A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with the Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, certifies in the applicable Letter of Transmittal that it is not (1) a Participating Broker-Dealer, (2) a Person participating in the distribution of the Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144) of the Company; (B) any such transfer is effected pursuant to the Shelf Registration Statement in accordance with the Registration Rights Agreement; (C) any such transfer is effected by a Participating Broker-Dealer pursuant to the Exchange Offer Registration Statement in accordance with the Registration Rights Agreement; or (D) the Registrar receives the following: (1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or (2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof; and, in each such case set forth in this subparagraph (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act. (iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof. (f) Exchange Offer. Upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Restricted Global Notes tendered for acceptance by Persons that certify in the applicable Letters of Transmittal that (x) they are not Participating Broker-Dealers, 34 (y) they are not participating in a distribution of the Exchange Notes and (z) they are not affiliates (as defined in Rule 144) of the Company, and accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount equal to the principal amount of the Restricted Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Restricted Global Notes to be reduced accordingly, and the Company shall execute and the Trustee shall authenticate and deliver to the Persons designated by the Holders of Restricted Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate principal amount. Any Notes that remain outstanding after the consummation of the Exchange Offer, and Exchange Notes issued in connection with the Exchange Offer, shall be treated as a single class of securities under this Indenture. (g) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture. (i) Private Placement Legend. Except as permitted below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form: "THIS SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT: (A) SUCH SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON-U.S. PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL 35 "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR ")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION, IF ANY, FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THIS SECURITY BY THE HOLDER OR BY ANY INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL; AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. THIS SECURITY MAY NOT BE ACQUIRED OR HELD WITH THE ASSETS OF (I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO ERISA, (II) A "PLAN" DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) ANY ENTITY DEEMED TO HOLD "PLAN ASSETS" OF ANY OF THE FOREGOING BY REASON OF AN EMPLOYEE BENEFIT PLAN'S OR PLAN'S INVESTMENT IN SUCH ENTITY, OR (IV) A GOVERNMENTAL PLAN OR CHURCH PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE ("SIMILAR LAW"), UNLESS THE ACQUISITION AND HOLDING OF THIS SECURITY 36 BY THE PURCHASER OR TRANSFEREE, THROUGHOUT THE PERIOD THAT IT HOLDS THIS SECURITY, ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS UNDER ERISA AND SECTION 4975 OF THE CODE OR ANY PROVISIONS OF SIMILAR LAW, AS APPLICABLE, PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. BY ITS ACQUISITION OR HOLDING OF THIS SECURITY, EACH PURCHASER AND TRANSFEREE WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT THE FOREGOING REQUIREMENTS HAVE BEEN SATISFIED." Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.07 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend. (ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form: "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN." 37 (iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form: THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. (h) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (i) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company's order or at the Registrar's request. (ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid and legally binding obligations of the Company, evidencing the same debt, and entitled to the same 38 benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.03 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.07 to effect a registration of transfer or exchange may be submitted by facsimile with the original to follow by first class mail. (j) No Obligation of the Trustee. (i) The Trustee shall have no responsibility or obligation to any beneficial owner in a Global Note, a member of, or a participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to or upon the order of the registered Holders (which shall be the Depository or its nominee in the case of the Global Note). The rights of beneficial owners in the Global Note shall be exercised only through the Depository subject to the applicable rules and procedures of the Depository. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, participants and any beneficial owners. (ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depository participants, members or beneficial owners in the Global Note) other than to make any required delivery of such certificates and other 39 documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. Section 2.08. Replacement Notes. If any mutilated Note is surrendered to the Trustee, or the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Company's and the Trustee's reasonable requirements for the replacements of Notes are met. An indemnity bond shall be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent or any authenticating agent from any loss which any of them may suffer if a Note is replaced. The Company may charge for its expenses (including fees and expenses of the Trustee) in replacing a Note. Every replacement Note shall be an obligation of the Company and shall be entitled to all benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.09. Outstanding Notes; Treasury Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee, except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.09 as not outstanding. A Note does not cease to be outstanding because the Company, a Subsidiary Guarantor or any of their respective Subsidiaries or Affiliates of the Company holds such Note. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, any Subsidiary Guarantor or an Affiliate of the Company shall be considered as though they are not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. If a Note is replaced pursuant to Section 2.08, it shall cease to be outstanding unless the Trustee receives proof satisfactory to it that such replaced Note is held by a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of such Note and replacement thereof pursuant to Section 2.08. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a Redemption Date or maturity date of the Notes, money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Holders of Notes on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) shall cease to be outstanding and interest thereon shall cease to accrue. 40 Section 2.10. Temporary Notes. Until certificates in definitive form for the Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate certificates in temporary form for the Notes. Certificates in temporary form for the Notes shall be substantially in the form of certificates in definitive form for the Notes but may have such variations as the Company and the Trustee consider appropriate for certificates in temporary form for the Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate certificates in definitive form for the Notes in exchange for certificates in temporary form for the Notes. Until such exchange, certificates in temporary form for the Notes shall be entitled to the same rights, benefits and privileges as certificates in definitive form for the Notes. Section 2.11. Cancellation. The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation, and shall dispose of such canceled Notes in its customary manner. Section 2.12. Defaulted Interest. If the Company defaults in a payment of interest on the Notes, the Company shall pay such defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a subsequent record date, in each case at the rate provided in the Notes and in Section 4.01 hereof, which date shall be at the earliest practicable date but in all events at least five Business Days prior to the payment date. The Company shall fix or cause to be fixed any such record date and payment date, and, at least 15 days prior to the special record date, the Company shall mail or cause to be mailed to each Holder of a Note a notice that states such record date, such related payment date and the amount of any such defaulted interest to be paid to Holders of the Notes. Section 2.13. CUSIP Number. The Company in issuing the Notes may use a "CUSIP" number, and, if the Company shall do so, the Trustee shall use such CUSIP number in notices of redemption or exchange as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP number printed in such notice or on the Notes and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in a CUSIP number. Section 2.14. Persons Deemed Owners. The Company, any Subsidiary Guarantor, the Trustee, any Paying Agent and any authenticating agent may treat the Person in whose name any Note is registered as the owner of such Note for the purpose of receiving payments of principal of, premium, if any, or interest on such Note and for all other purposes. None of the Company, any Subsidiary Guarantor, the 41 Trustee, any Paying Agent or any authenticating agent shall be affected by any notice to the contrary. Section 2.15. Issuance of Additional Notes. The Company may, subject to Article Four of this Indenture and applicable law, issue additional Notes under this Indenture (the "Additional Notes"). The Notes issued on the Issue Date and any additional Notes subsequently issued shall be treated as a single class for all purposes under this Indenture. ARTICLE THREE REDEMPTION Section 3.01. Rights of Redemption. (a) In addition to the provisions of Sections 4.11 and 4.16 hereof, the Notes are subject to redemption at any time on or after November 1, 2008, at the option of the Company, in whole or in part, subject to the conditions and at the Redemption Prices specified in the form of Note attached hereto as Exhibit A-1 and Exhibit A-2, together with accrued and unpaid interest, if any, to the Redemption Date (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date). (b) In addition, at any time prior to November 1, 2006, the Company, at its option, may use the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the aggregate original principal amount of Notes originally issued under this Indenture, subject to any restriction or other provisions relating thereto contained in any Senior Debt, at a redemption price of 109% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Redemption Date (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date); provided that at least 65% of the aggregate principal amount of Notes originally issued hereunder remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); provided, further, that any such redemption must occur within 60 days of the closing of such Equity Offering. Section 3.02. Notice to Trustee. If the Company elects to redeem Notes pursuant to the optional redemption provisions of paragraph 6 of the Notes, it shall furnish to the Trustee, at least 45 days but not more than 60 days before the Redemption Date, an Officers' Certificate setting forth the Redemption Date, the principal amount of Notes to be redeemed and the Redemption Price. Section 3.03. Selection of Notes to Be Redeemed. If less than all of the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed in multiples of $1,000 pro rata, by lot or by any other method that the Trustee 42 considers fair and appropriate; provided that if the Notes are listed on any securities exchange, such method must comply with the requirements of such exchange. The Trustee shall make the selection from outstanding Notes not previously called for redemption not less than 30 nor more than 60 days prior to the Redemption Date. The Trustee may select for redemption portions of the principal of Notes that have denominations larger than $1,000. Notes and portions of them it selects shall be in amounts of $1,000 or whole multiples of $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company promptly of the Notes or portions of Notes selected for redemption. Section 3.04. Notice of Redemption. (a) At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail to each Holder of Notes to be redeemed at such Holder's registered address. The notice shall identify the Notes to be redeemed and shall state: (1) the Redemption Date; (2) the Redemption Price, including the amount of accrued and unpaid interest, if any, to be paid upon such redemption; (3) the aggregate principal amount of Notes being redeemed; (4) the name, address and telephone number of the Paying Agent; (5) that Notes called for redemption must be surrendered to the Paying Agent at the address specified in such notice to collect the Redemption Price; (6) that, unless the Company defaults in the payment of the Redemption Price or accrued interest, interest on Notes called for redemption ceases to accrue on and after the Redemption Date and the only remaining right of the Holders is to receive payment of the Redemption Price and accrued interest upon surrender to the Paying Agent of the Notes called for redemption and to be redeemed; (7) if any Note is being redeemed in part, the portion of the principal amount of such Note, equal to $1,000 or any integral multiple thereof, to be redeemed and that, after the Redemption Date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued; (8) the paragraph of the Notes pursuant to which the Notes called for redemption are being redeemed; and (9) the CUSIP number of the Notes. 43 (b) At the Company's request, the Trustee shall give the notice of redemption required in Section 3.04(a) in the Company's name and at the Company's expense; provided, however, that the Company shall deliver to the Trustee, at least 45 days prior to the Redemption Date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in Section 3.04(a). (c) A notice of redemption under this Indenture may not be conditional. Section 3.05. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.04, Notes called for redemption become due and payable on the Redemption Date at the Redemption Price. Upon surrender to the Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued interest to the Redemption Date. Section 3.06. Deposit of Redemption Price. Prior to 11:00 am Eastern Time on the Redemption Date, the Company shall deposit with the Paying Agent funds available on the Redemption Date sufficient to pay the Redemption Price of, and accrued interest on, the Notes to be redeemed on that date. The Paying Agent shall promptly return to the Company any money so deposited which is not required for that purpose upon the written request of the Company, except with respect to monies owed as obligations to the Trustee pursuant to Article Seven. If any Note called for redemption shall not be so paid upon redemption because of the failure of the Company to comply with the preceding paragraph, interest will continue to be payable on the unpaid principal and premium, if any, including from the Redemption Date until such principal and premium, if any, is paid, and, to the extent lawful, on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.07. Notes Redeemed in Part. Upon surrender of a Note that is to be redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder, at the expense of the Company, a new Note equal in aggregate amount to the unredeemed portion of the Note surrendered. ARTICLE FOUR COVENANTS Section 4.01. Payment of Notes. The Company shall pay the principal of, premium, if any, and interest on, the Notes on the dates and in the manner provided in the Notes and this Indenture. Principal, premium, if any, and interest shall be considered paid on the date due if the Trustee or Paying Agent holds on that date money deposited by the Company designated for and sufficient to pay all principal, 44 premium, if any, and interest then due. Reference in this Indenture and the Notes to "interest" with respect to the Notes shall include any interest payable under the terms of the Notes, including any additional interest that accrues on the Notes as a result of the provisions of the Registration Rights Agreement, which additional interest on the Notes shall be due and payable as provided by the Registration Rights Agreement. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal, and premium, if any, at the rate borne by the Notes to the extent lawful; and it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Commission Reports. (a) Whether or not required by the Commission, so long as any Notes are outstanding, the Company shall furnish to the Trustee for forwarding to the Holders of Notes, within the time periods specified in the Commission's rules and regulations: (1) all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by the Company's certified independent accountants; and (2) all current reports that would be required to be filed with the Commission on Form 8-K if the Company were required to file such reports. In addition, whether or not required by the Commission, the Company shall file a copy of all of the information and reports referred to in clauses (1) and (2) above with the Commission for public availability within the time periods specified in the Commission's rules and regulations (unless the Commission will not accept such a filing) and make such information available to Holders and prospective investors upon request. In addition, the Company and the Subsidiary Guarantors shall, for so long as any Notes remain outstanding, furnish to the Holders and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. (b) If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by the preceding paragraph shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company. 45 (c) Delivery of such reports, information, and documents to the Trustee pursuant to the provisions of this Section 4.02 is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). Section 4.03. Compliance Certificates. (a) The Company (and each Subsidiary Guarantor to the extent that such Subsidiary Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Company and its Subsidiaries (or such Subsidiary Guarantor and its Subsidiaries) during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company (or such Subsidiary Guarantor) has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Company (or such Subsidiary Guarantor) has kept, observed, performed and fulfilled its obligations under this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company (or such Subsidiary Guarantor) is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company (or such Subsidiary Guarantor) is taking or proposes to take with respect thereto. (b) The Company shall, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith (and, in any event, within 10 days) upon any Officer becoming aware of any Default or Event of Default, an Officers' Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto. Section 4.04. Maintenance of Office or Agency. The Company shall maintain at all times in the Borough of Manhattan, The City of New York, an office or agency where Notes may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company initially designates The Bank of New York, 101 Barclay Street, 8 West, New York, New York 10286 to be its agent for purposes of the preceding sentence. The Company shall give prompt written notice to the Trustee of any change in the location of such office or agency; provided that such office or agency shall at all times be in the Borough of Manhattan, The City of New York. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 14.02. 46 The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. Section 4.05. Corporate Existence. Subject to the provisions of Article Five of this Indenture, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Restricted Subsidiary and all rights (charter and statutory) and franchises of the Company and the Restricted Subsidiaries; provided that the Company shall not be required to preserve the corporate existence of any Restricted Subsidiary, or any such right or franchise, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole and that the loss thereof would not reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations hereunder; and provided further, that the foregoing shall not prohibit a sale, transfer or conveyance of a Restricted Subsidiary or any of its assets in compliance with the terms of this Indenture. Section 4.06. Waiver of Stay, Extension or Usury Laws. Each of the Company and the Subsidiary Guarantors covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and each of the Company and the Subsidiary Guarantors (to the extent that it may lawfully do so), hereby expressly waives all benefit or advantage of any such law, and covenant that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. Payment of Taxes and Other Claims. The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, any material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. 47 Section 4.08. Business Activities. The Company shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole. Section 4.09. Limitation on Incurrence of Additional Indebtedness and Issuance of Preferred Stock. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including Acquired Debt), and the Company shall not permit any of its Restricted Subsidiaries to issue any preferred stock; provided, however, that the Company or any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock and the Restricted Subsidiaries may issue preferred stock, if the Fixed Charge Coverage Ratio for the Company's most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period. So long as no Default shall have occurred and be continuing or would be caused thereby, the first paragraph of this Section 4.09 will not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (1) the incurrence by the Company or any Subsidiary Guarantor of Indebtedness under Credit Facilities in an aggregate principal amount at any one time outstanding (with letters of credit being deemed to have a principal amount equal to the maximum amount that may be drawn thereunder, without regard to any reinstatement) not to exceed $200.0 million, less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary to permanently repay any such Indebtedness (and, in the case of any revolving credit Indebtedness, to effect a corresponding commitment reduction thereunder) pursuant to Section 4.11 hereof; (2) Existing Indebtedness; (3) the incurrence by the Company and the Subsidiary Guarantors of Indebtedness represented by the Notes and the related Subsidiary Guarantees and the Exchange Notes and the related Subsidiary Guarantees; (4) the incurrence by the Company or any Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations (including, without limitation, pursuant to any Expansion Equipment Sale-Leaseback Transaction), mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Restricted Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to 48 refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed $25.0 million at any time outstanding; (5) the incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under the first paragraph of this Section 4.09 or clause (2), (3), (4), (5) or (12) of this paragraph; (6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries; provided, however, that: (a) if the Company or any Subsidiary Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Subsidiary Guarantee, in the case of a Subsidiary Guarantor; (b) (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Wholly Owned Restricted Subsidiary of the Company and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Wholly Owned Restricted Subsidiary of the Company, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6); and (c) Indebtedness owed to the Company or any Subsidiary Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Subsidiary Guarantor; (7) the Guarantee by the Company or any Subsidiary Guarantor of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this Section 4.09; (8) (i) Indebtedness of the Company or any of its Restricted Subsidiaries under agreements providing for indemnification, adjustment of purchase price or similar obligations, or Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business or assets, so long as the principal amount does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary in connection with such disposition, and (ii) Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, issued in the ordinary course of business of the Company 49 or such Restricted Subsidiary in order to provide security for workers' compensation claims or payment obligations in connection with self-insurance or similar requirements in the ordinary course of business and other Indebtedness with respect to worker's compensation claims, self-insurance obligations, performance, surety and similar bonds and completion guarantees provided by the Company or any of its Restricted Subsidiaries in the ordinary course of business; (9) the incurrence by the Company or any Restricted Subsidiary of Indebtedness in respect of netting services, overdraft protection and otherwise in connection with deposit accounts; provided that such Indebtedness is extinguished within five Business Days of its incurrence; (10) the issuance of preferred stock by a Restricted Subsidiary to the Company or other Restricted Subsidiaries; (11) Indebtedness of the Company to the extent that the net proceeds thereof are promptly deposited to defease the Notes in accordance with the provisions of Article Thirteen hereof; and (12) the incurrence by the Company or any Restricted Subsidiary of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (12), not to exceed $35.0 million. For purposes of determining compliance with this Section 4.09, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (12) above, or is entitled to be incurred pursuant to the first paragraph of this Section 4.09, the Company shall be permitted to classify on the date of its incurrence, and from time to time to reclassify all or a portion of, such item of Indebtedness in any manner that complies with this Section 4.09. Indebtedness under Credit Agreement outstanding on the date on which Notes are first issued and authenticated under this Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that may be Incurred pursuant to this Section 4.09 will not be deemed to be exceeded with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies. Section 4.10. Limitation on Restricted Payments. (A) The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on account of the Company's or any of its Restricted Subsidiaries' Equity Interests 50 (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or dividends or distributions payable to the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company, or any Subsidiary of the Company (other than a Wholly Owned Restricted Subsidiary of the Company) or any direct or indirect parent of the Company held by Persons other than the Company or any Restricted Subsidiary; (iii) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or any Subsidiary Guarantee, except (a) a payment of interest or principal at the Stated Maturity thereof or (b) a purchase or other acquisition for value in anticipation of satisfying a scheduled maturity, sinking fund or amortization obligation or principal repayment obligation, in each case due within one year of the date of such purchase or other acquisition; or (iv) make any Restricted Investment (all such payments and other actions set forth in clauses (i) through (iv) being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (1) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (2) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09; and (3) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date hereof (excluding Restricted Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9), (10) and (12) of the next succeeding paragraph (B)), is less than the sum, without duplication, of: (a) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date hereof to the end of the Company's most recently ended fiscal quarter for which internal financial statements are available 51 at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (b) 100% of the aggregate net cash proceeds received by the Company since the date hereof as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company); plus (c) to the extent that any Restricted Investment that was made after the date hereof is sold for cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (ii) the initial amount of such Restricted Investment; plus (d) $5.0 million. (B) So long as no Default has occurred and is continuing or would be caused thereby (solely in the case of clause (4), (5), (6), (8) or (11) below), the preceding provisions shall not prohibit: (1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (2) the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Subsidiary Guarantor or of any Equity Interests of the Company (including the declaration and payment of accrued dividends on any such Equity Interests) in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); (3) the defeasance, redemption, repurchase or other acquisition of Indebtedness of the Company or any Subsidiary Guarantor subordinated to the Notes or the Subsidiary Guarantees with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (4) the payment of any dividend or distribution by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis; (5) Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Capital Stock (other than Disqualified Stock) of the Company; 52 (6) the repurchase or redemption of Equity Interests (other than Disqualified Stock) of the Company; provided, however, that the aggregate amount of any such repurchases or redemptions shall not exceed $25.0 million; (7) the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants if such Capital Stock represents all or a portion of the exercise price thereof; (8) the declaration and payment of dividends on shares of Disqualified Stock of the Company issued in accordance with Section 4.09 hereof; (9) the making of cash payments in lieu of the issuance of fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Company; (10) purchases of minority interests in Restricted Subsidiaries; (11) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests (other than Disqualified Stock) of the Company, in each case, held by any current or former employee, officer, director or consultant of the Company or any Restricted Subsidiary of the Company, pursuant to any management equity subscription agreement, stock option, restricted stock or similar plans or agreements; provided that the aggregate amount paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $1.0 million in any calendar year; provided, however, that the Company may carry forward and make in the next succeeding calendar year, in addition to the amount permitted for such calendar year pursuant to this clause (11), the amount of such purchases, acquisitions, redemptions or retirements for value permitted to have been made pursuant to this clause (11) but not made in the immediately preceding calendar year up to a maximum of $1.0 million; and (12) Restricted Payments not otherwise permitted in an amount not to exceed $15.0 million. The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this Section 4.10 shall be determined by the Board of Directors, whose resolution with respect thereto shall be delivered to the Trustee. The Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the fair market value exceeds $10.0 million. Not later than the date of making any Restricted Payment (other than any Restricted Payment described in (B)(6) of this Section 4.10), the Company shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.10 were computed. The Company shall deliver to the Trustee, not later than 15 days after the end of each fiscal quarter in which the Company makes any Restricted Payment 53 described in (B)(6) of this Section 4.10, an Officers' Certificate stating the total amount of such Restricted Payments described in (B)(6) of this Section 4.10 made during the immediately receding fiscal quarter and cumulatively since the Issue Date. Each of such aforementioned Officers' Certificates shall be accompanied by a copy of any fairness opinion or appraisal as required by this Indenture. Section 4.11. Limitation on Sale of Assets. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless: (1) the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued, sold or otherwise disposed of; (2) such fair market value (i) where such value is $5.0 million or less, is determined by the chief executive officer or the chief financial officer of the Company or (ii) where such value is greater than $5.0 million, is determined by the Company's Board of Directors and evidenced by a resolution of the Board of Directors of the Company, and in each case, such determination is set forth in an Officers' Certificate delivered to the Trustee; and (3) at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Replacement Assets or a combination of both; provided that, for purposes of this Section 4.11, each of the following shall be deemed to be cash: (a) any liabilities (as shown on the Company's or such Restricted Subsidiary's most recent balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms pari passu or subordinated to the Notes or any Subsidiary Guarantee and liabilities that are owed to the Company or any Affiliate of the Company) that are assumed by the transferee of any such assets pursuant to a customary written novation agreement that releases the Company or such Restricted Subsidiary from further liability; and (b) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion) within 60 days of such Asset Sale. Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option: (1) to prepay, repay or purchase Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; provided, however, that if any Net Proceeds received in any Build-to-Suit Sale- 54 Leaseback Transaction or any Expansion Equipment Sale-Leaseback Transaction are used to repay revolving credit Indebtedness, no corresponding reduction in commitments with respect thereto will be required; or (2) to purchase Replacement Assets or to make a capital expenditure in or that is used or useful in a Permitted Business or to enter into a commitment to do so. Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph shall constitute "Excess Proceeds." Within 30 days after the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an "Asset Sale Offer" to all Holders of Notes, and all holders of other Indebtedness that is pari passu with the Notes or any Subsidiary Guarantee containing provisions similar to those set forth in this Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of principal amount of the Notes purchased plus accrued and unpaid interest thereon to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.11, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.11 by virtue of such conflict. Section 4.12. Limitation on Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under this Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien. 55 Section 4.13. Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (2) make loans or advances to the Company or any of its Restricted Subsidiaries; or (3) transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries. However, the preceding restrictions shall not apply to encumbrances or restrictions existing under, by reason of or with respect to: (1) the Credit Agreement, Existing Indebtedness or any other agreements in effect on the date hereof and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof; provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date hereof; (2) this Indenture, the Notes and the Subsidiary Guarantees; (3) applicable law; (4) any Person, or the property or assets of such Person, acquired by the Company or any of its Restricted Subsidiaries, existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of such Person, so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof; provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date of the acquisition; (5) customary supermajority voting provisions and customary provisions with respect to the disposition or distribution of assets or property, in each case contained in joint venture agreements; 56 (6) in the case of clause (3) of the first paragraph of this Section 4.13: (a) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset, (b) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture, or (c) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary; (7) any agreement for the sale or other disposition of all or substantially all of the Capital Stock of, or property and assets of, a Restricted Subsidiary; (8) Permitted Refinancing Indebtedness, provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (9) contained in the terms of any Indebtedness or any agreement pursuant to which such Indebtedness was issued if: (a) the encumbrance or restriction applies only in the event of a payment default or a default with respect to a financial covenant contained in such Indebtedness or agreement, (b) the encumbrance or restriction is not materially more disadvantageous to the Holders of the Notes than is customary in comparable financings (as determined by the Company in good faith), and (c) the Company determines that any such encumbrance or restriction will not materially affect the Company's ability to make principal or interest payments on the Notes. Section 4.14. Limitation on Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: 57 (1) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm's-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company; and (2) the Company delivers to the Trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.5 million, a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this Section 4.14 and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing. The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of the prior paragraph: (1) transactions between or among the Company and/or its Restricted Subsidiaries; (2) payment of reasonable and customary directors' fees and reasonable and customary indemnification and similar arrangements; (3) Permitted Investments and Restricted Payments that are permitted by Section 4.10 hereof; (4) any sale of Equity Interests (other than Disqualified Stock) of the Company; (5) any transaction with a Person that would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns Equity Interests in or controls such Person; (6) any employment agreement or other employee compensation arrangements entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business; and (7) transactions entered into pursuant to any agreement existing on the date of the Indenture. 58 Section 4.15. Limitation on Senior Subordinated Indebtedness. The Company shall not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of the Company unless it is pari passu or subordinate in right of payment to the Notes. No Subsidiary Guarantor shall incur any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Subsidiary Guarantor unless it is pari passu or subordinate in right of payment to such Subsidiary Guarantor's Subsidiary Guarantee. For purposes of the foregoing, no Indebtedness will be deemed to be subordinated or junior in right of payment to any other Indebtedness of the Company solely by virtue of being unsecured or by virtue of the fact that the holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders of Secured Indebtedness priority over the other holders of Secured Indebtedness in the collateral held by them. Section 4.16. Change of Control. (a) If a Change of Control occurs, each Holder of Notes shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the offer described in this Section 4.16 (the "Change of Control Offer") at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon to the date of purchase (the "Change of Control Payment"). Within 30 days following any Change of Control, the Company shall mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and stating (1) that the Change of Control Offer is being made pursuant to this Section 4.16 and that all Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 90 days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any Note not tendered shall continue to accrue interest; (4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer shall be required to surrender the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and (7) that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. The Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Indenture relating to such Change of Control Offer, the Company shall comply with the applicable securities laws and 59 regulations and shall not be deemed to have breached its obligations under this Section 4.16 by virtue of such compliance. (b) By 11:00 a.m. (noon) Eastern Time on the Change of Control Payment Date, the Company shall, to the extent lawful, (1) accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered, and (3) deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers' Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company. The Paying Agent shall promptly mail or wire transfer to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each such new Note shall be in a principal amount of $1,000 or an integral multiple thereof. Prior to complying with this Section 4.16, but in any event within 60 days following a Change of Control, the Company shall either repay all outstanding Senior Debt or obtain the requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this Section 4.16. The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (c) Notwithstanding anything to the contrary in this Section 4.16, the Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.16 and all other provisions of this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Section 4.17. Designation of Restricted and Unrestricted Subsidiaries. The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary; provided that: (1) any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated shall be deemed to be an incurrence of Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such incurrence of Indebtedness would be permitted under the covenant described above under Section 4.09 hereof; (2) the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the such Subsidiary) shall be deemed to be a Restricted Investment made as of the time of such designation and that such Investment would be permitted under Section 4.10 hereof; 60 (3) such Subsidiary does not own any Equity Interests of, or hold any Liens on any property of, the Company or any Restricted Subsidiary; and (4) the Subsidiary being so designated: (a) is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company; (b) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (c) has at least one director on its Board of Directors that is not a director or officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or officer of the Company or any of its Restricted Subsidiaries; and (5) no Default or Event of Default would be in existence following such designation. Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted by this Indenture. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that: (1) such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period; (2) all outstanding Investments owned by such Unrestricted Subsidiary shall be deemed to be made as of the time of such designation and such Investments shall only be permitted if such Investments would be permitted under Section 4.10 hereof; (3) all Liens of such Unrestricted Subsidiary existing at the time of such designation would be permitted under Section 4.12 hereof; and 61 (4) no Default or Event of Default would be in existence following such designation. Section 4.18. Limitation on Issuances and Sales of Equity Interests of Restricted Subsidiaries. The Company shall not transfer, convey, sell, lease or otherwise dispose of, and shall not permit any of its Restricted Subsidiaries to issue, transfer, convey, sell, lease or otherwise dispose of, any Equity Interests in any Restricted Subsidiary of the Company to any Person (other than the Company or a Wholly Owned Restricted Subsidiary of the Company or, if necessary, shares of its Capital Stock constituting directors' qualifying shares or issuances of shares of Capital Stock of foreign Restricted Subsidiaries to foreign nationals, to the extent required by applicable law), except: (1) if, immediately after giving effect to such issuance, transfer, conveyance, sale, lease or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary, any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under Section 4.10 hereof if made on the date of such issuance or sale; and (2) the Company or such Restricted Subsidiary complies with Section 4.11 hereof. Section 4.19. Payments for Consent. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. Section 4.20. Limitations on Issuances of Guarantees by Restricted Subsidiaries; Merger, Consolidation and Sale of Assets by Subsidiary Guarantors; Release of Subsidiary Guarantees. (A) The Company shall not permit any of its Restricted Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to secure the payment of any other Indebtedness of the Company, unless such Restricted Subsidiary is a Subsidiary Guarantor or simultaneously executes and delivers a supplemental indenture providing for a Subsidiary Guarantee by such Restricted Subsidiary of the Notes, which Subsidiary Guarantee shall be senior to or pari passu with such Subsidiary's Guarantee of or pledge to secure such other Indebtedness unless such other Indebtedness is Senior Debt, in which case such Subsidiary's Subsidiary Guarantee may be subordinated to the Guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt. (B) A Subsidiary Guarantor shall not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Subsidiary 62 Guarantor is the surviving Person), another Person, other than the Company or another Subsidiary Guarantor, unless: (1) immediately after giving effect to that transaction, no Default or Event of Default exists; and (2) either: (a) the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of such Subsidiary Guarantor under this Indenture, its Subsidiary Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee and in accordance with the provisions of Section 4.22; or (b) such sale or other disposition complies with Section 4.11 hereof, including the application of the Net Proceeds therefrom. (C) The Subsidiary Guarantee of a Subsidiary Guarantor shall be released: (1) in connection with any sale or other disposition of all of the Capital Stock of a Subsidiary Guarantor to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale or other disposition complies with Section 4.11 hereof; (2) at such time as such Subsidiary Guarantor no longer Guarantees any other Indebtedness of the Company; (3) if the Company properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary pursuant to Section 4.17 hereof; (4) in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Subsidiary of the Company, if the sale or other disposition complies with the provisions of Section 4.11 hereof; or (5) upon Legal Defeasance or Covenant Defeasance of the Notes as provided in Article Thirteen of this Indenture. Upon the occurrence of any of the foregoing events described in this subsection (C) of this Section 4.20, the Subsidiary Guarantor will be released from its Subsidiary Guarantee upon receipt by the Trustee of a request by the Company accompanied by an Officers' Certificate and an Opinion of Counsel certifying that all conditions specified in this Indenture for such release have been satisfied in accordance with the provisions of this Indenture. Upon receipt of the items specified in the preceding sentence, the Trustee shall deliver to the Company an appropriate 63 instrument evidencing such release. Any Subsidiary Guarantor not so released remains liable for the full amount of principal of and interest on the Notes in the manner provided in Article Eleven of the Indenture. Section 4.21. Sale and Leaseback Transactions. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided that the Company or any Restricted Subsidiary may enter into a Sale and Leaseback Transaction if: (1) the Company or that Restricted Subsidiary, as applicable, could have incurred Indebtedness in an amount equal to the Attributable Debt relating to such Sale and Leaseback Transaction under the Fixed Charge Coverage Ratio test in the first paragraph of Section 4.09 hereof; (2) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the fair market value, as determined in good faith by the Board of Directors of the Company and set forth in an Officers' Certificate delivered to the Trustee, of the property that is the subject of that Sale and Leaseback Transaction; and (3) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with Section 4.11. Section 4.22. Additional Subsidiary Guarantees. The Company shall cause each Domestic Subsidiary that it creates or acquires on or after the date hereof to become a Subsidiary Guarantor by executing and delivering to the Trustee a supplemental indenture in the form of Exhibit D and in substance satisfactory to the Trustee, which subjects such Domestic Subsidiary to the provisions (including the representations and warranties) of this Indenture providing, among other things, a Guarantee of the Notes by such Domestic Subsidiary on the same basis as the Subsidiary Guarantors on the date hereof. ARTICLE FIVE SUCCESSOR CORPORATION Section 5.01. Merger, Consolidation or Sale of Assets. The Company shall not, in a single transaction or a series of related transactions: (A) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (B) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole to another Person or Persons; unless: 64 (1) either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (i) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia, and (ii) assumes all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee; (2) immediately after giving effect such transaction, no Default or Event of Default exists; (3) immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of Section 4.09; and (4) each Subsidiary Guarantor, unless such Subsidiary Guarantor is the Person with which the Company has entered into a transaction under this Section 5.01, shall have by amendment to its Subsidiary Guarantee confirmed that its Subsidiary Guarantee shall apply to the obligations of the Company or the surviving person in accordance with the Notes and the Indenture. In addition, the Company will not and will not permit any Restricted Subsidiary to, directly or indirectly, lease all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to any other Person. Clause (3) of this Section 5.01 shall not apply to a merger, consolidation, sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Restricted Subsidiaries. Section 5.02. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, conveyance or other disposition of all substantially all of the assets of the Company in accordance with Section 5.01 hereof, the successor corporation formed by such consolidation or into or with which the Company is merged or to which such sale, assignment, transfer, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, assignment, transfer conveyance or other disposition, the provisions of this Indenture referring to the "Company" shall refer instead to the successor corporation and not to the Company), and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and thereafter the predecessor Company shall be relieved of all further obligations and covenants under this Indenture and the Notes. 65 ARTICLE SIX DEFAULTS AND REMEDIES Section 6.01. Events of Default. Each of the following is an "Event of Default": (1) default for 30 days in the payment when due of interest on the Notes whether or not prohibited by the provisions of Article Ten of this Indenture; (2) default in payment when due (whether at maturity, upon acceleration, redemption or otherwise, including, without limitation, the failure to repurchase Notes tendered pursuant to a Change of Control Offer or an Asset Sale Offer on the date specified for such payment in the applicable offer to purchase) of the principal of, or premium, if any, on the Notes, whether or not prohibited by the provisions of Article Ten of this Indenture; (3) failure (other than a default described in clause (2) above) by the Company or any of its Restricted Subsidiaries to comply with the provisions of Sections 4.16 and 5.01 hereof; (4) failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or Holders representing 25% or more of the aggregate principal amount of Notes outstanding to comply with any of the other agreements in this Indenture; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the date of this Indenture, if that default: (a) is caused by a failure to pay principal of, premium, if any, or interest on such Indebtedness at final maturity thereof; or (b) results in the acceleration of such Indebtedness prior to its final maturity, and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a similar default aggregates $10.0 million or more; (6) failure by the Company or any of its Restricted Subsidiaries to pay final judgments aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days; 66 (7) except as permitted by this Indenture, any Subsidiary Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Subsidiary Guarantor, or any Person acting on behalf of any Subsidiary Guarantor, shall deny or disaffirm its obligations under its Subsidiary Guarantee; and (8) the Company, any of its Significant Subsidiaries or any Subsidiary Guarantor of the Company that, taken together, would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law: (a) commences a voluntary case, (b) consents to the entry of an order for relief against it in an involuntary case, (c) makes a general assignment for the benefit of its creditors, or (d) generally is not paying its debts as they become due; and or a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company, any of its Significant Subsidiaries or any Subsidiary Guarantor of the Company that, taken together, would constitute a Significant Subsidiary, in an involuntary case; (ii) appoints a custodian for the Company, any of its Significant Subsidiaries or any Subsidiary Guarantor of the Company that, taken together, would constitute a Significant Subsidiary, or for all or substantially all of the properties of the Company, any of its Significant Subsidiaries or any Subsidiary Guarantor of the Company that, taken together, would constitute a Significant Subsidiary; or (iii) orders the liquidation of the Company, any of its Significant Subsidiaries or any Subsidiary Guarantor of the Company that, taken together, would constitute a Significant Subsidiary; and the order or decree remains unstayed and in effect for 60 consecutive days. The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law. Section 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in clause (8) of Section 6.01) under Section 6.01 occurs and is continuing, then and in every such case the 67 Trustee or the Holders of not less than 25% in aggregate principal amount of the outstanding Notes may declare the unpaid principal of, premium, if any, and accrued and unpaid interest on, all the Notes then outstanding to be due and payable, by a notice in writing to the Company (and to the Trustee, if given by Holders) specifying the respective Event of Default and upon any such declaration such principal of, premium, if any, and accrued and unpaid interest shall become immediately due and payable; provided, however, that so long as any Obligations permitted to be incurred under the Indenture pursuant to the Credit Agreement shall be outstanding or the commitments thereunder have not been terminated, that acceleration shall not be effective until the earlier of (1) an acceleration of all Obligations under the Credit Agreement or (2) five business days after receipt by the administrative agent under such Credit Agreement of written notice of the acceleration of the Notes. If an Event of Default specified in clause (8) of Section 6.01 above occurs, all unpaid principal of, and accrued interest on, the Notes then outstanding will become due and payable immediately, without any declaration or other act on the part of the Trustee or any Holder. If any Event of Default occurs by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of paragraph 7 of the Notes, then, upon acceleration of the Notes, an equivalent premium shall also become and be immediately due and payable, to the extent permitted by law, anything in this Indenture or in the Notes to the contrary notwithstanding. If an Event of Default occurs during any time that the Notes are outstanding, by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes, then, the premium specified in this Indenture shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes. If (i) (A) the Company or any Subsidiary Guarantor has paid or deposited with such Trustee a sum sufficient to pay (1) all overdue installments of interest on all the Notes, (2) the principal of, and premium, if any, on any Notes that have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Notes, (3) to the extent that payment of such interest is lawful, interest on the defaulted interest at the rate or rates prescribed therefor in the Notes, and (4) all money paid or advanced by the Trustee thereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; (B) all Events of Default, other than the nonpayment of the principal of any Notes that have become due solely by such declaration of acceleration, have been cured or waived as provided in this Indenture; and (C) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (ii) the Holders of a majority in aggregate principal amount of then outstanding Notes give written notice to the Company, the Subsidiary Guarantors and the Trustee of their desire to rescind and annul a declaration of acceleration and its consequences, then such declaration of acceleration shall be deemed rescinded and annulled. No such rescission will affect any subsequent Event of Default or impair any right consequent thereon. 68 Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue, in its own name and as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of principal or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. Section 6.04. Waiver of Past Defaults. Subject to Sections 6.07 and 9.02, the Holders of at least a majority in aggregate principal amount of Notes then outstanding by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except a continuing Default or Event of Default in payment of principal, premium, if any, or interest on the Notes. Section 6.05. Control by Majority. The Holders of a majority in aggregate principal amount of the Notes then outstanding will have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee under this Indenture or exercising any trust or power conferred on such Trustee; provided that the Trustee (i) may refuse to follow any direction that is in conflict with any rule of law or with this Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction and (ii) may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes. Section 6.06. Limitation on Remedies. No Holder of any of the Notes will have any right to institute any proceeding, judicial or otherwise, or for the appointment of a receiver or trustee or pursue any remedy under this Indenture, unless: (1) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of the outstanding Notes have made written request to the Trustee to pursue such remedy, including, if applicable, to institute proceedings in respect of such Event of Default in its own name as Trustee under this Indenture; 69 (3) such Holder or Holders have offered to the Trustee reasonable indemnity and security satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (4) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such requested proceeding; and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the outstanding Notes. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over other Holders. Section 6.07. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the Holder of any Notes will have the right, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and interest on such Notes on the Stated Maturity therefor and to institute suit for the enforcement of any such payment, and such right may not be impaired without the consent of such Holder. Section 6.08. Collection Suit by Trustee. If an Event of Default in payment of principal, premium, if any, or interest specified in Section 6.01(l), (2) or (3) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any Subsidiary Guarantor for the whole amount of principal, premium, if any, and interest remaining unpaid with respect to the Notes, and interest on overdue principal and premium, if any, and, to the extent lawful, interest on overdue interest, and such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation and expenses of the Trustee, its agents and counsel. Section 6.09. Trustee May File Proofs of Claim. (a) The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, the Subsidiary Guarantors, their creditors or their property and may collect and receive any money or other property payable or deliverable on any such claims and to distribute the same. (b) Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 70 Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee for amounts due under Section 7.07; Second: to Holders of Senior Debt to the extent required by Article Ten of the Indenture; Third: to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and Fourth: to the Company. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorney's fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. The foregoing shall not apply to a suit by the Trustee, a suit by a holder pursuant to Section 6.07 hereof, or a suit by Holders or more than 10% in aggregate principal amount of the then outstanding Notes. ARTICLE SEVEN TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such rights and powers vested in it by this Indenture and use the same degree of care and skill in such exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. 71 (b) Except during the continuance of an Event of Default: (1) The Trustee need perform only those duties that are specifically set forth (or incorporated by reference) in this Indenture and no implied covenants or obligations shall be read into this Indenture against Trustee. (2) In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine such certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph (c) does not limit the effect of paragraph (b) of this Section. (2) The Trustee shall not be liable for any error of judgment made in good faith by an officer of the Trustee, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (3) The Trustee shall not be liable with respect to action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05, and the Trustee shall be entitled from time to time to request such a direction. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01. (e) The Trustee shall be under no obligation and may refuse to perform any duty or exercise any right or power unless it receives indemnity satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. Subject to Section 7.01: (a) The Trustee may conclusively rely on and shall be protected in acting or refraining from acting upon any document (whether in its original or facsimile form) believed by it to be genuine and to have been signed or presented by the proper person. The Trustee shall not be 72 bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture or other paper or document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within the rights or powers conferred to it by this Indenture. (e) The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (f) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture. (g) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (h) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder; and (i) The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Subsidiaries or Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. 73 Section 7.04. Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company's use of the proceeds from the Notes, and it shall not be responsible for any statement in the Notes other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is actually known to the Trustee, the Trustee shall mail to each Holder pursuant to Section 14.02 a notice of the Default within 90 days after the occurrence thereof. Except in the case of a Default in any payment on any Note, the Trustee may withhold the notice if and so long as the board of directors, executive committee or a trust committee of its directors and/or officers in good faith determines that withholding the notice is in the interests of Holders. Section 7.06. Reports by Trustee to Holders. Within 60 days after each May 15, beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Holder a brief report dated as of such May 15, that complies with TIA Section 313(a), but only if such report is required in any year under TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b) and 313(c). A copy of each report at the time of its mailing to Holders shall be filed with the Commission and each stock exchange on which the Notes are listed. The Company shall promptly notify the Trustee in writing if the Notes become listed on any national securities exchange or of any delisting thereof. Section 7.07. Compensation and Indemnity. The Company agrees to pay the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for its services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company agrees to reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred by it. Such expenses may include the reasonable compensation and expenses of the Trustee's agents and counsel. The Trustee shall not be under any obligation to institute any suit, or take any remedial action under this Indenture, or to enter any appearance or in any way defend any suit in which it may be a defendant, or to take any steps in the execution of the trusts created hereby or thereby or in the enforcement of any rights and powers under this Indenture, until it shall be indemnified to its satisfaction against any and all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provisions of this Indenture, including compensation for services, costs, expenses, outlays, counsel fees and other disbursements, and against all liability not due to its negligence or willful misconduct. The Company and the Subsidiary Guarantors jointly and severally agree to indemnify each of the Trustee and any predecessor 74 trustee and their agents for and to hold them harmless against any and all loss, liability, damage, claim or expense, including taxes (other than taxes based on the income of Trustee) incurred by it in connection with the acceptance and administration of the trust and its duties hereunder as Trustee, Registrar and/or Paying Agent including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company and the Subsidiary Guarantors of any claim of which a Trust Officer has received written notice and for which it may seek indemnity; provided, however, unless the position of the Company is prejudiced by such failure, the failure of the Trustee to promptly notify the Company shall not limit its right to indemnification. The Company shall defend each such claim and the Trustee shall cooperate in the defense. The Trustee may retain separate counsel if the Trustee shall have been reasonably advised by such counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to employ separate counsel, and the Company shall reimburse the Trustee for the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent. Neither the Company nor the Subsidiary Guarantors shall be obligated to reimburse any expense or indemnify against any loss or liability determined by a court of competent jurisdiction to have been caused by the Trustee through the Trustee's own negligence, willful misconduct or breach of its duties under this Indenture. To secure the payment obligations of the Company and the Subsidiary Guarantors in this Section, the Trustee shall have a lien prior to that of the Holders of the Notes on all money or property held or collected by the Trustee for any amount owing it or any predecessor trustee pursuant to this section, except that held in trust to pay principal of and interest on particular Notes. When the Trustee incurs expenses or renders services after the occurrence of any Event of Default specified in Section 6.01(8) or (9), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section shall survive the termination of this Indenture and resignation or removal of the Trustee. Section 7.08. Replacement of Trustee. The Trustee may resign by so notifying the Company and the Subsidiary Guarantors. The Holders of a majority in aggregate principal amount of the Notes may remove the Trustee by so notifying the Trustee, in writing. The Company may remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged a bankrupt or an insolvent; 75 (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting as Trustee hereunder. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. Any Trustee appointed by the Company or by Holders of a majority in aggregate principal amount of the Notes must have and maintain its principal place of business and Corporate Trust Office in the State of New York. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company and the Subsidiary Guarantors. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Company), the Company or the Holders of a majority in aggregate principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Any successor Trustee shall comply with TIA Section 310(a)(5). Section 7.09. Successor Trustee by Merger, Etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee; provided that such corporation or association shall be otherwise eligible and qualified under this Article and the requirements of Section 7.08. Section 7.10. Eligibility; Disqualification. This Indenture shall always have a Trustee which satisfies the requirements of TIA Section 310(a)(1). The Trustee shall always have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. The Trustee shall also comply with TIA Section 310(b). The Trustee must have and maintain its principal place of business and Corporate Trust Office in the State of New York. 76 Section 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE EIGHT SATISFACTION AND DISCHARGE OF INDENTURE Section 8.01. Termination of Company's Obligations. (a) Subject to the provisions of Sections 8.04 and 8.05 hereof, this Indenture shall cease to be of further effect as to all Notes issued hereunder, and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture when: (1) either: (i) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or (ii) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Subsidiary Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Subsidiary Guarantor is a party or by which the Company or any Subsidiary Guarantor is bound; (3) the Company or any Subsidiary Guarantor has paid or caused to be paid all sums payable by it hereunder; 77 (4) the Company has delivered irrevocable instructions to the Trustee hereunder to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be; and (5) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been satisfied. (b) Notwithstanding the above, the Trustee shall pay to the Company from time to time upon its request any cash or Government Securities held by it as provided in this section which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect a satisfaction and discharge under this Article Eight. Section 8.02. Application of Trust Money. The Trustee shall hold in trust money or Government Securities deposited with it pursuant to Section 8.01. It shall apply the deposited money and the money from Government Securities through the Paying Agent and in accordance with the provisions of the Notes and this Indenture to the payment of principal of, premium, if any, and interest on the Notes. Section 8.03. Repayment to the Company. Any money deposited with the Trustee in trust for the payment of the principal of, premium, if any, or interest on any Note and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request; and the Holder of such Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee with respect to such trust money shall thereupon cease; provided, however, that the Trustee, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times or Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Company. Section 8.04. Survival. In the event that the Company makes (or causes to be made) an irrevocable deposit with the Trustee for the benefit of the Holders pursuant to Section 8.01(a)(1)(ii) hereof, prior to the date of maturity or redemption, as the case may be, the following provisions of the Indenture shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due from the trust; 78 (2) the Company's obligations with respect to such Notes under Article Two and Section 4.04 hereof; (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's obligations in connection therewith; and (4) this Article Eight. Section 8.05. Reinstatement If the Trustee or Paying Agent is unable to apply any United States dollars or Government Securities in accordance with Section 8.02 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01(a)(1)(ii) hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 hereof; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS Section 9.01. Without Consent of Holders. Subject to Section 10.13 and Section 12.13 of this Indenture, the Company, the Subsidiary Guarantors and the Trustee may modify, amend or supplement this Indenture or the Notes without consent of any Holder: (1) to cure any ambiguity, defect or inconsistency; (2) to provide for uncertificated Notes in addition to or in place of certificated Notes; (3) to provide for the assumption of the Company's or any Subsidiary Guarantor's obligations to the Holders of the Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's or such Subsidiary Guarantor's assets pursuant to the provisions of Section 5.01, 4.20(B) or 4.11; (4) to make any change that would provide any additional right or benefits to the Holders or that does not adversely affect the legal rights hereunder of any such Holder; 79 (5) to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (6) to comply with Sections 4.20 and 4.22; (7) to evidence and provide for the acceptance of appointment by a successor Trustee; or (8) to provide for the issuance of Additional Notes in accordance with the Indenture. Upon the request of the Company and the Subsidiary Guarantors, accompanied by a Board Resolution of the Company and each Subsidiary Guarantor authorizing the execution of any such supplemental indenture, and upon receipt by the Trustee of the documents described in Section 9.06, the Trustee may, but shall not be obligated to, join with the Company and the Subsidiary Guarantors in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and make any further appropriate agreements and stipulations that may be therein contained. After an amendment or waiver under this Section becomes effective, the Company shall mail to the Holders of each Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 9.02. With Consent of Holders. Except as provided below in this Section 9.02, Section 10.13 and Section 12.13, the Company, the Subsidiary Guarantors and the Trustee may amend this Indenture or the Notes with the written consent (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes, or a solicitation of consents in respect of Notes, provided that in each case such offer or solicitation is made to all Holders of then outstanding Notes on equal terms) of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes. Upon the request of the Company and the Subsidiary Guarantors, accompanied by a Board Resolution of the Company and each Subsidiary Guarantor authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02(b), the Trustee shall, subject to Section 9.06, join with the Company and the Subsidiary Guarantors in the execution of such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. The Holders of a majority in aggregate principal amount of the then outstanding Notes may waive compliance in a particular instance by the Company or the Subsidiary Guarantors with any provision of this Indenture or the Notes (including, without limitation, waivers obtained in connection with a purchase of, or tender offer or exchange offer for Notes or a solicitation of 80 consents in respect of Notes, provided that in each case such offer or solicitation is made to all Holders of the then outstanding Notes on equal terms). However, without the consent of each Holder affected, an amendment or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder): (1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (2) reduce the principal of or change the fixed maturity of any Note or alter the provisions, or waive any payment, with respect to the redemption of the Notes; (3) reduce the rate of or change the time for payment of interest on any Note; (4) waive a Default or Event of Default in the payment of principal of, premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration); (5) make any Note payable in money other than U.S. dollars; (6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, premium, if any, or interest on the Notes; (7) release any Subsidiary Guarantor from any of its obligations under its Subsidiary Guarantee or the Indenture, except in accordance with the terms of the Indenture; or (8) impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or the Subsidiary Guarantees; (9) after an Asset Sale or Change of Control has occurred, amend, change or modify the obligation of the Company to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with Section 4.11 hereof or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with Section 4.16 hereof, including, in each case, amending, changing or modifying any definition relating thereto; (10) except as otherwise permitted under Sections 5.01 or 4.20 hereof, consent to the assignment or transfer by the Company or any Subsidiary Guarantor of any of their rights or obligations under the Indenture; (11) amend or modify any of the provisions of the Indenture or the related definitions affecting the subordination or ranking of the Notes or any Subsidiary Guarantee in any manner adverse to the holders of the Notes or any Subsidiary Guarantee; or (12) make any change in the preceding amendment and waiver provisions. 81 The right of any Holder to participate in any consent required or sought pursuant to any provision of this Indenture (and the obligation of the Company to obtain any such consent otherwise required from such Holder) may be subject to the requirement that such Holder shall have been the Holder of record of any Notes with respect to which such consent is required or sought as of a date identified by the Trustee in a notice furnished to Holders in accordance with the terms of this Indenture. Section 9.03. Compliance with Trust Indenture Act. Every amendment to or supplement of this Indenture or the Notes shall comply with the TIA as then in effect. Section 9.04. Revocation and Effect of Consents. A consent to an amendment, supplement or waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, until an amendment, supplement or waiver becomes effective, any such Holder or subsequent Holder may revoke the consent as to his Note or portion of a Note. For such revocation to be effective, the Trustee must receive the notice of revocation before the date the amendment, supplement or waiver becomes effective. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment or waiver. If the Company elects to fix a record date for such purpose, the record date shall be fixed at such date as the Company may designate. If a record date is fixed, then notwithstanding the provisions of the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to consent to such amendment or waiver or to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No consent shall be valid or effective for more than 90 days after such record date unless consent from the Holders of the principal amount of Notes required hereunder for such amendment or waiver to be effective also shall have been given and not revoked within such 90-day period. After an amendment, supplement or waiver becomes effective, it shall bind every Holder unless it makes a change described in any of clauses (1) through (9) of Section 9.02. In that case the amendment, supplement or waiver shall bind each Holder of a Note who has consented to it and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note. Section 9.05. Notation on or Exchange of Notes. If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note about the changed terms and return it to the Holder. Alternatively, if the 82 Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Section 9.06. Trustee Protected. The Trustee shall sign any amendment or supplement or waiver authorized pursuant to this Article. In signing such amendment or supplement or waiver the Trustee shall be provided with, and (subject to Article Seven of the Indenture) shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplement or waiver is authorized or permitted by and complies with this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. ARTICLE TEN SUBORDINATION OF NOTES Section 10.01. Agreement to Subordinate. The Company agrees, and each Holder by accepting a Note agrees, that payment of principal, premium, if any, and interest on (or any other Obligations relating to) the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article Ten, to the prior payment in full in cash of all Senior Debt of the Company (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. This Article Ten shall constitute a continuing offer to all Persons who become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt, and such holders are made obligees hereunder and any one or more of them may enforce such provisions. Section 10.02. Liquidation; Dissolution; Bankruptcy. The holders of Senior Debt of the Company shall be entitled to receive payment in full in cash of all Obligations due in respect of Senior Debt of the Company (including, without limitation, interest after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt of the Company) before the Holders of Notes shall be entitled to receive any payment with respect to (or any other Obligations relating to) the Notes (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust pursuant to Article Thirteen hereof), in the event of any distribution to creditors of the Company in connection with: (i) any liquidation or dissolution of the Company, whether voluntary or involuntary; 83 (ii) any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property, whether voluntary or involuntary; (iii) any assignment for the benefit of creditors of the Company; or (iv) any marshaling of the Company's assets and liabilities. The Company shall give prompt written notice to the Trustee of the occurrence of any event described in clauses (i) through (iv) above. Section 10.03. Default on Designated Senior Debt. The Company may not make any payment in respect of the Notes (except in respect of Permitted Junior Securities or from the trust pursuant to Article Thirteen hereof) if: (1) a payment default on Designated Senior Debt of the Company occurs and is continuing beyond any applicable grace period; or (2) any other default occurs and is continuing on any series of Designated Senior Debt of the Company that permits holders of that series of Designated Senior Debt of the Company to accelerate its maturity and the Trustee receives a notice (a "Payment Blockage Notice") of such default from the administrative agent under the Credit Agreement or a Representative of the holders of such Designated Senior Debt (a "nonpayment default"). Payments on the Notes may not be resumed until: (1) in the case of a payment default on Designated Senior Debt of the Company, upon the date on which such default is cured or waived; and (2) in case of a nonpayment default, the earlier of the date on which such default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received by the Trustee, unless the maturity of such Designated Senior Debt of the Company has been accelerated. No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice, unless such nonpayment default has been cured or waived. Section 10.04. Acceleration of Notes. The Company shall promptly notify holders of its Senior Debt and any agent or representative with respect to such Senior Debt if payment of the Notes is accelerated because of an Event of Default. 84 Section 10.05. When Distribution Must Be Paid Over. If the Trustee or any Holder of the Notes receives a payment in respect of the Notes (except in respect of Permitted Junior Securities or from the trust under Article Thirteen hereof) when the payment is prohibited by this Article Ten, the Trustee or the Holder, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt of the Company. Upon the proper written request of the holders of Senior Debt of the Company, the Trustee or the Holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt of the Company or their proper representative. With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article Ten, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to or on behalf of Holders or the Company or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article Ten, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. Section 10.06. Notice by the Company. The Company shall promptly notify the Trustee and the Paying Agent in writing of any facts known to the Company that would cause a payment of any Obligations with respect to the Notes to violate this Article Ten, but failure to give such notice shall not affect the subordination of the Notes to the Senior Debt as provided in this Article Ten. Section 10.07. Subrogation. After all Senior Debt is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Debt. A distribution made under this Article Ten to holders of Senior Debt that otherwise would have been made to Holders of Notes is not, as between the Company and Holders, a payment by the Company on the Notes. Section 10.08. Relative Rights. This Article Ten defines the relative rights of Holders of Notes and holders of Senior Debt. Nothing in this Indenture shall: (a) impair, as between the Company and Holders of Notes, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Notes in accordance with their terms; (b) affect the relative rights of Holders of Notes and creditors of the Company other than their rights in relation to holders of Senior Debt; or 85 (c) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Debt to receive distributions and payments otherwise payable to Holders of Notes. If the Company fails because of this Article Ten to pay principal of or interest on a Note on the due date, the failure is still a Default or Event of Default. Section 10.09. Subordination May Not Be Impaired by the Company. No right of any holder of Senior Debt to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture. Section 10.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Company referred to in this Article Ten, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten. Section 10.11. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article Ten or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article Ten. Only the Company or a Representative may give the notice. Nothing in this Article Ten shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 10.12. Authorization to Effect Subordination. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article Ten, and appoints the Trustee to act as 86 such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the lenders under the Credit Facilities are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. Section 10.13. Amendments. The provisions of this Article Ten may not be amended, modified or waived without the written consent of the holders of all Senior Debt of the Company. ARTICLE ELEVEN GUARANTEES Section 11.01. Unconditional Guarantee. Each Subsidiary Guarantor hereby, jointly and severally, unconditionally guarantees, as primary obligor and not merely as surety (such guarantee to be referred to herein as the "Subsidiary Guarantee"), to each Holder and to the Trustee the due and punctual payment of the principal of, premium, if any, and interest on the Notes and all other amounts due and payable under this Indenture and the Notes by the Company whether at maturity, by acceleration, redemption, repurchase or otherwise, including, without limitation, interest on the overdue principal of, premium, if any, and interest on the Notes, to the extent lawful, all in accordance with the terms hereof and thereof; subject, however, to the limitations set forth in this Article Eleven and Article Twelve hereof. Failing payment when due of any amount so guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payments, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Subsidiary Guarantee will not be discharged except by complete performance of the obligations contained in the Notes, this Indenture and in this Subsidiary Guarantee. If any Holder or the Trustee is required by any court or otherwise to return to the Company, any Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Subsidiary Guarantor, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor agrees it shall not be entitled to any 87 right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that, as between each Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article Six hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article Six hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by each Subsidiary Guarantor for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantee of each Subsidiary Guarantor herein shall be, in the manner and to the extent set forth in Article Twelve hereof, subordinated in right of payment to the prior payment when due of the principal of, premium, if any, accrued and unpaid interest and all other amounts owing on all existing and future Senior Debt of such Subsidiary Guarantor and of the Company, as the case may be, and senior to the right of payment of principal of, premium, if any, and accrued and unpaid interest on all existing and future subordinated Indebtedness of such Subsidiary Guarantor that is subordinated in right of payment to the Notes or the Subsidiary Guarantee. Section 11.02. Limitation of Subsidiary Guarantor's Liability. Each Subsidiary Guarantor and by its acceptance hereof each Holder hereby confirms that it is the intention of all such parties that the guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a fraudulent transfer or conveyance for purposes of any federal, state or foreign law or a prohibited distribution to shareholders under the laws of the State of Tennessee. To effectuate the foregoing intention, the Holders and each Subsidiary Guarantor hereby irrevocably agree that the obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to Section 11.03, result in the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal, state or foreign law or a prohibited distribution to shareholders under the laws of the State of Tennessee. Section 11.03. Contribution. In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the event any payment or distribution is made by any Subsidiary Guarantor (a "Funding Guarantor") under the Subsidiary Guarantee, such Funding Guarantor shall be entitled to a contribution from each other Subsidiary Guarantor for all payments, damages and expenses incurred by the Funding Guarantor in discharging the Company's Obligations with respect to the Notes or any other Subsidiary Guarantor's Obligations with respect to the Subsidiary Guarantee. 88 Section 11.04. Execution and Delivery of Subsidiary Guarantees. Each Subsidiary Guarantor hereby agrees that its execution and delivery of this Indenture or any supplemental indentures pursuant to Section 4.22 hereof shall evidence its Subsidiary Guarantee set forth in Section 11.01 without the need for any further notation on the Notes. Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 11.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation relating to such Subsidiary Guarantee. If an Officer of a Subsidiary Guarantor whose signature is on this Indenture or any supplemental indenture no longer holds that office at the time the Trustee authenticates such Notes or at any time thereafter, such Subsidiary Guarantor's Subsidiary Guarantee shall be valid nevertheless. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of any Subsidiary Guarantee set forth in this Indenture on behalf of the Subsidiary Guarantor. Section 11.05. Severability. In case any provision of this Subsidiary Guarantee shall be invalid, illegal or unenforceable, that portion of such provision that is not invalid, illegal or unenforceable shall remain in effect, and the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. ARTICLE TWELVE SUBORDINATION OF SUBSIDIARY GUARANTEES Section 12.01. Guarantees Subordinated to Senior Debt. Each Subsidiary Guarantor agrees, and each Holder by accepting a Note agrees, that any payment in respect of the Subsidiary Guarantee of such Subsidiary Guarantor is subordinated in right of payment, to the extent and in the manner provided in this Article Twelve, to the prior payment in full in cash of all Senior Debt of the Company and such Subsidiary Guarantor (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. This Article Twelve shall constitute a continuing offer to all Persons who become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of Senior Debt, and such holders are made obligees hereunder and any one or more of them may enforce such provisions. 89 Section 12.02. Liquidation; Dissolution; Bankruptcy. The holders of Senior Debt of the Subsidiary Guarantors and of the Company shall be entitled to receive payment in full in cash of all Obligations due in respect of such Senior Debt (including, without limitation, interest after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt of the Subsidiary Guarantor) before the Holders of Notes shall be entitled to receive any payment with respect to any such Subsidiary Guarantor's Subsidiary Guarantee or any distribution of assets or proceeds (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust pursuant to Article Thirteen hereof), in the event of any distribution to creditors of any such Subsidiary Guarantors in connection with: (i) any liquidation or dissolution of such Subsidiary Guarantor, whether voluntary or involuntary; (ii) any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Subsidiary Guarantor or its property, whether voluntary or involuntary; (iii) any assignment for the benefit of such Subsidiary Guarantor's creditors; or (iv) any marshaling of such Subsidiary Guarantor's assets and liabilities. The Company shall give prompt written notice to the Trustee of the occurrence of any event described in clauses (i) through (iv) above with respect to any Subsidiary Guarantor. Section 12.03. Default on Designated Senior Debt. No Subsidiary Guarantor may make any payment in respect of its Subsidiary Guarantee (except in respect of Permitted Junior Securities or from the trust pursuant to Article Thirteen hereof) if: (1) a payment default on Designated Senior Debt of the Company or such Subsidiary Guarantor occurs and is continuing beyond any applicable grace period; or (2) any other default occurs and is continuing on any series of Designated Senior Debt of the Company or such Subsidiary Guarantor that permits holders of that series of Designated Senior Debt to accelerate its maturity and the Trustee receives a Payment Blockage Notice of such default from the administrative agent under the Credit Agreement or any agent or Representative with respect to such Designated Senior Debt. Payments on such Subsidiary Guarantee may be resumed: (1) in the case of a payment default on Designated Senior Debt of the Company or such Subsidiary Guarantor, upon the date on which such default is cured or waived; and 90 (2) in case of a nonpayment default, the earlier of the date on which such default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received by the Trustee, unless the maturity of such Designated Senior Debt of the Company or such Subsidiary Guarantor has been accelerated. No new Payment Blockage Notice may be delivered unless and until 360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such non-payment default has been cured or waived. Section 12.04. Guarantees Unconditional. Except as otherwise provided herein, nothing contained in this Indenture or in any Guarantee is intended to or shall impair, as between the Subsidiary Guarantors and the Holders, the Guarantees, which are absolute and unconditional, as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Subsidiary Guarantors, other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Twelve, of the holders of Senior Debt in respect of cash, property or securities of any Subsidiary Guarantor received upon the exercise of any such remedy. Upon any distribution of assets of any Subsidiary Guarantor referred to in this Article Twelve, the Trustee, subject to the provisions of Section 7.01, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any insolvency or liquidation proceedings is pending, or a certificate of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other indebtedness of such Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve. Section 12.05. When Distribution Must Be Paid Over. If the Trustee or any Holder of the Notes receives a payment in respect of any Subsidiary Guarantor's Subsidiary Guarantee (except in respect of Permitted Junior Securities or from the trust under Article Thirteen hereof) when the payment is prohibited by this Article Twelve, the Trustee or the Holder, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt of such Subsidiary Guarantor or of the Company. Upon the proper written request of the holders of Senior Debt of such Subsidiary Guarantor or of the Company, the Trustee or the Holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt of such Subsidiary Guarantor or of the Company or their proper Representative. With respect to the holders of Senior Debt, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article Twelve, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this 91 Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to or on behalf of Holders or any Subsidiary Guarantor or any other Person money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article Twelve, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee. Section 12.06. Notice by the Company. The Company shall promptly notify the Trustee and the Paying Agent in writing of any facts known to the Company that would cause a payment of any Obligations with respect to the Subsidiary Guarantees to violate this Article Twelve, but failure to give such notice shall not affect the subordination of the Subsidiary Guarantees to the Senior Debt as provided in this Article Twelve. Section 12.07. Subrogation. After all Senior Debt of a Subsidiary Guarantor and the Company is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated to the rights of holders of such Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of such Senior Debt. A distribution made under this Article Twelve to holders of such Senior Debt that otherwise would have been made to Holders of Notes is not, as between any Subsidiary Guarantor and the Holders, a payment by any such Subsidiary Guarantors with respect to a Subsidiary Guarantee. Section 12.08. Relative Rights. This Article Twelve defines the relative rights of Holders of Notes and holders of Senior Debt of the Subsidiary Guarantors and the Company. Nothing in this Indenture shall: (a) impair, as between any Subsidiary Guarantor and Holders of Notes, the obligation of such Subsidiary Guarantor, which is absolute and unconditional, to make payments in accordance with the terms of the Subsidiary Guarantee; (b) affect the relative rights of Holders of Notes and creditors of any Subsidiary Guarantor other than their rights in relation to holders of such Senior Debt; or (c) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of such Senior Debt to receive distributions and payments otherwise payable to Holders of Notes by any such Subsidiary Guarantor. If any Subsidiary Guarantor fails because of this Article Twelve to make a payment pursuant to the terms of its Subsidiary Guarantee, the failure is still a Default or Event of Default. 92 Section 12.09. Subordination May Not Be Impaired by the Company. No right of any holder of Senior Debt of any Subsidiary Guarantor or of the Company to enforce the subordination of the Indebtedness evidenced by the Subsidiary Guarantees shall be impaired by any act or failure to act by the Company, any Subsidiary Guarantor or any Holder or by the failure of the Company, any Subsidiary Guarantor or any Holder to comply with this Indenture. Section 12.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Debt of the Subsidiary Guarantors or of the Company, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of any Subsidiary Guarantor referred to in this Article Twelve, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Debt and other Indebtedness of such Subsidiary Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Twelve. Section 12.11. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article Twelve or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes or any Subsidiary Guarantee to violate this Article Twelve. Only the Company or a Representative may give the notice. Nothing in this Article Twelve shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Debt of any Subsidiary Guarantor or of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 12.12. Authorization to Effect Subordination. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article Twelve, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the lenders under the 93 Credit Facilities are hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. Section 12.13. Amendments. The provisions of this Article Twelve may not be amended, modified or waived without the written consent of the holders of all Senior Debt. ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE Section 13.01. Option to Effect Legal Defeasance or Covenant Defeasance. The Company may, at the option of the Board of Directors evidenced by a resolution set forth in an Officers' Certificate, at any time, elect to have either Section 13.02 or 13.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article Thirteen. Section 13.02. Legal Defeasance and Discharge. Upon the Company's exercise under Section 13.01 hereof of the option applicable to this Section 13.02, the Company shall, subject to the satisfaction of the conditions set forth in Section 13.04 hereof, be deemed to have been discharged from its obligations with respect to all outstanding Notes and all obligations of the Subsidiary Guarantors shall be deemed to have been discharged with respect to their obligations under the Subsidiary Guarantees on the date the conditions set forth below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that the Company and the Subsidiary Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes and Subsidiary Guarantees, respectively, which shall thereafter be deemed to be "outstanding" only for the purposes of Section 13.05 hereof and the other Sections of this Indenture referred to in (a) and (b) below, and to have satisfied all its other obligations under such Notes and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder: (a) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due from the trust described in Section 13.04; (b) the Company's obligations with respect to such Notes under Article Two and Section 4.04 hereof; (c) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company's and Subsidiary Guarantors' obligations in connection therewith; and 94 (d) this Article Thirteen. Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 13.02 notwithstanding the prior exercise of its option under Section 13.03 hereof. Section 13.03. Covenant Defeasance. Upon the Company's exercise under Section 13.01 hereof of the option applicable to this Section 13.03, the Company shall, subject to the satisfaction of the conditions set forth in Section 13.04 hereof, be released from its obligations under the covenants contained in Section 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 4.21, 4.22 and clause (3) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 13.04 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed "outstanding" for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes, the Company may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company's exercise under Section 13.01 hereof of the option applicable to this Section 13.03, subject to the satisfaction of the conditions set forth in Section 13.04 hereof, Sections 6.01(3) though (6) shall not constitute Events of Default. Section 13.04. Conditions to Legal or Covenant Defeasance. The following shall be the conditions to the application of either Section 13.02 or 13.03 hereof to the outstanding Notes: (a) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in United States dollars, Government Securities, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any and interest on the outstanding Notes on the Stated Maturity or on the applicable Redemption Date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular Redemption Date; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such Government Securities to the payment of such principal of, premium, if any, and interest on the outstanding Notes on such Stated Maturity date or such Redemption Date and, with respect to any Redemption Date, the Company shall have provided the Trustee with irrevocable instructions to redeem all of the Notes on such Redemption Date; 95 (b) in the case of an election under Section 13.02 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (ii) since the date hereof, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon, such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred; (c) in the case of an election under Section 13.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (d) no Default or Event of Default shall have occurred and be continuing either (i) on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit); or (ii) insofar as Sections 6.01(8) hereof is concerned, at any time in the period ending on the 91st day after the date of deposit; (e) such election under either Section 13.02 or Section 13.03 hereof shall not result in a breach or violation of, or constitute a default under, any material agreement or instrument or any other material agreement or instrument to which the Company or any of its Subsidiaries are a party or by which the Company or any of its Subsidiaries is bound; (f) the Company must have delivered to the Trustee an Opinion of Counsel to the effect that, (1) assuming no intervening bankruptcy of the Company or any Subsidiary Guarantor between the date of deposit and the 91st day following the deposit and assuming that no Holder is an "insider" of the Company under applicable bankruptcy law, after the 91st day following the deposit, the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or any applicable state bankruptcy, insolvency, reorganization or similar state law affecting creditors' rights generally and (2) the creation of the defeasance trust does not violate the Investment Company Act of 1940; (g) the Company must deliver to the Trustee an Officers' Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; (h) if the Notes are to be redeemed prior to their Stated Maturity, the Company must deliver to the Trustee irrevocable instructions to redeem all of the Notes on the specified Redemption Date; and 96 (i) the Company must deliver to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with. Section 13.05. Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions. Subject to Section 13.06 hereof, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 13.05, the "Trustee") pursuant to Section 13.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 13.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes. Anything in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or Government Securities held by it as provided in Section 13.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 13.04(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance. Section 13.06. Repayment to the Company. Any money deposited with the Trustee, in trust for the payment of the principal of, premium, if any, or interest on any Note pursuant to Section 13.04 and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request; and the Holder of such Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee with respect to such trust money, shall thereupon cease; provided, however, that the Trustee, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Company. 97 Section 13.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any United States dollars or Government Securities in accordance with Section 13.02 or 13.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 13.02 or 13.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 13.02 or 13.03 hereof, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent. ARTICLE FOURTEEN MISCELLANEOUS Section 14.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with the duties imposed by operation of TIA Section 318(c), the imposed duties shall control. Section 14.02. Notices. Any notice or communication shall be sufficiently given if in writing and delivered in person or mailed by certified or registered mail (return receipt requested), telecopier or overnight air courier guaranteeing next day delivery, addressed as follows: If to the Company or any Subsidiary Guarantor: O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Facsimile: (615) 782-8818 Attention: A. Chad Fitzhugh If to the Trustee: The Bank of New York 101 Barclay Street, Floor 8W New York, New York 10286 Facsimile: (212) 815-5704 Attention: Corporate Trust Administration 98 The Company or any Subsidiary Guarantor or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication mailed to a Holder shall be mailed to him by first-class mail at this address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. If the Company or any Subsidiary Guarantor mails notice or communications to Holders it shall mail a copy to the Trustee and each Agent at the same time. Section 14.03. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Subsidiary Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). Section 14.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company or any Subsidiary Guarantor to the Trustee to take any action under this Indenture (except with respect to the initial issuance of the Notes), the Company or such Subsidiary Guarantor, as the case may be, shall furnish to the Trustee: (1) an Officers' Certificate (which shall include the statements set forth in Section 14.05) stating that, in the opinion of the signers, the conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, such conditions precedent have been complied with. 99 Section 14.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of each such person, such covenant or condition has been complied with. Section 14.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or for a meeting of Holders. The Registrar or Paying Agent may make reasonable rules for its functions. Section 14.07. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday, or a day on which banks and trust companies in The City of New York are not required by law or executive order to be open. If a payment date is a Legal Holiday at a place of payment, payment may be made at the place on the next succeeding day that is not a Legal Holiday, without additional interest. Section 14.08. No Personal Liability of Directors, Officers, Employees and Stockholders. No director, officer, employee, incorporator or stockholder of the Company or any Subsidiary Guarantor, as such, shall have any liability for any obligations of the Company or the Subsidiary Guarantors under the Notes, this Indenture, the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Notes. Section 14.09. Governing Law. THIS INDENTURE AND THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 100 Section 14.10. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company, any Subsidiary Guarantor or any other Subsidiary. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 14.11. Successors. All agreements of the Company and the Subsidiary Guarantors in this Indenture and the Notes shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. Section 14.12. Duplicate Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same instrument. Section 14.13. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and a Holder shall have no claim therefor against any party hereto. 101 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above. O'CHARLEY'S INC. By /s/ A. Chad Fitzhugh ----------------------------------------- Name: A. Chad Fitzhugh Title: Chief Financial Officer, Secretary and Treasurer 102 AIR TRAVEL SERVICES, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ----------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer DFI, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S FINANCE COMPANY, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S MANAGEMENT COMPANY, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S RESTAURANT PROPERTIES, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh --------------------------------------- Name: A. Chad Fitzhugh Title: Secretary O'CHARLEY'S SERVICE COMPANY, INC., a Tennessee corporation By: /s/ A. Chad Fitzhugh --------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer O'CHARLEY'S SPORTS BAR, INC., an Alabama corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: President OCI, INC., a Delaware corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer OPI, INC., a Colorado corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer 99 COMMISSARY, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary A-2 99 RESTAURANTS, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS OF BOSTON, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary 99 RESTAURANTS OF MASSACHUSETTS, a Massachusetts Business Trust By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer 99 RESTAURANTS OF VERMONT, LLC, a Vermont limited liability company By: 99 WEST, INC., its Sole Member By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Clerk and Treasurer 99 WEST, INC., a Massachusetts corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Clerk and Treasurer A-3 STONEY RIVER MANAGEMENT COMPANY, INC., a Delaware corporation By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary and Treasurer STONEY RIVER, LLC, a Delaware limited liability company By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary STONEY RIVER LEGENDARY MANAGEMENT, L.P., a Georgia limited partnership By: STONEY RIVER, LLC, its General Partner By: /s/ A. Chad Fitzhugh ---------------------------------------- Name: A. Chad Fitzhugh Title: Secretary A-4 THE BANK OF NEW YORK, as Trustee By /s/ Robert A. Massimillo ----------------------------------------- Name: Robert A. Massimillo Title: Vice President A-5 EXHIBIT A-1 [FORM OF FACE OF INITIAL NOTE] O'CHARLEY'S INC. THIS SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT: (A) SUCH SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON U.S PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) (1) , (2) , (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR ")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION, IF ANY, FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THIS SECURITY BY THE HOLDER OR BY ANY INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL; AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. THIS SECURITY MAY NOT BE ACQUIRED OR HELD WITH THE ASSETS OF (I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO ERISA, (II) A "PLAN" DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) ANY ENTITY DEEMED TO HOLD "PLAN ASSETS" OF ANY OF THE FOREGOING BY REASON OF AN EMPLOYEE BENEFIT PLAN'S OR PLAN'S INVESTMENT IN SUCH ENTITY, OR (IV) A GOVERNMENTAL PLAN OR CHURCH PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE ("SIMILAR LAW"), UNLESS THE ACQUISITION AND HOLDING OF THIS SECURITY BY THE PURCHASER OR TRANSFEREE, THROUGHOUT THE PERIOD THAT IT HOLDS THIS SECURITY, ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS UNDER ERISA AND SECTION 4975 OF THE CODE OR ANY PROVISIONS OF SIMILAR LAW, AS APPLICABLE, PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. BY ITS ACQUISITION OR HOLDING OF THIS SECURITY, EACH PURCHASER AND TRANSFEREE WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT THE FOREGOING REQUIREMENTS HAVE BEEN SATISFIED. THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO A-1-2 ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. A-1-3 9% SENIOR SUBORDINATED NOTES DUE 2013 No. R-__ $___________________ CUSIP No. 670823AA1 O'Charley's Inc., a Tennessee corporation, promises to pay to Cede & Co. or registered assigns the principal sum of _______________ Dollars on November 1, 2013. Interest Payment Dates: May 1 and November 1, commencing May 1, 2004 Record Dates: April 15 and October 15. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. A-1-4 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. Dated: __________________ O'CHARLEY'S INC. By ________________________ Name: Title: By ________________________ Name: Title: A-1-5 Certificate of Authentication: THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Notes referred to in the within- mentioned Indenture. Date: ____________________ By __________________________________ Authorized Signatory A-1-6 [REVERSE OF NOTE] O'CHARLEY'S INC. 9% SENIOR SUBORDINATED NOTES DUE 2013 1. Interest. O'Charley's Inc., a Tennessee corporation (the "Company"), promises to pay interest on the principal amount of this Note at 9% per annum from November 4, 2003 until maturity; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Note from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured at a rate of 0.25% per annum per $1,000 principal amount of such Notes with respect to the first 90-day period following such Registration Default, increasing by an additional 0.25% per annum per $1,000 principal amount of such Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of additional interest of 1.0% per annum per $1,000 principal amount of such Notes for all Registration Defaults. The Company will pay interest semiannually on May 1 and November 1 of each year (each an "Interest Payment Date"), or if any such day is not a Business Day, on the next succeeding Business Day. Interest on the Notes will accrue from the most recent Interest Payment Date on which interest has been paid or, if no interest has been paid, from November 4, 2003; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be May 1, 2004. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the persons who are registered holders of Notes at the close of business on the record date immediately preceding the Interest Payment Date, even if such Notes are cancelled after the record date and on or before the Interest Payment Date, except as provided in Section 2.11 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York maintained for such purposes, provided that payment by wire transfer of immediately available funds shall be required with respect to principal of, premium, if any, and interest on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. A-1-7 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice, as provided in the Indenture (defined below). Neither the Company nor any of its Subsidiaries may act as Paying Agent or Registrar. 4. Indenture. The Company issued the Notes under an Indenture, dated as of November 4, 2003 (the "Indenture"), among the Company, the Subsidiary Guarantors and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Indenture pursuant to which the Notes are issued provides that an unlimited aggregate principal amount of Notes may be issued thereunder. 5. Guarantees. The Notes are general senior subordinated unsecured obligations of the Company. The Company's obligation to pay principal, premium, if any, and interest with respect to the Notes is unconditionally guaranteed on a senior subordinated basis, jointly and severally, by the Subsidiary Guarantors pursuant to Article Eleven of the Indenture. Certain limitations to the obligations of the Subsidiary Guarantors are set forth in further detail in the Indenture. 6. Subordination. Each Holder by accepting this Note agrees, that payment of principal, premium, if any, and interest on (or any other Obligations relating to) the Notes is subordinated in right of payment, to the extent and in the manner provided in Article Ten of the Indenture, to the prior payment in full in cash of all Senior Debt of the Company (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. Each Holder by accepting this Note agrees, that any payment in respect of the Subsidiary Guarantee of each Subsidiary Guarantor is subordinated in right of payment, to the extent and in the manner provided in Article Twelve of the Indenture, to the prior payment in full in cash of all Senior Debt of the Company and such Subsidiary Guarantor (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. 7. Optional Redemption. Except as described below, the Notes will not be redeemable at the Company's option prior to November 1, 2008. At any time on or after November 1, 2008, the Company may, at its option, redeem all or any portion of the Notes, subject to any restrictions or other provisions relating thereto in any Senior Debt, at the redemption prices (expressed as percentages of the principal amount of the Notes) set forth below, plus, in each case, accrued interest thereon to the applicable redemption date, if redeemed during the 12-month period beginning November 1 of the years indicated below:
Year Percentage - ---- ---------- ~~2008 104.500%~~
A-1-8 ~~2009 103.000% 2010 101.500% 2011 and thereafter 100.000%~~

Notwithstanding the foregoing, at any time and from time to time on or prior to November 1, 2006, the Company may redeem in the aggregate up to 35% of the aggregate original principal amount of the Notes issued under the Indenture with the net cash proceeds of one or more Equity Offerings, at a redemption price (expressed as a percentage of principal amount) of 109.000%, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that (1) at least 65% of the aggregate principal amount of the Notes originally issued under the Indenture must remain outstanding after each such redemption and (2) any such redemption must occur within 60 days of the date of the closing of the Equity Offering. 8. Mandatory Redemption. The Company shall not be required to make mandatory redemption payments or sinking fund payments with respect to the Notes. 9. Selection and Notice of Redemption. Notice of redemption will be mailed to the Holder's registered address at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed. If less than all Notes are to be redeemed, the Trustee shall select the Notes to be redeemed in multiples of $1,000 pro rata, by lot or by any other method that the Trustee considers fair and appropriate; provided that if the Notes are listed on any securities exchange, that such method complies with the requirements of such exchange. Notes in denominations larger than $1,000 may be redeemed in part. On and after the redemption date interest ceases to accrue on Notes or portions of them called for redemption (unless the Company shall default in the payment of the redemption price or accrued interest). 10. Repurchase at Option of Holder. (a) Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to a Change of Control Offer at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, to the date of purchase. Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing, among other things, the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 90 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. (b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option to (1) prepay, repay or purchase Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; provided, however, that if any Net Proceeds received in any Build-to-Suit Sale-Leaseback Transaction or any Expansion Equipment Sale-Leaseback Transaction are used to repay revolving credit Indebtedness, no corresponding reduction in commitments with respect thereto will be required; or (2) to purchase Replacement Assets or to A-1-9 make a capital expenditure in or that is used or useful in a Permitted Business or enter into a commitment to do so. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph shall constitute "Excess Proceeds." Within 30 days after the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an "Asset Sale Offer" to all Holders of Notes, and all holders of other Indebtedness that is pari passu with the Notes or any Subsidiary Guarantee containing provisions similar to those set forth in this Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of principal amount of the Notes purchased plus accrued and unpaid interest thereon to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. 11. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Notes selected for redemption. Also, the Company is not required to transfer or exchange any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed. 12. Persons Deemed Owners. The registered Holder of a Note may be treated as the owner of it for all purposes and neither the Company, any Subsidiary Guarantor, the Trustee nor any Agent shall be affected by notice to the contrary. 13. Amendment, Supplement, Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes, and any past default or noncompliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes. Without the consent of any Holder, the Company may modify, amend or supplement the Indenture or the Notes to: cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in addition to or in place of certificated Notes; provide for the assumption of the Company's or any Subsidiary Guarantor's Obligations to the Holders of the Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's or such Subsidiary Guarantor's assets pursuant to the provisions of Section 5.01, 4.20(B) or 4.11 of the Indenture; to make any change that would provide any additional benefit or rights to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder; to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; to comply with Sections 4.20 (Release of Subsidiary Guarantees) A-1-10 and 4.22 (Additional Subsidiary Guarantors) of the Indenture; evidence and provide for the acceptance of appointment by a successor Trustee; or to provide for the issuance of Additional Notes in accordance with the Indenture. 14. Defaults and Remedies. If an Event of Default (other than an Event of Default related to bankruptcy or insolvency of the Company, any Subsidiary Guarantor or any Significant Subsidiary (or any Subsidiaries of the Company that, taken together as a whole, would constitute a Significant Subsidiary)) under the Indenture occurs and is continuing, then and in every such case the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes may declare the unpaid principal of, premium, if any, and accrued and unpaid interest on, all the Notes then outstanding to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by Holders) specifying the respective Event of Default and upon any such declaration such principal, premium, if any, and accrued and unpaid interest shall become immediately due and payable; provided, however, that so long as any Obligations under any Credit Agreement shall be outstanding or the commitments thereunder have not been terminated, that acceleration shall not be effective until the earlier of (1) the acceleration of all Obligations under the Credit Agreement or (2) five business days after receipt by the administrative agent under the Credit Agreement of written notice of the acceleration of the Notes. If an Event of Default related to bankruptcy or insolvency of the Company, any Subsidiary Guarantor or any Significant Subsidiary (or any Subsidiaries of the Company that, taken together as a whole, would constitute a Significant Subsidiary) occurs, all unpaid principal of, and accrued interest on, the Notes then outstanding will become due and payable immediately, without any declaration or other act on the part of the Trustee or any Holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity and security satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes may direct the Trustee in its exercise of any trust or power. 15. Trustee Dealings with Company and Subsidiary Guarantors. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, the Subsidiary Guarantors or their respective Subsidiaries or Affiliates with the same rights it would have if it were not Trustee. 16. Authentication. This Note shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Note. 17. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience to Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 18. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company, any Subsidiary Guarantor or the Trustee, shall not have any liability for any obligations of the Company, any Subsidiary Guarantor or the Trustee, under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of or by reason of, A-1-11 such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 19. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). This Note shall be governed by and construed in accordance with the laws of the State of New York. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: O'Charley's Inc., 3038 Sidco Drive, Nashville, Tennessee 37204, Attention: A. Chad Fitzhugh. A-1-12 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to: ________________________________________________________________________________ (Insert assignee's social security or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ___________________________________ as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Your Signature:_________________________________________________________________ (Sign exactly as your name appears on the other side of this Note) Your Name:_____________________________________________________________________ Date:_____________________ Signature Guarantee:____________________________________________________________ A-1-13 FORM OF OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.11 or Section 4.16 of the Indenture, check the box: [ ] If you want to have only part of this Note purchased by the Company pursuant to Section 4.11 or Section 4.16 of the Indenture, state the amount (in integral multiples of $1,000: $_____________________ Date:_________________ Signature:_____________________________________________ (Sign exactly as your name appears on the other side of this Note) Name:___________________________________________________________________________ Signature Guarantee:____________________________________________________________ [TO BE ATTACHED TO GLOBAL NOTES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE The following increases or decreases in this Global Note have been made:
PRINCIPAL AMOUNT OF AMOUNT OF AMOUNT OF THIS SIGNATURE OF DECREASE IN INCREASE IN GLOBAL NOTE AUTHORIZED PRINCIPAL PRINCIPAL FOLLOWING SUCH SIGNATORY OF DATE OF AMOUNT OF THIS AMOUNT OF THIS DECREASE OR TRUSTEE OR NOTES EXCHANGE GLOBAL NOTE GLOBAL NOTE INCREASE CUSTODIAN - -------------------------------------------------------------------------------------------------
EXHIBIT A-2 [FORM OF FACE OF INITIAL NOTE] O'CHARLEY'S INC. THIS SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER THAT: (A) SUCH SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A NON U.S PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a) (1) , (2) , (3) OR (7) OF THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR ")) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, OR (e) IN ACCORDANCE WITH ANOTHER EXEMPTION, IF ANY, FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUER SO REQUESTS), (2) TO THE ISSUER, OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT A-2-1 AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND SUBJECT TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THIS SECURITY BY THE HOLDER OR BY ANY INVESTOR ACCOUNT OR ACCOUNTS BE AT ALL TIMES WITHIN ITS OR THEIR CONTROL; AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. THIS SECURITY MAY NOT BE ACQUIRED OR HELD WITH THE ASSETS OF (I) AN "EMPLOYEE BENEFIT PLAN" (AS DEFINED IN THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")) THAT IS SUBJECT TO ERISA, (II) A "PLAN" DESCRIBED IN SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), (III) ANY ENTITY DEEMED TO HOLD "PLAN ASSETS" OF ANY OF THE FOREGOING BY REASON OF AN EMPLOYEE BENEFIT PLAN'S OR PLAN'S INVESTMENT IN SUCH ENTITY, OR (IV) A GOVERNMENTAL PLAN OR CHURCH PLAN SUBJECT TO APPLICABLE LAW THAT IS SUBSTANTIALLY SIMILAR TO THE FIDUCIARY RESPONSIBILITY OR PROHIBITED TRANSACTION PROVISIONS OF ERISA OR SECTION 4975 OF THE CODE ("SIMILAR LAW"), UNLESS THE ACQUISITION AND HOLDING OF THIS SECURITY BY THE PURCHASER OR TRANSFEREE, THROUGHOUT THE PERIOD THAT IT HOLDS THIS SECURITY, ARE EXEMPT FROM THE PROHIBITED TRANSACTION RESTRICTIONS UNDER ERISA AND SECTION 4975 OF THE CODE OR ANY PROVISIONS OF SIMILAR LAW, AS APPLICABLE, PURSUANT TO ONE OR MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS. BY ITS ACQUISITION OR HOLDING OF THIS SECURITY, EACH PURCHASER AND TRANSFEREE WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT THE FOREGOING REQUIREMENTS HAVE BEEN SATISFIED. THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO A-2-2 ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON. A-2-3 9% SENIOR SUBORDINATED NOTES DUE 2013 No. S-__ $____________________ CUSIP No. U6750MAA5 O'Charley's Inc., a Tennessee corporation, promises to pay to Cede & Co. or registered assigns the principal sum of _______________________ Dollars on November 1, 2013. Interest Payment Dates: May 1 and November 1, commencing May 1, 2004 Record Dates: April 15 and October 15. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. A-2-4 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. Dated: ____________________ O'CHARLEY'S INC. By ________________________ Name: Title: By ________________________ Name: Title: A-2-5 Certificate of Authentication: THE BANK OF NEW YORK, as Trustee, certifies that this is one of the Notes referred to in the within- mentioned Indenture. Date: _____________________ By ________________________________ Authorized Signatory A-2-6 [REVERSE OF NOTE] O'CHARLEY'S INC. 9% SENIOR SUBORDINATED NOTES DUE 2013 1. Interest. O'Charley's Inc., a Tennessee corporation (the "Company"), promises to pay interest on the principal amount of this Note at 9% per annum from November 4, 2003 until maturity; provided, however, that if a Registration Default (as defined in the Registration Rights Agreement) occurs, additional interest will accrue on this Note from and including the date on which any such Registration Default shall occur to but excluding the date on which all Registration Defaults have been cured at a rate of 0.25% per annum per $1,000 principal amount of such Notes with respect to the first 90-day period following such Registration Default, increasing by an additional 0.25% per annum per $1,000 principal amount of such Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of additional interest of 1.0% per annum per $1,000 principal amount of such Notes for all Registration Defaults. The Company will pay interest semiannually on May 1 and November 1 of each year (each an "Interest Payment Date"), or if any such day is not a Business Day, on the next succeeding Business Day. Interest on the Notes will accrue from the most recent Interest Payment Date on which interest has been paid or, if no interest has been paid, from November 4, 2003; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be May 1, 2004. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate equal to the interest rate then in effect; it shall pay interest on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. Method of Payment. The Company shall pay interest on the Notes (except defaulted interest) to the persons who are registered holders of Notes at the close of business on the record date immediately preceding the Interest Payment Date, even if such Notes are cancelled after the record date and on or before the Interest Payment Date, except as provided in Section 2.11 of the Indenture with respect to defaulted interest. The Notes shall be payable as to principal, premium, if any, and interest at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York maintained for such purposes, provided that payment by wire transfer of immediately available funds shall be required with respect to principal of, premium, if any, and interest on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Holders must surrender Notes to a Paying Agent to collect principal payments. The Company will pay principal of, premium, if any, and interest on the Notes in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. A-2-7 3. Paying Agent and Registrar. Initially, the Trustee will act as Paying Agent and Registrar. The Company may change any Paying Agent, Registrar or co-registrar without notice, as provided in the Indenture (defined below). Neither the Company nor any of its Subsidiaries may act as Paying Agent or Registrar. 4. Indenture. The Company issued the Notes under an Indenture, dated as of November 4, 2003 (the "Indenture"), among the Company, the Subsidiary Guarantors and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Indenture pursuant to which the Notes are issued provides that an unlimited aggregate principal amount of Notes may be issued thereunder. 5. Guarantees. The Notes are general senior subordinated unsecured obligations of the Company. The Company's obligation to pay principal, premium, if any, and interest with respect to the Notes is unconditionally guaranteed on a senior subordinated basis, jointly and severally, by the Subsidiary Guarantors pursuant to Article Eleven of the Indenture. Certain limitations to the obligations of the Subsidiary Guarantors are set forth in further detail in the Indenture. 6. Subordination. Each Holder by accepting this Note agrees, that payment of principal, premium, if any, and interest on (or any other Obligations relating to) the Notes is subordinated in right of payment, to the extent and in the manner provided in Article Ten of the Indenture, to the prior payment in full in cash of all Senior Debt of the Company (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. Each Holder by accepting this Note agrees, that any payment in respect of the Subsidiary Guarantee of each Subsidiary Guarantor is subordinated in right of payment, to the extent and in the manner provided in Article Twelve of the Indenture, to the prior payment in full in cash of all Senior Debt of the Company and such Subsidiary Guarantor (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Debt. 7. Optional Redemption. Except as described below, the Notes will not be redeemable at the Company's option prior to November 1, 2008. At any time on or after November 1, 2008, the Company may, at its option, redeem all or any portion of the Notes, subject to any restrictions or other provisions relating thereto in any Senior Debt, at the redemption prices (expressed as percentages of the principal amount of the Notes) set forth below, plus, in each case, accrued interest thereon to the applicable redemption date, if redeemed during the 12-month period beginning November 1 of the years indicated below:
Year Percentage - ---- ---------- ~~2008 104.500%~~
A-2-8 ~~2009 103.000% 2010 101.500% 2011 and thereafter 100.000%~~

Notwithstanding the foregoing, at any time and from time to time on or prior to November 1, 2006, the Company may redeem in the aggregate up to 35% of the aggregate original principal amount of the Notes issued under the Indenture with the net cash proceeds of one or more Equity Offerings, at a redemption price (expressed as a percentage of principal amount) of 109.000%, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided, however, that (1) at least 65% of the aggregate principal amount of the Notes originally issued under the Indenture must remain outstanding after each such redemption and (2) any such redemption must occur within 60 days of the date of the closing of the Equity Offering. 8. Mandatory Redemption. The Company shall not be required to make mandatory redemption payments or sinking fund payments with respect to the Notes. 9. Selection and Notice of Redemption. Notice of redemption will be mailed to the Holder's registered address at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed. If less than all Notes are to be redeemed, the Trustee shall select the Notes to be redeemed in multiples of $1,000 pro rata, by lot or by any other method that the Trustee considers fair and appropriate; provided that if the Notes are listed on any securities exchange, that such method complies with the requirements of such exchange. Notes in denominations larger than $1,000 may be redeemed in part. On and after the redemption date interest ceases to accrue on Notes or portions of them called for redemption (unless the Company shall default in the payment of the redemption price or accrued interest). 10. Repurchase at Option of Holder. (a) Upon the occurrence of a Change of Control, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to a Change of Control Offer at an offer price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, to the date of purchase. Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing, among other things, the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the date specified in such notice, which date shall be no earlier than 30 days and no later than 90 days from the date such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. (b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option to (1) prepay, repay or purchase Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; provided, however, that if any Net Proceeds received in any Build-to-Suit Sale-Leaseback Transaction or any Expansion Equipment Sale-Leaseback Transaction are used to repay revolving credit Indebtedness, no corresponding reduction in commitments with respect thereto will be required; or (2) to purchase Replacement Assets or to A-2-9 make a capital expenditure in or that is used or useful in a Permitted Business or enter into a commitment to do so. Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph shall constitute "Excess Proceeds." Within 30 days after the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall make an "Asset Sale Offer" to all Holders of Notes, and all holders of other Indebtedness that is pari passu with the Notes or any Subsidiary Guarantee containing provisions similar to those set forth in this Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100% of principal amount of the Notes purchased plus accrued and unpaid interest thereon to the date of purchase, and shall be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and such other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee shall select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero. 11. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Notes selected for redemption. Also, the Company is not required to transfer or exchange any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed. 12. Persons Deemed Owners. The registered Holder of a Note may be treated as the owner of it for all purposes and neither the Company, any Subsidiary Guarantor, the Trustee nor any Agent shall be affected by notice to the contrary. 13. Amendment, Supplement, Waiver. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes, and any past default or noncompliance with any provision may be waived with the consent of the Holders of a majority in aggregate principal amount of the Notes. Without the consent of any Holder, the Company may modify, amend or supplement the Indenture or the Notes to: cure any ambiguity, defect or inconsistency; provide for uncertificated Notes in addition to or in place of certificated Notes; provide for the assumption of the Company's or any Subsidiary Guarantor's Obligations to the Holders of the Notes in the case of a merger or consolidation or sale of all or substantially all of the Company's or such Subsidiary Guarantor's assets pursuant to the provisions of Section 5.01, 4.20(B) or 4.11 of the Indenture; to make any change that would provide any additional benefit or rights to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder; to comply with requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; to comply with Sections 4.20 (Release of Subsidiary Guarantees) A-2-10 and 4.22 (Additional Subsidiary Guarantors) of the Indenture; evidence and provide for the acceptance of appointment by a successor Trustee; or to provide for the issuance of Additional Notes in accordance with the Indenture. 14. Defaults and Remedies. If an Event of Default (other than an Event of Default related to bankruptcy or insolvency of the Company, any Subsidiary Guarantor or any Significant Subsidiary (or any Subsidiaries of the Company that, taken together as a whole, would constitute a Significant Subsidiary)) under the Indenture occurs and is continuing, then and in every such case the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes may declare the unpaid principal of, premium, if any, and accrued and unpaid interest on, all the Notes then outstanding to be due and payable immediately, by a notice in writing to the Company (and to the Trustee, if given by Holders) specifying the respective Event of Default and upon any such declaration such principal, premium, if any, and accrued and unpaid interest shall become immediately due and payable; provided, however, that so long as any Obligations under any Credit Agreement shall be outstanding or the commitments thereunder have not been terminated, that acceleration shall not be effective until the earlier of (1) the acceleration of all Obligations under the Credit Agreement or (2) five business days after receipt by the administrative agent under the Credit Agreement of written notice of the acceleration of the Notes. If an Event of Default related to bankruptcy or insolvency of the Company, any Subsidiary Guarantor or any Significant Subsidiary (or any Subsidiaries of the Company that, taken together as a whole, would constitute a Significant Subsidiary) occurs, all unpaid principal of, and accrued interest on, the Notes then outstanding will become due and payable immediately, without any declaration or other act on the part of the Trustee or any Holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity and security satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes may direct the Trustee in its exercise of any trust or power. 15. Trustee Dealings with Company and Subsidiary Guarantors. The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company, the Subsidiary Guarantors or their respective Subsidiaries or Affiliates with the same rights it would have if it were not Trustee. 16. Authentication. This Note shall not be valid until the Trustee or an authenticating agent signs the certificate of authentication on the other side of this Note. 17. CUSIP Numbers. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company will cause CUSIP numbers to be printed on the Notes as a convenience to Holders of the Notes. No representation is made as to the accuracy of such numbers as printed on the Notes and reliance may be placed only on the other identification numbers printed hereon. 18. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company, any Subsidiary Guarantor or the Trustee, shall not have any liability for any obligations of the Company, any Subsidiary Guarantor or the Trustee, under the Notes, the Subsidiary Guarantees or the Indenture or for any claim based on, in respect of or by reason of, A-2-11 such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes. 19. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). This Note shall be governed by and construed in accordance with the laws of the State of New York. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to: O'Charley's Inc., 3038 Sidco Drive, Nashville, Tennessee 37204, Attention: A. Chad Fitzhugh. A-2-12 ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to: ________________________________________________________________________________ (Insert assignee's social security or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _____________________________________ as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Your Signature:_________________________________________________________________ (Sign exactly as your name appears on the other side of this Note) Your Name:______________________________________________________________________ Date:___________________ Signature Guarantee:____________________________________________________________ A-2-13 FORM OF OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Note purchased by the Company pursuant to Section 4.11 or Section 4.16 of the Indenture, check the box: [ ] If you want to have only part of this Note purchased by the Company pursuant to Section 4.11 or Section 4.16 of the Indenture, state the amount (in integral multiples of $1,000: $___________________ Date:_______________ Signature: ____________________________________________ (Sign exactly as your name appears on the other side of this Note) Name:___________________________________________________________________________ Signature Guarantee:____________________________________________________________ A-2-14 EXHIBIT B FORM OF CERTIFICATE OF TRANSFER O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Facsimile: (615) 782-8818 Attention: A. Chad Fitzhugh The Bank of New York 101 Barclay Street, Floor 8W New York, NY 10286 Facsimile: (212) 815-5704 Attention: Corporate Trust Administration Re: 9% Senior Subordinated Notes due 2013 CUSIP:_____________ Reference is hereby made to the Indenture, dated as of November 4, 2003 (the "Indenture"), between O'Charley's Inc., a Tennessee corporation (the "Company"), the Subsidiary Guarantors and The Bank of New York, as Trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. ___________________ (the "Transferor") owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount at maturity of $___________ in such Note[s] or interests (the "Transfer"), to ___________________________ (the "Transferee"), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that: [CHECK ALL THAT APPLY] 1. - CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a "qualified institutional buyer" within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 2. - CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE, REGULATION S PERMANENT GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period as defined in Regulation S, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than the Initial Purchasers). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Temporary Global Note, Regulation S Permanent Global Note and/or the Definitive Note and in the Indenture and the Securities Act. 3. - CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one): (a) - such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act; or (b) - such Transfer is being effected to the Company or a subsidiary thereof; or (c) - such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or (d) - such Transfer is being effected to an Institutional Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if B-2 the principal amount of Notes to be transferred is less than $100,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Definitive Notes and in the Indenture and the Securities Act. 4. - CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE. (a) - CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (b) - CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture. (c) - CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note shall not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture. B-3 This certificate and the statements contained herein are made for your benefit and the benefit of the Company. _________________________________ [Insert Name of Transferor] By_______________________________ Name: Title: Dated:____________________ B-4 ANNEX A TO CERTIFICATE OF TRANSFER 1. The Transferor owns and proposes to transfer the following: [CHECK ONE OF (A) OR (B)] (A) - a beneficial interest in the: (i) - 144A Global Note (CUSIP 670823AA1); or (ii) - Regulation S Global Note (CUSIP U670MAA5); or (B) - a Restricted Definitive Note. 2. After the Transfer the Transferee shall hold: [CHECK ONE] (A) - a beneficial interest in the: (i) - 144A Global Note (CUSIP 670823AA1); or (ii) - Regulation S Global Note (CUSIP U670MAA5); or (iii) - Unrestricted Global Note; or (B) - a Restricted Definitive Note; or (C) - an Unrestricted Definitive Note, in accordance with the terms of the Indenture. B-5 EXHIBIT C FORM OF CERTIFICATE OF EXCHANGE O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Facsimile: (615) 782-8818 Attention: A. Chad Fitzhugh The Bank of New York 101 Barclay Street, Floor 8W New York, NY 10286 Facsimile: (212) 815-5704 Attention: Corporate Trust Administration Re: 9% Senior Subordinated Notes due 2013 CUSIP: ______________ Reference is hereby made to the Indenture, dated as of November 4, 2003 (the "Indenture"), between O'Charley's Inc., a Tennessee corporation (the "Company), the Subsidiary Guarantors and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. __________________________ (the "Owner") owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount at maturity of $____________ in such Note[s] or interests (the "Exchange"). In connection with the Exchange, the Owner hereby certifies that: 1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE. (a) - CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the "Securities Act"), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (b) - CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (c) - CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL Note. In connection with the Owner's Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. (d) - CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States. 2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES. (a) - CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner's beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner's own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued shall continue to be subject to the restrictions on transfer C-2 enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act. (b) - CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner's Restricted Definitive Note for a beneficial interest in the [CHECK ONE] - 144A Global Note, - Regulation S Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner's own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued shall be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act. This certificate and the statements contained herein are made for your benefit and the benefit of the Company. ____________________________________ [Insert Name of Transferor] By__________________________________ Name: Title: Dated:______________________ C-3 EXHIBIT D FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Facsimile: (615) 782-8818 Attention: A. Chad Fitzhugh The Bank of New York 101 Barclay Street, Floor 8W Facsimile: (212) 815-5704 New York, NY 10286 Attention: Corporate Trust Administration Re: 9% Senior Subordinated Notes due 2013 CUSIP: ____________ Reference is hereby made to the Indenture, dated as of November 4, 2003 (the "Indenture"), between O'Charley's Inc., a Tennessee corporation (the "Company"), the Subsidiary Guarantors and The Bank of New York, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. In connection with our proposed purchase of $____________ aggregate principal amount at maturity of: (a) - beneficial interest in a Global Note, or (b) - a Definitive Note, we confirm that: 1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we shall do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein. 3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we shall be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us shall bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. ___________________________________________ [Insert Name of Accredited Investor] By_________________________________________ Name: Title: Dated:_____________________ D-2 EXHIBIT E FORM OF SUPPLEMENTAL INDENTURE TO ADD SUBSIDIARY GUARANTORS This Supplemental Indenture, dated as of _________________ (this "Supplemental Indenture"), among [NAME OF FUTURE SUBSIDIARY GUARANTOR] (the "New Subsidiary Guarantor"), O'Charley's Inc. (together with its successors and assigns, the "Company"), each other then existing Subsidiary Guarantor under the Indenture referred to below (the "Subsidiary Guarantors"), and The Bank of New York, as Trustee under the Indenture referred to below. W I T N E S S E T H: WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have heretofore executed and delivered an Indenture, dated as of November 4, 2003 (as amended, supplemented, waived or otherwise modified, the "Indenture"), providing for the issuance of a principal amount of up to $125,000,000 of 9% Senior Subordinated Notes due 2013 of the Company; WHEREAS, Section 4.22 of the Indenture provides that the Company is required to cause certain Subsidiaries that are created or acquired after the date of the Indenture to execute and deliver to the Trustee a Supplemental Indenture pursuant to which such Subsidiary will fully and unconditionally guarantee, on a joint and several basis with the other Subsidiary Guarantors, the full and prompt payment of the Obligations of the Company under the Notes and the Indenture on a senior subordinated basis, and the performance of all other obligations of the Company to the Holders and the Trustee all in accordance with the terms set forth in Article Eleven of the Indenture; WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee, the Company and the Subsidiary Guarantors are authorized to execute and deliver this Supplemental Indenture to amend the Indenture, without the consent of any Holder; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the New Subsidiary Guarantor, the Company, the other Subsidiary Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows: ARTICLE ONE DEFINITIONS Section 1.1 Defined Terms. As used in this Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as therein defined, except that the term "Holders" in this Guarantee shall refer to the term "Holders" as defined in the Indenture and the Trustee acting on behalf or for the benefit of such holders. The words "herein," "hereof" and "hereby" and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular section hereof. ARTICLE TWO AGREEMENT TO BE BOUND; GUARANTEE Section 2.1 Agreement to be Bound. The New Subsidiary Guarantor hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture. The New Subsidiary Guarantor agrees to be bound by all of the provisions of the Indenture applicable to a Subsidiary Guarantor and to perform all of the obligations and agreements of a Subsidiary Guarantor under the Indenture. Section 2.2 Guarantee. The New Subsidiary Guarantor hereby unconditionally guarantees, as primary obligor and not merely as surety, jointly and severally with each other Subsidiary Guarantor, to each Holder of the Notes and the Trustee, the full and punctual payment when due, whether at maturity, upon redemption or repurchase, by declaration of acceleration or otherwise, of the obligations pursuant to Article Eleven of the Indenture on basis consistent with Article Twelve of the Indenture and subject to the terms and conditions of the Indenture. ARTICLE THREE MISCELLANEOUS Section 3.1 Miscellaneous. All notices and other communications to the New Subsidiary Guarantor shall be given as provided in the Indenture to the New Subsidiary Guarantor, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company. Address of New Subsidiary Guarantor: [NAME OF NEW SUBSIDIARY GUARANTOR] c/o O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Facsimile: (615) 782-8818 Attention: A. Chad Fitzhugh Section 3.2 Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained. Section 3.3 Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws. E-2 Section 3.4 Separability. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 3.5 Ratification of Indenture; Supplemental Indenture Part of Indenture; Trustee's Disclaimer. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture. Section 3.6 Multiple Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. Section 3.7 Headings. The headings of the Articles and Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. E-3 IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. [NEW SUBSIDIARY GUARANTOR], as a Subsidiary Guarantor By_________________________________ Name: Title: O'CHARLEY'S INC. By_________________________________ Name: Title: THE BANK OF NEW YORK, as Trustee By_________________________________ Name: Title: [EACH THEN EXISTING SUBSIDIARY GUARANTOR] By_________________________________ Name: Title: E-4 EX-10.4 6 g85963exv10w4.txt EX-10.4 AMENDED AND RESTATED CREDIT AGREEMENT EXHIBIT 10.4 ================================================================================ CREDIT AGREEMENT dated as of November 4, 2003, by and among O'CHARLEY'S INC., as Borrower, the Lenders referred to herein, WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, BANK OF AMERICA, N.A. AND COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A. "RABOBANK INTERNATIONAL", NEW YORK BRANCH as Co-Syndication Agents, and AMSOUTH BANK AND SUNTRUST BANK, as Co-Documentation Agents WACHOVIA CAPITAL MARKETS, LLC, d/b/a WACHOVIA SECURITIES as Sole Lead Arranger and Sole Book Manager ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.........................................................................................1 SECTION 1.1 Definitions......................................................................1 SECTION 1.2 General.........................................................................19 SECTION 1.3 Other Definitions and Provisions................................................19 ARTICLE II REVOLVING CREDIT FACILITY..........................................................................19 SECTION 2.1 Revolving Credit Loans..........................................................19 SECTION 2.2 Swingline Loans.................................................................20 SECTION 2.3 Procedure for Advances of Revolving Credit Loans................................22 SECTION 2.4 Repayment of Loans..............................................................22 SECTION 2.5 Notes...........................................................................23 SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment..........................24 SECTION 2.7 Termination of Revolving Credit Facility........................................24 SECTION 2.8 Increase of Revolving Credit Commitment.........................................24 ARTICLE III LETTER OF CREDIT FACILITY..........................................................................26 SECTION 3.1 L/C Commitment..................................................................26 SECTION 3.2 Procedure for Issuance of Letters of Credit.....................................26 SECTION 3.3 Commissions and Other Charges...................................................27 SECTION 3.4 L/C Participations..............................................................27 SECTION 3.5 Reimbursement Obligation of the Borrower........................................28 SECTION 3.6 Obligations Absolute............................................................29 SECTION 3.7 Effect of Application...........................................................29 ARTICLE IV [Intentionally Omitted]............................................................................29 ARTICLE V GENERAL LOAN PROVISIONS............................................................................29 SECTION 5.1 Interest........................................................................29 SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans........................32 SECTION 5.3 Fees............................................................................33 SECTION 5.4 Manner of Payment...............................................................34 SECTION 5.5 Crediting of Payments and Proceeds..............................................34 SECTION 5.6 Adjustments.....................................................................35 SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent........................................................35 SECTION 5.8 Changed Circumstances...........................................................36 SECTION 5.9 Indemnity.......................................................................38 SECTION 5.10 Capital Requirements............................................................38 SECTION 5.11 Taxes...........................................................................38 SECTION 5.12 Security........................................................................40 SECTION 5.13 Replacement of Lenders..........................................................40 ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING.......................................................41 SECTION 6.1 Closing.........................................................................41 SECTION 6.2 Conditions to Closing and Initial Extensions of Credit..........................41 SECTION 6.3 Conditions to All Extensions of Credit..........................................46 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWER.....................................................46
i SECTION 7.1 Representations and Warranties..................................................46 SECTION 7.2 Survival of Representations and Warranties, Etc.................................54 ARTICLE VIII FINANCIAL INFORMATION AND NOTICES.................................................................54 SECTION 8.1 Financial Statements and Projections............................................54 SECTION 8.2 Officer's Compliance Certificate................................................55 SECTION 8.3 Accountants' Certificate........................................................55 SECTION 8.4 Other Reports...................................................................56 SECTION 8.5 Notice of Litigation and Other Matters..........................................56 SECTION 8.6 Accuracy of Information.........................................................57 ARTICLE IX AFFIRMATIVE COVENANTS.............................................................................57 SECTION 9.1 Preservation of Corporate Existence and Related Matters.........................58 SECTION 9.2 Maintenance of Property.........................................................58 SECTION 9.3 Insurance.......................................................................58 SECTION 9.4 Accounting Methods and Financial Records........................................58 SECTION 9.5 Payment and Performance of Obligations..........................................58 SECTION 9.6 Compliance with Laws and Approvals..............................................58 SECTION 9.7 Environmental Laws..............................................................59 SECTION 9.8 Compliance with ERISA...........................................................59 SECTION 9.9 Compliance with Agreements......................................................59 SECTION 9.10 Visits and Inspections..........................................................59 SECTION 9.11 Additional Subsidiaries; Equipment; Real Property Acquisitions..................60 SECTION 9.12 Use of Proceeds.................................................................61 SECTION 9.13 Conduct of Business.............................................................61 SECTION 9.14 Further Assurances..............................................................61 SECTION 9.15 Landlord Consents...............................................................61 ARTICLE X FINANCIAL COVENANTS...............................................................................61 SECTION 10.1 Maximum Adjusted Debt to EBITDAR Ratio..........................................62 SECTION 10.2 Maximum Senior Secured Leverage Ratio...........................................62 SECTION 10.3 Minimum Fixed Charge Coverage Ratio.............................................62 SECTION 10.4 Minimum Asset Coverage Ratio....................................................62 SECTION 10.5 Minimum Capital Expenditures Ratio..............................................62 ARTICLE XI NEGATIVE COVENANTS................................................................................63 SECTION 11.1 Limitations on Debt..............................................................63 SECTION 11.2 Limitations on Liens.............................................................64 SECTION 11.3 Limitations on Loans, Advances, Investments and Acquisitions.....................65 SECTION 11.4 Limitations on Mergers and Liquidation...........................................66 SECTION 11.5 Limitations on Sale of Assets....................................................67 SECTION 11.6 Limitations on Dividends and Distributions.......................................68 SECTION 11.7 Limitations on Exchange and Issuance of Ownership Interests......................69 SECTION 11.8 Transactions with Affiliates.....................................................69 SECTION 11.9 Certain Accounting Changes; Organizational Documents.............................69 SECTION 11.10 Amendments; Payments and Prepayments of Subordinated Debt........................69 SECTION 11.11 Restrictive Agreements...........................................................69 SECTION 11.12 Nature of Business...............................................................70 SECTION 11.13 Impairment of Security Interests.................................................70 SECTION 11.14 SRLS Entities Restrictions.......................................................70

ii SECTION 11.15 Franchisees Restrictions.........................................................70 ARTICLE XII DEFAULT AND REMEDIES..............................................................................70 SECTION 12.1 Events of Default................................................................70 SECTION 12.2 Remedies.........................................................................73 ARTICLE XIII THE ADMINISTRATIVE AGENT..........................................................................74 SECTION 13.1 Appointment......................................................................74 SECTION 13.2 Delegation of Duties.............................................................75 SECTION 13.3 Exculpatory Provisions...........................................................75 SECTION 13.4 Reliance by the Administrative Agent.............................................75 SECTION 13.5 Notice of Default................................................................76 SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders.......................76 SECTION 13.7 Indemnification..................................................................77 SECTION 13.8 The Administrative Agent in Its Individual Capacity..............................77 SECTION 13.9 Resignation of the Administrative Agent; Successor Administrative Agent..........77 SECTION 13.10 Syndication and Documentation Agents.............................................78 ARTICLE XIV MISCELLANEOUS.....................................................................................78 SECTION 14.1 Notices..........................................................................78 SECTION 14.2 Expenses; Indemnity..............................................................79 SECTION 14.3 Set-off..........................................................................80 SECTION 14.4 Governing Law....................................................................80 SECTION 14.5 Jurisdiction and Venue...........................................................80 SECTION 14.6 Binding Arbitration; Waiver of Jury Trial........................................81 SECTION 14.7 Reversal of Payments.............................................................82 SECTION 14.8 Injunctive Relief; Punitive Damages..............................................82 SECTION 14.9 Accounting Matters...............................................................83 SECTION 14.10 Successors and Assigns; Participations...........................................83 SECTION 14.11 Amendments, Waivers and Consents.................................................88 SECTION 14.12 Performance of Duties............................................................89 SECTION 14.13 All Powers Coupled with Interest.................................................89 SECTION 14.14 Survival of Indemnities..........................................................89 SECTION 14.15 Titles and Captions..............................................................89 SECTION 14.16 Severability of Provisions.......................................................89 SECTION 14.17 Counterparts.....................................................................89 SECTION 14.18 Term of Agreement................................................................89 SECTION 14.19 Advice of Counsel................................................................90 SECTION 14.20 No Strict Construction...........................................................90 SECTION 14.21 Inconsistencies with Other Documents; Independent Effect of Covenants............90 SECTION 14.22 Reaffirmation of Security Documents and Loan Documents...........................90

iii EXHIBITS Exhibit A-1 - Form of Amended and Restated Revolving Credit Note Exhibit A-2 - Form of Amended and Restated Swingline Note Exhibit B - Form of Notice of Borrowing Exhibit C - Form of Notice of Account Designation Exhibit D - Form of Notice of Prepayment Exhibit E - Form of Notice of Conversion/Continuation Exhibit F - Form of Officer's Compliance Certificate Exhibit G - Form of Assignment and Acceptance SCHEDULES Schedule 7.1(a) - Jurisdictions of Organization and Qualification Schedule 7.1(b) - Subsidiaries and Capitalization Schedule 7.1(h) - Environmental Matters Schedule 7.1(i) - ERISA Plans Schedule 7.1(l) - Material Contracts Schedule 7.1(m) - Labor and Collective Bargaining Agreements Schedule 7.1(r) - Real Property Schedule 7.1(t) - Debt and Guaranty Obligations Schedule 7.1(u) - Litigation Schedule 11.2 - Existing Liens Schedule 11.3 - Existing Loans, Advances and Investments

iv EXECUTION COPY AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 4th day of November, 2003, by and among O'CHARLEY'S INC., a Tennessee corporation, as Borrower, the lenders who are or may become a party to this Agreement, as Lenders, WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as Administrative Agent for the Lenders, BANK OF AMERICA, N.A. AND COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A. "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as Co-Syndication Agents, and AMSOUTH BANK AND SUNTRUST BANK, as Co-Documentation Agents. STATEMENT OF PURPOSE Pursuant to the Credit Agreement dated as of January 27, 2003 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the "Existing Credit Agreement"), by and among the Borrower, the lenders party thereto (the "Existing Lenders") and Wachovia Bank, National Association, as administrative agent, the Existing Lenders extended certain credit facilities to the Borrower pursuant to the terms thereof. The Borrower has requested, and, subject to the terms and conditions hereof, the Lenders have agreed to amend and restate the Existing Credit Agreement on the terms and conditions of this Agreement. It is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties under the Existing Credit Agreement or be deemed to be evidence or constitute repayment of all or any portion of such obligations and liabilities, but that this Agreement amend and restate in its entirety the Existing Credit Agreement and re-evidence the obligations and liabilities of the Borrower and the other credit parties outstanding thereunder. It is also the intent of the Borrower and Subsidiary Guarantors (as defined below) to confirm that all obligations under the loan documents referred to in the Existing Credit Agreement shall continue in full force and effect as modified by the Loan Documents referred to herein and that, from and after the Closing Date, all references to the "Credit Agreement" contained in any such existing loan documents shall be deemed to refer to this Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereby agree that the Existing Credit Agreement is hereby amended and restated as follows: ARTICLE I DEFINITIONS SECTION 1.1 Definitions. The following terms when used in this Agreement shall have the meanings assigned to them below: "Acquisition" means the acquisition by the Borrower, or one or more Subsidiary Guarantors, of the assets of 99 Boston Inc., 99 Boston of Vermont, Inc. and Doe Family II, LLC pursuant to the terms of the Asset Purchase Agreement, dated October 28, 2002, by and among the Borrower, as Buyer, 99 Boston, Inc., 99 Boston of Vermont, Inc., Doe Family II, LLC, William A. Doe, III, Dana G. Doe and Charles F. Doe, Jr., as Sellers and the acquisition by the Borrower or one or more Subsidiary Guarantors of the stock of 99 West, Inc. pursuant to the terms of the Merger Agreement dated October 28, 2002, by and among the Borrower, Volunteer Acquisition Corporation, 99 West, Inc., William A. Doe, III, Dana G. Doe and Charles F. Doe, Jr. "Adjusted Debt" means, as of any date of calculation, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries in accordance with GAAP: (a) Debt as of such date, plus (b) the product of (i) Rental Expense for the four (4) consecutive Fiscal Quarter period ending on or immediately prior to such date, multiplied by (ii) 8.0; provided, however, that for purposes of calculating compliance with Section 10.1, Rental Expense for the four (4) consecutive Fiscal Quarter period ending on such date shall be increased to include rental expense associated with any sale-leaseback transaction permitted hereunder on a pro forma basis. "Adjusted Debt to EBITDAR Ratio" shall mean the ratio set forth in Section 10.1. "Administrative Agent" means Wachovia in its capacity as Administrative Agent hereunder, and any successor thereto appointed pursuant to Section 13.9. "Administrative Agent's Office" means the office of the Administrative Agent specified in or determined in accordance with the provisions of Section 14.1(c). "Affiliate" means, with respect to any Person, any other Person (other than a Subsidiary of the Borrower) which directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such first Person or any of its Subsidiaries. The term "control" means (a)the power to vote ten percent (10%) or more of the securities or other equity interests of a Person having ordinary voting power, or (b)the possession, directly or indirectly, of any other power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. "Agreement" means this Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time. "Aggregate Commitment" means the aggregate amount of the Lenders' Commitments hereunder, as such amount may be reduced or otherwise modified at any time or from time to time pursuant to the terms hereof. On the Closing Date, the Aggregate Commitment shall be One Hundred Twenty-Five Million Dollars ($125,000,000). "Aggregate Permitted Note Repurchases Amount" means $25,000,000; provided, however, that the Aggregate Permitted Note Repurchases Amount shall be reduced "dollar for 2 dollar" for every dollar less than $125,000,000 received by the Borrower in gross proceeds from the issuance of the Senior Subordinated Notes. "Applicable Law" means all applicable provisions of constitutions, laws, statutes, ordinances, rules, treaties, regulations, permits, licenses, approvals, interpretations and orders of courts or Governmental Authorities and all orders and decrees of all courts and arbitrators. "Applicable Margin" shall have the meaning assigned thereto in Section 5.1(c). "Application" means an application, in the form specified by the Issuing Lender from time to time, requesting the Issuing Lender to issue a Letter of Credit. "Approved Fund" means any Person (other than a natural Person), including, without limitation, any special purpose entity, that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business; provided, that such Approved Fund must be administered by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. "Arbitration Rules" shall have the meaning assigned thereto in Section 14.6(a). "Asset Coverage Ratio" means, as of any Fiscal Quarter end, the ratio of (a) the Consolidated gross book value of the Borrower's and its Subsidiaries' land and all improvements thereto (other than buildings), accounts receivables, inventory and cash on such date and determined in accordance with GAAP to (b) the aggregate amount of all outstanding Extensions of Credit under this Credit Facility on each such date. "Assignment and Acceptance" shall have the meaning assigned thereto in Section 14.10. "Base Rate" means, at any time, the higher of (a) the Prime Rate and (b) the Federal Funds Rate plus 1/2 of 1%; each change in the Base Rate shall take effect simultaneously with the corresponding change or changes in the Prime Rate or the Federal Funds Rate. "Base Rate Loan" means any Loan bearing interest at a rate based upon the Base Rate as provided in Section 5.1(a). "Benefited Lender" shall have the meaning assigned thereto in Section 5.6. "Borrower" means O'Charley's Inc., a Tennessee corporation, in its capacity as borrower hereunder. "Build-to-Suit Sale-Leaseback Transaction" means, in respect of any real property acquired and improved by the Borrower or any of its Subsidiary Guarantors after the Closing Date solely in connection with new store openings, any transaction occurring after the Closing Date whereby such real property is sold by and leased back to the Borrower or such Subsidiary Guarantors within a period ending not later than the date that is the earlier of (i) two years after 3 the date such real property was acquired and (ii) 270 days after the date that construction work to improve such real property commenced. "Business Day" means (a) for all purposes other than as set forth in clause (b) below, any day other than a Saturday, Sunday or legal holiday on which banks in Charlotte, North Carolina and New York, New York, are open for the conduct of their commercial banking business, and (b) with respect to all notices and determinations in connection with, and payments of principal and interest on, any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and that is also a day for trading by and between banks in Dollar deposits in the London interbank market. "Calculation Date" shall have the meaning assigned thereto in Section 5.1(c). "Capital Asset" means, with respect to the Borrower and its Subsidiaries, any asset that should, in accordance with GAAP, be classified and accounted for as a capital asset on a Consolidated balance sheet of the Borrower and its Subsidiaries. "Capital Expenditures" means with respect to the Borrower and its Subsidiaries for any period, the aggregate cost of all Capital Assets acquired by the Borrower and its Subsidiaries during such period, as determined in accordance with GAAP. "Capital Lease" means any lease of any property by the Borrower or any of its Subsidiaries, as lessee, that should, in accordance with GAAP, be classified and accounted for as a capital lease on a Consolidated balance sheet of the Borrower and its Subsidiaries. "Cash Equivalents" shall have the meaning assigned thereto in Section 11.3(b). "Cash Management Program" means the cash management program of the Swingline Lender and any other cash management or other arrangement which the Borrower and the Swingline Lender agree should be included in the borrowing and repayment of Swingline Loans pursuant to Section 2.2. "Change in Control" shall have the meaning assigned thereto in Section 12.1(i). "Closing Date" means the date of this Agreement or such later Business Day upon which each condition described in Section 6.2 shall be satisfied or waived in all respects in a manner acceptable to the Administrative Agent, in its sole discretion. "Co-Documentation Agents" means, collectively, AmSouth Bank and Suntrust Bank. "Co-Syndication Agents" means, collectively, Bank of America, N.A. and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A. "Rabobank International", New York Branch. "Code" means the Internal Revenue Code of 1986, and the rules and regulations thereunder, each as amended or modified from time to time. 4 "Collateral" means the collateral security for the Obligations pledged or granted pursuant to the Security Documents. "Collateral Agreement" means the Amended and Restated Collateral Agreement dated as of the date hereof executed by the Borrower and the Subsidiary Guarantors in favor of the Administrative Agent for the ratable benefit of itself and the Lenders, as amended, restated, supplemented or otherwise modified from time to time "Collateral Assignment Agreement" means the Collateral Assignment Agreement dated as of January 27, 2003 executed by the Borrower or any of its Subsidiaries, as applicable, in favor of the Administrative Agent for the ratable benefit of itself and the Lenders, as reaffirmed pursuant to the Reaffirmation Agreement and as otherwise amended, restated or supplemented from time to time. "Commitment" means, as to any Lender, the obligation of such Lender to make Loans to and issue or participate in Letters of Credit issued for the account of the Borrower hereunder in an aggregate principal or face amount at any time outstanding not to exceed the amount set forth opposite such Lender's name in the Register, as the same may be reduced or otherwise modified at any time or from time to time pursuant to the terms hereof. "Commitment Fee Rate" shall have the meaning assigned thereto in Section 5.3(a). "Commitment Percentage" means, as to any Lender at any time, the ratio of (a) the amount of the Commitment of such Lender to (b) the Aggregate Commitments of all of the Lenders. "Consolidated" means, when used with reference to financial statements or financial statement items of the Borrower and its Subsidiaries, such statements or items on a consolidated basis in accordance with applicable principles of consolidation under GAAP. "Credit Facility" means, collectively, the Revolving Credit Facility and the L/C Facility. "Debt" means, with respect to the Borrower and its Subsidiaries at any date and without duplication, the sum of the following calculated in accordance with GAAP: (a) all liabilities, obligations and indebtedness for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of any such Person, (b) all obligations to pay the deferred purchase price of property or services of any such Person (including, without limitation, all obligations under non-competition agreements), except trade payables arising in the ordinary course of business not more than ninety (90) days past due, (c) all obligations of any such Person as lessee under Capital Leases, (d) all Debt of any other Person secured by a Lien on any asset of any such Person, (e) all Guaranty Obligations of any such Person, (f) all obligations, contingent or otherwise, of any such Person relative to the face amount of letters of credit, whether or not drawn, including, without limitation, any Reimbursement Obligation, and banker's acceptances issued for the account of any such Person, (g) all obligations of any such Person to redeem, repurchase, exchange, defease or otherwise make payments in respect of capital stock or other securities or partnership interests of such Person, (h) all net payment obligations incurred by any such 5 Person pursuant to Hedging Agreements, and (i) all outstanding payment obligations with respect to Synthetic Leases. "Default" means any of the events specified in Section 12.1 which with the passage of time, the giving of notice or any other condition, would constitute an Event of Default. "Disputes" shall have the meaning set forth in Section 14.6. "Dollars" or "$" means, unless otherwise qualified, dollars in lawful currency of the United States. "Domestic Subsidiary" means any Subsidiary that is organized under the laws of any political subdivision of the United States. "EBITDA" means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries in accordance with GAAP: (a) Net Income for such period plus (b) the sum of the following to the extent deducted in determining Net Income: (i) Tax Expense, (ii) Interest Expense, and (iii) amortization, depreciation and other non-cash charges, less (c) interest income and any extraordinary gains, plus (d) extraordinary losses in amounts reasonably acceptable to the Administrative Agent; provided, that following the closing of the Acquisition, EBITDA for the four (4) consecutive Fiscal Quarter period ending on such date shall be increased to reflect the aggregate historical EBITDA attributable to 99 Boston Inc., 99 West Inc., 99 Boston of Vermont, Inc. and Doe Family II, LLC giving pro forma effect to the Acquisition. "EBITDAR" means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for the Borrower and its Subsidiaries in accordance with GAAP: (a) EBITDA for such period, plus (b) Rental Expense for such period. "Eligible Assignee" means, with respect to any assignment of the rights, interest and obligations of a Lender hereunder, a Person that is at the time of such assignment (a) a commercial bank organized under the laws of the United States or any state thereof, having combined capital and surplus in excess of $500,000,000, (b) a commercial bank organized under the laws of any other country that is a member of the Organization of Economic Cooperation and Development, or a political subdivision of any such country, having combined capital and surplus in excess of $500,000,000, (c) a finance company, insurance company or other financial institution which in the ordinary course of business extends credit of the type extended hereunder and that has total assets in excess of $1,000,000,000, (d) already a Lender hereunder (whether as an original party to this Agreement or as the assignee of another Lender), (e) the successor (whether by transfer of assets, merger or otherwise) to all or substantially all of the commercial lending business of the assigning Lender, (f) any Affiliate of assigning Lender or (g) any Approved Fund or (h) any other Person that has been approved in writing as an Eligible Assignee by the Borrower (other than upon the occurrence and during the continuance of any Default or Event of Default) and the Administrative Agent. 6 "Employee Benefit Plan" means any employee benefit plan within the meaning of Section 3(3) of ERISA which (a) is maintained for employees of the Borrower or any ERISA Affiliate or (b) has at any time within the preceding six (6) years been maintained for the employees of the Borrower or any current or former ERISA Affiliate. "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations (other than internal reports prepared by any Person in the ordinary course of business and not in response to any third party action or request of any kind) or proceedings relating in any way to any actual or alleged violation of or liability under any Environmental Law or relating to any permit issued, or any approval given, under any such Environmental Law, including, without limitation, any and all claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages, contribution, indemnification cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to human health or the environment. "Environmental Laws" means any and all federal, foreign, state, provincial and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals, legally binding interpretations and orders of courts or Governmental Authorities, relating to the protection of human health or the environment, including, but not limited to, requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling, reporting, licensing, permitting, investigation or remediation of Hazardous Materials. "ERISA" means the Employee Retirement Income Security Act of 1974, and the rules and regulations thereunder, each as amended or modified from time to time. "ERISA Affiliate" means any Person who together with the Borrower is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA. "Eurodollar Reserve Percentage" means, for any day, the percentage (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) which is in effect for such day as prescribed by the Federal Reserve Board (or any successor) for determining the maximum reserve requirement (including, without limitation, any basic, supplemental or emergency reserves) in respect of eurocurrency liabilities or any similar category of liabilities for a member bank of the Federal Reserve System in New York City. "Event of Default" means any of the events specified in Section 12.1, provided that any requirement for passage of time, giving of notice, or any other condition, has been satisfied. "Existing Credit Agreement" shall have the meaning given thereto in the Statement of Purpose herein. "Existing Lenders" shall have the meaning assigned thereto in the Statement of Purpose herein. 7 "Existing Letters of Credit" means, collectively, (i) the standby letter of credit dated September 10, 1999, issued by Fleet Bank in the face amount of $517,000, for the benefit of The Traveler's Indemnity Company and (ii) the standby letter of credit dated January 8, 1998, issued by Fleet Bank in the face amount of $1,821,000, for the benefit of National Union Fire Insurance Company of Pittsburgh, PA. "Existing Loans" shall have the meaning assigned thereto in Section 6.2(c). "Expansion Capital Expenditures" means Capital Expenditures of the Borrower and its Subsidiaries associated solely with new store openings. "Extensions of Credit" means, as to any Lender at any time, (a) an amount equal to the sum of (i) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (ii) such Lender's Revolving Credit Commitment Percentage of the L/C Obligations then outstanding, and (iii) such Lender's Revolving Credit Commitment Percentage of the Swingline Loans then outstanding, or (b) the making of any Loan or participation in any Letter of Credit by such Lender, as the context requires. "FDIC" means the Federal Deposit Insurance Corporation, or any successor thereto. "Federal Funds Rate" means, the rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) representing the daily effective federal funds rate as quoted by the Administrative Agent and confirmed in Federal Reserve Board Statistical Release H.15 (519) or any successor or substitute publication selected by the Administrative Agent. If, for any reason, such rate is not available, then "Federal Funds Rate" shall mean a daily rate which is determined, in the opinion of the Administrative Agent, to be the rate at which federal funds are being offered for sale in the national federal funds market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays shall be the same as the rate for the most immediately preceding Business Day. "Fiscal Quarter" means each fiscal quarter of the Borrower and its Subsidiaries ending on the Sunday that is sixteen (16), twenty-eight (28), forty (40) and fifty-two (52) weeks from the first day of the Borrower's Fiscal Year. "Fiscal Year" means the fiscal year of the Borrower and its Subsidiaries ending on the last Sunday of December. "Foreign Subsidiary" means any Subsidiary of the Borrower that is not a Domestic Subsidiary. "Franchisee" means, any Person with whom the Borrower or any of its Subsidiaries has entered into a franchise agreement or similar arrangement for the purpose of developing and operating restaurants. "GAAP" means generally accepted accounting principles, as recognized by the American Institute of Certified Public Accountants and the Financial Accounting Standards Board, consistently applied and maintained on a consistent basis for the Borrower and its Subsidiaries 8 throughout the period indicated and (subject to Section 14.9) consistent with the prior financial practice of the Borrower and its Subsidiaries. "Governmental Approvals" means all authorizations, consents, approvals, licenses and exemptions of, registrations and filings with, and reports to, all Governmental Authorities. "Governmental Authority" means any nation, province, state or political subdivision thereof, and any government or any Person exercising executive, legislative, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guaranty Obligation" means, with respect to the Borrower and its Subsidiaries, without duplication, any obligation, contingent or otherwise, of any such Person pursuant to which such Person has directly or indirectly guaranteed any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of any such Person (a)to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement condition or otherwise) or (b)entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, that the term Guaranty Obligation shall not include endorsements for collection or deposit in the ordinary course of business. "Hazardous Materials" means any substances or materials (a) which are or become defined as hazardous wastes, hazardous substances, pollutants, contaminants, or toxic substances under any Environmental Law, (b)which are toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human health or the environment and are or become regulated by any Governmental Authority, (c)the presence of which require investigation or remediation under any Environmental Law or common law, (d) the discharge or emission or release of which requires a permit or license under any Environmental Law or other Governmental Approval, (e)which are deemed to constitute a nuisance or a trespass which pose a health or safety hazard to Persons or neighboring properties, (f)which consist of underground or aboveground storage tanks, whether empty, filled or partially filled with any substance, or (g)which contain, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic gas. "Hedging Agreement" means any agreement with respect to any Interest Rate Contract, forward rate agreement, commodity swap, forward foreign exchange agreement, currency swap agreement, cross-currency rate swap agreement, currency option agreement or other agreement or arrangement designed to alter the risks of any Person arising from fluctuations in interest rates, currency values or commodity prices, all as amended, restated, supplemented or otherwise modified from time to time. 9 "Hedging Obligations" shall have the meaning assigned thereto in the definition of "Obligations." "Intercreditor and Subordination Agreement" means the intercreditor and subordination agreement dated as of January 27, 2003 between the Administrative Agent and O'Charley's Finance Company, Inc, as amended, restated, supplemented or otherwise modified from time to time. "Interest Expense" means, with respect to the Borrower and its Subsidiaries for any period, the gross interest expense (including, without limitation, interest expense attributable to Capital Leases and all net payment obligations pursuant to Hedging Agreements), all determined for such period on a Consolidated basis, without duplication, in accordance with GAAP. "Interest Period" shall have the meaning assigned thereto in Section 5.1(b). "Interest Rate Contract" means any interest rate swap agreement, interest rate cap agreement, interest rate floor agreement, interest rate collar agreement, interest rate option or any other agreement regarding the hedging of interest rate risk exposure executed in connection with hedging the interest rate exposure of any Person and any confirming letter executed pursuant to such agreement, all as amended, restated, supplemented or otherwise modified from time to time. "ISP98" means the International Standby Practices (1998 Revision, effective January 1, 1999), International Chamber of Commerce Publication No. 590. "Issuing Lender" means (a) Wachovia, in its capacity as issuer of any Letter of Credit, or any successor thereto and (b) with respect to the Existing Letters of Credit, the Lender issuing such Existing Letter of Credit. "L/C Commitment" means the lesser of (a) Ten Million Dollars ($10,000,000) and (b) the Revolving Credit Commitment. "L/C Facility" means the letter of credit facility established pursuant to Article III. "L/C Obligations" means at any time, an amount equal to the sum of (a) the aggregate undrawn and unexpired amount of the then outstanding Letters of Credit and (b) the aggregate amount of drawings under Letters of Credit which have not then been reimbursed pursuant to Section 3.5. "L/C Participant" means, with respect to the L/C Facility, each Person executing this Agreement as a Lender under the Revolving Credit Facility (other than the Issuing Lender). "Lender" means each Person executing this Agreement as a Lender (including, without limitation, the Issuing Lender, L/C Participants and the Swingline Lender unless the context otherwise requires) set forth on the signature pages hereto and each Person that hereafter becomes a party to this Agreement as a Lender pursuant to Section 14.10. 10 "Lending Office" means, with respect to any Lender, the office of such Lender maintaining such Lender's Revolving Credit Commitment Percentage of the Extensions of Credit. "Letters of Credit" means the collective reference to letters of credit issued pursuant to Section 3.1 and the Existing Letters of Credit. "LIBOR" means the rate of interest per annum determined on the basis of the rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a period equal to the applicable Interest Period which appears on the Telerate Page 3750 at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period (rounded upward, if necessary, to the nearest 1/100th of 1%). If, for any reason, such rate does not appear on Telerate Page 3750, then "LIBOR" shall be determined by the Administrative Agent to be the arithmetic average of the rate per annum at which deposits in Dollars in minimum amounts of at least $5,000,000 would be offered by first class banks in the London interbank market to the Administrative Agent at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period. Each calculation by the Administrative Agent of LIBOR shall be conclusive and binding for all purposes, absent manifest error. "LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) determined by the Administrative Agent pursuant to the following formula: LIBOR Rate = LIBOR ---------------------------------- 1.00-Eurodollar Reserve Percentage "LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the LIBOR Rate as provided in Section 5.1(a). "Lien" means, with respect to any asset, any mortgage, leasehold mortgage, lien, pledge, charge, security interest, hypothecation or encumbrance of any kind in respect of such asset. For the purposes of this Agreement, a Person shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, Capital Lease or other title retention agreement relating to such asset. "Loan Documents" means, collectively, this Agreement, the Notes, the Applications, the Subsidiary Guaranty Agreement, the Collateral Agreement, the Intercreditor and Subordination Agreement, the Security Documents, each joinder agreement executed pursuant to Section 9.11 and each other document, instrument, certificate and agreement executed and delivered by the Borrower or any Subsidiary thereof in connection with this Agreement or otherwise referred to herein or contemplated hereby (excluding any Hedging Agreement), all as may be amended, restated, supplemented or otherwise modified from time to time. "Loans" means the collective reference to the Revolving Credit Loans and the Swingline Loans and "Loan" means any of such Loans. 11 "Maintenance Capital Expenditures" means, with respect to the Borrower and its Subsidiaries, Capital Expenditures less Expansion Capital Expenditures. "Material Adverse Effect" means, with respect to the Borrower or any of its Subsidiaries, a material adverse effect on the properties, business, operations or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, or the ability of any such Person to perform its obligations under any Loan Document or any Material Contract, in each case to which it is a party. "Material Contract" means (a) any contract or other agreement, written or oral, of the Borrower or any of its Subsidiaries involving monetary liability of or to any such Person in an amount in excess of $10,000,000 per annum, or (b)any other contract or agreement, written or oral, of the Borrower or any of its Subsidiaries the failure to comply with which could reasonably be expected to have a Material Adverse Effect. "Mortgages" means the collective reference to each deed of trust, mortgage, or other real property security document, encumbering certain real property now or hereafter owned by the Borrower or any Subsidiary, in each case in form and content satisfactory to the Administrative Agent and executed by the Borrower or any Subsidiary thereof in favor of the Administrative Agent for the ratable benefit of itself and the Lenders, as each such document may be amended, restated, or supplemented from time to time. "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or is accruing an obligation to make, or has accrued an obligation to make contributions within the preceding six (6) years. "Net Cash Proceeds" means, as applicable, (a) with respect to any sale or other disposition of assets, the gross cash proceeds received by the Borrower or any of its Subsidiaries from such sale less the sum of (i) all income taxes and other taxes assessed by a Governmental Authority as a result of such sale and any other fees and expenses incurred in connection therewith and (ii) the principal amount of, premium, if any, and interest on any Debt secured by a Lien on the asset (or a portion thereof) sold, which Debt is required to be repaid in connection with such sale, (b) with respect to any offering of equity securities or issuance of Debt, the gross cash proceeds received by the Borrower or any of its Subsidiaries therefrom less all legal, underwriting and other fees and expenses incurred in connection therewith and (c) with respect to any payment under an insurance policy or in connection with a condemnation proceeding, the amount of cash proceeds received by the Borrower or its Subsidiaries from an insurance company or Governmental Authority, as applicable, net of all expenses of collection. "Net Income" means, with respect to the Borrower and its Subsidiaries, for any period of determination, the net income (or loss) for such period, determined on a Consolidated basis in accordance with GAAP; provided that there shall be excluded from Net Income (a) the net income (or loss) of any Person (other than a Subsidiary which shall be subject to clause (c) below), in which the Borrower or any of its Subsidiaries has a joint interest with a third party, except to the extent such net income is actually paid to the Borrower or any of its Subsidiaries by dividend or other distribution during such period (in an amount not to exceed the Borrower's or 12 such Subsidiary's share of the equity income from such Person), (b) the net income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of such Person or is merged into or consolidated with such Person or any of its Subsidiaries or that Person's assets are acquired by such Person or any of its Subsidiaries except to the extent included pursuant to the foregoing clause (a), and (c) the net income (if positive) of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary to the Borrower or any of its Subsidiaries of such net income (i) is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute rule or governmental regulation applicable to such Subsidiary or (ii) would be subject to any taxes payable on such dividends or distributions. "Notes" means the collective reference to the Revolving Credit Notes and the Swingline Note, and "Note" means any of such Notes. "Notice of Account Designation" shall have the meaning assigned thereto in Section 2.3(b). "Notice of Borrowing" shall have the meaning assigned thereto in Section 2.2(b). "Notice of Conversion/Continuation" shall have the meaning assigned thereto in Section 5.2. "Notice of Prepayment" shall have the meaning assigned thereto in Section 2.4(c). "Obligations" means, in each case, whether now in existence or hereafter arising: (a) the principal of and interest on (including interest accruing after the filing of any bankruptcy or similar petition) the Loans, (b) the L/C Obligations, (c) all existing or future payment and other obligations owing by the Borrower under any Hedging Agreement (which such Hedging Agreement is permitted hereunder) with any Person that is a Lender hereunder, or any Affiliate of a Lender, at the time such Hedging Agreement is executed (all such obligations with respect to any such Hedging Agreement, "Hedging Obligations") and (d) all other fees and commissions (including attorneys' fees), charges, indebtedness, loans, liabilities, financial accommodations, obligations, covenants and duties owing by the Borrower or any of its Subsidiaries to the Lenders or the Administrative Agent, in each case under or in respect of this Agreement, any Note, any Letter of Credit or any of the other Loan Documents of every kind, nature and description, direct or indirect, absolute or contingent, due or to become due, contractual or tortious, liquidated or unliquidated, and whether or not evidenced by any note. "Officer's Compliance Certificate" shall have the meaning assigned thereto in Section 8.2. "Operating Lease" shall mean, as to any Person as determined in accordance with GAAP, any lease of property (whether real, personal or mixed) by such Person as lessee which is not a Capital Lease. "Other Taxes" shall have the meaning assigned thereto in Section 5.11(b). 13 "PBGC" means the Pension Benefit Guaranty Corporation or any successor agency. "Pension Plan" means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of the Code and which (a) is maintained for the employees of the Borrower or any ERISA Affiliates or (b) has at any time within the preceding six (6) years been maintained for the employees of the Borrower or any of its current or former ERISA Affiliates. "Permitted Acquisition" shall have the meaning assigned thereto in Section 11.3(c). "Permitted Lien" means any Lien permitted pursuant to Section 11.2 hereof. "Permitted Note Repurchases" means the repurchase by the Borrower of the Senior Subordinated Notes on the open market in an aggregate amount not to exceed the Aggregate Permitted Note Repurchases Amount during the term of the Credit Facility; provided that immediately prior to and after giving effect to any such repurchase, (i) no Default or Event of Default has occurred and is continuing, and (ii) the Borrower shall have demonstrated to the Administrative Agent pro forma compliance with each covenant contained in, and in the manner set forth in, Article X prior to the consummation of such repurchase (which shall be evidenced by an Officer's Compliance Certificate, in form and substance reasonably satisfactory to the Administrative Agent, delivered to the Administrative Agent prior to such repurchase by the Borrower). "Person" means an individual, corporation, limited liability company, partnership, association, trust, business trust, joint venture, joint stock company, pool, syndicate, sole proprietorship, unincorporated organization, Governmental Authority or any other form of entity or group thereof. "Prime Rate" means, at any time, the rate of interest per annum publicly announced from time to time by Wachovia as its prime rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in such prime rate occurs. The parties hereto acknowledge that the rate announced publicly by Wachovia as its prime rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks. "Pro Rata Share" means, with respect to each Lender at any time, a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Commitment of such Lender at such time and the denominator of which is the amount of the Aggregate Commitments at such time. The initial Pro Rata Share of each Lender is set forth opposite the name of such Lender on the Register or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. "Ratings Downgrade" means, a downgrade of the rating of the Credit Facility to (i) a rating less than BB- by Standard and Poor's and (ii) a rating less than Ba3 by Moody's Investors Service, Inc. 14 "Reaffirmation Agreement" means the Reaffirmation Agreement, of even date herewith, among the Borrower, certain Subsidiaries of the Borrower and the Administrative Agent (for the ratable benefit of itself and the Lenders), as amended, restated, supplemented or otherwise modified from time to time. "Register" shall have the meaning assigned thereto in Section 14.10(d). "Reimbursement Obligation" means the obligation of the Borrower to reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under Letters of Credit. "Rental Expense" means, with respect to the Borrower and its Subsidiaries for any period, all rental expenses paid in cash with respect to long-term real property leases and operations leases of the Borrower and its Subsidiaries for such period, determined on a Consolidated basis in accordance with GAAP; provided, that following the closing of the Acquisition, Rental Expense for the four (4) consecutive Fiscal Quarter period ending on such date shall be increased to reflect the aggregate historical Rental Expense attributable to 99 Boston Inc., 99 West Inc., 99 Boston of Vermont, Inc. and Doe Family II, LLC giving pro forma effect to the Acquisition. "Required Lenders" means, at any date, any combination of Lenders holding more than fifty percent (50%) of the Revolving Credit Commitments (or the Revolving Credit Loans if such Commitments have been terminated). "Responsible Officer" means any of the following: the chief executive officer, president, vice-president, chief financial officer or secretary of the Borrower or applicable Subsidiary Guarantor or any other officer of the Borrower or applicable Subsidiary Guarantor reasonably acceptable to the Administrative Agent. "Revolving Credit Commitment" means (a) as to any Lender, the obligation of such Lender to make Revolving Credit Loans to the account of the Borrower hereunder in an aggregate principal amount at any time outstanding not to exceed the amount set forth opposite such Lender's name on the Register as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof and (b) as to all Lenders, the aggregate commitment of all Lenders to make Revolving Credit Loans, as such amount may be reduced or modified at any time or from time to time pursuant to the terms hereof. The Revolving Credit Commitment of all Lenders on the Closing Date shall be One Hundred Twenty-Five Million Dollars $125,000,000. "Revolving Credit Commitment Percentage" means, as to any Lender at any time, the ratio of (a) the amount of the Revolving Credit Commitment of such Lender to (b) the Revolving Credit Commitments of all Lenders. "Revolving Credit Facility" means the revolving credit facility established pursuant to Article II. 15 "Revolving Credit Loan" means any revolving loan made to the Borrower pursuant to Section 2.1, and all such revolving loans collectively as the context requires. "Revolving Credit Maturity Date" means the earliest of the dates referred to in Section 2.7. "Revolving Credit Notes" means the collective reference to the Amended and Restated Revolving Credit Notes made by the Borrower payable to the order of each Lender holding a Revolving Credit Commitment , substantially in the form of Exhibit A-1 hereto, evidencing the Revolving Credit Facility, and any amendments, supplements and modifications thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part. "Sale-Leaseback Facility" shall have the meaning assigned thereto in Section 6.2(h). "Security Documents" means the collective reference to the Subsidiary Guaranty Agreement, the Collateral Agreement, the Mortgages, the Collateral Assignment Agreement, the Reaffirmation Agreement and each other agreement or writing pursuant to which the Borrower or any Subsidiary thereof purports to pledge or grant a security interest in any property or assets securing the Obligations or any such Person purports to guaranty the payment and/or performance of the Obligations, as reaffirmed pursuant to the Reaffirmation Agreement, and all as amended, restated, supplemented or otherwise modified from time to time. "Senior Debt" means Total Debt less Subordinated Debt. "Senior Secured Leverage Ratio" shall have the meaning assigned thereto in Section 10.2. "Senior Subordinated Notes" means the 9.00% unsecured senior subordinated notes issued by the Borrower due November 1, 2013 in the aggregate original principal amount not to exceed $125,000,000 as described in the Indenture dated November 4, 2003. "Solvent" means, as to the Borrower and its Subsidiaries on a particular date, that any such Person (a) has capital sufficient to carry on its business and transactions and all business and transactions in which it has committed to engage and is able to pay its debts as they mature, (b) owns property having a value, both at fair valuation and at present fair saleable value, greater than the amount required to pay its probable liabilities (including contingencies), and (c) does not believe that it will incur debts or liabilities beyond its ability to pay such debts or liabilities as they mature. "SRLS Entities" means, collectively, SRLS LLC 5001, SRLS LLC 5002, SRLS LLC 5003, SRLS LLC 5004, SRLS LLC 5005 and SRLS LLC 5006. "Standard & Poor's" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. 16 "Subordinated Debt" means the collective reference to (i) the Senior Subordinated Notes and (ii) other subordinated Debt consisting of high-yield notes or convertible notes with a maturity no earlier than a date that is six (6) months after the Revolving Credit Maturity Date issued on terms and conditions (including subordination provisions) in form and substance reasonably satisfactory to the Administrative Agent and consistent with then-current market terms and conditions for such tenor of subordinated Debt. "Subsidiary" means as to any Person, any corporation, partnership, limited liability company or other entity of which more than fifty percent (50%) of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other managers of such corporation, partnership, limited liability company or other entity is at the time owned by or the management is otherwise controlled by such Person (irrespective of whether, at the time, capital stock or other ownership interests of any other class or classes of such corporation, partnership, limited liability company or other entity shall have or might have voting power by reason of the happening of any contingency). Unless otherwise qualified references to "Subsidiary" or "Subsidiaries" herein shall refer to those of the Borrower. "Subsidiary Guaranteed Obligations" means the collective reference to the guaranteed obligations of each of the Subsidiaries party to the Subsidiary Guaranty Agreement. "Subsidiary Guarantors" means the collective reference to the Domestic Subsidiaries of the Borrower now or hereafter party to the Subsidiary Guaranty Agreement; provided, however, that SRLS Entities and any Franchisees shall not be Subsidiary Guarantors. "Subsidiary Guaranty Agreement" means the unconditional guaranty agreement dated as of January 27, 2003 executed by the Subsidiary Guarantors in favor of the Administrative Agent for the ratable benefit of itself and the Lenders, as reaffirmed pursuant to the Reaffirmation Agreement and as otherwise amended, restated, supplemented or otherwise modified from time to time. "Swingline Commitment" means the lesser of (a) Five Million Dollars ($5,000,000) and (b) the Revolving Credit Commitment. "Swingline Facility" means the swingline facility established pursuant to Section 2.2. "Swingline Lender" means AmSouth Bank, in its capacity as provider of Swingline Loans, or any successor swingline lender hereunder. "Swingline Loan" means any swingline loan made by the Swingline Lender to the Borrower pursuant to Section 2.2, and all such swingline loans collectively as the context requires. "Swingline Note" means the Amended and Restated Swingline Note made by the Borrower payable to the order of the Swingline Lender, substantially in the form of Exhibit A-2 hereto, evidencing the Swingline Loans, and any amendments, supplements and modifications 17 thereto, any substitutes therefor, and any replacements, restatements, renewals or extensions thereof, in whole or in part. "Swingline Termination Date" means the Revolving Credit Termination Date. "Synthetic Lease" means 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. "Tax Expense" means, with respect to the Borrower and its Subsidiaries for any period, federal, state, local and foreign income, value added and similar taxes, franchise taxes and single business taxes imposed on the Borrower or any of its Subsidiaries, without duplication, for such period. "Taxes" shall have the meaning assigned thereto in Section 5.11(a). "Termination Event" means except for any such event or condition that could not reasonably be expected to have a Material Adverse Effect: (a)a "Reportable Event" described in Section 4043 of ERISA for which the notice requirement has not been waived by the PBGC, or (b)the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination, under Section 4041 of ERISA, if the plan assets are not sufficient to pay all plan liabilities, or (d) the institution of proceedings to terminate, or the appointment of a trustee with respect to, any Pension Plan by the PBGC, or (e) any other event or condition which would constitute grounds under Section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, or (f) the imposition of a Lien pursuant to Section 412 of the Code or Section 302 of ERISA, or (g)the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan if withdrawal liability is asserted by such plan, or (h)any event or condition which results in the reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA, or (i) any event or condition which results in the termination of a Multiemployer Plan under Section 4041A of ERISA or the institution by PBGC of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA. "Total Debt" means, as of any date of determination with respect to the Borrower and its Subsidiaries on a Consolidated basis without duplication, the sum of all Debt of the Borrower and its Subsidiaries. "Uniform Customs" means the Uniform Customs and Practice for Documentary Credits (1993 Revision), effective January, 1994 International Chamber of Commerce Publication No. 500. "UCC" means the Uniform Commercial Code as in effect in the State of New York, as amended or modified from time to time. 18 "United States" means the United States of America. "Wachovia" means Wachovia Bank, National Association, a national banking association, and its successors. "Working Capital" means, for any period of determination, current assets minus cash and minus current liabilities (excluding any principal payments associated with the Revolving Credit Loans), all determined in accordance with GAAP. SECTION 1.2 General. Unless otherwise specified, a reference in this Agreement to a particular article, section, subsection, Schedule or Exhibit is a reference to that article, section, subsection, Schedule or Exhibit of this Agreement. Wherever from the context it appears appropriate, each term stated in either the singular or plural shall include the singular and plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. Any reference herein to "Charlotte time" shall refer to the applicable time of day in Charlotte, North Carolina. SECTION 1.3 Other Definitions and Provisions. (a) Use of Capitalized Terms. Unless otherwise defined therein, all capitalized terms defined in this Agreement shall have the defined meanings when used in this Agreement, the Notes and the other Loan Documents or any certificate, report or other document made or delivered pursuant to this Agreement. (b) Miscellaneous. The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. (c) Plural and Singular. The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms. ARTICLE II REVOLVING CREDIT FACILITY SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions of this Agreement, and in reliance upon the representations and warranties set forth herein, each Lender severally agrees to make Revolving Credit Loans to the Borrower from time to time from the Closing Date through, but not including, the Revolving Credit Maturity Date as requested by the Borrower in accordance with the terms of Section 2.3; provided, that (a) the aggregate principal amount of all outstanding Revolving Credit Loans (after giving effect to any amount requested) shall not exceed the Revolving Credit Commitment less the Swingline Commitment less all L/C Obligations and (b) the principal amount of outstanding Revolving Credit Loans from any Lender to the Borrower shall not at any time exceed such Lender's Revolving Credit 19 Commitment less such Lender's Revolving Credit Commitment Percentage of outstanding L/C Obligations and less such Lender's Revolving Credit Commitment Percentage of the Swingline Commitment. Each Revolving Credit Loan by a Lender shall be in a principal amount equal to such Lender's Revolving Credit Commitment Percentage of the aggregate principal amount of Revolving Credit Loans requested on such occasion. Subject to the terms and conditions hereof, the Borrower may borrow, repay and reborrow Revolving Credit Loans hereunder until the Revolving Credit Maturity Date. SECTION 2.2 Swingline Loans. (a) Availability. Subject to the terms and conditions of this Agreement, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time from the Closing Date through, but not including, the Swingline Termination Date; provided, that the aggregate principal amount of all outstanding Swingline Loans (after giving effect to any amount requested), shall not exceed the lesser of (i) the Revolving Credit Commitment less the sum of all outstanding Revolving Credit Loans and the L/C Obligations and (ii) the Swingline Commitment; provided further that the Swingline Lender will not make a Swingline Loan after it has received written notice from the Administrative Agent that one or more of the applicable conditions to Extensions of Credit specified in Section 6.3 is not then satisfied until such conditions are satisfied or waived in accordance with the provisions of this Agreement (and the Swingline Lender shall be entitled to conclusively rely on any such notice and shall have no obligation to independently investigate the accuracy of such notice and shall have no liability to the Borrower in respect thereof if such notice proves to be inaccurate). (b) Procedure for Advances of Swingline Loans. The Borrower shall give the Swingline Lender notice at such times and in such form and substance as may be agreed upon by the Swingline Lender and the Borrower; provided, however, that the obligation of the Swingline Lender under this Section 2.2 to make any such Swingline Loan to the Borrower shall be subject to all the terms and conditions hereof (including, without limitation, the terms and conditions set forth in subsection (a) above). (c) Payment of Principal and Interest. Principal and interest on Swingline Loans deemed requested pursuant to Section 2.2(b) hereof shall be paid pursuant to the terms and conditions agreed upon between the Swingline Lender and the Borrower without any deduction, setoff or counterclaim whatsoever. Principal and interest on Swingline Loans requested pursuant to Section 2.2 hereof shall be paid pursuant to the terms of this Agreement. Unless sooner paid pursuant to the provisions hereof or the provisions of any Cash Management Program, the principal of the Swingline Loans shall be paid in full, together with accrued interest thereon, on the Swingline Termination Date. (d) Refunding. (i) Swingline Loans shall be refunded by the Lenders with a Revolving Credit Commitment on demand by the Swingline Lender. Such refundings shall be made by the Lenders in accordance with their respective Revolving Credit Commitment Percentages and shall thereafter be reflected as Revolving Credit Loans of the Lenders on the books and records of the 20 Administrative Agent. Each Lender shall fund its respective Revolving Credit Commitment Percentage of Revolving Credit Loans as required to repay Swingline Loans outstanding to the Swingline Lender upon demand by the Swingline Lender but in no event later than 2:00 p.m. (Charlotte time) on the next succeeding Business Day after such demand is made. No Lender's obligation to fund its respective Revolving Credit Commitment Percentage of a Swingline Loan shall be affected by any other Lender's failure to fund its Revolving Credit Commitment Percentage of a Swingline Loan, nor shall any Lender's Revolving Credit Commitment Percentage be increased as a result of any such failure of any other Lender to fund its Revolving Credit Commitment Percentage of a Swingline Loan. (ii) The Borrower shall pay to the Swingline Lender on demand the amount of such Swingline Loans to the extent amounts received from the Lenders pursuant to subsection 2.2(d)(i) are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. In addition, the Borrower hereby authorizes the Administrative Agent to charge any account maintained by the Borrower with the Swingline Lender (up to the amount available therein) in order to immediately pay the Swingline Lender the amount of such Swingline Loans to the extent amounts received from the Lenders pursuant to subsection 2.2(d)(i) are not sufficient to repay in full the outstanding Swingline Loans requested or required to be refunded. If any portion of any such amount paid to the Swingline Lender shall be recovered by or on behalf of the Borrower from the Swingline Lender in bankruptcy or otherwise, the loss of the amount so recovered shall be ratably shared among all the Lenders in accordance with their respective Revolving Credit Commitment Percentages (unless the amounts so recovered by or on behalf of the Borrower pertain to a Swingline Loan extended after the occurrence and during the continuance of an Event of Default of which the Administrative Agent has received notice in the manner required pursuant to Section 13.5 and which such Event of Default has not been waived by the Required Lenders or the Lenders, as applicable). (iii) Each Lender with a Revolving Credit Commitment acknowledges and agrees that its obligation to refund Swingline Loans in accordance with the terms of this Section 2.2 is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Article VI. Further, each Lender agrees and acknowledges that if prior to the refunding of any outstanding Swingline Loans pursuant to this Section 2.2, one of the events described in Section 12.1(j) or (k) shall have occurred, each Lender will, on the date the applicable Revolving Credit Loan would have been made, purchase an undivided participating interest in the Swingline Loan to be refunded in an amount equal to its Revolving Credit Commitment Percentage of the aggregate amount of such Swingline Loan. Each Lender will immediately transfer to the Swingline Lender, in immediately available funds, the amount of its participation and upon receipt thereof the Swingline Lender will deliver to such Lender a certificate evidencing such participation dated the date of receipt of such funds and for such amount. Whenever, at any time after the Swingline Lender has received from any Lender such Lender's participating interest in a Swingline Loan, the Swingline Lender receives any payment on account thereof, the Swingline Lender will distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded). 21 SECTION 2.3 Procedure for Advances of Revolving Credit Loans. (a) Requests for Borrowing. (i) Revolving Credit Loans. The Borrower shall give the Administrative Agent irrevocable prior written notice substantially in the form of Exhibit B attached hereto (a "Notice of Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the same Business Day as each Base Rate Loan and (ii) at least three (3) Business Days before each LIBOR Rate Loan, of its intention to borrow, specifying (A) the date of such borrowing, which shall be a Business Day, (B) the amount of such borrowing, which shall be, (x) with respect to Base Rate Loans in an aggregate principal amount of $1,000,000 or a whole multiple of $500,000 in excess thereof, and (y) with respect to LIBOR Rate Loans in an aggregate principal amount of $3,000,000 or a whole multiple of $1,000,000 in excess thereof, (C)whether the Loans are to be LIBOR Rate Loans or Base Rate Loans, and (D) in the case of a LIBOR Rate Loan, the duration of the Interest Period applicable thereto. A Notice of Borrowing received after 11:00 a.m. (Charlotte time) shall be deemed received on the next Business Day. The Administrative Agent shall promptly notify the Lenders of each Notice of Borrowing. (ii) Swingline Loans. Swingline Loans shall be requested in the manner set forth in Section 2.2(b). (b) Disbursements. (i) Revolving Credit Loans. Not later than 2:00 p.m. (Charlotte time) on the proposed borrowing date, each Lender will make available to the Administrative Agent, for the account of the Borrower, at the office of the Administrative Agent in funds immediately available to the Administrative Agent, such Lender's Revolving Credit Commitment Percentage of the Revolving Credit Loans to be made on such borrowing date. The Borrower hereby irrevocably authorizes the Administrative Agent to disburse the proceeds of each borrowing requested pursuant to this Section 2.3 in immediately available funds by crediting or wiring such proceeds to the deposit account of the Borrower identified in the most recent notice substantially in the form of Exhibit C hereto (a "Notice of Account Designation") delivered by the Borrower to the Administrative Agent or as may be otherwise agreed upon by the Borrower and the Administrative Agent from time to time. Subject to Section 5.7 hereof, the Administrative Agent shall not be obligated to disburse the portion of the proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3 to the extent that any Lender has not made available to the Administrative Agent its Revolving Credit Commitment Percentage of such Loan. Revolving Credit Loans to be made for the purpose of refunding Swingline Loans shall be made by the Lenders as provided in Section 2.2(d). (ii) Swingline Loans. Swingline Loans shall be disbursed in the manner set forth in Section 2.2(b). SECTION 2.4 Repayment of Loans. 22 (a) Repayment on Termination Date. The Borrower hereby agrees to repay the outstanding principal amount of (i) all Revolving Credit Loans in full on the Revolving Credit Maturity Date, and (ii) all Swingline Loans in accordance with Section 2.2(d), together, in each case, with all accrued but unpaid interest thereon. (b) Mandatory Repayment of Revolving Credit Loans. If at any time the outstanding principal amount of all Revolving Credit Loans plus the Swingline Commitment and L/C Obligations exceeds the Revolving Credit Commitment, then the Borrower shall repay immediately upon notice from the Administrative Agent, by payment to the Administrative Agent for the account of the Lenders, Extensions of Credit in an amount equal to such excess with each such repayment applied first to the principal amount of outstanding Swingline Loans, second to the principal amount of outstanding Revolving Credit Loans and third, with respect to any Letters of Credit then outstanding, a payment of cash collateral into a cash collateral account opened by the Administrative Agent, for the benefit of the Lenders in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit (such cash collateral to be applied in accordance with Section 12.2(b)). (c) Optional Repayments. The Borrower may at any time and from time to time repay the Loans, in whole or in part, upon at least three (3) Business Days' irrevocable notice to the Administrative Agent with respect to LIBOR Rate Loans and one (1) Business Day irrevocable notice with respect to Base Rate Loans and Swingline Loans, substantially in the form attached hereto as Exhibit D (a "Notice of Prepayment") specifying the date and amount of repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans, Swingline Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender. If any such notice is given, the amount specified in such notice shall be due and payable on the date set forth in such notice. Partial repayments shall be in an aggregate amount (i) of $1,000,000 or a whole multiple of $500,000 in excess thereof with respect to Base Rate Loans (other than Swingline Loans), (ii) of $3,000,000 or a whole multiple of $1,000,000 in excess thereof with respect to LIBOR Rate Loans and (iii) permitted pursuant to the Cash Management Program (or as otherwise agreed to by the Swingline Lender and the Borrower) with respect to Swingline Loans. Each such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (d) Limitation on Repayment of LIBOR Rate Loans. The Borrower may not repay any LIBOR Rate Loan on any day other than on the last day of the Interest Period applicable thereto unless such repayment is accompanied by any amount required to be paid pursuant to Section 5.9 hereof. (e) Hedging Agreements. No repayment or prepayment pursuant to this Section 2.4 shall affect any of the Borrower's obligations under any Hedging Agreement. SECTION 2.5 Notes. 23 (a) Revolving Credit Notes. Each Lender's Revolving Credit Loans and the obligation of the Borrower to repay such Revolving Credit Loans shall be evidenced by a separate Revolving Credit Note executed by the Borrower payable to the order of such Lender. (b) Swingline Note. The Swingline Loans and the obligation of the Borrower to repay such Swingline Loans shall be evidenced by a Swingline Note executed by the Borrower payable to the order of the Swingline Lender. SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment. (a) Voluntary Reduction. The Borrower shall have the right at any time and from time to time, upon at least five (5) Business Days prior written notice to the Administrative Agent, to permanently reduce, without premium or penalty, (i) the entire Revolving Credit Commitment at any time or (ii) portions of the Revolving Credit Commitment, from time to time, in an aggregate principal amount not less than $3,000,000 or any whole multiple of $1,000,000 in excess thereof. The amount of each partial permanent reduction shall permanently reduce the Lenders' Revolving Credit Commitments pro rata in accordance with their respective Revolving Credit Commitment Percentages. (b) [Intentionally Omitted]. (c) Corresponding Payment. Each permanent reduction permitted pursuant to this Section 2.6 shall be accompanied by a payment of principal sufficient to reduce the aggregate outstanding Revolving Credit Loans, Swingline Loans and L/C Obligations, as applicable, after such reduction to the Revolving Credit Commitment as so reduced and if the Revolving Credit Commitment as so reduced is less than the aggregate amount of all outstanding Letters of Credit, the Borrower shall be required to deposit cash collateral in a cash collateral account opened by the Administrative Agent in an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Such cash collateral shall be applied in accordance with Section 12.2(b). Any reduction of the Revolving Credit Commitment to zero shall be accompanied by payment of all outstanding Revolving Credit Loans and Swingline Loans (and furnishing of cash collateral satisfactory to the Administrative Agent for all L/C Obligations) and shall result in the termination of the Revolving Credit Commitment and the Swingline Commitment and the Revolving Credit Facility. Such cash collateral shall be applied in accordance with Section 12.2(b). If the reduction of the Revolving Credit Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall be accompanied by any amount required to be paid pursuant to Section 5.9. SECTION 2.7 Termination of Revolving Credit Facility. The Revolving Credit Facility shall terminate on the earliest of (a) November 4, 2007, (b) the date of termination by the Borrower pursuant to Section 2.6, or (c) the date of termination by the Administrative Agent on behalf of the Lenders pursuant to Section 12.2(a). SECTION 2.8 Increase of Revolving Credit Commitment. 24 (a) At any time prior to the Revolving Credit Maturity Date, the Borrower shall have the right to increase the Revolving Credit Commitment upon not less than thirty (30) days prior written notice to the Administrative Agent (which shall promptly notify the Lenders); provided that (i) no Lender shall have any obligation to increase its Revolving Credit Commitment and the failure by any Lender to respond to a request for such increase shall be deemed to be a refusal of such request by such Lender, (ii) such requested increase shall be in a minimum principal amount of $5,000,000 or a whole multiple of $5,000,000 in excess thereof, (iii) in no event shall the Revolving Credit Commitment be increased to an aggregate amount greater than One Hundred Fifty Million Dollars ($150,000,000), (iv) no Default or Event of Default shall have occurred and be continuing either prior to or after giving effect to such increase in the Revolving Credit Commitment, and (v) the Administrative Agent shall have received a resolution duly adopted by the Board of Directors of the Borrower authorizing the increase contemplated in this Section 2.8. Each Lender shall notify the Administrative Agent whether or not it agrees to increase its Revolving Credit Commitment and, if so, whether by an amount equal to, greater than, or less than its Pro Rata Share of such requested increase (any increases requested hereunder shall be offered to the Lenders on a pro rata basis prior to offering any such increase to a Person that is not party to this Agreement). The Administrative Agent shall notify the Borrower and each Lender of the Lender's responses to each request made hereunder. (b) Any increase in the Revolving Credit Commitment which is accomplished by increasing the Commitment of any Lender or Lenders who are at the time of such increase party to this Agreement (which Lender or Lenders may consent to such increase in their sole and absolute discretion) shall be accomplished as follows: (i) this Agreement will be amended by the Borrower, the Administrative Agent and those Lender(s) whose Commitment(s) is or are being increased to reflect the revised Commitment amounts of each of the Lenders, (ii) the Administrative Agent will deliver an updated Register to the Borrower and each of the Lenders reflecting the revised Commitment amounts and Commitment Percentages of each of the Lenders, (iii) the Borrower shall pay any and all costs required pursuant to Section 5.9 in connection with such reallocation as if such reallocation were a repayment, and (iv) if requested, the Borrower will deliver new Note(s) to the Lender or Lenders whose Commitment(s) is or are being increased reflecting the revised Commitment amount of such Lender(s). (c) Any increase in the Revolving Credit Commitment which is accomplished by addition of a new Lender under the Agreement shall be accomplished as follows: (i) such new Lender shall be an Eligible Assignee and shall be subject to the consent of the Borrower and the Administrative Agent, which consent shall not be unreasonably withheld, (ii) this Agreement will be amended by the Borrower, the Administrative Agent and by the party becoming an additional Lender hereunder to reflect the addition of such party as a Lender hereunder, (iii) the Administrative Agent will deliver an updated Register to the Borrower and each of the Lenders reflecting the revised Commitment amounts and Commitment Percentages of each of the Lenders, (iv) the Borrower shall pay any and all costs required pursuant to Section 5.9 in connection with such reallocation as if such reallocation were a repayment, and (v) if requested, the Borrower will deliver Note(s) to any such new Lender and new Note(s) to the Lender or Lenders whose Commitment(s) is or are being increased reflecting the revised Commitment amount of such Lender(s). 25 ARTICLE III LETTER OF CREDIT FACILITY SECTION 3.1 L/C Commitment. Subject to the terms and conditions hereof, the Issuing Lender, in reliance on the agreements of the L/C Participants set forth in Section 3.4(a), agrees to issue standby Letters of Credit for the account of the Borrower on any Business Day from the Closing Date through but not including the fifth (5th) Business Day prior to the Revolving Credit Maturity Date in such form as may be approved from time to time by the Issuing Lender; provided, that the Issuing Lender shall have no obligation to issue, and L/C Participants shall have no obligation to participate in, any Letter of Credit if, after giving effect to such issuance, (a) the L/C Obligations would exceed the L/C Commitment or (b) the aggregate principal amount of outstanding Revolving Credit Loans, plus the Swingline Commitment, plus the aggregate amount of L/C Obligations would exceed the Revolving Credit Commitment. Each Letter of Credit shall (i) be in a minimum amount of $50,000, (ii) be a standby letter of credit issued to support obligations of the Borrower or any of the Subsidiary Guarantors, contingent or otherwise, incurred in the ordinary course of business, (iii) expire on a date satisfactory to the Issuing Lender, which date shall be no later than the earlier of (A) one year from the date of issuance of such Letter of Credit and (B) the fifth (5th) Business Day prior to the Revolving Credit Maturity Date and (iv) be subject to the Uniform Customs and/or ISP98, as set forth in the Application or as determined by the Issuing Lender and, to the extent not inconsistent therewith, the laws of the State of North Carolina. The Issuing Lender shall not at any time be obligated to issue, and L/C Participants shall have no obligation to participate in, any Letter of Credit hereunder if such issuance would conflict with, or cause the Issuing Lender or any L/C Participant to exceed any limits imposed by, any Applicable Law. References herein to "issue" and derivations thereof with respect to Letters of Credit shall also include extensions or modifications of any existing Letters of Credit, unless the context otherwise requires. The Existing Letters of Credit shall be deemed to be Letters of Credit issued and outstanding under this Agreement on and after the Closing Date; provided, however, that such Existing Letters of Credit shall be replaced by letters of credit issued by Wachovia, as Issuing Lender, pursuant to and under the terms of this Agreement upon the expiration and/or maturity thereof and shall not otherwise be extended, renewed or modified. SECTION 3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time to time request that the Issuing Lender issue a Letter of Credit by delivering to the Issuing Lender at the Administrative Agent's Office an Application therefor, completed to the satisfaction of the Issuing Lender, and such other certificates, documents and other papers and information as the Issuing Lender may reasonably request. Upon receipt of any Application, the Issuing Lender shall process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall, subject to Section 3.1 and Article VI hereof, promptly issue the Letter of Credit requested thereby (but in no event shall the Issuing Lender be required to issue any Letter of Credit earlier than three (3) Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such Letter of Credit to the beneficiary thereof or as otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing Lender shall promptly furnish to the Borrower 26 a copy of such Letter of Credit and promptly notify each Lender of the issuance and upon request by any Lender, furnish to such Lender a copy of such Letter of Credit and the amount of such Lender's Letter of Credit participation therein. SECTION 3.3 Commissions and Other Charges. (a) Letter of Credit Commission. The Borrower shall pay to the Administrative Agent, for the account of the Issuing Lender and the L/C Participants, a letter of credit commission with respect to each Letter of Credit in an amount equal to the face amount of such Letter of Credit, as applicable, multiplied by the Applicable Margin with respect to LIBOR Rate Loans for the Revolving Credit Facility (determined on a per annum basis). Such commission shall be payable quarterly in arrears on the last Business Day of each calendar quarter and on the Revolving Credit Maturity Date. The Administrative Agent shall, promptly following its receipt thereof, distribute to the Issuing Lender and the L/C Participants all commissions received pursuant to this Section 3.3(a) in accordance with their respective Revolving Credit Commitment Percentages. (b) Issuance Fee. In addition to the foregoing commission, the Borrower shall pay the Issuing Lender, for its own account, an issuance fee with respect to each Letter of Credit in an amount equal to the face amount of such Letter of Credit multiplied by 0.125% per annum. Such issuance fee shall be payable quarterly in arrears on the last Business Day of each calendar quarter and on the Revolving Credit Maturity Date. (c) Other Fees and Expenses. In addition to the foregoing fees and commissions, the Borrower shall pay or reimburse the Issuing Lender, for its own account, for such normal and customary costs and expenses as are incurred or charged by the Issuing Lender in issuing, effecting payment under, amending or otherwise administering any Letter of Credit. SECTION 3.4 L/C Participations. (a) Participations. The Issuing Lender irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the Issuing Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the Issuing Lender, on the terms and conditions hereinafter stated, for such L/C Participant's own account and risk an undivided interest equal to such L/C Participant's Revolving Credit Commitment Percentage in the Issuing Lender's obligations and rights under and in respect of each Letter of Credit issued hereunder and the amount of each draft paid by the Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees with the Issuing Lender that, if a draft is paid under any Letter of Credit for which the Issuing Lender is not reimbursed in full by the Borrower through a Revolving Credit Loan or otherwise in accordance with the terms of this Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at the Issuing Lender's address for notices specified herein an amount equal to such L/C Participant's Revolving Credit Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed. 27 (b) Payments by L/C Participants. Upon becoming aware of any amount required to be paid by any L/C Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion of any payment made by the Issuing Lender under any Letter of Credit, the Issuing Lender shall notify each L/C Participant of the amount and due date of such required payment and such L/C Participant shall pay to the Issuing Lender the amount specified on the applicable due date. If any such amount is paid to the Issuing Lender after the date such payment is due, such L/C Participant shall pay to the Issuing Lender on demand, in addition to such amount, the product of (i) such amount, times (ii) the daily average Federal Funds Rate as determined by the Administrative Agent during the period from and including the date such payment is due to the date on which such payment is immediately available to the Issuing Lender, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. A certificate of the Issuing Lender with respect to any amounts owing under this Section 3.4(b) shall be conclusive in the absence of manifest error. With respect to payment to the Issuing Lender of the unreimbursed amounts described in this Section 3.4(b), if the L/C Participants receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due that Business Day, and (B) after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due on the following Business Day. (c) Distributions to L/C Participants. Whenever, at any time after the Issuing Lender has made payment under any Letter of Credit and has received from any L/C Participant its Revolving Credit Commitment Percentage of such payment in accordance with this Section 3.4, the Issuing Lender receives any payment related to such Letter of Credit (whether directly from the Borrower or otherwise, or any payment of interest on account thereof, the Issuing Lender will distribute to such L/C Participant its pro rata share thereof; provided, that in the event that any such payment received by the Issuing Lender shall be required to be returned by the Issuing Lender, such L/C Participant shall return to the Issuing Lender the portion thereof previously distributed by the Issuing Lender to it. SECTION 3.5 Reimbursement Obligation of the Borrower. In the event of any drawing under any Letter of Credit, the Borrower agrees to reimburse (either with the proceeds of a Revolving Credit Loan as provided for in this Section 3.5 or with funds from other sources), in same day funds, the Issuing Lender on each date on which the Issuing Lender notifies the Borrower of the date and amount of a draft paid under any Letter of Credit for the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment. Unless the Borrower shall immediately notify the Issuing Lender that the Borrower intends to reimburse the Issuing Lender for such drawing from other sources or funds, the Borrower shall be deemed to have timely given a Notice of Borrowing to the Administrative Agent requesting that the Lenders make a Revolving Credit Loan bearing interest at the Base Rate on such date in the amount of (a) such draft so paid and (b) any amounts referred to in Section 3.3(c) incurred by the Issuing Lender in connection with such payment, and the Lenders shall make a Revolving Credit Loan bearing interest at the Base Rate in such amount, the proceeds of which shall be applied to reimburse the Issuing Lender for the amount of the related drawing and costs and expenses. Each Lender acknowledges and agrees that its obligation to fund a Revolving Credit Loan in accordance with this Section 3.5 to reimburse the Issuing Lender for any draft paid under a Letter of Credit is absolute and 28 unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, non-satisfaction of the conditions set forth in Section 2.3(a) or Article VI. If the Borrower has elected to pay the amount of such drawing with funds from other sources and shall fail to reimburse the Issuing Lender as provided above, the unreimbursed amount of such drawing shall bear interest at the rate which would be payable on any outstanding Base Rate Loans which were then overdue from the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) until payment in full. SECTION 3.6 Obligations Absolute. The Borrower's obligations under this Article III (including, without limitation, the Reimbursement Obligation) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment which the Borrower may have or have had against the Issuing Lender or any beneficiary of a Letter of Credit or any other Person. The Borrower also agrees that the Issuing Lender and the L/C Participants shall not be responsible for, and the Borrower's Reimbursement Obligation under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee. The Issuing Lender shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Letter of Credit, except for errors or omissions caused by the Issuing Lender's gross negligence or willful misconduct. The Borrower agrees that any action taken or omitted by the Issuing Lender under or in connection with any Letter of Credit or the related drafts or documents, if done in the absence of gross negligence or willful misconduct, shall be binding on the Borrower and shall not result in any liability of the Issuing Lender or any L/C Participant to the Borrower. The responsibility of the Issuing Lender to the Borrower in connection with any draft presented for payment under any Letter of Credit, in addition to any payment obligation expressly provided for in such Letter of Credit, be limited to determining that the documents (including each draft) delivered under such Letter of Credit in connection with such presentment are in conformity with such Letter of Credit. SECTION 3.7 Effect of Application. To the extent that any provision of any Application related to any Letter of Credit is inconsistent with the provisions of this Article III, the provisions of this Article III shall apply. ARTICLE IV [Intentionally Omitted] ARTICLE V GENERAL LOAN PROVISIONS SECTION 5.1 Interest. 29 (a) Interest Rate Options. Subject to the provisions of this Section 5.1, at the election of the Borrower, (i) Revolving Credit Loans shall bear interest at (A) the Base Rate plus the Applicable Margin as set forth in Section 5.1(c) or (B) the LIBOR Rate plus the Applicable Margin as set forth in Section 5.1(c) and (ii) any Swingline Loan shall bear interest at the Base Rate plus the Applicable Margin as set forth in Section 5.1(c). The Borrower shall select the rate of interest and Interest Period, if any, applicable to any Loan at the time a Notice of Borrowing is given pursuant to Section 2.3, as applicable, or at the time a Notice of Conversion/Continuation is given pursuant to Section 5.2. Any Loan or any portion thereof as to which the Borrower has not duly specified an interest rate as provided herein shall be deemed a Base Rate Loan. (b) Interest Periods. In connection with each LIBOR Rate Loan, the Borrower, by giving notice at the times described in Section 5.1(a), shall elect an interest period (each, an "Interest Period") to be applicable to such Loan, which Interest Period shall be a period of one (1), two (2), three (3), or six (6) months with respect to each LIBOR Rate Loan; provided that: (i) the Interest Period shall commence on the date of advance of or conversion to any LIBOR Rate Loan and, in the case of immediately successive Interest Periods, each successive Interest Period shall commence on the date on which the immediately preceding Interest Period expires; (ii) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided, that if any Interest Period with respect to a LIBOR Rate Loan would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the immediately preceding Business Day; (iii) any Interest Period with respect to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the relevant calendar month at the end of such Interest Period; (iv) no Interest Period shall extend beyond the Revolving Credit Maturity Date; and (v) there shall be no more than six (6) Interest Periods in effect at any time. (c) Applicable Margin. The Applicable Margin provided for in Section 5.1(a) with respect to any Loan (the "Applicable Margin") shall be based upon the table set forth below and shall be determined and adjusted quarterly on the date (each a "Calculation Date") ten (10) Business Days after the earlier of (i) the date on which Borrower provides or (ii) the date on which the Borrower is required to provide, an Officer's Compliance Certificate for the most recently ended Fiscal Quarter of the Borrower; provided, however, that (A) the initial Applicable Margin shall be based on Pricing Level III (as shown below) and shall remain at Pricing Level III until the first Calculation Date occurring after the Closing Date and, thereafter the Pricing Level shall be determined by reference to the Senior Secured Leverage Ratio as of the last day of 30 the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date, and (B) if the Borrower fails to provide the Officer's Compliance Certificate as required by Section 8.2 for the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date, the Applicable Margin from such Calculation Date shall be based on Pricing Level I (as shown below) until such time as an appropriate Officer's Compliance Certificate is provided, at which time the Pricing Level shall be determined by reference to the Senior Secured Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Borrower preceding such Calculation Date. Subject to Sections 5.1(c)(ii)(A) and (B) in the preceding sentence, the Applicable Margin shall be effective from one Calculation Date until the next Calculation Date. Any adjustment in the Applicable Margin shall be applicable to all Extensions of Credit then existing or subsequently made or issued. Pricing Grid
Senior Secured Level Leverage Ratio Applicable Base Rate Margin Applicable LIBOR Rate Margin - ------------ ----------------------- --------------------------- ---------------------------- I Greater than or equal 1.00% 2.25% to 1.75 to 1.00 - ----------------------------------------------------------------------------------------------- II Greater than or equal 0.75% 2.00% to 1.25 to 1.00 but less than 1.75 to 1.00 - ----------------------------------------------------------------------------------------------- III Greater than or equal 0.50% 1.75% to 0.75 to 1.00 but less than 1.25 to 1.00 - ----------------------------------------------------------------------------------------------- IV Less than 0.75 to 1.00 0.00% 1.25% - -----------------------------------------------------------------------------------------------
(d) Default Rate. Subject to Section 12.3, at the discretion of the Administrative Agent or as directed by the Required Lenders, upon the occurrence and during the continuance of an Event of Default, (i) the Borrower shall no longer have the option to request LIBOR Rate Loans or Swingline Loans, (ii) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of two percent (2%) in excess of the rate then applicable to LIBOR Rate Loans until the end of the applicable Interest Period and thereafter at a rate equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans, and (iii) all outstanding Base Rate Loans and other Obligations arising hereunder or under any other Loan Document shall bear interest at a rate per annum equal to two percent (2%) in excess of the rate then applicable to Base Rate Loans or such other Obligations arising hereunder or under any other Loan Document. Interest shall continue to accrue on the Notes after the filing by or against the Borrower of any petition seeking any relief in bankruptcy or under any act or law pertaining to insolvency or debtor relief, whether state, federal or foreign. 31 (e) Interest Payment and Computation. Interest on each Base Rate Loan shall be payable in arrears on the last Business Day of each calendar quarter commencing December 31, 2003; and interest on each LIBOR Rate Loan shall be payable on the last day of each Interest Period applicable thereto, and if such Interest Period extends over three (3) months, at the end of each three (3) month interval during such Interest Period. Interest on LIBOR Rate Loans and all fees payable hereunder shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed and interest on Base Rate Loans shall be computed on the basis of a 365/366-day year and assessed for the actual number of days elapsed. (f) Maximum Rate. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder or under any of the Notes charged or collected pursuant to the terms of this Agreement or pursuant to any of the Notes exceed the highest rate permissible under any Applicable Law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such a court determines that the Lenders have charged or received interest hereunder in excess of the highest applicable rate, the rate in effect hereunder shall automatically be reduced to the maximum rate permitted by Applicable Law and the Lenders shall at the Administrative Agent's option (i) promptly refund to the Borrower any interest received by the Lenders in excess of the maximum lawful rate or (ii) apply such excess to the principal balance of the Obligations on a pro rata basis. It is the intent hereof that the Borrower not pay or contract to pay, and that neither the Administrative Agent nor any Lender receive or contract to receive, directly or indirectly in any manner whatsoever, interest in excess of that which may be paid by the Borrower under Applicable Law. SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans. Provided that no Default or Event of Default has occurred and is then continuing, the Borrower shall have the option to (a) convert at any time following the third Business Day after the Closing Date all or any portion of any outstanding Base Rate Loans (other than Swingline Loans) in a principal amount equal to $3,000,000 or any whole multiple of $1,000,000 in excess thereof into one or more LIBOR Rate Loans and (b) upon the expiration of any Interest Period, (i) convert all or any part of its outstanding LIBOR Rate Loans in a principal amount equal to $1,000,000 or a whole multiple of $500,000 in excess thereof into Base Rate Loans (other than Swingline Loans) or (ii) continue such LIBOR Rate Loans as LIBOR Rate Loans. Whenever the Borrower desires to convert or continue Loans as provided above, the Borrower shall give the Administrative Agent irrevocable prior written notice in the form attached as Exhibit E (a "Notice of Conversion/Continuation") not later than 11:00 a.m. (Charlotte time) three (3) Business Days before the day on which a proposed conversion or continuation of such Loan is to be effective specifying (A) the Loans to be converted or continued, and, in the case of any LIBOR Rate Loan to be converted or continued, the last day of the Interest Period therefor, (B) the effective date of such conversion or continuation (which shall be a Business Day), (C) the principal amount of such Loans to be converted or continued, and (D) the Interest Period to be applicable to such converted or continued LIBOR Rate Loan. The Administrative Agent shall promptly notify the Lenders of such Notice of Conversion/Continuation. LIBOR Rate Loans shall be converted to Base Rate Loans upon the expiration of the applicable Interest Period unless the Administrative Agent shall have received a Notice of Conversion/Continuation pursuant to the above. 32 SECTION 5.3 Fees. (a) Commitment Fee. Commencing on the Closing Date, the Borrower shall pay to the Administrative Agent, for the account of the Lenders, a non-refundable commitment fee at a rate per annum equal to the applicable rate based upon the table set forth below (the "Commitment Fee Rate") on the aggregate average daily unused portion of the Revolving Credit Commitment; provided, that the amount of outstanding Swingline Loans shall not be considered usage of the Revolving Credit Commitment for the purpose of calculating such commitment fee. The commitment fee shall be payable in arrears on the last Business Day of each calendar quarter during the term of this Agreement commencing on the first such date following the Closing Date, and on the Revolving Credit Maturity Date. Such commitment fee shall be distributed by the Administrative Agent to the Lenders pro rata in accordance with the Lenders' respective Revolving Credit Commitment Percentages. The Commitment Fee Rate shall be based upon the table set forth below and shall be determined and adjusted quarterly on each Calculation Date; provided, however, that (i) the initial Commitment Fee Rate shall be based on Pricing Level III (as shown below) and shall remain at Pricing Level III until the first Calculation Date occurring after the Closing Date and thereafter the Pricing Level shall be determined by reference to the Senior Secured Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date, and (ii) if the Borrower fails to provide the Officer's Compliance Certificate as required by Section 8.2 for the most recently ended Fiscal Quarter of the Borrower preceding the applicable Calculation Date, the Commitment Fee Rate from such Calculation Date shall be based on Pricing Level I (as shown below) until such time as an appropriate Officer's Compliance Certificate is provided, at which time the Pricing Level shall be determined by reference to the Senior Secured Leverage Ratio as of the last day of the most recently ended Fiscal Quarter of the Borrower preceding such Calculation Date. Subject to Sections 5.3(a)(i) and (ii) in the preceding sentence, the Commitment Fee Rate shall be effective from one Calculation Date until the next Calculation Date.
Senior Secured Pricing Level Leverage Ratio Commitment Fee Rate - ------------------------------- ----------------------------- ------------------------------------------------------ I Greater than or equal to 0.500% 1.75 to 1.00 - ------------------------------- ----------------------------- ------------------------------------------------------ II Greater than or equal to 0.500% 1.25 to 1.0, but less than 1.75 to 1.00 - ------------------------------- ----------------------------- ------------------------------------------------------ III Greater than or equal to 0.375% 0.75 to 1.00 but less than 1.25 to 1.00 - ------------------------------- ----------------------------- ------------------------------------------------------ IV Less than 0.75 to 1.00 0.375% - ------------------------------- ----------------------------- ------------------------------------------------------
(b) Upfront Fees. On the Closing Date, the Borrower shall pay to the Administrative Agent, for the account of the Lenders, Upfront Fees as provided in that certain fee letter between the Borrower and the Administrative Agent dated as of October 31, 2003 (the "Fee Letter"). 33 (c) Administrative Agent's and Other Fees. In order to compensate the Administrative Agent for structuring and syndicating the Loans and for its obligations hereunder, the Borrower agrees to pay to the Administrative Agent, for its account, the administrative fee and other fees set forth in the Fee Letter. SECTION 5.4 Manner of Payment. Each payment by the Borrower on account of the principal of or interest on the Loans or of any fee, commission or other amounts (including the Reimbursement Obligation) payable to the Lenders under this Agreement or any Note shall be made not later than 1:00 p.m. (Charlotte time) on the date specified for payment under this Agreement to the Administrative Agent at the Administrative Agent's Office for the account of the Lenders (other than as set forth below) pro rata in accordance with their respective Revolving Credit Commitment Percentages (except as specified below), in Dollars, in immediately available funds and shall be made without any set-off, counterclaim or deduction whatsoever. Any payment received after such time but before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment on such date for the purposes of Section 12.1, but for all other purposes shall be deemed to have been made on the next succeeding Business Day. Any payment received after 2:00 p.m. (Charlotte time) shall be deemed to have been made on the next succeeding Business Day for all purposes. Upon receipt by the Administrative Agent of each such payment, the Administrative Agent shall distribute to each Lender at its address for notices set forth herein its pro rata share of such payment in accordance with such Lender's Revolving Credit Commitment Percentage (except as specified below) and shall wire advice of the amount of such credit to each Lender. Each payment to the Administrative Agent of the Issuing Lender's fees or L/C Participants' commissions shall be made in like manner, but for the account of the Issuing Lender or the L/C Participants, as the case may be. Each payment to the Administrative Agent of Administrative Agent's fees or expenses shall be made for the account of the Administrative Agent and any amount payable to any Lender under Sections 5.8, 5.9, 5.10, 5.11 or 14.2 shall be paid to the Administrative Agent for the account of the applicable Lender. Subject to Section 5.1(b)(ii) if any payment under this Agreement or any Note shall be specified to be made upon a day which is not a Business Day, it shall be made on the next succeeding day which is a Business Day and such extension of time shall in such case be included in computing any interest if payable along with such payment. SECTION 5.5 Crediting of Payments and Proceeds. In the event that the Borrower shall fail to pay any of the Obligations when due and the Obligations have been accelerated pursuant to Section 12.2, all payments received by the Lenders upon the Notes and the other Obligations and all net proceeds from the enforcement of the Obligations shall be applied: (a) first to all expenses then due and payable by the Borrower hereunder and under the other Loan Documents, (b) then to all indemnity obligations then due and payable by the Borrower hereunder and under the other Loan Documents, (c) then to all Administrative Agent's and Issuing Lender's fees then due and payable, (d) then to all commitment and other fees and commissions then due and payable, (e) then to accrued and unpaid interest on the Notes, accrued and unpaid interest on the Reimbursement Obligation (pro rata in accordance with all such amounts due), (f) then to the principal amount of the Notes and Reimbursement Obligation and any payments (including any termination payments and any accrued and unpaid interest thereon) due in respect of a Hedging Agreement with any Lender or the Administrative Agent (which such Hedging Agreement is permitted hereunder) (pro rata in accordance with all such amounts 34 due) and (g) then to the cash collateral account described in Section 12.2(b) hereof to the extent of any L/C Obligations then outstanding, in that order. SECTION 5.6 Adjustments. If any Lender (a "Benefited Lender") shall at any time receive any payment of all or part of the Obligations owing to it, or interest thereon, or if any Lender shall at any time receive any collateral in respect to the Obligations owing to it (whether voluntarily or involuntarily, by set-off or otherwise) (other than pursuant to Sections 5.8, 5.9, 5.10, 5.11 or 14.2 hereof) in a greater proportion than any such payment to and collateral received by any other Lender, if any, in respect of the similar Obligations owing to such other Lender, or interest thereon, such Benefited Lender shall promptly notify the Administrative Agent of the receipt of such payment or Collateral. The Administrative Agent shall then distribute such notice to the other Lenders. The Benefited Lender shall purchase for cash from the other Lenders such portion of each such other Lender's Extensions of Credit, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned to the extent of such recovery, but without interest. The Borrower agrees that each Lender so purchasing a portion of another Lender's Extensions of Credit may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion. SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative Agent. The obligations of the Lenders under this Agreement to make the Loans and issue or participate in Letters of Credit are several and are not joint or joint and several. Unless the Administrative Agent shall have received notice from a Lender prior to a proposed borrowing date that such Lender will not make available to the Administrative Agent such Lender's ratable portion of the amount to be borrowed on such date (which notice shall not release such Lender of its obligations hereunder), the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the proposed borrowing date in accordance with Section 2.3(b), and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If such amount is made available to the Administrative Agent on a date after such borrowing date, such Lender shall pay to the Administrative Agent on demand an amount, until paid, equal to the product of (a) the amount not made available by such Lender in accordance with the terms hereof, times (b) the daily average Federal Funds Rate during such period as determined by the Administrative Agent, times (c) a fraction the numerator of which is the number of days that elapse from and including such borrowing date to the date on which such amount not made available by such Lender in accordance with the terms hereof shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent with respect to any amounts owing under this Section 5.7 shall be conclusive, absent manifest error. If such Lender's Revolving Credit Commitment Percentage of such borrowing is not made available to the Administrative Agent by such Lender within three (3) Business Days after such borrowing date, the Administrative Agent shall be entitled to recover such amount made available by the Administrative Agent with interest 35 thereon at the rate per annum applicable to Base Rate Loans hereunder, on demand, from the Borrower. The failure of any Lender to make available its Revolving Credit Commitment Percentage of any Loan requested by the Borrower shall not relieve it or any other Lender of its obligation, if any, hereunder to make its Revolving Credit Commitment Percentage of such Loan available on the borrowing date, but no Lender shall be responsible for the failure of any other Lender to make its Revolving Credit Commitment Percentage of such Loan available on the borrowing date. Notwithstanding anything set forth herein to the contrary, any Lender that fails to make available its Revolving Credit Commitment Percentage of any Loan shall not (a) have any voting or consent rights under or with respect to any Loan Document or (b) constitute a "Lender" (or be included in the calculation of Required Lenders hereunder) for any voting or consent rights under or with respect to any Loan Document. SECTION 5.8 Changed Circumstances. (a) Circumstances Affecting LIBOR Rate Availability. If with respect to any Interest Period the Administrative Agent or any Lender (after consultation with the Administrative Agent) shall determine that, by reason of circumstances affecting the foreign exchange and interbank markets generally, deposits in eurodollars, in the applicable amounts are not being quoted via the Telerate Page 3750 or offered to the Administrative Agent or such Lender for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrower. Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, the obligation of the Lenders to make LIBOR Rate Loans and the right of the Borrower to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall be suspended, and the Borrower shall repay in full (or cause to be repaid in full) the then outstanding principal amount of each such LIBOR Rate Loan together with accrued interest thereon, on the last day of the then current Interest Period applicable to such LIBOR Rate Loan or convert the then outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as of the last day of such Interest Period. (b) Laws Affecting LIBOR Rate Availability. If, after the date hereof, the introduction of, or any change in, any Applicable Law or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, shall make it unlawful or impossible for any of the Lenders (or any of their respective Lending Offices) to honor its obligations hereunder to make or maintain any LIBOR Rate Loan, such Lender shall promptly give notice thereof to the Administrative Agent and the Administrative Agent shall promptly give notice to the Borrower and the other Lenders. Thereafter, until the Administrative Agent notifies the Borrower that such circumstances no longer exist, (i) the obligations of the Lenders to make LIBOR Rate Loans and the right of the Borrower to convert any Loan or continue any Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrower may select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not lawfully continue to maintain a LIBOR Rate Loan to the end of the then current Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR Rate Loan shall immediately be converted to a Base Rate Loan for the remainder of such Interest Period. 36 (c) Increased Costs. If, after the date hereof, the introduction of, or any change in, any Applicable Law, or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any of the Lenders (or any of their respective Lending Offices) with any request or directive (whether or not having the force of law) of such Governmental Authority, central bank or comparable agency: (i) shall (except as provided in Section 5.11(e)) subject any of the Lenders (or any of their respective Lending Offices) to any tax, duty or other charge with respect to any Note, Letter of Credit, or Application or shall change the basis of taxation of payments to any of the Lenders (or any of their respective Lending Offices) of the principal of or interest on any Note, Letter of Credit or Application or any other amounts due under this Agreement in respect thereof (except for changes in the rate of franchise tax or tax on the overall net income of any of the Lenders or any of their respective Lending Offices imposed by the jurisdiction in which such Lender is organized or is or should be qualified to do business or such Lending Office is located); provided that the Borrower shall not be obligated to pay any amounts pursuant to this Section 5.8(c)(i) to the extent that such amounts are duplicative of any amounts paid by the Borrower pursuant to Section 5.11; or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit, insurance or capital or similar requirement against assets of, deposits with or for the account of, or credit extended by any of the Lenders (or any of their respective Lending Offices) or shall impose on any of the Lenders (or any of their respective Lending Offices) or the foreign exchange and interbank markets any other condition affecting any Note; and the result of any of the foregoing events described in clause (i) or (ii) above is to increase the costs to any of the Lenders of maintaining any LIBOR Rate Loan or issuing or participating in Letters of Credit or to reduce the yield or amount of any sum received or receivable by any of the Lenders under this Agreement or under the Notes in respect of a LIBOR Rate Loan or Letter of Credit or Application, then such Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify the Borrower of such fact and demand compensation therefor and, within fifteen (15) days after such notice by the Administrative Agent, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or Lenders for such increased cost or reduction. The Administrative Agent will promptly notify the Borrower of any event of which it has knowledge which will entitle such Lender to compensation pursuant to this Section 5.8(c); provided, that the Administrative Agent shall incur no liability whatsoever to the Lenders or the Borrower in the event it fails to do so. The amount of such compensation shall be determined, in the applicable Lender's sole discretion, based upon the assumption that such Lender funded its Revolving Credit Commitment Percentage of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. 37 SECTION 5.9 Indemnity. The Borrower hereby indemnifies each of the Lenders against any loss or expense which may arise or be attributable to each Lender's obtaining, liquidating or employing deposits or other funds acquired to effect, fund or maintain any Loan (a) as a consequence of any failure by the Borrower to make any payment when due of any amount due hereunder in connection with a LIBOR Rate Loan, (b) due to any failure of the Borrower to borrow, continue or convert on a date specified therefor in a Notice of Borrowing or Notice of Conversion/Continuation or (c)due to any payment, prepayment or conversion of any LIBOR Rate Loan on a date other than the last day of the Interest Period therefor. The amount of such loss or expense shall be determined, in the applicable Lender's sole discretion, based upon the assumption that such Lender funded its Revolving Credit Commitment Percentage of the LIBOR Rate Loans in the London interbank market and using any reasonable attribution or averaging methods which such Lender deems appropriate and practical. A certificate of such Lender setting forth the basis for determining such amount or amounts necessary to compensate such Lender shall be forwarded to the Borrower through the Administrative Agent and shall be conclusively presumed to be correct save for manifest error. SECTION 5.10 Capital Requirements. If either (a) the introduction of, or any change in, or in the interpretation of, any Applicable Law or (b) compliance with any guideline or request from any central bank or comparable agency or other Governmental Authority (whether or not having the force of law), has or would have the effect of reducing the rate of return on the capital of, or has affected or would affect the amount of capital required to be maintained by, any Lender or any corporation controlling such Lender as a consequence of, or with reference to the Commitments and other commitments of this type, below the rate which such Lender or such other corporation could have achieved but for such introduction, change or compliance, then within five (5) Business Days after written demand by any such Lender, the Borrower shall pay to such Lender from time to time as specified by such Lender additional amounts sufficient to compensate such Lender or other corporation for such reduction. A certificate as to such amounts submitted to the Borrower and the Administrative Agent by such Lender, shall, in the absence of manifest error, be presumed to be correct and binding for all purposes. SECTION 5.11 Taxes. (a) Payments Free and Clear. Except as otherwise provided in Section 5.11(e), any and all payments by the Borrower hereunder or under the Notes or the Letters of Credit shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholding, and all liabilities with respect thereto excluding, (i) in the case of each Lender and the Administrative Agent, income and franchise taxes imposed by the jurisdiction under the laws of which such Lender or the Administrative Agent (as the case may be) is organized or is or should be qualified to do business or any political subdivision thereof and (ii) in the case of each Lender, income and franchise taxes imposed by the jurisdiction of such Lender's Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder or under any Note or in respect of any Letter of Credit to any Lender or the Administrative Agent, (A) except as 38 otherwise provided in Section 5.11(e), the sum payable shall be increased as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.11) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the amount such party would have received had no such deductions or withholdings been made, (B)the Borrower shall make such deductions or withholdings, (C) the Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with Applicable Law, and (D) the Borrower shall deliver to the Administrative Agent and such Lender evidence of such payment to the relevant taxing authority or other Governmental Authority in the manner provided in Section 5.11(d). (b) Stamp and Other Taxes. In addition, the Borrower shall pay any present or future stamp, registration, recordation or documentary taxes or any other similar fees or charges or excise or property taxes, levies of the United States or any state or political subdivision thereof or any applicable foreign jurisdiction which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Extensions of Credit, the Letters of Credit or the other Loan Documents, or the perfection of any rights or security interest in respect thereof (hereinafter referred to as "Other Taxes"). (c) Indemnity. Except as otherwise provided in Section 5.11(e), the Borrower shall indemnify each Lender and the Administrative Agent for the full amount of Taxes and Other Taxes (including, without limitation, any Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 5.11) paid by such Lender or the Administrative Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Such indemnification shall be made within thirty (30) days from the date such Lender or the Administrative Agent (as the case may be) makes written demand therefor. (d) Evidence of Payment. Within thirty (30) days after the date of any payment of Taxes or Other Taxes, the Borrower shall furnish to the Administrative Agent and the applicable Lender, at its address referred to in Section 14.1, the original or a certified copy of a receipt evidencing payment thereof or other evidence of payment satisfactory to the Administrative Agent. (e) Delivery of Tax Forms. Each Lender organized under the laws of a jurisdiction other than the United States or any state thereof shall deliver to the Borrower, with a copy to the Administrative Agent, on the Closing Date or concurrently with the delivery of the relevant Assignment and Acceptance, as applicable, (i) two United States Internal Revenue Service Forms W-9, Forms W-8ECI or Forms W-8BEN, as applicable (or successor forms) properly completed and certifying in each case that such Lender is entitled to a complete exemption from withholding or deduction for or on account of any United States federal income taxes, and (ii) an Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be, to establish an exemption from United States backup withholding taxes. Each such Lender further agrees to deliver to the Borrower, with a copy to the Administrative Agent, as applicable, two Form W-9, Form W-8BEN or W-8ECI, or successor applicable forms or manner of certification, as the case may be, on or before the date that any such form expires or becomes 39 obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower, certifying in the case of a Form W-9, Form W-8BEN or W-8ECI (or successor forms) that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes (unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders such forms inapplicable or the exemption to which such forms relate unavailable and such Lender notifies the Borrower and the Administrative Agent that it is not entitled to receive payments without deduction or withholding of United States federal income taxes) and, in the case of a Form W-9, Form W-8BEN or W-8ECI, establishing an exemption from United States backup withholding tax. Notwithstanding anything in any Loan Document to the contrary, the Borrower shall not be required to pay additional amounts to any Lender or the Administrative Agent under Section 5.11 or Section 5.8(c), (i) if such Lender or the Administrative Agent fails to comply with the requirements of this Section 5.11(e), other than to the extent that such failure is due to a change in law occurring after the date on which such Lender or the Administrative Agent became a party to this Agreement or (ii)that are the result of such Lender's or the Administrative Agent's gross negligence or willful misconduct, as applicable. (f) Survival. Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 5.11 shall survive the payment in full of the Obligations and the termination of the Commitments. SECTION 5.12 Security. The Obligations of the Borrower and the Subsidiary Guaranteed Obligations shall be secured as provided in the Security Documents. SECTION 5.13 Replacement of Lenders. (a) If any Lender requests compensation pursuant to Section 5.8 or Section 5.10, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.11, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (A) would eliminate or reduce amounts payable pursuant to Section 5.8, Section 5.10 or Section 5.11, as the case may be, in the future and (B) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. (b) If any Lender requests compensation pursuant to Section 5.8 or Section 5.10, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.11, then the Borrower may, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 14.10), all of its interests, rights and obligations under this Agreement to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (A) the Borrower shall have received the prior written consent of the 40 Administrative Agent, which consent shall not unreasonably be withheld, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees, breakage costs and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and (C) in the case of any such assignment resulting from a claim for compensation pursuant to Section 5.8 or Section 5.10, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. (c) To the extent that any Lender (a "Replaced Lender") is required to assign all of its interests, rights and obligations under this Agreement to an Eligible Assignee (a "Replacement Lender") pursuant to this Section 5.13, upon the execution of all applicable assignment documents and the satisfaction of all other conditions set forth herein, the Replacement Lender shall become a Lender hereunder and the Replaced Lender shall cease to be a Lender hereunder, except with respect to the indemnification provisions under this Agreement, which provisions shall survive as to such Replaced Lender. ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING SECTION 6.1 Closing. The closing shall take place at the offices of Kennedy Covington Lobdell & Hickman, L.L.P. at 10:00 a.m. on November 4, 2003, or at such other place, and on such other date and time as the parties hereto shall mutually agree. SECTION 6.2 Conditions to Closing and Initial Extensions of Credit. The obligation of the Lenders to close this Agreement and to make the initial Loan or issue or participate in the initial Letter of Credit, if any, is subject to the satisfaction of each of the following conditions: (a) Executed Loan Documents. This Agreement, the Revolving Credit Notes, the Swingline Note, the Security Documents, the Intercreditor and Subordination Agreement, together with any other applicable Loan Documents, shall have been duly authorized, executed and delivered to the Administrative Agent by the parties thereto, shall be in full force and effect and no Default or Event of Default shall exist thereunder, and the Borrower shall have delivered original counterparts thereof to the Administrative Agent. (b) Closing Certificates; etc. (i) Officer's Certificate of the Borrower. The Administrative Agent shall have received a certificate from a Responsible Officer, in form and substance satisfactory to the Administrative Agent, to the effect that all representations and warranties of the Borrower and its Subsidiaries contained in this Agreement and the other Loan Documents are true, correct and complete; that neither the Borrower nor any of its Subsidiaries is in violation of any of the 41 covenants contained in this Agreement and the other Loan Documents; that, after giving effect to the transactions contemplated by this Agreement, no Default or Event of Default has occurred and is continuing; and that the Borrower and its Subsidiaries have satisfied each of the closing conditions. (ii) Certificate of Secretary of the Borrower and each of the Subsidiary Guarantors. The Administrative Agent shall have received a certificate of the secretary or assistant secretary of the Borrower and each of the Subsidiary Guarantors certifying as to the incumbency and genuineness of the signature of each officer of the Borrower or such Subsidiary Guarantor executing the Loan Documents to which it is a party and certifying that attached thereto is a true, correct and complete copy of (A) the articles of incorporation or other organizational document of the Borrower or such Subsidiary Guarantor and all amendments thereto, certified as of a recent date by the appropriate Governmental Authority in its jurisdiction of incorporation, (B) the bylaws or other operative document of the Borrower or such Subsidiary Guarantor as in effect on the date of such certifications, (C) resolutions duly adopted by the Board of Directors or other governing body of the Borrower or such Subsidiary Guarantor authorizing the borrowings contemplated hereunder and the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, and (D) each certificate required to be delivered pursuant to Section 6.2(b)(iii). (iii) Certificates of Good Standing. The Administrative Agent shall have received long-form certificates as of a recent date of the good standing of the Borrower and each Subsidiary Guarantor under the laws of its respective jurisdiction of organization and, to the extent requested by the Administrative Agent, each other jurisdiction where the Borrower and each of the Subsidiary Guarantors is qualified to do business and a certificate of the relevant taxing authorities of such jurisdictions certifying that such Person has filed required tax returns and owes no delinquent taxes. (iv) Opinions of Counsel. The Administrative Agent shall have received favorable opinions of counsel to the Borrower and the Subsidiary Guarantors addressed to the Administrative Agent and the Lenders with respect to the Borrower, the Loan Documents and such other matters as the Lenders shall request. (v) Tax Forms. The Administrative Agent shall have received copies of the United States Internal Revenue Service forms required by Section 5.11(e) hereof. (c) Collateral. (i) Filings and Recordings. All filings and recordations that are necessary to perfect the security interests of the Lenders in the collateral described in the Security Documents shall have been received by the Administrative Agent and the Administrative Agent shall have received evidence satisfactory thereto that upon such filings and recordations such security interests constitute valid and perfected first priority Liens therein, subject only to Permitted Liens. 42 (ii) Pledged Collateral. The Administrative Agent shall have received (A) original stock certificates or other certificates evidencing the capital stock or other ownership interests pledged pursuant to the Collateral Agreement, together with an undated stock power for each such certificate duly executed in blank by the registered owner thereof and (B) each original promissory note pledged pursuant to the Collateral Agreement. (iii) Hazard and Liability Insurance. The Administrative Agent shall have received certificates of insurance, evidence of payment of all insurance premiums for the current policy year of each, and, if requested by the Administrative Agent, copies (certified by a Responsible Officer) of insurance policies in the form required under the Security Documents and otherwise in form and substance reasonably satisfactory to the Administrative Agent. (iv) Real Property Information. The Administrative Agent shall have received any and all certificates, documents and information reasonably requested by Administrative Agent or the Lenders on the parcels of real property subject to the Mortgages, including, without limitation, title insurance, title exceptions, matters relating to flood hazard properties, surveys, environmental assessments, engineering and structural reports, permanent certificates of occupancy and evidence of zoning compliance, each in form and substance reasonably satisfactory to the Administrative Agent. (d) Consents; Defaults. (i) Governmental and Third Party Approvals. The Borrower shall have obtained all necessary approvals, authorizations and consents of any Person and of all Governmental Authorities and courts having jurisdiction with respect to the transactions contemplated by this Agreement and the other Loan Documents. (ii) No Injunction, Etc. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain substantial damages in respect of, or which is related to or arises out of this Agreement, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby, or which, in the Administrative Agent's sole discretion, would make it inadvisable to consummate the transactions contemplated by this Agreement and such other Loan Documents. (iii) No Event of Default. No Default or Event of Default shall have occurred and be continuing. (e) Financial Matters. (i) Financial Statements. The Administrative Agent shall have received the most recent audited Consolidated financial statements of the Borrower and its Subsidiaries, all in form and substance satisfactory to the Administrative Agent and prepared in accordance with GAAP. 43 (ii) Financial Condition Certificate. The Borrower shall have delivered to the Administrative Agent a certificate, in form and substance satisfactory to the Administrative Agent, and certified as accurate by a Responsible Officer, that (A) the Borrower and each of its Subsidiaries are each Solvent, (B) the Borrower's and its Subsidiaries' payables are current and not past due, (C) attached thereto are calculations evidencing compliance on a pro forma basis with the covenants contained in Article X hereof, (D)the financial projections previously delivered to the Administrative Agent represent the good faith estimates (utilizing reasonable assumptions) of the financial condition and operations of the Borrower and its Subsidiaries and (E) attached thereto is a calculation of the Applicable Margin pursuant to Section 5.1(c). (iii) Pro Forma Consolidated Financial Statements. The Administrative Agent shall have received a pro forma Consolidated quarterly balance sheet as of October 5, 2003 for the Borrower and its Subsidiaries giving effect to the closing hereof, the consummation of the Sale-Leaseback Facility and the issuance of the Senior Subordinated Notes, all in form and substance satisfactory to the Administrative Agent. (iv) Estimated Consolidated Income Statement. The Administrative Agent shall have received an estimated Consolidated income statement for the Borrower and its Subsidiaries for the Fiscal Quarter ended October 5, 2003, all in form and substance satisfactory to the Administrative Agent. (v) Payment at Closing; Fee Letters. The Borrower shall have paid to the Administrative Agent and the Lenders the fees set forth or referenced in Section 5.3 and any other accrued and unpaid fees or commissions due hereunder (including, without limitation, legal fees and expenses) and to any other Person such amount as may be due thereto in connection with the transactions contemplated hereby, including all taxes, fees and other charges in connection with the execution, delivery, recording, filing and registration of any of the Loan Documents. (f) Miscellaneous. (i) Notice of Borrowing. The Administrative Agent shall have received a Notice of Borrowing, as applicable, from the Borrower in accordance with Section 2.3(a), and a Notice of Account Designation specifying the account or accounts to which the proceeds of any Loans made after the Closing Date are to be disbursed. (ii) Existing Debt. All Debt of the Borrower and its Subsidiaries (including, without limitation, the Existing Facility), other than Debt permitted pursuant to Section 11.1 and the Existing Letters of Credit, shall be repaid in full and terminated and all security therefor released. (iii) Due Diligence and Other Documents. All opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be satisfactory in form and substance to the Administrative Agent. The Administrative Agent shall have received copies of all other documents, certificates and 44 instruments reasonably requested thereby, with respect to the transactions contemplated by this Agreement. (g) Senior Subordinated Notes. (i) Senior Subordinated Note Documents. The Administrative Agent shall have received copies of all documents, certificates and instruments reasonably requested by the Administrative Agent with respect to the transactions contemplated by the Senior Subordinated Notes, and each such document, certificate and instrument shall be in form and substance satisfactory to the Administrative Agent. (ii) Senior Subordinated Notes Issuance. The Borrower shall have received, on or prior to the Closing Date, gross cash proceeds from the issuance and sale for cash of the Senior Subordinated Notes in an aggregate amount of at least $100,000,000 and such Senior Subordinated Notes issuance shall be on terms and conditions (including, without limitation, the subordination provisions applicable thereto) satisfactory to the Administrative Agent. (iii) Opinion of Counsel. The Administrative Agent shall have received a copy of each opinion issued in connection with the Senior Subordinated Notes along with a letter from counsel providing that such opinion may be relied upon by the Administrative Agent and the Lenders. (h) Sale-Leaseback Facility. The Borrower shall have entered into and received $50,000,000 in gross proceeds from various purchase agreements and leases dated as of October 17, 2003, between the Borrower, O'Charley's Restaurant Properties, LLC and CNL Funding 2001-A L.P. or any of its Affiliates, with respect to real property owned by the Borrower, upon terms and conditions satisfactory to the Administrative Agent (the "Sale-Leaseback Facility"), and the Administrative Agent shall have received copies of all documents, certificates and instruments reasonably requested by the Administrative Agent with respect to the transactions contemplated by the Sale-Leaseback Facility, and each such document, certificate and instrument shall be in form and substance satisfactory to the Administrative Agent. (i) Application of Proceeds. Net cash proceeds from the Sale-Leaseback Facility and the Senior Subordinated Notes shall have been used and applied by the Borrower in a manner satisfactory to the Administrative Agent. (j) Repayment of Certain Amounts Outstanding under Existing Credit Agreement. On the Closing Date, (i) all outstanding loans under the Existing Credit Agreement (the "Existing Loans") made by any Existing Lender who is not a Lender hereunder shall be repaid in full and the commitments and other obligations and rights (except as expressly set forth in the Existing Credit Agreement) of such Existing Lender shall be terminated, (ii) all outstanding Existing Loans not being repaid under clause (i) above shall be deemed Revolving Credit Loans hereunder and the Administrative Agent shall make such transfers of funds as are necessary in order that the outstanding balance of such Revolving Credit Loans together with any Revolving Credit Loans funded on the Closing Date, are in accordance with the Revolving Credit Commitment Percentage of the Lenders hereunder, (iii) there shall have been paid in cash in full 45 all accrued but unpaid interest due on the Existing Loans on the Closing Date, (iv) there shall have been paid in cash in full all accrued but unpaid fees under the Existing Credit Agreement due to the Existing Lenders and all other amounts, costs and expenses then owing to any of the Existing Lenders and/or Wachovia, as administrative agent under the Existing Credit Agreement, (v) all outstanding Letters of Credit under the Existing Credit Agreement shall be Letters of Credit hereunder and (vi) all outstanding promissory notes issued by the Borrower to the Existing Lenders under the Existing Credit Agreement shall be promptly returned to the Borrower for cancellation. SECTION 6.3 Conditions to All Extensions of Credit. The obligations of the Lenders to make any Extensions of Credit (including the initial Extension of Credit), convert or continue any Loan and/or the Issuing Lender to issue or extend any Letter of Credit are subject to the satisfaction of the following conditions precedent on the relevant borrowing, continuation, conversion, issuance or extension date: (a) Continuation of Representations and Warranties. The representations and warranties contained in Article VII shall be true and correct on and as of such borrowing, continuation, conversion, issuance or extension date with the same effect as if made on and as of such date, except for any representation and warranty made as of an earlier date, which representation and warranty shall remain true and correct as of such earlier date. (b) No Existing Default. No Default or Event of Default shall have occurred and be continuing (i) on the borrowing, continuation or conversion date with respect to such Loan or after giving effect to the Loans to be made, continued or converted on such date or (ii) on the issuance or extension date with respect to such Letter of Credit or after giving effect to the issuance or extension of such Letter of Credit on such date. (c) Notices. The Administrative Agent shall have received a Notice of Borrowing or Notice of Conversion/Continuation, as applicable, from the Borrower in accordance with Section 2.3(a). (d) Additional Documents. The Administrative Agent shall have received each additional document, instrument, legal opinion or other item reasonably requested by it. ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE BORROWER SECTION 7.1 Representations and Warranties. To induce the Administrative Agent and Lenders to enter into this Agreement and to induce the Lenders to make Extensions of Credit, the Borrower and its Subsidiaries hereby represent and warrant to the Administrative Agent and Lenders both before and after giving effect to the transactions contemplated hereunder that: (a) Organization; Power; Qualification. Each of the Borrower and its Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its 46 incorporation or formation, has the power and authority to own its properties and to carry on its business as now being and hereafter proposed to be conducted and is duly qualified and authorized to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification and authorization, except to the extent that the failure to so qualify or be in good standing could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. The jurisdictions in which the Borrower and its Subsidiaries are organized and qualified to do business as of the Closing Date are described on Schedule 7.1(a). (b) Ownership. Each Subsidiary of the Borrower as of the Closing Date is listed on Schedule 7.1(b). As of the Closing Date, the capitalization of the Borrower and its Subsidiaries consists of the number of shares, authorized, issued and outstanding, of such classes and series, with or without par value, membership interests, or other ownership interests described on Schedule 7.1(b). All outstanding shares or other ownership interests have been duly authorized and validly issued and are fully paid and nonassessable, with no personal liability attaching to the ownership thereof, and not subject to any preemptive or similar rights. The equityholders of the Subsidiaries of the Borrower and the number of shares or other ownership units owned by each as of the Closing Date are described on Schedule 7.1(b). As of the Closing Date, there are no outstanding stock purchase warrants, subscriptions, options, securities, instruments or other rights of any type or nature whatsoever, which are convertible into, exchangeable for or otherwise provide for or permit the issuance of capital stock, membership interests or other ownership interests of the Borrower or its Subsidiaries, except as described on Schedule 7.1(b). (c) Authorization of Agreement, Loan Documents and Borrowing. Each of the Borrower and its Subsidiaries has the right, power and authority and has taken all necessary corporate and other action to authorize the execution, delivery and performance of this Agreement and each of the other Loan Documents to which it is a party in accordance with their respective terms. This Agreement and each of the other Loan Documents have been duly executed and delivered by the duly authorized officers of the Borrower and each of its Subsidiaries party thereto, and each such document constitutes the legal, valid and binding obligation of the Borrower or its Subsidiary party thereto, enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar state or federal debtor relief laws from time to time in effect which affect the enforcement of creditors' rights in general and the availability of equitable remedies. (d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc. The execution, delivery and performance by the Borrower and its Subsidiaries of the Loan Documents to which each such Person is a party, in accordance with their respective terms, the Extensions of Credit hereunder and the transactions contemplated hereby do not and will not, by the passage of time, the giving of notice or otherwise, (i) require any Governmental Approval or violate any Applicable Law relating to the Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute a default under the articles of incorporation, bylaws or other organizational documents of the Borrower or any of its Subsidiaries or, except as could not reasonably be expected to result in a Material Adverse Effect, any indenture, agreement or other instrument to which such Person is a party or by which any of its properties may be bound or any Governmental Approval relating to such Person, (iii) result in or require the creation or imposition of any Lien upon or with respect to any property now owned or hereafter acquired by 47 such Person other than Liens arising under the Loan Documents or (iv) require any consent or authorization of, filing with, or other act in respect of, an arbitrator or Governmental Authority and no consent of any other Person is required in connection with the execution, delivery, performance, validity or enforceability of this Agreement except, in each case, (A)as may be required by laws affecting the offering and sale of securities generally, (B)filings with the United States Copyright Office and/or the United States Patent and Trademark Office, (C)filings under the UCC and recording of the Mortgages and (D)those notices, consents and authorizations which have been obtained prior to the Closing Date. (e) Compliance with Law; Governmental Approvals. Each of the Borrower and its Subsidiaries (i) has all Governmental Approvals required by any Applicable Law for it to conduct its business, each of which is in full force and effect, is final and not subject to review on appeal and is not the subject of any pending or, to the best of its knowledge, threatened attack by direct or collateral proceeding, (ii) is in compliance with each Governmental Approval applicable to it and in compliance with all other Applicable Laws relating to it or any of its respective properties and (iii) has timely filed all material reports, documents and other materials required to be filed by it under all Applicable Laws with any Governmental Authority and has retained all material records and documents required to be retained by it under Applicable Law in each case, except as could not reasonably be expected to result in a Material Adverse Effect. (f) Tax Returns and Payments. Each of the Borrower and its Subsidiaries has duly filed or caused to be filed all federal, state, local and other tax returns required by Applicable Law to be filed, and has paid prior to delinquency all federal, state, local and other taxes, assessments and governmental charges or levies upon it and its property, income, profits and assets which are due and payable. Such returns accurately reflect in all material respects all liability for taxes of the Borrower and its Subsidiaries for the periods covered thereby. There is no ongoing audit or examination or, to the knowledge of the Borrower, other investigation by any Governmental Authority of the tax liability of the Borrower and its Subsidiaries that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Governmental Authority has notified the Borrower or any of its Subsidiaries of any Lien or other claim against the Borrower or any Subsidiary thereof with respect to unpaid taxes which has not been discharged or resolved. The charges, accruals and reserves on the books of the Borrower and any of its Subsidiaries in respect of federal, state, local and other taxes for all Fiscal Years and portions thereof since the organization of the Borrower and any of its Subsidiaries are in the judgment of the Borrower adequate, and the Borrower does not anticipate any additional taxes or assessments for any of such years. (g) Intellectual Property Matters. Each of the Borrower and its Subsidiaries owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, service mark, service mark rights, trade names, trade name rights, copyrights and rights with respect to the foregoing which are required to conduct its business except where the absence thereof could not reasonably be expected to have a Material Adverse Effect. No event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and, to Borrower's knowledge, neither the Borrower nor any Subsidiary thereof is liable to any 48 Person for infringement under Applicable Law with respect to any such rights as a result of its business operations. (h) Environmental Matters. Except as to matters described in Schedule 7.1(h) which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) The properties owned, leased or operated by the Borrower and its Subsidiaries now do not contain, and to their knowledge have not previously contained, any Hazardous Materials in amounts or concentrations which (A) constitute or constituted a material violation of applicable Environmental Laws or (B) could give rise to any material liability under applicable Environmental Laws; (ii) The Borrower, each Subsidiary and such properties and all operations conducted in connection therewith are in material compliance, and have been in material compliance, with all applicable Environmental Laws, and there is no contamination at, under or about such properties or such operations which could interfere with the continued operation of such properties or impair the fair saleable value thereof; (iii) Neither the Borrower nor any Subsidiary thereof has received any notice of violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters, Hazardous Materials, or compliance with Environmental Laws, nor does the Borrower or any Subsidiary thereof have knowledge or reason to believe that any such notice will be received or is being threatened; (iv) Hazardous Materials have not been transported or disposed of to or from the properties owned, leased or operated by the Borrower and its Subsidiaries in violation of, or in a manner or to a location which could give rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of such properties in violation of, or in a manner that could give rise to liability under, any applicable Environmental Laws; (v) No judicial proceedings or governmental or administrative action is pending, or, to the knowledge of the Borrower, threatened, under any Environmental Law to which the Borrower or any Subsidiary thereof is or will be named as a potentially responsible party with respect to such properties or operations conducted in connection therewith, 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 Borrower, any Subsidiary or such properties or such operations; and (vi) There has been no release, or to the best of the Borrower's knowledge, threat of release, of Hazardous Materials at or from any properties owned, leased or operated by the Borrower or any Subsidiary, now or in the past, in violation of or in amounts or in a manner that could give rise to any material liability under Environmental Laws. (i) ERISA. 49 (i) As of the Closing Date, neither the Borrower nor any ERISA Affiliate maintains or contributes to, or has any obligation under, any Employee Benefit Plans other than those identified on Schedule 7.1(i); (ii) The Borrower and each ERISA Affiliate is in material compliance with all applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans except for any required amendments for which the remedial amendment period as defined in Section 401(b) of the Code has not yet expired and except where a failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and each trust related to such plan has been determined to be exempt under Section 501(a) of the Code except for such plans that have not yet received determination letters but for which the remedial amendment period for submitting a determination letter has not yet expired. No liability has been incurred by the Borrower or any ERISA Affiliate which remains unsatisfied for any taxes or penalties with respect to any Employee Benefit Plan or any Multiemployer Plan except for a liability that could not reasonably be expected to have a Material Adverse Effect; (iii) As of the Closing Date, no Pension Plan has been terminated for which the liabilities have not been satisfied in full, nor has any accumulated funding deficiency (as defined in Section 412 of the Code) been incurred (without regard to any waiver granted under Section 412 of the Code), nor has any funding waiver from the Internal Revenue Service been received or requested with respect to any Pension Plan, nor has the Borrower or any ERISA Affiliate failed to make any contributions or to pay any amounts due and owing as required by Section 412 of the Code, Section 302 of ERISA or the terms of any Pension Plan prior to the due dates of such contributions under Section 412 of the Code or Section 302 of ERISA, nor has there been any event requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with respect to any Pension Plan; (iv) Except where the failure of any of the following representations to be correct in all material respects could not reasonably be expected to have a Material Adverse Effect, neither the Borrower nor any ERISA Affiliate has: (A) engaged in a nonexempt prohibited transaction described in Section 406 of the ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC which remains outstanding other than the payment of premiums and there are no premium payments which are due and unpaid, (C) failed to make a required contribution or payment to a Multiemployer Plan, or (D) failed to make a required installment or other required payment under Section 412 of the Code; (v) No Termination Event has occurred or is reasonably expected to occur; and (vi) Except where the failure of any of the following representations to be correct in all material respects could not reasonably be expected to have a Material Adverse Effect, no proceeding, claim (other than a benefits claim in the ordinary course of business), lawsuit and/or investigation is existing or, to the best knowledge of the Borrower after due 50 inquiry, threatened concerning or involving any (A) employee welfare benefit plan (as defined in Section 3(1) of ERISA) currently maintained or contributed to by the Borrower or any ERISA Affiliate, (B) Pension Plan or (C) Multiemployer Plan. (j) Margin Stock. Neither the Borrower nor any Subsidiary thereof is engaged principally or as one of its activities in the business of extending credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each such term is defined or used, directly or indirectly, in Regulation U of the Board of Governors of the Federal Reserve System). No part of the proceeds of any of the Loans or Letters of Credit will be used for purchasing or carrying margin stock or for any purpose which violates, or which would be inconsistent with, the provisions of Regulation T, U or X of such Board of Governors. (k) Government Regulation. Neither the Borrower nor any Subsidiary thereof is an "investment company" or a company "controlled" by an "investment company" (as each such term is defined or used in the Investment Company Act of 1940, as amended) and neither the Borrower nor any Subsidiary thereof is, or after giving effect to any Extension of Credit will be, subject to regulation under the Public Utility Holding Company Act of 1935 or the Interstate Commerce Act, each as amended, or any other Applicable Law (including, without limitation, the Trading with the Enemy Act, the United States Treasury Department foreign assets control regulations and Executive Order 13224 Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism) which limits its ability to incur or consummate the transactions contemplated hereby. (l) Material Contracts. Schedule 7.1(l) sets forth a complete and accurate list of all Material Contracts of the Borrower and its Subsidiaries in effect as of the Closing Date not listed on any other Schedule hereto; other than as set forth in Schedule 7.1(l), each such Material Contract is, and after giving effect to the consummation of the transactions contemplated by the Loan Documents will be, in full force and effect in accordance with the terms thereof. The Borrower and its Subsidiaries have delivered to the Administrative Agent a true and complete copy of each Material Contract required to be listed on Schedule 7.1(l) or any other Schedule hereto. Neither the Borrower nor any Subsidiary (nor, to the knowledge of the Borrower, any other party thereto) is in breach of or in default under any Material Contract in any material respect. (m) Employee Relations. Each of the Borrower and its Subsidiaries has a stable work force in place and is not, as of the Closing Date, party to any collective bargaining agreement nor has any labor union been recognized as the representative of its employees except as set forth on Schedule 7.1(m). The Borrower knows of no pending, threatened or contemplated strikes, work stoppage or other collective labor disputes involving its employees or those of its Subsidiaries that could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (n) Burdensome Provisions. Neither the Borrower nor any Subsidiary thereof is a party to any indenture, agreement, lease or other instrument, or subject to any corporate or partnership restriction, Governmental Approval or Applicable Law which is so unusual or burdensome as in the foreseeable future could be reasonably expected to have a Material Adverse Effect. The Borrower and its Subsidiaries do not presently anticipate that future expenditures needed to meet the provisions of any statutes, orders, rules or regulations of a Governmental Authority will be so burdensome as to have a Material 51 Adverse Effect. No Subsidiary is party to any agreement or instrument or otherwise subject to any restriction or encumbrance that restricts or limits its ability to make dividend payments or other distributions in respect of its capital stock to the Borrower or any Subsidiary or to transfer any of its assets or properties to the Borrower or any other Subsidiary in each case other than existing under or by reason of the Loan Documents or Applicable Law. (o) Financial Statements. The (i) audited Consolidated balance sheet of the Borrower and its Subsidiaries as of December 29, 2002 and the related audited statements of income and retained earnings and cash flows for the Fiscal Year then ended and (ii) unaudited Consolidated balance sheet of the Borrower and its Subsidiaries as of July 13, 2003 and related unaudited interim statements of income and retained earnings, copies of which have been furnished to the Administrative Agent and each Lender, are complete and correct in all material respects and fairly present on a Consolidated basis the assets, liabilities and financial position of the Borrower and its Subsidiaries as at such dates, and the results of the operations and changes of financial position for the periods then ended (other than customary year-end adjustments for unaudited financial statements). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP. The Borrower and its Subsidiaries have no Debt, obligation or other unusual forward or long-term commitment which is not fairly reflected in the foregoing financial statements or in the notes thereto. (p) No Material Adverse Change. Since December 29, 2002, there has been no material adverse change in the properties, business, operations, or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, and no event has occurred or condition arisen that could reasonably be expected to have a Material Adverse Effect. (q) Solvency. As of the Closing Date and after giving effect to each Extension of Credit made hereunder, the Borrower and each of its Subsidiaries will be Solvent. (r) Titles to Properties. Schedule 7.1(r) sets forth a list of each parcel of real property owned or leased by the Borrower or its Subsidiaries as of the Closing Date. Each of the Borrower and its Subsidiaries has such title to the real property owned or leased by it as is necessary to the conduct of its business and valid and legal title to all of its personal property and assets, including, but not limited to, those reflected on the balance sheets of the Borrower and its Subsidiaries delivered pursuant to Section 7.1(o), except those which have been disposed of by the Borrower or its Subsidiaries subsequent to such date which dispositions have been in the ordinary course of business or as otherwise expressly permitted hereunder. (s) Liens. None of the properties and assets of the Borrower or any Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to Section 11.2. No financing statement under the Uniform Commercial Code of any state which names the Borrower or any Subsidiary thereof or any of their respective trade names or divisions as debtor and which has not been terminated, has been filed in any state or other jurisdiction and neither the Borrower nor any Subsidiary thereof has signed any such financing statement or any security agreement 52 authorizing any secured party thereunder to file any such financing statement, except to perfect those Liens permitted by Section 11.2 hereof. (t) Debt and Guaranty Obligations. Schedule 7.1(t) is a complete and correct listing of all Debt and Guaranty Obligations of the Borrower and its Subsidiaries as of the Closing Date in excess of $1,000,000. The Borrower and its Subsidiaries have performed and are in compliance in all material respects with all of the terms of such Debt and Guaranty Obligations and all instruments and agreements relating thereto, and no default or event of default, or event or condition which with notice or lapse of time or both would constitute such a default or event of default on the part of the Borrower or any of its Subsidiaries exists with respect to any such Debt or Guaranty Obligation. (u) Litigation. Except for matters existing on the Closing Date which are set forth on Schedule 7.1(u), there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against the Borrower or any Subsidiary thereof or any of their respective properties in any court or before any arbitrator of any kind or before or by any Governmental Authority for which liability to the Borrower or its Subsidiaries could reasonably be expected to have a Material Adverse Effect. (v) Absence of Defaults. No event has occurred or is continuing which constitutes a Default or an Event of Default, or which constitutes, or which with the passage of time or giving of notice or both would constitute, a default or event of default by the Borrower or any Subsidiary thereof under any Material Contract or judgment, decree or order to which the Borrower or its Subsidiaries is a party or by which the Borrower or its Subsidiaries or any of their respective properties may be bound or which would require the Borrower or its Subsidiaries to make any payment thereunder prior to the scheduled maturity date therefor. (w) Senior Debt Status. The Obligations of the Borrower and each of its Subsidiaries under this Agreement and each of the other Loan Documents ranks and shall continue to rank at least senior in priority of payment to the Senior Subordinated Notes and all other Subordinated Debt of each such Person and is designated as "Senior Indebtedness" under all instruments and documents, now or in the future, relating to the Senior Subordinated Notes and all other Subordinated Debt of such Person. (x) Accuracy and Completeness of Information. All written information, reports and other papers and data produced by or on behalf of the Borrower or any Subsidiary thereof (other than financial projections, which shall be subject to the standard set forth in Section 8.1(c)) and furnished to the Lenders were, at the time the same were so furnished, complete and correct in all respects to the extent necessary to give the recipient a true and accurate knowledge of the subject matter. No document furnished or written statement made to the Administrative Agent or the Lenders by the Borrower or any Subsidiary thereof in connection with the negotiation, preparation or execution of this Agreement or any of the Loan Documents contains or will contain any untrue statement of a fact material to the creditworthiness of the Borrower or its Subsidiaries or omits or will omit to state a fact necessary in order to make the statements contained therein not misleading. The Borrower is not aware of any facts which it has not disclosed in writing to the Administrative Agent having a Material Adverse Effect, or insofar as 53 the Borrower can now foresee, which could reasonably be expected to have a Material Adverse Effect. (y) Tax Shelter Regulations. The Borrower does not intend to treat the Loans and/or Letters of Credit as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrower determines to take any action inconsistent with such intention, it will promptly notify the Administrative Agent thereof. If the Borrower so notifies the Administrative Agent, the Borrower acknowledges that the Administrative Agent and/or one or more of the Lenders may treat the Loans and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and the Administrative Agent and/or such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation. SECTION 7.2 Survival of Representations and Warranties, Etc. All representations and warranties set forth in this Article VII and all representations and warranties contained in any certificate, or any of the Loan Documents (including, but not limited to, any such representation or warranty made in or in connection with any amendment thereto) shall constitute representations and warranties made under this Agreement. All representations and warranties made under this Agreement shall be made or deemed to be made at and as of the Closing Date (except those that are expressly made as of a specific date), shall survive the Closing Date and shall not be waived by the execution and delivery of this Agreement, any investigation made by or on behalf of the Lenders or any borrowing hereunder. ARTICLE VIII FINANCIAL INFORMATION AND NOTICES Until all the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11, the Borrower will furnish or cause to be furnished to the Administrative Agent at the Administrative Agent's Office at the address set forth in Section 14.1 and to the Lenders at their respective addresses as set forth in the Register, or such other office as may be designated by the Administrative Agent and Lenders from time to time: SECTION 8.1 Financial Statements and Projections. (a) Quarterly Financial Statements. As soon as practicable and in any event within forty-five (45) days after the end of the first three (3) Fiscal Quarters of each Fiscal Year (or, if either such date is earlier, on the date of any required public filing thereof, or five (5) days following any date on which the Borrower may be required by GAAP to file such statements), an unaudited Consolidated and consolidating balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Quarter and unaudited Consolidated and consolidating statements of income, retained earnings and cash flows for the Fiscal Quarter then ended and that portion of the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the corresponding period in the preceding Fiscal Year and prepared by the Borrower in accordance with GAAP and, if 54 applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the period, and certified by the chief financial officer of the Borrower to present fairly in all material respects the financial condition of the Borrower and its Subsidiaries on a Consolidated and consolidating basis as of their respective dates and the results of operations of the Borrower and its Subsidiaries for the respective periods then ended, subject to normal year end adjustments. (b) Annual Financial Statements. As soon as practicable and in any event within ninety (90) days after the end of each Fiscal Year (or, if either such date is earlier, on the date of any required public filing thereof, or five (5) days following any date on which the Borrower may be required by GAAP to file such statements), an audited Consolidated balance sheet of the Borrower and its Subsidiaries as of the close of such Fiscal Year and audited Consolidated statements of income, retained earnings and cash flows for the Fiscal Year then ended, including the notes thereto, all in reasonable detail setting forth in comparative form the corresponding figures as of the end of and for the preceding Fiscal Year and prepared by an independent certified public accounting firm approved by the Audit Committee of the Board of Directors of the Borrower and reasonably acceptable to the Administrative Agent in accordance with GAAP and, if applicable, containing disclosure of the effect on the financial position or results of operations of any change in the application of accounting principles and practices during the year, and accompanied by a report thereon by such certified public accountants that is not qualified with respect to scope limitations imposed by the Borrower or any of its Subsidiaries or with respect to accounting principles followed by the Borrower or any of its Subsidiaries not in accordance with GAAP. (c) Annual Business Plan and Financial Projections. As soon as practicable and in any event within sixty (60) days after the beginning of each Fiscal Year, a business plan of the Borrower and its Subsidiaries for the ensuing four (4) Fiscal Quarters and the Fiscal Year thereafter, such plan to be prepared in accordance with GAAP and to include, on a quarterly basis, the following: a quarterly operating and capital budget for the ensuing four (4) Fiscal Quarters, a yearly operating and capital budget for the Fiscal Year thereafter, a projected income statement, statement of cash flows and balance sheet and a report containing management's discussion and analysis of such projections, accompanied by a certificate from the chief financial officer of the Borrower to the effect that, to the best of such officer's knowledge, such projections are good faith estimates (utilizing reasonable assumptions) of the projected financial condition and operations of the Borrower and its Subsidiaries for such period. SECTION 8.2 Officer's Compliance Certificate. At each time financial statements are delivered pursuant to Sections 8.1 (a) or (b) and at such other times as the Administrative Agent shall reasonably request, a certificate of the chief financial officer or the treasurer of the Borrower in the form of Exhibit F attached hereto (an "Officer's Compliance Certificate"). SECTION 8.3 Accountants' Certificate. At each time financial statements are delivered pursuant to Section 8.1(b), a certificate of the independent public accountants certifying such financial statements addressed to the Administrative Agent for the benefit of the Lenders: 55 (a) stating that in making the examination necessary for the certification of such financial statements, they obtained no knowledge of any Default or Event of Default or, if such is not the case, specifying such Default or Event of Default and its nature and period of existence; and (b) including the calculations prepared by such accountants required to establish whether or not the Borrower and its Subsidiaries are in compliance with the financial covenants set forth in Article X hereof as at the end of each respective period. SECTION 8.4 Other Reports. (a) Promptly upon receipt thereof, copies of all reports, if any, submitted to the Borrower or its Board of Directors by its independent public accountants in connection with their auditing function, including, without limitation, any management report and any management responses thereto; (b) Such other information regarding the operations, business affairs and financial condition of the Borrower or any of its Subsidiaries as the Administrative Agent or any Lender may reasonably request; and (c) Promptly after the Borrower has notified the Administrative Agent of any intention by the Borrower to treat the Loans and/or Letters of Credit as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form. SECTION 8.5 Notice of Litigation and Other Matters. Prompt (but in no event later than ten (10) days after an officer of the Borrower obtains knowledge thereof) telephonic and written notice of: (a) the commencement of all proceedings and investigations by or before any Governmental Authority and all actions and proceedings in any court or before any arbitrator against or involving the Borrower or any Subsidiary thereof or any of their respective properties, assets or businesses which in any such case could reasonably be expected to result in a Material Adverse Effect; (b) any notice of any violation received by the Borrower or any Subsidiary thereof from any Governmental Authority including, without limitation, any notice of violation of Environmental Laws which in any such case could reasonably be expected to have a Material Adverse Effect; (c) any labor controversy that has resulted in, or threatens to result in, a strike or other work action against the Borrower or any Subsidiary thereof that could reasonably be expected to have a Material Adverse Effect; 56 (d) any attachment, judgment, Lien, levy or order exceeding $2,500,000 that may be assessed against or threatened in writing against the Borrower or any Subsidiary thereof; (e) (i) any Default or Event of Default, (ii) the occurrence or existence of any event or circumstance that foreseeably will become a Default or Event of Default or (iii) any event which constitutes or which with the passage of time or giving of notice or both would constitute a default or event of default under any Material Contract to which the Borrower or any of its Subsidiaries is a party or by which the Borrower or any Subsidiary thereof or any of their respective properties may be bound; (f) (i) any unfavorable determination letter from the Internal Revenue Service regarding the qualification of an Employee Benefit Plan under Section 401(a) of the Code (along with a copy thereof), (ii) all notices received by the Borrower or any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan, (iii) all notices received by the Borrower or any ERISA Affiliate from a Multiemployer Plan sponsor concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA and (iv) the Borrower obtaining knowledge or reason to know that the Borrower or any ERISA Affiliate has filed or intends to file a notice of intent to terminate any Pension Plan under a distress termination within the meaning of Section 4041(c) of ERISA; (g) any event which makes any of the representations set forth in Section 7.1 inaccurate in any respect; (h) any Ratings Downgrade; (i) a copy of any notice of any default or event of default, acceleration, redemption, request for a material waiver, request for a material amendment or any other notice of a material event delivered to or received by any Person (including, without limitation, any trustee or noteholder) in connection with the Senior Subordinated Notes or any other Subordinated Debt. SECTION 8.6 Accuracy of Information. All written information, reports, statements and other papers and data furnished by or on behalf of the Borrower to the Administrative Agent or any Lender whether pursuant to this Article VIII or any other provision of this Agreement, or any of the Security Documents, shall be, at the time the same is so furnished, comply with the representations and warranties set forth in Section 7.1(x). ARTICLE IX AFFIRMATIVE COVENANTS Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner provided for in Section 14.11, the Borrower will, and will cause each of its Subsidiaries to: 57 SECTION 9.1 Preservation of Corporate Existence and Related Matters. Except as permitted by Section 11.4, preserve and maintain its separate corporate, limited liability company or partnership existence and all rights, franchises, licenses and privileges necessary to the conduct of its business, and qualify and remain qualified as a foreign corporation, limited liability company or limited partnership and authorized to do business in each jurisdiction where the nature and scope of its activities require it to so qualify under Applicable Law except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect. SECTION 9.2 Maintenance of Property. In addition to the requirements of any of the Security Documents, protect and preserve in accordance with sound business practices all properties useful in and material to its business, including copyrights, patents, trade names, service marks and trademarks; maintain in accordance with sound business practices all buildings, equipment and other tangible real and personal property; and from time to time make or cause to be made all renewals, replacements and additions to such property necessary for the conduct of its business, so that the business carried on in connection therewith may be properly and advantageously conducted at all times. SECTION 9.3 Insurance. Maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as are customarily maintained by similar businesses (including hazard and business interruption coverage) and as are required by Applicable Law and as are required by any Security Documents, and on the Closing Date and from time to time thereafter deliver to the Administrative Agent upon its request a detailed list of the insurance then in effect, stating the names of the insurance companies, the amounts and rates of the insurance, the dates of the expiration thereof and the properties and risks covered thereby. SECTION 9.4 Accounting Methods and Financial Records. Maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete in all material respects) as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP and in compliance with the regulations of any Governmental Authority having jurisdiction over it or any of its properties. SECTION 9.5 Payment and Performance of Obligations. Pay and perform all Obligations or Subsidiary Guaranteed Obligations, as applicable, under this Agreement and the other Loan Documents, and pay or perform (a) all taxes, assessments and other governmental charges that may be levied or assessed upon it or any of its property, and (b) all other indebtedness, obligations and liabilities in accordance with customary trade practices; provided, that the Borrower or such Subsidiary may contest any item described in clauses (a) or (b) of this Section 9.5 in good faith so long as adequate reserves are maintained with respect thereto in accordance with GAAP. SECTION 9.6 Compliance with Laws and Approvals. Observe and remain in compliance in all material respects with all Applicable Laws and maintain in full force and effect all material Governmental Approvals, in each case applicable to the conduct of its business. 58 SECTION 9.7 Environmental Laws. In addition to and without limiting the generality of Section 9.6, (a)comply in all material respects with, and ensure such compliance by all tenants and subtenants with all applicable Environmental Laws and obtain and comply with and maintain, and ensure that all tenants and subtenants, if any, obtain and comply in all material respects with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws, (b) conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, and promptly comply with all lawful orders and directives of any Governmental Authority regarding Environmental Laws, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out of, or in any way relating to the presence of Hazardous Materials, or the violation of, noncompliance with or liability under any Environmental Laws applicable to the operations of the Borrower or any such Subsidiary, or any orders, requirements or demands of Governmental Authorities related thereto, including, without limitation, reasonable attorney's and consultant's fees, investigation and laboratory fees, response costs, court costs and litigation expenses, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. SECTION 9.8 Compliance with ERISA. In addition to and without limiting the generality of Section 9.6, (a) except where the failure to so comply could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) comply with all material applicable provisions of ERISA and the regulations and published interpretations thereunder with respect to all Employee Benefit Plans, (ii) not take any action or fail to take action the result of which could be a liability to the PBGC or to a Multiemployer Plan, (iii) not participate in any prohibited transaction that could result in any civil penalty under ERISA or tax under the Code and (iv) operate each Employee Benefit Plan in such a manner that will not incur any tax liability under Section 4980B of the Code or any liability to any qualified beneficiary as defined in Section 4980B of the Code and (b) furnish to the Administrative Agent upon the Administrative Agent's request such additional information about any Employee Benefit Plan as may be reasonably requested by the Administrative Agent to the extent that the furnishing of such information does not violate ERISA, the Health Insurance Portability and Accountability Act of 1996 or any other Applicable Law. SECTION 9.9 Compliance with Agreements. Comply in all material respects with each term, condition and provision of all leases, agreements and other instruments entered into in the conduct of its business including, without limitation, any Material Contract. SECTION 9.10 Visits and Inspections. Permit representatives of the Administrative Agent or any Lender, from time to time, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by independent accountants; and discuss with its principal officers, and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects. Unless a Default or Event of Default has occurred and is continuing, the representatives of the Administrative Agent or any Lender will provide the 59 Borrower with advance notice of such visits and inspections, and will visit and inspect during the Borrower's normal business hours. SECTION 9.11 Additional Subsidiaries; Equipment; Real Property Acquisitions. (a) Additional Domestic Subsidiaries. Within thirty (30) days after the creation or acquisition of any Domestic Subsidiary of the Borrower (excluding any Franchisees) with assets in excess of $150,000, cause to be executed and delivered to the Administrative Agent (i) duly executed joinder agreements in form and substance reasonably satisfactory to the Administrative Agent joining such Subsidiary to the Collateral Agreement, the Collateral Assignment Agreement and any other applicable Security Documents, (ii) updated Schedules 7.1(a), 7.1(b) and 7.1(r) reflecting the creation or acquisition of such Subsidiary, (iii) a Subsidiary Guaranty Agreement duly executed and delivered by such Subsidiary, (iv) favorable legal opinions addressed to the Administrative Agent and Lenders in form and substance reasonably satisfactory thereto with respect to such joinder agreement, (v) original stock or other certificates and stock or other transfer powers evidencing the ownership interests of the Borrower in such Subsidiary, (vi) all documents required by Section 9.11(c), and (vii) any other documents and certificates as may be requested by the Administrative Agent. (b) Additional Foreign Subsidiaries. Notify the Administrative Agent at the time that any Person becomes a first tier Foreign Subsidiary of the Borrower (excluding any Franchisees), and promptly thereafter (and in any event within thirty (30) days), cause (i) the Borrower or applicable Subsidiary to deliver to the Administrative Agent a supplement to the Security Documents pledging sixty-five percent (65%) of the total outstanding ownership interest or capital stock of such new Foreign Subsidiary and a consent thereto executed by such new Foreign Subsidiary (including, without limitation, if applicable, original stock certificates (or the equivalent thereof pursuant to the Applicable Laws and practices of any relevant foreign jurisdiction) evidencing the capital stock of such new Foreign Subsidiary, together with an appropriate undated stock power for each certificate duly executed in blank by the registered owner thereof), (ii) such Person to deliver to the Administrative Agent documents of the types referred to in clauses (ii) and (iii) of Section 6.2(b) 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 in clauses (i) and (ii)), and (iii) such Person to deliver to the Administrative Agent such other documents and closing certificates as may be reasonably requested by the Administrative Agent, all in form, content and scope reasonably satisfactory to the Administrative Agent (c) Equipment; Real Property Acquisitions. (i) Within thirty (30) days after the date of a Ratings Downgrade, the Borrower shall deliver to the Administrative Agent a first priority perfected security interest in all equipment of the Borrower and its direct and indirect Subsidiaries (excluding any SRLS Entity and any Franchisees) and shall execute any and all documents requested by the Administrative Agent, all in form and substance acceptable to the Administrative Agent, to evidence such security interest. 60 (ii) Within forty-five (45) days after the occurrence of a Ratings Downgrade, the Borrower or its direct and indirect Subsidiaries (excluding any SRLS Entity and any Franchisees) shall, with respect to all real property acquired after the Closing Date (and any other real property owned by the Borrower or its direct and indirect Subsidiaries not then subject to a Mortgage), cause to be executed and delivered to the Administrative Agent (A) Mortgages (unless otherwise agreed by the Administrative Agent and the Required Lenders), (B) an updated Schedule 8.1(r) together with title insurance policies, copies of title exceptions, flood surveys, property surveys, environmental assessments and any other related real property documentation, all in form and content reasonably acceptable to the Administrative Agent and (C) an updated Schedule 7.1(h) in form and content reasonably acceptable to the Administrative Agent. (d) Additional Subsidiary Guarantors. Notwithstanding anything to the contrary contained herein, in the event that any Subsidiary shall guaranty the payment or performance of the Senior Subordinated Notes, the Borrower shall cause such Subsidiary to immediately execute a joinder to the Subsidiary Guaranty Agreement and the Security Documents described in Section 9.11(a) and to deliver all of the other instruments, documents, certificates and opinions required pursuant to Section 9.11(a). SECTION 9.12 Use of Proceeds. The Borrower shall use the proceeds of the Extensions of Credit (a) to refinance existing indebtedness of the Borrower, (b) for general corporate purposes of the Borrower and the Subsidiary Guarantors, including, without limitation, working capital, capital expenditures in the ordinary course of business and Permitted Acquisitions (which may include stock repurchases of up to $25,000,000 of the Borrower's capital stock), and (c) to pay fees and expenses incurred in connection with the transactions contemplated herein. SECTION 9.13 Conduct of Business. Engage only in businesses in substantially the same fields as the businesses conducted on the Closing Date. SECTION 9.14 Further Assurances. Make, execute and deliver all such additional and further acts, things, deeds and instruments as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably require to document and consummate the transactions contemplated hereby and to vest completely in and insure the Administrative Agent and the Lenders their respective rights under this Agreement, the Notes, the Letters of Credit and the other Loan Documents. SECTION 9.15 Landlord Consents. Use its best good faith efforts to obtain and deliver landlord consents, estoppel letters of consent and waivers in respect of Collateral held on leased premises as may be reasonably required from time to time by the Administrative Agent. ARTICLE X FINANCIAL COVENANTS 61 Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11, the Borrower and its Subsidiaries on a Consolidated basis will not: SECTION 10.1 Maximum Adjusted Debt to EBITDAR Ratio. As of any Fiscal Quarter end, permit the ratio of (a) Adjusted Debt on such date (less any cash existing on the Consolidated balance sheet on such date) to (b) EBITDAR for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date to be greater than 4.75 to 1. SECTION 10.2 Maximum Senior Secured Leverage Ratio: As of any Fiscal Quarter end, permit the ratio of (a) Senior Debt on such date (less any cash existing on the Consolidated balance sheet on such date) to (b) EBITDA for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date to be greater than 2.00 to 1.00; provided, however, that for purposes of calculating compliance with this financial covenant, EBITDA for the four (4) consecutive Fiscal Quarter period ending on or immediately prior to such date shall be reduced to reflect rental expense associated with any sale-leaseback transaction permitted hereunder on a pro forma basis. SECTION 10.3 Minimum Fixed Charge Coverage Ratio: As of any Fiscal Quarter end, permit the ratio of (a) EBITDAR for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date minus the greater of (i) Maintenance Capital Expenditures for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date or (ii) 50% of depreciation for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date to (b) Rental Expense for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date (provided, however, that for purposes of calculating compliance with this Section 10.3, Rental Expense for the four (4) consecutive Fiscal Quarter period ending on such date shall be increased to include rental expense associated with any sale-leaseback transaction permitted hereunder on a pro forma basis) plus Interest Expense for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date plus the aggregate amount of any Permitted Note Repurchases by the Borrower for the period of four (4) consecutive Fiscal Quarters ending on or immediately prior to such date to be less than the corresponding ratio set forth below:
PERIOD MINIMUM RATIO ----------------------------------------------------------------------------- ------------------------- Closing Date through and including the last day of Fiscal Year 2004 1.25 to 1.00 ----------------------------------------------------------------------------- ------------------------- Fiscal Year 2005 and thereafter 1.50 to 1.00 ----------------------------------------------------------------------------- -------------------------
SECTION 10.4 Minimum Asset Coverage Ratio. As of any Fiscal Quarter end, permit the Asset Coverage Ratio to be less than 1.00 to 1.00. SECTION 10.5 Minimum Capital Expenditures Ratio. As of any Fiscal Quarter end, permit the ratio of (a) 90% of EBITDA to (b) Expansion Capital Expenditures to be less than 1.00 to 1.00; provided, however, that for purposes of calculating compliance with this financial covenant, the Borrower shall be entitled to add back to EBITDA 20% of the Net Cash 62 Proceeds from issuances of equity consummated during the four (4) consecutive Fiscal Quarter period ending on such date in an aggregate amount not to exceed $10,000,000 for any one such equity issuance; provided, further, that for purposes of calculating compliance with this financial covenant, EBITDA for the four (4) consecutive Fiscal Quarter period ending on or immediately prior to such date shall be reduced to reflect rental expense associated with any sale-leaseback transaction permitted hereunder on a pro forma basis. ARTICLE XI NEGATIVE COVENANTS Until all of the Obligations have been paid and satisfied in full and the Commitments terminated, unless consent has been obtained in the manner set forth in Section 14.11, the Borrower will not and will not permit any of its Subsidiaries to: SECTION 11.1 Limitations on Debt. Create, incur, assume or suffer to exist any Debt except: (a) the Obligations (excluding Hedging Obligations permitted pursuant to Section 11.1(b)); (b) Debt incurred in connection with a Hedging Agreement with a counterparty and upon terms and conditions (including interest rate) reasonably satisfactory to the Administrative Agent; provided, that any counterparty that is a Lender shall be deemed satisfactory to the Administrative Agent. (c) Debt existing on the Closing Date and not otherwise permitted under this Section 11.1, as set forth on Schedule 7.1(t), and the renewal, refinancing, extension and replacement (but not the increase in the aggregate principal amount) thereof; (d) purchase money Debt of the Borrower and its Subsidiaries, and Debt of the Borrower and its Subsidiaries incurred in connection with Capitalized Leases; (e) unsecured Debt of the Borrower and the Subsidiary Guarantors not otherwise permitted hereunder in an aggregate amount not to exceed $15,000,000 on any date of determination; (f) the Senior Subordinated Notes and other Subordinated Debt; provided, however, (i) that no Default or Event of Default shall have occurred and be continuing and would be caused by the issuance of such Subordinated Debt and (ii) the Administrative Agent shall have received satisfactory written evidence that the Borrower would be in compliance with all covenants contained in this Agreement on a pro forma basis after giving effect to the issuance of any such Subordinated Debt; 63 (g) Guaranty Obligations (including, without limitation, the Subsidiary Guaranteed Obligations) in favor of the Administrative Agent for the benefit of the Administrative Agent and the Lenders; (h) Guaranty Obligations with respect to Debt permitted pursuant to subsections (a) through (d) and (f) of this Section 11.1; (i) Guaranty Obligations of the Borrower with respect to (i) Debt of the Subsidiary Guarantors permitted pursuant to subsection (e) of this Section 11.1 and (ii) Operating Leases of the Subsidiary Guarantors; (j) Guaranty Obligations with respect to Debt of (i) Franchisees of the Borrower or (ii) any SRLS Entities; provided, that the aggregate outstanding amount of all such Guaranty Obligations plus the aggregate amount of all Permitted Acquisitions permitted under Section 11.3(c) hereunder plus the aggregate outstanding amount of all investments (other than Permitted Acquisitions) permitted under Section 11.3(c) hereunder plus the aggregate amount of all sales permitted under Section 11.5(l) hereunder shall not exceed $30,000,000 in the aggregate during the term of the Credit Facility; and (k) Debt owed by any Subsidiary Guarantor to the Borrower, by the Borrower to any Subsidiary Guarantor, or by any Subsidiary Guarantor to another Subsidiary Guarantor. provided, that no agreement or instrument with respect to Debt permitted to be incurred by this Section shall restrict, limit or otherwise encumber (by covenant or otherwise) the ability of any Subsidiary of the Borrower to make any payment to the Borrower or any of the Subsidiary Guarantors (in the form of dividends, intercompany advances or otherwise) for the purpose of enabling the Borrower to pay the Obligations; provided, further, that notwithstanding any of the foregoing, no SRLS Entity shall be permitted to incur any Guaranty Obligations. SECTION 11.2 Limitations on Liens. Create, incur, assume or suffer to exist, any Lien on or with respect to any of its assets or properties (including, without limitation, shares of capital stock or other ownership interests), real or personal, whether now owned or hereafter acquired, except: (a) Liens for taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or Environmental Laws) not yet due or as to which the period of grace (not to exceed thirty (30) days), if any, related thereto has not expired or which are being contested in good faith and by appropriate proceedings if adequate reserves are maintained to the extent required by GAAP; (b) the claims of materialmen, mechanics, carriers, warehousemen, processors or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, (i) which are not overdue for a period of more than thirty (30) days or (ii) which are being contested in good faith and by appropriate proceedings; 64 (c) Liens consisting of deposits or pledges made in the ordinary course of business in connection with, or to secure payment of, obligations under workers' compensation, unemployment insurance or similar legislation; (d) Liens constituting encumbrances in the nature of zoning restrictions, easements and rights or restrictions of record on the use of real property, which in the aggregate are not substantial in amount and which do not, in any case, materially detract from the value of such property or materially impair the use thereof in the ordinary conduct of business; (e) Liens of the Administrative Agent for the benefit of the Administrative Agent and the Lenders; (f) Liens not otherwise permitted by this Section 11.2 and in existence on the Closing Date and described on Schedule 11.2; and (g) Liens securing Debt permitted under Section 11.1(d); provided that (i) such Liens shall be created within six (6) months from the date of the acquisition or lease of the related asset, (ii) such Liens do not at any time encumber any property other than the property financed by such Debt, (iii) the amount of Debt secured thereby is not increased and (iv) the principal amount of Debt secured by any such Lien shall at no time exceed one hundred percent (100%) of the original purchase price or lease payment amount of such property at the time it was acquired. SECTION 11.3 Limitations on Loans, Advances, Investments and Acquisitions. Purchase, own, invest in or otherwise acquire, directly or indirectly, any capital stock, interests in any partnership or joint venture (including, without limitation, the creation or capitalization of any Subsidiary), evidence of Debt or other obligation or security, substantially all or a portion of the business or assets of any other Person or any other investment or interest whatsoever in any other Person, or make or permit to exist, directly or indirectly, any loans, advances or extensions of credit to, or any investment in cash or by delivery of property in, any Person except: (a) investments (i) in Subsidiaries existing on the Closing Date, (ii)in Subsidiaries (other than the SRLS Entities and any Franchisees) formed or acquired after the Closing Date so long as the Borrower and the Subsidiaries (other than the SRLS Entities and any Franchisees) comply with all applicable provisions of this Credit Agreement (including, without limitation, Section 9.11), (iii)loans made pursuant to Section 11.1(k) hereof, and (iv) the other loans, advances and investments described on Schedule 11.3 existing on the Closing Date; (b) investments in (i)marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency thereof maturing within one year from the date of acquisition thereof, (ii)commercial paper, variable or fixed rate notes maturing no more than six (6) months from the date of acquisition thereof and issued by, or guaranteed by, a domestic corporation rated A-1 (or the equivalent thereof) or better by Standard& Poor's or P-1 (or the equivalent thereof) or better by Moody's Investors Service, Inc., (iii)certificates of deposit maturing no more than one year from the date of creation thereof issued by any of the Lenders or commercial banks incorporated under the laws of the United States of America, each having combined capital, surplus and undivided profits of not less than $500,000,000 and having a 65 rating of "A" or better by a nationally recognized rating agency; provided, that the aggregate amount invested in such certificates of deposit shall not at any time exceed $5,000,000 for any one such certificate of deposit and $10,000,000 for any one such bank, (iv)time deposits maturing no more than thirty (30) days from the date of creation thereof with commercial banks or savings banks or savings and loan associations each having membership either in the FDIC or the deposits of which are insured by the FDIC and in amounts not exceeding the maximum amounts of insurance thereunder or (v) repurchase agreements with a Lender or a bank or trust company or a 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 (such investments described in items (i) through (v) above, "Cash Equivalents"); (c) investments by the Borrower or any of the Subsidiary Guarantors in the form of acquisitions of a substantially similar business or line of business (whether by the acquisition of capital stock, assets or any combination thereof) of any other Person (each, a "Permitted Acquisition") and other investments by the Borrower or any of the Subsidiary Guarantors in (i) Franchisees of the Borrower or (ii) any SRLS Entities; provided, however, that the aggregate amount of all such Permitted Acquisitions permitted under this Section 11.3(c) plus the aggregate outstanding amount of all investments (other than Permitted Acquisitions) permitted under Section this 11.3(c) plus the aggregate outstanding amount of all Guaranty Obligations permitted under Section 11.1(j) hereunder plus the aggregate amount of all sales permitted under Section 11.5(l) hereunder shall not exceed $30,000,000 in the aggregate during the term of the Credit Facility; (d) Hedging Agreements permitted pursuant to Section 11.1; (e) purchases of assets in the ordinary course of business; (f) other loans, investments and advances in an aggregate amount not to exceed $500,000 on any date of determination; and (g) investments in "rabbi trusts" made by the Borrower or any Subsidiary Guarantor in connection with executive deferred compensation arrangements entered into by the Borrower or such Subsidiary Guarantor in the ordinary course of business consistent with past practice. SECTION 11.4 Limitations on Mergers and Liquidation. Merge, consolidate or enter into any similar combination with any other Person or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution) except: (a) any Subsidiary Guarantor of the Borrower may merge with the Borrower or any other Subsidiary Guarantor of the Borrower; provided that in any merger involving the Borrower, the Borrower shall be the surviving entity; (b) any Subsidiary Guarantor of the Borrower may merge into the Person such Subsidiary Guarantor was formed to acquire in connection with a Permitted Acquisition; provided that the Subsidiary Guarantor shall be the surviving entity; and 66 (c) any Subsidiary Guarantor of the Borrower may wind-up into the Borrower or any other Subsidiary Guarantor and any Foreign Subsidiary of the Borrower may wind-up into the Borrower or any Subsidiary Guarantor. SECTION 11.5 Limitations on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, the sale of any receivables and leasehold interests and any sale-leaseback or similar transaction), whether now owned or hereafter acquired except: (a) the sale of inventory in the ordinary course of business; (b) the sale of obsolete assets no longer used or usable in the business of the Borrower or any of its Subsidiaries; (c) the transfer of assets to the Borrower or any Subsidiary Guarantor of the Borrower pursuant to Section 11.4; (d) the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; (e) the disposition of any Hedging Agreement; (f) sales of real property acquired before the Closing Date made in connection with sale-leaseback transactions consummated at arms-length after the Closing Date on terms and conditions reasonably satisfactory to the Administrative Agent so long as (i) the Borrower shall have demonstrated to the Administrative Agent pro forma compliance with each covenant contained in, and in the manner set forth on, Article X prior to the consummation of such sale-leaseback transaction, (ii) that no Default or Event of Default shall have occurred and be continuing both before and after giving effect thereto, and (iii) the aggregate amount of Net Cash Proceeds resulting from all such sale-leaseback transactions shall not exceed an aggregate amount of $35,000,000 during the term of the Credit Facility; (g) sales of assets made in connection with store closings and store relocations in an aggregate annual amount not to exceed $5,000,000; (h) sales by Stoney River Management Company, Inc. of up to 6% of the membership interests in each of the SRLS Entities, to the general manager of each such entity pursuant to, and in accordance with, the terms and provisions set forth in each such entity's operating agreement; (i) sales made in connection with Build-to-Suit Sale-Leaseback Transactions; provided that (i) no Default or Event of Default has occurred and is continuing both before and after giving effect thereto and (ii) the Borrower is in compliance with all covenants contained in this Agreement on a pro forma basis after giving effect to the contemplated Build-to-Suit Sale-Leaseback Transaction; 67 (j) sales of real property acquired after the Closing Date made in connection with sale-leaseback transactions that do not otherwise qualify as Build-to-Suit Sale-Leaseback Transactions hereunder so long as (i) no Default or Event of Default has occurred and is continuing both before and after giving effect thereto, (ii) the Borrower is in compliance with all covenants contained in this Agreement on a pro forma basis after giving effect to such sale-leaseback transaction and (iii) the aggregate amount of all such sale-leaseback transactions does not exceed $25,000,000 during the term of the Credit Facility; (k) the Sale-Leaseback Facility; (l) sales to Franchisees or any SRLS Entities of (i) Borrower's existing restaurant facility in Jonesboro, Arkansas, and (ii) other assets; provided, that the aggregate amount of all such sales plus the aggregate outstanding amount of all Guaranty Obligations permitted under Section 11.1(j) hereunder plus the aggregate amount of all Permitted Acquisitions permitted under Section 11.3(c) hereunder plus the aggregate outstanding amount of all investments (other than Permitted Acquisitions) permitted under Section 11.3(c) hereunder shall not exceed $30,000,000 in the aggregate during the term of the Credit Facility; and (m) sales by OCI, Inc. of all or any part of (i) the shares of common stock of J. Alexander Corporation, and/or (ii) the investments in the Evergreen MMF, both as more particularly described on Schedule 11.3. Upon the consummation of sales made pursuant to the above Section 11.5, and upon the request of the Borrower, the Administrative Agent and the Lenders will release their liens on the applicable property and the Administrative Agent shall execute such documents as may be necessary to evidence such releases, all such documents to be in form and substance satisfactory to the Administrative Agent. SECTION 11.6 Limitations on Dividends and Distributions. Declare or pay any dividends upon any of its capital stock or any other ownership interests; purchase, redeem, retire or otherwise acquire, directly or indirectly, any shares of its capital stock or other ownership interests, or make any distribution of cash, property or assets among the holders of shares of its capital stock or other ownership interests, or make any change in its capital structure; provided that: (a) the Borrower or any Subsidiary may pay dividends in shares of its own capital stock, membership interests, or other ownership units; and (b) any Subsidiary may pay cash dividends to the Borrower or to its parent Subsidiary; (c) the Borrower may redeem and repurchase shares of its stock pursuant to a repurchase program authorized from time to time by its Board of Directors in an aggregate amount not to exceed $25,000,000 over the term of the Credit Facility; and 68 (d) the Borrower may accept in payment of the exercise price of stock options granted to employees shares of its stock owned by the optionee. SECTION 11.7 Limitations on Exchange and Issuance of Ownership Interests. Issue, sell or otherwise dispose of any class or series of capital stock or other ownership interests that, by its terms or by the terms of any security into which it is convertible or exchangeable, is, or upon the happening of an event or passage of time would be, (a) convertible or exchangeable into Debt or (b) required to be redeemed or repurchased, including at the option of the holder, in whole or in part, or has, or upon the happening of an event or passage of time would have, a redemption or similar payment due. SECTION 11.8 Transactions with Affiliates. Except for transactions permitted by 11.3, 11.6 and 11.7, directly or indirectly (a) make any loan or advance to, or purchase or assume any note or other obligation to or from, any of its officers, directors, shareholders or other Affiliates, or to or from any member of the immediate family of any of its officers, directors, shareholders or other Affiliates, or subcontract any operations to any of its Affiliates or (b) enter into, or be a party to, any other transaction not described in clause (a) above with any of its Affiliates, except pursuant to the reasonable requirements of its business and upon fair and reasonable terms that are no less favorable to it than it would obtain in a comparable arm's length transaction with a Person not its Affiliate. SECTION 11.9 Certain Accounting Changes; Organizational Documents. (a) Change its Fiscal Year end or any Fiscal Quarter end, or make any change in its accounting treatment and reporting practices except consistent with GAAP or (b) amend, modify or change its articles of incorporation (or corporate charter or other similar organizational documents) or amend, modify or change its bylaws (or other similar documents) in any manner adverse in any respect to the rights or interests of the Lenders. SECTION 11.10 Amendments; Payments and Prepayments of Subordinated Debt. Amend or modify (or permit the modification or amendment of) any of the terms or provisions of the Senior Subordinated Notes or any other Subordinated Debt, or cancel or forgive, make any payment or prepayment on, or redeem or acquire for value (including without limitation by way of depositing with any trustee with respect thereto money or securities before due for the purpose of paying when due) the Senior Subordinated Notes or any other Subordinated Debt, other than, so long as no Default or Event of Default shall have occurred and be continuing or would be caused thereby, (i) regularly scheduled payments of accrued interest on the Senior Subordinated Notes (including additional interest required to be paid on account of a registration default arising under the registration rights agreements in connection with the Senior Subordinated Notes in an amount not to exceed more than one percent (1%) per year per annum) to the extent such payments are permitted under the subordination provisions thereof, (ii) Permitted Note Repurchases and (iii) principal payments or prepayments of intercompany Subordinated Debt between the Borrower and the Subsidiary Guarantors. SECTION 11.11 Restrictive Agreements. 69 (a) Negative Pledges. Enter into any Debt which (i) contains any negative pledge on assets or any covenants more restrictive than the provisions of Articles IX, X and XI hereof, or (ii) restricts, limits or otherwise encumbers its ability to incur Liens on or with respect to any of its assets or properties other than the assets or properties securing such Debt (excluding, solely for the purposes of this Section 11.11(a), the Senior Subordinated Notes so long as such Senior Subordinated Notes do not restrict, limit or otherwise encumber the ability of the Borrower or any Subsidiary to incur Liens in favor of the Administrative Agent or any Lender under this Credit Facility to the extent the Debt under the Credit Agreement is permitted under the Senior Subordinated Notes). (b) Restrictions on Dividends. Enter into or permit to exist any agreement which impairs or limits the ability of any Subsidiary of the Borrower to pay dividends or distributions to the Borrower. SECTION 11.12 Nature of Business. Alter the character or conduct of the business conducted by the Borrower and its Subsidiaries as of the Closing Date. SECTION 11.13 Impairment of Security Interests. Take or omit to take any action, which might or would have the result of materially impairing the security interests in favor of the Administrative Agent with respect to the Collateral or grant to any Person (other than the Administrative Agent for the benefit of itself and the Lenders pursuant to the Security Documents) any interest whatsoever in the Collateral, except for Liens permitted under Section 11.2 and asset sales permitted under Section 11.5. SECTION 11.14 SRLS Entities Restrictions. (a) Materially change or alter the character or conduct of business by any SRLS Entity from and after the Closing Date, (b) except as expressly permitted under this Agreement, increase the assets, liabilities or revenue of any SRLS Entity from and after the Closing Date or (c) permit any SRLS Entity to create, incur, assume or suffer to exist any Guaranty Obligations at any time. SECTION 11.15 Franchisees Restrictions. Permit the amount of total assets of all Franchisees that are Subsidiaries, as determined in accordance with GAAP, to exceed $25,000,000 in the aggregate. ARTICLE XII DEFAULT AND REMEDIES SECTION 12.1 Events of Default. Each of the following shall constitute an Event of Default, whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment or order of any court or any order, rule or regulation of any Governmental Authority or otherwise: 70 (a) Default in Payment of Principal of Loans and Reimbursement Obligations. The Borrower shall default in any payment of principal of any Loan, Note or Reimbursement Obligation when and as due (whether at maturity, by reason of acceleration or otherwise). (b) Other Payment Default. The Borrower shall default in the payment when and as due (whether at maturity, by reason of acceleration or otherwise) of interest on any Loan, Note or Reimbursement Obligation or the payment of any other Obligation, and such default shall continue unremedied for five (5) Business Days. (c) Misrepresentation. Any representation, warranty, certification or statement of fact made or deemed to be made by or on behalf of the Borrower or any of its Subsidiaries under this Agreement, any other Loan Document or any document delivered in connection herewith or therewith that is subject to materiality or Material Adverse Effect qualifications, be incorrect or misleading in any material respect when made or deemed made, or any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any Subsidiary under this Agreement, any other Loan Document, or in any document delivered in connection herewith or therewith that is not subject to materiality or Material Adverse Effect qualification shall be incorrect or misleading in any material respect when made or deemed made. (d) Default in Performance of Certain Covenants. The Borrower shall default in the performance or observance of any covenant or agreement contained in Sections 8.1, 8.2, 8.5(e)(i), 9.10 9.11 or 9.12 or Articles X or XI of this Agreement. (e) Default in Performance of Other Covenants and Conditions. The Borrower or any Subsidiary thereof shall default in the performance or observance of any term, covenant, condition or agreement contained in this Agreement (other than as specifically provided for otherwise in this Section 12.1) or any other Loan Document and such default shall continue for a period of thirty (30) days after written notice thereof has been given to the Borrower by the Administrative Agent. (f) Hedging Agreement. The Borrower shall default in the performance or observance of any terms, covenant, condition or agreement (after giving effect to any applicable grace or cure period) under any Hedging Agreement and such default causes the termination of such Hedging Agreement or permits any counterparty to such Hedging Agreement to terminate any such Hedging Agreement. (g) Debt Cross-Default. The Borrower or any of its Subsidiaries shall (i) default in the payment of any Debt (other than the Notes or any Reimbursement Obligation) the aggregate outstanding amount of which Debt is in excess of $5,000,000 beyond the period of grace if any, provided in the instrument or agreement under which such Debt was created, or (ii) default in the observance or performance of any other agreement or condition relating to any Debt (other than the Notes or any Reimbursement Obligation) the aggregate outstanding amount of which Debt is in excess of $5,000,000 or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Debt (or a trustee 71 or agent on behalf of such holder or holders) to cause, with the giving of notice if required, any such Debt to become due prior to its stated maturity (any applicable grace period having expired). (h) Other Cross-Defaults. The Borrower or any of its Subsidiaries shall default in the payment when due, or in the performance or observance, of any obligation or condition of any Material Contract which default is not cured within any applicable grace period, unless, but only as long as, the existence of any such default is being contested by the Borrower or any such Subsidiary in good faith by appropriate proceedings and adequate reserves in respect thereof have been established on the books of the Borrower or such Subsidiary to the extent required by GAAP. (i) Change in Control. (i) Any person or group of persons (within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended) shall obtain ownership or control in one or more series of transactions of more than twenty percent (20%) of the common stock or twenty percent (20%) of the voting power of the Borrower entitled to vote in the election of members of the board of directors of the Borrower, (ii) there shall have occurred under any indenture or other instrument evidencing any Debt in excess of $1,000,000 any "change in control" (as defined in such indenture or other evidence of Debt) obligating the Borrower to repurchase, redeem or repay all or any part of the Debt or capital stock provided for therein, or (iii) any "Change of Control" under any Subordinated Debt permitted under this Agreement of the Borrower or its Subsidiaries, including, without limitation, the Senior Subordinated Notes, or any document executed in connection therewith (any such event, a "Change in Control"). (j) Voluntary Bankruptcy Proceeding. The Borrower or any Subsidiary thereof shall (i) commence a voluntary case under the federal bankruptcy laws (as now or hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition for adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of, or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a substantial part of its property, domestic or foreign, (v) admit in writing its inability to pay its debts as they become due, (vi) make a general assignment for the benefit of creditors, or (vii) take any corporate action for the purpose of authorizing any of the foregoing. (k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be commenced against the Borrower or any Subsidiary thereof in any court of competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the like for the Borrower or any Subsidiary thereof or for all or any substantial part of their respective assets, domestic or foreign, and such case or proceeding shall continue without dismissal or stay for a period of sixty (60) consecutive days, or an order granting the 72 relief requested in such case or proceeding (including, but not limited to, an order for relief under such federal bankruptcy laws) shall be entered. (l) Failure of Agreements. Any material provision of this Agreement or any material provision of any other Loan Document shall for any reason cease to be valid and binding on the Borrower or Subsidiary party thereto or any such Person shall so state in writing, or any Loan Document shall for any reason cease to create a valid and perfected first priority Lien on, or security interest in, any of the collateral purported to be covered thereby, in each case other than in accordance with the express terms hereof or thereof. (m) Termination Event. The occurrence of any of the following events: (i) the Borrower or any ERISA Affiliate fails to make full payment when due of all amounts which, under the provisions of any Pension Plan or Section 412 of the Code, the Borrower or any ERISA Affiliate is required to pay as contributions thereto, (ii) an accumulated funding deficiency in excess of $1,000,000 occurs or exists, whether or not waived, with respect to any Pension Plan, (iii) a Termination Event or (iv) the Borrower or any ERISA Affiliate as employers under one or more Multiemployer Plans makes a complete or partial withdrawal from any such Multiemployer Plan and the plan sponsor of such Multiemployer Plans notifies such withdrawing employer that such employer has incurred a withdrawal liability requiring payments in an amount exceeding $1,000,000. (n) Judgment. A judgment or order for the payment of money which causes the aggregate amount of all such judgments to exceed $2,500,000 in any Fiscal Year shall be entered against the Borrower or any of its Subsidiaries by any court and such judgment or order shall continue without discharge or stay for a period of thirty (30) days. (o) Environmental. Any one or more Environmental Claims shall have been asserted against the Borrower or any of its Subsidiaries; the Borrower and its Subsidiaries would be reasonably likely to incur liability as a result thereof; and such liability would be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect. SECTION 12.2 Remedies. Upon the occurrence of an Event of Default, with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to the Borrower: (a) Acceleration; Termination of Facilities. Declare the principal of and interest on the Loans, the Notes and the Reimbursement Obligations at the time outstanding, and all other amounts owed to the Lenders and to the Administrative Agent under this Agreement or any of the other Loan Documents (including, without limitation, all L/C Obligations, whether or not the beneficiaries of the then outstanding Letters of Credit shall have presented or shall be entitled to present the documents required thereunder) and all other Obligations (other than Hedging Obligations), to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or the other Loan Documents to the contrary notwithstanding, and terminate the Credit Facility and any right of the Borrower to request borrowings or Letters of Credit thereunder; provided, that upon the occurrence of an Event of 73 Default specified in Section 12.1(j) or (k), the Credit Facility shall be automatically terminated and all Obligations (other than Hedging Obligations) shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are expressly waived, anything in this Agreement or in any other Loan Document to the contrary notwithstanding. (b) Letters of Credit. With respect to all Letters of Credit with respect to which presentment for honor shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, the Borrower shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such Letters of Credit, and the unused portion thereof after all such Letters of Credit shall have expired or been fully drawn upon, if any, shall be applied to repay the other Obligations on a pro rata basis. After all such Letters of Credit shall have expired or been fully drawn upon, the Reimbursement Obligation shall have been satisfied and all other Obligations shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to the Borrower. (c) Rights of Collection. Exercise on behalf of the Lenders all of its other rights and remedies under this Agreement, the other Loan Documents and Applicable Law, in order to satisfy all of the Borrower's Obligations. SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc. The enumeration of the rights and remedies of the Administrative Agent and the Lenders set forth in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, any of its Subsidiaries, the Administrative Agent and the Lenders or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Loan Documents or to constitute a waiver of any Event of Default. ARTICLE XIII THE ADMINISTRATIVE AGENT SECTION 13.1 Appointment. Each of the Lenders hereby irrevocably designates and appoints Wachovia as Administrative Agent of such Lender under this Agreement and the other Loan Documents for the term hereof and each such Lender irrevocably authorizes 74 Wachovia, as Administrative Agent for such Lender, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and such other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or such other Loan Documents, the Administrative Agent 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 Agreement or the other Loan Documents or otherwise exist against the Administrative Agent. Any reference to the Administrative Agent in this Article XIII shall be deemed to refer to the Administrative Agent solely in its capacity as Administrative Agent and not in its capacity as a Lender. SECTION 13.2 Delegation of Duties. The Administrative Agent may execute any of its respective duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by the Administrative Agent with reasonable care. SECTION 13.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or the other Loan Documents (except for actions occasioned directly by its or such Person's own gross negligence or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any of its Subsidiaries or any officer thereof contained in this Agreement or the other Loan Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or the other Loan Documents or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or the other Loan Documents or for any failure of the Borrower or any of its Subsidiaries to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement, or to inspect the properties, books or records of the Borrower or any of its Subsidiaries. SECTION 13.4 Reliance by the Administrative Agent. The Administrative Agent 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 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 the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless such Note shall have been transferred in accordance with Section 14.10. The Administrative Agent shall be fully justified in failing or refusing to take any action under this 75 Agreement and the other Loan Documents unless it shall first receive such advice or concurrence of the Required Lenders (or, when expressly required hereby or by the relevant other Loan Documents, all the 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 except for its own gross negligence or willful misconduct. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes in accordance with a request of the Required Lenders (or, when expressly required hereby, all the Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Notes. SECTION 13.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless it has received notice from a Lender or the Borrower referring to this Agreement, 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, it shall promptly give 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 (or, when expressly required hereby, all the Lenders); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders, except to the extent that other provisions of this Agreement expressly require that any such action be taken or not be taken only with the consent and authorization or the request of the Lenders or Required Lenders, as applicable. SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Borrower or any of its Subsidiaries, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent 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, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries and made its own decision to make its Loans and issue or participate in Letters of Credit hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent 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 Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder or by the other Loan Documents, the Administrative Agent shall 76 not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, financial and other condition or creditworthiness of the Borrower or any of its Subsidiaries which may come into the possession of the Administrative Agent or any of its respective officers, directors, employees, agents, attorneys-in-fact, Subsidiaries or Affiliates. SECTION 13.7 Indemnification. The Lenders agree to indemnify the Administrative Agent in its capacity as such and (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to the respective amounts of their Revolving Credit Commitment Percentages 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 the payment of the Notes or any Reimbursement Obligation) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement or the other Loan Documents, or any documents, reports or other information provided to the Administrative Agent or any Lender or contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative 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 solely from the Administrative Agent's bad faith, gross negligence or willful misconduct. The agreements in this Section 13.7 shall survive the payment of the Notes, any Reimbursement Obligation and all other amounts payable hereunder and the termination of this Agreement. SECTION 13.8 The Administrative Agent in Its Individual Capacity. The Administrative Agent and its respective Subsidiaries and Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Administrative Agent were not the Administrative Agent hereunder. With respect to any Loans made or renewed by it and any Note issued to it and with respect to any Letter of Credit issued by it or participated in by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity. SECTION 13.9 Resignation of the Administrative Agent; Successor Administrative Agent. Subject to the appointment and acceptance of a successor as provided below, the Administrative Agent may resign at any time by giving notice thereof to the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent, which successor shall have minimum capital and surplus of at least $500,000,000. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the Administrative Agent's giving of notice of resignation, then the Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent, which successor shall have minimum capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all rights, 77 powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Section 13.9 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. SECTION 13.10 Co-Syndication Agents and Co-Documentation Agents. The Co-Syndication Agents and the Co-Documentation Agents, in their respective capacities as syndication and documentation agents shall have no duties or responsibilities under this Agreement or any other Loan Document. ARTICLE XIV MISCELLANEOUS SECTION 14.1 Notices. (a) Method of Communication. Except as otherwise provided in this Agreement, all notices and communications hereunder shall be in writing (for purposes hereof, the term "writing" shall include information in electronic format such as electronic mail and internet web pages), or by telephone subsequently confirmed in writing. Any notice shall be effective if delivered by hand delivery or sent via electronic mail, posting on an internet web page, telecopy, recognized overnight courier service or certified mail, return receipt requested, and shall be presumed to be received by a party hereto (i) on the date of delivery if delivered by hand or sent by electronic mail, posting on an internet web page (provided the recipients of such notice have been made specifically aware of the posting of such notice by any other method permitted by this Section 14.1(a)), telecopy, (ii) on the next Business Day if sent by recognized overnight courier service and (iii) on the third Business Day following the date sent by certified mail, return receipt requested. A telephonic notice to the Administrative Agent as understood by the Administrative Agent will be deemed to be the controlling and proper notice in the event of a discrepancy with or failure to receive a confirming written notice. (b) Addresses for Notices. Notices to any party shall be sent to it at the following addresses, or any other address as to which all the other parties are notified in writing. If to the Borrower: O'Charley's Inc. 3038 Sidco Drive Nashville, Tennessee 37204 Attention: Mr. Chad Fitzhugh, Chief Financial Officer Telephone No.: (615) 782-8818 Telecopy No.: (615) 782-5031 With copies to: Bass, Berry & Sims, PLC 315 Deaderick Street Nashville, TN 37238 78 Attention: J. Page Davidson Telephone No.: (615) 742-6200 Telecopy No.: (615) 742-6293 If to Wachovia as Administrative Agent: Wachovia Bank, National Association Charlotte Plaza, CP-8 201 South College Street Charlotte, North Carolina 28288-0680 Attention: Syndication Agency Services Telephone No.: (704) 374-2698 Telecopy No.: (704) 383-0288 With a copy to: Wachovia Bank, National Association 301 South College Street, 5th Floor Charlotte, North Carolina 28288-0680 Attention: Mr. Louis K. Beasley, III Telephone No.: (704) 374-3070 Telecopy No.: (704) 383-8494 If to any Lender: To the address set forth on the Register. (c) Administrative Agent's Office. The Administrative Agent hereby designates its office located at the address set forth above, or any subsequent office which shall have been specified for such purpose by written notice to the Borrower and Lenders, as the Administrative Agent's Office referred to herein, to which payments due are to be made and at which Loans will be disbursed and Letters of Credit issued. SECTION 14.2 Expenses; Indemnity. The Borrower will (a) pay all out-of-pocket expenses (including, without limitation, all costs of electronic or internet distribution of any information hereunder) of the Administrative Agent in connection with (i) the preparation, execution and delivery of this Agreement and each other Loan Document, whenever the same shall be executed and delivered, including, without limitation, all out-of-pocket syndication and due diligence expenses and reasonable fees and disbursements of counsel for the Administrative Agent and (ii) the preparation, execution and delivery of any waiver, amendment or consent by the Administrative Agent or the Lenders relating to this Agreement or any other Loan Document, including, without limitation, reasonable fees and disbursements of counsel for the Administrative Agent, (b) pay all reasonable out-of-pocket expenses of the Administrative Agent and each Lender actually incurred in connection with the administration and enforcement of any rights and remedies of the Administrative Agent and Lenders under the Credit Facility, including, without limitation, in connection with any workout, restructuring, bankruptcy or other similar proceeding, creating and perfecting Liens in favor of Administrative Agent on behalf of Lenders pursuant to any Security Document, enforcing any Obligations of, or collecting any payments due from, the Borrower or any Subsidiary Guarantor by reason of an Event of Default (including in connection with the sale of, collection from, or other realization upon any of the 79 Collateral or the enforcement of the Subsidiary Guaranty Agreement); consulting with appraisers, accountants, engineers, attorneys and other Persons concerning the nature, scope or value of any right or remedy of the Administrative Agent or any Lender hereunder or under any other Loan Document or any factual matters in connection therewith, which expenses shall include without limitation the reasonable fees and disbursements of such Persons, and (c) defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective parents, Subsidiaries, Affiliates, employees, agents, trustees and advisors, officers and directors, from and against any obligations, losses, penalties, fines, liabilities, settlements, damages, actions, judgments, suits, disbursements, costs and expenses, suffered by any such Person in connection with any claim (including, without limitation, any Environmental Claims), investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender is a party thereto) and the prosecution and defense thereof, arising out of or in any way connected with the Loans, this Agreement, any other Loan Document, or any documents, reports or other information provided to the Administrative Agent or any Lender or contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby, including, without limitation, reasonable attorney's and consultant's fees, except to the extent that any of the foregoing directly result from the gross negligence or willful misconduct of the party seeking indemnification therefor. SECTION 14.3 Set-off. In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon and after the occurrence of any Event of Default and during the continuance thereof, the Lenders and any assignee or participant of a Lender in accordance with Section 14.10 are hereby authorized by the Borrower at any time or from time to time, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, time or demand, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness at any time held or owing by the Lenders, or any such assignee or participant to or for the credit or the account of the Borrower against and on account of the Obligations irrespective of whether or not (a) the Lenders shall have made any demand under this Agreement or any of the other Loan Documents or (b) the Administrative Agent shall have declared any or all of the Obligations to be due and payable as permitted by Section 12.2 and although such Obligations shall be contingent or unmatured. Notwithstanding the preceding sentence, each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. SECTION 14.4 Governing Law. This Agreement, the Notes and the other Loan Documents, unless otherwise expressly set forth therein, shall be governed by, construed and enforced in accordance with and all issues related to the legality, validity or enforceability hereof and thereof shall be determined under the laws of the State of New York (including Section5-1401 and Section5-1402 of the General Obligations Law of the State of New York), without regard to the conflicts of law principles thereof. SECTION 14.5 Jurisdiction and Venue. 80 (a) Jurisdiction. The Borrower hereby irrevocably consents to the personal jurisdiction of the state and federal courts located in New York, New York and Mecklenburg County, North Carolina (and any courts from which an appeal from any of such courts must or may be taken), in any action, claim or other proceeding arising out of any dispute in connection with this Agreement, the Notes and the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations. The Borrower hereby irrevocably consents to the service of a summons and complaint and other process in any action, claim or proceeding brought by the Administrative Agent or any Lender in connection with this Agreement, the Notes or the other Loan Documents, any rights or obligations hereunder or thereunder, or the performance of such rights and obligations, on behalf of itself or its property, in the manner specified in Section 14.1. Nothing in this Section 14.5 shall affect the right of the Administrative Agent or any Lender to serve legal process in any other manner permitted by Applicable Law or affect the right of the Administrative Agent or any Lender to bring any action or proceeding against the Borrower or its properties in the courts of any other jurisdictions. (b) Venue. The Borrower hereby irrevocably waives any objection it may have now or in the future to the laying of venue in the aforesaid jurisdictions in any action, claim or other proceeding arising out of or in connection with this Agreement, any other Loan Document or the rights and obligations of the parties hereunder or thereunder. The Borrower irrevocably waives, in connection with such action, claim or proceeding, any plea or claim that the action, claim or other proceeding has been brought in an inconvenient forum. SECTION 14.6 Binding Arbitration; Waiver of Jury Trial. (a) Binding Arbitration. Upon demand of any party, whether made before or after institution of any judicial proceeding, any dispute, claim or controversy arising out of, connected with or relating to this Agreement or any other Loan Document ("Disputes"), between or among parties hereto and to the other Loan Documents shall be resolved by binding arbitration as provided herein. Institution of a judicial proceeding by a party does not waive the right of that party to demand arbitration hereunder. Disputes may include, without limitation, tort claims, counterclaims, claims brought as class actions, claims arising from Loan Documents executed in the future, disputes as to whether a matter is subject to arbitration, or claims concerning any aspect of the past, present or future relationships arising out of or connected with the Loan Documents. Arbitration shall be conducted under and governed by the Commercial Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration Association (the "AAA") and the Federal Arbitration Act. All arbitration hearings shall be conducted in New York, New York or Charlotte, North Carolina. The expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules shall be applicable to claims of less than $1,000,000. All applicable statutes of limitations shall apply to any Dispute. A judgment upon the award may be entered in any court having jurisdiction. Notwithstanding anything foregoing to the contrary, any arbitration proceeding demanded hereunder shall begin within ninety (90) days after such demand therefor and shall be concluded within one hundred twenty (120) days after such demand. These time limitations may not be extended unless a party hereto shows cause for extension and then such extension shall not exceed a total of sixty (60) days. The panel from which all arbitrators are selected shall be comprised of licensed attorneys selected from the 81 Commercial Financial Dispute Arbitration Panel of the AAA. The single arbitrator selected for expedited procedure shall be a retired judge from the highest court of general jurisdiction, state or federal, of the state where the hearing will be conducted. The parties hereto do not waive any applicable Federal or state substantive law except as provided herein. Notwithstanding the foregoing, this paragraph shall not apply to any Hedging Agreement. (b) Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER AND THE BORROWER HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. (c) Preservation of Certain Remedies. Notwithstanding the preceding binding arbitration provisions, the parties hereto and the other Loan Documents preserve, without diminution, certain remedies that such Persons may employ or exercise freely, either alone, in conjunction with or during a Dispute. Each such Person shall have and hereby reserves the right to proceed in any court of proper jurisdiction or by self help to exercise or prosecute the following remedies, as applicable: (i) all rights to foreclose against any real or personal property or other security by exercising a power of sale granted in the Loan Documents or under Applicable Law or by judicial foreclosure and sale, including a proceeding to confirm the sale, (ii) all rights of self help including peaceful occupation of property and collection of rents, set off, and peaceful possession of property, (iii) obtaining provisional or ancillary remedies including injunctive relief, sequestration, garnishment, attachment, appointment of receiver and in filing an involuntary bankruptcy proceeding, and (iv) when applicable, a judgment by confession of judgment. Preservation of these remedies does not limit the power of an arbitrator to grant similar remedies that may be requested by a party in a Dispute. SECTION 14.7 Reversal of Payments. To the extent the Borrower makes a payment or payments to the Administrative Agent for the ratable benefit of the Lenders or the Administrative Agent receives any payment or proceeds of the collateral which payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds received, the Obligations or part thereof intended to be satisfied shall be revived and continued in full force and effect as if such payment or proceeds had not been received by the Administrative Agent. SECTION 14.8 Injunctive Relief; Punitive Damages. (a) Injunctive Relief. The Borrower recognizes that, in the event the Borrower fails to perform, observe or discharge any of its obligations or liabilities under this Agreement, any remedy of law may prove to be inadequate relief to the Lenders. Therefore, the Borrower agrees 82 that the Lenders, at the Lenders' option, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. (b) Punitive Damages. The Administrative Agent, the Lenders and the Borrower (on behalf of itself and its Subsidiaries) hereby agree that no such Person shall have a remedy of punitive or exemplary damages against any other party to a Loan Document and each such Person hereby waives any right or claim to punitive or exemplary damages that it may now have or that may arise in the future in connection with any Dispute, whether such Dispute is resolved through arbitration or judicially. SECTION 14.9 Accounting Matters. All financial and accounting calculations, measurements and computations made for any purpose relating to this Agreement, including, without limitation, all computations utilized by the Borrower or any Subsidiary thereof to determine compliance with any covenant contained herein, shall, except as otherwise expressly contemplated hereby or unless there is an express written direction by the Administrative Agent to the contrary agreed to by the Borrower, be performed in accordance with GAAP as in effect on the Closing Date. In the event that changes in GAAP shall be mandated by the Financial Accounting Standards Board, or any similar accounting body of comparable standing, or shall be recommended by the Borrower's certified public accountants, to the extent that such changes would modify such accounting terms or the interpretation or computation thereof, such changes shall be followed in defining such accounting terms only from and after the date the Borrower and the Required Lenders shall have amended this Agreement to the extent necessary to reflect any such changes in the financial covenants and other terms and conditions of this Agreement. SECTION 14.10 Successors and Assigns; Participations. (a) Benefit of Agreement. This Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and the Lenders, all future holders of the Notes, and their respective successors and assigns, except that the Borrower shall not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Assignment by Lenders. Each Lender may, in the ordinary course of its business and in accordance with Applicable Law, sell or assign to any Lender, any Affiliate of a Lender and with the consent of the Borrower (so long as no Default or Event of Default has occurred and is continuing) and the consent of the Administrative Agent, which consents shall not be unreasonably withheld or delayed, assign to one or more other Eligible Assignees (any of the foregoing assignees or purchasers, a "Purchasing Lender") all or a portion of its interests, rights and obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of the Extensions of Credit at the time owing to it and the Notes held by it); provided that: (i) each such assignment shall be of a constant, and not a varying, percentage of the Revolving Credit Commitment of the assigning Lender's rights and obligations under this Agreement; 83 (ii) if less than all of the assigning Lender's Revolving Credit Commitment is to be assigned, the Commitment so assigned shall not be less than $5,000,000 with respect to the Revolving Credit Facility, unless the Administrative Agent consents in writing to a lesser amount; (iii) the Purchasing Lender shall have delivered to the Administrative Agent all United States Internal Revenue Service Forms required pursuant to Section 5.11(e) and all of the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance substantially in the form of Exhibit G attached hereto (or such other form as may be specified by the Administrative Agent from time to time, an "Assignment and Acceptance"), together with (to the extent requested by any Purchasing Lender) any Note or Notes subject to such assignment; (iv) no assignment of a Revolving Credit Commitment, or participation in L/C Obligations or Swingline Loans shall be made without the prior written consent of the Administrative Agent, the Swingline Lender, the Issuing Lender and (so long as no Default or Event of Default has occurred and is continuing) the Borrower (which consents shall not be unreasonably withheld); (v) where consent of the Borrower to an assignment to a Purchasing Lender is required hereunder (including consent to an assignment to an Approved Fund), the Borrower shall be deemed to have given its consent five (5) Business Days after the date written notice thereof has been delivered by the assigning Lender (through the Administrative Agent) unless such consent is expressly refused by the Borrower prior to such fifth (5th) Business Day; (vi) such assignment shall not, without the consent of the Borrower, require the Borrower to file a registration statement with the Securities and Exchange Commission or apply to or qualify the Loans or the Notes under the blue sky laws of any state; and (vii) the assigning Lender shall pay to the Administrative Agent an assignment fee of $3,500 upon the execution by such Lender of the Assignment and Acceptance; provided that no such fee shall be payable upon any assignment by a Lender to an Affiliate thereof; and provided further that, in any case of contemporaneous assignments by a Lender (including a group of affiliated Lenders that are funds managed by the same investment advisor) to a single assignee or more than one fund managed by the same investment advisor (which funds are not then Lenders hereunder), only a single $3,500 fee shall be payable for all such contemporaneous assignments. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five (5) Business Days after the execution thereof (unless otherwise agreed to by the Administrative Agent), (A) the Purchasing Lender thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereby and (B) the Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement. 84 (c) Rights and Duties Upon Assignment. By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Purchasing Lender thereunder confirm to and agree with each other and the other parties hereto as set forth in such Assignment and Acceptance. (d) Register. The Administrative Agent shall maintain a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders and the amount of the Extensions of Credit with respect to each Lender from time to time (the "Register"). The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and by any Lender with respect to entries applicable to such Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Issuance of New Notes. Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and a Purchasing Lender together with any Note or Notes (if applicable) subject to such assignment and (if applicable) the written consent to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is substantially in the form of Exhibit G: (i) accept such Assignment and Acceptance; (ii) record the information contained therein in the Register; (iii) give prompt notice thereof to the Lenders and the Borrower; and (iv) promptly deliver a copy of such Assignment and Acceptance to the Borrower. Within five (5) Business Days after receipt of notice, the Borrower shall execute and deliver to the Administrative Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the order of such Purchasing Lender (to the extent requested thereby) in amounts equal to the Revolving Credit Commitment assumed by it pursuant to such Assignment and Acceptance and a new Note or Notes to the order of the assigning Lender (to the extent requested thereby) in an amount equal to the Revolving Credit Commitment retained by it hereunder. Such new Note or Notes shall be in an aggregate principal amount equal to the aggregate principal amount of such surrendered Note or Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the assigned Notes delivered to the assigning Lender. Each surrendered Note or Notes shall be canceled and returned to the Borrower. Notwithstanding anything in this Agreement to the contrary, any Lender which has not been issued a Note or Notes hereunder may at any time deliver a written request for a Note or Notes to the Administrative Agent and the Borrower. Within five (5) Business Days after receipt of notice, the Borrower shall execute and deliver to the Administrative Agent, a Note or Notes (as applicable) to the order of such Lender in amounts equal to the Revolving Credit Commitment of 85 such Lender. Upon receipt thereby, the Administrative Agent shall promptly deliver such Note or Notes to such Lender. (f) Participations. Each Lender may, without notice to or the consent of the Borrower or the Administrative Agent, in the ordinary course of its commercial banking business and in accordance with Applicable Law, sell participations to one or more banks or other entities (any such bank or other entity, a "Participant") in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Extensions of Credit and the Notes held by it); provided that: (i) each such participation shall be in an amount not less than $5,000,000 with respect to the Revolving Credit Facility; (ii) such Lender's obligations under this Agreement (including, without limitation, its Revolving Credit Commitment) shall remain unchanged; (iii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations; (iv) such Lender shall remain the holder of the Notes held by it for all purposes of this Agreement; (v) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement; (vi) such Lender shall not permit such Participant the right to approve any waivers, amendments or other modifications to this Agreement or any other Loan Document other than waivers, amendments or modifications which would reduce the principal of or the interest rate on any Loan or Reimbursement Obligation, extend the term or increase the amount of the Revolving Credit Commitment of such Lender, reduce the amount of any fees to which such Participant is entitled, extend any scheduled payment date for principal of any Loan or, except as expressly contemplated hereby or thereby, release substantially all of the Collateral; and (vii) any such disposition shall not, without the consent of the Borrower, require the Borrower to file a registration statement with the Securities and Exchange Commission to apply to qualify the Loans or the Notes under the blue sky law of any state. The Borrower agrees that each Participant shall be entitled to the benefits of Section 5.7, Section 5.8, Section 5.9, Section 5.10, Section 5.11 and Section 14.3 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section 14.10; provided that a Participant shall not be entitled to receive any greater payment under Section 5.7, Section 5.8, Section 5.9, Section 5.10, and Section 5.11 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's 86 prior written consent and such Participant shall have delivered to the Administrative Agent all United States Internal Revenue Service Forms required pursuant to Section 5.11(e). (g) Disclosure of Information; Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by, or required to be disclosed to, any rating agency, or regulatory or similar authority (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies under this Agreement or under any other Loan Document (or any Hedging Agreement with a Lender or the Administrative Agent) or any action or proceeding relating to this Agreement or any other Loan Document (or any Hedging Agreement with a Lender or the Administrative Agent) or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any purchasing lender, proposed purchasing lender, participant or proposed participant in connection with any assignment, proposed assignment, participation or proposed participation or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower, (h) to Gold Sheets and other similar bank trade publications, such information to consist of deal terms and other information customarily found in such publications, or (i) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, "Information" means all information received from the Borrower or its Subsidiaries relating to the Borrower or its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or its Subsidiaries; provided that, in the case of information received from the Borrower or its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Notwithstanding anything herein to the contrary, "Information" shall not include, and the Borrower, its Subsidiaries, the Administrative Agent, each Lender and the respective Affiliates of each of the foregoing(and the respective partners, directors, officers, employees, agents, advisors and other representatives of the aforementioned Persons), and any other party, may disclose to any and all persons, without limitation of any kind (a) any information with respect to the U.S. federal and state income tax treatment of Loans and/or Letters of Credit and the other transactions contemplated hereby and any facts that may be relevant to understanding the U.S. federal or state income tax treatment of such Loans and/or Letters of Credit and the other transactions ("tax structure"), which facts shall not include for this purpose the names of the parties or any other person named herein, or information that would permit identification of the parties or such other persons, or any pricing terms or other nonpublic 87 business or financial information that is unrelated to such tax treatment or tax structure, and (b) all materials of any kind (including opinions or other tax analyses) that are provided to the Borrower, the Administrative Agent or such Lender relating to such tax treatment or tax structure. (h) Certain Pledges or Assignments. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement or any other Loan Document to secure obligations of such Lender, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment of a security interest shall release a Lender form any of its obligations hereunder or substitute such pledgee or assignee for such Lender as a party hereto. SECTION 14.11 Amendments, Waivers and Consents. Except as set forth below or as specifically provided in any Loan Document, any term, covenant, agreement or condition of this Agreement or any of the other Loan Documents may be amended or waived by the Lenders, and any consent given by the Lenders, if, but only if, such amendment, waiver or consent is in writing signed by the Required Lenders (or by the Administrative Agent with the consent of the Required Lenders) and delivered to the Administrative Agent and, in the case of an amendment, signed by the Borrower; provided, that no amendment, waiver or consent shall: (a) (i) increase the Revolving Credit Commitment of any Lender or increase the amount of any Revolving Credit Loan, (ii) reduce the Revolving Credit Commitment Percentage, rate of interest or fees payable on any Revolving Credit Loan or Reimbursement Obligation, (iii) reduce or forgive the principal amount of any Revolving Credit Loan or the amount of any Reimbursement Obligation, (iv) extend the originally scheduled time or times of payment of the principal of any Revolving Credit Loan or Reimbursement Obligation or the time or times of payment of interest on any Revolving Credit Loan or Reimbursement Obligation or any fee or commission with respect thereto, (v) permit any subordination of the principal or interest on any Revolving Credit Loan or Reimbursement Obligation or (vi) extend the time of the obligation of the Lenders holding Revolving Credit Commitments to make or issue or participate in letters, in each case, without the written consent of each Lender holding Revolving Credit Loans or a Revolving Credit Commitment; (b) (i) release the Borrower from the Obligations (other than Hedging Obligations) hereunder, (ii) permit any assignment (other than as specifically permitted or contemplated in this Agreement) of any of the Borrower's rights and obligations hereunder, (iii) release any material portion of the Collateral or release any Security Document (other than asset sales permitted pursuant to Section 11.5 (which such Collateral may be released upon the consent of the Administrative Agent only) and as otherwise specifically permitted or contemplated in this Agreement or the applicable Security Document), (iv) release any Subsidiary Guarantor from its respective Guaranty Obligations, (v) permit any Liens (other than Permitted Liens) on any Collateral secured under this Credit Facility or (vi) amend the provisions of this Section 14.11 or the definition of Required Lenders, in each case, without the prior written consent of each Lender. 88 In addition, no amendment, waiver or consent to the provisions of Section 5.4 with respect to the pro rata treatment of payments, or Section 5.5 with respect to the application of proceeds, shall be made without the consent of each Lender adversely affected thereby. In addition, no amendment, waiver or consent shall be made to the provisions of (a) Article XIII without the written consent of the Administrative Agent, and (b) Article III without the written consent of the Issuing Lender. SECTION 14.12 Performance of Duties. The Borrower's obligations under this Agreement and each of the other Loan Documents shall be performed by the Borrower at its sole cost and expense. SECTION 14.13 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to the Lenders, the Administrative Agent and any Persons designated by the Administrative Agent or any Lender pursuant to any provisions of this Agreement or any of the other Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied, any of the Commitments remain in effect or the Credit Facility has not been terminated. SECTION 14.14 Survival of Indemnities. Notwithstanding any termination of this Agreement, the indemnities to which the Administrative Agent and the Lenders are entitled under the provisions of this Article XIV and any other provision of this Agreement and the other Loan Documents shall continue in full force and effect and shall protect the Administrative Agent and the Lenders against events arising after such termination as well as before. SECTION 14.15 Titles and Captions. Titles and captions of Articles, Sections and subsections in, and the table of contents of, this Agreement are for convenience only, and neither limit nor amplify the provisions of this Agreement. SECTION 14.16 Severability of Provisions. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 14.17 Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. SECTION 14.18 Term of Agreement. This Agreement shall remain in effect from the Closing Date through and including the date upon which all Obligations arising hereunder or under any other Loan Document shall have been indefeasibly and irrevocably paid and satisfied in full and all Commitments have been terminated. The Administrative Agent is hereby permitted to release all Liens on the Collateral in favor of the Administrative Agent, for the ratable benefit of itself and the Lenders, upon repayment of the outstanding principal of and all 89 accrued interest on the Loans, payment of all outstanding fees, expenses and other Obligations hereunder and the termination of the Lender's Commitments. No termination of this Agreement shall affect the rights and obligations of the parties hereto arising prior to such termination or in respect of any provision of this Agreement which survives such termination. SECTION 14.19 Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed this Agreement with its counsel. SECTION 14.20 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. SECTION 14.21 Inconsistencies with Other Documents; Independent Effect of Covenants. (a) In the event there is a conflict or inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall control; provided, that any provision of the Security Documents which imposes additional burdens on the Borrower or its Subsidiaries or further restricts the rights of the Borrower or its Subsidiaries or gives the Administrative Agent or Lenders additional rights shall not be deemed to be in conflict or inconsistent with this Agreement and shall be given full force and effect. (b) This Agreement constitutes an amendment and restatement of the Existing Credit Agreement, as amended, effective from and after the Closing Date. The execution and delivery of this Agreement shall not constitute a novation of any Debt or other obligations owing to the Lenders or the Administrative Agent under the Existing Credit Agreement based on facts or events occurring or existing prior to the execution and delivery of this Agreement. On the Closing Date, the credit facilities described in the Existing Credit Agreement, as amended, shall be amended, supplemented, modified and restated in their entirety by the facilities described herein, and all loans and other obligations of the Borrower outstanding as of such date under the Existing Credit Agreement, as amended, shall be deemed to be loans and obligations outstanding under the corresponding facilities described herein, without any further action by any Person, except that the Administrative Agent shall make such transfers of funds as are necessary in order that the outstanding balance of such Loans, together with any Loans funded on the Closing Date, reflect the Commitments of the Lenders hereunder. (c) The Borrower expressly acknowledges and agrees that each covenant contained in Articles IX, X, or XI hereof shall be given independent effect. Accordingly, the Borrower shall not engage in any transaction or other act otherwise permitted under any covenant contained in Articles IX, X, or XI if, before or after giving effect to such transaction or act, the Borrower shall or would be in breach of any other covenant contained in Articles IX, X, or XI. SECTION 14.22 Reaffirmation of Security Documents and Loan Documents. The Borrower hereby reaffirms and acknowledges that (a) each of its obligations as a Grantor under 90 the applicable Security Documents, (b) each of the UCC-1 financing statements filed pursuant to the Security Documents and (c) each other Loan Document to which they are a party, in each case, shall continue to be in full force and effect and are hereby in all respects ratified and reaffirmed as if fully restated as of the date hereof by this Agreement. [Signature pages to follow] 91 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed under seal by their duly authorized officers, all as of the day and year first written above. O'CHARLEY'S INC., as Borrower By: /s/ A. Chad Fitzhugh ----------------------------------- Name: A. Chad Fitzhugh Title: Chief Financial Officer, Secretary and Treasurer WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent and Lender By: /s/ Scott Joyce ----------------------------------- Name: Scott Joyce Title: Associate BANK OF AMERICA, N.A., as Co-Syndication Agent and Lender By: /s/ Brian Sallee ----------------------------------- Name: Brian Sallee Title: Asst. Vice President AMSOUTH BANK, as Co-Documentation Agent, Swingline Lender and Lender By: /s/ Monty R. Trimble ----------------------------------- Name: Monty R. Trimble Title: Senior Vice President SUNTRUST BANK, as Co-Documentation Agent and Lender By: /s/ Ned Spitzer ----------------------------------- Name: Ned Spitzer Title: Vice President BANK ONE, N.A., as Lender By: /s/ John B. Middelberg ----------------------------------- Name: John B. Middelberg Title: Vice President REGIONS BANK, as Lender By: /s/ Sam Prudhomme ----------------------------------- Name: Sam Prudhomme Title: Assistant Vice President, Corporate Banking, Regions Bank COOPERATIEVE CENTRALE RAIFFEISEN- BOERENLEENBANK B.A. "RABOBANK INTERNATIONAL", NEW YORK BRANCH, as Co-Syndication Agent and Lender By: /s/ Tamira Treffers ----------------------------------- Name: Tamira Treffers Title: Executive Director By: /s/ Brett Delfino ----------------------------------- Name: Brett Delfino Title: Executive Director UNION PLANTERS BANK, N.A., as Lender By: /s/ Jeff Calvert ----------------------------------- Name: Jeff Calvert Title: Senior Vice President FLEET NATIONAL BANK, as Lender By: /s/ Heidi F. Tyng ----------------------------------- Name: Heidi Tyng Title: Vice President EX-10.5 7 g85963exv10w5.txt EX-10.5 FORM OF AMEND. & RESTATED CREDIT NOTE EXHIBIT 10.5 This note replaces but does not extinguish the obligations under that certain Revolving Credit Note (the "Original Revolving Credit Note") executed in connection with the Credit Agreement dated as of January 27, 2003 by and among the Borrower, the lenders party thereto and Wachovia Bank, National Association, as Administrative Agent. AMENDED AND RESTATED REVOLVING CREDIT NOTE $_________ __________, _____ FOR VALUE RECEIVED, the undersigned, O'CHARLEY'S INC., a corporation organized under the laws of Tennessee (the "Borrower"), promises to pay to the order of _______________ (the "Lender"), at the place and times provided in the Credit Agreement referred to below, the principal sum of _______________ DOLLARS ($__________) or, if less, the principal amount of all Revolving Credit Loans made by the Lender from time to time pursuant to that certain Amended and Restated Credit Agreement, dated as of ____________, 2003 (as further amended, restated, supplemented or otherwise modified, the "Credit Agreement"), by and among the Borrower, the Lenders who are or may become a party thereto, as Lenders (the "Lenders"), and Wachovia Bank, National Association, as Administrative Agent (the "Administrative Agent"). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. The unpaid principal amount of this Amended and Restated Revolving Credit Note (the "Revolving Credit Note") from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the Credit Agreement. All payments of principal and interest on this Revolving Credit Note shall be payable in lawful currency of the United States of America in immediately available funds to the account designated in the Credit Agreement. This Revolving Credit Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Revolving Credit Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Revolving Credit Note and on which such Obligations may be declared to be immediately due and payable. THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND ALL ISSUES RELATED TO THE LEGALITY, VALIDITY OR ENFORCEABILITY HEREOF, SHALL BE DETERMINED UNDER THE LAWS OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REFERENCE TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. The Debt evidenced by this Revolving Credit Note is senior in right of payment to all Subordinated Debt (including, without limitation, the Senior Subordinated Notes) referred to in the Credit Agreement. The Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Revolving Credit Note. This Revolving Credit Note is given in modification, replacement and restatement of the Original Revolving Credit Note, but not in repayment or extinguishment of the unpaid indebtedness evidenced by the Original Revolving Credit Note, and all indebtedness formerly evidenced by said Original Revolving Credit Note and unpaid on the date hereof shall now be evidenced by this Revolving Credit Note, and as of the date hereof, said Original Revolving Credit Note shall no longer evidence said outstanding indebtedness. This Revolving Credit Note shall not be considered to be a novation of said Original Revolving Credit Note as this Revolving Credit Note evidences the same indebtedness. (Signature Page Follows) 2 IN WITNESS WHEREOF, the undersigned has executed this Revolving Credit Note under seal as of the day and year first above written. O'CHARLEY'S INC. By: _____________________________________ Name:________________________________ Title:_______________________________ 3 EX-10.6 8 g85963exv10w6.txt EX-10.6 FORM OF AMEND & RESTATED SWINGLINE NOTE EXHIBIT 10.6 This note replaces but does not extinguish the obligations under that certain Swingline Note (the "Original Swingline Note") executed in connection with the Credit Agreement dated as of January 27, 2003 by and among the Borrower, the lenders party thereto and Wachovia Bank, National Association, as Administrative Agent. AMENDED AND RESTATED SWINGLINE NOTE $__________ __________, 2003 FOR VALUE RECEIVED, the undersigned, O'CHARLEY'S INC., a corporation organized under the laws of Tennessee (the "Borrower"), promises to pay to the order of _________________________________________ (the "Lender"), at the place and times provided in the Credit Agreement referred to below, the principal sum of _______________ DOLLARS ($__________) or, if less, the principal amount of all Swingline Loans made by the Lender from time to time pursuant to that certain Amended and Restated Credit Agreement, dated as of ______________, 2003 (as further amended, restated, supplemented or otherwise modified, the "Credit Agreement"), by and among the Borrower, the Lenders who are or may become a party thereto, as Lenders (the "Lenders"), and Wachovia Bank, National Association, as Administrative Agent (the "Administrative Agent"). Capitalized terms used herein and not defined herein shall have the meanings assigned thereto in the Credit Agreement. The unpaid principal amount of this Amended and Restated Swingline Note (the "Swingline Note") from time to time outstanding is subject to mandatory repayment from time to time as provided in the Credit Agreement and shall bear interest as provided in Section 5.1 of the Credit Agreement. Swingline Loans refunded as Revolving Credit Loans in accordance with Section 2.2(d) of the Credit Agreement shall be payable by the Borrower as Revolving Credit Loans pursuant to the Revolving Credit Notes, and shall not be payable under this Swingline Note as Swingline Loans. All payments of principal and interest on this Swingline Note shall be payable in lawful currency of the United States of America in immediately available funds to the account designated in the Credit Agreement. This Swingline Note is entitled to the benefits of, and evidences Obligations incurred under, the Credit Agreement, to which reference is made for a description of the security for this Swingline Note and for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Obligations evidenced by this Swingline Note and on which such Obligations may be declared to be immediately due and payable. THIS SWINGLINE NOTE SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND ALL ISSUES RELATED TO THE LEGALITY, VALIDITY OR ENFORCEABILITY HEREOF, SHALL BE DETERMINED UNDER THE LAWS OF NEW YORK (INCLUDING SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REFERENCE TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. The Debt evidenced by this Swingline Note is senior in right of payment to all Subordinated Debt (including, without limitation, the Senior Subordinated Notes) referred to in the Credit Agreement. The Borrower hereby waives all requirements as to diligence, presentment, demand of payment, protest and (except as required by the Credit Agreement) notice of any kind with respect to this Swingline Note. This Swingline Note is given in modification, replacement and restatement of the Original Swingline Note, but not in repayment or extinguishment of the unpaid indebtedness evidenced by the Original Swingline Note, and all indebtedness formerly evidenced by said Original Swingline Note and unpaid on the date hereof shall now be evidenced by this Swingline Note, and as of the date hereof, said Original Swingline Note shall no longer evidence said outstanding indebtedness. This Swingline Note shall not be considered to be a novation of said Original Swingline Note as this Swingline Note evidences the same indebtedness. (Signature Page Follows) 2 IN WITNESS WHEREOF, the undersigned has executed this Swingline Note under seal as of the day and year first above written. O'CHARLEY'S INC. By: _____________________________________ Name:________________________________ Title:_______________________________ 3 EX-31.1 9 g85963exv31w1.txt EX-31.1 SECTION 302 CERTIFICATION OF THE CEO Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Gregory L. Burns, certify that: 1. I have reviewed this quarterly report on Form 10-Q of O'Charley's Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 19, 2003 /s/ Gregory L. Burns -------------------------------- Chief Executive Officer EX-31.2 10 g85963exv31w2.txt EX-31.2 SECTION 302 CERTIFICATION OF THE CFO Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, A. Chad Fitzhugh, certify that: 1. I have reviewed this quarterly report on Form 10-Q of O'Charley's Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 19, 2003 /s/ A. Chad Fitzhugh --------------------- Chief Financial Officer EX-32.1 11 g85963exv32w1.txt EX-32.1 SECTION 906 CERTIFICATION OF THE CEO Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of O'Charley's Inc. (the "Company") on Form 10-Q for the period ending October 5, 2003 as filed with the Securities and Exchange Commission on November 19, 2003 (the "Report"), I, Gregory L. Burns, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Gregory L. Burns - -------------------------- Gregory L. Burns Chief Executive Officer November 19, 2003 EX-32.2 12 g85963exv32w2.txt EX-32.2 SECTION 906 CERTIFICATION OF THE CFO Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of O'Charley's Inc. (the "Company") on Form 10-Q for the period ending October 5, 2003 as filed with the Securities and Exchange Commission on November 19, 2003 (the "Report"), I, A. Chad Fitzhugh, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ A. Chad Fitzhugh - -------------------------- A. Chad Fitzhugh Chief Financial Officer November 19, 2003 -----END PRIVACY-ENHANCED MESSAGE-----

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(1)		Capitalized lease obligations include the interest expense component of approximately $4.3 million.

(2)		This pertains to the revolving credit portion of our previous bank credit facility, of which $128.1 million is included in long-term debt above.

(3)		This pertains to the term loan portion of our previous bank credit facility, of which $95.0 million is included in long-term debt above.

(1)		Capitalized lease obligations include the interest expense component of approximately $4.3 million.

(2)		This pertains to our amended and restated credit facility, of which $54.0 million is included in long-term debt above.

(3)		This pertains to our 9.0% senior subordinated notes due 2013, of which $125.0 million is included in long-term debt above.