FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "First Amendment"), dated as of June 30, 1998, is entered into among
FRANCHISE FINANCE CORPORATION OF AMERICA, a Delaware corporation ("Company"),
the banks listed on the signature page hereof (the "Lenders"), and NATIONSBANK,
N.A. (successor by merger to NationsBank of Texas, N.A.) in its capacity as
administrative agent for the Lenders (the "Administrative Lender").
A. Company, Lenders, certain Co-Agents and Administrative Lender are
parties to that certain Second Amended and Restated Credit Agreement, dated as
of December 29, 1997, as amended by that certain waiver letter, dated February
17, 1998 (said Credit Agreement, as amended, the "Credit Agreement"; the terms
defined in the Credit Agreement and not otherwise defined herein shall be used
herein as defined in the Credit Agreement).
B. Company, Lenders and Administrative Lender desire to amend the
Credit Agreement to make certain amendments thereto.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the parties
hereto covenant and agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) The definition of "Applicable Law" set forth in Section
1.1 of the Credit Agreement is hereby amended to read as follows:
"`APPLICABLE LAW' means (a) in respect of any Person,
all provisions of constitutions, statutes, rules, regulations
and orders of governmental bodies or regulatory agencies
applicable to such Person and its properties, including,
without limiting the foregoing, all orders and decrees of all
courts and arbitrators in proceedings or actions to which the
Person in question is a party, and (b) in respect of contracts
relating to interest or finance charges that are made or
performed in the State of Texas, `Applicable Law' means the
laws of the United States of America, including without
limitation 12 USC xx.xx. 85 and 86, as amended from time to
time, and any other statute of the United States of America
now or at any time hereafter prescribing the maximum rates of
interest on loans and extensions of credit, and the laws of
the State of Texas, including, without limitation, Art. 1H, if
applicable, and if Art. 1H is not applicable, Art. 1D, and any
other statute of the State of Texas now or at any time
hereafter prescribing maximum rates of interest on loans and
extensions of credit; provided that the parties hereto agree
that the provisions of Chapter 346 of the Texas Finance Code,
as amended, shall not apply to Advances, this Agreement, the
Notes or any other Loan Papers."
(b) The definition of "Highest Lawful Rate" set forth in
Section 1.1 of the Credit Agreement is hereby amended to read as
follows:
"`HIGHEST LAWFUL RATE' shall mean at the particular
time in question the maximum rate of interest which, under
Applicable Law, the Lenders are then permitted to charge on
the Obligation. If the maximum rate of interest which, under
Applicable Law, the Lenders are permitted to charge on the
Obligation shall change after the date hereof, the Highest
Lawful Rate shall be automatically increased or decreased, as
the case may be, from time to time as of the effective time of
each change in the Highest Lawful Rate without notice to the
Borrower. For purposes of determining the Highest Lawful Rate
under the Applicable Law of the State of Texas, the applicable
rate ceiling shall be (a) the weekly rate ceiling described in
and computed in accordance with the provisions of Art. ID.003,
or (b) if the parties subsequently contract as allowed by
Applicable Law, the quarterly ceiling or the annualized
ceiling computed pursuant to Art. ID.008; provided, however,
that at any time the weekly rate ceiling, the quarterly
ceiling or the annualized ceiling shall be less than 18% per
annum or more than 24% per annum, the provisions of Art.
ID.009(a) and (b) shall control for purposes of such
determination, as applicable."
(c) Article 4 of the Credit Agreement is hereby amended by
adding a new Section 4.21 thereto to read as follows:
"4.21 YEAR 2000 COMPLIANCE. The Borrower has (a)
initiated a review and assessment of all areas within its and
each of its Subsidiaries' business and operations (including
those affected by its suppliers and vendors) that could be
adversely affected by the "Year 2000 Problem" (that is, the
risk that computer applications used by the Borrower or any of
its Subsidiaries (or its suppliers and vendors) may be unable
to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December
31, 1999), (b) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis, and (c) to date,
implemented that plan in accordance with that timetable. The
Borrower reasonably believes that all computer applications
(including those of its suppliers and vendors) that are
material to its or any of its Subsidiaries' business and
operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 Compliant"), except to
the extent that a failure to do so could not reasonably be
expected to have a Material Adverse Effect."
(d) Article 5 of the Credit Agreement is hereby amended by
adding a new Section 5.15 thereto to read as follows:
"5.15 YEAR 2000 COMPLIANCE. The Borrower will
promptly notify the Administrative Agent in the event the
Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is
material to its or any of its Subsidiaries' business and
operations will not be Year 2000 Compliant, except to the
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extent that such failure could not reasonably be expected to
have a Material Adverse Effect."
(e) Section 6.6 of the Credit Agreement is hereby amended to
read as follows:
"6.6 DISPOSITIONS OF ASSETS. Company shall not, and
shall not permit any of its Subsidiaries to, sell, lease,
assign, or otherwise dispose of any assets of Company or any
of its Subsidiaries in an Asset Sale, or otherwise consummate
any Asset Sale, except so long as there exists no Default or
Event of Default, and no Default or Event of Default would be
caused thereby, Company and its Subsidiaries may consummate
Asset Sales for fair market value in an aggregate amount not
to exceed during any period of four consecutive fiscal
quarters 25% of Total Assets (calculated as an amount equal to
the result of (a) the sum of Total Assets as of the first day
of each fiscal quarter during such four quarter period (b)
divided by four), provided that the Asset Sale Proceeds in
excess of $3,000,000 of each Asset Sale (including in respect
of an Asset Securitization) which occurs after the Closing
Date are applied as provided in Section 2.5(b) hereof;
provided that, notwithstanding anything herein to the
contrary, (i) Company will not dispose of any assets at any
time in an amount that would impair or jeopardize the status
of Company as a Real Estate Investment Trust and (ii) the
market value of any assets sold in an Asset Securitization
shall be excluded from the calculation of assets disposed of
in Asset Sales for purposes of the 25% limitation set forth in
this Section 6.6. On the day of any Asset Sale by Company or
its Subsidiaries in which the Asset Sale Proceeds thereof
exceed $3,000,000, Company shall deliver to Administrative
Agent a certificate of an Authorized Officer certifying as to
the amount of gross proceeds thereof and costs and expenses
payable thereof which were deducted in determining the Asset
Sale Proceeds."
(f) Section 6.10 of the Credit Agreement is hereby amended to
read as follows:
"6.10 LOANS AND INVESTMENTS. Company shall not, and
shall not permit any of its Subsidiaries to, make any
Investment to, or make or have any Investment in, any Person,
or make any commitment to make any such Investment, or make
any acquisition, except (a) investments existing on the date
hereof as shown on Section 4.13 hereto, (b) Investments in
Cash Equivalents, (c) Investments in travel advances in the
ordinary course of business to officers and employees, (d)
Investments in accounts receivable arising in the ordinary
course of business, (e) Investments in Subsidiaries of Company
in compliance with Section 6.17 hereof, and (f) Investments in
the form of subordinated investment securities and other
similar instruments obtained by Company or any of its
Subsidiaries in connection with an Asset Securitization;
provided that the aggregate amount of such Investments
pursuant to clause (f) (including the Secured Franchise Loan
Pass-Through Certificates shown on Schedule 4.13 hereto) shall
not exceed 20% of Total Assets at any time."
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(g) The Compliance Certificate in the form of Exhibit C to the
Credit Agreement is hereby amended to be in the form of Exhibit C to
this First Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, Company represents and warrants that, as of the
date hereof and after giving effect to the amendments provided in the foregoing
Section 1:
(a) the representations and warranties contained in the Credit
Agreement are true and correct on and as of the date hereof as if made
on and as of such date;
(b) no event has occurred and is continuing which constitutes
a Default or an Event of Default;
(c) Company has full power and authority to execute, deliver
and perform this First Amendment and the Credit Agreement, as amended
by this First Amendment, the execution, delivery and performance of
this First Amendment and the Credit Agreement, as amended by this First
Amendment, have been duly authorized by all corporate action of
Company, and this First Amendment and the Credit Agreement, as amended
hereby, constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except
as enforceability may be limited by applicable debtor relief laws and
by general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and except as rights to
indemnity may be limited by federal or state securities laws;
(d) neither the execution, delivery and performance of this
First Amendment or the Credit Agreement, as amended by this First
Amendment, nor the consummation of any transactions herein or therein,
will contravene or conflict with any Law to which Company or any of its
Subsidiaries if subject or any indenture, agreement or other instrument
to which Company or any of its Subsidiaries or any of their respective
property is subject; and
(e) no authorization, approval, consent or other action by,
notice to, or filing with, any governmental authority or other Person
(not previously obtained), is required for the (i) execution, delivery
or performance by Company of this First Amendment and the Credit
Agreement, as amended by this First Amendment, or (ii) acknowledgment
of this First Amendment by any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be effective
as of June 30, 1998, subject to the following:
(a) Administrative Lender shall receive counterparts of this
First Amendment executed by Lenders comprising the Majority Lenders;
(b) Administrative Lender shall receive counterparts of this
First Amendment executed by Company and acknowledged by each Guarantor;
(c) the representations and warranties set forth in Section 2
of this First Amendment shall be true and correct; and
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(d) Administrative Lender and Lenders shall receive in form
and substance satisfactory to Administrative Lender and Lenders, such
other documents, certificates and instruments as Lenders shall require.
4. GUARANTOR'S ACKNOWLEDGMENT. By signing below, each Guarantor (a)
acknowledges, consents and agrees to the execution, delivery and performance by
Company of this First Amendment, (b) acknowledges and agrees that its
obligations in respect of its Guaranty Agreement and Subordination Agreement are
not released, diminished, waived, modified, impaired or affected in any manner
by this First Amendment or any of the provisions contemplated herein, (c)
ratifies and confirms its obligations under its Guaranty Agreement and
Subordination Agreement, and (d) acknowledges and agrees that it has no claim or
offsets against, or defenses or counterclaims to, its Guaranty Agreement and
Subordination Agreement.
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each
reference in the Credit Agreement to "this Agreement," "hereunder," or
words of like import shall mean and be a reference to the Credit
Agreement, as amended by this First Amendment.
(b) The Credit Agreement, as amended by this First Amendment,
and all other Loan Papers shall remain in full force and effect and are
hereby ratified and confirmed.
6. COSTS, EXPENSES AND TAXES. Company agrees to pay on demand all costs
and expenses of Administrative Lender in connection with the preparation,
reproduction, execution and delivery of the First Amendment and the other
instruments and documents to be delivered hereunder (including the reasonable
fees and out-of-pocket expenses of Special Counsel).
7. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which when taken together shall constitute but one and
the same instrument.
8. GOVERNING LAW; BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
(without giving effect to conflict of laws) and the United States of America,
and shall be binding upon Company, each Guarantor and each Lender and their
respective successors and assigns.
9. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of this
First Amendment for any other purpose.
10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES.
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IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
FRANCHISE FINANCE CORPORATION OF
AMERICA
By /s/ Xxxx X. Xxxxxxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxxxxxx, Executive Vice
President and Chief Financial Officer
LENDERS:
NATIONSBANK, N.A., individually
and as Administrative Agent
By /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx, Senior Vice
President
BANK OF MONTREAL, CHICAGO
BRANCH, individually and as Co-Agent
By /s/ Xxxxxxxxx Xxxxxxxx Xxxxxxxx
----------------------------------
Xxxxxxxxx Xxxxxxxx Xxxxxxxx, Director
COMMERZBANK AKTIENGESELLSCHAFT, LOS
ANGELES BRANCH, individually and as
Co-Agent
By /s/ Xxxxxx X. Xxxxxx
----------------------------------
Xxxxxx X. Xxxxxx, Vice President
By /s/ Xxxxxx Xxxxxxxxxxx
----------------------------------
Xxxxxx Xxxxxxxxxxx, Vice President
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THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., individually and as Co-Agent
By /s/ Xxxxxx Xxxxxxx
----------------------------------
Xxxxxx Xxxxxxx, Deputy General
Manager
By /s/ Xxxxx Read
----------------------------------
Xxxxx Read, Vice President
UBS AG (NEW YORK BRANCH),
individually and as Co-Agent
By /s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx, Director
By /s/ Xxxxx X. Xxxxxxx
----------------------------------
Xxxxx X. Xxxxxxx, Assistant Vice
President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND," NEW YORK BRANCH
By /s/ W. Xxxxxxx Xxxxxxx
----------------------------------
W. Xxxxxxx Xxxxxxx, Senior Credit
Officer and Senior Vice President
By /s/ M. Xxxxxxxxx Xxxxxx
----------------------------------
M. Xxxxxxxxx Xxxxxx, Vice President
AMSOUTH BANK (f/k/a AMSOUTH BANK
OF ALABAMA)
By /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx, Assistant
Vice-President
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DRESDNER BANK AG, NEW YORK
BRANCH AND GRAND CAYMAN BRANCH
By /s/ Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx, Assistant Vice
President
By /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx, Vice President
BANK HAPOALIM, B.M., SAN XXXXXXXXX
XXXXXX
By /s/ Xxx Xxxxxxx
----------------------------------
Xxx Xxxxxxx, Vice President
By /s/ Xxxx Xxxx
----------------------------------
Xxxx Xxxx, Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx, Vice President
FIRST UNION NATIONAL BANK
By /s/ Xxxx X. Xxxxxxxx
----------------------------------
Xxxx X. Xxxxxxxx, Director
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NORWEST BANK ARIZONA, NATIONAL
ASSOCIATION
By /s/ Xxxxxx Xxxx
----------------------------------
Xxxxxx Xxxx, Vice President
ACKNOWLEDGED:
FFCA ACQUISITION CORPORATION
By Xxxx X. Xxxxxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxxxxx, Executive Vice President
and Chief Financial Officer
FFCA INSTITUTIONAL ADVISORS, INC.
By Xxxx X. Xxxxxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxxxxx, Executive Vice President
and Chief Financial Officer
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EXHIBIT C
QUARTERLY COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he/she is a duly elected
Authorized Officer of Franchise Finance Corporation of America, a Delaware
corporation ("Borrower"), and that he/she is authorized to execute this
Certificate on behalf of Borrower in connection with that certain Second Amended
and Restated Credit Agreement dated as of December 29, 1997 ("Credit
Agreement"), among Borrower, NationsBank of Texas, N.A., individually and as
Administrative Agent, Bank of Montreal, Chicago Branch, Commerzbank
Akiengesellschaft, Los Angeles Branch, The Long Term Credit Bank of Japan, Ltd.
and Union Bank of Switzerland (New York Branch), as Co-Agents, and each Lender a
party thereto. All terms used but not defined herein shall have the meanings set
forth in the Credit Agreement. This Certificate is submitted concurrently with
quarterly financial statements of Borrower for the period ended ____________,
____. The undersigned hereby further certifies to the following as of the date
set forth below:
1. The representations and warranties of Borrower under the Credit
Agreement are true and complete in all material respects, before and after
giving effect to any Advances.
2. No event has occurred which constitutes a Default or Event of
Default.
3. Company continues to qualify as a Real Estate Investment Trust under
the Code.
4. The following calculations are true, accurate and complete, and are
made in accordance with the terms and provisions of the Credit Agreement:
1. APPLICABLE MARGIN.
The Index Debt Rating is ____________. The Applicable Margin with
respect to Base Rate Advances is ____%. The Applicable Margin with
respect to LIBOR Advances is ____%.
2. Section 6.1(a). Minimum Net Worth.
(a) Minimum Net Worth
(i) $425,000,000 $425,000,000
(ii 75% of aggregate Net Cash Proceeds received by $___________
Borrower and its Consolidated Subsidiaries after
April 15, 1997, disposition of Capital Stock
(iii) amount equal to Net Worth of any Person acquired $___________
(via asset or stock purchase) by Borrower or any
Subsidiary to the extent purchase price is paid
for in Capital Stock of Borrower or such
Subsidiary
(iv) Minimum Net Worth [(i) + (ii) + (iii)] $___________
(b) Actual Net Worth (determined in accordance with GAAP) $___________
3. Section 6.1(b). Total Indebtedness to Adjusted Net Worth Ratio.
(a) Maximum Ratio 0.90 to 1
(b) Actual Ratio
(i) Indebtedness of Company and Consolidated
Subsidiaries
a. Debt for Borrowed Money $___________
b. Capital Lease obligations $___________
c. Reimbursement obligations relating to
letters of credit $___________
d. Contingent Liabilities relating to (a), (b)
and (c) above $___________
e. Withdrawal Liability $___________
f. indebtedness associated with Interest Hedge
Agreements $___________
g. payments due for the deferred purchase price
of property and services (excluding trade
payables less than 90 days old) $___________
h. obligations (contingent or otherwise to
purchase, retire or redeem any Capital Stock) $___________
i. [a. + b. + c. + d. + e. + f. + g. + h.] $___________
(ii) Indebtedness evidenced by Intercompany Notes and
which is subject to a Subordination Agreement $___________
(iii) Total Indebtedness [(i) - (ii)] $___________
C-2
(iv) Adjusted Net Worth
a. Actual Net Worth (determined in accordance
with GAAP) $___________
b. Accumulated Depreciation (determined in
accordance with GAAP) $___________
c. Adjusted Net Worth [a. + b.] $__________
(v) Total Indebtedness to Adjusted Net Worth
[(iii)/(iv)] _____ to 1
4. Section 6.1(c). Fixed Charge Coverage Ratio.
---------------------------
(a) Minimum Ratio 2.0 to 1
(b) Actual Ratio
(i) Cash Flow From Operations for twelve-calendar
month period ending on or most recently ended
prior to date of determination $___________
(ii) cash interest payable on all Indebtedness
(including interest on Capitalized Leases) $___________
(iii) [(i) + (ii)] $___________
(iv) cash interest payable on all Indebtedness
(including interest on Capitalized Leases) $___________
(v) regularly scheduled principal amounts on Indebtedness
(including rentals under Lease Obligations but
excluding any payment which pays Indebtedness in full
to the extent such payment exceeds the immediately
preceding scheduled principal payment) $___________
(vi) principal amounts of all Indebtedness (including
under Lease Obligations) required to be prepaid
or purchased during such period $___________
(vii) [(iv) + (v) + (vi)] $___________
C-3
(viii) Fixed Charge Coverage Ratio [(iii)/(vii)] ____ to 1
5. Section 6.1(d). Maximum Total Secured Indebtedness.
(a) Maximum Total Secured Indebtedness (10% of Total Assets) $___________
(b) Actual Total Secured Indebtedness
Indebtedness of Borrower and its Consolidated
Subsidiaries (from Section 3(b)(i) above that is secured
by a Consensual Lien) $___________
6. Section 6.1(e). Ratio of Total Unencumbered Assets to Total Unsecured
Indebtedness.
(a) Minimum Ratio 1.75 to 1
(b) Actual Ratio
(i) Total Assets not subject to a Lien other than
Liens of the type described in clause (a) through
(f) of the definition of Permitted Liens $___________
(ii) Aggregate amount of Indebtedness of Company and
its Consolidated Subsidiaries that is not secured
by a Lien other than Liens of the type described
in clause (a) through (f) of the definition of
Permitted Liens $__________
(iii) [(i)/(ii)] ____ to 1
7. Section 6.3. Contingent Liabilities.
(a) Maximum $5,000,000
(b) Actual $___________
8. Section 6.6. Disposition of Assets.
(a) Maximum during any four consecutive fiscal quarters
(i) Total Assets as of the first day of preceding
four consecutive fiscal quarters divided by four $___________
(ii) 25% times 8(a)(i) above $___________
C-4
(b) Actual (excluding Assets disposed of in an Asset Securitization) $___________
9. Section 6.7. Permitted Distributions.
(a) Maximum
(i) Cash Flow From Operations (from Section 4(b)(i)
above) $___________
(ii) 95% times 9(a)(i) above $___________
(b) Actual $___________
10. Section 6.10. Asset Securitization Investments.
(a) Maximum - 20% of Total Assets $___________
(b) Actual $___________
IN WITNESS WHEREOF, I have executed this Certificate as of the ____ day
of _________, 19__.
FRANCHISE FINANCE CORPORATION OF AMERICA
By_______________________________________
Name_____________________________________
Title____________________________________
C-5
