AFC ENTERPRISES, INC. FIRST AMENDMENT TO CREDIT AGREEMENT
EXECUTION
COPY
AFC ENTERPRISES, INC.
FIRST AMENDMENT
TO CREDIT AGREEMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT, dated as of April 14, 2006 (this “Amendment”), to the Second Amended and
Restated Credit Agreement, dated as of May 11, 2005, (the “Credit Agreement”) is entered into by
and among AFC ENTERPRISES, INC., a Minnesota corporation (the “Borrower”), the LENDERS party
thereto, JPMORGAN CHASE BANK, N.A. (“JPMCB”), as Administrative Agent, X.X.XXXXXX SECURITIES INC.,
as Sole Bookrunner and Lead Arranger and FLEET NATIONAL BANK, INC., as Documentation Agent.
Capitalized terms used herein not otherwise defined herein or otherwise amended hereby shall have
the meanings ascribed thereto in the Credit Agreement.
RECITALS:
WHEREAS, Borrower has requested that the Lenders agree to make amendments to certain
provisions of the Credit Agreement to permit certain repurchases of Borrower Common Stock subject
to the terms and conditions set forth herein;
WHEREAS, the Lenders have agreed to amend certain provisions of the Credit Agreement, in each
case in the manner, and on the terms and conditions, provided for herein;
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
1.1 Amendments to Article I: Definitions
A. Section 1.01 of the Credit Agreement is hereby amended by adding the following definitions:
“Adjusted Taxes” means, with respect to any period from the Closing Date, Taxes other
than such Taxes payable in connection with the disposition of its interests and assets with respect
to its Church’s Chicken and Texas Chicken business pursuant to that certain Asset Purchase
Agreement between the Borrower and Cajun Holding Company, a Delaware corporation, dated as of
October 30, 2004, as may be amended, and income from discontinued operations.
“First Amendment” means the amendment to the Credit Agreement dated as of April 14,
2006.
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“First Amendment Effective Date” means the date on or prior to April 14, 2006 upon which all the conditions precedent set forth in Section 2 of the First Amendment are satisfied.
B. The following definitions in Section 1.01 of the Credit Agreement shall be amended as
follows:
(i) “Cash Equivalents” is hereby amended by deleting clause (ii) in its
entirety and replacing it with the following:
“(ii) marketable direct obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof, in each case
maturing within one year after such date (except in the case of taxable auction rate municipal
bonds and auction rate preferred securities which may have longer maturities) and having, at the
time of the acquisition thereof, the highest rating obtainable from either S&P or Xxxxx’x;”
(ii) “Consolidated EBITDA” is hereby amended by (a) deleting clause (a)(ii) in its entirety and replacing it with the following:
“(ii) the aggregate amount of all provisions for all Adjusted Taxes (whether or not paid, estimated
or accrued) based upon or determined by reference to the income and profits for such period,”
and (b) deleting clause (b) (ii) in its entirety and replacing it with the following:
“(ii) after-tax income derived from discontinued operations or from the subject of Asset Sales, all
as determined on a consolidated basis in accordance with GAAP.”
(iii) “Consolidated Excess Cash Flow” is hereby amended by deleting
clause (i) (d) in its entirety and replacing it with the following:
“(d) provisions for current Adjusted Taxes based upon or determined by reference to income of
Borrower and its Subsidiaries and payable in cash with respect to such period,”
1.2 Amendment to Article II: The Credits
Section 2.10(d) is hereby amended by deleting the last sentence and replacing such sentence in
its entirety by the following:
“Each prepayment pursuant to this paragraph shall be made on or before March 31 of each year.”
1.3 Amendment to Article VI: Negative Covenants
A. Section 6.06(a) is hereby deleted in its entirety and replaced by the following:
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“The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree
to pay or make, directly or indirectly, any Restricted Payment, except, so long as no Default or
Event of Default shall have occurred and be continuing, the Borrower may (i) consummate the
Shareholder Transaction in an aggregate amount not to exceed $375,000,000 (the “Shareholder
Transaction Amount”), (ii) make payments to purchase Borrower Common Stock or options, warrants or
rights to purchase or acquire Borrower Common Stock (or any transaction that has a substantially
similar effect) with Consolidated Excess Cash Flow to the extent not required to be paid pursuant
to Section 2.10(d); provided, however, that if at the time of the making such
purchase, and after giving effect thereto, the Total Leverage Ratio of Borrower (a) is greater than
or equal to 3:00 to 1.00, such payment shall not exceed $15,000,000 per fiscal year and (b) is less
than 3.00 to 1.00 but greater than 2.00 to 1.00, such payment shall not exceed $20,000,000 per
fiscal year, and (iii) may use the proceeds from stock option exercises in an amount not to exceed
the sum of (x) $6.4 million from such proceeds received from the Closing Date to December 25, 2005
and (y) 100% of such proceeds received subsequent to December 26, 2005 to make payments to purchase
Borrower Common Stock or options, warrants or rights to purchase or acquire Borrower Common Stock
(or any transaction that has a substantially similar effect). The Borrower shall provide the
Administrative Agent a certificate, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to clauses (i), (ii) and (iii) above in reasonable detail.”
B. Section 6.12(i) is hereby deleted in its entirety and replaced by the following:
“(i) Consolidated EBITDAR less Adjusted Taxes less Consolidated Maintenance Capital Expenditure to”
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS
2.1 The effectiveness of the amendments set forth at Section 1 hereof are subject to the
satisfaction, or waiver, of the following conditions on or before the date hereof:
A. The Borrower, the Required Lenders and the Subsidiary Loan Party shall have indicated their
consent to this Amendment by the execution and delivery of the applicable signature pages to the
Administrative Agent.
B. As of the First Amendment Effective Date, after giving effect to this Amendment, the
representations and warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of the First Amendment Effective Date to
the same extent as though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such representations and
warranties shall have been true, correct and complete in all material respects on and as of such
earlier date.
C. As of the First Amendment Effective Date, after giving effect to this Amendment, no event
shall have occurred and be continuing that would constitute an Event of Default or a Default.
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D. As of the First Amendment Effective Date, the Borrower shall have paid all fees and other
amounts due and payable, including, to the extent invoiced, reimbursement or other payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower under any Loan Document.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Required Lenders to enter into this Amendment, each applicable Loan Party
represents and warrants to each Lender, as of the date hereof and upon giving effect to this
Amendment, that the representations and warranties contained in each of the Loan Documents are
true, correct and complete in all material respects on and as of the date hereof to the same extent
as though made on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and warranties shall
have been true, correct and complete in all material respects on and as of such earlier date.
SECTION 4. ACKNOWLEDGMENT AND CONSENT
4.1 The Subsidiary Loan Party has (i) guarantied the Obligations and (ii) created Liens in
favor of Lenders on certain Collateral to secure such obligations.
4.2 The Subsidiary Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment. The Subsidiary Loan Party hereby confirms that each
Security Document to which it is a party or otherwise bound and all Collateral encumbered thereby
will continue to guarantee or secure, as the case may be, to the fullest extent possible in
accordance with the Security Documents, the payment and performance of all Obligations under the
Credit Agreement and the Obligations (as such term is defined in the Security Documents) under the
Security Documents, as the case may be, including without limitation the payment and performance of
all such Obligations under the Credit Agreement and the Obligations under the Security Documents in
respect of the Obligations of Borrower now or hereafter existing under or in respect of the Credit
Agreement, as amended hereby, and grants to the Collateral Agent a continuing lien on and security
interest in and to all Collateral as collateral security for the prompt payment and performance in
full when due of the Obligations under the Credit Agreement and the Obligations under the Security
Documents (whether at stated maturity, by acceleration or otherwise).
4.3 The Subsidiary Loan Party acknowledges and agrees that any of the Security Documents to
which it is a party or otherwise bound shall continue in full force and effect and that all of its
obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. The Subsidiary Loan Party represents and warrants
that all representations and warranties contained in the Credit Agreement, as amended hereby, and
the Security Documents to which it is a party or otherwise bound are true, correct and complete in
all material respects on and as of the First Amendment Effective Date to the same extent as though
made on and as of that date, except to the extent such
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representations and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier date.
4.4 The Subsidiary Loan Party acknowledges and agrees that (i) notwithstanding the conditions
to effectiveness set forth in this Amendment, the Subsidiary Loan Party is not required by the
terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this
Amendment or any other Loan Document shall be deemed to require the consent of the Subsidiary Loan
Party to any future amendments to the Credit Agreement.
SECTION 5. MISCELLANEOUS
5.1 This Amendment shall be binding upon the parties hereto and the Lenders and their
respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of Lenders. No Loan Party’s rights or obligations hereunder or any interest
therein may be assigned or delegated by any Loan Party without the prior written consent of all
Lenders.
5.2 In case any provision in or obligation hereunder shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
5.3 On and after the First Amendment Effective Date, each reference in the Credit Agreement to
“this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof” or words of like import referring to the Credit Agreement shall mean and be a reference
to the Credit Agreement as amended by this Amendment.
5.4 Except as specifically amended by this Amendment, the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby ratified and confirmed.
5.5 The execution, delivery and performance of this Amendment shall not, except as expressly
provided herein, constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Loan
Documents.
5.6 Section headings herein are included herein for convenience of reference only and shall
not constitute a part hereof for any other purpose or be given any substantive effect.
5.7 THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY, AND SHALL BE
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CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5.8 This Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such counterparts together shall
constitute but one and the same instrument. As set forth herein, this Amendment shall become
effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by
Borrower and Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.
| BORROWER: | AFC ENTERPRISES, INC., |
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| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Chief Executive Officer | |||
| SUBSIDIARY LOAN PARTY: | AFC PROPERTIES, INC. |
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| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | Vice President | |||
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| LENDERS: | JPMORGAN CHASE BANK, N.A., individually as a Lender and as Administrative Agent |
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| By | /s/ H. Xxxxx Xxxxx | |||
| Name: | H. Xxxxx Xxxxx | |||
| Title: | Vice President | |||
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| By signing below, you have indicated your consent to the First Amendment Institution Name: |
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| Amegy Bank National Association | ||||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Name: | Xxxxxxx X. Xxxx | |||
| Title: | Senior Vice President | |||
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