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Exhibit 10.18
FOURTH AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
FOURTH AMENDMENT (this "Amendment"), dated as of November 22, 1995, to
the Amended and Restated Credit Agreement, dated as of October 8, 1993, as
amended by a First Amendment, dated as of January 20, 1994, and a Second
Amendment, dated as of February 10, 1995, and a Third Amendment, dated as of May
10, 1995 (as so amended, the "Credit Agreement"), among The Ground Round, Inc.
(the "First Borrower"), a Delaware corporation, GR of Minn., Inc., a Delaware
corporation (the "Second Borrower", and together with the First Borrower, the
"Borrowers"), the banks named therein (the "Banks"), The Bank of New York, as
Agent (the "Agent") and Chemical Bank, as Co-Agent.
PRELIMINARY STATEMENTS:
a. The Credit Agreement amended and restated the Amended and
Restated Credit Agreement, dated as of April 26, 1992,
among the Borrowers, the banks named therein and Citibank,
N.A., as original agent.
b. The Borrowers have requested that the Agent and the
Lenders waive each of the Fixed Charge Coverage Ratio
covenant and the Funded Debt to Free Operating Cash Flow
Ratio covenant for the fourth quarter of fiscal year 1995
and for fiscal year 1996.
c. The Borrowers desire to amend the Credit Agreement to (i)
reduce the amounts required under the Net Worth covenant
for the fourth quarter of fiscal year 1995 and for fiscal
year 1996, (ii) permit the Borrowers to sell certain
restaurants and other assets and to retain up to 25% of
the proceeds of such asset sales prior to and including
March 31, 1996, and (iii) provide for additional covenants
with respect to EBITDA and Capital Expenditures.
d. The Lenders and the Agent are willing to grant the waivers
and to amend the Credit Agreement with respect to the
foregoing.
e. Unless otherwise defined herein, all terms defined in the
Credit Agreement shall be used herein as therein defined.
In consideration of the covenants, conditions and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties agree as
follows:
SECTION i. Waivers.
Subject to the satisfaction of the conditions precedent set forth in
Section 3 below, the Agent and the Lenders hereby waive the Borrowers'
compliance with the Fixed Charge Covenant Ratio in Section 5.01(q) of the Credit
Agreement and the Funded Debt to Free Operating Cash Flow Ratio in Section
5.01(r) of the Credit Agreement for the fourth fiscal quarter of 1995 and for
fiscal year 1996.
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SECTION ii. Amendments to Credit Agreement.
The Credit Agreement is, effective as of the date hereof, subject to
the satisfaction of the conditions precedent set forth in Section 3 below,
hereby amended as follows:
(i)Section 1.01 is hereby amended by deleting the
definition of "Applicable Margin" and inserting the
following in substitution therefor:
"`Applicable Margin': means, at all times: (i) with
respect to the unpaid principal amount of Alternate Base
Rate Advances, 0.75%, and (ii) with respect to the unpaid
principal amount of Eurodollar Rate Advances, 2.00%."
(ii)Section 1.01 is hereby further amended by inserting
the following new definitions:
"`Fourth Amendment': means the Fourth Amendment, dated as
of November 22, 1995, to this Agreement.
`Restaurant Capital Gains': means capital gains,
calculated in accordance with GAAP, and as reported by GRR
on its reports to the SEC on Form 10-Q and Form 10-K, with
respect to each Ground Round restaurant which is sold.
`Restaurant Disclosure Letter': means that certain letter
dated November 22, 1995 from the Borrowers addressed to
the Agent and the Lenders, with respect to restaurants and
other assets which the Borrowers propose selling on or
prior to March 31, 1996."
(iii)Section 2.05(b)(ii) is hereby amended by inserting
the following at the end of the first sentence thereof:
"provided, further, however, that with respect to Net Cash
Proceeds received from the sale, lease, transfer or other
disposition of any assets of the Borrowers completed on or
after the date of the Fourth Amendment but on or before
March 31, 1996, the Borrowers may retain an amount up to
25% of Net Cash Proceeds with respect to each such asset
sold which is a restaurant or other asset shown on the
Restaurant Disclosure Letter, or which is an asset
otherwise permitted to be sold pursuant to the provisions
of Section 5.02(e)."
(iv)Section 2.06(b)(i) is hereby amended by deleting the
percentage "0.375%" therein and inserting "0.75%" in
substitution therefor.
(v)Section 2.06(b)(ii) is hereby amended by deleting the
percentage "2.25%" therein and inserting "2.625%" in
substitution therefor.
(vi)Section 5.01(n) is amended by deleting the chart for
each period and inserting the following in substitution
therefor:
"Fiscal Year Fiscal Quarter
1995 4th $58,500,000
1996 1st $56,000,000
1996 2nd-4th $54,700,000*
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1997 1st-4th $68,000,000
1998 1st-4th $71,000,000
1999 1st-4th $80,000,000
2000 1st-4th $89,000,000"
* For purposes of this covenant, the Net Worth
required for the 2nd-4th fiscal quarters of 1996 shall be
increased by the amount of Restaurant Capital Gains for
such fiscal period.
(vii)Section 5.01(t)(ii)(C) is amended to
read as follows:
"(C) a Compliance Certificate satisfactory to the Agent
showing computations used by the Borrowers in determining compliance
with the covenants contained in Sections 5.01(m), 5.01(n) through (s),
5.01(u) and (v), 5.02(a) through (c), 5.02(f) through (i) and 5.02(r)."
(viii)Section 5.01(t)(iii)(D) is amended to
read as follows:
"(D) a schedule in form satisfactory to the Agent of the
computations used by such accountants in determining, as of the end of
such Fiscal Year, compliance with the covenants contained in Sections
5.01(m), 5.01(n) through (s), 5.01 (u) and (v), 5.02(a) through (c),
5.02(f) through (i) and 5.02(r), which may be in the form of the
Compliance Certificate and . . ."
(ix)Section 5.01 is further amended by adding
new subsections (u) and (v) thereto to read as follows:
"(u) Capital Expenditures.
Not permit Capital Expenditures to exceed the
amounts set forth below for each period set forth below:
Fiscal Year Fiscal Quarter
1996 1st $500,000
1996 2nd $700,000
1996 3rd $2,000,000*
1996 4th $1,200,000
* For purposes of this covenant, the maximum Capital
Expenditure threshold for the third fiscal quarter of 1996
shall be decreased to $1,000,000 if the Borrowers do not
complete the New Restaurant to be located in Whitemarsh,
Pennsylvania.
(v) EBITDA.
Maintain at all times, EBITDA, after
deducting the amount of Restaurant Capital Gains included
in the definition of net income for purposes of
calculating EBITDA, of not less than the amount set forth
below for each period set forth below:
Fiscal Year Fiscal Quarter
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1996 1st $1,100,000
1996 2nd $1,650,000
1996 3rd $2,600,000
1996 4th $3,100,000"
(x)Section 5.02(e) is amended by amending
clause (iii) thereof, and inserting a new clause (iv) at
the end thereof, to read as follows:
"(iii) sales of any restaurant the Location Operating
Profit of which has been less than $200,000 for the most
recent 12 month period, provided, that all such
restaurants are sold for cash, and (iv) sales of any
restaurant or other asset listed on the Restaurant
Disclosure Letter, provided that all such restaurants or
other assets are sold for cash and that not less than 90%
of the amount of anticipated cash proceeds, as shown on
said Restaurant Disclosure Letter, is actually received by
the Borrowers, and provided, further, that all such sales
shall be completed on or before March 31, 1996."
SECTION iii. Conditions of Effectiveness.
This Amendment shall become effective as of the date hereof, when the
Agent shall have received:
(a) counterparts of (i) this Amendment executed by the
Borrowers, the Required Lenders and the Agent, (ii) the Consent
appended hereto (the "Consent") executed by each of the Guarantors, and
(iii) such other documents as the Agent shall reasonably request;
(b) a fee in the amount of 1/4 of 1% on each Lenders'
Commitment as in effect on the date of this Amendment, paid to the
Agent by the Borrowers for the account of each of the Lenders which
have executed the Fourth Amendment;
(c) a certificate of the Secretary or Assistant Secretary
of each of the Borrowers (a) attaching a true and complete copy of the
resolutions of its Board of Directors evidencing authorization of this
Amendment and the Credit Agreement as amended thereby, (b) attaching a
true and complete copy of its certificate of incorporation and by-laws,
or stating that such documents have not been amended since the
Reinstatement Date, (c) setting forth the incumbency of its officer or
officers who may sign this Amendment; and
(d) A favorable opinion of counsel to the Borrowers and
the Guarantors to the effect that this Amendment and the Consent have
been duly authorized, executed and delivered by the Loan Parties party
thereto.
SECTION iv. Representations and Warranties.
The Borrowers hereby (a) reaffirm and admit the validity and
enforceability of the Loan Documents and all of their obligations thereunder,
(b) agree and admit that they have no defenses to or offsets against any of
their obligations to the Agent or any Lender under the Loan Documents, and (c)
represent and warrant that there exists no Default or Event of Default and that
the representations and warranties contained in the Credit Agreement are true
and correct on and as of the date hereof.
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SECTION v. Reference to and Effect on the Loan
Documents.
(i)Upon the effectiveness of this Amendment,
on and after the date hereof, each reference
in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein", or words of
like import, and each reference in the other
Loan Documents to the Credit Agreement, shall
mean and be a reference to the Credit
Agreement as amended hereby;
(ii)Except as specifically amended or waived
above, the Credit Agreement and the Notes,
and all other Loan Documents, shall remain in
full force and effect and are hereby ratified
and confirmed. Without limiting the
generality of the foregoing, the Collateral
Documents and all Collateral described
therein shall continue to secure the payment
of the obligations of the Borrowers
thereunder, under the Credit Agreement, as
amended hereby, and under the Notes and other
Loan Documents; and
(iii)The execution, delivery and
effectiveness of this Amendment shall not,
except as expressly provided herein, operate
as a waiver of any right, power or remedy of
any Lender or the Agent under any of the Loan
Documents, nor, except as provided herein,
constitute a waiver of any provision of any
of the Loan Documents.
SECTION vi. Costs and Expenses.
The Borrowers agree to pay on demand all reasonable costs and expenses
of the Agent in connection with the arranging, preparation, reproduction,
execution and delivery of this Amendment and the other instruments and documents
to be delivered hereunder, including the reasonable fees and expenses of Xxxxx,
Xxxxxx & Xxxxxx, LLP, special counsel for the Agent, with respect thereto, and
of local counsel, if any, who may be retained by said special counsel with
respect thereto.
SECTION vii. Counterparts.
This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be an
original and all of which together shall constitute but one and the same
document.
SECTION viii. Governing Law.
This Amendment is intended to be performed in the State of New York and
shall be construed and is enforceable in accordance with, and shall be governed
by, the internal laws of the State of New York without regard to principles of
conflict of laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
THE GROUND ROUND, INC.
By:
----------- ---------------
Name:
Title:
GR OF MINN., INC.
By:
----------- ---------------
Name:
Title:
THE BANK OF NEW YORK,
individually and as Agent
By:
----------- ---------------
Name:
Title:
CHEMICAL BANK, individually and
as Co-Agent
By:
----------- ---------------
Name:
Title:
BANK OF AMERICA ILLINOIS
By:
----------- ---------------
Name:
Title:
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NBD BANK
By:
----------- ---------------
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
----------- ---------------
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By:
----------- ---------------
Name:
Title: Authorized Signatory
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CONSENT OF GUARANTORS
DATED AS OF NOVEMBER 22, 1995
The undersigned, as the Guarantors referred to in the foregoing Fourth
Amendment, dated as of November 22, 1995, to the Amended and Restated Credit
Agreement, dated as of October 8, 1993, as amended by a First Amendment, dated
as of January 20, 1994, and a Second Amendment, dated as of February 10, 1995,
and a Third Amendment dated as of May 10, 1995, among The Ground Round, Inc., GR
of Minn., Inc., the banks named therein, The Bank of New York, as Agent, and
Chemical Bank as Co-Agent, each hereby consents to the foregoing Amendment and
hereby confirms and agrees that, notwithstanding the effectiveness of said
Amendment, (i) the Guaranty and each Collateral Document in effect on the date
hereof to which it is a party are, and shall continue to be, in full force and
effect and are hereby confirmed and ratified in all respects, except that, upon
the effectiveness of, and after the date of, said Amendment, all references in
the Guaranty and each such Collateral Document to the Credit Agreement shall
mean the Credit Agreement as amended by said Amendment and (ii) such Collateral
Documents consisting of security agreements and all collateral described therein
do, and shall continue to, secure the payments by the Borrowers referred to in
said Amendment of their obligations under the Credit Agreement, as amended by
said Amendment, and under the Notes.
GRH OF NJ, INC.
By:
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Name:
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Title:
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GROUND ROUND HOLDINGS, INC.
By:
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Name:
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Title:
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GROUND ROUND RESTAURANTS, INC.
By:
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Name:
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Title:
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G.R. GLENDLOC, INCORPORATED
By:
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Name:
-------------------
Title:
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GROUND ROUND OF BALTIMORE, INC.
By:
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Name:
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Title:
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GRXR OF BEL AIR, INC.
By:
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Name:
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Title:
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GRXR OF XXXXXXXXX, INC.
By:
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Name:
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Title:
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GRXR OF HAGERSTOWN, INC.
By:
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Name:
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Title:
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