Contract
EXHIBIT
10.1
Execution
Counterpart
AMENDMENT
NO. 3 TO FIRST LIEN CREDIT AGREEMENT dated as of December 12, 2005 (this
“Amendment
Agreement”)
among
KRISPY KREME DOUGHNUT CORPORATION, a North Carolina corporation (the
“Borrower”),
the
GUARANTORS (as defined in the Credit Agreement referred to below) signatory
hereto and the LENDERS (as defined in the Credit Agreement referred to below)
signatory hereto.
The
Borrower is party to a First Lien Credit Agreement dated as of April 1,
2005 (as amended, amended and restated, supplemented or otherwise modified
up to
the date hereof, the “Credit
Agreement”)
among
the Borrower, the Parent Guarantor, the Subsidiary Guarantors, the Lenders,
Credit Suisse (formerly known as Credit Suisse First Boston), as Administrative
Agent and Issuing Lender, and Xxxxx Fargo Foothill, Inc., as Collateral Agent,
Issuing Lender and Swingline Lender.
The
Borrower has requested that the Required Lenders agree to amend certain
provisions of the Credit Agreement, and the Required Lenders have agreed,
subject to the terms and conditions hereinafter set forth to such
amendments.
Accordingly,
in consideration of the premises and for other good and valuable consideration,
the sufficiency and receipt of all of which are hereby acknowledged, the parties
hereto hereby agree as follows:
SECTION 1.
Defined
Terms.
Capitalized terms used but not herein shall be used herein as defined in the
Credit Agreement.
SECTION 2.
Amendments.
As of
the Amendment Effective Date (as defined below):
(a) Section
1.01 of the Credit Agreement is hereby amended by inserting the following new
defined term therein in the appropriate alphabetical location:
“Amendment
No. 3 Effective Date”
means
the date that the amendments to this Agreement effected by Amendment No. 3
hereto become effective.
(b) The
definition of “Applicable Margin” in Section 1.01 of the Credit Agreement is
hereby amended to read as follows:
“Applicable
Margin”
means:
(a) with respect to any ABR Loan, (i) 2.25% per annum on or prior to
the last day of the 2007 Fiscal Year and (ii) 1.75% per annum thereafter; and
(b) with respect to any Eurodollar Loan, (i) 3.25% per annum on or prior to
the last day of the 2007 Fiscal Year and (ii) 2.75% per annum thereafter;
provided
that,
with respect to any date on or prior to the last day of the 2007 Fiscal Year,
the Applicable Margin for each Type of Loan shall be reduced by 0.50% per annum
if, on the last day of each of any two consecutive Fiscal Quarters falling
in
the 2007 Fiscal Year (each such day being referred to as a “Test
Date”)
(w)
Consolidated EBITDA for the period for four consecutive Fiscal Quarters ending
on such Test Date shall be at least $55,000,000, (x) the Consolidated Leverage
Ratio on such Test Date shall not exceed the ratio required to have been
maintained on such Test Date by Section 7.09(a) of this Agreement as in effect
before the Amendment No. 3 Effective Date, (y) the Consolidated Interest
Coverage Ratio on such Test Date shall not be less than the ratio required
to
have been maintained
on
such
Test Date by Section 7.09(b) of this Agreement as in effect before the Amendment
No. 3 Effective Date and (z) the Borrower shall have furnished to the
Administrative Agent its financial statements as at and for the periods ending
on the Test Dates as required by Section 6.01(a) or 6.01(b), together with
a
certificate of a Financial Officer of the Parent Guarantor certifying that
the
conditions set forth in the preceding clauses (w), (x) and (y) have been
satisfied and setting forth reasonably detailed calculations demonstrating
such
satisfaction. The reduction of the Applicable Margin pursuant to the proviso
in
the preceding sentence shall take effect from and after the second Business
Day
following receipt by the Administrative Agent of the financial statements and
certificate referred to in clause (z) of said sentence for the second Test
Date
(such second Business Day being referred to herein as the “Rate
Reduction Date”).
(c) The
definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is
hereby amended to add the following sentence at the end thereof:
“Notwithstanding
anything contained herein to the contrary, the amount of Consolidated EBITDA
attributable to the third Fiscal Quarter of Fiscal Year 2006 shall not be deemed
to exceed $6,800,000, and, if the amount of Consolidated EBITDA attributable
to
such Fiscal Quarter would otherwise exceed $6,800,000, such amount shall be
reduced to $6,800,000 for purposes of this Agreement.”
(d) The
definition of “Investment” in Section 1.01 of the Credit Agreement is hereby
amended by adding the following sentence at the end thereof:
“For
the
avoidance of doubt, the forgiveness by the Borrower of receivables owing from
New England Dough, LLC not to exceed $3,000,000 in connection with the
contemplated restructuring of New England Dough, LLC shall not be deemed to
be
an Investment for purposes of this Agreement.”
(e) Clause
(f) of the definition of “Net Liquidity” in Section 1.01 of the Credit Agreement
is hereby amended to read as follows:
“(f) the
lesser of (A) $15,000,000 and (B) the aggregate cash balances of the
Concentration Accounts and the Depositary Account (i) determined at 1:30 p.m.,
New York City time, on such date or if such date is not a Business Day, at
1:30
p.m., New York City time, on the Business Day next occurring (in each case,
after giving effect to any prepayments that the Borrower is required to make
pursuant to Section 2.10(b)(iii)) and (ii) not subject to any Lien other than
(x) the Liens created by the Loan Documents and the Second Lien Loan Documents
and (y) set-off rights”
(f) The
first
sentence of Section 2.11(a) of the Credit Agreement is hereby amended to read
as
follows:
“The
Borrower agrees to pay to the Administrative Agent for the account of each
Lender a commitment fee, which shall accrue at a rate per annum equal to 3/4
of
1% on the average daily unused amount of the Commitment of such Lender during
the period from and including the date hereof to but excluding the earlier
of
the date such Commitment terminates and the Commitment Termination Date;
provided
that
such rate shall be reduced by ¼ of 1% per annum from and after the earlier of
(x) the first day of the 2008
Fiscal
Year and (y) the Rate Reduction Date (as defined in the definition of
“Applicable Margin” in Section 1.01 hereof).”
(g) Section
2.08(d) of the Credit Agreement is hereby amended by substituting “August 1,
2006” for “the first anniversary of the “Effective Date”.
(h) Section
5.02 of the Credit Agreement is hereby amended by deleting “and” at the end of
paragraph (d) thereof, substituting “; and” for the period at the end of
paragraph (e) thereof and adding a new paragraph (f) thereto reading as
follows:
“(f)
In
connection with any requested Loan, the aggregate cash balances in all deposit
accounts (including, without limitation, the Concentration Accounts and the
Depository Account) of the Obligors, determined at 1:30 p.m., New York City
time, on the date of such Loan (including, without duplication, the proceeds
of
such Loan) shall not exceed $15,000,000 after giving effect to all cash
disbursements (including the use of the proceeds of such Loan) permitted
hereunder to be made on such date.”
(i) The
table
in Section 7.09(a) of the Credit Agreement is amended to read as
follows:
|
Period
|
Ratio
|
|
|
Second,
Third and Fourth Fiscal Quarters of 2006 Fiscal Year
|
4.50
to 1.00
|
|
|
First
Fiscal Quarter of 2007 Fiscal Year
|
5.40
to 1.00
|
|
|
Second
Fiscal Quarter of 2007 Fiscal Year
|
5.00
to 1.00
|
|
|
Third
Fiscal Quarter of 2007 Fiscal Year
|
4.80
to 1.00
|
|
|
Fourth
Fiscal Quarter of 2007 Fiscal Year
|
4.70
to 1.00
|
|
|
First
Fiscal Quarter of 2008 Fiscal Year and Thereafter
|
3.70
to 1.00
|
(j) The
table
in Section 7.09(b) of the Credit Agreement is amended to read as
follows:
|
Period
|
Ratio
|
|
|
Second
and Third Fiscal Quarters of 2006 Fiscal Year
|
3.15
to 1.00
|
|
|
Fourth
Fiscal Quarter of 2006 Fiscal Year
|
2.50
to 1.00
|
|
|
First
Fiscal Quarter of 2007 Fiscal Year
|
2.10
to 1.00
|
|
|
Second
Fiscal Quarter of 2007 Fiscal Year
|
2.05
to 1.00
|
|
|
Third
Fiscal Quarter of 2007 Fiscal Year
|
2.05
to 1.00
|
|
|
Fourth
Fiscal Quarter of 2007 Fiscal Year
|
2.05
to 1.00
|
|
|
First
Fiscal Quarter of 2008 Fiscal Year and Thereafter
|
3.40
to 1.00
|
(k) Paragraph
(t) of Article VIII of the Credit Agreement is hereby amended to read as
follows:
“(t)
the
Restatement Date shall not have occurred on or before April 30, 2006;
or”
(l) The
paragraph of Section D of Exhibit B of the Credit Agreement that refers to
the
aggregate cash balances of the Concentration Accounts and the Depositary Account
is hereby amended to read as follows:
“The
lesser of $15,000,000 and the aggregate cash balances of the Concentration
Accounts and the Depositary Account determined at 1:30 pm NYC time (after giving
effect to any prepayment on such date).”
(m) Exhibit
H
of the Credit Agreement is hereby amended by deleting “and” at the end of
paragraph 3(c) thereof, substituting “; and” for the period at the end of
paragraph (d) thereof and adding a new paragraph (e) thereto reading as
follows:
“(e)
The
aggregate cash balances in all deposit accounts (including, without limitation,
the Concentration Accounts and the Depository Account) of the Obligors,
determined at 1:30 p.m., New York City time, on the above-referenced requested
date for such Loan (including, without duplication, the proceeds of such Loan),
shall not exceed $15,000,000 after giving effect to all cash disbursements
(including the use of the proceeds of such Loan) permitted by the Credit
Agreement to be made on such date.”
(n) Amendment
and Waiver No. 2 to the First Lien Credit Agreement dated as of October 25,
2005
among the Borrower, the Guarantors signatory thereto and the Lenders signatory
thereto is hereby amended as follows:
(A) The
ninth
“Whereas” clause thereof is hereby amended to read as follows:
“WHEREAS,
Krispy Kreme International Ltd. (“KKI”),
one
of the Borrower’s Included Subsidiaries, desires to sell to KKA Holdings Pty Ltd
(as trustee for the KKA Holdings Unit Trust) (the “Australia
Sale”) all
of
its equity interests in Krispy Kreme Australia Pty Limited (“KKA”)
for
approximately AUD 3,500,000 in cash and KKI and the Borrower desire to sell
to
said trustee loans made to KKA for approximately AUD 5,075,000 in cash, but
the
Borrower’s existing Guarantee of Indebtedness of KKA will not be reduced or
cancelled concurrently with such sale;”
| (B) |
Clause
(ii) of Section 1(c) thereof is hereby amended to read as
follows:
|
“(ii) agree
that the sale by KKI and the Borrower of their loans made to KKA as part of
the
Australia Sale shall be deemed to be a sale by KKI of equity interests in KKA
for purposes of said Section 7.03(f) and that said Section 7.03(f) shall not
be
deemed to prohibit the sale of such loans in a separate transaction from, and
on
a different date than, the sale of the equity interests in KKA”
SECTION 3.
Conditions
to Effectiveness.
The
amendments set forth in Section 2 hereof shall become effective when, and only
when, and as of the date (the “Amendment
Effective Date”)
on
which (a) the Administrative Agent shall have received counterparts of this
Amendment Agreement executed by the Borrower, each of the Guarantors (other
than
Freedom Rings, LLC) and the Required Lenders (b) all the conditions to the
effectiveness of the Amendment No. 3 to the Second Lien Credit Agreement of
even date herewith, substantially in the form heretofore delivered to the
Lenders, shall have occurred other than the effectiveness of this Amendment
Agreement, (c) the Administrative Agent shall have received payment of all
accrued fees and expenses of the Administrative Agent (including the reasonable
and accrued fees of counsel to the Administrative Agent invoiced on or prior
to
the date hereof) and (d) the Borrower shall have paid to the Administrative
Agent for the account of each Lender that shall have executed and delivered
to
the Administrative Agent a counterpart of this Amendment Agreement on or before
the Amendment Effective Date the amendment fee payable to such Lender under
Section 4 hereof.
SECTION
4. Fees.
The
Borrower shall pay to the Administrative Agent for the account of each Lender
that executes and delivers to the Administrative Agent a counterpart of this
Amendment Agreement on or before December 15, 2005 (New York time) an amendment
fee equal to 0.25% of the Commitment of such Lender, such fee to be payable
(i)
in the case of Lenders that execute and deliver this Amendment Agreement on
or
before the Amendment Effective Date, on the Amendment Effective Date and (ii)
in
the case of all other Lenders entitled to receive such fee, not later than
December 19, 2005.
SECTION 5.
Reference
to and Effect on the Financing Documents.
(a)
On
and
after the Amendment Effective Date, each reference in the Credit Agreement
to
“this Agreement”, “hereunder”, “hereof” 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
modified hereby.
(b) The
Credit Agreement and each of the other Loan Documents, as specifically modified
by this Amendment Agreement, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) The
execution, delivery and effectiveness of this Amendment Agreement shall not,
except as expressly provided herein, operate as a waiver of any right, power
or
remedy of the Credit Agreement or the other Loan Documents, nor constitute
a
waiver of any provision of the Credit Agreement or the other Loan
Documents.
SECTION 6.
Affirmation
of Guarantors.
Each
Guarantor signatory hereto hereby consents to the amendments to the Credit
Agreement effected hereby, and hereby confirms and agrees that, notwithstanding
the effectiveness of the amendments set forth in Section 2 hereof (and
notwithstanding the failure of Freedom Rings, LLC to be a party hereto), the
obligations of such Guarantor contained in Article III of the Credit
Agreement or in any other Loan Documents to which it is a party are, and shall
remain, in full force and effect and are hereby ratified and confirmed in all
respects, except that, on and after the effectiveness of such amendments, each
reference in Article III of the Credit Agreement and in each of the other
Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of
like import shall mean and be a reference to the Credit Agreement as modified
by
this Amendment Agreement.
SECTION 7.
GOVERNING
LAW.
THIS
AMENDMENT AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
SECTION 8.
Execution
in Counterparts.
This
Amendment Agreement may be executed by one or more of the parties to this
Amendment Agreement on any number of separate counterparts, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Amendment Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment Agreement.
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to
be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
KRISPY
KREME DOUGHNUT CORPORATION
By:
/s/
Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title: CFO
GUARANTORS:
KRISPY
KREME DOUGHNUTS, INC.
KRISPY
KREME DISTRIBUTING COMPANY, INCORPORATED
KRISPY
KREME CANADA, INC.
HD
CAPITAL CORPORATION
HDN
DEVELOPMENT CORPORATION
KRISPY
KREME COFFEE COMPANY, LLC
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION, an authorized
Member
|
GOLDEN
GATE DOUGHNUTS, LLC
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION, an authorized
Member
|
PANHANDLE
DOUGHNUTS, LLC
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION, an authorized
Member
|
NORTH
TEXAS DOUGHNUTS, L.P.
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION, its General
Partner
|
By:
/s/
Xxxxxxx X. Xxxxxx
Name:
Xxxxxxx X. Xxxxxx
Title:
Authorized Officer
LENDER
Consent
of Required Lenders Received
