Contract
Exhibit 10.1
AMENDMENT
NO. 3 TO CREDIT AGREEMENT, dated as of April 9, 2008 (this “Amendment
Agreement”), among KRISPY KREME DOUGHNUT CORPORATION, a North Carolina
corporation (the “Borrower”), KRISPY
KREME DOUGHNUTS, INC., a North Carolina corporation (the “Parent Guarantor”),
the SUBSIDIARY 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.
PRELIMINARY
STATEMENTS
WHEREAS,
the Borrower is party to a Credit Agreement, dated as of February 16, 2007 (as
amended by Amendment No. 1 to Credit Agreement, dated as of June 21, 2007, and
as further amended by Amendment No. 2 to Credit Agreement, dated as of January
23, 2008, the “Credit
Agreement”), among the Borrower, the Parent Guarantor, the Subsidiary
Guarantors, the Lenders, and Credit Suisse, Cayman Islands Branch, as
Administrative Agent, Collateral Agent, Issuing Lender, and Swingline
Lender.
WHEREAS,
the Borrower has requested that the Required Lenders agree to amend and waive
certain provisions of the Credit Agreement, and the Required Lenders have
agreed, subject to the terms and conditions hereinafter set forth to such
amendments and waivers.
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 defined herein shall be
used herein as defined in the Credit Agreement.
SECTION 2. Amendments. As
of the Amendment Effective Date:
(a) The
following definitions are added to Section 1.01 of the Credit
Agreement:
“‘LIBOR Floor Rate’
means a rate equal to 3.25% per annum.”
(b) The
definition of “Applicable Commitment Fee Rate” in Section 1.01 of the Credit
Agreement is deleted in its entirety and replaced with the
following:
“‘Applicable Commitment Fee
Rate’ means 0.75% per annum.”
(c) The
definition of “Applicable Margin” in Section 1.01 of the Credit Agreement is
deleted in its entirety and replaced with the following:
“‘Applicable Margin’
means: (a) with respect to any ABR Loan, 4.50% per annum;
and (b) with respect to any Eurodollar Loan, 5.50% per
annum. The Applicable Margin for the Incremental Loans of any Series
shall be determined at the time such Series of Loans is established pursuant to
Section 2.01(c); and (a) if the Applicable Margin for Incremental Facility
Term Loans of any Series would otherwise be more than 25 basis points higher
than the Applicable Margin for Term Loans, then the Applicable Margin for Term
Loans shall be automatically increased to a rate per annum equal to 25 basis
points less than the Applicable Margin for such Series of Incremental Facility
Term Loans from and after the earlier of the initial date of borrowing of such
Incremental Facility Term Loans or the date that the related Incremental
Facility Term Loan Commitments are
2
established
and (b) if the Applicable Margin for Incremental Revolving Credit Loans of any
Series would otherwise be more than 25 basis points higher than the Applicable
Margin for Revolving Credit Loans, then the Applicable Margin for Revolving
Credit Loans shall be automatically increased to a rate per annum equal to 25
basis points less than the Applicable Margin for such Series of Incremental
Facility Revolving Credit Loans from and after the date that the related
Incremental Facility Revolving Credit Commitments are established.”
(d) The
definition of “Consolidated EBITDA” in Section 1.01 of the Credit Agreement is
amended as follows:
(i) “and”
immediately preceding clause (h) in said definition is deleted and replaced with
“,” and a new clause (i) is added immediately following said clause (h) reading
as follows:
“and (i)
without duplication of clause (g) above, the aggregate amount of cash or
non-cash charges reducing Consolidated Net Income for such period in respect of
Specified Contingent Obligations;” and
(ii) “(a)” is
added after “less (ii)” in said definition and a new clause (b) is added at the
end of clause (ii) of said definition reading as follows:
“and (b)
the aggregate amount of cash payments made by the Obligors during such period in
respect of Specified Contingent Obligations to the extent that such aggregate
amount during the relevant fiscal period (x) relates to charges that reduced
Consolidated Net Income for such period or any prior period and (y) exceeds
$3,000,000 for such period or $6,000,000 in the aggregate.”
(e) The
definition of “Consolidated Net Income” in Section 1.01 of the Credit Agreement
is amended by deleting clause (vi) thereof in its entirety and replacing it with
the following:
“(vi)
gains or losses on Dispositions or on disposals of leased property (in the case
of disposals of leased property, to the extent not exceeding $2,000,000 in any
relevant fiscal period or $5,000,000 in the aggregate).”
(f) The
definition of “Excess Cash Flow” in Section 1.01 of the Credit Agreement is
amended by deleting clause (g) thereof in its entirety and replacing it with the
following:
“(g) to
the extent added to determine Consolidated EBITDA, those items set forth in
clauses (d), (e), (f), (h) and (i) (with respect to clause (i), up to $3,000,000
for such period or $6,000,000 in the aggregate) of the definition of
“Consolidated EBITDA” to the extent such items were paid in cash by the Parent
Guarantor or any of its Subsidiaries on a consolidated basis during such period
(it being understood that non-cash charges that were added to determine
Consolidated EBITDA in a prior period pursuant to clause (i) of Consolidated
EBITDA shall be included in the calculation of the amount under this clause (g)
to the extent such items were paid in cash during the current period (subject to
the $3,000,000 and $6,000,000 limitations set forth above)).”
(g) The
definition of “LIBO Rate” in Section 1.01 of the Credit Agreement is amended by
adding the following at the end thereof: “Notwithstanding the
foregoing, the LIBO Rate for
3
any
Interest Period will not at any time be less than the LIBOR Floor
Rate. As used in this Agreement, the ‘LIBO Rate’ shall in all cases
mean such rate subject to the LIBOR Floor Rate.”
(h) The
definition of “Permitted Encumbrances” in Section 1.01 of the Credit Agreement
is amended as follows: (i) the “and” immediately following clause (k) in said
definition is deleted and replaced with “;”, (ii) the “.”immediately following
clause (l) in said definition is deleted and replaced with “; and” and a new
clause (m) is added immediately following said clause (l) reading as
follows:
“(m) in
the case of the leased stores listed as numbers 77, 78, and 79 on Schedule VIII,
options granted on arm’s length terms to Persons to acquire such stores (whether
through an assignment of lease or otherwise) and restrictions on the transfer of
such stores contained in any agreement governing any such option.”
(i) Section
7.03(f) of the Credit Agreement is deleted in its entirety and replaced with the
following:
“(f) unless
a Default has occurred and is continuing, the Parent Guarantor or any of its
Included Subsidiaries may sell all or any portion of its equity interests or
other Investments in any Joint Venture for fair market value, subject to the
conditions that (a) if the fair market value thereof is greater than $500,000,
75% of the consideration therefor shall be received in cash (the cancellation or
reduction of a Guarantee by the Parent Guarantor or any of its Included
Subsidiaries in support of obligations of such Joint Venture being deemed to
constitute cash for the purposes of this clause (a)) (it being understood that
such cash consideration may be received in installments (and Guarantees may be
cancelled or reduced in installments) over a period not to exceed three years
from the consummation of the sale; provided that (i) the
unpaid portion of the purchase price (or the Guarantee to be cancelled or
reduced) is secured by a Lien in favor of the seller on the portion of the
equity interests or other Investments being sold corresponding to such unpaid
portion and (ii) such Lien shall not be sold, assigned or otherwise transferred
by the seller in any manner (other than to the Borrower or a Guarantor)), (b) if
the aggregate amount of such consideration exceeds $2,000,000, the amount of
consideration to be received by the Parent Guarantor or such Included Subsidiary
(including the amount of any Guarantee theretofore issued by the Parent
Guarantor or such Included Subsidiary to be cancelled in connection with such
sale) has been determined by the Board of Directors to be fair to the Parent
Guarantor or such Included Subsidiary, (c) if the aggregate amount of such
consideration exceeds $10,000,000, the Board of Directors shall have received a
fairness opinion in connection with such sale rendered by a recognized
institution with established expertise in valuing transactions of such type and
(d) in connection with such sale, all Guarantees theretofore issued by the
Parent Guarantor or any of its Included Subsidiaries in support of obligations
of such Joint Venture shall be cancelled or reduced at least in proportion to
the percentage of interests sold (it being understood that such Guarantees to be
cancelled or reduced may be cancelled or reduced in installments over a period
not to exceed three years from the consummation of the sale; provided that (i) the
Guarantee to be cancelled or reduced following the sale is secured by a Lien in
favor of the seller on the portion of the equity interests or other Investments
being sold corresponding to such uncancelled or unreduced portion and (ii) such
Lien shall not be sold, assigned or otherwise transferred by the seller in any
manner (other than to the Borrower or a Guarantor));”
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(j) Section
7.03(g) of the Credit Agreement is deleted in its entirety and replaced with the
following:
“(g) unless
a Default has occurred and is continuing, the Parent Guarantor and its Included
Subsidiaries may sell other property for cash for fair market value for
consideration not exceeding $20,000,000 in any Fiscal Year; provided that (i)
until such time as the Borrower has made voluntary or mandatory prepayments of
the Term Loans in an aggregate principal amount of at least $9,260,000 following
March 31, 2008 (including payments made pursuant to this clause or pursuant to
Section 2.10(a), (c)(i), (c)(ii), (c)(iii) or (c)(iv), but excluding payments
made pursuant to Section 2.09(a)(iii) or Section 2.10(c)(v)), the Net Available
Proceeds received under this clause (g) in excess of $500,000 in any Fiscal Year
shall be applied to prepay Term Loans without any right of reinvestment in
accordance with Section 2.10 hereof, (ii) without duplication of clause (i)
above, to the extent the aggregate Net Available Proceeds received under this
clause (g) in any Fiscal Year exceeds $10,000,000, then such excess Net
Available Proceeds shall be applied to prepay Term Loans without any right of
reinvestment in accordance with Section 2.10 hereof and (iii) in the case of the
sale of any owned Real Property, a portion of the consideration therefor (up to
$5,000,000 in any Fiscal Year) may be in the form of a note secured by such Real
Property (except that (x) no more than $10,000,000 in the aggregate may be
outstanding on any such note or notes at any one time and (y) at least 50% of
the consideration received for such sale of Real Property must be in the form of
cash);”
(k) Section
7.03(h) of the Credit Agreement is deleted in its entirety and replaced with the
following:
“(h) the
Parent Guarantor and its Included Subsidiaries may (i) lease or sublease
property in an arm’s length transaction in the ordinary course of business,
(ii) lease or sublease stores to franchisees on fair market value terms or
assign leases covering leased stores in an arm’s length transaction (provided that, in the
case of an assignment of a lease, the Parent Guarantor or such Included
Subsidiary may remain liable for payments under the lease following any such
assignment) and (iii) dispose of the other leased assets in an arm’s length
transaction (including by means of (x) a substantially simultaneous purchase and
sale of such asset or (y) a termination of the lease and payment of the
remaining obligations thereunder); provided that, in the
case of this clause (iii), the aggregate fair market value of leased assets so
disposed (excluding the Borrower’s corporate jet) shall not exceed $5,000,000 in any Fiscal Year;”
(l) Section
7.05 of the Credit Agreement is amended as follows: (i) the “and” immediately
following clause (n) in Section 7.05 is deleted and replaced with “;”, (ii) the
“.”immediately following clause (o) in Section 7.05 is deleted and replaced with
“; and” and a new clause (p) is added immediately following said clause (o)
reading as follows:
“(p)
Investments (i) received as consideration for a sale of property to the extent
permitted by Section 7.03 and (ii) deemed to have been made as a result of
remaining liable for payments under a lease assigned in accordance with Section
7.03(h).”
(m) The table
in Section 7.09(a) of the Credit Agreement setting forth the Consolidated
Leverage Ratio levels is deleted in its entirety and replaced with the
following:
5
|
Period
|
Ratio
|
|
|
Fourth
Fiscal Quarter of 2008 Fiscal Year
|
4.00
to 1.00
|
|
|
2009
Fiscal Year
|
4.75
to 1.00
|
|
|
First
Fiscal Quarter of 2010 Fiscal Year
|
4.50
to 1.00
|
|
|
Second
Fiscal Quarter of 2010 Fiscal Year
|
4.50
to 1.00
|
|
|
Third
Fiscal Quarter of 2010 Fiscal Year
|
4.25
to 1.00
|
|
|
Fourth
Fiscal Quarter of 2010 Fiscal Year
|
4.00
to 1.00
|
|
|
2011
and 2012 Fiscal Year
|
3.00
to 1.00
|
|
|
2013
Fiscal Year and Thereafter
|
2.75
to 1.00
|
(n) The table
in Section 7.09(b) of the Credit Agreement setting forth the Consolidated
Interest Coverage Ratio levels is deleted in its entirety and replaced with the
following:
|
Period
|
Ratio
|
|
|
Fourth
Fiscal Quarter of 2008 Fiscal Year
|
3.25
to 1.00
|
|
|
2009
Fiscal Year
|
2.50
to 1.00
|
|
|
First
Fiscal Quarter of 2010 Fiscal Year
|
2.50
to 1.00
|
|
|
Second
Fiscal Quarter of 2010 Fiscal Year
|
2.75
to 1.00
|
|
|
Third
Fiscal Quarter of 2010 Fiscal Year
|
2.75
to 1.00
|
|
|
Fourth
Fiscal Quarter of 2010 Fiscal Year
|
3.00
to 1.00
|
|
|
2011
Fiscal Year and Thereafter
|
4.50
to 1.00
|
(o) Schedules
III, IV and X of the Credit Agreement are amended and restated in their entirety
by replacing such schedules with Schedules III, IV and X attached hereto, which
schedules have been revised as follows:
(i) changes
to the “Amount Outstanding Subject to Guaranty as of 1/28/2007” in Rows (x),
(z), (aa) and (cc) of Part A - Section 3 of Schedule III;
(ii) the
heading “2. The Obligors are parties to the following intercompany
loans among themselves and their wholly-owned subsidiaries:” on page 5 of
Schedule III has been changed to read “4. The Obligors are parties to
the following intercompany loans among themselves and their wholly-owned
subsidiaries:”;
(iii) changes
to the “Amount Outstanding Subject to Guaranty as of 1/28/2007” in Rows (x),
(z), (aa) and (cc) of Section 4 of Schedule IV;
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(iv) changes
to the Rows entitled “KK of South Florida” and “Total” in Schedule
X;
(v) in the
footnote in Schedule X, “(should be resolved by Q1)” has been
deleted;
(vi) on the
first page of Part B of Schedule III, the heading has been changed to read “Part
B – Liens” instead of “Schedule IIB – Liens”; and
(vii) “Schedule
VIII” previously attached to the end of Part B of Schedule III has been deleted
in its entirety.
SECTION 3. Waiver. As
of the Amendment Effective Date, each of the Lenders that is a party hereto
hereby waives any Default that shall have occurred, before the date hereof as a
result of any breach of any representation or warranty made or deemed made
before the date hereof in respect of the amounts or other items set forth in
Schedules III, IV and X that are being amended hereby.
SECTION 4. Representations and
Warranties. The Borrower hereby represents and warrants to the
undersigned Lenders that, after giving effect to the amendments and waivers
herein, (a) the representations and warranties of the Borrower and the Parent
Guarantor set forth in the Credit Agreement, and of each Obligor in each of the
other Loan Documents to which it is a party, are true and correct in all
material respects on and as of the date hereof (except to the extent that any
such representation or warranty expressly relates to an earlier date), with each
reference therein to the Credit Agreement being deemed for purposes hereof to be
a reference to the Credit Agreement as modified hereby and (b) no Default has
occurred and is continuing.
SECTION 5. Conditions to
Effectiveness. The amendments set forth in Section 2 hereof
and the waiver set forth in Section 3 hereof shall become effective when, and
only when, and as of the date (the “Amendment Effective
Date”) on which the Administrative Agent shall have
received:
(a)
counterparts of this Amendment Agreement executed by the Borrower, each of the
Guarantors, and the Required Lenders;
(b) payment
of fees and expenses of the Administrative Agent set forth in the Fee Letter,
dated March 14, 2008 (the “Fee Letter”), between
the Administrative Agent and the Borrower (including the reasonable and accrued
fees of counsel to the Administrative Agent);
(c)
payment of an amendment fee for the account of each Lender that has approved
this Amendment Agreement equal to 0.35% of such Lender’s aggregate outstanding
Revolving Credit Commitments and Term Loans as of the date hereof (prior to
giving effect to the Revolving Credit Commitment reduction described in Section
6 herein);
(d) a
favorable opinion of Xxxxxx Xxxxxx & Xxxxxxx LLP, special New York counsel
to the Borrower and Xxxxxxxxxx Xxxxxxxx, LLP, special North Carolina counsel to
the Borrower, in each case, dated the Amendment Effective Date and in form and
substance reasonably satisfactory to the Administrative Agent covering such
matters (including the enforceability of the Credit Agreement, the valid
organization, good standing and due authorization of the Borrower) as the
Administrative Agent shall reasonably request;
(e) a
certificate, signed by the Secretary or Assistant Secretary of the
Borrower
7
and dated
the Amendment Effective Date, evidencing the organization, existence and good
standing of the Borrower, the authorization of this Amendment Agreement and any
other legal matters relating to the Borrower or this Amendment Agreement as the
Administrative Agent may reasonably request, all in form and substance
reasonably satisfactory to the Administrative Agent; and
(f) a
certificate, signed by a duly authorized officer of the Borrower and dated the
Amendment Effective Date, in respect of the matters set forth in Section 4
above, in form and substance reasonably satisfactory to the Administrative
Agent.
SECTION
6. Reduction of Revolving
Credit Commitment. On the Amendment Effective Date, the
aggregate Revolving Credit Commitment under the Credit Agreement shall be
reduced to $30,000,000, such reduction to be made ratably among the Revolving
Credit Lenders. This Section 6 shall constitute notice under Section
2.08 of the Credit Agreement to so reduce the Revolving Credit Commitment (it
being understood that the Administrative Agent and the Lenders party hereto
hereby waive the requirement thereunder that the Borrower provide three Business
Days prior notice of such reduction).
SECTION 7. 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 8. 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, 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 9. GOVERNING
LAW. THIS AMENDMENT AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 10. Execution in
Counterparts. This Amendment Agreement may be
8
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.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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.
Xxxx
Name:
Xxxxxxx X. Xxxx
Title:
Executive Vice President, Chief Financial Officer
and
Treasurer
GUARANTORS:
KRISPY
KREME DOUGHNUTS, INC.
GOLDEN
GATE DOUGHNUTS, LLC
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
as
authorized Manager
|
PANHANDLE
DOUGHNUTS, LLC
|
|
By:
|
KRISPY
KREME MANAGEMENT I, LLC,
|
|
|
an
authorized Manager
|
|
|
By:
|
KRISPY
KREME MANAGEMENT II, LLC,
|
|
|
an
authorized Manager
|
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
as
authorized Member of Krispy Kreme Management I, LLC
and Krispy Kreme Management II, LLC
and Krispy Kreme Management II, LLC
NORTH
TEXAS DOUGHNUTS, L.P.
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
its
General Partner
|
KK CANADA
HOLDINGS, INC.
KRISPY
KREME MANAGEMENT I, LLC
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
as
authorized Member
|
KRISPY
KREME MANAGEMENT II, LLC
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
as authorized Member
KRISPY
KREME MANAGEMENT III, LLC
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
as
authorized Member
|
SOUTHERN
DOUGHNUTS, LLC
|
|
By:
|
KRISPY
KREME MANAGEMENT I, LLC,
|
|
|
as
authorized Manager
|
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
as
authorized Member
|
SOUTHWEST
DOUGHNUTS, LLC
|
|
By:
|
KRISPY
KREME MANAGEMENT I, LLC,
|
|
|
as
authorized Manager
|
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
as
authorized Member
|
NORTHEAST
DOUGHNUTS, LLC
|
|
By:
|
KRISPY
KREME MANAGEMENT I, LLC,
|
|
|
as
authorized Manager
|
|
|
By:
|
KRISPY
KREME DOUGHNUT CORPORATION,
|
|
|
as
authorized Member
|
KRISPY
KREME MOBILE STORE COMPANY
KRISPY
KREME CANADA, INC.
By: /s/ Xxxxxxx X.
Xxxx
Name:
Xxxxxxx X. Xxxx
Title:
Authorized Officer
HD
CAPITAL CORPORATION
HDN
DEVELOPMENT CORPORATION
By: /s/ H. Xxxxx Xxxxxx,
III
Name: H.
Xxxxx Xxxxxx, III
Title:
President
LENDERS
Consent
of Required Lenders Received
