EXHIBIT 4.8
SECOND AMENDMENT AND WAIVER
SECOND AMENDMENT AND WAIVER, dated as of September 25, 1998 (this
"Amendment"), to the Credit Agreement, dated as of May 19, 1998 (as amended,
supplemented or otherwise modified, the "Credit Agreement"), among Favorite
Brands International, Inc., a Delaware corporation (the "Borrower"), Favorite
Brands International Holding Corp., a Delaware corporation ("Holdings"), the
several banks and other financial institutions parties thereto (the "Lenders"),
Bank of America National Trust and Savings Association, as documentation agent
for the Lenders (in such capacity, the "Documentation Agent") and as co-
syndication agent (in such capacity, a "Co-Syndication Agent"), and The Chase
Manhattan Bank, as letter of credit issuing bank, swingline lender, and as
administrative agent for the Lenders (in such capacity, the "Administrative
Agent") and as co-syndication agent (in such capacity, a "Co-Syndication
Agent").
W I T N E S S E T H:
WHEREAS, the Borrower, Holdings, the Lenders, the Documentation Agent
and the Administrative Agent are parties to the Credit Agreement; and
WHEREAS, the Borrower has requested that certain provisions of the
Credit Agreement be modified in the manner provided for in this Amendment and
the Lenders are willing to agree to such modifications upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, and for other good and valuable consideration, the sufficiency
of which is hereby acknowledged, the Borrower, Holdings, the Lenders, the
Documentation Agent and the Administrative Agent hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the Credit
Agreement shall have such meanings when used herein.
2. Amendments to Section 1.1. (a) Section 1.1 of the Credit
Agreement is hereby amended by adding the following definitions in proper
alphabetical order:
"Second Amendment Effective Date" shall mean the "Effective Date" as
defined in the Second Amendment and Waiver dated as of September 25, 1998
to this Agreement.
"Sponsor Loan" shall mean the $17,000,000 loan to be made to the
Borrower by TPG, certain other equity holders of Holdings and their
Affiliates and related parties as a condition to the effectiveness of the
Second Amendment and Waiver dated as of September 25, 1998 to this
Agreement. The Sponsor Loan shall (i) be unsecured, (ii) mature in a
single installment after November 19, 2005, (iii) bear interest at a rate
not in
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excess of 10% per annum, which interest shall accrue and not be
payable until the scheduled principal maturity date and (iv) contain
limited covenants, events of default and other terms reasonably
satisfactory to the Administrative Agent.
(b) Subsection 1.1 of the Credit Agreement is amended by deleting the
definition of "Applicable Margin" and substituting therefor the following:
"Applicable Margin" means (a) with respect to Base Rate Loans under
the Facility B Term Commitment, 2.00% prior to the Second Amendment
Effective Date, and 2.25% thereafter, (b) with respect to Offshore Rate
Loans under the Facility B Term Commitment, 3.00% prior to the Second
Amendment Effective Date, and 3.25% thereafter, (c) with respect to Base
Rate Loans under any Revolving Credit Commitment, 1.50% prior to the Second
Amendment Effective Date, and 1.75% thereafter and (d) with respect to
Offshore Rate Loans under any Revolving Credit Commitment, 2.50% prior to
the Second Amendment Effective Date, and 2.75% thereafter (i) in each case
for the period from the Closing Date through the date which is three
Business Days after the delivery of the financial reports and certificate
delivered to the Administrative Agent pursuant to subsection 7.1(a) or
7.1(b) and subsection 7.2(b), respectively, for the fiscal quarter ending
June 1999 and (ii) thereafter, the percentage specified below opposite the
Total Debt to EBITDA Ratio (which ratio shall be calculated for the Four
Trailing Quarters ending on the last day of such fiscal quarter) calculated
for the periods described below:
Total Debt to EBITDA Ratio
at End of Fiscal Quarter Applicable Margin
------------------------ -------------------------------------------------
Facility B Term Loans Revolving Credit Loan
----------------------- -----------------------
Base Offshore Base Offshore
Rate Loans Rate Loans Rate Loans Rate Loans
---------- ---------- ---------- ----------
Less than 3.50 to 1.00 1.75% 2.75% .75% 1.75%
Greater than or equal to 3.50 to 1.00
but less than 4.00 to 1.00 1.75% 2.75% 1.00% 2.00%
Greater than or equal to 4.00 to 1.00
but less than 4.50 to 1.00 2.00% 3.00% 1.25% 2.25%
Greater than or equal to 4.50 to 1.00
but less than 5.00 to 1.00 2.00% 3.00% 1.50% 2.50%
Greater than or equal to 5.00 to 1.00 2.25% 3.25% 1.75% 2.75%
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The Applicable Margin shall be adjusted automatically as to all Facility B
Term Loans and Revolving Credit Loans then outstanding (without regard to
the timing of Interest Periods) three Business Days after the delivery to
the Administrative Agent of the financial reports and certificate delivered
pursuant to subsections 7.1(a), 7.1(b) and 7.2(b), respectively, for the
fiscal quarter ending June 1999, and three Business Days after delivery to
the Administrative Agent of such financial reports and certificate for each
fiscal quarter thereafter. If the Borrower fails to deliver such financial
reports and certificate to the Administrative Agent for any such fiscal
quarter by the date required hereunder, then the Applicable Margin for all
Loans of any Type beginning three Business Days after such date shall,
until three Business Days after delivery of such financial reports and
certificate, be the next highest Applicable Margin for such Type as set
forth in the chart above; thus, if the Applicable Margin for Facility B
Term Loans had previously been 1.75% for Base Rate Loans and 2.75% for
Offshore Rate Loans, a failure to deliver quarterly financials on a timely
basis would cause the Applicable Margin for such Loans to be 2.00% and
3.00%, respectively, until three Business Days after such delivery.
(c) Section 1.1 of the Credit Agreement is amended by adding at the
end of the definition of "Consolidated Interest Expense" the following:
Notwithstanding the foregoing, unpaid accrued interest on the Sponsor Loan
shall be excluded in calculating Consolidated Interest Expense.
(d) Section 1.1 of the Credit Agreement is amended by adding to the
definition of "EBITDA" immediately after the phrase "Consolidated Interest
Expense" which appears in clause (ii) thereof the phrase "(plus, to the extent
deducted in computing such consolidated net income, unpaid accrued interest on
the Sponsor Loan for such period)".
(e) Section 1.1 of the Credit Agreement is amended by deleting the
definition of "Total Debt" and substituting therefor the following:
"Total Debt" means, as of any date of determination, the sum of the
interest-bearing Indebtedness of the Borrower and its Subsidiaries on a
consolidated basis, and, without duplication, all obligations with respect
to the imputed principal portion of Capital Leases, except that Total Debt
shall not include (i) Indebtedness in respect of Swap Contracts or (ii)
obligations to the extent that such obligations are Contingent Obligations.
(f) Section 1.1 of the Credit Agreement is amended by deleting from
the definition of "Total Debt to EBITDA Ratio" the parenthetical clause
beginning "(excluding the principal amount ...)".
(g) Section 1.1 of the Credit Agreement is amended by deleting clause
(i) which appears in the first parenthetical phrase of the definition of "Total
Senior Secured Debt to EBITDA Ratio" and renumbering clauses (ii) and (iii)
which appear in such parenthetical as clauses (i) and (ii), respectively.
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3. Amendment to Section 5.2. Section 5.2 of the Credit Agreement is
amended by deleting from clause (d) the date "March 31, 1998" and substituting
therefor the date "June 27, 1998".
4. Amendment to Section 6.11. Section 6.11 of the Credit Agreement
is amended by deleting from clause (c) the date "March 31, 1998" and
substituting therefor the date "June 27, 1998".
5. Amendment to Subsection 8.5. Subsection 8.5 of the Credit
Agreement is amended by (i) deleting the word "and" from the end of clause (h),
(ii) deleting the period at the end of clause (i) and substituting therefor the
phrase "; and" and (iii) adding the following new clause (j) at the end thereof:
(j) the Sponsor Loan in a principal amount not to exceed
$17,000,000.
6. Amendment to Section 8.8. Section 8.8 of the Credit Agreement is
amended by (i) deleting the word "and" from the end of clause (i), (ii) deleting
the period from the end of clause (j) and substituting therefor the phrase ";
and" and (iii) adding the following new clause (k) at the end thereof;
(k) guarantees of the Sponsor Loan on terms satisfactory to the
Administrative Agent by Subsidiaries which have guaranteed the
Obligations.
7. Deletion of Sections 8.14 and 8.15. Sections 8.14 and 8.15 of the
Credit Agreement are deleted.
8. Amendment to Section 8.16. Section 8.16 of the Credit Agreement
is amended by replacing such Section with the following:
8.16 Interest Coverage Ratio.
The Borrower will not permit the ratio of EBITDA to Consolidated
Interest Expense, as of the end of any Four Trailing Quarters ending
on the dates listed below to be less than the ratio set forth opposite
such dates:
Measurement Date Ratio
---------------- -----
September 25, 1999 1.00:1.00
December 25, 1999 1.10:1.00
March 25, 2000 1.10:1.00
June 24, 2000 1.20:1.00
September 23, 2000 1.25:1.00
December 30, 2000 1.25:1.00
March 31, 2001 1.30:1.00
June 30, 2001 1.40:1.00
September 29, 2001 1.75:1.00
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Measurement Date Ratio
---------------- -----
December 29, 2001 1.75:1.00
March 30, 2002 2.00:1.00
June 29, 2002 2.00:1.00
September 28, 2002 2.00:1.00
December 28, 2002 2.00:1.00
March 29, 2003 2.00:1.00
June 28, 2003 2.25:1.00
September 27, 2003 2.25:1.00
December 27, 2003 2.25:1.00
March 27, 2004 2.25:1.00
June 26, 2004 2.25:1.00
September 25, 2004 2.50:1.00
December 24, 2004 2.50:1.00
March 26, 2005 2.50:1.00
June 25, 2005 2.50:1.00
9. Amendment to Section 8.17. Section 8.17 of the Credit Agreement is
amended by replacing such Section with the following:
8.17 Senior Secured Debt to EBITDA.
The Borrower will not permit the Total Senior Secured Debt to
EBITDA Ratio for any Four Trailing Quarters ending on the dates listed
below to be greater than the amount set forth opposite such dates:
Measurement Date Ratio
---------------- -----
December 26, 1998 5.25:1.00
March 27, 1999 4.50:1.00
June 26, 1999 4.00:1.00
September 25, 1999 3.75:1.00
December 25, 1999 3.25:1.00
March 25, 2000 3.25:1.00
June 24, 2000 2.75:1.00
September 23, 2000 2.75:1.00
December 30, 2000 2.50:1.00
March 31, 2001 2.50:1.00
June 30, 2001 2.25:1.00
September 29, 2001 2.25:1.00
December 29, 2001 2.25:1.00
March 30, 2002 2.00:1.00
June 29, 2002 2.00:1.00
September 28, 2002 2.00:1.00
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December 28, 2002 2.00:1.00
March 29, 2003 2.00:1.00
June 28, 2003 2.00:1.00
September 27, 2003 2.00:1.00
December 27, 2003 2.00:1.00
March 27, 2004 2.00:1.00
June 26, 2004 2.00:1.00
September 25, 2004 2.00:1.00
December 24, 2004 2.00:1.00
March 26, 2005 2.00:1.00
June 25, 2005 2.00:1.00
10. Addition of Section 8.26. Section 8 of the Credit Agreement is
amended by adding the following new Section at the end thereof:
8.26 Sponsor Loan.
Neither the Borrower nor any of its Subsidiaries shall (i)
prepay, redeem, purchase, defease, or otherwise satisfy prior to the
scheduled maturity thereof in any manner the Indebtedness evidenced by
the Sponsor Loan, (ii) make, create, incur, assume or suffer to exist
any Lien upon or with respect to any of its property to secure the
Sponsor Loan or any guarantee thereof, (iii) permit interest to be
paid on the Sponsor Loan other than by accrual thereof, compounded not
more frequently than quarterly, or (iv) enter into any modification,
alteration or amendment of the documentation evidencing the Sponsor
Loan or any guarantee thereof if such modification, alteration or
amendment adversely affects the rights or interests of the Borrower or
the Lenders.
11. Amendment to Compliance Certificate. The form of Compliance
Certificate is deemed to be amended to the extent required to reflect the
amendments set forth herein.
12. Waiver by Lenders. The Majority Facility B Lenders hereby waive
compliance by the Borrower with the requirement of Section 2.7(b)(iii) of the
Credit Agreement that the Borrower prepay the Term Loan with the net proceeds of
the Sponsor Loan.
13. Representations and Warranties. The Borrower hereby confirms,
reaffirms and restates the representations and warranties made by it in Article
6 of the Credit Agreement except to the extent the same expressly relate to an
earlier date; provided that each reference to the Credit Agreement therein
shall be deemed to be a reference to the Credit Agreement after giving effect to
this Amendment. The Company represents and warrants that no Default or Event of
Default has occurred and is continuing.
14. Continuing Effect of the Agreements. This Amendment shall not
constitute a waiver, amendment or modification of any other provision of the
Credit Agreement not expressly referred to herein and shall not be construed as
a waiver or consent to any further
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or future action on the part of the Borrower that would require a waiver or
consent of the Lenders, the Documentation Agent or the Administrative Agent.
Except as expressly modified hereby, the provisions of the Credit Agreement are
and shall remain in full force and effect.
15. Counterparts. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts and all such
counterparts shall be deemed to be one and the same instrument. Each party
hereto confirms that any facsimile copy of such party's executed counterpart of
this Amendment (or its signature page thereof) shall be deemed to be an executed
original thereof.
16. Effectiveness. This Amendment shall be effective (the date of
effectiveness, the "Effective Date") upon:
(a) receipt by the Administrative Agent of counterparts hereof,
duly executed and delivered by the Borrower, each other Loan Party for
which a signature line is included below, the Majority Lenders, the
Majority Revolving Credit Lenders and the Majority Facility B Lenders;
(b) receipt by the Administrative Agent for the account of each
Lender which returns an executed copy of this Amendment to the
Administrative Agent on or prior to the close of business on Friday,
October 9, 1998 of an amendment fee equal to .25% of the sum of such
Lender's Revolving Credit Commitment and Term Loans, payable on the
Effective Date; and
(c) receipt by the Borrower of at least $17,000,000 in cash as
the proceeds of the Sponsor Loan.
17. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
FAVORITE BRANDS INTERNATIONAL, INC.
By:
-------------------------------
Name:
Title:
8
FAVORITE BRANDS INTERNATIONAL
HOLDING CORP.
By:
---------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
individually as a Lender,
the Issuing Bank, the
Swingline Lender, Co-Syndication Agent and
as Administrative Agent
By:
---------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Documentation Agent, as Co-Syndication
Agent and as a Lender
By:
---------------------------------
Name:
Title:
AT&T COMMERCIAL FINANCE
CORPORATION
By:
---------------------------------
Name:
Title:
BANKBOSTON N.A., formerly known as
BANK OF BOSTON
By:
---------------------------------
Name:
Title:
0
XXX XXXX XX XXXX XXXXXX
By:
---------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By:
---------------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
COMMERCIAL LOAN FUNDING TRUST I
BY: Xxxxxx Commercial Paper Inc., not in
its individual capacity but solely as
administrative agent
By:
---------------------------------
Name:
Title:
CYPRESSTREE SENIOR FLOATING RATE
FUND
BY: CypressTree Investment Management
Company, Inc.
As Portfolio Manager
By:
---------------------------------
Name:
Title:
10
DEBT STRATEGIES FUND, INC.
By:
---------------------------------
Name:
Title:
FIRST DOMINION FUNDING I
By:
---------------------------------
Name:
Title:
KZH CYPRESSTREE-1 LLC
By:
---------------------------------
Name:
Title:
KZH ING-1 LLC
By:
---------------------------------
Name:
Title:
KZH ING-2 LLC
By:
---------------------------------
Name:
Title:
KZH IV LLC
By:
---------------------------------
Name:
Title:
KZH III LLC
By:
---------------------------------
Name:
Title:
LASALLE NATIONAL BANK, as a Co-Agent
By:
---------------------------------
Name:
Title:
00
XXXXXXX XXXXXXX PRIME RATE TRUST
By: PILGRIM AMERICA INVESTMENTS INC.
as its Investment Manager
By:
---------------------------------
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX
PRIME INCOME TRUST
By:
---------------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research as
Investment Advisor
By:
---------------------------------
Name:
Title:
XXX XXXXXX AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:
---------------------------------
Name:
Title:
SANKATY HIGH YIELD ASSET PARTNERS,
L.P.
By:
---------------------------------
Name:
Title:
XXX XXXXXX CLO II, LIMITED,
By: Xxx Xxxxxx American Capital Management,
Inc. as collateral manager
By:
---------------------------------
Name:
Title:
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The undersigned Loan Parties hereby confirm
that their obligations under the Loan
Documents remain in full force and effect
after giving effect to the foregoing Second
Amendment and Waiver:
TROLLI, INC.
By:
---------------------------------
Name:
Title:
XXXXXX TRUCKING CORPORATION
By:
---------------------------------
Name:
Title:
