Exhibit 4.2
CONFORMED COPY
FIRST AMENDMENT
FIRST AMENDMENT, dated as of December 27, 1998 (this
"AMENDMENT"), to the Credit Agreement, dated as of November 19, 1997 (as
amended, supplemented or otherwise modified, the "CREDIT AGREEMENT"), among
FRIENDLY ICE CREAM CORPORATION, a Massachusetts corporation (the "BORROWER"),
the several banks and other financial institutions or entities parties thereto
(the "LENDERS"), and SOCIETE GENERALE, as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement, the Lenders have
agreed to make, and have made, extensions of credit to the Borrower;
WHEREAS, the Borrower has requested, and upon this Amendment
becoming effective, the Lenders will have agreed, that certain provisions of the
Credit Agreement be amended in the manner provided for in this Amendment;
NOW, THEREFORE, in consideration of the premises and the
agreements hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS. Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT.
2.1 AMENDMENTS TO SECTION 1.1 OF THE CREDIT AGREEMENT.
Section 1.1 of the Credit Agreement is hereby amended by deleting therefrom the
definitions of the following terms in their respective entireties and
substituting in lieu thereof the following definitions:
"'APPLICABLE MARGIN': for each Type of Loan, the rate per
annum set forth under the relevant column heading below:
Eurodollar ABR
Loans Loans
---------- -----
Revolving Credit Loans 2.75% 1.25%
Tranche A Term Loans 2.75% 1.25%
Tranche B Term Loans 2.75% 1.25%
Tranche C Term Loans 3.00% 1.50%;
PROVIDED, that on and after the first Adjustment Date occurring after
the completion of four full fiscal quarters of the Borrower after the
Closing Date, the Applicable Margin
2
with respect to Revolving Credit Loans and Tranche A Term Loans will be
determined pursuant to the Pricing Grid."
"'CONSOLIDATED CASH INTEREST EXPENSE": for any period, total
cash interest expense (including that attributable to Capital Lease
Obligations) of the Borrower and its Subsidiaries for such period with
respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Interest Rate
Protection Agreements to the extent such net costs are allocable to
such period in accordance with GAAP); PROVIDED that in no event shall
the amendment fees paid in connection with the First Amendment to this
Agreement constitute Consolidated Cash Interest Expense."
"'CONSOLIDATED EBITDA': for any period, Consolidated Net
Income for such period PLUS, without duplication and to the extent
reflected as a charge in the statement of such Consolidated Net Income
for such period, the sum of (a) income tax expense, (b) interest
expense, amortization or writeoff of debt discount and debt issuance
costs and commissions, discounts and other fees and charges associated
with Indebtedness (including the Loans), (c) depreciation and
amortization expense, (d) amortization of intangibles (including, but
not limited to, goodwill) and organization costs, (e) any
extraordinary, unusual or non-recurring expenses or losses (including,
whether or not otherwise includable as a separate item in the statement
of such Consolidated Net Income for such period, losses on sales of
assets outside of the ordinary course of business) and (f) any other
non-cash charges, and MINUS, to the extent included in the statement of
such Consolidated Net Income for such period, the sum of (a) interest
income, (b) any extraordinary, unusual or non-recurring income or gains
(including, whether or not otherwise includable as a separate item in
the statement of such Consolidated Net Income for such period, gains on
the sales of assets outside of the ordinary course of business (it
being understood that sales of restaurants in an aggregate amount up to
$2,500,000 in any fiscal year are deemed to be in the ordinary course
of business)) and (c) any other non-cash income, all as determined on a
consolidated basis, PROVIDED, that, in calculating Consolidated EBITDA
for periods that include any fiscal quarter of the Borrower's 1998 and
1999 fiscal years, any expenses resulting from the closing of the
Borrower's Troy, Ohio manufacturing and distribution facility and the
termination of its operations in China and the United Kingdom shall be
disregarded to the extent that the aggregate amount of such expenses
does not exceed $7,500,000."
"'EXCESS CASH FLOW': for any fiscal year of the Borrower, the
excess, if any, of (a) Consolidated EBITDA for such fiscal year over
(b) the sum, without duplication, of (i) the lesser of (x) the
aggregate amount actually paid by the Borrower and its Subsidiaries in
cash during such fiscal year on account of Capital Expenditures
(excluding the principal amount of Indebtedness incurred in connection
with such expenditures and any such expenditures financed with the
proceeds of any Reinvestment Deferred Amount (but only to the extent
such expenditures so financed exceed the amount of Capital Expenditures
permitted to be made in such fiscal year from the proceeds of any
Reinvestment Deferred Amount in accordance with the provisions of
clause (b) of Section 7.7)) and (y) in the case of fiscal years 1999
through 2002, the amount set forth opposite such fiscal year below:
3
Fiscal Year Amount
----------- ------
1999 $43,000,000
2000 41,500,000
2001 43,500,000
2002 45,500,000
(ii) the aggregate amount of all prepayments of Revolving Credit Loans
during such fiscal year to the extent accompanying permanent optional
reductions of the Revolving Credit Commitments and all optional
prepayments of the Term Loans during such fiscal year, (iii) the
aggregate amount of all regularly scheduled principal payments of
Funded Debt (including, without limitation, the Term Loans) of the
Borrower and its Subsidiaries made during such fiscal year (other than
in respect of any revolving credit facility to the extent there is not
an equivalent permanent reduction in commitments thereunder), (iv) the
aggregate amount actually paid by the Borrower and its Subsidiaries in
cash during such fiscal year on account of income taxes and
(v) Consolidated Cash Interest Expense for such fiscal year."
2.2 AMENDMENT TO SECTION 2.10(A) OF THE CREDIT AGREEMENT.
Section 2.10(a) of the Credit Agreement is hereby amended by inserting,
immediately following the percentage "50%" that appears therein, the following
parenthetical phrase "(or 100%, if, as of the last day of the fiscal quarter
most recently ended prior to the date of such issuance for which financial
statements shall have been delivered to the Lenders pursuant to Section 6.1, the
Consolidated Leverage Ratio (adjusted to give PRO FORMA effect to such issuance
and to any application of the Net Cash Proceeds thereof to repay Indebtedness)
shall have been greater than 4 to 1)".
2.3 AMENDMENT TO SECTION 2.10(B) OF THE CREDIT AGREEMENT.
Section 2.10(b) of the Credit Agreement is hereby amended by deleting from the
proviso thereto the following: "(i) the Borrower may exclude from the
requirements of this paragraph the first $7,500,000 of aggregate Net Cash
Proceeds from Asset Sales and Recovery Events and (ii)".
2.4 AMENDMENT TO SECTION 6.2 OF THE CREDIT AGREEMENT. Section
6.2 of the Credit Agreement is hereby amended by adding at the end thereof the
following new paragraph (i):
"(i) within 15 days after the end of each fiscal month, a
certificate of an Authorized Signatory setting forth in reasonable
detail the aggregate sales revenues of the Borrower and its
Subsidiaries for such fiscal month and the calculation of Consolidated
EBITDA for such fiscal month."
4
2.5 AMENDMENTS TO SECTION 7.1 OF THE CREDIT AGREEMENT.
Section 7.1 of the Credit Agreement is hereby amended by deleting said section
in its entirety and substituting in lieu thereof the following:
"7.1 FINANCIAL CONDITION COVENANTS.
(a) CONSOLIDATED LEVERAGE RATIO. Permit the Consolidated
Leverage Ratio as at the last day of any period of four consecutive fiscal
quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter set forth below
to exceed the ratio set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
Fiscal quarters from and including fourth quarter of
fiscal 1997 through and including third quarter of
fiscal 1998 4.75 to 1.00
Fourth quarter of fiscal 1998 5.25 to 1.00
First quarter of fiscal 1999 5.90 to 1.00
Second quarter of fiscal 1999 5.50 to 1.00
Third quarter of fiscal 1999 5.00 to 1.00
Fourth quarter of fiscal 1999 4.40 to 1.00
First quarter of fiscal 2000 5.00 to 1.00
Second quarter of fiscal 2000 4.70 to 1.00
Third quarter of fiscal 2000 4.20 to 1.00
Fourth quarter of fiscal 2000 4.10 to 1.00
Fiscal quarters from and including first quarter of
fiscal 2001 through and including third quarter of
fiscal 2001 4.30 to 1.00
Fourth quarter of fiscal 2001 3.55 to 1.00
Fiscal quarters from and including first quarter of
fiscal 2002 through and including third quarter of
fiscal 2002 3.75 to 1.00
Fourth quarter of fiscal 2002 3.05 to 1.00
First fiscal quarter of fiscal 2003 and all fiscal
quarters thereafter 3.25 to 1.00
5
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Permit the
Consolidated Interest Coverage Ratio for any period of four consecutive fiscal
quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Leverage Ratio
-------------- --------------
Fiscal quarters from and including fourth
quarter of fiscal 1997 through and including
third quarter of fiscal 1998 1.50 to 1.00
Fourth quarter of fiscal 1998 1.50 to 1.00
First quarter of fiscal 1999 1.30 to 1.00
Second quarter of fiscal 1999 1.40 to 1.00
Third quarter of fiscal 1999 1.50 to 1.00
Fourth quarter of fiscal 1999 1.60 to 1.00
First quarter of fiscal 2000 1.50 to 1.00
Second quarter of fiscal 2000 1.60 to 1.00
Third quarter of fiscal 2000 1.70 to 1.00
Fourth quarter of fiscal 2000 1.75 to 1.00
Fiscal quarters from and including first quarter of
fiscal 2001 through and including third quarter of
fiscal 2001 1.65 to 1.00
Fourth quarter of fiscal 2001 1.95 to 1.00
Fiscal quarters from and including first
quarter of fiscal 2002 through and including 1.85 to 1.00
third quarter of fiscal 2002
Fourth quarter of fiscal 2002 2.10 to 1.00
Fiscal quarters from and including first
quarter of fiscal 2003 through and including
third quarter of fiscal 2003 2.00 to 1.00
Fourth fiscal quarter of fiscal 2003 and all
fiscal quarters thereafter 2.15 to 1.00
6
(c) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Borrower (or, if less, the number of full fiscal quarters
subsequent to the Closing Date) ending with any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
Consolidated Fixed
Fiscal Quarter Charge Coverage Ratio
-------------- ---------------------
Fiscal quarters from and including fourth quarter of
fiscal 1997 through and including third quarter of
fiscal 1998 1.40 to 1.00
Fourth quarter of fiscal 1998 1.30 to 1.00
First quarter of fiscal 1999 1.15 to 1.00
Second quarter of fiscal 1999 1.20 to 1.00
Third quarter of fiscal 1999 1.20 to 1.00
Fourth quarter of fiscal 1999 1.25 to 1.00
First quarter of fiscal 2000 1.10 to 1.00
Second quarter of fiscal 2000 1.10 to 1.00
Third quarter of fiscal 2000 1.20 to 1.00
Fourth quarter of fiscal 2000 1.20 to 1.00
Fiscal quarters from and including first quarter of
fiscal 2001 through and including third quarter of
fiscal 2001 1.10 to 1.00
Fourth quarter of fiscal 2001 1.25 to 1.00
Fiscal quarters from and including first quarter of
fiscal 2002 through and including third quarter of
fiscal 2002 1.15 to 1.00
Fourth quarter of fiscal 2002 1.30 to 1.00
Fiscal quarters from and including first quarter of
fiscal 2003 through and including third quarter of
fiscal 2003 1.20 to 1.00
Fourth fiscal quarter of fiscal 2003 and all fiscal
quarters thereafter 1.30 to 1.00
7
(d) MAINTENANCE OF NET WORTH. Permit Consolidated Net Worth as
of the last day of any fiscal quarter of the Borrower ending during any fiscal
year set forth below to be less than the amount set forth below opposite such
fiscal year:
Consolidated
Fiscal Quarter Net Worth
-------------- ------------
Fiscal quarters from and including fourth quarter of
fiscal 1997 through and including third quarter of
fiscal 1998 ($95,000,000)
Fourth quarter of fiscal 1998 ($98,000,000)
First quarter of fiscal 1999 ($105,000,000)
Second quarter of fiscal 1999 ($100,000,000)
Third quarter of fiscal 1999 ($93,500,000)
Fourth quarter of fiscal 1999 ($93,000,000)
First quarter of fiscal 2000 ($103,500,000)
Second quarter of fiscal 2000 ($97,300,000)
Third quarter of fiscal 2000 ($88,000,000)
Fourth quarter of fiscal 2000 ($86,500,000)
Fiscal quarters from and including first quarter of
fiscal 2001 through and including third quarter of
fiscal 2001 ($91,500,000)
Fourth quarter of fiscal 2001 ($75,000,000)
Fiscal quarters from and including first quarter of
fiscal 2002 through and including third quarter of
fiscal 2002 ($80,000,000)
Fourth quarter of fiscal 2002 ($55,000,000)
Fiscal quarters from and including first quarter of
fiscal 2003 through and including third quarter of
fiscal 2003 ($60,000,000)
Fourth fiscal quarter of fiscal 2003 and all fiscal
quarters thereafter ($50,000,000)"
2.6 AMENDMENT TO SECTION 7.6 OF THE CREDIT AGREEMENT.
Section 7.6 of the Credit Agreement is hereby amended by deleting
paragraph (b) of said Section in its entirety and
substituting in lieu thereof the following:
8
"(b) [Intentionally omitted]."
2.7 AMENDMENT TO SECTION 7.7 OF THE CREDIT AGREEMENT.
Section 7.7 of the Credit Agreement is hereby amended by deleting said Section
in its entirety and substituting in lieu thereof the following:
"7.7 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to
make (by way of the acquisition of securities of a Person or otherwise)
any Capital Expenditure, except (a) Capital Expenditures of the
Borrower and its Subsidiaries in the ordinary course of business not
exceeding by more than $3,000,000 the Permitted Capital Expenditure
Amount for such fiscal year and (b) Capital Expenditures made with the
proceeds of any Reinvestment Deferred Amount, provided that the
aggregate amount of Capital Expenditures made pursuant to this clause
(b) during any fiscal year set forth below shall not exceed the amount
set forth opposite such fiscal year below:
Fiscal Year Amount
----------- ------
1999 $10,000,000
2000 3,000,000
2001 3,000,000
2002 and thereafter 3,000,000,
provided that if the Reinvestment Deferred Amount for any fiscal year
set forth in the table above arising out of Asset Sales shall be less
than the amount set forth above for such fiscal year, an amount equal
to the lesser of (i) such difference and (ii) $3,000,000 shall be added
to the amount set forth above for the succeeding fiscal year for the
purposes of the immediately preceding proviso (but not for the purposes
of this proviso). Anything in this Section to the contrary
notwithstanding, (x) if during any fiscal year the amount of Capital
Expenditures by the Borrower and its Subsidiaries (other than Capital
Expenditures made with the proceeds of any Reinvestment Deferred
Amount) shall exceed the Permitted Capital Expenditure Amount for such
fiscal year by up to the $3,000,000 amount permitted by clause (a) of
the preceding sentence, the Permitted Capital Expenditure Amount for
the succeeding fiscal year shall be automatically reduced by an amount
equal to such excess and (y) in no event may the aggregate amount of
Capital Expenditures during fiscal years 1999 through 2002 exceed
$173,500,000."
2.8 AMENDMENTS TO ANNEXES. Annexes A and C to the Credit
Agreement are hereby amended to read in their entireties as set forth in Annexes
A and C, respectively, hereto.
SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective as of the date set forth above (the "AMENDMENT EFFECTIVE DATE")
on the date on which (a) the Borrower and the Required Lenders shall have
executed and delivered to the Administrative Agent this Amendment, (b) each
Guarantor shall have executed the
9
Acknowledgment and Consent in the form annexed hereto and (c) the Borrower shall
have paid to the Administrative Agent, on behalf of each Lender, an amendment
fee in an amount equal to .50% (or .75%, in the case of each Lender which shall
have executed and delivered its signature page hereto to counsel to the
Administrative Agent by noon on Wednesday, December 30, 1998) of the sum of such
Lender's Revolving Credit Commitment and Term Loans then outstanding.
SECTION 4. REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by the Loan Parties in the Loan Documents are true and
correct in all material respects on and as of the Amendment Effective Date,
before and after giving effect to the effectiveness of this Amendment, as if
made on and as of the Amendment Effective Date, except to the extent such
representations and warranties expressly relate to a specific earlier date, in
which case such representations and warranties were true and correct as of such
earlier date.
SECTION 5. PAYMENT OF EXPENSES. The Borrower agrees to pay or
reimburse the Administrative Agent for all of its reasonable out-of-pocket costs
and expenses incurred in connection with this Amendment and any other documents
prepared in connection herewith and the transactions contemplated hereby,
including, without limitation, the reasonable fees and disbursements of counsel
to the Administrative Agent.
SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. 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
amended hereby. 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 Administrative Agent under any of
the Loan Documents. Except as expressly amended herein, all of the provisions of
the Credit Agreement and the other Loan Documents are and shall remain in full
force and effect in accordance with the terms thereof and are hereby in all
respects ratified and confirmed.
SECTION 7. COUNTERPARTS. This Amendment may be executed by one
or more of the parties to this Amendment 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 signature page of this
Amendment by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof. A set of the copies of this Amendment signed by all
the parties shall be lodged with the Borrower and the Administrative Agent.
SECTION 8. GOVERNING LAW. This Amendment and the rights and
obligations of the parties hereto shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.
10
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.
FRIENDLY ICE CREAM CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------------
Title: Senior Executive Vice President
and Chief Administrative Officer
SOCIETE GENERALE
By: /s/ Xxxxxxxxx Xxxxxxxxx
------------------------------------------
Title: Managing Director
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /s/ Xxxxx Xxxxxxxx
------------------------------------------
Title: Senior Vice President
SANWA BUSINESS CREDIT CORPORATION
By: /s/ Xxxx Xxxxx
------------------------------------------
Title: Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Title: Vice President
11
BANKBOSTON, N.A.
By: /s/ Xxx Xxxxx
------------------------------------------
Title: Division Executive
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Title: Duly Authorized Signatory
FIRST SOURCE FINANCIAL LLP
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Title: Senior Vice President
12
NATIONSBANK, N.A.
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
------------------------------------------
Title: Senior Vice President
PAMCO CAYMAN LTD.
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx Xxxxx
------------------------------------------
Title: Executive Vice President
XXX CAPITAL FUNDING, L.P.
By: Highland Capital Management, L.P.
as Collateral Manager
By: /s/ Xxxx Xxxxx
------------------------------------------
Title: Executive Vice President
SENIOR DEBT PORTFOLIO
By: First Source Financial, Inc.,
its Agent/Manager
By: /s/ Xxxxx X. Page
------------------------------------------
Title: Vice President
FOOTHILL INCOME TRUST, L.P.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Title: Managing Partner
14
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned corporations as guarantors under the
Guarantee and Collateral Agreement, dated as of November 19, 1997, made by the
undersigned corporations in favor of the Administrative Agent, for the benefit
of the Lenders, hereby (a) consents to the transactions contemplated by this
Amendment and (b) acknowledges and agrees that the guarantees (and grants of
collateral security therefor) contained in such Guarantee and Collateral
Agreement are, and shall remain, in full force and effect after giving effect to
this Amendment and all prior modifications to the Credit Agreement.
FRIENDLY'S RESTAURANTS FRANCHISE,
INC.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------------------------
Title: Chief Administrative Officer, Senior
Executive Vice President and Assistant
Clerk
FRIENDLY'S INTERNATIONAL, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------
Title: Vice President, Finance and Assistant
Secretary
ANNEX A
PRICING GRID FOR REVOLVING CREDIT LOANS,
TRANCHE A TERM LOANS AND COMMITMENT FEES
Consolidated Applicable Margin
Leverage Ratio for Eurodollar Loans Commitment Fee Rate
-------------- -------------------- -------------------
greater than equal to $ 4.0 to 1.0 2.750% 0.500%
greater than equal to $ 3.5 to 1.0 and less than 4.0 to 1.0 2.500% 0.500%
greater than equal to $ 3.0 to 1.0 and less than 3.5 to 1.0 2.375% 0.500%
greater than equal to $ 2.5 to 1.0 and less than 3.0 to 1.0 2.125% 0.375%
less than 2.5 to 1.0 1.875% 0.375%
Changes in the Applicable Margin with respect to Revolving Loans and
Tranche A Loans or in the Commitment Fee Rate resulting from changes in the
Consolidated Leverage Ratio shall become effective on the date (the "ADJUSTMENT
DATE") on which financial statements are delivered to the Lenders pursuant to
Section 6.1 (but in any event not later than the 45th day after the end of each
of the first three quarterly periods of each fiscal year or the 90th day after
the end of each fiscal year, as the case may be) and shall remain in effect
until the next change to be effected pursuant to this paragraph. If any
financial statements referred to above are not delivered within the time periods
specified above, then, until such financial statements are delivered, the
Consolidated Leverage Ratio as at the end of the fiscal period that would have
been covered thereby shall for the purposes of this definition be deemed to be
greater than 4.0 to 1.0. In addition, at all times while a Default or an Event
of Default shall have occurred and be continuing, there shall be no reduction in
the Applicable Margin with respect to Revolving Loans and Tranche A Loans or in
the Commitment Fee Rate; PROVIDED, HOWEVER, that any applicable reduction shall
become effective at such time as no Default or Event of Default shall be
continuing. Each determination of the Consolidated Leverage Ratio pursuant to
this definition shall be made as at the end of and with respect to the period of
four consecutive fiscal quarters of the Borrower ending at the end of the period
covered by the relevant financial statements and shall reflect the matters set
forth in the proviso to Section 7.1(a).
ANNEX C
PERMITTED CAPITAL EXPENDITURE GRID
Ratio of
Capital Consolidated Consolidated Permitted
Fiscal Expenditure EBITDA EBITDA to Capital
Year Amount Target Consolidated Expenditure
EBITDA Target Percentage
------------------------------------------------------------- ----------------------------------------------------------
1998 $53,000,000 $ 67,700,000
-------------------------------------------------------------
1999 $33,000,000 $ 77,800,000 greater than or equal to $ 0.90 to 1.00 100%
-------------------------------------------------------------
2000 $38,500,000 $ 84,800,000
------------------------------------------------------------- ----------------------------------------------------------
2001 $40,500,000 $ 95,400,000 less than 0.90 to 1.00 80%
and
greater than or equal to $ 0.80 to 1.00
------------------------------------------------------------- ----------------------------------------------------------
2002 and thereafter $42,500,000 $105,900,000 less than 0.80 to 1.00 50%
------------------------------------------------------------- ----------------------------------------------------------
Changes in the Permitted Capital Expenditure Amount resulting from
changes in the Ratio of Consolidated EBITDA to Consolidated EBITDA Target shall
become effective on the date (the "PERMITTED CAPITAL EXPENDITURE ADJUSTMENT
DATE") on which audited financial statements are delivered to the Lenders
pursuant to Section 6.1(a) with respect to any fiscal year, commencing with the
Borrower's 1998 fiscal year (but in any event not later than the 90th day after
the end of each such fiscal year), and shall remain in effect until the next
change to be effected pursuant to this paragraph. If any financial statements
are not delivered within the time period specified above, then, until such
financial statements are delivered, the Ratio of Consolidated EBITDA to
Consolidated EBITDA Target as at the end of the fiscal year that would have been
covered thereby shall for the purposes of this definition be deemed to be less
than 0.80 to 1.00. Each determination of the Ratio of Consolidated EBITDA to
Consolidated EBITDA Target shall be made with respect to the period of four
consecutive quarters of the Borrower ending at the end of the fiscal year
covered by the relevant financial statements.
