FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "First Amendment"), dated as of June 30, 1998, is entered into among
FRANCHISE FINANCE CORPORATION OF AMERICA, a Delaware corporation ("Company"),
the banks listed on the signature page hereof (the "Lenders"), and NATIONSBANK,
N.A. (successor by merger to NationsBank of Texas, N.A.) in its capacity as
administrative agent for the Lenders (the "Administrative Lender").
A. Company, Lenders, certain Co-Agents, and Administrative Lender are
parties to that certain Second Amended and Restated Credit Agreement, dated as
of December 29, 1997, as amended by that certain waiver letter, dated February
17, 1998, (said Credit Agreement, as amended, the "Credit Agreement"; the terms
defined in the Credit Agreement and not otherwise defined herein shall be used
herein as defined in the Credit Agreement).
B. Company, Lenders and Administrative Lender desire to amend the
Credit Agreement to make certain amendments thereto.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, the parties
hereto covenant and agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT.
(a) The definition of "Applicable Law" set forth in Section 1.1 of the
Credit Agreement is hereby amended to read as follows:
"`Applicable Law' means, (a) in respect of any Person, all
provisions of constitutions, statutes, rules, regulations and orders of
governmental bodies or regulatory agencies applicable to such Person
and its properties, including, without limiting the foregoing, all
orders and decrees of all courts and arbitrators in proceedings or
actions to which the Person in question is a party, and (b) in respect
of contracts relating to interest or finance charges that are made or
performed in the State of Texas, `Applicable Law' means the laws of the
United States of America, including without limitation 12 USC xx.xx. 85
and 86, as amended from time to time, and any other statute of the
United States of America now or at any time hereafter prescribing the
maximum rates of interest on loans and extensions of credit, and the
laws of the State of Texas, including, without limitation, Art. 1H, if
applicable, and if Art. 1H is not applicable, Art. 1D, and any other
statute of the State of Texas now or at any time hereafter prescribing
maximum rates of interest on loans and extensions of credit; provided
that the parties hereto agree that the provisions of Chapter 346 of the
Texas Finance Code, as amended, shall not apply to Advances, this
Agreement, the Notes or any other Loan Papers."
(b) The definition of "Highest Lawful Rate" set forth in Section 1.1 of
the Credit Agreement is hereby amended to read as follows:
"`Highest Lawful Rate' shall mean at the particular time in
question the maximum rate of interest which, under Applicable Law, the
Lenders are then permitted to charge on the Obligation. If the maximum
rate of interest which, under Applicable Law, the Lenders are permitted
to charge on the Obligation shall change after the date hereof, the
Highest Lawful Rate shall be automatically increased or decreased, as
the case may be, from time to time as of the effective time of each
change in the Highest Lawful Rate without notice to the Borrower. For
purposes of determining the Highest Lawful Rate under the Applicable
Law of the State of Texas, the applicable rate ceiling shall be (a) the
weekly rate ceiling described in and computed in accordance with the
provisions of Art. ID.003, or (b) if the parties subsequently contract
as allowed by Applicable Law, the quarterly ceiling or the annualized
ceiling computed pursuant to Art. ID.008; provided, however, that at
any time the weekly rate ceiling, the quarterly ceiling or the
annualized ceiling shall be less than 18% per annum or more than 24%
per annum, the provisions of Art. ID.009(a) and (b) shall control for
purposes of such determination, as applicable."
(c) Article 4 of the Credit Agreement is hereby amended by adding a new
Section 4.21 thereto to read as follows:
"4.21 Year 2000 Compliance. The Borrower has (a) initiated a
review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by its
suppliers and vendors) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by the
Borrower or any of its Subsidiaries (or its suppliers and vendors) may
be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999),
(b) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (c) to date, implemented that plan in accordance
with that timetable. The Borrower reasonably believes that all computer
applications (including those of its suppliers and vendors) that are
material to its or any of its Subsidiaries' business and operations
will on a timely basis be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be
"Year 2000 Compliant"), except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect".
(d) Article 5 of the Credit Agreement is hereby amended by adding a new
Section 5.15 thereto to read as follows:
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"5.15 Year 2000 Compliance. The Borrower will promptly notify
the Administrative Agent in the event the Borrower discovers or
determines that any computer application (including those of its
suppliers and vendors) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 Compliant,
except to the extent that such failure could not reasonably be expected
to have a Material Adverse Effect."
(e) Section 6.6 of the Credit Agreement is hereby amended to read as
follows:
"6.6 Dispositions of Assets. Company shall not, and shall not
permit any of its Subsidiaries to, sell, lease, assign, or otherwise
dispose of any assets of Company or any of its Subsidiaries in an Asset
Sale, or otherwise consummate any Asset Sale, except so long as there
exists no Default or Event of Default, and no Default or Event of
Default would be caused thereby, Company and its Subsidiaries may
consummate Asset Sales for fair market value in an aggregate amount not
to exceed during any period of four consecutive fiscal quarters 25% of
Total Assets (calculated as an amount equal to the result of (a) the
sum of Total Assets as of the first day of each fiscal quarter during
such four quarter period (b) divided by four), provided that the Asset
Sale Proceeds in excess of $3,000,000 of each Asset Sale (including in
respect of an Asset Securitization) which occurs after the Closing Date
are applied as provided in Section 2.5(b) hereof; provided that,
notwithstanding anything herein to the contrary, (i) Company will not
dispose of any assets at any time in an amount that would impair or
jeopardize the status of Company as a Real Estate Investment Trust and
(ii) the market value of any assets sold in an Asset Securitization
shall be excluded from the calculation of assets disposed of in Asset
Sales for purposes of the 25% limitation set forth in this Section 6.6.
On the day of any Asset Sale by Company or its Subsidiaries in which
the Asset Sale Proceeds thereof exceed $3,000,000, Company shall
deliver to Administrative Agent a certificate of an Authorized Officer
certifying as to the amount of gross proceeds thereof and costs and
expenses payable thereof which were deducted in determining the Asset
Sale Proceeds."
(f) Section 6.10 of the Credit Agreement is hereby amended to read as
follows:
"6.10 Loans and Investments. Company shall not, and shall not
permit any of its Subsidiaries to, make any Investment to, or make or
have any Investment in, any Person, or make any commitment to make any
such Investment, or make any acquisition, except (a) Investments
existing on the date hereof as shown on Section 4.13 hereto, (b)
Investments in Cash Equivalents, (c) Investments in travel advances in
the ordinary course of business to officers and employees, (d)
Investments in accounts receivable arising in the ordinary course of
business, (e) Investments in Subsidiaries of Company in compliance with
Section 6.17 hereof, and (f) Investments in the form of subordinated
investment securities and other similar instruments obtained by Company
or any of its Subsidiaries in connection with an Asset Securitization;
provided that the aggregate amount of such Investments pursuant to
clause (f) (including the Secured Franchise Loan Pass-Through
Certificates shown on Schedule 4.13 hereto) shall not exceed 20% of
Total Assets at any time."
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(g) The Compliance Certificate in the form of Exhibit C to the Credit
Agreement is hereby amended to be in the form of Exhibit C to this First
Amendment.
2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OF DEFAULT. By its
execution and delivery hereof, Company represents and warrants that, as of the
date hereof and after giving effect to the amendments provided in the foregoing
Section 1:
(a) the representations and warranties contained in the Credit
Agreement are true and correct on and as of the date hereof as if made on and as
of such date;
(b) no event has occurred and is continuing which constitutes a Default
or an Event of Default;
(c) Company has full power and authority to execute, deliver and
perform this First Amendment and the Credit Agreement, as amended by this First
Amendment, the execution, delivery and performance of this First Amendment and
the Credit Agreement, as amended by this First Amendment, have been duly
authorized by all corporate action of Company, and this First Amendment and the
Credit Agreement, as amended hereby, constitute the legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable debtor relief laws
and by general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws;
(d) neither the execution, delivery and performance of this First
Amendment or the Credit Agreement, as amended by this First Amendment, nor the
consummation of any transactions herein or therein, will contravene or conflict
with any Law to which Company or any of its Subsidiaries is subject or any
indenture, agreement or other instrument to which Company or any of its
Subsidiaries or any of their respective property is subject; and
(e) no authorization, approval, consent or other action by, notice to,
or filing with, any governmental authority or other Person (not previously
obtained), is required for the (i) execution, delivery or performance by Company
of this First Amendment and the Credit Agreement, as amended by this First
Amendment, or (ii) acknowledgment of this First Amendment by any Guarantor.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be effective
as of June 30, 1998, subject to the following:
(a) Administrative Lender shall receive counterparts of this First
Amendment executed by Lenders comprising the Majority Lenders;
(b) Administrative Lender shall receive counterparts of this First
Amendment executed by Company and acknowledged by each Guarantor;
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(c) the representations and warranties set forth in Section 2 of this
First Amendment shall be true and correct; and
(d) Administrative Lender and Lenders shall receive in form and
substance satisfactory to Administrative Lender and Lenders, such other
documents, certificates and instruments as Lenders shall require.
4. GUARANTOR'S ACKNOWLEDGMENT. By signing below, each Guarantor (i)
acknowledges, consents and agrees to the execution, delivery and performance by
Company of this First Amendment, (ii) acknowledges and agrees that its
obligations in respect of its Guaranty Agreement and Subordination Agreement are
not released, diminished, waived, modified, impaired or affected in any manner
by this First Amendment or any of the provisions contemplated herein, (iii)
ratifies and confirms its obligations under its Guaranty Agreement and
Subordination Agreement, and (iv) acknowledges and agrees that it has no claim
or offsets against, or defenses or counterclaims to, its Guaranty Agreement and
Subordination Agreement.
5. REFERENCE TO THE CREDIT AGREEMENT.
(a) Upon the effectiveness of this First Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", or words of like import
shall mean and be a reference to the Credit Agreement, as amended by this First
Amendment.
(b) The Credit Agreement, as amended by this First Amendment, and all
other Loan Papers shall remain in full force and effect and are hereby ratified
and confirmed.
6. COSTS, EXPENSES AND TAXES. Company agrees to pay on demand all costs
and expenses of Administrative Lender in connection with the preparation,
reproduction, execution and delivery of the First Amendment and the other
instruments and documents to be delivered hereunder (including the reasonable
fees and out-of-pocket expenses of Special Counsel).
7. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which when taken together shall constitute but one and
the same instrument.
8. GOVERNING LAW; BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
(without giving effect to conflict of laws) and the United States of America,
and shall be binding upon Company, each Guarantor and each Lender and their
respective successors and assigns.
9. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of this
First Amendment for any other purpose.
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10. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE
PARTIES.
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the date first above written.
FRANCHISE FINANCE CORPORATION OF AMERICA
By: /s/ Xxxx X. Xxxxxxxxxxxx
---------------------------------------------
Xxxx X. Xxxxxxxxxxxx
Executive Vice President and Chief Financial
Officer
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LENDERS:
NATIONSBANK, N.A., individually and as
Administrative Agent
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
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BANK OF MONTREAL, CHICAGO BRANCH,
individually and as Co-Agent
By: /s/ Xxxxxxxxx Xxxxxxxx Xxxxxxxx
---------------------------------------------
Name: Xxxxxxxxx Xxxxxxxx Xxxxxxxx
Title: Director
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COMMERZBANK AKTIENGESELLSCHAFT, LOS
ANGELES BRANCH, individually and as Co-Agent
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxx Xxxxxxxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title: Vice President
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THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., individually and as Co-Agent
By: /s/ Xxxxxx Xxxxxxx
---------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Deputy General Manager
By: /s/ Xxxxx Read
---------------------------------------------
Name: Xxxxx Read
Title: Vice President
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UBS AG (NEW YORK BRANCH), individually and
as Co-Agent
By: /s/ Xxxxxxx X. Xxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Director
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Assistant Vice President
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COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND", NEW YORK BRANCH
By: /s/ W. Xxxxxxx Xxxxxxx
---------------------------------------------
Name: W. Xxxxxxx Xxxxxxx
Title: Senior Credit Officer
Senior Vice President
By: /s/ M. Xxxxxxxxx Xxxxxx
---------------------------------------------
Name: M. Xxxxxxxxx Xxxxxx
Title: Vice President
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XXXXXXX XXXX (x/x/x XXXXXXX XXXX XX
XXXXXXX)
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Vice-President
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XXXXXXXX XXXX XX, XXX XXXX BRANCH
AND GRAND CAYMAN BRANCH
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Assistant Vice President
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
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XXXX XXXXXXXX, X.X., XXX XXXXXXXXX XXXXXX
By: /s/ Xxx Xxxxxxx
---------------------------------------------
Name: Xxx Xxxxxxx
Title: Vice President
By: /s/ Xxxx Xxxx
---------------------------------------------
Name: Xxxx Xxxx
Title: Vice President
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THE INDUSTRIAL BANK OF JAPAN, LIMITED,
LOS ANGELES AGENCY
By: /s/ Xxxxxxx Xxxx
---------------------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
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FIRST UNION NATIONAL BANK
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Director
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NORWEST BANK ARIZONA, NATIONAL ASSOCIATION
By: /s/ Xxxxxx Xxxx
---------------------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
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ACKNOWLEDGED:
FFCA ACQUISITION CORPORATION
By: /s/ Xxxx X. Xxxxxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
FFCA INSTITUTIONAL ADVISORS, INC.
By: /s/ Xxxx X. Xxxxxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
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EXHIBIT C
QUARTERLY COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he/she is a duly elected
Authorized Officer of Franchise Finance Corporation of America, a Delaware
corporation ("Borrower"), and that he/she is authorized to execute this
Certificate on behalf of Borrower in connection with that certain Second Amended
and Restated Credit Agreement dated as of December 29, 1997 ("Credit
Agreement"), among Borrower, NationsBank of Texas, N.A., individually and as
Administrative Agent, Bank of Montreal, Chicago Branch, Commerzbank
Akiengesellschaft, Los Angeles Branch, The Long Term Credit Bank of Japan, Ltd.
and Union Bank of Switzerland (New York Branch), as Co-Agents, and each Lender a
party thereto. All terms used but not defined herein shall have the meanings set
forth in the Credit Agreement. This Certificate is submitted concurrently with
quarterly financial statements of Borrower for the period ended _____________,
____. The undersigned hereby further certifies to the following as of the date
set forth below:
1. The representations and warranties of Borrower under the
Credit Agreement are true and complete in all material
respects, before and after giving effect to any Advances.
2. No event has occurred which constitutes a Default or Event of
Default.
3. Company continues to qualify as a Real Estate Investment Trust
under the Code.
4. The following calculations are true, accurate and complete,
and are made in accordance with the terms and provisions of
the Credit Agreement:
1. Applicable Margin.
The Index Debt Rating is _________. The Applicable Margin with respect
to Base Rate Advances is _____%.
The Applicable Margin with respect to LIBOR Advances is _____%.
2. Section 6.1 (a). Minimum Net Worth.
(a) Minimum Net Worth
(i) $425,000,000 $425,000,000
(ii) 75% of aggregate Net Cash Proceeds $__________
received by Borrower and its Consolidated
Subsidiaries after April 15, 1997, from
disposition of Capital Stock
(iii) amount equal to Net Worth of any Person $__________
acquired (via asset or stock purchase) by
Borrower or any Subsidiary to the extent
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purchase price is paid for in Capital Stock
of Borrower or such Subsidiary
(iv) Minimum Net Worth [(i) + (ii) + (iii)] $__________
(b) Actual Net Worth (determined in accordance with $__________
GAAP)
3. Section 6.1 (b). Total Indebtedness to Adjusted Net Worth Ratio.
(a) Maximum Ratio 0.90 to 1
(b) Actual Ratio
(i) Indebtedness of Company and
Consolidated Subsidiaries
a. Debt for Borrowed Money $__________
b. Capital Lease obligations $__________
c. Reimbursement obligations relating $__________
to letters of credit
d. Contingent Liabilities relating to $__________
(a), (b) and (c) above
e. Withdrawal Liability $__________
f. indebtedness associated with $__________
Interest Hedge Agreements
g. payments due for the deferred $__________
purchase price of property and
services (excluding trade payables
less than 90 days old)
h. obligations (contingent or otherwise $__________
to purchase, retire or redeem any
Capital Stock)
i. [a. + b. + c. + d. + e. + f. + $__________
g. + h.]
(ii) Indebtedness evidenced by Intercompany $__________
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Notes and which is subject to a
Subordination Agreement
(iii) Total Indebtedness [(i) - (ii)] $__________
(iv) Adjusted Net Worth
a. Actual Net Worth (determined in $__________
accordance with GAAP)
b. Accumulated Depreciation (determined $__________
in accordance with GAAP)
c. Adjusted Net Worth [a. + b.] $__________
(v) Total Indebtedness to Adjusted Net Worth _____ to 1
[(iii)/(iv)]
4. Section 6.1 (c). Fixed Charge Coverage Ratio.
(a) Minimum Ratio 2.0 to 1
(b) Actual Ratio
(i) Cash Flow From Operations for twelve- $_________
calendar month period ending on or most
recently ended prior to date of determination
(ii) cash interest payable on all Indebtedness $_________
(including interest on Capitalized Leases)
(iii) [(i) + (ii)] $_________
(iv) cash interest payable on all Indebtedness $_________
(including interest on Capitalized Leases)
(v) regularly scheduled principal amounts on $_________
Indebtedness (including rentals under
Lease Obligations but excluding any
payment which pays Indebtedness in full
to the extent such payment exceeds the
immediately preceding scheduled principal
payment)
(vi) principal amounts of all Indebtedness $_________
(including under Lease Obligations)
required to be prepaid or purchased during
such period
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(vii) [(iv) + (v) + (vi)] $_________
(viii) Fixed Charge Coverage Ratio [(iii)/(vii)] _____ to 1
5. Section 6.1 (d). Maximum Total Secured Indebtedness.
(a) Maximum Total Secured Indebtedness (10% of $_________
Total Assets)
(b) Actual Total Secured Indebtedness
Indebtedness of Borrower and its Consolidated $_________
Subsidiaries (from Section 3(b) (I) above that is
secured by a Consensual Lien)
6. Section 6.1 (e). Ratio of Total Unencumbered Assets to Total Unsecured
Indebtedness.
(a) Minimum Ratio 1.75 to 1
(b) Actual Ratio
(i) Total Assets not subject to a Lien other $__________
than Liens of the type described in clause (a) through
(f) of the definition of Permitted Liens
(ii) Aggregate amount of Indebtedness of $__________
Company and its Consolidated Subsidiaries
that is not secured by a Lien other than Liens
of the type described in clause (a) through
(f) of the definition of Permitted Liens
(iii) [(i)/(ii)] _____ to 1
7. Section 6.3. Contingent Liabilities.
(a) Maximum $5,000,000
(b) Actual $_________
8. Section 6.6. Disposition of Assets.
(a) Maximum during any four consecutive fiscal
quarters
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(i) Total Assets as of the first day of $_________
preceding four consecutive fiscal quarters
divided by four
(ii) 25% times 8(a)(i) above $_________
(b) Actual (excluding Assets disposed of in an Asset $_________
Securitization)
9. Section 6.7. Permitted Distributions.
(a) Maximum
(i) Cash Flow From Operations (from $_________
Section 4(b)(i) above)
(ii) 95% times 9(a)(i) above $_________
(b) Actual $_________
10. Section 6.10 Asset Securitization Investments.
(a) Maximum - 20% of Total Assets $_________
(b) Actual $_________
IN WITNESS WHEREOF, I have executed this Certificate as of the _____ day of
___________, 19__.
FRANCHISE FINANCE CORPORATION
OF AMERICA
By: _________________________________
Name:__________________________
Title: ________________________
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