AFC ENTERPRISES, INC. SECOND AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.1
AFC ENTERPRISES, INC.
SECOND AMENDMENT
TO CREDIT AGREEMENT
TO CREDIT AGREEMENT
This SECOND AMENDMENT, dated as of April 25, 2007 (this “Amendment”), to the Second Amended and
Restated Credit Agreement, dated as of May 11, 2005 (the “Credit Agreement”, as amended by the
First Amendment to the Credit Agreement, dated April 14, 2006 among the Borrower, JPMorgan Chase
Bank, N.A. and the Lenders party thereto, each in their stated capacities), is entered into by and
among AFC ENTERPRISES, INC., a Minnesota corporation (the “Borrower”), the LENDERS party thereto,
JPMORGAN CHASE BANK, N.A. (“JPMCB”), as Administrative Agent, X.X.XXXXXX SECURITIES INC., as Sole
Bookrunner and Lead Arranger and FLEET NATIONAL BANK, N.A., as Documentation Agent. Capitalized
terms used herein not otherwise defined herein or otherwise amended hereby shall have the meanings
ascribed thereto in the Credit Agreement.
RECITALS:
WHEREAS, Borrower has requested that the Lenders agree to make amendments to certain provisions of
the Credit Agreement to permit certain repurchases of Borrower Common Stock subject to the terms
and conditions set forth herein;
WHEREAS, the Lenders have agreed to amend certain provisions of the Credit Agreement, in each case
in the manner, and on the terms and conditions, provided for herein;
NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
1.1 Amendments to Article I: Definitions
A. Section 1.01 is hereby amended by adding the following definitions:
“Second Amendment” means the amendment to the Credit Agreement dated as of April 25,
2007.
“Second Amendment Effective Date” means the date on or prior to April 25, 2007 upon
which all the conditions precedent set forth in Section 2 of the Second Amendment are satisfied.
B. The definition of “Consolidated Excess Cash Flow” in Section 1.01 is hereby amended
by deleting subclause (ii)(a) in its entirety and replacing it with the following:
“(a) voluntary, mandatory and scheduled repayments of Consolidated Total Indebtedness
(excluding repayments of Revolving Loans except to the extent the Revolving Loan Commitments are
permanently reduced in connection with such repayments and mandatory
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prepayments of the Loans and excluding voluntary repayments made after the Borrower’s fiscal
year ending in 2006),”.
1.2 Amendment to Article II: The Credits
Section 2.10(d) is hereby amended by deleting such subsection in its entirety and replacing it
with the following:
“(d) Following the end of each fiscal year of the Borrower, the Borrower shall prepay Term
Loan Borrowings in an aggregate amount equal to: (i) 50% of the sum of (A) Consolidated Excess Cash
Flow less (B) the amount of any voluntary prepayments, less (C) the amount by which Revolving Loan
Commitments are permanently reduced in connection with repayments and mandatory prepayments of the
Revolving Loans, for such fiscal year in accordance with paragraph (e) below if the Total Leverage
Ratio is greater than or equal to 3.00 to 1.00 on the last day of such fiscal year, (ii) 25% of the
sum of (A) Consolidated Excess Cash Flow less (B) the amount of any voluntary prepayments, less (C)
the amount by which Revolving Loan Commitments are permanently reduced in connection with
repayments and mandatory prepayments of the Revolving Loans, for such fiscal year in accordance
with paragraph (e) below if the Total Leverage Ratio is less than 3.00 to 1.00 but greater than
2.00 to 1.00 on the last day of such fiscal year or (iii) 0% of Consolidated Excess Cash Flow for
such fiscal year in accordance with paragraph (e) below if the Total Leverage Ratio is less than or
equal to 2.00 to 1.00 on the last day of such fiscal year. Each prepayment pursuant to this
paragraph shall be made on or before March 31 of each year.
1.3 Amendments to Article VI: Negative Covenants
A. Section 6.06(a) is hereby amended by deleting such subsection in its entirety and replacing
it with the following:
“(a) The Borrower will not, and will not permit any of its Subsidiaries to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, except, so long as no
Default or Event of Default shall have occurred and be continuing, the Borrower may (i) consummate
the Shareholder Transaction in an aggregate amount not to exceed $375,000,000 (the
“Shareholder Transaction Amount”), (ii) make payments to purchase Borrower
Common Stock or options, warrants or rights to purchase or acquire Borrower Common Stock (or any
transaction that has a substantially similar effect) with Consolidated Excess Cash Flow to the
extent not required to be paid pursuant to Section 2.10(d); provided, however, that
if at the time of making such purchase, and after giving effect thereto, the Total Leverage Ratio
of Borrower (a) is greater than or equal to 3:00 to 1.00, such payment shall not exceed $15,000,000
per fiscal year and (b) is less than 3.00 to 1.00 but greater than 2.00 to 1.00, such payment shall
not exceed $25,000,000 per fiscal year, (iii) at any time from and after the Second Amendment
Effective Date, make payments to purchase Borrower Common Stock or options, warrants or rights to
purchase or acquire Borrower Common Stock (or any transaction that has a substantially similar
effect) in an aggregate amount not to exceed $40,000,000, in addition to all other payments made
and permitted hereunder, and (iv) use the proceeds from stock option exercises in an amount not to
exceed the sum of (x) $6,400,000 from such proceeds received from the Closing Date to December 25,
2005 and (y) 100% of such proceeds received subsequent to December 26, 2005
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TO CREDIT AGREEMENT |
to make payments to purchase Borrower Common Stock or options, warrants or rights to purchase
or acquire Borrower Common Stock (or any transaction that has a substantially similar effect). The
Borrower shall provide the Administrative Agent a certificate, in form and substance reasonably
satisfactory to the Administrative Agent, with respect to clauses (i), (ii), (iii) and (iv)
above, in reasonable detail.”
B. Section 6.12 is hereby amended by deleting such section in its entirety and replacing it
with the following:
“SECTION 6.12 Minimum Fixed Charge Coverage Ratio. As of the last day of any fiscal
quarter, the Borrower will not permit the ratio of (i) Consolidated EBITDAR less provisions for
current taxes based upon or determined by reference to income of Borrower and its Subsidiaries and
payable in cash with respect to such period less Consolidated Maintenance Capital
Expenditure to (ii) Consolidated Fixed Charges, in each case for any period of four consecutive
fiscal quarters ending on or after the Closing Date to be less than 1.30:1.00 for any such periods
ending on or prior to June 30, 2006, 1.40:1.00 for any such periods ending in subsequent to June
30, 2006, but prior to the fiscal quarter ending June 30, 2008 and 1.50:1.00 thereafter.”
1.4 Amendment to Article IX: Miscellaneous
Section 9.01(b) is hereby amended by deleting such subsection in its entirety and replacing it
with the following:
“(b) if to the Borrower, to it at 0000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxx, XX 00000,
Attention of Treasurer (Telecopy No. (000) 000-0000); and in the case of any notice of default or
in the Event of Default, concurrently to each of AFC Enterprises, Inc., 0000 Xxxxxxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxx, XX 00000, Attention of General Counsel (Telecopy No. (000) 000-0000) and to
Xxxxx Xxxxxxx Xxxxxx & Small, P.C., 0000 Xxxxxxxxx Xxxxxxx, XX, Xxxxx 0000, Xxxxxxx, XX 00000-0000,
Attention of Xxxxxx X. Xxxxxx, Esq. (Telecopy No. (000) 000-0000);”.
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS
2.1 The effectiveness of the amendments set forth at Section 1 hereof are subject to the
satisfaction, or waiver, of the following conditions on or before the date hereof:
A. The Borrower, the Required Lenders and the Subsidiary Loan Party shall have indicated their
consent to this Amendment by the execution and delivery of the applicable signature pages to the
Administrative Agent.
B. As of the Second Amendment Effective Date, after giving effect to this Amendment, the
representations and warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of the Second Amendment Effective Date to
the same extent as though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case
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such representations and warranties shall have been true, correct and complete in all material
respects on and as of such earlier date.
C. As of the Second Amendment Effective Date, after giving effect to this Amendment, no event
shall have occurred and be continuing that would constitute an Event of Default or a Default.
D. As of the Second Amendment Effective Date, the Borrower shall have paid all fees and other
amounts due and payable, including, to the extent invoiced, reimbursement or other payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower under any Loan Document.
E. Administrative Agent shall have received, for distribution to all Lenders executing this
Amendment by 12:00 noon Eastern time on Wednesday, April 25, 2007, an amendment fee equal to 0.05%
of such Lenders’ outstanding Loans and, without duplication, unused Commitments immediately prior
to the Second Amendment Effective Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES
In order to induce Required Lenders to enter into this Amendment, each applicable Loan Party
represents and warrants to each Lender, as of the date hereof and upon giving effect to this
Amendment, that the representations and warranties contained in each of the Loan Documents are
true, correct and complete in all material respects on and as of the date hereof to the same extent
as though made on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and warranties shall
have been true, correct and complete in all material respects on and as of such earlier date.
SECTION 4. ACKNOWLEDGMENT AND CONSENT
4.1 The Subsidiary Loan Party has (i) guarantied the Obligations and (ii) created Liens in
favor of Lenders on certain Collateral to secure such obligations.
4.2 The Subsidiary Loan Party hereby acknowledges that it has reviewed the terms and
provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit
Agreement effected pursuant to this Amendment. The Subsidiary Loan Party hereby confirms that each
Security Document to which it is a party or otherwise bound and all Collateral encumbered thereby
will continue to guarantee or secure, as the case may be, to the fullest extent possible in
accordance with the Security Documents, the payment and performance of all Obligations under the
Credit Agreement and the Obligations (as such term is defined in the Security Documents) under the
Security Documents, as the case may be, including without limitation the payment and performance of
all such Obligations under the Credit Agreement and the Obligations under the Security Documents in
respect of the Obligations of Borrower now or hereafter existing under or in respect of the Credit
Agreement, as amended hereby, and grants to the Collateral Agent a continuing lien on and security
interest in and to all Collateral as collateral security for the prompt payment and performance in
full when due of the Obligations under the Credit Agreement and the Obligations under the Security
Documents (whether at stated maturity, by acceleration or otherwise).
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4.3 The Subsidiary Loan Party acknowledges and agrees that any of the Security Documents to
which it is a party or otherwise bound shall continue in full force and effect and that all of its
obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. The Subsidiary Loan Party represents and warrants
that all representations and warranties contained in the Credit Agreement, as amended hereby, and
the Security Documents to which it is a party or otherwise bound are true, correct and complete in
all material respects on and as of the Second Amendment Effective Date to the same extent as though
made on and as of that date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date.
4.4 The Subsidiary Loan Party acknowledges and agrees that (i) notwithstanding the conditions
to effectiveness set forth in this Amendment, the Subsidiary Loan Party is not required by the
terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this
Amendment or any other Loan Document shall be deemed to require the consent of the Subsidiary Loan
Party to any future amendments to the Credit Agreement.
SECTION 5. MISCELLANEOUS
5.1 This Amendment shall be binding upon the parties hereto and the Lenders and their
respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of Lenders. No Loan Party’s rights or obligations hereunder or any interest
therein may be assigned or delegated by any Loan Party without the prior written consent of all
Lenders.
5.2 In case any provision in or obligation hereunder shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
5.3 On and after the Second Amendment Effective Date, each reference in the Credit Agreement
to “this Agreement”, “hereunder”, “hereof”, “herein” 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 by this Amendment.
5.4 Except as specifically amended by this Amendment, the Credit Agreement and the other Loan
Documents shall remain in full force and effect and are hereby ratified and confirmed.
5.5 The execution, delivery and performance of this Amendment shall not, except as expressly
provided herein, constitute a waiver of any provision of, or operate as a waiver of any right,
power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Loan
Documents.
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5.6 Section headings herein are included herein for convenience of reference only and shall
not constitute a part hereof for any other purpose or be given any substantive effect.
5.7 THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5.8 This Amendment may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original, but all such counterparts together shall
constitute but one and the same instrument. As set forth herein, this Amendment shall become
effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by
Borrower and Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.
| BORROWER: | AFC ENTERPRISES, INC. |
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| By: | /s/ X. Xxxxxxxx Hope, III | |||
| Name: | X. Xxxxxxxx Hope, III | |||
| Title: | Chief Financial Officer | |||
| SUBSIDIARY LOAN PARTY: | AFC PROPERTIES, INC. |
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| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | Vice President | |||
Second Amendment to Second Amended and Restated Credit Agreement
| LENDERS: | JPMORGAN CHASE BANK, N.A., individually as a Lender and as Administrative Agent |
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| By: | /s/ H. Xxxxx Xxxxx | |||
| Name: | H. Xxxxx Xxxxx | |||
| Title: | Senior Vice President | |||
Second Amendment to Second Amended and Restated Credit Agreement
| By signing below, you have indicated your consent to the Second Amendment. Institution Name: XX Xxxxxx Xxxxx Bank, N.A. |
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| By: | /s/ H. Xxxxx Xxxxx | |||
| Name: | H. Xxxxx Xxxxx | |||
| Title: | Senior Vice President | |||
Second Amendment to Second Amended and Restated Credit Agreement
| By signing below, you have indicated your consent to the Second Amendment. Institution Name: Bank of America, N.A. (f/k/a/ Fleet National Bank, Inc.) |
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| By: | /s/ Xxxx X. Xxxxxxx | |||
| Name: | Xxxx X. Xxxxxxx | |||
| Title: | Vice President | |||
Second Amendment to Second Amended and Restated Credit Agreement
| By signing below, you have indicated your consent to the Second Amendment. [Other Lender signatures omitted.] |
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Second Amendment to Second Amended and Restated Credit Agreement
