AMENDMENT NO. 2 dated as of December 31, 1998 (this
"Amendment") to the Credit Agreement dated as of December
2, 1998, as amended (the "Credit Agreement") by and among
FAMILY GOLF CENTERS, INC., a New York corporation (the
"Company"), THE CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as Agent and as a Lender, and the
Lenders Party Thereto.
WHEREAS, the Company has requested and the Agent and the Lenders have agreed,
subject to the terms and conditions of this Amendment, to amend certain
provisions of the Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
1. Amendment.
-- ----------
a. The definition of "Consolidated Debt Service Coverage Ratio" in
Section 1.01 of the Credit Agreement is hereby amended in its entirety as
follows:
"Consolidated Debt Service Coverage Ratio" shall mean for any
period, the ratio of (a) Consolidated EBITDA plus, to the extent
deducted in determining Consolidated EBITDA, all operating lease
expenses, less (i) all cash dividends, distributions and withdrawals
paid (including amounts reserved for such purposes) with respect to
any capital stock, (ii) all redemptions, repurchases and retirements
of capital stock (including amounts reserved for such purposes), and
(iii) cash tax payments, to (b) the sum of (i) all interest accrued
or paid (if not previously accrued) on any Indebtedness, during the
immediately preceding four fiscal quarters, plus (ii) the scheduled
installments of principal on all Indebtedness with an original
maturity of 365 days or more plus (iii) the scheduled operating
lease expenditures during the next succeeding four fiscal quarters.
All the foregoing categories shall be calculated with respect to the
Company and its Subsidiaries and shall be calculated (without
duplication) over the four fiscal quarters next preceding the date
of calculation thereof with the exception of (i) the scheduled
installments of principal on all Indebtedness of the Company and its
Subsidiaries with an original maturity of 365 days or more, and (ii)
the scheduled operating lease expenditures referred to in
clause (b)(iii) above, which shall each be calculated based upon the
next succeeding four fiscal quarters. Notwithstanding the foregoing,
with respect to the fiscal quarter ended June 30, 1998 and each
earlier fiscal quarter only, the foregoing categories which are
calculated over the prior four fiscal quarters shall not be
calculated to include the operations of Eagle Quest Golf Centers
Inc. and its subsidiaries.
b. The definition of "LIBO Margin" in Section 1.01 of the Credit
Agreement is hereby amended in its entirety to provide as follows:
"LIBO Margin" shall mean (a) with respect to an Adjusted Libor Loan
which is a Revolving Credit Loan, the percentage set forth below
under the heading "Revolving Credit Loan LIBO Margin" opposite the
applicable ratio and (b) with respect to an
Adjusted Libor Loan which is a Term Loan, the percentage set forth
below under the heading "Term Loan LIBO Margin" opposite the
applicable ratio.
Revolving
Credit Loan Term Loan
Consolidated Funded Debt LIBO Margin LIBO Margin
to Consolidated EBITDA (360 day basis) (360 day basis)
---------------------- --------------- ---------------
Equal to or less than 2.00:1.00 1.50% 1.75%
Greater than 2.00:1.00 but 1.75% 2.00%
equal to or less than 2.50:1.00
Greater than 2.50:1.00 but 2.00% 2.25%
equal to or less than 3.00:1.00
Greater than 3.00:1.00 but 2.25% 2.50%
equal to or less than 4.00:1.00
Greater than 4.00:1.00 but 2.50% 2.75%
less than 5:00:1:00
Equal to or greater than 5:00:1:00 2.75% 3.00%
Notwithstanding the foregoing, during the period commencing the
Closing Date and ending on April 15, 1999, the LIBO Margin shall be
2.50%. The LIBO Margin will be set or reset with respect to each
Loan on the date which is five Business Days following the date of
receipt by the Agent of the financial statements referred to in
Section 6.03(a) and Section 6.03(b) together with a certificate of
the Chief Financial Officer of the Company certifying the ratio of
Consolidated Funded Debt to Consolidated EBITDA and setting forth
the calculation thereof in detail; provided, however, (a) the LIBO
Margin will first be reset on April 16, 1999, provided the financial
statements for the fiscal year ending December 31, 1998, and the
certificate of the Chief Financial Officer of the Company identified
above are delivered to the Agent not less than five (5) Business
Days prior to April 16, 1999; and (b) if any such financial
statement and certificate are not received by the Agent within the
time period required pursuant to Section 6.03(a) or Section 6.03(b),
as the case may be, the LIBO Margin will be set or reset, unless the
rate of interest specified in Section 3.01(e) is in effect, based on
a ratio of Consolidated Funded Debt to Consolidated EBITDA of
greater than 5.00:1.00 from the date such financial statement and
certificate were due until the date which is five Business Days
following the receipt by the Agent of such financial statements and
certificate, and provided, further, that the Lenders shall not in
any way be deemed to have waived any Default or Event of Default,
including without limitation, an Event of Default resulting from the
failure of the Company to comply with Section 7.13 of this
Agreement, or any rights or remedies hereunder or under any other
Loan Document in connection with the foregoing proviso. During the
occurrence and continuance of a
Default or Event of Default, no downward adjustment, and only upward
adjustments, shall be made to the LIBO Margin."
c. Section 3.01(a) of the Credit Agreement is hereby amended in its
entirety to provide as follows:
"(a) Each Alternate Base Rate Loan which is a Revolving Credit Loan
shall bear interest for the period from the date thereof on the
unpaid principal amount thereof at a fluctuating rate per annum
equal to the Alternate Base Rate plus a margin of .75% per annum."
d. Section 3.01(c) of the Credit Agreement is hereby amended in its
entirety to provide as follows:
"(c) Each Alternate Base Rate Loan which is a Term Loan shall bear
interest for the period from the date thereof on the unpaid
principal amount thereof at a fluctuating rate per annum equal to
the Alternate Base Rate plus a margin of 1.25% per annum."
e. Section 3.03 is hereby amended to redesignate clause "(b)" as clause
"(c)" and to redesignate clause "(c)" as clause "(d)" and to add a new clause
"(b)" which shall read in its entirety as follows:
"(b) In the event of the initial offering or placement of the
Subordinated Debt permitted pursuant to Paragraph 2 hereof, the
Company shall on the date of such offering or placement apply a
portion of the proceeds therefrom to payment in full of the
outstanding Revolving Credit Loans."
f. Section 7.13(b) of the Credit Agreement is hereby amended by deleting
the table therein and replacing it with the following table in its place and
stead:
Period Ratio
------ -----
December 31, 1998 through March 30, 2000 3.50:1.00
March 31, 2000 and thereafter 4.00:1.00
g. Section 7.13(c) of the Credit Agreement is hereby amended by deleting
the table therein and replacing it with the following table in its place and
stead:
Period Ratio
------ -----
December 31, 1998 through June 29, 1999 5.90:1.00
June 30, 1999 through September 29, 1999 5.50:1.00
September 30, 1999 through December 30, 2000 5.00:1.00
December 31, 2000 and thereafter 4.50:1.00
h. Section 7.13(e) of the Credit Agreement is hereby amended in its
entirety to provide as follows:
"(e) Consolidated Senior Funded Debt to Consolidated EBITDA. Permit
at any time during the periods set forth below the ratio of
Consolidated Senior Funded Debt to Consolidated EBITDA to exceed the
ratio set forth below opposite the applicable period:
Period Ratio
------ -----
Closing Date through September 29, 1999 3.00:1.00
September 30, 1999 through December 30, 1999 2.75:1.00
December 31, 1999 and thereafter 2.50:1.00
2. Consent.
--------
The Required Lenders hereby agree to the issuance by the Company of
Subordinated Debt, in an amount not to exceed $150,000,000, during the period
commencing on the date hereof through December 31, 1999, on the terms described
on Exhibit A hereto provided that no Default or Event of Default (including,
without limitation due to a cross default with respect to a default under the
Company's Term Loan Agreement with ORIX USA Corporation) has occurred and is
then continuing or would occur after giving effect to such issuance of
Subordinated Debt and subject to the prior approval by the Required Lenders of
the terms and conditions of the indenture or other agreement or instrument
governing the terms of such Subordinated Debt.
3. Continuing Covenants.
---------------------
The Company covenants and agrees to deliver to the Agent, no later than January
30, 1999, a copy of the duly executed amendment with respect to the Company's
Term Loan Agreement with ORIX USA Corporation, in form and substance
satisfactory to the Agent in its sole discretion, which amendment revises the
financial covenants in such agreement to financial covenants which are no more
onerous than those found in the Credit Agreement, provided, that if such Term
Loan Agreement shall have been irrevocably terminated prior to January 31, 1999
and there shall remain no indebtedness of the Company due and owing to ORIX USA
Corporation thereunder by the Company, the Company shall not be required to
deliver such Amendment.
4. Miscellaneous.
---------------
This Amendment shall be construed and enforced in accordance with the laws of
the State of New York.
This Amendment shall become effective upon the Agent's receipt, in form and
substance satisfactory to the Agent and its counsel of the following: (i) this
Amendment duly executed on behalf of the Company and consented to by each
Guarantor, (ii) a copy of the duly executed waiver to the Company's Term Loan
Agreement with ORIX USA Corporation, in form and substance satisfactory to the
Agent in its sole discretion, which waiver shall waive compliance by the
Company with the financial covenants in such agreement and (iii) such other
certificates, instruments, documents and agreements as may be required by the
Agent and its counsel.
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as defined in the Credit Agreement.
Except as expressly amended hereby, the Credit Agreement shall remain in full
force and effect in accordance with the original terms thereof.
The amendments herein contained are limited specifically to the matters set
forth above and do not constitute directly or by implication an amendment or
waiver of any other provision of Credit Agreement or any default which may
occur or may have occurred under the Credit Agreement.
The Company hereby represents and warrants that (a) after giving effect to this
Amendment, the representations and warranties by the Company and each of its
Subsidiaries pursuant to the Credit Agreement and the Loan Documents to which
each is a party are true and correct in all material respects as of the date
hereof with the same effect as those such representations and warranties have
been made on and as of such date, unless such representation is as of a
specific date, in which case, as of such date, and (b) after giving effect to
this Amendment, no Default or Event of Default has occurred and is continuing.
Please be advised that should there be a need for further amendments or waivers
with respect to these covenants or any other covenants, those requests shall be
evaluated by the Lenders when formally requested, in writing, by the Company,
and the Lenders may deny any such requests for any reason in their sole
discretion.
This Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute
but one Amendment. This Amendment shall become effective when duly executed
counterparts hereof which, when taken together, bear the signatures of each of
the parties hereto shall have been delivered to the Agent.
This Amendment shall constitute a Loan Document.
IN WITNESS WHEREOF, the Company and the Agent, as authorized on behalf of the
Required Lenders, have caused this Amendment to be duly executed by their duly
authorized officers, all as of the day and year first above written.
FAMILY GOLF CENTERS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
THE CHASE MANHATTAN BANK,
as Agent
By: /s/ Xxxxxx X. Xxxxx, Xx.
-------------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Vice President
