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Exhibit 10.42
FIRST AMENDMENT
TO
CKE RESTAURANTS, INC.
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1996
This FIRST AMENDMENT (this "Amendment") is among CKE
RESTAURANTS, INC., a Delaware corporation (the "Borrower"), the Financial
Institutions party to the Credit Agreement referred to below (the "Lenders"),
and NATIONSBANK OF TEXAS, N.A., as agent (the "Agent") for the Lenders
thereunder.
PRELIMINARY STATEMENTS:
1. The Borrower, the Lenders and the Agent have entered into a
Credit Agreement dated as of August 1, 1996 (the "Credit Agreement"; capitalized
terms used and not otherwise defined herein have the meanings assigned to such
terms in the Credit Agreement).
2. The Borrower has requested that the Agent and the Lenders
(i) consent to a specified Designated Investment and a specified Permitted
Acquisition which, when combined, are in excess of amounts currently permitted
under the Credit Agreement, and (ii) amend the Credit Agreement to permit the
consummation of Permitted Acquisition Financing with respect to such Permitted
Acquisition after the consummation of such Permitted Acquisition.
3. The Agent and the Lenders are willing to grant the request
of the Borrower on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit
Agreement is, effective concurrently with the satisfaction of the conditions
precedent set forth in Section 3 hereof, hereby amended as follows:
(a) The definitions of the terms "Designated Investment" and
"Permitted Acquisition Financing" contained in Section 1.01 of the Credit
Agreement are hereby amended and restated in their entirety to read as follows:
"`DESIGNATED INVESTMENT' means any Investment by the
Borrower or any of its Subsidiaries made after the date hereof in a
Person which is not a Subsidiary of the Borrower and which is engaged,
at the time of such Investment, primarily in the business that the
Borrower is engaged in on the date hereof.
`PERMITTED ACQUISITION FINANCING' means financing
for, or the refinancing of, a portion of the purchase price of the CBI
Acquisition consisting of either (a) Debt incurred by CBI or CBI
Acquisition Subsidiary, which Debt may be incurred in connection with
such Permitted Acquisition, or (b) a sale-leaseback transaction
involving the sale for cash and for fair market value of assets of CBI
and its Subsidiaries (and not any other assets of the Borrower and
its Subsidiaries) with a fair market value not in excess of $22,000,000
and the lease of such assets by such Person for lease payments not
exceeding $3,500,000 in any period of 12 consecutive months; provided,
however, that (i) the Obligations in respect of the Permitted
Acquisition Financing may not be guaranteed or otherwise supported by
the Borrower or any of its Subsidiaries (other than the obligor in
respect of such Permitted Acquisition Financing) unless such guarantee
or other support obligation is subordinated to the
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prior payment in full in cash of the Advances on, and is otherwise
subject to, terms and provisions acceptable to the Agent and the
Required Lenders, (ii) the Obligations in respect of the Permitted
Acquisition Financing must be incurred, if at all, on or prior to
December 31, 1996, and (iii) there may not be more than one Permitted
Acquisition Financing during the term of this Agreement."
(b) Section 1.01 of the Credit Agreement is hereby further
amended by adding thereto the following defined terms in the appropriate
alphabetical order:
"`FIRST AMENDMENT' means the First Amendment to this
Agreement, dated as of September 30, 1996.
`CBI' means Casa Xxxxxx Incorporated, a Texas
corporation.
`CBI ACQUISITION' means the Acquisition by CBI
Acquisition Subsidiary of 100% of the capital stock of CBI.
`CBI ACQUISITION SUBSIDIARY' means a Subsidiary of
the Borrower, of which the Borrower owns not less than 80% of the
Voting Stock, formed for purposes of acquiring the capital stock of CBI
in connection with the CBI Acquisition.
`CBI SHAREHOLDER/INVESTOR LOANS' means loans to CBI
Acquisition Subsidiary from its shareholders and other investors in an
aggregate principal amount not to exceed $22,000,000 which are
subordinated to the prior payment in full in cash of the Advances on,
and which are otherwise subject to, terms and provisions acceptable to
the Agent and the Required Lenders.
`SUBORDINATED DEBT' means (i) the Debt in respect of
the CBI Shareholder/Investor Loans (including any guarantee of such
Debt), and (ii) Permitted Subordinated Debt."
(c) Section 2.05(b)(iii) of the Credit Agreement is hereby
amended by (i) adding the parenthetical "(as to which the provisions of Section
2.05(b)(v) shall be applicable)" at the end of clause (A)(4) of such Section,
and (ii) adding the clause "(1) the provisions of Section 2.05(b)(v) shall be
applicable to any Permitted Acquisition Financing, and (2)" immediately
following the words "it being understood that" appearing in clause (B) of such
Section.
(d) Section 2.05(b) of the Credit Agreement is hereby further
amended by adding thereto a new Section 2.05(b)(v) to read as follows:
"(V) NET CASH PROCEEDS OF PERMITTED ACQUISITION
FINANCING. The Borrower shall, on the date of receipt by the Borrower
or any of its Subsidiaries of the Net Cash Proceeds from any Permitted
Acquisition Financing (other than any Permitted Acquisition Financing
which is consummated prior to or concurrently with the CBI Acquisition
and the Net Cash Proceeds of which reduce the purchase price payable in
connection with the CBI Acquisition by an amount equal to such Net Cash
Proceeds), prepay an aggregate principal amount of the Revolving B
Advances (or, if no Revolving B Advances are then outstanding, the Term
Advances) equal to the greater of (A) the principal amount of any CBI
Shareholder/Investor Loans made by the Borrower and its Subsidiaries to
CBI Acquisition Subsidiary, and (B) 100% of such Net Cash Proceeds
minus the principal amount of CBI Shareholder/Investor Loans made by
Persons other than the Borrower and its Subsidiaries and repaid with
the proceeds of such Permitted Acquisition Financing as permitted under
Section 6.02(k). Such prepayment shall be applied first to the
outstanding Revolving B Advances until such Advances are paid in full
and, thereafter, to the Term Advances and the installments
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thereof in inverse order of maturity.
(e) Section 6.01 of the Credit Agreement is hereby amended by
adding thereto a new Section 6.01(m) to read as follows:
"(M) CONSUMMATION OF EQUITY OFFERING OR PERMITTED
ACQUISITION FINANCING; REPAYMENT OF CBI SHAREHOLDER/INVESTOR LOANS. On
or prior to December 31, 1996, (i) either (A) the Borrower shall have
consummated a new public offering of its common stock resulting in Net
Cash Proceeds to the Borrower of not less than $42,000,000, or (B) CBI
or CBI Acquisition Subsidiary shall have consummated the Permitted
Acquisition Financing resulting in proceeds to the obligor thereunder
of not less than $22,000,000, and (ii) upon consummation of such equity
offering or such Permitted Acquisition Financing (and only upon such
consummation) CBI Acquisition Subsidiary shall repay in full the CBI
Shareholder/Investor Loans (it being understood and agreed that the
obligations under this Section 6.01(m) are in addition to any
obligations the Borrower may have under Section 2.05 to prepay the
Advances with the Net Cash Proceeds of any such equity offering or
Permitted Acquisition Financing). The provisions of this Section
6.01(m) are for the benefit of the Agent and the Lenders only (and may
be waived by the Agent and the Required Lenders) and shall not, under
any circumstances, be construed as conferring any rights in favor of
any holder of CBI Shareholder/Investor Loans and no such holder of CBI
Shareholder/Investor Loans shall be a third party beneficiary of the
provisions of this Section 6.01(m)."
(f) Section 6.02(a)(vii) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"(vii) Liens securing Permitted Acquisition
Financing so long as such Liens extend only to the assets of
CBI and its Subsidiaries (and, in the case of a sale-leaseback
transaction, only to the assets the subject of such
sale-leaseback) and do not extend to the capital stock of any
of the Borrower's Subsidiaries; and "
(g) Clause (3) of Section 6.02(b)(iii)(D) of the Credit
Agreement is hereby amended and restated in its entirety to read as follows:
"(3) Debt of CBI or CBI Acquisition Subsidiary in respect of
(I) the CBI Shareholder/Investor Loans, and (II) the Permitted
Acquisition Financing, in an aggregate principal amount for
all Debt described in this clause (3) not to exceed
$22,000,000,"
(h) Section 6.02(b)(iii) of the Credit Agreement is hereby
further amended by (i) deleting the word "and" appearing at the end of clause
(E) of such Section, (ii) deleting the period appearing at the end of clause
(F) of such Section and replacing it with a comma and (iii) adding thereto new
Sections 6.02(b)(iii)(G), (H) and (I) to read as follows:
"(G) unsecured Debt of the Borrower or any of its
Subsidiaries owing to former franchisees and representing the deferred
purchase price (or a deferred portion of such purchase price) payable
by the Borrower or such Subsidiary to such former franchisee in
connection with the purchase by the Borrower or such Subsidiary of one
or more retail outlets from such former franchisee in an aggregate
principal amount for all such Debt not to exceed $3,000,000 at any one
time outstanding,
(H) unsecured Debt of the Borrower or any of its
Subsidiaries consisting of guarantees of not more than 20% of the
principal amount of Debt of a franchisee incurred to finance a
remodeling, construction or purchase of a retail unit of such
franchisee, and
(I) unsecured Debt of the Borrower consisting of the
guarantee of not
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more than $5,000,000 in principal amount of the CBI
Shareholder/Investor Loans so long as such guarantee is subordinated to
the prior payment in full in cash of the Advances on, and is otherwise
subject to, terms and provisions acceptable to the Agent and the
Required Lenders."
(i) Section 6.02(e) of the Credit Agreement is hereby amended
by (i) deleting the word "and" appearing at the end of clause (iii) of such
Section, (ii) deleting clause (iv) of such Section in its entirety, and (iii)
adding thereto new clauses (iv) and (v) to read as follows:
"(iv) if the Permitted Acquisition Financing is a
sale-leaseback transaction, the sale by CBI and its Subsidiaries of the
assets of CBI and its Subsidiaries (and not of the Borrower or any of
the Borrower's other Subsidiaries) which are the subject of such
sale-leaseback transaction for cash and for fair market value; provided
that the Borrower shall, on the date of such sale, prepay the Advances
pursuant to, and in the amount and order of priority set forth in,
Section 2.05(b)(v); and
(v) so long as no Default shall occur and be continuing, the
grant of any option or other right to purchase any asset in a
transaction which would be permitted under the provisions of the
preceding clauses (ii), (iii) and (iv)."
(j) Section 6.02(f)(i) of the Credit Agreement is hereby
amended by (i) deleting the words "wholly-owned" appearing in the second line
thereof, and (ii) deleting the phrase "in an aggregate amount invested from the
date hereof not to exceed $5,000,000" and replacing it with the words "which are
Loan Parties".
(k) Section 6.02(f)(iii) of the Credit Agreement is hereby
amended by (i) deleting the word "and" appearing at the end of clause (B) of
such Section and (ii) adding a new clause (D) to such Section to read as
follows:
", and (D) Investments consisting of guarantees permitted under
Section 6.02(b)(iii)(H)"
(l) Section 6.02(f)(iv) of the Credit Agreement is hereby
amended by (i) deleting the word "or" appearing in clause (B)(II) of such
Section and inserting in lieu thereof the words "and consideration paid or
refinanced with the proceeds of the" and (ii) adding a new clause (B)(III) to
read as follows:
"and (III) in the case of a Permitted Acquisition by a Subsidiary of
the Borrower which is not a wholly-owned Subsidiary of the Borrower,
the consideration paid by such Subsidiary with the proceeds of equity
contributions to such Subsidiary by Persons other than the Borrower and
its Subsidiaries"
(m) Section 6.02(f)(v)(G) of the Credit Agreement is hereby
amended by (i) deleting the word "or" appearing in clause (II) of such Section
and inserting in lieu thereof the words "and consideration paid or refinanced
with the proceeds of the" and (ii) adding thereto a new clause (III) to read as
follows:
"and (III) in the case of a Permitted Acquisition by a Subsidiary of
the Borrower which is not a wholly-owned Subsidiary of the Borrower,
the consideration paid by such Subsidiary with the proceeds of equity
contributions to such Subsidiary by Persons other than the Borrower and
its Subsidiaries"
(n) Section 6.02(g) of the Credit Agreement is hereby amended
and restated in its entirety to read as follows:
"(G) DIVIDENDS, ETC. Declare or pay any dividends,
purchase, redeem, retire, defease or otherwise acquire for value any of
its capital stock or any warrants, rights or
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options to acquire such capital stock, now or hereafter outstanding, return any
capital to its stockholders as such, make any distribution of assets, capital
stock, warrants, rights, options, obligations or securities to its stockholders
as such, or permit any of its Subsidiaries to declare or pay any dividends,
purchase, redeem, retire, defease or otherwise acquire for value any of such
Subsidiaries' capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital to its
stockholders as such, make any distribution of assets, capital stock, warrants,
rights, options, obligations or securities to its stockholders as such, or
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of the Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any capital stock or any warrants, rights or options
to acquire such capital stock, except that:
(i) so long as no Default shall have occurred and be
continuing, the Borrower and its Subsidiaries may declare and
deliver dividends and distributions payable only in common
stock of the Borrower or such Subsidiary, as the case may be;
(ii) so long as no Default shall have occurred and be
continuing, the Borrower may declare and pay cash dividends to
its stockholders and purchase, redeem, retire or otherwise
acquire shares of its own outstanding capital stock for cash
if after giving effect thereto the aggregate amount of such
dividends, purchases, redemptions, retirements and
acquisitions paid or made after the date hereof would be less
than the sum of $5,000,000 plus 50% of Consolidated Net Income
of the Borrower for the fiscal year immediately preceding the
year in which such dividend, purchase, redemption, retirement
or acquisition is paid or made;
(iii) any wholly-owned Subsidiary of the Borrower may
declare or pay any dividends, purchase, redeem, retire,
defease or otherwise acquire for value any of such
Subsidiary's capital stock or any warrants, rights or options
to acquire such capital stock, now or hereafter outstanding,
return any capital to its stockholder as such, make any
distribution of assets, capital stock, warrants, rights,
options, obligations or securities to its stockholder as such;
and
(iv) so long as no Default has occurred and is
continuing, any Subsidiary of the Borrower that is not a
wholly-owned Subsidiary of the Borrower may declare and pay
cash dividends to the extent, and only to the extent, of any
cumulative positive net income (after deducting any negative
net income) of such Subsidiary arising after the date such
Subsidiary became a Subsidiary of the Borrower so long as such
dividends are payable to all of its equity holders on a
ratable basis."
(o) Section 6.02(k) of the Credit Agreement is hereby amended
by deleting the phrase "and (ii)" appearing in the fourth line of such Section
and replacing it with the following:
", (ii) CBI or CBI Acquisition Subsidiary may repay
outstanding CBI Shareholder/Investor Loans as required by
Section 6.01(m) and, with respect to the promissory note
issued by CBI Acquisition Subsidiary to Giant Group, Ltd., as
may be required by Section 2 of such promissory note on or
after November 30, 1996, and (iii)"
(p) Section 7.01(c) of the Credit Agreement is hereby amended
by deleting the phrase "Section 6.01(e) or (f)," appearing in the second line of
such Section and replacing it with the phrase "Section 6.01(e), (f) or (m),".
(q) Section 9.01 of the Credit Agreement is hereby amended by
deleting the phrase "Sections 2.05(b)(ii) and (iii)" appearing in the fifteenth
and sixteenth lines thereof and replacing it with the phrase "Sections
2.05(b)(ii), (iii) and (v)".
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SECTION 2. CONSENTS. Effective concurrently with the
satisfaction of the conditions precedent set forth in Section 3 hereof and
notwithstanding the provisions of Sections 6.02(f)(iv) and 6.02(f)(v)(G) of the
Credit Agreement, the Lenders hereby consent to:
(a) the consummation of the CBI Acquisition for an aggregate
purchase price payable by the Borrower and its Subsidiaries (after
deducting from such purchase price the equity contributions of, and CBI
Shareholder/Investor Loans made by, Persons other than the Borrower and
its Subsidiaries) not to exceed $25,000,000 (subject to adjustment as
set forth in Section 2(c) the Stock Purchase Agreement dated August 27,
1996 between the Borrower and Casa Xxxxxx Holdings, Inc. relating to
the CBI Acquisition) but only if (i) such acquisition otherwise
constitutes a Permitted Acquisition under, and is otherwise consummated
in accordance with the terms of, the Credit Agreement (it being
understood that upon such consummation such acquisition shall
constitute a Permitted Acquisition under the Credit Agreement), (ii)
the aggregate equity contribution by the Borrower and its Subsidiaries
in connection with such acquisition does not exceed $16,000,000 and the
Borrower and its Subsidiaries receive in exchange therefor not less
than 80% of the Voting Stock of CBI Acquisition Subsidiary, and (iii)
the financing for such acquisition is substantially as set forth in
Step 1 of the CBI Acquisition Financing Flow Worksheet provided to the
Agent with the Borrower's cover letter dated September 20, 1996 (and
the Agent and each Lender, by its execution hereof, acknowledges that
the terms and provisions (including those relating to subordination) of
the CBI Shareholder/Investor Loans and of the guarantee of the Borrower
relating thereto as set forth in the draft Stock Purchase and Loan
Agreement among CBI Restaurants, Inc., the Borrower and Fidelity
National Financial, Inc. and in the promissory note to be issued by CBI
Restaurants, Inc. in favor of Giant Group, Ltd. and the guaranty of the
Borrower relating to such promissory note, in each case as provided to
the Lenders prior to the execution hereof, are acceptable to the Agent
or such Lender, as the case may be); and
(b) the consummation of the purchase of common stock of
Rally's Hamburger's, Inc. in connection with its rights offering as
contemplated prior to the date of the First Amendment for an aggregate
purchase price not to exceed $2,500,000 (it being understood that upon
such consummation such purchase shall constitute a Designated
Investment under the Credit Agreement).
SECTION 3. CONDITIONS TO EFFECTIVENESS. This Amendment shall
become effective when:
(a) the Agent has executed this Amendment and has received
counterparts of this Amendment executed by the Borrower and the
Required Lenders; and
(b) the Agent has received counterparts of the Consent
appended hereto (the "Consent") executed by each of the Guarantors
(such Guarantors, together with the Borrower, each a "Loan Party" and,
collectively, the "Loan Parties").
SECTION 4. REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants as follows:
(a) AUTHORITY. The Borrower and each other Loan Party has the
requisite corporate power and authority to execute and deliver this Amendment or
the Consent, as applicable, and to perform its obligations hereunder and under
the Loan Documents (as amended or modified hereby) to which it is a party. The
execution, delivery and performance by the Borrower of this Amendment and by
each other Loan Party of the Consent, and the performance by each Loan Party of
each Loan Document (as amended or modified hereby) to which it is a part have
been duly approved by all necessary corporate action of such Loan Party and no
other corporate proceedings on the part of
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such Loan Party are necessary to consummate such transactions.
(b) ENFORCEABILITY. This Amendment has been duly executed and
delivered by the Borrower. The Consent has been duly executed and delivered by
each Guarantor. This Amendment and each Loan Document (as amended or modified
hereby) is the legal, valid and binding obligation of each Loan Party party
hereto or thereto, enforceable against such Loan Party in accordance with its
terms, and is in full force and effect.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in each Loan Document (other than any such representations
or warranties that, by their terms, are specifically made as of a date other
than the date hereof) are correct on and as of the date hereof as though made on
and as of the date hereof.
(d) NO DEFAULT. No event has occurred and is continuing that
constitutes a Default.
SECTION 5. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. (a)
Upon and after the effectiveness of this Amendment, 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 modified and amended hereby.
(b) Except as specifically amended above, the Credit Agreement
and all other Loan Documents, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) 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 Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
SECTION 6. EXECUTION IN COUNTERPARTS. This 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 taken together shall constitute but
one and the same agreement. Delivery of an executed counterpart of a signature
page to this Amendment or the Consent by telefacsimile shall be effective as
delivery of a manually executed counterpart of this Amendment or such Consent.
SECTION 7. GOVERNING LAW. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of California.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
CKE RESTAURANTS, INC.
By:__________________________________
Title:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By:__________________________________
Title:
LENDERS:
NATIONSBANK OF TEXAS, N.A.
By:__________________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:__________________________________
Title:
MELLON BANK, N.A.
By:__________________________________
Title:
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SUMITOMO BANK OF CALIFORNIA,
N.A.
By:________________________________
Title:
U. S. NATIONAL BANK OF OREGON
By:________________________________
Title:
XXXXX FARGO BANK, N.A.
By:________________________________
Title:
S-2
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CONSENT
DATED AS OF SEPTEMBER 30, 1996
The undersigned, as Guarantors under the Guaranty (as such terms
are defined in and under the Credit Agreement referred to in the foregoing First
Amendment), each hereby consents and agrees to the said First Amendment and
hereby confirms and agrees that the Guaranty is, and shall continue to be, in
full force and effect and is hereby ratified and confirmed in all respects
except that, upon the effectiveness of, and on and after the date of, the said
First Amendment, each reference in the Guaranty 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
the said First Amendment.
XXXX XXXXXXX ENTERPRISES, INC.
By:__________________________________
Title:
SUMMIT FAMILY RESTAURANTS INC.
By:__________________________________
Title:
HTB RESTAURANTS, INC.
By:__________________________________
Title:
BOSTON PACIFIC, INC.
By:__________________________________
Title:
