AMENDMENT NO. 1 AND WAIVER, dated as of
March 16, 1998 (this "AMENDMENT"), to the Credit
Agreement dated as of January 7, 1998 (the "CREDIT
AGREEMENT"), among DENNY'S, INC., a California
corporation, EL POLLO LOCO, INC., a Delaware
corporation, FLAGSTAR ENTERPRISES, INC., an Alabama
corporation, FLAGSTAR SYSTEMS, INC., a Delaware
corporation, QUINCY'S RESTAURANTS, INC., an Alabama
corporation (each of the foregoing, individually, a
"BORROWER" and, collectively, the "BORROWERS"),
ADVANTICA RESTAURANT GROUP, INC., a Delaware
Corporation ("PARENT"), the Lenders (as defined in
Article I of the Credit Agreement) and THE CHASE
MANHATTAN BANK, a New York banking corporation, as
swingline lender (in such capacity, the "SWINGLINE
LENDER"), as issuing bank, as administrative agent
(in such capacity, the "ADMINISTRATIVE AGENT") and as
collateral agent (in such capacity, the "COLLATERAL
AGENT") for the Lenders.
A. The Lenders have extended credit to the Borrowers, and have
agreed to extend credit to the Borrowers, in each case pursuant to the terms and
subject to the conditions set forth in the Credit Agreement.
B. Parent and the Borrowers have requested that the Required
Lenders (i) grant certain waivers of compliance by Parent and the Borrowers with
certain provisions of the Credit Agreement as provided herein and (ii) agree to
amend certain provisions of the Credit Agreement as provided herein.
C. The Required Lenders are willing to grant such waivers and
agree to such amendments, in each case on the terms and subject to the
conditions set forth herein.
D. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Waivers. (a) The Required Lenders hereby waive
compliance by Parent and the Borrowers with Section 5.11 of the Credit Agreement
to the extent, but only to the extent, necessary to permit any newly-formed,
special purpose subsidiary of Parent (the "SPC") the only assets of which are
(i) Defeasance Eligible Investments (as defined in the Real Estate Financing
Documents) that were acquired or retained in connection with the SRT Defeasance
(as defined below) and the earnings thereon and proceeds thereof and (ii) cash
in an amount necessary to effect the SRT Defeasance not to execute a Subsidiary
Guarantee Agreement, an Indemnity, Subrogation and Contribution Agreement or any
Security Document until such time when the SPC is no longer subject to a
contractual prohibition on doing so.
(b) The Required Lenders hereby waive compliance by Parent and
the Borrowers with Sections 5.12, 6.04, 6.05 and 6.08 of the Credit Agreement to
the extent, but only to the extent, necessary to permit (i) the use of a portion
of the proceeds of the Enterprises Sale (as defined in the Credit Agreement as
amended by this Amendment) to
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cause (A) the defeasance in full of (1) the Mortgage Notes of Spardee's Realty
(the "Spardee's Mortgage Notes") relating to the 10.25% Guaranteed Secured Bonds
due 2000 of Secured Restaurants Trust and (2) the Mortgage Notes of Quincy's
Realty (the "Quincy's Mortgage Notes") relating to the 10.25% Guaranteed Secured
Bonds due 2000 of Secured Restaurants Trust in accordance with their respective
terms (or otherwise on terms reasonably satisfactory to the Administrative
Agent) or (B) the defeasance in full of the 10.25% Guaranteed Secured Bonds due
2000 of Secured Restaurants Trust in accordance with their terms (or otherwise
on terms reasonably satisfactory to the Administrative Agent) and, in the case
of this clause (B), in consideration of such defeasance, the extinguishment of
all obligations of the Subsidiaries in respect of the Spardee's Mortgage Notes
and the Quincy's Mortgage Notes (the transactions referred to in clause (i)(A)
or (i)(B) above, the "SRT DEFEASANCE"), (ii) the transfer of the Defeasance
Eligible Investments and cash deposited to effect the SRT Defeasance to the SPC
(the "SPC Transfer") and (iii) waivers, amendments and supplements to the Real
Estate Financing Documents in connection with the implementation of the SRT
Defeasance reasonably acceptable to the Administrative Agent, among other
things, (A) to provide for reimbursement or indemnification by Parent of certain
costs of Financial Security Assurance Inc. ("FSA"), (B) to impose limitations on
distributions by Quincy's Realty and (C) to require the posting of a $1,000,000
letter of credit as part of the SRT Defeasance.
SECTION 2. Amendment. (a) Section 1.01 of the Credit Agreement
is hereby amended as follows:
(i) by inserting the following definitions in the appropriate
alphabetical order:
"'DENNY'S MORTGAGE NOTES' shall mean the 11.03% Mortgage Notes
of Denny's Realty due 2000."
"'ENTERPRISES SALE' shall have the meaning assigned to such
term in Section 6.05(h)."
"'QUINCY'S MORTGAGE NOTES' shall mean the Mortgage Notes of
Quincy's Realty relating to the 10.25% Guaranteed Secured
Bonds due 2000 of Secured Restaurants Trust."
"'SPARDEE'S MORTGAGE NOTES' shall mean the Mortgage Notes of
Spardee's Realty relating to the 10.25% Guaranteed Secured
Bonds due 2000 of Secured Restaurants Trust."
"'SRT BONDS' shall mean the 10.25% Guaranteed Secured Bonds
due 2000 of Secured Restaurants Trust."
"'SRT DEFEASANCE' shall have the meaning assigned to such term
in Section 6.05(h).";
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(ii) by inserting at the end of the definition of the term
"Consolidated EBITDA" before the period the following proviso:
"; provided, however, that (a) prior to the occurrence of an
Enterprises Sale, Consolidated EBITDA for each period will be
determined assuming that the consolidated results of
operations of Enterprises and its subsidiaries are
attributable to continuing operations of Parent and the
Subsidiaries, whether or not such consolidated results of
operations are at the time being classified by Parent in its
consolidated financial statements as the results of
discontinued operations, (b) upon and after the occurrence of
an Enterprises Sale, Consolidated EBITDA for each period that
includes the date of occurrence of such Enterprises Sale will,
solely for purposes of determining compliance with Sections
6.11, 6.12, 6.13 and 6.14, be determined on a pro forma basis,
as if Enterprises had been sold on the first day of such
period and (c) after the occurrence of any acquisition of any
person by Parent, any Borrower or any Specified Subsidiary,
Consolidated EBITDA for each period that includes the date of
occurrence of such acquisition will, solely for purposes of
determining compliance with Sections 6.11 and 6.12, be
determined on a pro forma basis, based on the actual
historical results of operations of such person, as if such
acquisition had occurred on the first day of such period";
(iii) by inserting at the end of the definition of the term
"Consolidated Interest Expense" after the period the following
sentence:
"Notwithstanding the foregoing, (a) prior to the occurrence of
an Enterprises Sale, Consolidated Interest Expense for each
period will be determined assuming that the consolidated
interest expense (net of interest income) of Enterprises and
its subsidiaries is attributable to continuing operations of
Parent and the Subsidiaries, whether or not the consolidated
results of operations of Enterprises and its subsidiaries are
at the time being classified by Parent in its consolidated
financial statements as the results of discontinued
operations, and (b) upon and after the occurrence of an
Enterprises Sale, Consolidated Interest Expense (i) for each
period that includes the date of occurrence of such
Enterprises Sale will, for all purposes in this Agreement, be
determined on a pro forma basis, as if Enterprises had been
sold and the SRT Defeasance had been effected on the first day
of such period and (ii) for each period will, for all purposes
in this Agreement, be determined without regard to (A)
interest expense in respect of the Spardee's Mortgage Notes,
the Quincy's Mortgage Notes and the SRT Bonds and (B) interest
income in respect of the Defeasance Eligible Investments (as
defined in the Real Estate Financing Documents).";
(iv) by inserting at the end of the definition of the term
"Consolidated Lease Expense" after the period the following sentence:
"Notwithstanding the foregoing, (a) prior to the occurrence of
an Enterprises Sale, Consolidated Lease Expense for each
period will be determined assuming that the consolidated
payment obligations of Enterprises and its subsidiaries for
such period under Operating Leases are
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attributable to continuing operations of Parent and the
Subsidiaries, whether or not the consolidated results of
operations of Enterprises and its subsidiaries are at the time
being classified by Parent in its consolidated financial
statements as the results of discontinued operations, and (b)
upon and after the occurrence of an Enterprises Sale,
Consolidated Lease Expense for each period that includes the
date of occurrence of such Enterprises Sale will, for all
purposes of this Agreement, be determined on a pro forma
basis, as if Enterprises had been sold on the first day of
such period.";
(v) by inserting at the end of the definition of the term
"Consolidated Total Debt" before the period the following text:
", MINUS, at any time after the Enterprises Sale and the SRT
Defeasance have occurred, the lesser of (x) $170,000,000, (y)
the Net Cash Proceeds of such Enterprises Sale that have not
previously been applied to incur Consolidated Capital
Expenditures (or investments in lieu thereof permitted under
Section 6.04(k)), pay Indebtedness, effect the SRT Defeasance
or make investments or for any other purpose and (z) the
aggregate amount of all cash and cash equivalents of Parent,
the Borrowers and the Specified Subsidiaries (excluding the
Defeasance Eligible Investments (as defined in the Real Estate
Financing Documents) acquired in connection with the SRT
Defeasance) that would be set forth on a consolidated balance
sheet of Parent, the Borrowers and the Specified Subsidiaries
prepared as of such date in accordance with GAAP";
(vi) by inserting immediately before the words "the fair
market value" in the last sentence of the definition of the term
"Indebtedness" the text "(a)" and inserting at the end of such
definition before the period the following text:
"and (b) if the SRT Defeasance has occurred and remains
effective, the aggregate amount of Indebtedness outstanding in
respect of the Quincy's Mortgage Notes and the Spardee's
Mortgage Notes or the SRT Bonds, as the case may be"; and
(vii) by deleting the words "each series of the Mortgage
Notes" set forth in the first line of the definition of the term "Real
Estate Refinancing" and substituting therefor the following words:
"(a) each series of the Mortgage Notes or (b) if the SRT
Defeasance has occurred and remains effective, the Denny's
Mortgage Notes".
(b) Section 6.04 of the Credit Agreement is hereby amended as
follows:
(i) by inserting immediately before the word "Subsidiaries" in
Section 6.04(k) the word "Domestic", by inserting immediately before
the words "any Borrower" in Section 6.04(k) the text "any of Parent,"
and by deleting the word "and" at the end of Section 6.04(k); and
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(ii) by deleting the period at the end of Section 6.04(l) and
substituting therefor the text "; and" and by inserting after Section
6.04(l) the following new section:
"(m) Defeasance Eligible Investments (as defined in the Real
Estate Financing Documents) acquired in connection with the
SRT Defeasance.".
(c) Section 6.05 of the Credit Agreement is hereby amended as
follows:
(i) by deleting the word "$5,000,000" in clause (ii) of
Section 6.05(e) and substituting therefor the word "$10,000,000";
(ii) by inserting at the end of Section 6.05(f) immediately
before the semicolon the following:
", except that during the three-fiscal-year period ending on
or about December 31, 2000, Quincy's and its subsidiaries may
dispose of additional underperforming restaurants (as
determined in the good faith judgment of Parent) pursuant to
this Section 6.05(f), having an aggregate Fair Market Value of
not more than $45,000,000";
(iii) by deleting the word "and" set forth at the end of
Section 6.05(f); and
(iv) by inserting after Section 6.05(g) the word "and" and the
following new sections:
"(h) Spartan may sell all the capital stock of Enterprises
(the "ENTERPRISES SALE"), provided that (i) at the time of
such sale and immediately after giving effect thereto no Event
of Default or Default shall have occurred and be continuing,
(ii) such sale is consummated in accordance with the terms of
the Stock Purchase Agreement among Parent, Spartan,
Enterprises and CKE Restaurants, Inc. dated as of February 18,
1998 (without giving effect to any amendments, waivers,
supplements or other modifications thereto that are adverse to
the Lenders) (the "Purchase Agreement"), and applicable law
and regulations and otherwise on terms reasonably satisfactory
to the Administrative Agent, (iii) Spartan shall have received
gross cash proceeds of not less than $380,799,679 (subject to
adjustment as provided in the Purchase Agreement) from such
sale, (iv) a portion of the cash proceeds of the Enterprises
Sale is used immediately (A) to defease in full (1) the
Spardee's Mortgage Notes and (2) the Quincy's Mortgage Notes
in accordance with their respective terms (or otherwise on
terms reasonably satisfactory to the Administrative Agent) or
(B) to defease in full the SRT Bonds in accordance with their
terms (or otherwise on terms reasonably satisfactory to the
Administrative Agent) in exchange for the extinguishment of
all obligations of the Subsidiaries in respect of the
Spardee's Mortgage Notes and the Quincy's Mortgage Notes and
(v) all Liens under or related to the Spardee's Mortgage Notes
and the Quincy's Mortgage Notes affecting the Properties (as
defined in the Spartan Indenture, but excluding the Defeasance
Eligible Investments (as defined in the Real Estate Financing
Documents) and cash deposited to effect the SRT Defeasance)
are released and eliminated (the transactions
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referred to in clause (iv)(A) or (iv)(B) above, together with
the transactions referred to in clause (v) above, the "SRT
DEFEASANCE");".
(d) Section 6.08 of the Credit Agreement is hereby amended by
inserting after the word "that" in the first proviso to Section 6.08(a) the word
"(i)" and inserting at the end of such proviso before the semicolon the
following:
"and (ii) Parent or the Subsidiaries may make up to an
aggregate of $2,000,000 in prepayments of Indebtedness of
Enterprises retained or to be retained by Parent or any
Subsidiary in connection with the Enterprises Sale".
(e) Section 6.10 of the Credit Agreement is hereby amended by
inserting at the end thereof before the period the following proviso:
", PROVIDED FURTHER, that, after the occurrence of an
Enterprises Sale, in addition to the Consolidated Capital
Expenditures (or investments in lieu thereof permitted under
Section 6.04(k)) permitted to be incurred pursuant to the
foregoing provisions of this Section, Parent, the Borrowers
and the Specified Subsidiaries may from time to time incur
Consolidated Capital Expenditures (or investments in lieu
thereof permitted under Section 6.04(k)) in an aggregate
amount during the term of this Agreement not to exceed the
lesser of (a) $170,000,000 and (b) the Net Cash Proceeds of
such Enterprises Sale that have not previously been applied to
incur Consolidated Capital Expenditures (or investments in
lieu thereof permitted under Section 6.04(k)), pay
Indebtedness, effect the SRT Defeasance or make investments or
for any other purpose";
(f) Section 6.13 of the Credit Agreement is hereby amended,
effective upon the occurrence of the Enterprises Sale and the SRT Defeasance, by
deleting the second through ninth lines of the table set forth therein and
substituting therefor the following:
Date Ratio
---- -----
March 31, 1998 1.45 to 1.00
June 30, 1998 1.45 to 1.00
September 30, 1998 1.45 to 1.00
December 31, 1998 1.50 to 1.00
March 31, 1999 1.60 to 1.00
June 30, 1999 1.60 to 1.00
September 30, 1999 1.75 to 1.00
December 31, 1999 1.75 to 1.00
(g) Section 6.14 of the Credit Agreement is hereby amended,
effective upon the occurrence of the Enterprises Sale and the SRT Defeasance, by
deleting the second through ninth lines of the table set forth therein and
substituting therefor the following:
Date Ratio
---- -----
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March 31, 1998 1.25 to 1.00
June 30, 1998 1.25 to 1.00
September 30, 1998 1.25 to 1.00
December 31, 1998 1.28 to 1.00
March 31, 1999 1.32 to 1.00
June 30, 1999 1.32 to 1.00
September 30, 1999 1.40 to 1.00
December 31, 1999 1.40 to 1.00
SECTION 3. Additional Agreements. Parent and the Borrowers
hereby agree (a) to effect the SPC Transfer and (b) in connection therewith, to
obtain (i) the release of (A) Quincy's Realty from all obligations under the
Quincy's Mortgage Notes and the Spardee's Mortgage Notes and (B) Parent from all
reimbursement and indemnification obligations related thereto and (ii) the
release and elimination of the pledge of, and any other Liens affecting, the
capital stock of Quincy's Realty under or related to the Quincy's Mortgage Notes
or the Spardee's Mortgage Notes within 30 days after the date of occurrence of
the Enterprises Sale. Parent and the Borrowers hereby further agree not to
permit (a) Quincy's Realty or, after the SPC Transfer, the SPC to transfer the
Defeasance Eligible Investments (as defined in the Real Estate Financing
Documents) or any earnings thereon or proceeds thereof to any other person or to
use the Defeasance Eligible Investments or any earnings thereon or proceeds
thereof for any purpose, in each case other than to satisfy the obligations of
Quincy's Realty or the SPC, as applicable, in respect of the Quincy's Mortgage
Notes, the Spardee's Mortgage Notes or the other Real Estate Financing
Documents, or (b) the SPC to engage in any business or activity other than
holding such assets and using them for such purpose. The failure of Parent and
the Borrowers to comply with this Section 3 will be deemed to constitute an
Event of Default under the Credit Agreement.
SECTION 4. Representations and Warranties. Parent and the
Borrowers represent and warrant to the Administrative Agent and to each of the
Lenders that:
(a) This Amendment has been duly authorized, executed and
delivered by Parent and each of the Borrowers and constitutes their
legal, valid and binding obligations, enforceable in accordance with
its terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
(b) Before and after giving effect to this Amendment, the
representations and warranties set forth in Article III of the Credit
Agreement are true and correct in all material respects with the same
effect as if made on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) The execution, delivery and performance by Parent and each
necessary Loan Party of the Purchase Agreement, and the completion of
both the Enterprises Sale and the SRT Defeasance (a) have been duly
authorized by all requisite corporate and, if required, stockholder
action and (b) will not (i) violate (A) any provision of law, statute,
rule or regulation, or of the certificate or articles of incorporation
or other constitutive documents or by-laws of Parent, any Borrower or
any Subsidiary, (B) any order of any Governmental Authority or
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(C) any provision of any indenture, agreement or other instrument to
which Parent, any Borrower or any Subsidiary is a party or by which any
of them or any of their property is or may be bound or (ii) be in
conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or
redemption of any obligation under any such indenture, agreement or
other instrument.
(d) Before and after giving effect to this Amendment, no Event
of Default or Default has occurred and is continuing.
SECTION 5. Conditions to Effectiveness. This Amendment shall
become effective as of the date first above written when the Administrative
Agent shall have received counterparts of this Amendment that, when taken
together, bear the signatures of Parent, each of the Borrowers and the Required
Lenders.
SECTION 6. Credit Agreement. Except as specifically amended
hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. After
the date hereof, any reference to the Credit Agreement shall mean the Credit
Agreement as amended hereby.
SECTION 7. Loan Document. This Amendment shall be a Loan
Document for all purposes.
SECTION 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
SECTION 9. Counterparts. This Amendment may be executed in two
or more counterparts, each of which shall constitute an original but all of
which when taken together shall constitute but one agreement.
SECTION 10. Expenses. Parent and the Borrowers agree to
reimburse the Administrative Agent for its out-of-pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
Cravath, Swaine & Xxxxx, counsel for the Administrative Agent.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
ADVANTICA RESTAURANT GROUP, INC.,
by
-------------------------
Name:
Title:
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DENNY'S, INC.,
by
-------------------------
Name:
Title:
EL POLLO LOCO, INC.,
by
-------------------------
Name:
Title:
FLAGSTAR ENTERPRISES, INC.,
by
-------------------------
Name:
Title:
FLAGSTAR SYSTEMS, INC.,
by
-------------------------
Name:
Title:
QUINCY'S RESTAURANTS, INC.,
by
-------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, individually
and as Administrative Agent, Collateral
Agent, Swingline Lender and Issuing
Bank,
by
-------------------------
Name:
Title:
10
SIGNATURE PAGE TO
AMENDMENT NO. 1,
CONSENT AND WAIVER DATED AS OF
March 16, 1998
To approve the Amendment:
Name of Institution ________________________________________________
by
-----------------------------------
Name:
Title:
