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Exhibit 10-78
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AMENDMENT NO. ONE AND WAIVER TO
AMENDED AND RESTATED CREDIT AGREEMENT
this Amendment No. One and Waiver to Amended and Restated Credit Agreement
(the "Agreement") dated as of April 28, 1993, is between Bank of America
National Trust and Savings Association (the "Bank") and Carl Karcher
Enterprises, Inc. (the "Borrower").
RECITALS
A. The Bank and the Borrower entered into a certain Amended and Restated
Credit Agreement dated as of November 20, 1992 (the "Agreement").
B. The Borrower is in default of certain terms and conditions of the
Agreement and has requested the Bank to waive such defaults.
C. The Borrower has requested the Bank to amend the Agreement to allow the
Borrower to purchase shares of the common stock of the Borrower from the Carl
N. and Margaret M. Karcher Trust for an amount not to exceed $10,000,000 and to
amend the Agreement in other respects.
D. The Bank has agreed to waive the defaults and to amend the Agreement but
on the terms and conditions herein contained.
AGREEMENT
1. Definitions. Capitalized terms used but not defined in this Amendment
shall have the meaning given to them in the Agreement.
2. Amendments. The Agreement is hereby amended as follows:
2.1 Paragraph 1.1(a) of the Agreement is of the Agreement is hereby
amended in full to read as follows:
"(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower. The amount of the line of
credit (the "Commitment") is Fifteen Million Dollars ($15,000,000)."
2.2 Paragraph 1.2 of the Agreement is amended by substituting the
date March 31, 1994" for the date "June 30, 1994" appearing therein.
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2.3 The lead in to Paragraph 1.7 is hereby amended in full to read as
follows:
"1.7 Letters of Credit. This line of credit may be used for financing
standby letters of credit with a maximum maturity of 365 days but not to extend
beyond the Expiration Date. The amount of letters of credit outstanding at any
one time (including amounts drawn on letters of credit and not yet reimbursed)
may not exceed Four Million Dollars ($4,000,000)."
2.4 Paragraph 6.2 (e) of the Agreement is amended by substituting
the phrase "50 days of each of Borrower's fiscal quarter's end" for the phrase
"30 days of each period's end" appearing therein.
2.5 Paragraph 6.2 (f) of the Agreement is hereby amended in full
to read as follows:
"(f) Within 100 days of each fiscal year end, Borrower's financial
forecast by fiscal quarter for the next fiscal year. Financial forecast to
include balance sheet, operating statement (including components of other
income), operating cash flow statement, and a schedule showing compliance
with all financial covenants; and for the immediately succeeding fiscal
year, a detailed capital budget report."
2.6 Paragraph 6.2 (g) of the Agreement is hereby amended in full
to read as follows:
"(g) Intentionally Left Blank".
2.7 The following Paragraph 6.2(i) is hereby added to the Agreement:
"(i) With the financial statements required in Paragraph 6.2(a) and
6.2(b) herein a compliance certificate in form and substance satisfactory to
Bank executed by the Borrower's chief financial officer."
2.8 Paragraph 6.4 of the Agreement is hereby amended in full
to read as follows:
"6.4 Retained Earnings. As of each date indicated below, increase
Retained Earnings by an amount that is greater than the Retained Earnings as
of the last day of the immediately prior fiscal year as indicated below, by
at least the amount set opposite such date (such calculation of Retained
Earnings not to take into account the effect of the consummation of the
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transaction contemplated by the Stock Purchase Agreement
to in Section 6.13)."
Minimum Semi-Annual increase
in Retained Earnings over
Prior Fiscal Year End Retained
Date Earnings
---- --------
August 09, 1993 $2,500,000
August 15, 1994 $5,000,000
Minimum Annual increase in
Retained Earnings Over Prior
Fiscal Year End Retained
Date Earnings
---- --------
January 31, 1994 $7,600,000
For the purposes of this Agreement, "Retained Earnings" means cumulative
earnings shown on the Borrower's balance sheet and in accordance with generally
accepted accounting principles consistently applied.
2.9 Paragraph 6.5 is hereby amended in full to read as follows:
"6.5 Debt to Tangible Net Worth. To maintain a ratio of Total
Liabilities to Tangible Net Worth not exceeding the ratio indicated at the
end of each fiscal quarter as specified below:
Period End Ratio
---------- ----
May 17, 1993 2.50:1.0
August 9, 1993 2.25:1.00
November 1, 1993 2.25:1.0
January 31, 1994 2.00:1.00
May 23, 1994 and 1.75:1.0
thereafter
For purposes of this Agreement, 'Total liabilities' means the sum of current
liabilities plus long term liabilities, and 'Tangible Net Worth' means the
gross book value of the Borrower's assets (excluding goodwill, patents,
trademarks, trade names, organization expense, treasury stock, unamortized debt
discount and expense, deferred research and development costs, deferred
marketing expenses, and other like intangibles, and monies due from affiliates,
officers, directors or shareholders of the Borrower) less total liabilities,
including but not limited to accrued and deferred income taxes, and any
reserves against assets."
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2.10 Paragraph 6.6 of the Agreement is hereby amended in full to read as
follows:
"6.6 Fixed Charge Coverage Ratio. To maintain a Fixed Charge
Coverage Ratio not less than the ratio indicated at the end of each
fiscal period as specified below:
Period End Ratio
---------- -----
For quarter ending
May 17, 1993 only 1.00:1.0
Year to date for quarter
ending August 9, 1993 1.00:1.00
Year to date for quarter
ending November 1, 1993 1.00:1.00
At the end of each fiscal
quarter thereafter,
calculated on a Four
Quarter Rolling Basis 1.00:1.00
For purposes of this Agreement, 'Fixed Charge Coverage Ratio' means the
following calculation, expressed as a ratio for any fiscal period: (a) EBITDA
less the net loss incurred on sales of fixed assets (or the EBITDA less the net
loss incurred on sales of fixed assets) divided by (b) the sum of (i) interest
and tax expense, (ii) dividends paid, (iii) current portion of long-term debt,
(iv) current portion of capital leases, and (v) the difference between (A) the
total price of fixed assets purchased and (B) the total principal amount of
loans and capital leases incurred to finance such purchases and the total
amount of cash proceeds realized from any sales of fixed assets; 'EBITDA' means
earnings before interest and tax expense, depreciation, amortization, and other
non-cash charges. This ratio shall be calculated quarterly using a year to
date cumulative basis until fiscal year end 1994, and as of fiscal year end
1994 and thereafter using a Four Quarter Rolling Basis. 'Four Quarter Rolling
Basis' shall mean the four quarters calculated using the results of the fiscal
quarter then most recently ended and the immediately preceding three (3)
quarters."
2.11 Paragraph 6.7 is hereby amended in full to read as follows;
"6.7 Intentionally Left Blank".
2.12 Paragraph 6.8 is hereby amended by substituting the figure
"28,000,000" for the figure "30,000,000" appearing therein.
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2.13 Paragraph 6.9 is hereby amended by substituting the phrase
"$10,000,000 as at the end of any fiscal quarter" for the phrase "$15,000,000
in any fiscal period" appearing therein.
2.14 Paragraph 6.13 is hereby amended to read in full as follows:
"6.13 Stock Redemption. Nor to expend funds for the redemption of
capital stock of the Borrower other than an aggregate amount not to exceed
Ten Million Dollars ($10,000,000) for the purchase of shares of the common
stock, without par value, of the Borrower from the Carl N. and Margaret M.
Karcher Trust U/D/T dated August 17, 1970 as amended (the "Trust") pursuant
to a stock purchase agreement by and among the Borrower, the Trust and Carl
and Margaret M. Karcher, provided that such redemption can only take place
if all the following occur: (i) the Bank receives an opinion of counsel
satisfactory to Bank that the stock repurchase complies with all federal
and state securities laws and regulations and any other related laws or
regulations, (ii) the Bank has received and approved an executed copy of
the stock purchase agreement referred to above, (iii) such repurchase
does not, and will not cause the Borrower to be in default of any of the
terms and conditions of this Agreement, and (iv) such repurchase must be
completed by August 9, 1993. The Borrower agrees, in furtherance and not
in limitation of the indemnities set forth in any other provision of this
Agreement, to indemnify and hold the Bank harmless from any and all
claims, damages, losses, liabilities, costs or expenses resulting from or
in any way connected with the stock purchase agreement referred to
above, or any similar agreement. Such indemnity shall survive repayment
of the Borrower's obligations to the Bank.
2.15 The following Paragraph is hereby added to paragraph 6.11 of the
Agreement at the end of that paragraph:
"Notwithstanding the exceptions contained in this Section 6.11 the
Borrower may only create security interests in real property."
2.16 Paragraph 6.14 is hereby amended to read in full as follows:
"6.14 Operating Profit. Maintain an Operating Profit for each
fiscal quarter. For the
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purposes of this Agreement "Operating Profit" means, income before
interest expense and taxers, other income, and gains on sales of
assets."
2.17 The Following Paragraph 6.27 is hereby added to the Agreement:
"6.27 Minimum Net Income. Earn net income before taxes of at
least the amounts indicated at the end of each fiscal period as
specified below:
Period End Amount
---------- ------
For the first fiscal quarter
of 1994 only $1,417,000
Year to date at the end of
the second fiscal quarter
of 1994 $4,850,000
Year to date at the end of
the third fiscal quarter
of 1994 $8,500,000
Year to date at the end of
fiscal year 1994. $13,278,000"
2.18 The Following Paragraph 6.28 is hereby added to the Agreement:
"6.28 Out-Of-Debt-Requirement. To repay all advances outstanding
under the Commitment and not draw any new advances for a period of at
least thirty (30) consecutive calendar days during the first two and
last two fiscal semi- annual periods."
2.19 The Following Paragraph 6.29 is hereby added to the Agreement:
"6.29 Not to enter into any agreement for funded or contingent
debt which contains any covenants which in the opinion of the Bank,
are more restrictive than the covenants contained this Agreement, or
amend any covenants in any such agreement so they are more
restrictive than the covenants contained in this Agreement."
3. Defaults. The Borrower hereby acknowledges it breached the following
terms and conditions of the Agreement for the 1993 year end period:
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3.1 Paragraph 6.4 in that the Tangible Net Worth decreased by the
amount of $4,947,000 rather than an increase of $9,000,000 as required.
3.2 Paragraph 6.5 in that the Total Liabilities to Tangible Net Worth
ratio was 2.15:1.00 rather than 2.00:1.00 as required.
3.3 Paragraph 6.6 in that the Fixed Charge Coverage Ratio was .98:1.00
rather than 1.00:1.00 as required.
3.4 Paragraph 6.14 in that the Borrower did not maintain an operating
profit for the fiscal quarter ending January 25, 1993.
4. Waiver. The Bank hereby waives compliance with the above covenants for
the 1993 fiscal year end only.
5. Representations and Warranties. When the Borrower signs this Amendment,
the Borrower represents and warrants to the Bank that: (a) other than the
defaults listed above there is no event which is, or with notice of, or lapse
of time, or both would be, a default under the Agreement and (b) the
representations and warranties in the Agreement are true as of the date of the
Amendment as if made on the date of this Amendment, (c) this Amendment is
within the Borrower's powers, has been duly authorized, and does not conflict
with any of the Borrower's organizational papers, and (d) this Amendment does
not conflict with any law, agreement, or obligations by which the Borrower is
bound.
6. Conditions. This Amendment will be effective when the Bank receives the
following items, in form and content acceptable to the Bank:
6.1 This Amendment executed by the Borrower.
6.2 A fee of $25,000.
7. Effect of Amendment and Waivers. The above waivers shall be limited
precisely as written and relate solely to the sections of the Agreement and for
the time referred to above. Nothing in the above consents shall be deemed to
(a) constitute a waiver of compliance by the Borrower with respect to any other
term, provision or condition of the Agreement or any other instrument or
agreement referred to therein or (b) prejudice any right or remedy that the
Bank may now have or may have in the future under applicable law or instrument
or agreement referred to therein. Except as expressly set forth herein, the
terms, provisions, and conditions of the Agreement and the other documents
issued pursuant thereto shall remain in full force and effect and in all other
respects are hereby ratified and confirmed.
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This Amendment is executed as of the date stated at the top of the
first page.
BANK OF AMERICA NATIONAL TRUST CARL KARCHER ENTERPRISES
AND SAVINGS ASSOCIATION INC.
By /s/ Deborah Miller By /s/ Donald E. Doyle
Title Vice President Title President and C.E.O.
By ______________________ By ________________________
Title ___________________ Title _____________________
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