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EXHIBIT 10.42
AMENDMENT NO. 2 TO TERM
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LOAN AND SECURITY AGREEMENT ("AGREEMENT")
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JANUARY 14, 1997
Carl Karcher Enterprises, Inc.
1200 North Harbor Boulevard
Anaheim, California 92803
Attn: Loren Pannier
Senior Vice President
Ladies and Gentlemen:
PREAMBLE. We refer to our Term Loan and Security Agreement with you dated as of
December 19, 1995 (the "Loan Agreement"), as amended by that certain Amendment
No. 1 to the Loan Agreement dated January 22, 1996. Capitalized terms used
herein and not defined herein have the meanings assigned to them in the Loan
Agreement.
Pursuant to the Loan Agreement, it was contemplated that the Fixed
Charge Coverage Ratio set forth in Section 7.12 of the Loan Agreement would
subtract capital expenditures, tax expense and dividends from EBITDA. Lender has
determined, however, that Borrower's new consortium of banks lead by NationsBank
has redefined "Fixed Charge Coverage Ratio" and "EBITDA".
As a result of the foregoing, Borrower and Lender have agreed that it
would be in the Borrower's and Heller's best interest to conform the definitions
of "Fixed Charge Coverage Ratio" and "EBITDA" in the Loan Agreement to coincide
with the redefined terms and ratios used by NationsBank.
The purpose of this Amendment is to memorialize our mutual
understanding and to amend to the Loan Agreement pertaining to the foregoing
matter and certain related matters.
Accordingly you and we hereby agree as follows:
1. AMENDMENTS TO SECTION 7.12 OF THE LOAN AGREEMENT.
Section 7.12 of the Loan Agreement is hereby deleted in its entirety
and the following revised Section 7.12 is substituted in lieu thereof:
7.12. FIXED CHARGE COVERAGE RATIO. If Guarantor's Fixed
Charge Coverage Ratio, determined on a Consolidated basis, is
less than the ratio indicated at the end of such fiscal period
as specified below:
FISCAL PERIOD ENDING RATIO
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at each quarter of 1997
and up to 1/26/98 1.10 : 1.00
at first quarter 1998
and thereafter 1.30 : 1.00
For purposes of this Agreement, "Fixed Charge Coverage Ratio"
means the following calculation, expressed as a ratio for any
fiscal period: (a) EBITDAR of Guarantor and its consolidated
Subsidiaries divided by (b) the sum of (I) interest expense,
(ii) the
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current portion of long-term debt, (iii) the current portion
of capital leases, (iv) rentals payable under leases of real
or personal, or mixed, property, (v) cash taxes, and (vi)
principal amounts due on funded debt. The current portion of
long-term debt, the current portion of capital leases, rentals
payable under leases, cash taxes and principal amounts due on
funded debt will be the amount shown on the consolidated
balance sheet of Guarantor as of the end of the applicable
quarter. "EBITDAR" means earnings before interest and tax
expense, depreciation, amortization and other non-cash
charges, and rent expense. This ratio shall be calculated
quarterly 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 fiscal three (3) quarters.
2. MISCELLANEOUS.
(a) EFFECT OF AMENDMENT. Except as set forth expressly herein, all
terms of the Loan Agreement and the other Loan Documents, as amended
hereby, shall be and remain in full force and effect and shall
constitute the legal, valid, binding and enforceable obligations of
Borrower to Lender. To the extent any terms and conditions in any of
the Loan Documents shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified and
amended accordingly to reflect the terms and conditions of the Loan
Agreement as modified and amended hereby. In connection herewith,
Borrower shall execute such amendments to the other Loan Documents or
re-execute such of the other Loan documents as Lender shall request.
(b) RATIFICATION. Borrower hereby restates, ratifies and reaffirms
each and every term and condition set forth in the Loan Agreement, as
amended hereby, and the Loan documents effective as of the date hereof.
(c) ESTOPPEL. To induce Lender to enter into this Amendment,
Borrower hereby acknowledges and agrees that, as of the date hereof, no
Default Condition or Event of Default has occurred and is continuing
and, in addition, there exists no right of offset, defense,
counterclaim or objection in favor of Borrower as against Lender with
respect to the Obligations.
(d) GOVERNING LAW. This Amendment shall be governed by, and
construed in accordance with, the internal laws (and not the laws of
conflicts) of the State of Illinois and all applicable federal laws of
the United States of America.
Please countersign in the space provided below to acknowledge your
concurrence with the foregoing.
Sincerely,
HELLER FINANCIAL, INC.
By: /s/Domminick J. Masciantonio
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Name: Domminick J. Masciantonio
Its: Senior Vice President
ACKNOWLEDGED AND AGREED
CARL KARCHER ENTERPRISES, INC.
By: /s/Robert A. Wilson
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Name: Robert A. Wilson
Title: Vice President
General Counsel