EXHIBIT 10.36
FOURTH AMENDMENT TO CREDIT AGREEMENT
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THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Amendment"), dated as of
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April 13, 2001 is among SCHLOTZSKY'S, INC., a Texas corporation ("Borrower"),
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each of the Lenders party to the Agreement referred to below, and WELLS FARGO
BANK TEXAS, NATIONAL ASSOCIATION, a national banking association (successor by
consolidation to Wells Fargo Bank (Texas), National Association), as Agent for
itself and the other Lenders (in such capacity, together with its successors in
such capacity the "Agent") and as the Issuing Bank.
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RECITALS:
A. Borrower, Agent, Lenders and Issuing Bank have previously entered into
that certain Credit Agreement dated as of December 7, 1999, as amended by (a)
that certain First Amendment to Credit Agreement dated as of December 31, 1999,
(b) that certain Second Amendment to Credit Agreement dated as of May 1, 2000
and (c) that certain Third Amendment to Credit Agreement dated as of September
30, 2000 (the Credit Agreement as so amended is hereinafter referred to as the
"Agreement").
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B. Borrower, Agent, Lenders and Issuing Bank now desire to amend (i) the
Agreement (a) to amend the definition of "Debt"; (b) to amend the delivery
requirements of the Quarterly Certificate; (c) to amend Section 10.6 of the
Agreement; and (d) to make such other modifications, in each case, as
hereinafter more specifically provided.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
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1.1 Definitions. All capitalized terms not otherwise defined herein, shall
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have the same meanings as in the Agreement, as amended hereby.
ARTICLE II
Amendments
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2.1 Amendment to Section 1.1. Effective as of the date hereof, the
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following definitions in Section 1.1 of the Agreement are amended and restated
to read in their entirety as follows:
"Contingent Liabilities" means, at any particular time, the contingent
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liabilities of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"Debt" means as to any Person at any time (without duplication): (a)
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all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, notes, debentures, or other similar
instruments whether
secured or unsecured, (c) all Capital Lease Obligations of such Person, (d)
all obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been assumed by
such Person or are non-recourse to the credit of such Person, but excluding
those obligations secured by landlord's liens or liens for taxes not yet
due and payable, (e) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit (whether drawn or
undrawn), bankers' acceptances, surety or other bonds and similar
instruments, and (f) all liabilities of such Person in respect of unfunded
vested benefits under any Plan; provided however, the term "Debt" shall not
include, except for clause (e) above, any items which are not required to
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be reflected as debt on the Borrower's balance sheet in accordance with
GAAP.
"Debt to EBITDA Ratio" means, for each Fiscal Quarter, the quotient
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determined by dividing (i) the sum of (1) those items described in clauses
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(a), (b), (c) and (d) of the definition of "Debt" of the Borrower and its
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consolidated Subsidiaries, plus (2) all Debt or other obligations of others
Guaranteed by the Borrower and/or its consolidated Subsidiaries, by (ii)
EBITDA for such Fiscal Quarter and the prior three (3) Fiscal Quarters.
2.2 Addition to Section 1.1. Effective as of the date hereof, the
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following definition is added to Section 1.1 of the Agreement in alphabetical
order to read in its entirety as follows:
"New Guaranty" means that certain Limited Guaranty Agreement dated as
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of April 10, 2001 executed by the Borrower in favor of The Frost National
Bank, pursuant to which the Borrower guarantees the indebtedness of
Schlotzsky's National Advertising and Marketing Fund, Inc. and Schlotzsky's
National Advertising Association, Inc.
2.3 Amendment to Section 8.1(c). Effective as of the date hereof, Section
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8.1(c) of the Agreement is amended and restated to read in its entirety as
follows:
(c) Quarterly Certificate. As soon as available, and in any event
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within (i) forty-five (45) days after the end of each of the first three
Fiscal Quarters of each Fiscal Year of the Borrower and the Subsidiaries,
and (ii) ninety (90) days after the end of the fourth Fiscal Quarter of
each Fiscal Year of the Borrower and the Subsidiaries, beginning with the
Fiscal Quarter ending March 31, 2001, a certificate (the "Quarterly
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Certificate") of the chief financial officer of the Borrower (1) stating
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that to the best of such officer's knowledge, no Default has occurred and
is continuing, or if a Default has occurred and is continuing, a statement
as to the nature thereof and the action that is proposed to be taken with
respect thereto, and (2) showing in reasonable detail the most recent
Fiscal Quarter calculations demonstrating compliance with Article X;
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2.4 Amendment to Section 10.6. Effective as of the date hereof, Section
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10.6 of the Agreement is amended and restated to read in its entirety as
follows:
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Section 10.6 Contingent Liabilities. The Borrower will not permit at
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any time (a) the aggregate amount of Contingent Liabilities (excluding that
portion of Contingent Liabilities of the Borrower incurred in connection
with a transaction in which the Borrower received cash to the extent of
cash received) to exceed $30,000,000, and (b) the aggregate amount of that
portion of Contingent Liabilities of the Borrower incurred in connection
with a transaction in which the Borrower received cash to the extent of
cash received to exceed the sum of (i) the New Guaranty amount plus (ii)
$2,000,000.
ARTICLE III
Conditions Precedent
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3.1 Conditions. The effectiveness of this Amendment is subject to the
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satisfaction of the following conditions precedent:
(a) Loan Documents. Agent shall have received all of the following,
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each dated (unless otherwise indicated) the date of this Amendment, in form
and substance satisfactory to the Agent:
(i) This Amendment executed by all parties hereto;
(ii) Resolutions of the Board of Directors of the Borrower
certified by its secretary or assistant secretary which authorize the
execution, delivery and performance by the Borrower of this Amendment,
and the other Loan Documents executed in connection herewith;
(iii) A certificate of incumbency certified by the secretary
or the assistant secretary of the Borrower certifying the names of the
officers thereof authorized to sign this Amendment and the other Loan
Documents together with specimen signatures of such officers;
(iv) Resolutions of the Board of Directors or comparable
authority of each of the Obligated Parties certified by its secretary or
assistant secretary which authorize the execution, delivery and performance
by each of the Obligated Parties of this Amendment and the Loan Documents
executed in connection herewith; and
(v) A certificate of incumbency certified by the secretary
or the assistant secretary of each Obligated Party certifying the names of
the officers thereof authorized to sign this Amendment and the other Loan
Documents together with specimen signatures of such officers.
(b) No Default. No Default shall have occurred and be continuing.
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(c) Representations and Warranties. All of the representations and
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warranties contained in Article VII of the Agreement, as amended hereby and
in the other Loan Documents shall be true and correct on and as of the date
of this Amendment with the
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same force and effect as if such representations and warranties had been
made on and as of such date, except to the extent such representations and
warranties speak to a specific date.
(d) Additional Documentation. The Agent shall have received such
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additional approvals, opinions or documents as the Agent may request.
ARTICLE IV
Ratifications, Representations and Warranties
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4.1 Ratifications. The terms and provisions set forth in this Amendment
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shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect. Borrower,
Lenders, Issuing Bank and Agent agree that the Agreement as amended hereby and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
4.2 Representations and Warranties. Borrower hereby represents and
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warrants to the Lenders, Agent and Issuing Bank that (i) the execution, delivery
and performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of Borrower and will not violate the articles of
incorporation or bylaws of Borrower, (ii) the representations and warranties
contained in the Agreement, as amended hereby, and any other Loan Document are
true and correct on and as of the date hereof as though made on and as of the
date hereof, except to the extent such representations and warranties speak to a
specific date, (iii) no Default has occurred and is continuing, and (iv)
Borrower is in full compliance with all covenants and agreements contained in
the Agreement as amended hereby.
ARTICLE V
Miscellaneous
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5.1 Survival of Representations and Warranties. All representations and
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warranties made in this Amendment or any other Loan Document including any Loan
Document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment and the other Loan Documents, and no
investigation by the Lenders, Agent or Issuing Bank or any closing shall affect
the representations and warranties or the right of the Lenders, Agent or Issuing
Bank to rely upon them.
5.2 Reference to Agreement. Each of the Loan Documents, including the
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Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
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5.3 Severability. Any provision of this Amendment held by a court of
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competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
5.4 Applicable Law. This Amendment and all other Loan Documents executed
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pursuant hereto shall be deemed to have been made and to be performable in
Austin, Travis County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas.
5.5 Successors and Assigns. This Amendment is binding upon and shall inure
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to the benefit of the Lenders, Agent, Issuing Bank and Borrower and their
respective successors and assigns, except Borrower may not assign or transfer
any of its rights or obligations hereunder without the prior written consent of
the Lenders.
5.6 Counterparts. This Amendment may be executed in one or more
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counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
5.7 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS, DOCUMENTS
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AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
[Remainder of Page Intentionally Left Blank]
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Executed as of the date first written above.
BORROWER:
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SCHLOTZSKY'S, INC.
By:
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Name:
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Title:
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Address for Notices:
203 Colorado St.
Austin, TX 78701
Fax No.: (512) 236-3650
Telephone No.: (512) 236-3600
Attention: Chief Financial Officer
AGENT, ISSUING BANK AND LENDER:
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WELLS FARGO BANK TEXAS, NATIONAL
ASSOCIATION
By:
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Name:
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Title:
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Address for Notices:
111 Congress Avenue, Suite 300
Austin, TX 78701
Fax No.: (512) 344-7318
Telephone No.: (512) 344-7037
Attention: Richard Gan
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OTHER LENDERS:
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THE FROST NATIONAL BANK
By:
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Name:
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Title:
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Address for Notices:
2728 North Harwood, Suite 100
Dallas, TX 75201
Fax No.: (214) 515-4955
Telephone No.: (214) 515-4907
Attention: Shannon Bettis
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TEXAS CAPITAL BANK, NATIONAL
ASSOCIATION
By:
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Name:
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Title:
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Address for Notices:
2100 McKinney Avenue, Suite 900
Dallas, TX 75201
Fax No.: (214) 932-6604
Telephone No.: (214) 932-6675
Attention: Tim Monter
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Obligated Parties Consent
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Each of the undersigned Obligated Parties (i) consent and agree to this
Amendment; and (ii) agree that the Loan Documents to which it is a party shall
remain in full force and effect and shall continue to be the legal, valid and
binding obligation of such Obligated Party enforceable against it in accordance
with their respective terms.
OBLIGATED PARTIES:
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RAD ACQUISITION CORP.
SCHLOTZSKY'S REAL ESTATE, INC.
SCHLOTZSKY'S RESTAURANTS, INC.
DFW RESTAURANT TRANSFER CORP.
SGC CONSTRUCTION CORP. (fka Schlotzsky's Equipment
Corporation)
SREI TURNKEY DEVELOPMENT, L.L.C.
56TH & 6TH, INC.
SCHLOTZSKY'S BRANDS, INC.
By:
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Name:
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Title:
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SCHLOTZSKY'S BRANDS I, L.L.C.
By:
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Name:
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Title:
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SCHLOTZSKY'S BRAND PRODUCTS, L.P.
By: Schlotzsky's Brands, Inc., as general
partner
By:
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Name:
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Title:
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