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EXHIBIT 10.23
EIGHTH AMENDMENT, WAIVER AND DEFERRAL TO
AMENDED AND RESTATED CREDIT AGREEMENT
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EIGHTH AMENDMENT, WAIVER AND DEFERRAL (this "AMENDMENT"), dated as of June
27, 1996, to the Amended and Restated Credit Agreement, dated as of October 8,
1993, as amended by a First Amendment, dated as of January 20, 1994, a Second
Amendment, dated as of February 10, 1995, a Third Amendment, dated as of May 10,
1995, a Fourth Amendment, dated as of November 22, 1995, a Fifth Amendment,
dated as of February 12, 1996, a Sixth Amendment, Waiver and Deferral dated as
of April 12, 1996 and a Seventh Amendment, Waiver and Deferral, dated as of May
30, 1996 (as so amended, the "CREDIT AGREEMENT"), among The Ground Round, Inc.
(the "FIRST BORROWER"), a Delaware corporation, GR of Minn., Inc., a Delaware
corporation (the "SECOND BORROWER", and together with the First Borrower, the
"BORROWERS"), the banks named therein (the "BANKS"), The Bank of New York, as
Agent (the "AGENT") and Chemical Bank, as Co-Agent.
PRELIMINARY STATEMENTS:
A. The Credit Agreement amended and restated the Amended and Restated
Credit Agreement, dated as of April 26, 1992, among the Borrowers, the banks
named therein and Citibank, N.A., as original agent.
B. The Borrowers have requested that the Agent and the Lenders waive (i)
the Consolidated Net Worth Covenant for the third quarter of fiscal year 1996,
(ii) the EBITDA covenant for the third quarter of fiscal year 1996 and (iii)
through July 31, 1996, certain reporting requirements set forth in Section
5.01(t).
C. The Borrowers desire to amend the Credit Agreement to (i) permit the
Borrowers to further defer payment of the principal of the Tranche A Term
Advances (which was originally due and payable on April 15, 1996 and which was
previously deferred to May 31, 1996 pursuant to the Sixth Amendment and to June
30, 1996 pursuant to the Seventh Amendment) to July 31, 1996, (ii) permit the
Borrowers to further defer the payment of certain net proceeds of sale from
certain restaurants as described in Section 1 herein to July 31, 1996, (iii)
permit the Borrowers to defer the payment of a certain fee payable pursuant to
the terms of Section 2.07(e) of the Credit Agreement to July 31, 1996; (iv)
permit the Borrowers to defer the
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payment of certain net proceeds of sale from certain restaurants as described
herein to July 31, 1996 in the event that the Borrowers, the Guarantors, the
Lenders and the Co-Agents shall have executed a mutually acceptable term sheet
regarding a restructuring of the obligations of the Borrowers and the Guarantors
under the Credit Agreement (the "RESTRUCTURING TERM SHEET") and (v) prohibit
Eurodollar Rate Advances maturing after July 31, 1996.
D. The Lenders and the Agent are willing to grant the waiver and to amend
the Credit Agreement with respect to the foregoing subject to the terms and
conditions contained herein.
E. Unless otherwise defined herein, all terms defined in the Credit
Agreement shall be used herein as therein defined.
In consideration of the covenants, conditions and agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
SECTION 1. Deferrals.
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Subject to the satisfaction of the conditions set forth in Section 5 hereof
and so long as no Event of Default shall have occurred and be continuing under
the Credit Agreement, the Co-Agents and the Lenders hereby agree to permit the
Borrowers (a) to defer to July 31, 1996 the payment of the principal of the
Tranche A Term Advances that is due and payable on June 30, 1996, (b) to defer
to July 31, 1996 the payment of 75% of Net Cash Proceeds of the sale of the two
restaurants located at Madeira, Ohio and Worcester, Massachusetts, respectively,
that is due and payable on June 30, 1996, which payment shall be applied in
accordance with the terms of Section 2.05(b)(ii) of the Credit Agreement and (c)
to defer to July 31, 1996 the payment of the restructuring fee that is due and
payable on June 30, 1996 pursuant to the terms of Section 2.07(e) of the Credit
Agreement.
SECTION 2. Waiver.
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Subject to the satisfaction of the conditions precedent set forth in
Section 5 below, the Agent and the Lenders hereby waive (i) the Borrowers'
compliance with the Consolidated Net Worth covenant in Section 5.01(n) of the
Credit Agreement for the third
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fiscal quarter of 1996, PROVIDED that Consolidated Net Worth for such fiscal
quarter shall not be less than $47,700,000, (ii) the Borrowers' compliance with
the EBITDA covenant in Section 5.01(v) of the Credit Agreement for the third
fiscal quarter of 1996 provided that EBITDA for such fiscal quarter shall not be
less than ($500,000) and (iii) through July 31, 1996, the Borrowers' compliance
with the reporting requirements set forth in Section 5.01(t)(xvii) of the Credit
Agreement. For purposes of this Waiver, the determination of EBITDA and
Consolidated Net Worth for the third fiscal quarter of 1996 shall be deemed to
be exclusive of any accounting treatment of any fees and expenses payable by the
Borrowers in respect of the transactions contemplated by the Restructuring Term
Sheet.
SECTION 3. Agreement Regarding Store Dispositions.
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From and after the Effective Date of this Eighth Amendment, and
notwithstanding the provisions of Section 2.05(b) of the Credit Agreement, 100%
of the Net Cash Proceeds resulting from the sale of any of the Borrowers'
restaurant locations shall be deposited into the Prepayment Account. If on or
before July 31, 1996, the Borrowers, the Guarantors and the Lenders shall have
executed the Restructuring Term Sheet, the Agent shall be permitted to release
to the Borrowers an amount not in excess of $1,000,000 from the Prepayment
Account for the Borrowers' working capital purposes. On July 31, 1996 (i) all
funds on deposit in the Prepayment Account shall be applied in accordance with
the terms of Section 2.05(b)(ii) of the Credit Agreement and (ii) the Borrowers
shall prepay the Advances in an amount equal to the amount, if any, released to
the Borrowers provided for above, for application in accordance with the terms
of Section 2.05(b)(ii) of the Credit Agreement.
SECTION 4. Amendments to Credit Agreement.
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The Credit Agreement is, effective as of the date hereof, subject to the
satisfaction of the conditions precedent set forth in Section 5 below, hereby
amended as follows:
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(a) Section 1.01 is hereby amended by inserting the following new
definition:
"`EIGHTH AMENDMENT': means the Eighth Amendment, Waiver and Deferral, dated
as of June 27, 1996, to this Agreement".
(b) Section 1.01 is hereby amended by deleting subsection (e) at the end of
the definition of "INTEREST PERIOD" and inserting in lieu thereof the following
new subsection (e):
"(e) notwithstanding anything to the contrary above, neither Borrower may
select any Interest Period that ends after July 31, 1996."
SECTION 5. Conditions of Effectiveness.
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This Amendment shall become effective as of the date hereof, PROVIDED, that
the Agent shall have received counterparts of (i) this Amendment executed by the
Borrowers, the Lenders and the Agent, (ii) the Consent appended hereto (the
"CONSENT") executed by each of the Guarantors, and (iii) such other documents as
the Agent shall reasonably request.
SECTION 6. Representations and Warranties.
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The Borrowers hereby (a) reaffirm and admit the validity and enforceability
of the Loan Documents and all of their obligations thereunder, (b) agree and
admit that they have no defenses to or offsets against any of their obligations
to the Agent or any Lender under the Loan Documents, and (c) represent and
warrant that there exists no Default or Event of Default and that the
representations and warranties contained in the Credit Agreement are true and
correct on and as of the date hereof.
SECTION 7. Reference to and Effect on the Loan Documents.
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(a) Upon the effectiveness of this Amendment, on and after the date hereof,
each reference in the Credit Agreement to "this
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Agreement", "hereunder", "hereof", "herein", or words of like import, and each
reference in the other Loan Documents to the Credit Agreement, shall mean and be
a reference to the Credit Agreement as amended hereby;
(b) Except as specifically amended or waived above, the Credit Agreement
and the Notes, and all other Loan Documents, shall remain in full force and
effect and are hereby ratified and confirmed. Without limiting the generality of
the foregoing, the Collateral Documents and all Collateral described therein
shall continue to secure the payment of the obligations of the Borrowers
thereunder, under the Credit Agreement, as amended hereby, and under the Notes
and other Loan Documents; and
(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, except
as provided herein, constitute a waiver of any provision of any of the Loan
Documents.
SECTION 8. Costs and Expenses.
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The Borrowers agree to pay on demand all reasonable costs and expenses of
the Agent in connection with the arranging, preparation, reproduction, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and expenses of Zalkin, Rodin
& Goodman, LLP, special counsel for the Agent, with respect thereto, and of
local counsel, if any, who may be retained by said special counsel with respect
thereto.
SECTION 9. Counterparts.
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This Amendment may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which shall be an
original and all of which together shall constitute but one and the same
document.
SECTION 10. Governing Law.
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This Amendment is intended to be performed in the State of New York and
shall be construed and is enforceable in accordance with,
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and shall be governed by, the internal laws of the State of New York without
regard to principles of conflict of laws.
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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.
THE GROUND ROUND, INC.
By:
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Name:
Title:
GR OF MINN., INC.
By:
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Name:
Title:
THE BANK OF NEW YORK,
Individually and as Agent
By:
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Name:
Title:
CHEMICAL BANK, Individually and as
Co-Agent
By:
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Name:
Title:
BANK OF AMERICA ILLINOIS
By:
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Name:
Title:
NBD BANK
By:
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Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
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By:
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Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:
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Name:
Title:
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CONSENT OF GUARANTORS
DATED AS OF JUNE 27, 1996
The undersigned, as the Guarantors referred to in the foregoing Eighth
Amendment, Waiver and Deferral, dated as of June 27, 1996, to the Amended and
Restated Credit Agreement, dated as of October 8, 1993, as amended by a First
Amendment, dated as of January 20, 1994, a Second Amendment, dated as of
February 10, 1995, a Third Amendment dated as of May 10, 1995, a Fourth
Amendment dated as of November 22, 1995 and a Fifth Amendment, dated as of
February 12, 1996, a Sixth Amendment, Waiver and Deferral, dated as of April 12,
1996 and a Seventh Amendment, Waiver and Deferral, dated as of May 30, 1996
among The Ground Round, Inc., GR of Minn., Inc., the banks named therein, The
Bank of New York, as Agent, and Chemical Bank as Co-Agent, each hereby consents
to the foregoing Amendment and hereby confirms and agrees that, notwithstanding
the effectiveness of said Amendment, (i) the Guarantors have no defenses to or
offsets against any of their obligations to the Agent or any Lender under any
Loan Document and the Guaranty and each Collateral Document in effect on the
date hereof to which it is a party are, and shall continue to be, in full force
and effect and are hereby confirmed and ratified in all respects, except that,
upon the effectiveness of, and after the date of, said Amendment, all references
in the Guaranty and each such Collateral Document to the Credit Agreement shall
mean the Credit Agreement as amended by said Amendment and (ii) such Collateral
Documents consisting of security agreements and all collateral described therein
do, and shall continue to, secure the payments by the Borrowers referred to in
said Amendment of their obligations under the Credit Agreement, as amended by
said Amendment, and under the Notes.
GRH OF NJ, INC.
By:
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Name:
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Title:
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GROUND ROUND HOLDINGS, INC.
By:
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Name:
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Title:
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GROUND ROUND RESTAURANTS, INC.
By:
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Name:
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Title:
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G.R. GLENDLOC, INCORPORATED
By:
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Name:
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Title:
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GROUND ROUND OF BALTIMORE, INC.
By:
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Name:
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Title:
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GRXR OF BEL AIR, INC.
By:
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Name:
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Title:
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GRXR OF FREDERICK, INC.
By:
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Name:
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Title:
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GRXR OF HAGERSTOWN, INC.
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By:
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Name:
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Title:
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