Exhibit 10.1
AMENDMENT NO. 5
TO REVOLVING CREDIT AGREEMENT
This AMENDMENT NO. 5 TO REVOLVING CREDIT AGREEMENT (this
"AMENDMENT") is dated as of December 17, 2004, by and among (a) FRIENDLY ICE
CREAM CORPORATION, a Massachusetts corporation (the "BORROWER"), (b) the Lenders
and (c) FLEET NATIONAL BANK, as administrative agent for the Lenders party to
the Revolving Credit Agreement (as hereinafter defined) (in such capacity, the
"ADMINISTRATIVE AGENT"). Capitalized terms as used and not otherwise defined in
this Amendment shall have the meanings assigned to such terms in the Revolving
Credit Agreement.
WHEREAS, the Borrower, the Lenders and the Administrative
Agent are parties to that certain Revolving Credit Agreement, dated as of
December 17, 2001 (as heretofore amended or otherwise amended, modified, or
amended and restated and in effect immediately prior to the date hereof, the
"REVOLVING CREDIT AGREEMENT"; the Revolving Credit Agreement as further amended
by this Amendment, the "AMENDED REVOLVING CREDIT AGREEMENT");
WHEREAS, the Borrower has requested that the Lenders (a) amend
certain financial covenants under the Revolving Credit Agreement and (b) agree
to certain other amendments and modifications to the Revolving Credit Agreement,
in each case as set forth herein; and
WHEREAS, pursuant to the terms, subject to the conditions and
in reliance on the representations and warranties contained in this Amendment,
the undersigned Lenders are prepared to (a) amend certain financial covenants
under the Revolving Credit Agreement and (b) agree to certain other amendments
and modifications to the Revolving Credit Agreement, in each case as set forth
herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Amendment, the Borrower, the Administrative Agent
and the Lenders hereby agree as follows:
SECTION 1. AMENDMENT TO REVOLVING CREDIT AGREEMENT.
1.1. CERTAIN DEFINED TERMS. Section 1.1 of the Revolving
Credit Agreement is hereby amended as follows:
(a) by inserting the following new defined term in the
appropriate alphabetical sequence in such Section 1.1:
"ASSET SALE CAPITAL EXPENDITURE PROCEEDS. See ss.3(b)(i)."
"FIFTH AMENDMENT. The Amendment No. 5 to Revolving Credit
Agreement, dated as of December 17, 2004, among the
Borrower, the Lenders and the Administrative Agent."
"FIFTH AMENDMENT EFFECTIVE DATE. The date on which all
conditions precedent to the Fifth Amendment hereto shall have been satisfied or
waived by the Lenders."
"MAINTENANCE CAPITAL EXPENDITURES. Capital Expenditures that
are not Growth Capital Expenditures. For purposes of calculating the financial
covenants in Section 10 hereof, Maintenance Capital Expenditures shall be the
greater of (i) Maintenance Capital Expenditures for such fiscal year and (ii)
$15,000,000."
(b) by deleting each reference to "0.50%" in the definition of
"Applicable Margin" under the column labeled "Commitment Fee" and substituting
in lieu thereof in each instance the percentage "0.75%".
(c) by amending and restating in their entirety the
definitions of "Fixed Charge Coverage Ratio" and "Growth Capital Expenditures"
as follows:
"FIXED CHARGE COVERAGE RATIO. As of any date of determination,
the ratio of (a) Consolidated EBITDAR, minus, the sum of (b)(i) Maintenance
Capital Expenditures less Asset Sale Capital Expenditure Proceeds not to exceed
$2,000,000 in the aggregate in any fiscal year, and (ii) cash income tax
expense, to, the sum of (w) Consolidated Total Interest Expense payable in cash,
(x) actual and accrued scheduled principal repayments of Indebtedness made or
accrued during such period, (y) Rental Expense and (z) mandatory cash
contributions made by the Borrower to any of its pension plans due to changes in
fair market value of pension plan assets (to the extent not already deducted in
the calculation of Consolidated EBITDA)."
"GROWTH CAPITAL EXPENDITURES. Capital Expenditures related to
(i) the construction, acquisition or opening of any new restaurant locations
during any fiscal year, PLUS (ii) the expansion and/or conversion of any
existing manufacturing and distribution facilities during any fiscal year, PLUS
(iii) the opening of any new manufacturing and distribution facilities during
any fiscal year, PLUS (iv) the Impact Remodeling Program as in effect on the
date of the Fifth Amendment Effective Date during any fiscal year."
1.2. Section 3.2(b)(i) of the Revolving Credit Agreement is
hereby amended by deleting clause (i) of Section 3.2(b) in its entirety and
substituting in lieu thereof the following new clause (i):
"(i) Net Cash Sale Proceeds from Asset Sales (other than (A)
the sale, lease, license or other dispositions of assets in the ordinary course
of business consistent with past practices, (B) Asset Sales made in connection
with the Sale-Leaseback Transaction and the FFCA Mortgage Financing, (C) Excess
Properties Sales, or (D) Permitted Unit Sales), the Borrower shall pay to the
Administrative Agent for the respective accounts of the Lenders an amount equal
to one hundred percent (100%) of such Net Cash Sale Proceeds; PROVIDED, HOWEVER,
that the Borrower may, at its option (as elected by the Borrower in writing to
the Administrative Agent on or prior to the event giving rise to such Net Cash
Sale Proceeds), so long as in each fiscal year (commencing with the 2005 fiscal
year) the aggregate amount of such Net Cash Sale Proceeds reinvested by the
Borrower pursuant to this clause (i) shall not exceed $2,000,000 and so long as
no Default shall have occurred and be continuing, reinvest (or commit to
reinvest as evidence by a binding written contract upon terms reasonably
acceptable to the Administrative Agent) such Net Cash Sale Proceeds in Capital
Expenditures to be used in the business of the Borrower and its Restricted
Subsidiaries within 180 days of receipt thereof (the "ASSET SALE CAPITAL
EXPENDITURE PROCEEDS"); PROVIDED, FURTHER, HOWEVER that any Net Cash Sale
Proceeds not so reinvested (or committed to be reinvested upon terms reasonably
acceptable to the Administrative Agent) within 180 days of receipt thereof shall
be immediately applied to the prepayment of Loans as set forth in ss.3.4."
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1.3. Section 3.2(c) of the Revolving Credit Agreement is
hereby amended by amending and restating such subsection in its entirety as
follows:
"(c) The Borrower shall repay in full to the Revolving Credit
Lenders all principal, interest and other amounts outstanding under the
Revolving Credit Loans (i) on or after May 1 and on or before June 15 of each
calendar year during the term hereof, commencing with the 2006 calendar year,
such that as of June 15 of each such calendar year (or the next Business Day,
if, in any year, June 15 is not a Business Day) and for a period of not less
than 15 consecutive days immediately following the date of such repayment, the
amount of all outstanding Revolving Credit Loans (excluding all Unpaid
Reimbursement Obligations) shall be zero; and (ii) on or after June 15 and on or
before September 30 for the 2005 calendar year, such that as of September 30,
2005 (or the next Business Day, if, September 30 is not a Business Day) and for
a period of not less than 30 consecutive days immediately following the date of
such repayment, the amount of all outstanding Revolving Credit Loans and all
Unpaid Reimbursement Obligations shall be zero. Such payments shall not be made
from the proceeds of the Loans or any other Indebtedness unless such
Indebtedness is permitted pursuant to ss.9.1."
1.4. INTEREST COVERAGE. Section 10.1 of the Revolving Credit
Agreement is hereby amended by amending and restating in its entirety the table
set forth at the end of such Section 10.1 as follows:
"PERIOD RATIO
Fourth Fiscal Quarter of 2004 and First and Second Fiscal Quarters of 2005 2.00:1.00
Third and Fourth Fiscal Quarters of 2005 2.15:1.00
First and Second Fiscal Quarters of 2006 2.25:1.00
Third and Fourth Fiscal Quarters of 2006 and each fiscal quarter thereafter 2.50:1.00
1.5. CAPITAL EXPENDITURES. Section 10.2 of the Revolving
Credit Agreement is hereby amended by amending and restating in its entirety
such Section as follows:
"10.2. CAPITAL EXPENDITURES. The Borrower will not make, or
permit any Subsidiary of the Borrower to make (a) Growth Capital
Expenditures that exceed, in the aggregate, $7,000,000 per fiscal year,
or (b) Capital Expenditures in any fiscal year that exceed, in the
aggregate, the amount set forth below opposite such fiscal year and
such amount shall include any Growth Capital Expenditures during such
fiscal year:
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FISCAL YEAR CAPITAL EXPENDITURES
----------- --------------------
2004 $23,500,000
2005 $23,500,000
2006 $24,000,000
2007 $26,000,000
PROVIDED, HOWEVER, THAT (a) if the Consolidated EBITDA for any
Reference Period ending during any period described in the table below exceeds
the amount set forth opposite such period in such table, then the Borrower and
its Subsidiaries shall be permitted to make an additional $2,000,000 in the
aggregate in Capital Expenditures for each Fiscal Year identified above; and (b)
the Borrower and its Subsidiaries shall be permitted to make additional Capital
Expenditures in any Fiscal Year identified above equal to the Asset Sale Capital
Expenditure Proceeds received and reinvested in the Borrower and its
Subsidiaries during such Fiscal Year (such additional Capital Expenditures not
to exceed $2,000,000 in the aggregate):
FISCAL YEAR CONSOLIDATED EBITDA
----------- -------------------
2005 $52,000,000
2006 $55,000,000
2007 $57,000,000
1.6. MINIMUM EBITDA. Section 10.3(a) of the Revolving Credit
Agreement is hereby amended by amending and restating in its entirety the table
set forth at the end of such Section 10.3(a) as follows:
"PERIOD AMOUNT
------ ------
Fourth Fiscal Quarter of 2004 $46,500,000
First Fiscal Quarter of 2005 $42,000,000
Second Fiscal Quarter of 2005 $45,000,000
Third and Fourth Fiscal Quarters of 2005 $48,000,000
First Fiscal Quarter of 2006 $49,000,000
Second Fiscal Quarter of 2006 $50,000,000
Third Fiscal Quarter of 2006 $52,000,000
Fourth Fiscal Quarter of 2006 and each fiscal quarter thereafter $53,000,000"
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1.7. MINIMUM (QUARTERLY) EBITDA. Section 10.3(b) is hereby
amended by deleting such subsection in its entirety and replacing such
subsection with the following phrase: "[Intentionally Omitted]".
1.8. LEVERAGE RATIO. Section 10.4 of the Revolving Credit
Agreement is hereby amended by amending and restating in its entirety the table
set forth at the end of Section 10.4 as follows:
"PERIOD RATIO
------ -----
Fourth Fiscal Quarter of 2004 5.50:1.00
First Fiscal Quarter of 2005 5.75:1.00
Second Fiscal Quarter of 2005 5.50:1.00
Third and Fourth Fiscal Quarters of 2005 5.00:1.00
First and Second Fiscal Quarters of 2006 4.75:1.00
Third and Fourth Fiscal Quarters of 2006 4.25:1.00
Each fiscal quarter thereafter 4.00:1.00"
1.9. FIXED CHARGE COVERAGE RATIO. Section 10.6 of the
Revolving Credit Agreement is hereby amended by amending and restating in its
entirety the table set forth at the end of Section 10.6 as follows:
"PERIOD RATIO
Fourth Fiscal Quarter of 2004 and First Fiscal Quarter of 2005 1.00:1.00
Second Fiscal Quarter of 2005 and each fiscal quarter thereafter 1.05:1.00"
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Administrative Agent and each Lender, on and as
of the date hereof, as follows:
(a) This Amendment has been duly executed and delivered by the
Borrower. The execution and delivery by the Borrower of this Amendment and the
performance by the Borrower of this Amendment and the Amended Revolving Credit
Agreement have been duly authorized by proper corporate or other proceedings by
the Borrower, and this Amendment and the Amended Revolving Credit Agreement
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with the terms hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting generally the enforcement of creditors'
rights and general principles of equity and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
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(b) No Default or Event of Default exists on the date hereof
after giving effect to the amendments to the Revolving Credit Agreement effected
hereby.
SECTION 3. EFFECTIVENESS. This Amendment shall be deemed to be
effective as of the Fifth Amendment Effective Date only upon satisfaction of
each of the following conditions precedent to the Administrative Agent's
reasonable satisfaction, in each case on or prior to (or contemporaneously with)
the Fifth Amendment Effective Date:
(a) AMENDMENT TO REVOLVING CREDIT AGREEMENT. The
Administrative Agent shall have received duly executed counterpart signature
pages to this Amendment from each of the Borrower and the Lenders. The Amendment
Documents shall be in full force and effect and shall be in form and substance
reasonably satisfactory to the Administrative Agent.
(b) COSTS AND EXPENSES. The Borrower shall pay, in accordance
with Section 16.2 of the Revolving Credit Agreement, all reasonable
out-of-pocket costs and expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, execution, delivery and
enforcement of this Amendment, including, but not limited to, the reasonable
fees, expenses and disbursements of Xxxxxxx XxXxxxxxx LLP.
(c) FEES. The Administrative Agent shall have received from
the Borrower the fee (the "AMENDMENT FEE") in the amount of $175,000 for the pro
rata account of the Lenders based upon their Commitments immediately prior to
the Fifth Amendment Effective Date.
(d) CORPORATE OR OTHER ACTION; CORPORATE STRUCTURE. All
corporate (or other) action necessary for the valid execution, delivery and
performance by the Borrower of the Amendment Documents shall have been duly and
effectively taken, and evidence thereof satisfactory to the Lenders shall have
been provided to each of the Lenders.
SECTION 4. APPLICABLE LAW. THIS AMENDMENT SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.
SECTION 5. RATIFICATION BY GUARANTORS. By their signatures
below, Friendly's Restaurants Franchise, Inc. and Friendly's International, Inc.
(collectively, the "Guarantors") (a) ratify and confirm that certain Guaranty
dated as of the Initial Closing Date delivered by Guarantors in connection with
the Revolving Credit Agreement (the "Guaranty"), (b) represent the Guaranty is
in full force and effect and (c) acknowledge that the obligations and liability
of the Guarantors thereunder have not been affected, diminished or impaired in
any manner.
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SECTION 6. MISCELLANEOUS.
6.1. From and after the date hereof, this Amendment shall be
deemed a Loan Document for all purposes of the Revolving Credit Agreement and
the other Loan Documents and each reference to Loan Documents in the Revolving
Credit Agreement and the other Loan Documents shall be deemed to include this
Amendment. This Amendment may be executed in any number of counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute but one agreement. Delivery of an executed counterpart of a signature
page by facsimile transmission shall be effective as delivery of a manually
executed counterpart of this Amendment.
6.2. Except as expressly provided herein, (a) this Amendment
shall not limit the rights of or otherwise adversely affect the Lenders under
the Revolving Credit Agreement or any other Loan Document, and (b) the Lenders
reserve the right to insist on strict compliance with the terms of the Revolving
Credit Agreement and the other Loan Documents, and the Borrower expressly
acknowledges such reservation of rights. The grant of the consent and waiver
herein will not, either alone or taken with other waivers of provisions of the
Revolving Credit Agreement or any other Loan Document or consents with respect
thereto, be deemed to create or be evidence of a course of conduct. Any future
or additional waiver of any provision of the Revolving Credit Agreement, or of
any other Loan Document to which the Lenders are a party or have consented, or
consent with respect thereto shall be effective only if set forth in a writing
separate and distinct from this Amendment and duly executed by such parties as
are required by Section 16.12 of the Revolving Credit Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the undersigned has caused this
Amendment to be executed and delivered as an agreement as of the date first
written above.
FRIENDLY ICE CREAM CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
--------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Exec. VP of Administration & CFO
FLEET NATIONAL BANK,
individually and as Administrative Agent and as Lender
By: /s/ Xxxxxxxxx Xxxxx
--------------------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Director
CITIZENS BANK OF
MASSACHUSETTS,
individually and as Lender
By: /s/ Xxxxx Xxxx
--------------------------------------------------
Name: Xxxxx Xxxx
Title: Vice President
BANKNORTH, N.A.,
individually and as Lender
By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Vice President
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SECTION 6 AGREED TO AND ACCEPTED:
FRIENDLY'S RESTAURANTS FRANCHISE, INC.,
as Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Exec. VP of Administration & CFO
FRIENDLY'S INTERNATIONAL, INC.,
as Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Exec. VP of Administration & CFO
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