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EXHIBIT 10.26
AMENDMENT No. 8 AND AGREEMENT dated as of
December 26, 2000 (this "Amendment"), to the Credit
Agreement dated as of January 7, 1998, as amended by
Amendment No. 1 and Waiver dated as of March 16,
1998, Amendment No. 2 and Waiver dated as of May 21,
1998, Amendment No. 3 and Waiver dated as of July 16,
1998, Amendment No. 4 dated as of November 12, 1998,
Amendment No. 5 dated as of March 12, 1999, Amendment
No. 6 dated as of December 20, 1999, and Amendment
No. 7 dated as of June 20, 2000 (the "Credit
Agreement"), among DENNY'S, INC., a California
corporation, EL POLLO LOCO, INC., a Delaware
corporation, FLAGSTAR ENTERPRISES, INC., an Alabama
corporation, FLAGSTAR SYSTEMS, INC., a Delaware
corporation, QUINCY'S RESTAURANTS, INC., an Alabama
corporation (each of the foregoing, except for
FLAGSTAR ENTERPRISES, INC., QUINCY'S RESTAURANTS,
INC. and EL POLLO LOCO, INC., for purposes of this
Amendment and the Credit Agreement, individually, a
"Borrower" and, collectively, the "Borrowers"),
ADVANTICA RESTAURANT GROUP, INC., a Delaware
corporation ("Parent"), the Lenders (as defined in
Article I of the Credit Agreement) and THE CHASE
MANHATTAN BANK, a New York banking corporation, as
swingline lender (in such capacity, the "Swingline
Lender"), as issuing bank, as administrative agent
(in such capacity, the "Administrative Agent") and as
collateral agent (in such capacity, the "Collateral
Agent") for the Lenders.
A. The Lenders have extended credit to the Borrowers, and have
agreed to extend credit to the Borrowers, in each case pursuant to the terms and
subject to the conditions set forth in the Credit Agreement.
B. FRD and its subsidiaries are party to the New FRI-M Credit
Agreement, under which the borrowers thereunder may incur indebtedness in a
principal amount of up to $70,000,000.
C. Parent is party to the Advantica Guarantee, under which
Parent guarantees in full all indebtedness under the New FRI-M Credit Agreement.
D. Parent has advised the Administrative Agent that Parent
intends, subject to and in accordance with Section 6.04(n) of the Credit
Agreement, to satisfy its obligations under the Advantica Guarantee in full
prior to January 7, 2001.
E. Parent and the Borrowers have requested that the Required
Lenders agree to amend certain provisions of the Credit Agreement and amend
certain provisions of the Security Agreement.
F. The Required Lenders are willing to agree to such
amendments, on the terms and subject to the conditions set forth herein.
G. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Credit Agreement after giving effect to
this Amendment.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment to Credit Agreement. (a) Article VII of
the Credit Agreement is hereby amended by adding the following new sentence at
the end of such Article:
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"Notwithstanding the foregoing, no Event of Default or Default
under paragraph (a), (d), (e), (f), (g), (h) or (k) of this Article VII shall
occur or arise solely as a result of the occurrence of any event or the
existence of any circumstances (including any event or circumstances described
in paragraph (a), (d), (e), (f), (g), (h) or (k) of this Article VII) with
respect to FRD or any of its subsidiaries if the occurrence of such event or the
existence of such circumstances, as applicable, does not actually affect Parent
or any of the Specified Subsidiaries (other than solely because the references
to Subsidiaries in this Article VII include FRD and its subsidiaries) in a
manner that itself causes an Event of Default or a Default with respect to
Parent or any of its subsidiaries (other than FRD or any of its subsidiaries)."
(b) The amendment set forth in paragraph (a) of this Section 1
shall cease to be effective immediately following the payment by Parent of any
amount pursuant to the Advantica Guarantee unless prior to, substantially
simultaneous with or immediately following such payment, each of the following
requirements has been satisfied:
(i) The Advantica Guarantee shall be irrevocably terminated by
an agreement in form and substance reasonably satisfactory to the
Administrative Agent and signed by Credit Lyonnais New York Branch, as
Administrative Agent for the lenders under the New FRI-M Credit
Agreement (the "New FRI-M Agent"), which agreement shall be accompanied
by an acknowledgment by the New FRI-M Agent and the lenders and issuing
banks under the New FRI-M Credit Agreement that all principal, interest
and fees owed thereunder have been paid in full and all cash
collateralization requirements thereunder have been fully satisfied.
(ii) The Board of Directors of Parent shall designate FRD and
its subsidiaries as "Unrestricted Subsidiaries" for purposes of the New
Senior Notes Indenture in accordance with the terms thereof, and the
Administrative Agent shall have received a copy of the resolutions of
the Board of Directors of Parent authorizing such designation.
(iii) Parent shall (A) ensure that any payment that is made by
Parent pursuant to the Advantica Guarantee is made directly by Parent
to the New FRI-M Agent and is accompanied by a written statement by
Parent that such payment is being made pursuant to the Advantica
Guarantee, (B) deliver to the Administrative Agent a written
acknowledgment, in form and substance reasonably satisfactory to the
Administrative Agent, duly executed and delivered by the New FRI-M
Agent, pursuant to which the New FRI-M Agent acknowledges and agrees
that the payments made by Parent to or for the benefit of the lenders
or issuing banks under the New FRI-M Credit Agreement were made in
satisfaction of Parent's guarantee obligations pursuant to the
Advantica Guarantee, (C) endeavor in good faith to have included in the
written acknowledgment referred to in clause (B) above an
acknowledgment by the New FRI-M Agent that Parent is subrogated to all
rights (the "Subrogation Rights") of the lenders and issuing banks
under the New FRI-M Credit Agreement against each Borrower and
Guarantor (in each case, as defined in the New FRI-M Credit Agreement)
other than Parent (each such Borrower and Guarantor, a "New FRI-M
Credit Party"), including but not limited to all rights of such lenders
and issuing banks under or in respect of the FRD Guarantee Agreement,
Subsidiary Guarantee Agreements, Security Documents and Collateral
(each as defined in the New FRI-M Credit Agreement) and all voting
rights of such lenders and issuing banks thereunder, (D) deliver to the
Administrative Agent an assignment to the Administrative Agent or
another party designated by Parent as directed by the Administrative
Agent, as the Collateral Agent, and reasonably satisfactory to Parent
signed by the New FRI-M Agent, of each promissory note or UCC-1
Financing Statement, filing with the United States Patent and Trademark
Office, Mortgage (as defined in the New FRI-M Credit Agreement) or
similar filing filed by the New FRI-M Agent in respect of the New FRI-M
Credit Agreement, (E) deliver to the Administrative Agent the written
resignation by the New FRI-M Agent as administrative agent and
collateral agent for the lenders under the New FRI-M Credit Agreement
and the guarantee and collateral documents entered into pursuant
thereto and the appointment of the Administrative Agent or another
party designated by Parent as directed by the Administrative Agent and
reasonably satisfactory to Parent to act as the successor
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administrative agent and collateral agent thereunder, (F) deliver to
the Administrative Agent all stock certificates and instruments pledged
to and in the possession of the New FRI-M Agent in connection with the
New FRI-M Credit Agreement and all stock or note powers or other
instruments of transfer held by the New FRI-M Agent in connection
therewith and (G) deliver to the Administrative Agent amendments to
UCC-1 Financing Statements, duly executed and delivered by the
appropriate Loan Parties, reasonably requested by the Administrative
Agent to reflect the amendment pursuant to Section 2 of this Amendment
of the definition of the term Collateral.
(iv) Parent shall assign the Subrogation Rights to Denny's,
Inc. as a capital contribution.
(c) The amendment set forth in paragraph (a) of this Section 1
shall immediately cease to be effective if (i) any event or circumstances
described in Article VII that, with or without the giving of notice, would
constitute an Event of Default under and as described in the New Senior Notes
Indenture shall occur or arise with respect to FRD or any of its subsidiaries
and (ii) at the time such event occurs or such circumstances arise, FRD and its
subsidiaries have not previously been designated as "Unrestricted Subsidiaries"
for purposes of the New Senior Notes Indenture in accordance with the terms
thereof.
SECTION 2. Amendment to Security Agreement. The defined term
"Collateral" in Section 1.02 of the Security Agreement is hereby amended as
follows by substituting the text ", (e) any and all rights of any Grantor,
including all rights to payments from FRD or any of its subsidiaries, existing
as a result of rights of subrogation or otherwise that arose in connection with
Parent's payment and performance under the Advantica Guarantee, including all
rights in respect of any and all collateral securing the Obligations under the
New FRI-M Credit Agreement, and (f) Proceeds" for the existing text "and (e)
Proceeds.".
SECTION 3. Agreements. (a) The parties to this Amendment
hereby agree that Parent will not permit FRD or its subsidiaries to effect the
sale of any capital stock or all or substantially all the assets of FRD or any
of its subsidiaries, except that Parent may permit FRD or any of its
subsidiaries to effect any such sale on terms determined reasonably and in good
faith by the Board of Directors of Parent to be fair (the "Coco's/Carrows
Sale"); provided that (i) at the time of the Coco's/Carrows Sale, and
immediately after giving effect thereto, no Default or Event of Default shall
have occurred and be continuing and (ii) prior to or simultaneously with the
Coco's/Carrows Sale, the Advantica Guarantee shall, pursuant to an agreement in
form and substance reasonably satisfactory to the Administrative Agent, be
irrevocably terminated.
(b) The parties to this Amendment hereby further agree that
Parent shall (i) use commercially reasonable efforts to cause a Coco's/Carrows
Sale that complies with paragraph (a) above to be consummated as soon as
reasonably practicable and (ii) update the Lenders on a reasonable basis in
respect of all material developments in connection with (A) any potential
Coco's/Carrows Sale and (B) negotiations with the holders of the FRD Senior
Notes.
(c) The parties to this Amendment hereby further agree that,
notwithstanding anything in the Credit Agreement to the contrary, neither Parent
nor the Borrowers will, nor will they cause or permit any of the Specified
Subsidiaries to, voluntarily or involuntarily (A) surrender or forgive or
otherwise fail to be entitled to any rights to payment to which, immediately
prior to Parent's first payment of any amount pursuant to the Advantica
Guarantee, the lenders and issuing banks under the New FRI-M Credit Agreement
were entitled (other than pursuant to the Advantica Guarantee), or (B) allow the
subordination of or otherwise in any way allow any limitation of any such rights
to payment (other than a temporary delay in payment arising by operation of law
and other than subordination (or any other limitation) resulting from a judicial
order that has not become final and is subject to a stay), or (C) allow the
release or subordination of or otherwise in any way allow any limitation of
their rights with respect to the security interests that, immediately prior to
Parent's first payment of any amount pursuant to the Advantica Guarantee,
secured such rights to payment (other than a temporary delay in realizing upon
such security interests arising by operation of law and other than subordination
(or any
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other limitation) resulting from a judicial order that has not become final and
is subject to a stay).
(d) The parties to this Amendment hereby further agree that,
following a request by the Administrative Agent, Parent will use commercially
reasonable efforts to cause to be taken any actions reasonably requested by the
Administrative Agent to cause (i) the resignation of Credit Lyonnais New York
Branch as the administrative agent and collateral agent under the New FRI-M
Credit Agreement and the guarantee and collateral documents entered into
pursuant thereto and (ii) the appointment of Chase or another party designated
by Parent as directed by Chase and reasonably satisfactory to Chase as the
successor administrative agent and collateral agent thereunder to become
effective.
(e) Parent and the Borrowers hereby agree that not later than
three Business Days following the receipt by Parent or any of the Specified
Subsidiaries of any payment (a "Subrogation Payment") in respect of the payments
made by Parent under the Advantica Guarantee, the Borrowers will repay Swingline
Loans (and, after all then outstanding Swingline Loans have been repaid,
Revolving Loans) in an aggregate principal amount equal to the amount of such
Subrogation Payment to the extent Swingline Loans or Revolving Loans are then
outstanding; provided, however, that (i) no repayment of Loans pursuant to this
paragraph (e) shall be required to comply with the minimum prepayment
requirements set forth in the Credit Agreement, (ii) no repayment of Loans
pursuant to this paragraph (e) shall be required until the aggregate amount of
the Subrogation Payments received by Parent and the Specified Subsidiaries that
were not previously applied pursuant to this paragraph (e) to repay Loans equals
at least $1,000,000 and (iii) if at any time the aggregate amount of Subrogation
Payments required to be applied to repay Loans pursuant to this paragraph (e)
exceeds the aggregate principal amount of ABR Loans outstanding at such time,
then the Borrowers shall not be required to apply such excess to repay Loans
pursuant to this paragraph (e) until the end of the first Interest Period or
Interest Periods applicable to Eurodollar Borrowings that end after the date of
receipt of such Subrogation Payment; provided further that commencing on the
third Business Day following the receipt by Parent or the applicable Specified
Subsidiary of the applicable Subrogation Payments and continuing until such
repayment amounts referred to in clause (iii) above become due and payable
pursuant to this paragraph (e), such amounts shall be deposited in a Repayment
Account (as defined below). For purposes of this Amendment, the term "Repayment
Account" shall mean an account established by one of the Borrowers with the
Administrative Agent and over which the Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal for
application in accordance with this paragraph (e). If the maturity of the Loans
has been accelerated pursuant to Article VII of the Credit Agreement, the
Administrative Agent may, in its sole discretion, apply all amounts on deposit
in the Repayment Account to satisfy any of the Obligations under the Credit
Agreement. The Borrowers hereby grant to the Administrative Agent, for its
benefit and the benefit of the Lenders, a security interest in the Repayment
Account to secure the Obligations under the Credit Agreement.
(f) The parties to this Amendment hereby further acknowledge
and agree that, notwithstanding anything in the Credit Agreement to the
contrary, neither Parent nor the Borrowers will, nor will they cause or permit
any of the Specified Subsidiaries to, make any investments in, or any loans or
advances to, FRD or any of its subsidiaries after the date of this Amendment
other than pursuant to the Advantica Guarantee as in effect on the date hereof.
SECTION 4. Amendment Fee. In consideration of the agreements
of the Required Lenders contained in this Amendment, the Borrowers agree to pay
to the Administrative Agent, for the account of each Lender that delivers an
executed counterpart of this Amendment by 5:00 p.m., New York City time, on
December 26, 2000, an amendment (the "Amendment Fee") in an amount equal to 1/8
of 1.00% of such Lender's Commitment as of such date, provided that the
Amendment Fee shall not be payable unless and until this Amendment becomes
effective as provided in Section 6 below.
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SECTION 5. Representations and Warranties. Parent and the
Borrowers represent and warrant to the Administrative Agent and to each of the
Lenders that:
(a) This Amendment has been duly authorized, executed and
delivered by Parent, each of the Borrowers and each of the Subsidiary
Guarantors and constitutes their legal, valid and binding obligations,
enforceable in accordance with its terms except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
(b) Before and after giving effect to this Amendment, the
representations and warranties set forth in Article III of the Credit
Agreement are true and correct in all material respects with the same
effect as if made on the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) After giving effect to this Amendment, no Event of Default
or Default has occurred and is continuing.
(d) As of the date hereof, (i) no investments in FRD or its
subsidiaries have been made and are outstanding pursuant to Section 6.04(j) of
the Credit Agreement and (ii) not more than $75,000,000 of investments in FRD
and its subsidiaries have been made and are outstanding pursuant to Section
6.04(1) of the Credit Agreement.
SECTION 6. Conditions to Effectiveness. This Amendment shall
become effective as of the date first above written (the "Effective Date") when
the following conditions have been satisfied:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Issuing Bank, a favorable written opinion
of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx or other counsel for Parent
and the Borrowers reasonably satisfactory to the Administrative Agent,
substantially to the effect set forth in Exhibit A hereto, (i) dated
the Effective Date, (ii) addressed to the Issuing Bank, the
Administrative Agent, the Collateral Agent and the Lenders and (iii)
covering such other matters relating to the Loan Documents as the
Administrative Agent shall reasonably request, and Parent and the
Borrowers hereby request such counsel to deliver such opinions.
(b) All legal matters incident to this Amendment and the other
documents to be entered into in connection herewith shall be
satisfactory to the Lenders, to the Issuing Bank and to Cravath, Swaine
& Xxxxx, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i)
counterparts of this Amendment that, when taken together, bear the
signatures of Parent, each of the Borrowers, each of the Subsidiary
Guarantors and the Required Lenders and (ii) the Amendment Fees.
(d) The representations and warranties set forth in Section 5
hereof shall be true and correct with the same effect as if made on the
Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date, and the Administrative
Agent shall have received a certificate, dated the Effective Date and
signed by a Financial Officer of Parent, confirming compliance with
such condition.
SECTION 7. Credit Agreement. Except as specifically waived or
amended hereby, the Credit Agreement shall continue in full force and effect in
accordance with the provisions thereof as in existence on the date hereof. On
and after the Effective Date, any reference to the Credit Agreement shall mean
the Credit Agreement as amended hereby.
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SECTION 8. Loan Document. This Amendment shall be a Loan
Document for all purposes.
SECTION 9. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 10. Counterparts. This Amendment may be executed in
two or more 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 of this Amendment by telecopy shall be
effective as delivery of a manually executed counterpart of this Amendment.
SECTION 11. Expenses. Parent and the Borrowers agree to
reimburse the Administrative Agent for its out-of-pocket expenses in connection
with this Amendment, including the reasonable fees, charges and disbursements of
Cravath, Swaine & Xxxxx, counsel for the Administrative Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
ADVANTICA RESTAURANT GROUP, INC.,
by /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President and Treasurer
DENNY'S, INC.,
by /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President and Treasurer
ADVANTICA SYSTEMS, INC.,
by /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President and Treasurer
EACH OF THE SUBSIDIARY GUARANTORS LISTED ON
SCHEDULE I HERETO,
by /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: Vice President and Treasurer
THE CHASE MANHATTAN BANK, individually and
as Administrative Agent, Collateral Agent,
Swingline Lender and Issuing Bank,
by /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Vice President
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SIGNATURE PAGE TO
AMENDMENT NO. 8 AND
AGREEMENT DATED AS OF
DECEMBER 26, 2000
DENNY'S HOLDINGS, INC.
by /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Director
To approve Amendment No. 8 and Agreement:
Name of institution: Foothill Income Trust II, L.P.
by FIT II GP, LLC, its general partner
by /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Member
To approve Amendment No. 8 and Agreement:
Name of institution: AmSouth Bank
by /s/ Xxxxxxxx X. Xxxxxxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx
Title: Attorney-In-Fact
To approve Amendment No. 8 and Agreement:
Name of institution: Farallon Dining Investors, LLC
by /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Member
Farallon Capital Management, LLC
Farallon Dining Investors, LLC
To approve Amendment No. 8 and Agreement:
Name of institution: BHF (USA) Capital Corporation
by /s/ Xxxxxxxxxxx X. Xxxxx by /s/ Xxxx Xxxx
------------------------------- ----------------------
Name: Xxxxxxxxxxx X. Xxxxx Name: Xxxx Xxxx
Title: Vice President Title: Associate
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To approve Amendment No. 8 and Agreement:
Name of institution: Transamerica Business Credit Corporation
by /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title: SVP
To approve Amendment No. 8 and Agreement:
Name of institution: Fleet Business Credit Corporation
by /s/ Xxxx Xxxxx
-------------------------------
Name: Xxxx Xxxxx
Title: Vice President
To approve Amendment No. 8 and Agreement:
Name of institution: KZH CNC LLC
by /s/ Xxxxxxxx Xxxx
-------------------------------
Name: Xxxxxxxx Xxxx
Title: Authorized Agent
To approve Amendment No. 8 and Agreement:
Name of institution: Swaps CSLT
by /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
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SCHEDULE I
SUBSIDIARY GUARANTORS
Denny's Holdings, Inc.
Spartan Holdings, Inc.
TWS 500 Corp.
TWS 600 Corp.
TWS 700 Corp.
DFO, Inc.
Denny's Realty, Inc.
