FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
CONSOLIDATED PRODUCTS, INC., an Indiana corporation, (the "Company") and BANK
ONE, INDIANAPOLIS, National Association, a national banking association, (the
"Bank") agree as follows:
1. CONTEXT. This agreement is made in the context of the following agreed
state of facts:
a. The Company and the Bank are parties to an Amended and Restated Credit
Agreement dated December 30, 1994 (the "Agreement").
b. The Company has requested that the Bank (i) extend the Revolving Loan
Maturity Date to December 31, 1997, (ii) delete the requirement for
the Guaranty Agreements and (iii) modify certain covenants set forth
in the Agreement.
c. The Bank has agreed to such requests subject to certain terms and
conditions and the parties have executed this document (this "First
Amendment") to give effect to their agreement.
2. DEFINITIONS. Terms used in this First Amendment with their initial letters
capitalized are used as defined in the Agreement, unless otherwise defined
herein. Section 1 of the Agreement is amended as follows:
a. AMENDED DEFINITIONS. The definitions of "Applicable Spread" and "Revolving
Loan Maturity Date" are amended and restated in their entireties to read
hereafter as follows:
_ "APPLICABLE SPREAD" means that number of percentage points to be taken
into account in determining the LIBOR-based Rate at which interest
will accrue on the Loans and at which the facility fee to be paid by
the Company under the provisions of Section 2.a(v), each as determined
by reference to the following Table:
Revolving Loan Term Loan Facility Fee
-------------- --------- ------------
.875 1.125 .25
- "REVOLVING LOAN MATURITY DATE" means, as of the date of the First
Amendment, December 31, 1997, and thereafter any subsequent date to
which the Commitment may be extended by the Bank pursuant to the terms
of Section 2.a(iv).
- "TANGIBLE NET WORTH" means the consolidated shareholders' equity of
the Company and its Subsidiaries less any allowance for goodwill,
patents, trademarks, trade secrets and any other assets which would be
classified as intangible assets under generally accepted accounting
principles.
b. NEW DEFINITIONS. New definitions are added to Section 1 of the
Agreement as follows:
42
- "FIRST AMENDMENT" means the written amendment to this Agreement
entitled "First Amendment to Amended and Restated Credit Agreement"
and dated September 26, 1995.
- "FUNDED DEBT" means the total liabilities of the Company and its
Subsidiaries (excluding (i) any indebtedness of any Subsidiary
which is included in the financial statements furnished to the Bank
pursuant to Section 5.b to the Company, (ii) any indebtedness of
the Company to any Subsidiary, (iii) items of contingency reserves
or of reserves for deferred income taxes and (iv) all current
liabilities which do not represent borrowed monies) including, but
not limited to, capital lease obligations, indebtedness of any
other person guaranteed by the Company or any Subsidiary except
sale/lease back transactions of any Subsidiary guaranteed by the
Company, indebtedness secured by any lien on any property or asset
owned by the Company or any Subsidiary and any payment obligations
with respect to interest swaps or xxxxxx, currency swaps or xxxxxx
and similar obligations.
- "TOTAL CAPITAL" means an amount equal to the sum of the Funded Debt
plus the Tangible Net Worth.
3. THE REVOLVING LOAN. The Bank agrees to extend the Revolving Loan Maturity
Date from December 31, 1996, to December 31, 1997, under the provisions of
Section 2.a(iv) of the Agreement. The extension is subject to execution and
delivery by the Company to the Bank of a Revolving Note in the form of EXHIBIT
"A" attached to this First Amendment. Section 2.a(i) and Section 2.a(v) of the
Agreement are amended and restated in their entireties to read hereafter as
follows:
(i) THE COMMITMENT--USE OF PROCEEDS. From the date of the First
Amendment and until the Revolving Loan Maturity Date, the Bank
agrees to make Advances (collectively, the "Revolving Loan")
under a revolving line of credit from time to time to the Company
of amounts not exceeding Thirty Million and 00/100 Dollars
($30,000,000.00) (the "Commitment") in the aggregate at any
time outstanding, provided that all of the conditions of
lending stated in Section 7 of this Agreement as being
applicable to the Revolving Loan have been fulfilled at the
time of each Advance; and provided further that prior to
December 1, 1996, the Bank shall have no obligation to make
Advances under the Revolving Loan of amount exceeding Twenty
Million and 00/100 ($20,000,000.00) in the aggregate at any
time outstanding. Proceeds of the Revolving Loan may be used
by the Company only to fund working capital and capital
expenditures of the Company or any Subsidiary.
(v) FACILITY FEE. In addition to interest on the Revolving Loan,
the Company shall pay to the Bank a facility fee for each
partial or full calendar quarter during which the Commitment
is outstanding equal to the Applicable Spread per annum of the
average daily excess of the Commitment over the principal
balance of the Revolving Loan; provided that prior to December
1, 1996, the facility fee shall be an amount equal to the sum
of (A) the Applicable Spread per annum of the average daily
excess of (y) $20,000,000.00 over (z) the principal balance of
the Revolving Loan plus (B) one-eighth percent (1/8%) per
annum of $10,000,000. Facility fees for each calendar quarter
shall be due and payable within ten (10) days following the
Bank's submission of a statement of the amount due. Such fees
may be debited by the Bank when due to any demand deposit
account of the Company carried with the Bank without further
authority.
4. THE TERM NOTE. The first two sentences of Section 2.b(ii) of the
Agreement are amended and restated in their entireties to read hereafter as
follows:
(ii) THE TERM NOTE. The obligation of the Company to repay the
Term Loan shall be evidenced by a promissory note (the "Term
Note") in the form of EXHIBIT "B" attached to the First
43
Amendment. The principal of the Term Loan shall be repayable in
equal quarterly installments, each of which shall be equal to
one-fortieth (1/40) of the initial principal amount of the
Term Loan, which quarterly payments shall be due on the last
Banking Day of each March, June, September and December
commencing on the last Banking Day of March, 1998, and
continuing until that date which is sixty (60) months from the
date of the Term Note, on which date the entire principal
balance of the Term Loan shall be due and payable together
with all accrued and unpaid interest.
5. RELEASE OF THE GUARANTY AGREEMENTS. Section 4 of the Agreement is hereby
deleted to evidence the agreement of the Bank to release the requirement for the
Guaranty Agreements of Steak N Shake, Inc., Consolidated Specialty Restaurants,
Inc. and SNS Investment Company.
6. AMENDMENT OF FINANCIAL COVENANTS. Sections 5.g(iii) and 5.g(iv) are hereby
deleted from the Agreement and Sections 5.g(i) and 5.g(ii) of the Agreement are
amended and restated in their entireties to read hereafter as follows:
(i) RATIO OF FUNDED DEBT TO TOTAL CAPITAL. The Company shall maintain the
ratio of its Funded Debt to its Total Capital at levels not greater
than those shown in the following table during the periods indicated:
Period Ratio
------ -----
from the date of the First Amendment
and until September 25, 1996 .55 to 1.0
at September 26, 1996, and at all
times thereafter .50 to 1.0
(ii) DEBT SERVICE COVERAGE. On a rolling four quarter basis, the Company
shall maintain a debt service coverage ratio of not less than that
indicated opposite such period in the table. For purposes of this
covenant, the phrase "debt service coverage ratio" means the ratio of
the sum of net income plus interest expense plus rent expense paid
over the sum of current maturities of term debt, including current
capital lease obligations, plus interest expense plus rent expense
paid.
Period Ratio
------ -----
from the date of the First
Amendment and until April 9, 1996 1.00 to 1.0
at April 10, 1996, and at all
times thereafter 1.25 to 1.0
7. AMENDMENTS TO SECTION 6. Sections 6.d, 6.i and 6.j of the Agreement are
amended and restated in their entireties to read hereafter as follows:
d. MERGERS, CONSOLIDATIONS, SALES, ACQUISITION OR FORMATION OF
SUBSIDIARIES. The Company shall not be, and shall not permit any
Subsidiary to be, a party to any consolidation or to any merger and
shall not, and shall not permit any Subsidiary to, purchase the
capital stock of or otherwise acquire any equity interest in any other
business entity; provided, however,
44
that (i) any Subsidiary may merge or consolidate with or into the
Company, so long as the Company is the continuing or surviving
corporation, (ii) any Subsidiary may merge or consolidate with or into
a Subsidiary, and (iii) the Company may merge with any other solvent
corporation, so long as the Company shall be the continuing or
surviving corporation and so long as no Event of Default or Unmatured
Event of Default exists or would exist immediately after giving effect
to any such merger. The Company shall not, and shall not permit any
Subsidiary to, acquire any material part of the assets of any other
business entity, except in the ordinary course of business. The
Company shall not, and shall not permit any Subsidiary to, sell,
transfer, convey or lease all or any material part of its assets,
except in the ordinary course of business, or sell or assign with or
without recourse any receivables; provided, however, that any
Subsidiary may sell, transfer, convey or lease assets to the Company
or to any other Subsidiary. As used in this Section 6.d, the term
"material" means with respect to any asset sold, transferred, conveyed
or leased, that (1) the ratio of (a) aggregate net income produced by,
or attributable to such asset for the 36 month period most recently
ended prior to such sale, transfer, conveyance or lease to (b) the
consolidated net income of the Company and its Subsidiaries for such
36 month period is less than 10% AND (2) the ratio of (a) the value
(determined as the higher of fair market value or net book value on
the date of the respective transfer, sale, conveyance or lease) of all
assets sold, transferred, conveyed or leased during the 36 month
period most recently ended prior to the date of calculation to (b) the
total assets of the Company and its Subsidiaries determined as of the
last day of such 36 month period is less than 10%. The Company shall
not cause, and shall not permit any Subsidiary to cause, to be
created, or otherwise to be acquired, any additional Subsidiaries.
i. DEBT The Company shall not incur or permit to exist and shall not
permit any Subsidiary to incur or permit to exist any indebtedness for
borrowed money except:
(i) obligations of any Subsidiary to the Company or any other
Subsidiary;
(ii) obligations of the Company to any Subsidiary;
(iii) obligations of the Company and its Subsidiaries disclosed on
the "Schedule of Exceptions" attached as EXHIBIT "C" to the
First Amendment; and
(iv) other indebtedness of the Company or any Subsidiary for
borrowed money, so long as the aggregate indebtedness of the
Company secured by a "lien" (as defined in Section 6.j) plus
the indebtedness of the Subsidiaries does not exceed twenty
percent (20%) of the Tangible Net Worth.
j. LIENS. The Company shall not create or permit, and shall not allow
any Subsidiary to create or permit, to exist any mortgage, pledge,
title retention lien or other lien, encumbrance or security interest
(all of which are hereafter referred to in this subsection as a "lien"
or "liens") with respect to any property or assets now owned or
hereafter acquired except:
(i) liens in favor of the Bank created pursuant to the
requirements of this Agreement or otherwise;
(ii) any lien or deposit with any governmental agency required or
permitted to qualify the Company or the Subsidiary to
conduct business or exercise any
45
privilege, franchise or license, or to maintain
self-insurance or to obtain the benefits of or secure
obligations under any law pertaining to worker's
compensation, unemployment insurance, old age pensions,
social security or similar matters, or to obtain any stay or
discharge in any legal or administrative proceedings, or any
similar lien or deposit arising in the ordinary course of
business;
(iii) any mechanic's, worker's, repairmen's, carrier's,
warehousemen's or other like liens arising in the ordinary
course of business for amounts not yet due and for the
payment of which adequate reserves have been established, or
deposits made to obtain the release of such liens;
(iv) easements, licenses, minor irregularities in title or minor
encumbrances on or over any real property which do not, in
the judgment of the Bank, materially detract from the value
of such property or its marketability or its usefulness in
the business of the Company or the Subsidiary;
(v) liens for taxes and governmental charges which are not yet
due or which are being contested in good faith and by
appropriate proceedings and for which appropriate reserves
have been established;
(vi) liens created by or resulting from any litigation or legal
proceeding which is being contested in good faith and by
appropriate proceedings and for which appropriate reserves
have been established;
(vii) those specific liens existing as of the date of the First
Amendment and described on the "Schedule of Exceptions"
attached as EXHIBIT "C" to the First Amendment; and
(viii) liens securing indebtedness of Subsidiaries permitted under
the provisions of Section 6.i(iv).
8. CONDITIONS PRECEDENT. As conditions precedent to the effectiveness of this
First Amendment, the Bank shall have received, each duly executed and in form
and substance satisfactory to the Bank, this First Amendment and the following:
a. The Revolving Note.
b. Schedule of Exceptions in the form of EXHIBIT "C".
c. A certified copy of resolutions of the Board of Directors of the Company
authorizing the execution and delivery of this First Amendment, the
Revolving Note and any other document required under this First Amendment.
d. A certificate signed by the Secretary of the Company certifying the name of
the officer or officers authorized to sign this First Amendment, the
Revolving Note and any other document required under this First Amendment,
together with a sample of the true signature of each such officer.
e. Such other documents as may be reasonably required by the Bank.
46
9. REPRESENTATIONS AND WARRANTIES. To induce the Bank to enter into this
First Amendment, the Company represents and warrants, as of the date of this
First Amendment, that no Event of Default or Unmatured Event of Default has
occurred and is continuing and that the representations and warranties contained
in Section 3 of the Agreement are true and correct, except that the
representations contained in Section 3.d refer to the latest financial
statements furnished to the Bank by the Company pursuant to the requirements of
the Agreement.
10. REAFFIRMATION OF THE AGREEMENT. Except as amended by this First Amendment,
all terms and conditions of the Agreement shall continue unchanged and in full
force and effect.
IN WITNESS WHEREOF, the Company and the Bank, by their duly authorized officers,
have executed this First Amendment to Amended and Restated Credit Agreement on
September 26, 1995.
CONSOLIDATED PRODUCTS, INC.
By: /s/Xxxxx X. Bear
------------------------------
Xxxxx X. Bear, Senior Vice
President and Treasurer
BANK ONE, INDIANAPOLIS,
National Association
By: /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx, Vice President
and Senior Portfolio Manager
47
