EXHIBIT 10.12
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") effective
as of March 19, 2003 (the "EFFECTIVE DATE"), is entered into among BRAZOS
AUTOMOTIVE PROPERTIES, L.P, a Delaware limited partnership (the "BORROWER"),
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Agent for
the lenders (the "AGENT"), a syndicate of lenders as hereinafter named (the
"BANKS"), and Fleet National Bank, as Syndication Agent.
WHEREAS, Borrower and Banks entered into that certain Credit Agreement
dated as of September 15, 1998 (the "CREDIT AGREEMENT");
WHEREAS, Borrower has requested that the Banks extend the term of the
loan to September 30, 2008; and
WHEREAS, the Banks have agreed to such extension, subject to the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the undersigned parties agree as follows:
Section 1. Defined Terms. All capitalized terms used in this Amendment
but not defined in this Amendment shall have the meanings set forth in the
Credit Agreement.
Section 2. Credit Agreement Amendments.
(a) The following definitions in Section 1.1 are hereby deleted in
their entirety and the following shall be substituted in place thereof:
""ABR" means, for any day, the highest of (a) the
Federal Funds Rate plus fifty (50) basis points or (b) the
Prime Rate.
"AGENT" means JPMorgan Chase Bank (formerly known as
The Chase Manhattan Bank), in its capacity as administrative
agent pursuant to ARTICLE 8 and successor agent pursuant to
SECTION 8.6.
"APPLICABLE MARGIN" means at all times during the
applicable periods set forth below: (a) with respect to all
LIBOR Rate Advances, the applicable percentage set forth below
in the column entitled "Applicable Margin for LIBOR Rate
Advances"; (b) with respect to all ABR Advances, the
applicable percentage set forth below in the column entitled
"Applicable Margin for ABR Advances"; and (c) with respect to
the Commitment Fee, the applicable percentage set forth below
in the column entitled "Applicable Margin for Commitment Fee."
If, on December 31 of any year, the Net Income for the
Guarantor for the prior 12 months is less than (i) $8,500,000,
the applicable percentages set forth below in the columns
entitled "Applicable Margin for LIBOR Rate Advances" and
"Applicable Margin for ABR Advances" shall each increase by 50
bps at every level for the next 12 month period, or (ii)
$7,000,000, the
applicable percentages set forth below in the columns entitled
"Applicable Margin for LIBOR Rate Advances" and "Applicable
Margin for ABR Advances" shall each increase by 100 bps at
every level for the next 12 month period; provided however, if
on December 31 of any year, Net Income for the Guarantor
increases above $8,500,000, the applicable percentages set
forth below shall apply.
Applicable
Margin for Applicable Applicable
LIBOR Rate Margin for Margin for
Period Advances ABR Advances Commitment Fee
--------------------------- ---------- ------------ --------------
When the AD < OR = TO 2.50x 112.5 xx 00.0 xx 00 xx
When the AD > 2.50x 137.5 xx 00.0 xx 00 xx
When the AD > 3.00x 162.5 xx 00.0 xx 00 xx
When the AD > 3.50x 187.5 bp 37.5 bp 37.5 bp
When the AD > 4.00x 212.5 bp 62.5 bp 37.5 bp
and < OR = TO 4.25x
Definition: "AD" is the abbreviation for Adjusted
Debt/EBITDAR Ratio.
Adjusted Debt and EBITDAR are calculated for the most
recently-completed Four Quarter Period and the ratio of
Adjusted Debt to EBITDAR is calculated as of the last day of
such Four Quarter Period. The Applicable Margin, as adjusted
to reflect such calculations, shall become effective on the
date of receipt by the Agent of the Compliance Certificate
applicable to such Four Quarter Period. If Guarantor fails to
timely furnish to Borrower and Agent the Current Financials
and any related Compliance Certificate or, if for some other
reason, a new Applicable Margin for a current period cannot be
calculated, then the Applicable Margin in effect on the last
day of the last Four Quarter Period for which the ratio of
Adjusted Debt to EBITDAR was calculated shall remain in effect
until a new Applicable Margin can be calculated, which new
Applicable Margin shall become effective as provided in the
immediately preceding sentence.
"CHASE
CREDIT AGREEMENT" means that certain Amended
and Restated
Credit Agreement dated as of March 19, 2003
executed among Guarantor, Agent, and other financial
institutions from time to time party thereto, as the same may
have been amended and in effect on the date hereof.
"COMMITMENT" as to any Bank has the meaning set forth
in SECTION 2.1.
"EBITDAR" means, as determined, on a rolling twelve
month basis and in respect of any Person the sum of (i) the
Net Income of such Person, plus (ii) the Interest Expense of
such Person for such period as determined in accordance with
GAAP and as such item is reported on such Person's financial
statements, (iii) the income tax expense of such Person for
such period, (iv) the amount reported as the depreciation of
the assets of such Person for such period, computed in
accordance with GAAP, and as such item is used in the
computation of such Person's Net Income for such period, (v)
the amount reported as the amortization of intangibles for
such Person for such period, computed in accordance with GAAP,
and as such item is used in the computation of such Person's
Net Income for such period, and (vi) Rental Payments.
"MATURITY DATE" means the earlier of (a) September
30, 2008 or (b) the acceleration of the Obligations pursuant
to ARTICLE 7.
"NET INCOME" means, in respect of a Person, the net
income of such Person computed in accordance with GAAP and as
such item is reported from time to time on such Person's
statement of income and retained earnings (or similar
statement) (after deduction for payment of all taxes);
provided however, certain costs that in the past were
capitalized in the cost of an acquisition, but will be
required to be expensed under Statement of Financial
Accounting Standards 146, as well as other similar accounting
requirements that are issued in the future and require expense
treatment of costs that are currently capitalized in the cost
of an acquisition, shall be included as if capitalized under
prior accounting guidelines.
"RENTAL PAYMENTS" means, as determined, on a rolling
twelve month basis ending on the last day of the accounting
period covered by the consolidated financial statements of
Guarantor and its Subsidiaries, and delivered pursuant to this
Agreement, the dollar amount of the actual payments which
Guarantor or its Subsidiaries are required to make by the
terms of any lease to its landlords during such period; (a)
excluding, however (i) rentals under Capitalized Leases, (ii)
maintenance, repairs, taxes and other similar charges included
in such payments, (iii) amounts constituting step rent in
accordance with GAAP, and (iv) (without duplication) rentals
under equipment leases whether operating leases or Capitalized
Leases, and (b) less (x) rental income and (y) amortization of
gains on sale-leasebacks, such amortization not to exceed
$1,000,000 for purposes hereto.
"TERMINATION DATE" means the earlier of (a) March 19,
2003 or (b) the acceleration of the Obligations pursuant to
ARTICLE 7."
(b) Section 1.3 of the
Credit Agreement is deleted in its entirety
and the following is inserted in substitution thereof:
"Accounting Principles. Unless otherwise stated, (a) GAAP
determines all accounting and financial terms and compliance with
financial covenants; (b) all accounting principles applied in a current
period must be consistent in all material respects with those applied
during the preceding comparable period, unless the change is required
by GAAP; provided however, if the Guarantor or the Borrower wishes to
change an accounting principle that is not consistent with that applied
during the preceding comparable period, and is not required under GAAP,
such change shall not be effective unless (i) the Borrower or
Guarantor, as applicable, shall have objected in writing to determining
such compliance on such basis within ten (10) days of delivery to the
Agent of the financial statements relating to such period, or (ii) the
Majority Banks shall so object in writing within thirty (30) days after
receipt of such financial statements, in either of which events such
calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under SECTION 8.1
of the Chase
Credit Agreement, shall mean the Current Financials); and
(c) the Borrower or the Guarantor, as applicable, shall deliver to the
Agent at the same time as the delivery of any annual or quarterly
financial statement under this Agreement or under SECTION 8.1 of the
Chase Credit Agreement (i) a description in reasonable detail of any
material variation between the application of accounting principles
employed in the preparation of such statement and the application of
accounting principles employed in the preparation of the next preceding
annual or quarterly financial statements as to which no objection has
been made in accordance with the proviso of SUBPARAGRAPH (b) above and
(ii) reasonable estimates of the difference between such
statements arising as a consequence thereof. Notwithstanding the
foregoing to the contrary, for changes which are required under GAAP
where GAAP does not require restatement or proforma disclosure of the
impact of the change on prior periods, the impact of the change on
prior periods will only be disclosed if reasonably practical to
estimate.
(c) The following new Article is hereby inserted in its entirety
as a new Article 10 in the Credit Agreement:
"ARTICLE 10
CHANGE IN ACCOUNTING STANDARDS.
Section 10.1 Amendment. As a result of changes in the
accounting guidelines issued by the Financial Accounting
Standards Board which are contemplated to be effective July 1,
2003, Borrower, Agent, each Bank, Guarantor and Lessee hereby
agree to amend the Credit Agreement without the payment of any
modification or waiver fee upon occurrence of one of the
following events: (i) that such accounting guidelines require
the Debt evidenced by the Note to be reflected on the balance
sheet of Guarantor or (ii) on or before December 31, 2003,
Guarantor acquires 100% of the limited partnership interest in
the Borrower sufficient to result in the consolidation of the
Borrower on the balance sheet of Guarantor. Upon the
occurrence of one of the events described above, the parties
hereby agree as follows:
(a) Guarantor will either, at the sole election of
the Agent and the Majority Banks, (i) amend the Residual
Guaranty to guarantee 100% of the obligations thereunder and
amend the Guaranty to guarantee 100% of the obligations
thereunder or (ii) become a co-maker with the Borrower under
this Agreement;
(b) amend the definition of Maturity Date under this
Agreement to mature on September 30, 2006;
(c) amend this Agreement to be a revolving facility
with the addition of an unused commitment fee in the same
amount and structure as reflected in the Chase Credit
Agreement;
(d) amend the definition of Applicable Margin under
this Agreement to conform to the Applicable Margin as defined
in the Chase Credit Agreement;
(e) amend the financial covenants set forth in this
Agreement to be re-set at levels that are inclusive of the
change in such covenants resulting solely from the change in
accounting treatment of the Note; and
(f) amend the Commitment of each Bank to provide for
a reduction of the Commitment based upon the Acquisition Price
of any release of any Property on a dollar for dollar basis.
Section 10.2 Conditions to Amendment. Agent's
commitment hereunder and agreement to perform the services
described herein are subject to:
(a) there not having occurred and be continuing an
Event of Default under this Agreement, or any event which
would with the lapse of time become an Event of Default;
(b) the negotiation, execution, and delivery of
definitive documentation with respect to the amendment of this
Agreement pursuant to SECTION 10.1 reasonably satisfactory to
Agent, Banks, Lessee, Guarantor, and their respective counsel;
and
(c) Guarantor's payment of all third party fees and
expenses related to such amendments, including, without
limitation, attorneys' fees of Agent's counsel."
(d) Schedule 1 of the Credit Agreement is hereby deleted in its
entirety and Schedule 1 attached hereto shall be substituted in place thereof.
Section 3. Conditions. This Amendment shall not be effective unless and
until Borrower has delivered or caused to be delivered to Agent:
(a) Counterparts of this Amendment and such related documentation as
any Bank or its counsel shall determine in their reasonable discretion, in form
and substance satisfactory to the Agent, duly executed and delivered by the
Borrower, the Banks, and the Agent, as applicable;
(b) Payment for the account of the Banks of any amounts then due under
the Credit Agreement;
(c) A certificate from the Borrower dated as of the Effective Date
stating that (i) all representations, warranties, and covenants of the Borrower
set forth in the Credit Agreement, as amended hereby, each of the other Credit
Documents, and this Amendment are true and correct in all material respects and
(ii) no Default has occurred and is continuing;
(d) Certified resolutions of the Borrower approving this Amendment and
the other documents executed in connection herewith;
(e) A certificate of the Borrower certifying, as of the Effective Date,
the names and true signatures of persons authorized to sign this Amendment on
behalf of the Borrower;
(f) Appropriate evidence of regulatory applications, approvals and
permits, except those for which the failure to obtain would not result in a
Material Adverse Change;
(g) No later than one hundred twenty (120) days after the Effective
Date, a real estate MAI appraisal for at least [eighteen and one-half percent
(18.5%)] of the value of all Property currently owned by Borrower prepared by an
appraiser to be selected by Agent on behalf of the Banks; provided however, that
if such appraisal for any Property reflects a value of less than the Acquisition
Cost of such Property, Lessee shall be permitted, at its sole option, to
contribute additional real property to Borrower pursuant to an Acquisition up to
the amount of the difference between the Acquisition Cost and the appraised
value of such Property; and
(h) An environmental review of all Property, including, without
limitation:
i. A spreadsheet of all Property detailing any environmental claims,
excluding Property in Michigan and certain Property subject to a ground
lease whose term is about to expire,
ii. Review of ASTM database by an independent database provider on the
leased properties described in CLAUSE (i) above,
iii. Review of Guarantor's corporate environmental experience with all
of the sites described in CLAUSE (i) above and report of that
experience, and
iv. Guarantor's environmental management policy.
(i) Title endorsements to the Title Policy evidencing no negative
impact on the Mortgages based on this Amendment and any other related document.
Section 4. Effect.
(a) Except as otherwise expressly modified hereby, all terms and
provisions of the Credit Documents are hereby ratified and confirmed and shall
be and shall remain in full force and effect, enforceable in accordance with
their terms. In the event of any inconsistency between the terms of the Credit
Agreement, as hereby modified, and any other Credit Document, the terms of the
Credit Agreement, as amended hereby, shall control, and such other document
shall be deemed to be amended hereby to conform to the terms of the Credit
Agreement, as amended hereby. All references in any Credit Document to the
Credit Agreement shall henceforth be deemed to refer to the Credit Agreement, as
amended hereby.
(b) Notwithstanding anything to the contrary contained herein or
implied hereby or in any other Credit Document or in any other action or conduct
undertaken by the Borrower, the Agent or any Bank on or before the date hereof,
the agreements, covenants, and provisions contained herein shall constitute the
only evidence of the Banks' consent to modify the terms and provisions of the
Credit Documents in the manner set forth herein. Accordingly, no express or
implied consents to any further modifications of the Credit Documents, whether
any such modifications involve any of the matters contained in this Amendment or
otherwise, shall be inferred or implied from the Banks' execution of this
Amendment unless evidenced by an express written agreement executed by the Banks
and the Agent. Further, the Banks' and the Agent's execution of this Amendment
shall not constitute a waiver (either express or implied) of the requirement
that any further modification of the Credit Documents shall require the express
written approval of the Banks and the Agent as provided in the Credit Agreement,
no such approval (either express or implied) having been given as of the date
hereof.
Section 5. Defenses. The Borrower, by its execution hereof, hereby
declares that it knows of no set-offs, counterclaims, defenses, or other causes
of action against the Agent or the Banks arising out of the Credit Documents or
otherwise as of the date hereof.
Section 6. Credit Document. This Amendment is one of the "CREDIT
DOCUMENTS" described in the Credit Agreement and, as such, is subject to the
provisions of Article 9 of the Credit Agreement.
Section 7. Further Assurances. The parties hereto shall execute such
other documents, to be filed of record or otherwise, and the Borrower shall take
such actions as may be necessary or as may be reasonably required in the opinion
of the Agent to effect the transactions contemplated hereby.
Section 8. Representations and Warranties.
(a) The Borrower hereby represents and warrants to the Banks that (i)
it possesses all requisite power and authority to execute, deliver, and comply
with the terms of this Amendment and to effect the transactions contemplated
hereby, all of which have been duly authorized and approved by all necessary
corporate action and for which no consent of any other person is required, and
agrees to furnish the Agent with evidence of such authorization and approval
upon request; (ii) no event has occurred since the effective date of the Credit
Agreement which, individually or in the aggregate, would reasonably be
expected to cause a Material Adverse Change to occur; and (iii) the liens of the
Security Documents are valid and subsisting and continue to secure the
obligations under the Credit Documents.
(b) The Borrower hereby reaffirms each of the representations,
warranties, covenants, and agreements contained in the Credit Documents with the
same force and effect as if each were separately stated herein and made as of
the date hereof, except to the extent such representations or warranties relate
solely to an earlier date.
Section 9. Extension of the Lease Documents. Pursuant to Section 6.9(a)
of the Credit Agreement, by execution hereunder, the Agent and the Banks hereby
agree to a future extension of the Lease Documents, provided however, that the
term of such extension shall not extend beyond the Maturity Date of the Credit
Agreement, as amended hereby.
Section 10. Fees and Expenses. The Borrower agrees to pay on demand all
reasonable costs and expenses of the Agent (including, without limitation,
reasonable legal fees and expenses) incurred in connection with the preparation,
negotiation, and execution of this Amendment and the other documents executed in
connection herewith and to effect the transactions contemplated hereby.
Section 11. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same agreement.
Section 12. Binding Effect. This Amendment shall become effective when
it shall have been executed by the Borrower and the Agent, and when the Agent
shall have, as to each Bank, either received a counterpart hereof executed by
such Bank or been notified by such Bank that such Bank has executed it, and it
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent, and each Bank, and their respective successors and assigns, except that
the Borrower shall not have the right to assign its rights or delegate its
duties under this Amendment or any interest in the Credit Agreement without the
prior written consent of each Bank.
Section 13. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
EXECUTED as of the Effective Date.
BRAZOS AUTOMOTIVE PROPERTIES, L.P.
a
Delaware limited partnership
By: Brazos Automotive Properties Management, Inc.
a
Delaware corporation, its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxx, President
JPMORGAN CHASE BANK,
(formerly known as The Chase Manhattan Bank)
as Agent and a Bank
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxxxx, Vice President
FLEET NATIONAL BANK,
as Syndication Agent and a Bank
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxxx
--------------------------------------------
Title: Vice President
-------------------------------------------
MANUFACTURERS AND TRADERS TRUST
COMPANY, as a Bank
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------------------------
Title: Vice President
--------------------------------------------
KEYBANK, NA,
as a Bank
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------------
Title: Vice President
-------------------------------------------
HSBC BANK USA,
(formerly known as Marine Midland Bank) as a Bank
By: /s/ Xxxxxxx X. Xxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxx
--------------------------------------------
Title: Vice President
-------------------------------------------
CITIZENS BANK OF MASSACHUSETTS,
as a Bank
By: /s/ Xxxxxxxxx Xxxxxx
----------------------------------------------
Name: Xxxxxxxxx Xxxxxx
--------------------------------------------
Title: Vice President
-------------------------------------------
CHARTER ONE BANK N.A.
as a Bank
By: /s/ Xxxxx X. Case
----------------------------------------------
Name: Xxxxx X. Case
--------------------------------------------
Title: Vice President
-------------------------------------------
Lessee hereby consents to this Amendment, including, without
limitation, SECTION 3(g), in accordance with the requirements of any Credit
Document, including, without limitation, the Lessee Consent.
MONRO LEASING, LLC,
a
Delaware limited liability company,
as Lessee
By: Monro Muffler Brake, Inc.,
its Sole Member
By: /s/ Xxxxxxxxx X'Xxxxx
---------------------------------------
Xxxxxxxxx X'Xxxxx,
Executive Vice President of Finance,
Chief Financial Officer and Treasurer
The undersigned hereby consents, without limitation, to SECTION 3(g) of
this Amendment and to Article 10 of the Credit Agreement, as set forth in this
Amendment.
MONRO MUFFLER BRAKE, INC., a New York corporation
By: /s/ Xxxxxxxxx X'Xxxxx
-----------------------------------------------
Xxxxxxxxx X'Xxxxx,
Executive Vice President of Finance, Chief
Financial Officer and Treasurer
SCHEDULE 1
LIST OF BANKS AND COMMITMENTS
COMMITMENT
-------------
JPMorgan Chase Bank
Xxx Xxxxx Xxxxxx, Xxxxx 0
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx, Vice President $4,418,385.26
Fleet National Bank
Xxx Xxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx $4,273,520.17
Manufacturers and Traders Trust Company
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxx XxXxxxx $3,681,987.72
KeyBank, NA
0000 Xxxxxx & Xxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx $4,225,231.81
HSBC Bank USA
Xxx XXXX Xxxxx, 0xx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxx $3,681,987.72
Citizens Bank of Massachusetts
00 Xxxxx Xxxxxx, 00xx Xxxxx
Mail Stop #MS1510
Xxxxxx, XX 00000
Attn: Xxxxxxxxx Xxxxxx $3,863,069.08
Charter One Bank N.A.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx Xxxx $2,414,418.17
Total $26,558,559.93
==============
