Exhibit 10.1
AFC ENTERPRISES, INC.
SECOND AMENDMENT
TO CREDIT AGREEMENT
This SECOND AMENDMENT, dated as of April 25, 2007 (this “Amendment”), to the
Second Amended and Restated Credit Agreement, dated as of May 11, 2005 (the
“Credit Agreement”, as amended by the First Amendment to the Credit Agreement,
dated April 14, 2006 among the Borrower, JPMorgan Chase Bank, N.A. and the
Lenders party thereto, each in their stated capacities), is entered into by and
among AFC ENTERPRISES, INC., a Minnesota corporation (the “Borrower”), the
LENDERS party thereto, JPMORGAN CHASE BANK, N.A. (“JPMCB”), as Administrative
Agent, J.P.MORGAN SECURITIES INC., as Sole Bookrunner and Lead Arranger and
FLEET NATIONAL BANK, N.A., as Documentation Agent. Capitalized terms used herein
not otherwise defined herein or otherwise amended hereby shall have the meanings
ascribed thereto in the Credit Agreement.
RECITALS:
WHEREAS, Borrower has requested that the Lenders agree to make amendments to
certain provisions of the Credit Agreement to permit certain repurchases of
Borrower Common Stock subject to the terms and conditions set forth herein;
WHEREAS, the Lenders have agreed to amend certain provisions of the Credit
Agreement, in each case in the manner, and on the terms and conditions, provided
for herein;
NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT
     1.1 Amendments to Article I: Definitions
     A. Section 1.01 is hereby amended by adding the following definitions:
     “Second Amendment” means the amendment to the Credit Agreement dated as of
April 25, 2007.
     “Second Amendment Effective Date” means the date on or prior to April 25,
2007 upon which all the conditions precedent set forth in Section 2 of the
Second Amendment are satisfied.
     B. The definition of “Consolidated Excess Cash Flow” in Section 1.01 is
hereby amended by deleting subclause (ii)(a) in its entirety and replacing it
with the following:
     “(a) voluntary, mandatory and scheduled repayments of Consolidated Total
Indebtedness (excluding repayments of Revolving Loans except to the extent the
Revolving Loan Commitments are permanently reduced in connection with such
repayments and mandatory

         
SECOND AMENDMENT
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TO CREDIT AGREEMENT
       

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prepayments of the Loans and excluding voluntary repayments made after the
Borrower’s fiscal year ending in 2006),”.
     1.2 Amendment to Article II: The Credits
     Section 2.10(d) is hereby amended by deleting such subsection in its
entirety and replacing it with the following:
     “(d) Following the end of each fiscal year of the Borrower, the Borrower
shall prepay Term Loan Borrowings in an aggregate amount equal to: (i) 50% of
the sum of (A) Consolidated Excess Cash Flow less (B) the amount of any
voluntary prepayments, less (C) the amount by which Revolving Loan Commitments
are permanently reduced in connection with repayments and mandatory prepayments
of the Revolving Loans, for such fiscal year in accordance with paragraph
(e) below if the Total Leverage Ratio is greater than or equal to 3.00 to 1.00
on the last day of such fiscal year, (ii) 25% of the sum of (A) Consolidated
Excess Cash Flow less (B) the amount of any voluntary prepayments, less (C) the
amount by which Revolving Loan Commitments are permanently reduced in connection
with repayments and mandatory prepayments of the Revolving Loans, for such
fiscal year in accordance with paragraph (e) below if the Total Leverage Ratio
is less than 3.00 to 1.00 but greater than 2.00 to 1.00 on the last day of such
fiscal year or (iii) 0% of Consolidated Excess Cash Flow for such fiscal year in
accordance with paragraph (e) below if the Total Leverage Ratio is less than or
equal to 2.00 to 1.00 on the last day of such fiscal year. Each prepayment
pursuant to this paragraph shall be made on or before March 31 of each year.
     1.3 Amendments to Article VI: Negative Covenants
     A. Section 6.06(a) is hereby amended by deleting such subsection in its
entirety and replacing it with the following:
     “(a) The Borrower will not, and will not permit any of its Subsidiaries to,
declare or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, except, so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower may (i) consummate the Shareholder Transaction
in an aggregate amount not to exceed $375,000,000 (the “Shareholder Transaction
Amount”), (ii) make payments to purchase Borrower Common Stock or options,
warrants or rights to purchase or acquire Borrower Common Stock (or any
transaction that has a substantially similar effect) with Consolidated Excess
Cash Flow to the extent not required to be paid pursuant to Section 2.10(d);
provided, however, that if at the time of making such purchase, and after giving
effect thereto, the Total Leverage Ratio of Borrower (a) is greater than or
equal to 3:00 to 1.00, such payment shall not exceed $15,000,000 per fiscal year
and (b) is less than 3.00 to 1.00 but greater than 2.00 to 1.00, such payment
shall not exceed $25,000,000 per fiscal year, (iii) at any time from and after
the Second Amendment Effective Date, make payments to purchase Borrower Common
Stock or options, warrants or rights to purchase or acquire Borrower Common
Stock (or any transaction that has a substantially similar effect) in an
aggregate amount not to exceed $40,000,000, in addition to all other payments
made and permitted hereunder, and (iv) use the proceeds from stock option
exercises in an amount not to exceed the sum of (x) $6,400,000 from such
proceeds received from the Closing Date to December 25, 2005 and (y) 100% of
such proceeds received subsequent to December 26, 2005

         
SECOND AMENDMENT
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to make payments to purchase Borrower Common Stock or options, warrants or
rights to purchase or acquire Borrower Common Stock (or any transaction that has
a substantially similar effect). The Borrower shall provide the Administrative
Agent a certificate, in form and substance reasonably satisfactory to the
Administrative Agent, with respect to clauses (i), (ii), (iii) and (iv) above,
in reasonable detail.”
     B. Section 6.12 is hereby amended by deleting such section in its entirety
and replacing it with the following:
     “SECTION 6.12 Minimum Fixed Charge Coverage Ratio. As of the last day of
any fiscal quarter, the Borrower will not permit the ratio of (i) Consolidated
EBITDAR less provisions for current taxes based upon or determined by reference
to income of Borrower and its Subsidiaries and payable in cash with respect to
such period less Consolidated Maintenance Capital Expenditure to
(ii) Consolidated Fixed Charges, in each case for any period of four consecutive
fiscal quarters ending on or after the Closing Date to be less than 1.30:1.00
for any such periods ending on or prior to June 30, 2006, 1.40:1.00 for any such
periods ending in subsequent to June 30, 2006, but prior to the fiscal quarter
ending June 30, 2008 and 1.50:1.00 thereafter.”
     1.4 Amendment to Article IX: Miscellaneous
     Section 9.01(b) is hereby amended by deleting such subsection in its
entirety and replacing it with the following:
     “(b) if to the Borrower, to it at 5555 Glenridge Connector, Suite 300,
Atlanta, GA 30342, Attention of Treasurer (Telecopy No. (404) 459-4539); and in
the case of any notice of default or in the Event of Default, concurrently to
each of AFC Enterprises, Inc., 5555 Glenridge Connector, Suite 300, Atlanta, GA
30342, Attention of General Counsel (Telecopy No. (404) 459-4649) and to Cohen
Pollock Merlin & Small, P.C., 3350 Riverwood Parkway, SE, Suite 1600, Atlanta,
GA 30339-3359, Attention of Steven A. Fetter, Esq. (Telecopy No.
(770) 858-1277);”.
SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS
     2.1 The effectiveness of the amendments set forth at Section 1 hereof are
subject to the satisfaction, or waiver, of the following conditions on or before
the date hereof:
     A. The Borrower, the Required Lenders and the Subsidiary Loan Party shall
have indicated their consent to this Amendment by the execution and delivery of
the applicable signature pages to the Administrative Agent.
     B. As of the Second Amendment Effective Date, after giving effect to this
Amendment, the representations and warranties contained herein and in the other
Loan Documents shall be true, correct and complete in all material respects on
and as of the Second Amendment Effective Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case

         
SECOND AMENDMENT
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such representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date.
     C. As of the Second Amendment Effective Date, after giving effect to this
Amendment, no event shall have occurred and be continuing that would constitute
an Event of Default or a Default.
     D. As of the Second Amendment Effective Date, the Borrower shall have paid
all fees and other amounts due and payable, including, to the extent invoiced,
reimbursement or other payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrower under any Loan Document.
     E. Administrative Agent shall have received, for distribution to all
Lenders executing this Amendment by 12:00 noon Eastern time on Wednesday,
April 25, 2007, an amendment fee equal to 0.05% of such Lenders’ outstanding
Loans and, without duplication, unused Commitments immediately prior to the
Second Amendment Effective Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES
     In order to induce Required Lenders to enter into this Amendment, each
applicable Loan Party represents and warrants to each Lender, as of the date
hereof and upon giving effect to this Amendment, that the representations and
warranties contained in each of the Loan Documents are true, correct and
complete in all material respects on and as of the date hereof to the same
extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true, correct and
complete in all material respects on and as of such earlier date.
SECTION 4. ACKNOWLEDGMENT AND CONSENT
     4.1 The Subsidiary Loan Party has (i) guarantied the Obligations and
(ii) created Liens in favor of Lenders on certain Collateral to secure such
obligations.
     4.2 The Subsidiary Loan Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. The
Subsidiary Loan Party hereby confirms that each Security Document to which it is
a party or otherwise bound and all Collateral encumbered thereby will continue
to guarantee or secure, as the case may be, to the fullest extent possible in
accordance with the Security Documents, the payment and performance of all
Obligations under the Credit Agreement and the Obligations (as such term is
defined in the Security Documents) under the Security Documents, as the case may
be, including without limitation the payment and performance of all such
Obligations under the Credit Agreement and the Obligations under the Security
Documents in respect of the Obligations of Borrower now or hereafter existing
under or in respect of the Credit Agreement, as amended hereby, and grants to
the Collateral Agent a continuing lien on and security interest in and to all
Collateral as collateral security for the prompt payment and performance in full
when due of the Obligations under the Credit Agreement and the Obligations under
the Security Documents (whether at stated maturity, by acceleration or
otherwise).

         
SECOND AMENDMENT
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     4.3 The Subsidiary Loan Party acknowledges and agrees that any of the
Security Documents to which it is a party or otherwise bound shall continue in
full force and effect and that all of its obligations thereunder shall be valid
and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. The Subsidiary Loan Party represents and
warrants that all representations and warranties contained in the Credit
Agreement, as amended hereby, and the Security Documents to which it is a party
or otherwise bound are true, correct and complete in all material respects on
and as of the Second Amendment Effective Date to the same extent as though made
on and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
     4.4 The Subsidiary Loan Party acknowledges and agrees that
(i) notwithstanding the conditions to effectiveness set forth in this Amendment,
the Subsidiary Loan Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of the Subsidiary Loan Party to any future amendments to the Credit Agreement.
SECTION 5. MISCELLANEOUS
     5.1 This Amendment shall be binding upon the parties hereto and the Lenders
and their respective successors and assigns and shall inure to the benefit of
the parties hereto and the successors and assigns of Lenders. No Loan Party’s
rights or obligations hereunder or any interest therein may be assigned or
delegated by any Loan Party without the prior written consent of all Lenders.
     5.2 In case any provision in or obligation hereunder shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
     5.3 On and after the Second Amendment Effective Date, each reference in the
Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words
of like import referring to the Credit Agreement shall mean and be a reference
to the Credit Agreement as amended by this Amendment.
     5.4 Except as specifically amended by this Amendment, the Credit Agreement
and the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.
     5.5 The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of any Agent or Lender under,
the Credit Agreement or any of the other Loan Documents.

         
SECOND AMENDMENT
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     5.6 Section headings herein are included herein for convenience of
reference only and shall not constitute a part hereof for any other purpose or
be given any substantive effect.
     5.7 THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
     5.8 This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original, but all
such counterparts together shall constitute but one and the same instrument. As
set forth herein, this Amendment shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Borrower and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[The remainder of this page is intentionally left blank.]

         
SECOND AMENDMENT
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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

          BORROWER:  AFC ENTERPRISES, INC.
      By:   /s/ H. Melville Hope, III         Name:   H. Melville Hope, III     
  Title:   Chief Financial Officer     

          SUBSIDIARY LOAN PARTY: AFC PROPERTIES, INC.
      By:   /s/ Harold M. Cohen         Name:   Harold M. Cohen        Title:  
Vice President     

Second Amendment to Second Amended and Restated Credit Agreement

 

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          LENDERS:  JPMORGAN CHASE BANK, N.A.,
individually as a Lender and as Administrative Agent
      By:   /s/ H. David Jones         Name:   H. David Jones        Title:  
Senior Vice President     

Second Amendment to Second Amended and Restated Credit Agreement

 

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            By signing below, you have indicated your consent to the Second
Amendment.

Institution Name: JP Morgan Chase Bank, N.A.
      By:   /s/ H. David Jones         Name:   H. David Jones        Title:  
Senior Vice President     

Second Amendment to Second Amended and Restated Credit Agreement

 

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            By signing below, you have indicated your consent to the Second
Amendment.

Institution Name: Bank of America, N.A. (f/k/a/ Fleet
National Bank, Inc.)
      By:   /s/ John H. Schmidt         Name:   John H. Schmidt        Title:  
Vice President     

Second Amendment to Second Amended and Restated Credit Agreement

 

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            By signing below, you have indicated your consent to the Second
Amendment.

[Other Lender signatures omitted.]
   

Second Amendment to Second Amended and Restated Credit Agreement