EXHIBIT 10.1

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

Parties:

 

“LaSalle”:               LaSalle Bank, National Association     370 Seventeenth
Street     Suite 3590     Denver, CO 80202 “Borrower”:               Champps
Operating Corporation     10375 Park Meadows Drive, Suite 560     Littleton,
Colorado 80124 “Syndication Parties”:               Whose signatures appear
below

 

Execution Date: November 29, 2005

 

Recitals:

 

A. LaSalle (in its capacity as the Administrative Agent (“Agent”) and as a
Syndication Party) and Borrower have entered into that certain Credit Agreement
(Revolving Loan and Term Loans) dated as of March 16, 2004 (as amended,
modified, or supplemented from time to time, the “Credit Agreement”) pursuant to
which LaSalle and any entity which becomes a “Syndication Party” has extended
certain credit facilities to Borrower under the terms and conditions set forth
in the Credit Agreement.

 

B. Borrower has requested that the Agent and the Syndication Parties make
certain revisions to certain of Borrower’s covenants contained in the Credit
Agreement, which the Agent and the Syndication Parties are willing to do under
the terms and conditions as set forth in this First Amendment to Credit
Agreement (“First Amendment”).

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Agreement:

 

Now, therefore, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1. Amendments to Credit Agreement. The Credit Agreement is amended as of the
Effective Date as follows:

 

1.1 The following Section of Article 1 is hereby amended in its entirety to read
as follows:

 

1.25 EBITDA: means for any period, Consolidated Entities’ net income for such
period, plus (a) without duplication, the sum of (i) Interest Expense,
(ii) federal and state income taxes, (iii) depreciation and amortization
expenses, (iv) start-up costs associated with the opening of new restaurants, as
permitted under Section 10.13 hereof, (v) one time pre-payment fees associated
with payment in full of all Indebtedness of Borrower that is pre-paid at the
Closing Date with proceeds from the 3-Year Loan, (vi) non-cash impairment
expenses associated with the write down of assets, and (vii) non-cash
stock-based compensation expenses; minus (b) without duplication, extraordinary
gains, in each case as charged against (or added to, as the case may be)
revenues to arrive at net income for such period, all as determined in
accordance with GAAP.

 

1.2 Subsections 9.12.1 and 9.12.4 are hereby amended in their entirety to read
as follows:

 

9.12.1 Fixed Charge Coverage Ratio. Measured at the end of each Fiscal Quarter,
a ratio of (a) EBITDA plus cash rent expense for the Measurement Period minus
(i) the sum of Capital Expenditures (except expenditures relating to
construction of new restaurants) to a maximum of $4,000,000.00, (ii) cash taxes
paid, and (iii) distributions as dividends paid or on account of stock
repurchased, in each case for the Measurement Period, provided that the first
$3,000,000.00 of cash used by Borrower to repurchase stock during any
Measurement Period which starts and ends in the Fiscal Year ending on July 2,
2006, shall not be subtracted from EBITDA for the purpose of calculating the
Fixed Charge Coverage Ratio during such Measurement Period; (b) divided by the
sum of (i) the current maturities of Long-Term Debt, (ii) interest expense paid,
and (iii) rent expense, in each case of (ii) and (iii) for the Measurement
Period, of not less than 1.25 to 1.00.

 

9.12.4 Minimum Tangible Net Worth. Measured at the end of each Fiscal Quarter, a
Tangible Net Worth of not less than the sum of (a) $47,000,000.00 (less the
amount of stock repurchased by Borrower subsequent to November 29, 2005, up to a
maximum deduction of $10,000,000.00 in the aggregate); plus following the end of
each Fiscal Year, (b) an amount equal to forty percent (40.0%) of net income
earned in each full Fiscal Year commencing with the Fiscal Year ending July 2,
2006.

 

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1.3 The following Sections and Subsections of Article 10 are hereby amended in
their entirety to read as follows:

 

10.1 Borrowing. Borrower shall not, nor shall Borrower permit any Subsidiary of
Borrower to, create, incur, assume or permit to exist, directly or indirectly,
any Indebtedness, except for: (a) Indebtedness of Borrower arising under this
Credit Agreement and the other Loan Documents; (b) the GE Indebtedness;
(c) other Indebtedness arising out of Operating Leases in a maximum total value
of minimum lease payments due and payable within one year of $25,000,000.00; and
(d) other Indebtedness with maturities of not more than one (1) year, including,
without limitation, Indebtedness arising under guarantees permitted under
Section 10.5 hereof and Indebtedness arising under Capital Leases, in a maximum
aggregate amount of principal outstanding at any one time of $2,500,000.00.

 

10.10.2 Payments by Parent. Parent shall not, without the prior written consent
of all of the Syndication Parties (which they may grant or withhold in their
discretion) directly or indirectly, declare or pay any dividends (other than
dividends payable solely in stock of Parent) on account of any shares of any
class (including common or preferred stock) of its capital stock now or
hereafter outstanding, or set aside or otherwise deposit or invest any sums for
such purpose, or redeem, retire, defease, purchase or otherwise acquire any
shares of any class of its capital stock (or set aside or otherwise deposit or
invest any sums for such purpose) for any consideration other than common stock
or apply or set apart any sum, or make any other distribution (by reduction or
capital or otherwise) in respect of any such shares or agree to do any of the
foregoing; provided that if no Potential Default or Event of Default shall exist
before and after giving effect thereto, Parent may pay dividends, or redeem
stock, in an aggregate amount not to exceed $10,000,000.00 over the term of the
3-Year Loan, so long as Borrower has caused Parent to provide to the
Administrative Agent written notice of Parent’s intention to do so at least
thirty (30) days prior to Parent declaring, setting aside, or paying any such
dividends, accompanied by a proforma Compliance Certificate showing that, after
giving effect to the payment of such dividends, Borrower will be, on a
consolidated basis with the other Consolidated Entities, in compliance with each
of the financial covenants set forth in Subsections 9.12.1, 9.12.2, and 9.12.3
hereof by a margin of at least .25 to 1.00, and Borrower will be in compliance
with Subsection 9.12.4 hereof.

 

2. Conditions to Effectiveness of this First Amendment. The effectiveness of
this First Amendment is subject to satisfaction, in the Administrative Agent’s
sole discretion, of each of the following conditions precedent (the date on
which all such conditions precedent are so satisfied shall be the “Effective
Date”):

 

2.1 Delivery of Executed Loan Documents. Borrower shall have delivered to the
Administrative Agent, for the benefit of, and for delivery to, the
Administrative Agent and the Syndication Parties, the following documents, each
duly executed by Borrower and any other party thereto:

 

A. This First Amendment.

 

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B. Acknowledgement and Agreement of both Guarantors.

 

2.2 Representations and Warranties. The representations and warranties of
Borrower in the Credit Agreement shall be true and correct in all material
respects on and as of the Effective Date as though made on and as of such date.

 

2.3 No Event of Default. No Event of Default shall have occurred and be
continuing under the Credit Agreement as of the Effective Date of this First
Amendment.

 

2.4 Payment of Fees and Expenses. Borrower shall have paid the Administrative
Agent, by wire transfer of immediately available federal funds (a) all fees
presently due under the Credit Agreement (as amended by this First Amendment);
and (b) all expenses owing as of the Effective Date pursuant to Section 14.1 of
the Credit Agreement, including Agent’s costs and legal fees incurred in
connection with the negotiation, preparation, and execution of this First
Amendment.

 

3. General Provisions.

 

3.1 No Other Modifications. The Credit Agreement, as expressly modified herein,
shall continue in full force and effect and be binding upon the parties thereto.

 

3.2 Successors and Assigns. This First Amendment shall be binding upon and inure
to the benefit of Borrower, Agent, and the Syndication Parties, and their
respective successors and assigns, except that Borrower may not assign or
transfer its rights or obligations hereunder without the prior written consent
of all the Syndication Parties.

 

3.3 Definitions. Capitalized terms used, but not defined, in this First
Amendment shall have the meaning set forth in the Credit Agreement.

 

3.4 Severability. Should any provision of this First Amendment be deemed
unlawful or unenforceable, said provision shall be deemed several and apart from
all other provisions of this First Amendment and all remaining provision of this
First Amendment shall be fully enforceable.

 

3.5 Governing Law. To the extent not governed by federal law, this First
Amendment and the rights and obligations of the parties hereto shall be governed
by, interpreted and enforced in accordance with the laws of the State of
Colorado.

 

3.6 Headings. The captions or headings in this First Amendment are for
convenience only and in no way define, limit or describe the scope or intent of
any provision of this First Amendment.

 

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3.7 Counterparts. This First Amendment may be executed by the parties hereto in
separate counterparts, each of which, when so executed and delivered, shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
Copies of documents or signature pages bearing original signatures, and executed
documents or signature pages delivered by a party by telefax, facsimile, or
e-mail transmission of an Adobe® file format document (also known as a PDF file)
shall, in each such instance, be deemed to be, and shall constitute and be
treated as, an original signed document or counterpart, as applicable. Any party
delivering an executed counterpart of this First Amendment by telefax,
facsimile, or e-mail transmission of an Adobe® file format document also shall
deliver an original executed counterpart of this First Amendment, but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this First Amendment.

 

[Signatures to follow on next page.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed as of the Effective Date.

 

ADMINISTRATIVE AGENT:

      LaSalle Bank, National Association            

By:

 

/s/ Darren L. Lemkau

           

Name:

 

Darren L. Lemkau

           

Title:

 

Senior Vice President

BORROWER:

      Champps Operating Corporation            

By:

 

/s/ David Womack

           

Name:

 

David Womack

           

Title:

 

Chief Financial Officer

SYNDICATION PARTIES:

      LaSalle Bank, National Association            

By:

 

/s/ Darren L. Lemkau

           

Name:

 

Darren L. Lemkau

           

Title:

 

Senior Vice President

 

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR

 

CHAMPPS ENTERTAINMENT, INC. (“Guarantor”) as guarantor of the indebtedness of
Champps Operating Corporation (“Borrower”) to LaSalle Bank, National Association
(“LaSalle”) and the other Syndication Parties as defined above (collectively
with LaSalle, the “Lenders”) to that certain Credit Agreement (as defined in
this First Amendment) pursuant to a Guaranty (“Guaranty”) dated as of March 16,
2004, to induce the Lenders to execute the First Amendment, (i) consents to the
terms and Borrower’s execution of the First Amendment, (ii) reaffirms
Guarantor’s obligations to the Lenders pursuant to the terms of the Guaranty and
agrees that Borrower’s execution of this First Amendment shall not relieve such
Guarantor of liability under the Guaranty, and (iii) acknowledges and agrees
that the Lenders may amend, restate, extend, renew or otherwise modify the
Credit Agreement and any indebtedness of Borrower thereunder and any agreement
of Borrower executed in connection with the Credit Agreement, or enter into any
agreement or extend any additional or other credit accommodations, without
notifying or obtaining the consent of the undersigned and without impairing the
liability of the undersigned under the Guaranty, all notwithstanding that
Guarantor was asked to execute this Acknowledgment and Agreement.

 

Dated: November 29, 2005

 

Champps Entertainment, Inc.

By:

 

/s/ David Womack

Name:

 

David Womack

Title:

 

CFO

 

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ACKNOWLEDGMENT AND AGREEMENT OF GUARANTOR

 

CHAMPPS ENTERTAINMENT OF TEXAS, INC. (“Guarantor”) as guarantor of the
indebtedness of Champps Operating Corporation (“Borrower”) to LaSalle Bank,
National Association (“LaSalle”) and the other Syndication Parties as defined
above (collectively with LaSalle, the “Lenders”) to that certain Credit
Agreement (as defined in this First Amendment) pursuant to a Guaranty
(“Guaranty”) dated as of March 16, 2004, to induce the Lenders to execute the
First Amendment, (i) consents to the terms and Borrower’s execution of the First
Amendment, (ii) reaffirms Guarantor’s obligations to the Lenders pursuant to the
terms of the Guaranty and agrees that Borrower’s execution of this First
Amendment shall not relieve such Guarantor of liability under the Guaranty, and
(iii) acknowledges and agrees that the Lenders may amend, restate, extend, renew
or otherwise modify the Credit Agreement and any indebtedness of Borrower
thereunder and any agreement of Borrower executed in connection with the Credit
Agreement, or enter into any agreement or extend any additional or other credit
accommodations, without notifying or obtaining the consent of the undersigned
and without impairing the liability of the undersigned under the Guaranty, all
notwithstanding that Guarantor was asked to execute this Acknowledgment and
Agreement.

 

Dated: November 29, 2005

 

Champps Entertainment of Texas, Inc.

By:

 

/s/ Patrick Wayne Lerma

Name:

 

Patrick Wayne Lerma

Title:

 

President

 

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