EXECUTION COPY
MODIFICATION AGREEMENT NO. 7
TO
REDUCING REVOLVING
CREDIT AGREEMENT
THIS MODIFICATION AGREEMENT NO. 7 (the "Modification Agreement No.
7"), dated as of July 28, 1995, to the Reducing Revolving Credit Agreement,
dated as of July 21, 1993, as amended by Modification Agreement No. 1 to
Reducing Revolving Credit Agreement, dated as of July 21, 1993, by
Modification Agreement No. 2 to Reducing Revolving Credit Agreement, dated
as of December 21, 1993, by Modification Agreement No. 3 to Reducing
Revolving Credit Agreement, dated as of May 3, 1994, by Modification
Agreement No. 4 to Reducing Revolving Credit Agreement, dated as of October
27, 1994, by Modification Agreement No. 5 to Reducing Revolving Credit
Agreement, dated as of January 18, 1995, and by Modification Agreement No.
6 to Reducing Revolving Credit Agreement, dated as of April 1, 1995
(collectively, the "Existing Credit Agreement"), among SHONEY'S, INC., a
Tennessee corporation (the "Borrower"), CIBC INC., acting through its
Atlanta Office and various other financial institutions, which are now, or
in accordance with Section 10.10 of the Existing Credit Agreement hereafter
become, parties thereto (collectively, the "Lenders" and, individually, a
"Lender"), and CANADIAN IMPERIAL BANK OF COMMERCE, a Canadian chartered
bank acting through its New York Agency, as Agent and Collateral Agent (the
"Agent" and the "Collateral Agent", respectively) for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower has requested that certain provisions of the
Existing Credit Agreement be amended in certain respects as set forth
herein; and
WHEREAS, the Lenders are willing to amend certain provisions of
the Existing Credit Agreement and to take or permit the taking of certain
actions as set forth herein, but only on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Definitions. Unless otherwise
defined herein or the context otherwise requires, capitalized
terms used in this Modification Agreement No. 7, including its
preamble and recitals, have the following meanings (such meanings
to be equally applicable to the singular and plural forms
thereof):
"Agent" has the meaning assigned to such term in the
preamble.
"Borrower" has the meaning assigned to such term in the
preamble.
"Collateral Agent" has the meaning assigned to such term
in the preamble.
"Existing Credit Agreement" has the meaning assigned to
such term in the preamble.
"Lenders" and "Lender" have the respective meanings
assigned to such terms in the preamble.
"Modification Agreement No. 7" has the meaning assigned to
such term in the preamble.
"Modification Effective Date" has the meaning assigned to
such term in Section 3.1.
SECTION 1.2 Other Definitions. Unless otherwise
defined herein or the context otherwise requires, capitalized
terms used in this Modification Agreement No. 7, including its
preamble and recitals, have the meanings provided in the Existing
Credit Agreement.
ARTICLE II
AMENDMENT OF EXISTING CREDIT AGREEMENT
AS OF THE MODIFICATION EFFECTIVE DATE
Effective on (and subject to the occurrence of) the Modification
Effective Date, the provisions of the Existing Credit Agreement referred to
below are hereby amended in accordance with this Article II. Except as
expressly so amended, the Existing Credit Agreement shall continue in full
force and effect in accordance with its terms.
-2-
SECTION 2.1 Modification of Article I (Definitions).
Article I of the Existing Credit Agreement is hereby modified as
follows:
SECTION 2.1.1 Section 1.1 of the Existing Credit
Agreement is hereby amended by deleting clause (h) of the
definition of "Concept" in its entirety and substituting therefor
the words "(h) BarbWire's".
SECTION 2.1.2 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definition of
"Closing Date" in its entirety and substituting the following in
its place:
"'Closing Date' means July 21, 1993."
SECTION 2.1.3 Section 1.1 of the Existing Credit
Agreement is hereby amended by (a) deleting the parenthetical of
clause (a) of the definition of "EBITDA" in its entirety and
substituting the following: "((i) excluding extraordinary items of
gain and including extraordinary items of loss, in each case as
determined in accordance with GAAP consistently applied, (ii)
excluding any non-cash portion of restructuring charges accrued by
the Borrower on its consolidated income statements in respect of
its 1995 and 1996 Fiscal Years and (iii) excluding any ordinary
gains arising from the Divestitures)" and (b) deleting the
parenthetical in clause (b) of the definition of "EBITDA" and
substituting the following in its place: "(excluding the effects
of any non-cash portion of restructuring charges accrued by the
Borrower on its consolidated income statements in respect of its
1995 and 1996 Fiscal Years)".
SECTION 2.1.4 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definition of
"Memorandum" in its entirety and substituting the following in its
place:
"'Memorandum' means the Confidential Information
Memorandum dated May, 1995, compiled by Canadian Imperial Bank of
Commerce based on information provided by the Borrower, as
supplemented by a memorandum of the Borrower (and the attachments
and enclosures thereto) dated July 10, 1995."
SECTION 2.1.5 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definitions of
"Mortgage Financing Collateral" and "Mortgage Financing
Transactions" in their entirety and substituting the following in
their place:
-3-
"'Mortgage Financing Collateral' means (a) those
properties listed on Item 1.1 ("Mortgage Financing Collateral") of
the Disclosure Schedule (including buildings placed thereon) that
have been or are to be used to collateralize the debt incurred by
the Borrower in the Mortgage Financing Transactions; and (b)(i)
certain parcels of undeveloped real property and buildings placed
thereon owned or acquired by the Borrower or its Subsidiaries
which will be identified, promptly upon the acquisition thereof,
as "Mortgage Financing Collateral Property" and (ii) properties
owned by the Borrower or its Subsidiaries (other than Realco)
formerly constituting Tranche C Collateral which are identified as
"Mortgage Financing Collateral Property", in the case of clauses
(i) and (ii), in a written notice to be provided to the Agent
(which written notice may be provided pursuant to a Compliance
Certificate); provided, that at no time shall there be designated
as Mortgage Financing Collateral properties under clause (b)(i)
undeveloped properties which have a cost (excluding any
construction costs relating to such properties) in excess of
$50,000,000. Mortgage Financing Collateral includes properties to
be used for the purpose of engaging in new Mortgage Financing
Transactions or to be used in substitution for existing Mortgage
Financing Collateral subject to Mortgage Financing Transactions,
in each case, as permitted by clause (a) of Section 7.2.20.
"Mortgage Financing Transaction" means any program of
acquiring or financing
(a) land and buildings for restaurant
facilities (i) either listed on Item 1.1 ("Mortgage
Financing Collateral") of the Disclosure Schedule or
opened after the date hereof, to be owned and operated by
the Borrower or its Subsidiaries or (ii) formerly
constituting Tranche C Collateral; and
(b) land, buildings and/or equipment for
manufacturing and distribution facilities to be owned and
operated by the Borrower or its Subsidiaries,
in each case in which the lenders granting such financing will be
granted Security Interests in the land and/or buildings and/or
fixtures acquired or financed on terms and conditions (which may
include, without limitation, through the issuance and guarantee by
the Borrower or its Subsidiaries of industrial revenue bonds)
satisfactory to the Agent and evidenced by Mortgage Financing
Transaction Documents."
-4-
SECTION 2.1.6 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the proviso to the
definition of "Net Proceeds" and replacing it with the following:
"provided, further, that "Net Proceeds" shall be deemed not to
include (a) an amount equal to the first $5,000,000 in proceeds
(determined by aggregating the gross proceeds from applicable
asset sales and dispositions and subtracting therefrom customary
selling expenses incurred in connection therewith and good faith
estimated taxes payable as a result thereof) realized during each
Fiscal Year of sales other than the Divestitures and (b) any
rental payments made to the Borrower or Realco under a lease or
sublease of Xxx'x Famous Recipe restaurants permitted under clause
(l) of Section 7.2.11."
SECTION 2.1.7 Section 1.1 of the Existing Credit
Agreement is hereby further amended by deleting the definition of
"Permitted Subleases" in its entirety and substituting the
following in its place:
"'Permitted Subleases' means the subleases by the Borrower
of real properties (and related equipment and fixtures) owned by
Realco pursuant to clauses (j) or (l) of Section 7.2.11."
SECTION 2.1.8 Section 1.1 of the Existing Credit
Agreement is hereby further amended by adding each of the
following new definitions in their appropriate alphabetical order:
"Divestitures" means the sale and/or other disposition of
the assets and the related businesses of the Xxx'x Famous Recipe
Concept, the Pargo's Concept, the Fifth Quarter Concept and/or the
Xxxx Xxxx Foods Concept in accordance with the terms of clause (h)
of Section 7.2.11 or as otherwise agreed to by the Required
Lenders.
"Modification No. 7" means the Modification Agreement
No. 7, dated as of July 28, 1995, to this Agreement, among the
Borrower, the Lenders, the Agent and the Collateral Agent.
"Modification No. 7 Effective Date" has the meaning
assigned to the term "Modification Effective Date" in Modification
No. 7.
-5-
SECTION 2.2 Modification of Article II (Commitments, Borrowing
Procedures and Notes). Article II of the Existing Credit Agreement is
hereby modified as follows:
SECTION 2.2.1 Clause (b) of Section 2.2.2 of the Existing
Credit Agreement is hereby amended in its entirety to read as
follows:
"(b) On the day immediately following the date of
the receipt by the Borrower or any Subsidiary of Net
Proceeds, the Commitment Amount shall be immediately and
permanently reduced by an amount equal to (i) in the case
of Net Proceeds other than Net Proceeds of Divestitures,
such Net Proceeds and (ii) in the case of Net Proceeds of
Divestitures, 35% of the amount of such Net Proceeds."
SECTION 2.3 Modification of Article III (Repayments, Prepayments,
Interest and Fees). Article III of the Existing Credit Agreement is hereby
amended as follows:
SECTION 2.3.1 Section 3.1.2 of the Existing Credit
Agreement is hereby amended as follows: (i) the word "and" is
deleted at the end of clause (c) thereof, (ii) the "." at the end
of clause (d) thereof is hereby changed to "; and" and (iii) a new
clause (e) is added thereto as follows:
"(e) shall, on the day immediately following the
date of receipt by the Borrower or any Subsidiary of
proceeds of any Divestiture, make a mandatory prepayment
of the Loans in an aggregate principal amount equal to the
cash Net Proceeds received or receivable by the Borrower
or any Subsidiary on the date of consummation of such
Divestiture."
SECTION 2.3.2 Section 3.3.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 3.3.2 Modification Agreement No. 7 Upfront Fees.
The Borrower agrees to pay to each Lender which executes
Modification Agreement No. 7 on or prior to the Modification No. 7
Effective Date an upfront fee equal to 1/4 of 1% of such Lender's
Commitment, payable on the Modification No. 7 Effective Date."
SECTION 2.4 Modification of Article V (Conditions to Initial
Borrowing). Article V of the Existing Credit Agreement is hereby modified
as follows:
-6-
Section 2.4.1 Section 5.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 5.1 Closing Date. All of the conditions
precedent to the effectiveness of the Closing Date were
met or properly waived on July 21, 1993."
SECTION 2.5 Modification of Article VII (Covenants). Article VII
of the Existing Credit Agreement is hereby modified as follows:
SECTION 2.5.1 Section 7.1.12 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 7.1.12. Substitution of Realco Properties;
Disposition of Realco Properties. The Borrower may, and may
permit Realco to, in any Fiscal Year:
(a) substitute operating restaurant properties of the
Borrower for properties of Realco constituting up to 20% of the
aggregate net book value of Realco's assets, such substituted
properties to be of equal or greater value than the properties of
Realco being so exchanged, in each case as determined by the
valuations described below; provided, that the Agent shall have
received between sixty and thirty days prior to such substitution
of such properties, for its benefit and the benefit of the
Lenders, addressed to the Agent and the Lenders, in reasonable
detail and otherwise in form and substance satisfactory to the
Agent and the Required Lenders, valuations conducted by Xxxxxxxx &
Xxxxxxx, or other independent appraisers satisfactory to the
Agent, of the properties to be transferred to Realco and the
properties of Realco to be transferred to the Borrower, provided,
however, that if a property of the Borrower to be substituted was
built within one year of the proposed substitution for a Realco
property, the substituted property shall be valued at the actual
cost of such property to be so substituted;
(b) dispose of assets owned by Realco having an aggregate
net book value not in excess of $100,000; and
(c) dispose of restaurants owned by Realco as permitted
pursuant to clause (h) or (k) of Section 7.2.11."
SECTION 2.5.2 Clause (g) of Section 7.2.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
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"(g) Indebtedness of the Borrower in respect of trade or
commercial letters of credit and standby letters of credit (other
than any standby letter of credit issued in connection with the
Mortgage Financing Transactions to directly support Indebtedness
permitted under clause (i) below) in an aggregate amount not to
exceed (i) $40,000,000 at any one time outstanding for all such
letters of credit and (ii) $30,000,000 at any one time outstanding
for all standby letters of credit;"
SECTION 2.5.3 Clause (i) of Section 7.2.2 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(i) Indebtedness incurred by the Borrower under and in
connection with the Mortgage Financing Transactions and
refinancings thereof (A) made pursuant to Mortgage Financing
Transaction Documents and (B) in which the principal amount of
such Indebtedness is not increased thereby; provided, however,
that the Borrower may not incur any such new, non-refinanced
Indebtedness in connection with Mortgage Financing Transactions in
any Fiscal Year in excess of the amount of Indebtedness set forth
opposite such Fiscal Year below:
Fiscal Year Principal Amount
----------- ----------------
1995 $30,000,000
1996 $30,000,000
1997 $30,000,000
1998 $50,000,000
1999 $24,000,000
; provided, however, to the extent that the maximum amount of
Indebtedness in connection with Mortgage Financing Transactions
permitted to be incurred by the Borrower, without giving effect to
this proviso, exceeds the aggregate amount actually incurred
during such Fiscal Year, one hundred percent of the amount of such
excess may be carried over to succeeding Fiscal Years;"
SECTION 2.5.4 Section 7.2.3 of the Existing Credit Agreement is
hereby amended by (a) changing the period at the end of clause (j) thereof
to "; and" and (b) adding the following new clause (k) thereto:
"(k) the license for the use of the "Shoney's Inn" service xxxx
granted to ShoLodge, Inc. by the Borrower pursuant to the License
Agreement dated October 25, 1991."
-8-
SECTION 2.5.5 Section 7.2.4 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.4. Financial Condition. The Borrower will
not permit:
(a) Consolidated Net Worth on the last day of
any Fiscal Quarter occurring during any period set forth
below to be less than the amount set forth below:
Minimum Consolidated
Period Net Worth
------ --------------------
First Three Fiscal Quarters
of Fiscal Year 1995 $(145,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1995 $(120,000,000)
First Three Fiscal Quarters
of Fiscal Year 1996 $(120,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1996 $(75,000,000)
First Three Fiscal Quarters
of Fiscal Year 1997 $(75,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1997 $(25,000,000)
First Three Fiscal Quarters
of Fiscal Year 1998 $(25,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1998 $50,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $50,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and
thereafter $140,000,000
(b) the Funded Debt Ratio on the last day of any Fiscal Quarter
occurring during any period set forth below to be greater than the
ratio set forth below opposite such period:
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Maximum Funded
Period Debt Ratio
------ --------------
Third Fiscal Quarter
of Fiscal Year 1995 4.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1995 4.50:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 4.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1996 4.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 4.25:1.00
Fourth Fiscal Quarter of
Fiscal Year 1997 3.25:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 3.25:1.00
Fourth Fiscal Quarter of
Fiscal Year 1998 2.50:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 2.50:1.00
Fourth Fiscal Quarter of
Fiscal Year 1999 and
thereafter 2.00:1.00
(c) Consolidated Funded Debt as of the end of any Fiscal Quarter during
any period set forth below to be more than the amount set forth below
opposite such period:
Maximum
Period Consolidated Debt
------ -----------------
Third Fiscal Quarter
of Fiscal Year 1995 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1995 $585,000,000
First Three Fiscal Quarters
of Fiscal Year 1996 $585,000,000
Fourth Fiscal Quarter of
Fiscal Year 1996 $520,000,000
-10-
Maximum
Period Consolidated Debt
------ -----------------
First Three Fiscal Quarters
of Fiscal Year 1997 $520,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $495,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $495,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 $460,000,000
First Three Fiscal Quarters
of Fiscal Year 1999 $460,000,000
Fourth Fiscal Quarter of
Fiscal Year 1999 and
thereafter $460,000,000
(d) the Adjusted Interest Coverage Ratio to be
less than the ratio set forth below as of the end of
any Fiscal Quarter during any period set forth below
set forth opposite such ratio:
Minimum Adjusted
Period Interest Coverage Ratio
------ -----------------------
Third Fiscal Quarter
of Fiscal Year 1995 1.50:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 1.50:1.00
First and Second Fiscal Quarters
of Fiscal Year 1996 1.25:1.00
Third and Fourth Fiscal Quarters
of Fiscal Year 1996 1.00:1.00
First Fiscal Quarter
of Fiscal Year 1997 1.20:1.00
Second Fiscal Quarter
of Fiscal Year 1997 1.40:1.00
Third Fiscal Quarter
of Fiscal Year 1997 1.60:1.00
Fourth Fiscal Quarter
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of Fiscal Year 1997 2.10:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 2.10:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 3.20:1.00
First Three Fiscal Quarters
of Fiscal Year 1999 3.20:1.00
Fourth Fiscal Quarter
of Fiscal Year 1999
and thereafter 4.00:1.00; and
(e) the Consolidated Fixed Charge Coverage Ratio
on the last day of any Fiscal Quarter occurring during
any period set forth below to be less than the ratio set
forth opposite such period below:
Minimum Consolidated Fixed
Period Charge Coverage Ratio
------ --------------------------
Second Fiscal Quarter
of Fiscal Year 1995 .80:1.00
Third Fiscal Quarter
of Fiscal Year 1995 .75:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 .90:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 .90:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1997 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1997 1.00:1.00
First Three Fiscal Quarters
of Fiscal Year 1998 1.00:1.00
Fourth Fiscal Quarter
of Fiscal Year 1998 1.10:1.00
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First Three Fiscal Quarters
of Fiscal Year 1999 1.10:1.00
Fourth Fiscal Quarter of Fiscal
Year 1999 and thereafter 1.50:1.00.
SECTION 2.5.6 Section 7.2.5 of the Existing Credit Agreement is
hereby amended by (a) deleting clause (c)(i) of Section 7.2.5 in its
entirety and substituting therefor the words "(i) the aggregate amount of
all such Investments made after the Closing Date in all wholly-owned
Subsidiaries (other than Commissary Operations, Inc., Xxxx Xxxx Foods,
Inc., Realco, BarbWire's of Kansas, Inc. and Shoney's of Michigan, Inc.)
shall not exceed $2,500,000 at any one time,", (b) adding the word "and"
immediately following the ";" appearing in clause (i) of such Section and
(c) adding the following new clause (j) thereto: "(j) non-cash proceeds of
Divestitures and the promissory note described in clause (h)(ii)(C) of
Section 7.2.11;".
SECTION 2.5.7 Section 7.2.7 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.7. Consolidated Capital Expenditures, etc.
The Borrower will not, and will not permit any of its Subsidiaries
to, make any Consolidated Capital Expenditures, except the
Borrower and its Subsidiaries may make Consolidated Capital
Expenditures during any Fiscal Year (including, without
duplication, in connection with expenditures made pursuant to and
permitted by clauses (c) and (d) of Section 7.2.11) which do not
exceed, in the aggregate, the amount set forth opposite such
Fiscal Year below:
Fiscal Year Maximum Amount
----------- --------------
1995 Fiscal Year $ 78,000,000
1996 Fiscal Year $ 91,000,000
1997 Fiscal Year $ 95,000,000
1998 Fiscal Year $100,000,000
1999 Fiscal Year $125,000,000
provided, however, that (i) to the extent that the maximum amount
of Consolidated Capital Expenditures permitted to be made by the
Borrower and its Subsidiaries in any Fiscal Year, without giving
effect to this proviso, exceeds the aggregate amount actually
incurred during such Fiscal Year, the lesser of one hundred
percent of the amount of such excess or $10,000,000 may be carried
forward to the next Fiscal Year and (ii) in the Fiscal Years (but
no later than the 1997 Fiscal Year) in which the Borrower is
required to acquire restaurant properties from Marriott or
Xxxxxxxx
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Hospitality, Inc., either directly or pursuant to the Borrower's
obligations under the Restaurant Sale and Purchase Agreement dated
May 20, 1992, by and among the Borrower, Marriott Family
Restaurants, Inc., Marriott Corporation and Xxxxxxxx Hospitality,
Inc., Consolidated Capital Expenditures in respect of such Fiscal
Year shall be increased by an amount not to exceed $5,000,000 in
the aggregate for all such Fiscal Years, and provided, further,
that there shall be excluded from Consolidated Capital
Expenditures undeveloped real estate designated as Mortgage
Financing Collateral prior to such time that restaurants
constructed on such real estate are open and operating."
SECTION 2.5.8 Clause (b) of Section 7.2.8 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"(b) (i) Guaranties existing on May 9, 1993 and disclosed
in Item 7.2.8 ("Existing Guaranties") of the Disclosure Schedule
and (ii) guaranties replacing such guaranties so long as such
replacement guaranty does not increase the amount of obligations
guarantied thereby and the other terms and conditions of such
replacement guaranty are no more onerous to the Borrower than
those of the guaranty so replaced;"
SECTION 2.5.9 Section 7.2.11 of the Existing Credit Agreement
is hereby amended by (a) adding the words "(other than Divestitures)" after
the words "assets or properties" appearing in the second line of clause (e)
of such Section and (b) deleting clause (h) of such Section in its entirety
and replacing such clause with the following:
"(h) so long as no Default has occurred and is continuing
or would occur after giving effect thereto, the Borrower (i) may
sell the Pargo's, Fifth Quarter and Xxxx Xxxx Foods Concepts so
long as the consideration for any such sale shall be (x) at least
80% cash (unless the Required Lenders otherwise agree) and (y) is
within a range of fair values (as reasonably determined by the
Board of Directors of the Borrower) to Persons other than
Affiliates and (ii) may dispose of the Xxx'x Famous Recipe Concept
for (A) a cash consideration (as reasonably determined by the
Board of Directors of the Borrower), (B) a lease to the purchaser
of such Concept of up to 10 Xxx'x Famous Recipe restaurants in
connection therewith and (C) a promissory note of such purchaser
in a principal amount of $4,000,000; provided that (I) the cash
Net Proceeds of such Divestitures (other than proceeds of the
leases referred to above) shall be used to contemporaneously repay
Loans pursuant to Section 3.1.2(e) and any promissory notes
constituting Divestiture
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proceeds (including the note described in clause (C) above) shall
be pledged to the Collateral Agent for the benefit of the Lenders,
(II) the terms and conditions of any non-cash proceeds of such
Divestitures shall be in form and substance satisfactory to the
Agent and (III) upon the consummation of each such Divestiture
there shall remain Collateral having an aggregate value of at
least $500,000,000;"
SECTION 2.5.10 Clauses (j) and (k) of Section 7.2.11 of the
Existing Credit Agreement are hereby amended in their entirety to read as
follows:
"(j) the subleasing by the Borrower of real properties
owned by Realco having an aggregate net book value not in excess
of $10,000,000 at any time, provided such subleases are
subordinate to the Security Interests of the Collateral Documents;
(k) the disposition by the Borrower of up to forty
restaurants (which may constitute Collateral or be owned by
Realco) consisting of up to twenty "Shoney's" Concept restaurants
and up to twenty "Captain D's" Concept restaurants which
restaurants the Borrower has determined are no longer necessary or
useful for the continuing business of the Borrower; and"
SECTION 2.5.11 Section 7.2.11 of the Existing Credit Agreement is
hereby amended by adding a new clause (l) thereto to read as follows:
"(l) the leasing or subleasing by the Borrower or the leasing by
Realco of up to ten (10) Xxx'x Famous Recipe Concept restaurants
to RTM Inc. (or to a sublessee or lessee designated by RTM Inc.)
in connection with the Divestiture of the Xxx'x Famous Recipe
Concept."
SECTION 2.5.12 Section 7.2.15 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.15. Inconsistent Agreements. The Borrower
will not, and will not permit any of its Subsidiaries to, enter
into any agreement containing any provision which would be
violated or breached by any Loan or by the performance by the
Borrower of its obligations hereunder or under any Note, any other
Loan Document or any Realco Document."
SECTION 2.5.13 Clause (a) of Section 7.2.20 of the Existing
Credit Agreement is hereby amended in its entirety to read as follows:
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"(a) any provision of any Mortgage Financing Transaction
Document in any manner which adversely affects the Agent, the
Collateral Agent or the Lenders (it being understood that
amendments in form and substance satisfactory to the Agent to
Mortgage Financing Transaction Documents which would permit the
substitution of Mortgage Financing Collateral described in clause
(b)(ii) of the definition of Mortgage Financing Collateral for
existing Mortgage Financing Collateral subject to a Mortgage
Financing Transaction having an equal value shall not be deemed
adverse to the Agent, the Collateral Agent or the Lenders;
provided, that, any such valuation shall, in the case of existing
Mortgage Financing Collateral, be based on the value of such
Mortgage Financing Collateral at the time such property became
Mortgage Financing Collateral and, in the case of Mortgage
Financing Collateral described in clause (b)(ii) of the definition
of Mortgage Financing Collateral, be based on the valuation of
such Mortgage Financing Collateral as of April 15, 1995 as set
forth in the Xxxxxxxx and Xxxxxxx report thereon dated May 19,
1995),".
SECTION 2.5.14 Section 7.2.23 of the Existing Credit Agreement is
hereby amended in its entirety to read as follows:
"SECTION 7.2.23. Purchase of Franchisees. The Borrower
will not, and will not permit its Subsidiaries to, make any
Franchisee Acquisitions except Franchisee Acquisitions the
consideration for which is common stock and/or other
consideration, (i) such common stock not having a value in excess
of $10,000,000 in the aggregate (with such common stock being
valued at its market value at the time of the relevant
acquisition) and (ii) such other consideration having an aggregate
value for all such Franchisee Acquisitions not in excess of
$30,000,000 in any one Fiscal Year and not more than $60,000,000
in the aggregate (with any consideration other than cash valued at
the fair market value thereof); provided, however, that (x) both
before and after giving effect to any such Franchisee
Acquisitions, no Default shall have occurred or be continuing and
(y) if applicable, the Borrower and/or such Subsidiary shall have
complied with clause (iii) of the proviso to Section 7.2.5 (but
such compliance shall not be in derogation of the Borrower's
rights under clause (a) of Section 7.2.11 with respect to such
Subsidiary)."
SECTION 2.5.15 Section 7.2.24 of the Existing Credit Agreement is
hereby deleted in its entirety.
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SECTION 2.6 Modification of Article X (Miscellaneous). Article X
of the Existing Credit Agreement is hereby modified as follows:
SECTION 2.6.1 Clause (b)(iii) of Section 10.14 of the Existing
Credit Agreement is hereby amended by inserting a new clause (iii) to read
as set forth below and renumbering the existing clause (iii) to clause (iv)
and renumbering existing clause (iv) to clause (v):
"(iii) constituting property subject to a Mortgage or Subsidiary
Mortgage or held by Realco to the extent that the value
(determined as of the last available Xxxxxxxx & Xxxxxxx appraisal
for such property) of the remaining Collateral and assets of
Realco (after giving effect to such release) is equal to or
greater than $500,000,000; provided, however, that the aggregate
value of all such assets so released shall not exceed
$15,000,000;"
ARTICLE III
CONDITIONS TO EFFECTIVENESS
SECTION 3.1 Modification Effective Date. This Modification
Agreement No. 7 shall become effective as of the date first above written,
when all of the conditions set forth in Sections 3.1.1 through 3.1.17 shall
have been satisfied (the "Modification Effective Date").
SECTION 3.1.1 Resolutions, etc. The Agent shall have
received from the Borrower, a certificate, dated the Modification Effective
Date, of its Secretary or any Assistant Secretary as to:
(a) resolutions of its Board of Directors
then in full force and effect authorizing the execution,
delivery, and performance of this Modification Agreement
No. 7 and each other Loan Document to be executed by it;
and
(b) the incumbency and signatures of the
officers of the Borrower authorized to act with respect to
this Modification Agreement No. 7 and each other Loan
Document to be executed by it (upon which certificate the
Agent and each Lender may conclusively rely until the
Agent shall have received a further certificate of the
Secretary of the Borrower canceling or amending such prior
certificate, which further certificate shall be reasonably
satisfactory to the Agent).
-17-
SECTION 3.1.2 Compliance Certificate. The Agent shall have
received, with a counterpart for each Lender, a duly executed and completed
Compliance Certificate (based upon the Borrower's second Fiscal Quarter of
Fiscal Year 1995 financial statements), dated the Modification Effective
Date.
SECTION 3.1.3 Security Agreements; Insurance Compliance. The
Agent shall have received in connection with the Security Agreement and the
Subsidiary Security Agreements
(a) executed copies of proper Financing Statements
(Form UCC-1) or Financing Statement Amendment(Form UCC-3), naming
the Borrower or the relevant Subsidiary as the debtor, as
appropriate, and the Collateral Agent as the secured party, and
other similar Instruments or documents, with respect to collateral
described in Section 3.1.7 filed under the Uniform Commercial Code
in the States listed on the appropriate schedules to the
Collateral Documents;
(b) executed copies of proper Financing Statements
(Form UCC-3) to release all Security Interests and other rights of
any Person (other than the Collateral Agent) in the collateral
described in any Collateral Document previously granted by the
Borrower or the relevant Subsidiary, except for any Security
Interest which is permitted by clause (b) of Section 7.2.3 of the
Existing Credit Agreement;
(c) certified copies of Requests for Information or
Copies (Form UCC-11) (or similar search report certified by a
party acceptable to the Collateral Agent), dated a date within
sixty days of the Modification Effective Date for states other
than Tennessee and within (i) seven days of the Modification
Effective Date for Tennessee for filings that may be made with the
office of the Secretary of State of Tennessee and (ii) thirty days
of the Modification Effective Date for all other Tennessee filings
that may be made in offices other than the Secretary of State of
Tennessee, listing all effective financing statements which name
the Borrower or any relevant Subsidiary (under its present name
and any previous name) as debtor and which are filed in the
jurisdictions in which filings were made pursuant to clause (a),
together with copies of such financing statements (none of which
shall cover any collateral described in the Security Agreement or
the Subsidiary Security Agreements unless the Required Lenders
shall consent thereto in writing), and accompanied by judgment and
tax lien searches with respect to the Borrower and such
Subsidiaries; and
(d) evidence (including an insurance broker's
certificate or letter) reasonably satisfactory to the
-18-
Collateral Agent of compliance with Section 4.5 of each of the
Security Agreement and the Subsidiary Security Agreements and with
Section 7.1.5 of the Existing Credit Agreement.
SECTION 3.1.4 Amendments to Security Agreements. The Agent shall
have received an amendment to each of the Borrower Security Agreement, the
Copyright Security Agreement and the Trademark Security Agreement, dated as
of the Modification Effective Date in the forms attached hereto as Exhibits
B, C and D duly executed and delivered, and in form satisfactory for filing
with the appropriate public office.
SECTION 3.1.5 Realco Documents. The Agent shall have received,
with copies for each Lender, each Realco Document relating to properties to
be transferred to Realco on the Modification Effective Date, and such
Realco Documents shall be satisfactory in form and substance to the Agent.
SECTION 3.1.6 Officer Solvency Certificate. The Agent shall have
received for its benefit and the benefit of each Lender, a favorable
certificate of an Authorized Officer of the Borrower, dated as of the
Modification Effective Date, substantially in the form of Exhibit F
attached to the Existing Credit Agreement.
SECTION 3.1.7 Valuations. The Agent shall have received for its
benefit and the benefit of the Lenders, addressed to the Agent and the
Lenders, in reasonable detail and otherwise in form and substance
satisfactory to the Agent and the Lenders, valuations conducted by Xxxxxxxx
& Xxxxxxx, or other independent appraisers satisfactory to the Agent, of
all real estate of the Borrower and its Subsidiaries constituting
collateral being transferred to Realco in connection with the Modification
Effective Date, which on the Modification Effective Date substantiate
values in an amount at least equal to $51,000,000.
SECTION 3.1.8 [Intentionally Omitted].
SECTION 3.1.9 Consents, Approvals, etc. The Agent shall have
received copies of all consents, waivers, amendments and other approvals of
each Person necessary for the performance of the Realco Documents and the
other transactions contemplated hereby. Each such consent, waiver,
amendment and other approval shall be in full force and effect and in form
and substance satisfactory to the Agent.
SECTION 3.1.10 Transfers to Realco. The Agent shall have
received a certificate, dated the Modification Effective Date, from an
Authorized Officer containing a true and complete listing of all properties
transferred to Realco on the Modification
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Effective Date and all properties listed in such Authorized Officer's
certificate shall be contributed to Realco on terms and conditions
satisfactory to the Agent.
SECTION 3.1.11 Shareholder Approval. The Agent shall have
received, with a counterpart for each Lender, from the Borrower in its
capacity as shareholder of each of its Subsidiaries, a certificate of an
Authorized Officer dated as of the Modification Effective Date consenting
to and approving the execution, delivery and performance of each of the
Loan Documents to which any of such Subsidiaries is a party as well as the
transactions contemplated thereby.
SECTION 3.1.12 Acknowledgement by Subsidiary Guarantors. The
Agent shall have received, with a counterpart for each Lender, from each
Subsidiary Guarantor, the Acknowledgement by Subsidiary Guarantors, dated
as of the Modification Effective Date, substantially in the form of Exhibit
A attached hereto.
SECTION 3.1.13 No Materially Adverse Effect. No events shall
have occurred which, individually or in the aggregate, comprise a
Materially Adverse Effect since October 30, 1994.
SECTION 3.1.14 Closing Fees and Expenses. The Agent shall have
received payment in full of all of the fees required to be paid on the
Modification Effective Date in accordance with the Agent's Fee Letter, as
amended, and shall have received payment in full of its out-of-pocket costs
and expenses (including counsel fees and disbursements) payable in
accordance with Section 10.3 of the Existing Credit Agreement for which
invoices have been submitted on or prior to such date.
SECTION 3.1.15 Opinions of Counsel. The Agent shall have
received opinions, dated as of the Modification Effective Date and
addressed to the Agent and all Lenders, from the following:
(a) Tuke Xxxx & Xxxxxxx, counsel to the Borrower,
substantially in the form of Exhibit E attached hereto, and as to
such other matters related to the transactions contemplated hereby
as the Agent may reasonably require; and
(b) Local counsel satisfactory to the Agent from each
state in which property to be transferred to Realco in connection
with the Modification Effective Date is located, each in form and
substance satisfactory to the Agent and its counsel and not
objected to by the Required Lenders, and as to such other matters
related to the transactions contemplated hereby as the Agent may
reasonably require.
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SECTION 3.1.16 Execution of Counterparts. The Agent shall have
received counterparts of this Modification Agreement No. 7 duly executed by
the Borrower, the Agent, and the Required Lenders.
SECTION 3.1.17 Compliance with Warranties; No Default etc. The
Agent shall have received from an Authorized Officer of the Borrower a
certificate, dated the date first above written, stating that
(a) the representations and warranties set forth in
Article VI of the Existing Credit Agreement (excluding, however,
those contained in Section 6.7 thereof) and the representations
and warranties set forth in each of the other Loan Documents, in
each case as modified in accordance herewith, are true and correct
in all material respects with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case
such representations and warranties were true and correct as of
such earlier date);
(b) except as disclosed by the Borrower to the Agent
and the Lenders pursuant to Section 6.7 of the Existing Credit
Agreement:
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding is
pending or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries which
might have a Materially Adverse Effect; and
(ii) no development has occurred in any labor
controversy, litigation, arbitration or governmental
investigation or proceeding disclosed pursuant to Section
6.7 of the Existing Credit Agreement which might have a
Materially Adverse Effect; and
(c) no Default has occurred and is continuing, and
neither the Borrower nor any of its Subsidiaries is in material
violation of any law or government regulation or court order or
decree.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Cross References. References in this Modification
Agreement No. 7 to any article or section are, unless otherwise specified,
to such article or section of this Modification Agreement No. 7.
-21-
SECTION 4.2 Instrument Pursuant to Existing Credit Agreement;
Limited Waiver. This Modification Agreement No. 7 is a Loan Document
executed pursuant to the Existing Credit Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered, and
applied in accordance with all of the terms and provisions of the Existing
Credit Agreement. Any term or provision of and any modification effected
by this Modification Agreement No. 7 may be modified in any manner by an
instrument in writing executed by the Borrower and the Required Lenders (or
the Agent on behalf of and with the consent of the Required Lenders).
Except as expressly amended hereby, all of the representations, warranties,
terms, covenants and conditions of the Existing Credit Agreement shall
remain unmodified and unwaived. The modifications set forth herein shall
be limited precisely as provided for herein to the provisions expressly
modified herein and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any other term or provision of any other Loan
Document or of any transaction or further or future action on the part of
the Borrower which could require the consent of any of the Lenders under
the Existing Credit Agreement.
SECTION 4.3 Successors and Assigns. This Modification
Agreement No. 7 shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SECTION 4.4 Counterparts. This Modification Agreement No. 7
may be executed by the parties hereto in several counterparts which shall
be executed by the Borrower, each of the Required Lenders and the Agent, as
the case may be, all of which shall be deemed to be an original and which
shall constitute together but one and the same agreement.
SECTION 4.5 Event of Default. It is understood and agreed that
any breach of any representation or warranty or covenant contained herein
shall constitute an Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this
Modification Agreement No. 7 to be executed by the respective officers
hereunder duly authorized as of the day and year first above written.
SHONEY'S, INC.
By:
--------------------------
Title: Treasurer
CANADIAN IMPERIAL BANK OF
COMMERCE, acting through
its NEW YORK AGENCY, as
Agent
By:
-------------------------
Title: Authorized Signatory
CIBC INC., acting through
its Atlanta Office
By:
-------------------------
Title: Authorized Signatory
NATIONSBANK OF TENNESSEE, N.A.
By:
---------------------------
Title:
-----------------------
THE BANK OF NEW YORK
By:
---------------------------
Title:
-----------------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:
---------------------------
Title:
-----------------------
-00-
XXX XXXX XX XXXX XXXXXX
By:
---------------------------
Title:
-----------------------
THE MITSUBISHI TRUST AND
BANKING CORPORATION
By:
---------------------------
Title:
-----------------------
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By:
---------------------------
Title:
-----------------------
THE FUJI BANK, LIMITED
By:
---------------------------
Title:
-----------------------
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By:
---------------------------
Title:
-----------------------
KREDIETBANK N.V.
By:
---------------------------
Title:
-----------------------
THE BANK OF TOKYO TRUST COMPANY
By:
---------------------------
Title:
-----------------------
-24-
FIRST AMERICAN NATIONAL BANK
By:
---------------------------
Title:
-----------------------
ALLIED IRISH BANK
By:
---------------------------
Title:
-----------------------
MERCHANTILE BANK OF ST.
LOUIS, N.A.
By:
---------------------------
Title:
-----------------------
PNC BANK, KENTUCKY, INC.
By:
---------------------------
Title:
-----------------------
THE ROYAL BANK OF SCOTLAND
By:
---------------------------
Title:
-----------------------
GIROCREDIT BANK AG DER SPARKASSEN
GRAND CAYMAN ISLANDS BRANCH
By:
---------------------------
Title:
-----------------------
THE SUMITOMO BANK, LIMITED
By:
---------------------------
Title:
-----------------------
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