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EXHIBIT 2
June 27, 2000
[Holder]
[Address]
Dear Holder:
Shoney's, Inc., a Tennessee corporation ("Shoney's"), intends to offer
(the "Offer") to purchase for cash any and all of the outstanding Liquid Yield
Option Notes due 2004 (zero coupon) (the "Debentures") issued by Xxxxxx's, and
to solicit consents (the "Consents") to certain proposed amendments to the
indenture (the "Indenture") pursuant to which the Debentures were issued. The
Offer (including any Consent payment) will be for $250.00 per $1,000.00 in
principal amount at maturity (which, as of the date of this Letter Agreement, is
an aggregate of $177,358,000) of the Debentures (the "Purchase Price"), net to
the Seller in cash, and upon such other terms and subject to such conditions as
shall be set forth in Shoney's Purchase Offer and Consent Solicitation Statement
(the "Statement"). The Statement and the Offer will contain conditions, terms
and procedures that are the same in all material respects as were contained in
the previous offer for the Debentures made by Xxxxxx's on March 27, 2000 with
the exception of price and proposed amendments that might be made to the
indenture pursuant to which the Debentures were issued. Xxxxxx's anticipates
that the Offer will expire no later than August 31, 2000.
This letter agreement (the "Letter Agreement") sets forth the terms and
conditions by which you (the "Seller") (1) irrevocably and unconditionally agree
to deposit your Debentures pursuant to the offer; and (2) grant an Option (as
defined below) to Shoney's to purchase all of your Debentures. This Letter
Agreement also is your agreement to ensure that your affiliates are bound by and
perform your obligations as Seller hereunder, and any reference to "you" or
"Seller" in this Letter Agreement shall include your affiliates, all to the
extent applicable.
Xxxxxx's understands and, by your acceptance of this Letter Agreement,
you represent and warrant to Xxxxxx's that as of the date hereof, you
beneficially own, directly or indirectly, and exercise direction or control
over, the aggregate principal amount of Debentures set forth opposite your name
on the signature page to this Letter Agreement. Upon Xxxxxx's receipt of (i)
fully executed counterparts of letter agreements in the form of this Letter
Agreement between Shoney's and the beneficial owners of not less than 58% of the
outstanding principal amount of the Debentures and (ii) fully executed
counterparts of letter agreements between Xxxxxx's and the beneficial owners of
not less than 72% of the outstanding principal amount at maturity of the 8 1/4%
Convertible Subordinated Debentures due 2002 (the "TPI Debentures") originally
issued by TPI Enterprises, Inc., and subsequently assumed by Xxxxxx's (by which
such beneficial owners also grant to Shoney's options to purchase their TPI
Debentures on terms acceptable to Shoney's), Xxxxxx's will pay $125,000.00 to
the firm of Xxxxxxxxx, Xxxxx, Xxxxx, Xxxxx & Xxxxx, P.C. (the "Committee
Counsel" as its fee, which shall be deemed fully and unconditionally earned by
the Committee Counsel at that time. Notwithstanding this fee arrangement being
contained in multiple counterparts of this Letter Agreement being executed by
other holders of Debentures and TPI Debentures, Committee Counsel shall be
entitled only to one payment of $125,000.00 for services on behalf of all
signatories to counterparts of this Letter Agreement and shall not be entitled
to any further payment from Shoney's
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in connection with the transactions contemplated by this Letter Agreement, other
counterparts of this Letter Agreement or the Offer.
SECTION 1. DEPOSIT PURSUANT TO OFFER.
1.1 Deposit. Subject to Section 7 of this Letter Agreement, Seller
hereby irrevocably and unconditionally agrees to deposit all of his, her or its
Debentures, together with a completed and executed letter of transmittal,
pursuant to and in accordance with the terms of the Offer prior to the initial
expiration date of the Offer.
1.2 Non-Withdrawal. Notwithstanding any statutory or other rights as
may be granted by the terms of the Offer or otherwise that Seller might have,
Seller, subject to Section 7 of this Letter Agreement, hereby irrevocably and
unconditionally agrees not to withdraw or take any action to withdraw any
portion of his, her or its Debentures or Consents following the deposit of such
Debentures and the giving of such Consents pursuant to the Offer.
SECTION 2. OPTION TO PURCHASE DEBENTURES.
2.1 Grant of Option. On the terms and subject to the conditions set
forth in this Letter Agreement (including, without limitation, Section 7),
Seller hereby grants to Shoney's an irrevocable option (the "Option") to
purchase all of the right, title and interest of Seller in and to all of
Seller's Debentures for the Purchase Price.
2.2 Exercise of the Option. The Option shall become exercisable two (2)
business days following the date on which the Offer terminates or expires,
without being extended by Xxxxxx's. Xxxxxx's may exercise the option in while,
but not in part, in accordance with the terms of Section 2.1 of this Letter
Agreement at any time on or before September 3, 2000 (the "Exercise Period"). If
Xxxxxx's exercises the Option, it must do so with respect to all Debentures of
all persons or entities that have executed counterparts of this Letter
Agreement. In the event that Xxxxxx's is entitled to and wishes to exercise the
Option, Xxxxxx's shall send or give notice (the "Notice" and the date on which
the Notice is sent or given to shall be referred to herein as the "Notice Date")
to Seller at the address set forth above specifying the place and the date
(which shall be no later than September 6, 2000 (the "Closing Date") for the
closing of such purchase (the "Closing"). Any exercise of the Option shall be
deemed to have occurred on the Closing Date.
2.3 Closing. At the Closing, simultaneously with the payment by
Xxxxxx's of the Purchase Price for Seller's Debentures, Seller shall deliver, or
cause to be delivered, to Shoney's certificates representing Seller's Debentures
duly endorsed to Xxxxxx's or accompanied by bond powers duly executed by Seller
in blank, together with any necessary bond transfer stamps properly affixed or,
if Seller's Debentures are held by a nominee in street name, an irrevocable
instrument of transfer in such form as Shoney's shall provide.
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SECTION 3. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller hereby represents and warrants to and in favor of Xxxxxx's that:
(a) Seller has the power and capacity and has received all
requisite approvals to enter into this Letter Agreement and to perform
its obligations hereunder and this Letter Agreement is a valid and
binding agreement enforceable by Xxxxxx's against Seller in accordance
with its terms;
(b) Seller is (and, if possible, upon the deposit of Seller's
Debentures pursuant to the Offer, will be) the sole beneficial owner of
Seller's Debentures and has and will have the exclusive right to
dispose of Seller's Debentures as provided in this Letter Agreement;
(c) Seller's Debentures are, or prior to the expiration of the
offer, will be owned (and, if applicable, will be acquired by Xxxxxx's)
with good and marketable title, free and clear of any and all
mortgages, liens, charges, encumbrances and adverse claims;
(d) no person, firm or corporation has any agreement or
option, or any right or privilege (whether by law, pre-emptive or
contractual) capable of becoming an agreement or option, for the
purchase, acquisition or transfer of any of Seller's Debentures or any
interest therein or right thereto, except pursuant to this Letter
Agreement; and
(e) the execution and delivery of this Letter Agreement and
the fulfillment of the terms hereof by Seller do not and will not
result in a breach of any agreement or instrument to which Seller is a
party or by which Seller is contractually bound.
SECTION 4. COVENANTS OF SELLER.
Seller hereby covenants that during the term of this Letter Agreement
Seller will:
(a) not sell, assign, convey or otherwise dispose of any of
Seller's Debentures except pursuant to and in accordance with this
Letter Agreement;
(b) not exercise any rights or remedies available at common
law or pursuant to applicable corporate and securities laws to delay,
hinder, upset or challenge the Offer; provided, however, that this
provision is not intended to limit Seller's right to require Xxxxxx's
to comply with applicable securities laws or the terms of this Letter
Agreement;
(c) not assist, and will oppose, any proposed action by
Xxxxxx's noteholders or others that might reasonably be regarded as
being directed towards or likely to prevent or delay the successful
completion of the Offer; provided, however, that this provision shall
not
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require Seller to incur any cost or expense or initiate any litigation
or other proceeding in order to comply with these obligations; and
(d) use Seller's reasonable efforts to assist Xxxxxx's to
successfully complete the Offer and the acquisition of the Debentures;
provided, however, that this provision shall not require Seller to
incur any cost or expense or initiate any litigation or other
proceeding in order to comply with these obligations.
SECTION 5. XXXXXX'S REPRESENTATIONS AND WARRANTIES.
Xxxxxx's hereby represents and warrants to and in favor of Seller that:
(a) Xxxxxx's has the power and capacity and has received all
requisite approvals to enter into this Letter Agreement and to perform
its obligations hereunder and this Letter Agreement is a valid and
binding agreement enforceable by Seller against Xxxxxx's in accordance
with its terms; and
(b) the execution and delivery of this Letter of Agreement and
the fulfillment of the terms hereof by Xxxxxx's do not and will not
result in a breach of any agreement or instrument to which Xxxxxx's is
a party or by which Xxxxxx's is contractually bound.
SECTION 6. COVENANTS OF SHONEY'S.
Xxxxxx's hereby covenants that it will:
(a) announce the Offer within two (2) business days of
receiving letter agreements in the form of this Letter Agreement from
holders of not less than a majority of the outstanding principal amount
of the Debentures;
(b) within five (5) business days following announcement of
the Offer, file with the United States Securities and Exchange
Commission ("SEC") the Statement and any required ancillary documents
relating to the Offer;
(c) within five (5) business days following regulatory
clearance of the Statement by the SEC, commence the Offer;
(d) use its reasonable commercial efforts to successfully
complete the Offer and, subject to the terms and conditions of the
offer, will consummate the Offer if 90% or more of each of the
Debentures and the TPI Debentures have been tendered in the Offer;
provided, however, that nothing in this Letter Agreement shall obligate
Shoney's: (1) to keep the Offer open for acceptance beyond the
expiration date of the Offer (as it may be extended from time
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to time); or (2) to complete the Offer if less than 90% of each of the
Debentures and the TPI Debentures have been tendered in the Offer;
(e) provide Committee Counsel, on a weekly basis, the
percentage of Debentures that have been rendered pursuant to the Offer
as of the end of the preceding week; and
(f) comply with the Indenture.
SECTION 7. TERMINATION.
If the Option is not exercised in accordance with the terms and conditions of
Section 2.2, then, after the expiration of the Exercise Period, neither Seller
nor Xxxxxx's shall have any further rights or obligations under this Letter
Agreement, which shall terminate (including the Option granted hereunder). In
the event of such termination of this Letter Agreement, Seller may withdraw all
of his, her or its Debentures deposited in accordance with the terms and
conditions of the offer, this Letter Agreement shall forthwith be of no further
force and effect as between Seller and Shoney's and there shall be no liability
on the part of either Seller or Shoney's, except to the extent that either such
party has not fulfilled its obligations under this Letter agreement that arose
prior to its termination. In addition, Seller may withdraw its Debentures from
the Offer (and terminate the Option granted hereunder) upon the earlier to occur
of (i) the expiration of the Exercise Period, or (ii) any default by Xxxxxx's in
the performance of its obligations under this Letter Agreement, the Offer or the
Statement. Notwithstanding anything in this Letter Agreement to the contrary, no
termination as between Xxxxxx's and Seller will in any way affect Committee
Counsel's right to retain the fees paid pursuant to the third paragraph of this
Letter Agreement.
SECTION 8. GENERAL.
8.1 Disclosure. Prior to the first public disclosure of the existence
and terms and conditions of this Letter Agreement, none of the parties hereto
shall disclose the existence of this Letter Agreement, or any details hereof, to
any person without the prior written consent of the other parties hereto, except
to the extent required by law or as necessary to enforce that party's rights
under this Letter Agreement or the Indenture. The existence and terms and
conditions of this Letter Agreement may be disclosed by Xxxxxx's in press
releases issued in connection with the Offer and in the Statement and the
documents related thereto and may be disclosed by Seller to Seller's affiliates
and professional advisors and consultants and as otherwise may be required by
law or as necessary to enforce that party's rights under this Letter Agreement
or the Indenture.
8.2 Survival of Representations and Warranties. The representations and
warranties made by Xxxxxx's and Seller herein shall survive the Closing. No
investigations made by or on behalf of either party or any of their respective
agents at any time shall have the effect of waiving, diminishing the scope of or
otherwise affecting any representation, warranty or covenant made by the other
party herein or pursuant hereto.
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8.3 Specific Performance and other Equitable Rights. Each of the
parties recognizes and acknowledges that this Letter Agreement is an integral
part of the Offer, that Xxxxxx's would not contemplate causing the Offer to be
made unless this Letter Agreement was executed, and that a breach by any party
of any covenants or other commitments contained in this Letter Agreement will
cause the other party to sustain injury for which such party would not have an
adequate remedy at law for money damages. Therefore, each of the parties agrees
that in the event of any such breach, the aggrieved party shall be entitled to
the remedy of specific performance of such covenants or commitments and
preliminary and permanent injunctive and other equitable relief in addition to
any other remedy to which it or they may be entitled, at law or in equity.
8.4 Expenses. Xxxxxx's and Seller shall each pay his, her or its legal,
financial advisory and accounting costs incurred in connection with the
preparation, execution and delivery of this Letter Agreement and all documents
and instruments executed or prepared pursuant to this Letter Agreement.
8.5 Governing Law; Counterparts; Amendments; Entire Agreement; Time.
This Letter Agreement shall be governed by and construed in accordance with the
laws of the State of Tennessee. This Letter Agreement may be executed in one or
more counterparts which together shall be deemed to constitute one valid and
binding agreement, and delivery of the counterparts may be effected by means of
a telecopier transmission. This Letter Agreement may not be amended except by
written agreement signed by the parties hereto. This Letter Agreement
constitutes the entire agreement and understanding between the parties
pertaining to the subject matter of this Letter Agreement. Time shall be of the
essence of this Letter Agreement.
If the terms and conditions of this Letter Agreement are acceptable to
you, please so indicate by executing and returning the enclosed copy hereof to
the undersigned prior to 11:59 p.m. (Central Daylight time) on June 27, 2000,
failing which this letter shall be null and void.
Yours truly,
SHONEY'S, INC.
By:
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ACCEPTANCE:
The foregoing Letter Agreement is
agreed to and accepted this
27 day of June, 2000.
/s/ Xxxxxx X. Xxxxxx $52,000,000
--------------------------------- -------------------------------------
Name: Xxxxxx X. Xxxxxx $ Principal Amount
Title: Managing Director At Maturity of Debentures
The Debentures reside in:
Courage Special Situations Fund, L.P.: 5,000,000
V-One Opportunity Fund, L.P.: 47,000,000
