AMENDMENT NO. 3
Dated as of November 19, 1999
AMENDMENT NO. 3 TO THE CREDIT AGREEMENT (this "Amendment") is entered
into among Shoney's, Inc., a Tennessee corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders listed on the
signature pages hereof as the Initial Lenders (the "Initial Lenders"), BANK
OF AMERICA, N.A. (formerly known as NATIONSBANK, N.A.) ("Bank of America"),
as the initial issuing bank (in such capacity, the "Initial Issuing Bank"),
FIRST AMERICAN NATIONAL BANK, as the swing line bank (in such capacity, the
"Swing Line Bank") (the Initial Lenders, Initial Issuing Bank and Swing Line
Bank collectively, the "Lender Parties") and BANK OF AMERICA, as
administrative agent (together with any successor appointed pursuant to
Article VII of the Credit Agreement, the "Administrative Agent") for the
Lender Parties.
PRELIMINARY STATEMENTS:
(1) The parties hereto have entered into a Credit Agreement dated
as of November 28, 1997, as amended by Amendment No. 1 dated as of June 16,
1998 and Amendment No. 2 dated as of April 6, 1999 (as so amended, the
"Credit Agreement"). Capitalized terms not otherwise defined in this
Amendment have the meanings specified in the Credit Agreement.
(2) The parties hereto have agreed to amend the Credit Agreement
as hereinafter set forth.
SECTION 1. Amendments to the Credit Agreement. The Credit Agreement
is, effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 3, hereby amended as follows:
(a) Section 1.01 is amended by adding the following definitions
in the correct alphabetical order:
"'Adjusted EBITDA' means, for any period, the sum, determined
on a Consolidated basis, of (a) net income (or net loss), plus (b)
interest expense, plus (c) income tax expense, plus (d) depreciation
expense, plus (e) amortization expense, plus (f) all non-cash losses
and charges deducted in arriving at such net income, less (g) all
gains included in arriving at such net income, plus (h) all amounts
(up to an amount not in excess of $18 million) deducted in arriving
at such net income in respect of the Borrower's settlement (which was
announced publicly on March 12, 1999) of three wage-hour class action
lawsuits pending against the Borrower for $18.0 million, less (i)
income tax benefits, in each case
2
of the Borrower and its Subsidiaries, determined in accordance with
GAAP for such period."
"'Captain D's Subsidiary' means a newly created Subsidiary of
the Borrower which is established in accordance with Section
5.02(f)(ix) in connection with the Captain D=s system and which is
a special purpose, bankruptcy remote entity."
"'Maintenance Capital Expenditures' means, as of the end of each
fiscal quarter of the Borrower,(x) in the case of each of the first
three fiscal quarters of each Fiscal Year, $15 million and (y) in the
case of the fourth fiscal quarter of each Fiscal Year, the greater
of (i) $15 million and (ii) the aggregate amount of cash Capital
Expenditures made by the Borrower and its Subsidiaries during the
four fiscal quarter period ending at the end of such fiscal quarter
in connection with the operation and maintenance of restaurants as
set forth in a detailed summary of Maintenance Capital Expenditures
and total Capital Expenditures delivered by the Borrower to the
Administrative Agent and the Lender Parties together with the annual
financial statements required to be delivered pursuant to Section
5.03(d)."
"'Senior Debt' of any Person means all Debt for Borrowed Money
of such Person and its Subsidiaries that is not subordinated by its
terms to any other Debt for Borrowed Money of such Person and its
Subsidiaries."
"'Senior Leverage Ratio' means, as of the end of each fiscal
quarter of the Borrower, a ratio of (i) Senior Debt of the Borrower
and its Subsidiaries as of the end of such fiscal quarter less the
excess of (x) the sum of cash and Cash Equivalents held by the
Borrower and its Subsidiaries at the end of such fiscal quarter over
(y) the aggregate amount remaining to be paid by the Borrower at the
end of such fiscal quarter in respect of the Borrower's settlement
(which was announced publicly on March 22, 1999) of three wage-hour
class action lawsuits pending against the Borrower for $18.0 million
to (ii) Consolidated Adjusted EBITDA of the Borrower and its
Subsidiaries for the four fiscal quarter period ending at the end of
such fiscal quarter."
(b) Section 1.01 is amended by (i) adding at the end of the
definition of "Master Lease" the phrase and any other master lease agreement
entered into by the Captain D's Subsidiary on substantially similar terms as
the two preceding master lease agreements" and (ii) adding at the end of the
definition of "Net Cash Proceeds" the following proviso:
3
";provided further that Net Cash Proceeds in respect of any
sale, transfer or other disposition of any asset shall
exclude 1.5% of the aggregate amount of cash received from
time to time in connection with such transaction."
(c) Section 5.01(k) is amended by adding at the end thereof the
phrase "or from the Borrower, TPI, Shoney's SPV or TPI SPV to the Captain D's
Subsidiary."
(d) Section 5.02(e) is amended by adding the following clauses
to the end of clause (ii) therein:
"and (C) the transfer of real property and any other
related assets by the Borrower, TPI, Shoney's SPV or TPI SPV
to the Captain D's Subsidiary and (D) the lease of the real
property owned by the Captain D's Subsidiary to the
Borrower, TPI or any Subsidiary of the Borrower created in
accordance with the terms hereof, in each case pursuant to
the applicable Master Lease,"
(e) Section 5.02(e)(ix) is amended by replacing the figure
"$10,000,000" therein with the figure "$20,000,000".
(f) Section 5.02(f) is amended by adding at the end thereof the
following clause (ix):
"(ix) Investments by the Borrower, Shoney's SPV and TPI
SPV in the Captain D's Subsidiary consisting of the transfer
of real property, provided that on or prior to the date of
any such Investment (i) the charter documents of the Captain
D's Subsidiary shall contain substantially similar terms as
the charter documents of Shoney's SPV and TPI SPV and (ii)
the Borrower shall agree in writing to take all action
necessary to maintain the corporate existence of the Captain
D's Subsidiary separate and apart from the corporate
existence of the Borrower on substantially the same terms as
set forth in Section 5.01(p)."
(g) Section 5.04(a) is amended by (i) inserting the word
"Adjusted" immediately prior to the word "EBITDA" in clause (i) thereof and
(ii) replacing the chart therein with the following:
"Fiscal Quarter Ending Ratio
---------------------- -----
October 31, 1999 2.25:1
February 20, 2000 2.50:1
May 14, 2000 2.75:1
August 6, 2000 2.75:1
4
October 29, 2000 3.00:1
February 18, 2001 3.25:1
May 13, 2001 3.50:1
August 5, 2001 3.50:1
October 28, 2001 3.75:1"
and thereafter
(h) Section 5.04(c) is amended by replacing the chart therein with
the following:
"Fiscal Quarter Ending Ratio
---------------------- -----
October 31, 1999 5.00:1
February 20, 2000 5.00:1
May 14, 2000 4.75:1
August 6, 2000 4.75:1
October 29, 2000 4.75:1
February 18, 2001 5.00:1
May 13, 2001 5.00:1
August 5, 2001 5.00:1
October 28, 2001 4.75:1"
and thereafter
(i) Section 5.04(d) is amended in full to read as follows:
"(d) Fixed Charge Coverage Ratio. Maintain as of the
end of each fiscal quarter of the Borrower a ratio of (i)
the sum of (A) Consolidated Adjusted EBITDA of the Borrower
and its Subsidiaries for the most recently completed four
fiscal quarter period less (B) the aggregate amount of all
tax expense incurred (net of any tax benefit received) by
the Borrower and its Subsidiaries during such four fiscal
quarter period less (c) the aggregate amount of Maintenance
Capital Expenditures made by the Borrower and its
Subsidiaries during such four fiscal quarter period to (ii)
the sum of (A) Interest Expense in respect of such fiscal
quarter plus (B) the aggregate principal amount of all
scheduled amortization payments made by the Borrower and its
Subsidiaries during such four fiscal quarter period in
respect of Debt of the Borrower and its Subsidiaries of not
less than the ratio set forth below for such fiscal quarter:
"Fiscal Quarter Ending Ratio
---------------------- -----
5
October 31, 1999 1.00:1
February 20, 2000 1.10:1
May 14, 2000 1.15:1
August 6, 2000 1.20:1
October 29, 2000 1.30:1
February 18, 2001 1.40:1
May 13, 2001 and thereafter 1.20:1"
(j) Section 5.04 is amended by adding to the end thereof
subsection (e) to read as follows:
"(e) Senior Leverage Ratio. Maintain as of the
end of such fiscal quarter of the Borrower (commencing with
the fiscal quarter ending February 20, 2000) a Senior
Leverage Ratio of not more than the ratio set forth below
for such quarter:
"Fiscal Quarter Ending Ratio
---------------------- -----
February 20, 2000 3.00:1
May 14, 2000 2.60:1
August 6, 2000 2.40:1
October 29, 2000 2.25:1
February 18, 2001 2.25:1
May 13, 2001 2.25:1
August 5, 2001 2.10:1
October 28, 2001
and thereafter 2.00:1"
SECTION 2. Conditions of Effectiveness. (a) This Amendment shall
become effective as of the date first above written on the Business Day when,
and only when, the Administrative Agent shall have received (i) counterparts
of this Amendment executed by the Borrower and the Required Lenders or, as to
any of the Lenders, advice satisfactory to the Administrative Agent that such
Lender Party has executed this Amendment, (ii) the consent attached hereto
executed by each Loan Party (other than the Borrower) and (iii) an amount
equal to 0.25% of the aggregate amount of the Term A Advances, Term B
Advances and the Working Capital Commitments of the Lenders executing this
Amendment on or prior to 5:00 P.M. (New York City time) on November 24, 1999.
(b) This Amendment is subject to the provisions of Section 8.01
of the Credit Agreement.
6
SECTION 3. Reference to and Effect on the Credit Agreement. (a) On
and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in each of 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.
(b) The Credit Agreement, as specifically amended by this
Amendment, and each of the other Loan Documents are and shall continue to be
in full force and effect and are hereby in all respects ratified and
confirmed.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender Party or any of the Loan Documents or
the Administrative Agent under any of the Loan Documents, or constitute a
waiver of any provision of any of the Loan Documents.
SECTION 4. Execution in Counterparts. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of a signature page to
this Amendment by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment.
SECTION 5. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the
date first above written.
SHONEY'S, INC.
By /s/
------------------------
Title:
7
Agreed as of the date first above written:
BANK OF AMERICA, N.A.
as Administrative Agent, as Lender
and as Issuing Bank
By /s/
------------------------------------
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/
------------------------------------
Title:
PRIME INCOME TRUST
By /s/
------------------------------------
Title:
XXXXXXX XXXXX SENIOR FLOATING
RATE FUND, INC.
By /s/
------------------------------------
Title:
ML CLO XII PILGRIM AMERICA
(CAYMAN) LTD.
By /s/
------------------------------------
Title:
8
TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Ltd.
By /s/
-----------------------------------
Title:
By: TCW Investment Management
Company, as Investment Advisor
By /s/
----------------------------------
Title:
FREMONT FINANCIAL CORPORATION
By /s/
----------------------------------
Title:
CRESCENT/MACH I
PARTNERS, L.P.,
By: TCW Asset Management
Company, as Investment Manager
By /s/
--------------------------------
Title:
XXX XXXXXX AMERICAN
CAPITAL PRIME
RATE INCOME TRUST
By /s/
--------------------------------
Title:
FIRST AMERICAN NATIONAL BANK
By /s/
-------------------------------
Title:
9
THE LONG-TERM CREDIT
BANK OF JAPAN, LTD.
By /s/
--------------------------------
Title:
SENIOR HIGH INCOME PORTFOLIO, INC.
By /s/
--------------------------------
Title:
CAPTIVA II FINANCE LTD.
By /s/
---------------------------------
Title:
AERIES FINANCE LTD.
By /s/
---------------------------------
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research
as Investment Advisors
By /s/
--------------------------------
Title:
STRATA FUNDING LTD.
By /s/
--------------------------------
10
Title:
11
ML CBO IV (CAYMAN) LTD.
By: Protective Asset Management
Company, as Collateral Manager
By /s/
--------------------------------
Title:
CERES FINANCE LTD.
By /s/
--------------------------------
Title:
XXXXXX FINANCIAL, INC.
By /s/
-------------------------------
Title:
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By /s/
--------------------------------
Title:
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By /s/
-------------------------------
Title:
GREEN TREE FINANCIAL SERVICING
CORPORATION
By /s/
-------------------------------
Title:
12
THE TORONTO DOMINION BANK
By /s/
-----------------------------------
Title:
BALANCED HIGH-YIELD FUND I LTD., as Assignee
By: BHF-BANK AKTIENGESELLSCHAFT
acting through its New York Branch,
as attorney-in-fact
By /s/
-----------------------------------
Title:
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By /s/
-----------------------------------
Title:
CYPRESSTREE INVESTMENT PARTNERS I, LTD.
By: CypressTree Investment Management Company, Inc.,
as Portfolio Manager
By /s/
-----------------------------------
Title:
CONSENT
Dated as of November 19, 1999
Each of the undersigned corporations, as a Guarantor under the
Subsidiary Guaranty dated November 28, 1997 (the "Guaranty") in favor of the
the Lender Parties and the Agents parties to the Credit Agreement referred to
in the foregoing Amendment and as a grantor under the Security Agreement
dated November 28, 1997 (the "Security Agreement") made by each of the
undersigned corporations in favor of the Administrative Agent, hereby
consents to such Amendment and hereby confirms and agrees that
notwithstanding the effectiveness of such Amendment, (a) each of the Guaranty
and the Security Agreement is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that, on
and after the effectiveness of such Amendment, each reference in each of the
Guaranty and the Security Agreement to the "Credit Agreement", "thereunder",
"thereof" or words of like import shall mean and be a reference to the Credit
Agreement, as amended by such Amendment, and (b) the Collateral Documents to
which such corporation is a party and all of the Collateral described therein
do, and shall continue to, secure the payment of all of the Secured
Obligations (in each case, as defined therein).
TPI RESTAURANTS, INC.
By /s/
-----------------------------
Title:
TPI PROPERTIES, INC.
By /s/
-----------------------------
Title:
SHN PROPERTIES, LLC
By: Corporate Benefit Services, Incorporated
of Nashville, its Managing Member
By /s/
------------------------------
Title:
By /s/
------------------------------
Title:
2
SHONEY'S OF MICHIGAN, INC.
By /s/
-----------------------------
Title:
COMMISSARY OPERATIONS, INC.
By /s/
-----------------------------
Title:
PARGO'S OF XXXXXXXXX, INC.
By /s/
-----------------------------
Title:
SHONEY'S EQUIPMENT CORPORATION
By /s/
----------------------------=
Title:
CORPORATE BENEFIT SERVICES,
INCORPORATED OF NASHVILLE
By /s/
-----------------------------
Title:
PARGO'S OF YORK, INC.
By /s/
-----------------------------
Title:
3
SHONEY'S INVESTMENTS, INC.
By /s/
-----------------------------
Title:
TPI ENTERTAINMENT, INC.
By /s/
----------------------------
Title:
TPI TRANSPORTATION, INC.
By /s/
----------------------------
Title:
TPI COMMISSARY, INC.
By /s/
----------------------------
Title:
ML CLO XIX STERLING
(Cayman) Ltd.
By Sterling Asset Manager, L.L.C.,
as its Investment Advisor
By /s/
-----------------------------
Name:
Title:
