MODIFICATION AGREEMENT NO. 2
TO REIMBURSEMENT AGREEMENT AND STANDBY NOTE
THIS MODIFICATION AGREEMENT NO. 2 TO REIMBURSEMENT AGREEMENT
AND STANDBY NOTE (the "Modification No. 21") is made as of the 8th
day of June, 1994, by and among SHONEY'S, INC. (the "Borrower"), a
Tennessee corporation and NATIONSBANK OF TENNESSEE, N.A.
("NationsBank") (formerly known as Sovran Bank/Central South), a
national banking association having its principal place of business
in the City of Nashville, Tennessee, THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH ("LTCB"), a Japanese banking
corporation acting through its New York Branch with an office in
the City of New York, New York, KREDIETBANK, N.V., NEW YORK BRANCH
("Krediet"), a Belgian banking corporation acting through its New
York Branch with an office in the City of New York, New York, and
NATIONSBANK OF TENNESSEE, N.A. as agent for NationsBank, LTCB and
Krediet (in such capacity, the "Agent").
WITNESSETH:
WHEREAS, the parties heretofore entered into a Reimbursement
Agreement dated as of October 1, 1989 (the "Agreement"), as
modified and amended by a First Amendment to Reimbursement
Agreement dated as of February 1, 1990 (the "Amendment") and
Modification Agreement No. 1 to Reimbursement Agreement and Standby
Note dated July 21, 1993 (the "Modification No. 111) (the
Agreement, as modified and amended by the Amendment and
Modification No. 1, is hereinafter referred to as the
"Reimbursement Agreement"); and
WHEREAS, pursuant to the Reimbursement Agreement, the Borrower
has issued its $13,305,555.56 Standby Promissory Note dated October
27, 1989 (the "Note"), as modified and amended by Modification No.
1 (the Note,as modified and amended by Modification No. 1, is
hereinafter referred to as the "Standby Note"); and
WHEREAS, the Borrower has requested that NationsBank, LTCB and
Krediet (collectively, the "Letter of Credit Issuers") and the
Agent amend certain provisions of the Reimbursement Agreement and
the Standby Note as set forth herein; and
WHEREAS, the Letter of Credit Issuers and the Agent Are
willing to amend such provisions, but only on the terms and condi-
tions set forth herein,
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Certain Definitions. Unless otherwise defined
herein or the context otherwise requires, capitalized terms used in
this Modification No. 2, 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.
"Amendment" has the meaning assigned to such term in the first
recital.
"Borrower" has the meaning assigned to such term in the
preamble.
"Krediet" has the meaning assigned to such term in the
preamble.
"LTCB" has the meaning assigned to such term in the preamble.
"Letter of Credit Issuers" has the meaning assigned to such
term in the third recital.
"Modification Effective Date" has the meaning assigned to such
term in Section 3.1.
"Modification No. 1" has the meaning assigned to such term in
the first recital.
"Modification No. 2" means this Modification Agreement No. 2
to Reimbursement Agreement and Standby Note.
"NationsBank" has the meaning assigned to such term in the
preamble.
"Reimbursement Agreement" has the meaning assigned to such
term in the first recital.
"Standby Note" has the meaning assigned to such term in the
second recital.
SECTION 1.2. Other Definitions. Unless otherwise defined
herein or the context otherwise requires, capitalized terms used in
this Modification No. 2, including its preamble and recitals, have
the meanings assigned to such terms in the Reimbursement Agreement.
ARTICLE II.
MODIFICATION OF REIMBURSEMENT AGREEMENT AND
STANDBY NOTE AS OF THE MODIFICATION EFFECTIVE DATE
Effective on (and subject to the occurrence of) the
Modification Effective Date, the provisions of the Reimbursement
Agreement and Standby Note referred to below are hereby amended and
modified in accordance with this Article II. Except as expressly so
amended the Reimbursement Agreement and Standby Note shall continue
in full force and effect in accordance with their terms, and the
Borrower hereby reaffirms its obligations under the Reimbursement
-2-
Agreement and the Standby Note as amended and modified hereby and
under the other Note Documents.
SECTION 2.1. Modification of Reimbursement Agreement. The
Reimbursement Agreement is hereby amended in the following manner:
SECTION 2.1.1. The following definition of "First
Step-Down" is hereby added to Article I of the
Reimbursement Agreement in appropriate alphabetical
order:
"First Step-Down" shall mean the time at which
the Borrower has delivered a Compliance
Certificate (as defined in the CIBC Agreement)
pursuant to the CIBC Agreement demonstrating
that the Borrower's Funded Debt Ratio (as
defined in the CIBC Agreement) is equal to or
less than 3:1 and the Borrower's Adjusted
Interest Coverage Ratio (as defined in the
CIBC Agreement) is greater than 3:1."
SECTION 2.1.2. Section 3.02(a) of the Reimbursement
Agreement is hereby deleted and the following is inserted
in lieu therefor:
"(a) In addition to any other fees payable to
the Letter of Credit Issuers, the Borrower
will pay to the Agent for the benefit of the
Letter of Credit Issuers in advance, on the
Date of Issuance and on each Commission
Payment Date thereafter until the Termination
Date, a letter of credit fee for the period
from such Commission Payment Date (or, in the
case of the first such payment, the Date of
Issuance) to and including the day before the
next Commission Payment Date, in an amount
equal to the product of (i) one and one-half
percent (1 1/2%) per annum (the "Fee Percentage")
of the Stated Amount of the Letter of Credit
(as determined on such commission Payment
Date) multiplied by (ii) a fraction, the
numerator of which equals the actual number of
days from and including such Commission
Payment Date to and including the day before
the next Commission Payment Date and the
denominator of which equals the actual number
of days in such year, provided, however, that,
upon the occurrence of the First Step-Down,
the Fee Percentage shall be reduced to one and
one-quarter percent (l 1/4%) per annum. The
Borrower shall be entitled to a pro-rata
refund of such fee paid in advance if and to
the extent that the Stated Amount of the
-3-
Letter of Credit is reduced during the period
for which such fee was prepaid pursuant to the
provisions of Section 5.10(b) of the Note
Issuance Agreement."
SECTION 2.2. Modification of Standby Note. The Standby Note is
hereby amended in the following manner:
SECTION 2.2.1. The date "September 1, 1994"
appearing in the fourth full paragraph of the Standby
Note is hereby deleted and the date "September 1, 1996"
is inserted in lieu therefor.
ARTICLE III.
CONDITIONS TO EFFECTIVENESS
SECTION 3.1. Modification Effective Date. This Modification
No. 2 shall become effective as of the date first above written
(the "Modification Effective Date") when the Agent shall have
received counterparts of this Modification No. 2 duly executed by
the Borrower, the Agent and each of the Letter of Credit Issuers.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.1. Cross References. References in this
Modification No. 2 to any article or section are, unless otherwise
specified, to such article or section of this Modification No. 2.
SECTION 4.2. Instrument Pursuant to Reimbursement Agreement;
Limited Waiver. This Modification No. 2 is a document executed
pursuant to the Reimbursement Agreement and shall (unless otherwise
expressly indicated therein) be construed, administered, and
applied in accordance with all of the terms and provisions of the
Reimbursement Agreement. Any term or provision of and any modifica-
tion effected by this Modification No. 2 may be modified in any
manner by an instrument in writing executed by the parties hereto.
Except as expressly amended hereby, all of the representations,
warranties, terms, covenants, and conditions of the Reimbursement
Agreement, the Standby Note and the other Note Documents shall
remain unmodified and unwaived. The modifications set forth herein
shall be limited precisely as provided for herein to the provisions
expressly modified herein.
SECTION 4.3. Successors and Assigns. This Modification No.
2 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 No. 2 may be
executed by the parties hereto in several counterparts which shall
be executed by the Borrower, each of the Letter of Credit Issuers,
and the Agent, as the case may be, all of which shall be deemed to
-4-
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.
SECTION 4.6. Agreement of Letter of Credit Issuers. Without
limiting the generality of Section I of the Agreement of Banks made
as of October 1, 1989, by and among the Letter of Credit Issuers
and the Agent, each of the Latter of Credit Issuers represents and
warrants to each of the other Latter of Credit Issuers and to the
Agent that it has independently and without reliance upon any
representation made by either of the other Letter of Credit Issuers
or the Agent made its own decision to enter into this modification
No. 2 and that it continues to make its own independent credit
decisions with respect to the Borrower.
SECTION 4.7. Expenses. The Borrower hereby agrees that it
will pay all out-of-pocket expenses incurred by the Latter of
Credit Issuers and the Agent in connection with this Modification
No. 2, including reasonable attorneys' fees and expenses.
IN WITNESS WHEREOF, the parties hereto have caused this
Modification No. 2 to be executed by their respective officers
hereunder duly authorized as of the day and year first above
written.
SHONEY'S INC.
By:
--------------------------------
Title:
----------------------------
NATIONSBANK OF TENNESSEE, N.A.
(formerly known as Sovran
Bank/Central South)
By:
--------------------------------
Title:
----------------------------
THE LONG-TERM CREDIT BANK OF JAPAN
LIMITED, NEW YORK BRANCH
By:
--------------------------------
Title:
----------------------------
-5-
KREDIETBANK, N.V., NEW YORK BRANCH
By:
--------------------------------
Title:
----------------------------
NATIONSBANK OF TENNESSEE, N.A.
(formerly known as Sovran
Bank/Central South), as Agent
By:
--------------------------------
Title:
----------------------------
-6-