LOAN AGREEMENT
by and between
SHONEY'S, INC.,
as Borrower
and
NATIONSBANK OF TENNESSEE, N.A.,
as Lender
Dated as of
December 1, 1994
LOAN AGREEMENT
THIS LOAN AGREEMENT is dated as of December 1, 1994, by and
between SHONEY'S, INC., a Tennessee corporation ("Borrower"), and
NATIONSBANK OF TENNESSEE, N.A., a national banking association
("Lender");
W I T N E S S E T H:
WHEREAS, Borrower has applied to Lender for financing of the
type more particularly described below; and
WHEREAS, Lender is presently willing to extend such financing
to Borrower, subject to the terms and conditions hereof;
NOW, THEREFORE, for and in consideration of the foregoing and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING MATTERS
1.1 Defined Terms. As used herein, the following terms shall
have the following meanings, unless the context otherwise requires:
"Acceleration Event" shall have the meaning assigned thereto
in the Mortgages.
"Adjusted EBITDA" shall mean for any period,
(a) Borrower's EBITDA for such period;
minus
(b) Consolidated Capital Expenditures (other than in respect
of Capitalized Leases or Franchisee Acquisitions) for such period.
"Adjusted Interest Coverage Ratio" shall mean, at any date,
the ratio of
(a) Adjusted EBITDA for the four Fiscal Quarter period ending
on or prior to such date
to
(b) Consolidated Interest Expense paid or payable in cash in
respect of the four Fiscal Quarter period ending on or prior to
such date.
"Affiliate" shall mean, with respect to any Person, corpora-
tion or other entity, any Person, corporation or other entity
Controlling, Controlled by or under common Control with such
Person, corporation or entity.
"Agreement" shall mean this Loan Agreement and any future
amendments, modifications, restatements or supplements hereto or
hereof.
"Applicable Margin" shall mean (a) initially, (i) with respect
to the unpaid principal amount of each Fixed Rate Portion of the
Term Loan, one and one-quarter percent (1- 1/4%) per annum, and (ii)
with respect to the unpaid principal amount of the Floating Rate
Portion of the Term Loan, zero percent (0%) per annum, and (b)
thereafter, during the effective period of any Compliance
Certificate demonstrating that both Borrower's Funded Debt Ratio
and the Adjusted Interest Coverage Ratio (in each case determined
by reference to the applicable Compliance Certificate as set forth
below) are as set forth in the columns below entitled "Funded Debt
Ratio" and "Adjusted Interest Coverage Ratio", (i) with respect to
the unpaid principal amount of each Fixed Rate Portion of the Term
Loan, the applicable percentage set forth below in the column
entitled "Applicable Margin for Fixed Rate Portions," and (ii) with
respect to the unpaid principal amount of the Floating Rate Portion
of the Term Loan, the applicable percentage set forth below in the
column entitled "Applicable Margin for Floating Rate Portion":
Applicable Margin Applicable Margin
Funded Debt Adjusted Interest for Fixed Rate for Floating Rate
Ratio Coverage Ratio Portions Portion
Equal to or Equal to or less 1-1/4% 0%
greater than than 3:1
3:1
Less than 3:1 Greater than 3:1 1% 0%
but equal to but equal to or
or greater less than 4:1
than 2.5:1
Less than 2.5:1 Greater than 4:1 3/4% 0%
In order to be entitled to a reduction in the Applicable
Margin as set forth above, both Borrower's Funded Debt Ratio and
the Adjusted Interest Coverage Ratio must fall within the range set
forth opposite such reduced Applicable Margin.
The Funded Debt Ratio and Adjusted Interest Coverage Ratio
used to compute the Applicable Margin shall be the Funded Debt
Ratio and Adjusted Interest Coverage Ratio set forth in the
Compliance Certificate most recently delivered by Borrower to
Lender. Each Compliance Certificate delivered by Borrower shall be
in effect until the earlier of (i) (x) with respect to the first,
second and fourth Fiscal Quarters of any Fiscal Year, the 45th day
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after the end of the Fiscal Quarter next following the Fiscal
Quarter in respect of which such Compliance Certificate is being
delivered, and (y) with respect to the third Fiscal Quarter of any
Fiscal Year, the 90th day after the end of the Fiscal Quarter next
following such third Fiscal Quarter in respect of which such
Compliance Certificate is being delivered, or (ii) the effective
date of delivery of the next delivered Compliance Certificate due
pursuant to Section 7.2. If Borrower shall fail to deliver a
Compliance Certificate within 45 or 90 days after the end of any
Fiscal Quarter as required pursuant to clause (a) or (b) of Section
7.2., as the case may be, the Applicable Margin from and including
the 46th or 91st day, as the case may be, after the end of such
Fiscal Quarter to but not including the date Borrower delivers to
Lender a Compliance Certificate shall conclusively be presumed to
equal the highest Applicable Margin. Changes in the Applicable
Margin resulting from a change in the Funded Debt Ratio and
Adjusted Interest Coverage Ratio shall become effective on the
second Business Day after the date of delivery by Borrower to
Lender of a new Compliance Certificate pursuant to clause (a) or
(b) of Section 7.2. Upon the occurrence and during the continuance
of an Event of Default, the entire outstanding principal balance of
the Term Loan shall bear interest at the Default Rate.
"Asbestos" shall include all the meanings therefor under any
Relevant Environmental Laws and shall include, without limitation,
asbestos fibers, friable asbestos, and friable and potentially
friable asbestos containing material, as such terms are defined
under the Relevant Environmental Laws.
"Authorized Officers" shall mean the officers of the Borrower
authorized to act with respect to this Agreement and the other Loan
Documents as set forth in a certificate dated the date hereof of
Borrower's Secretary certifying the authority, incumbency and
signatures of such officers.
"Bankruptcy Code" shall mean Title 11 of the United States
Code, as amended from time to time.
"Borrower" has the meaning assigned to such term in the
preamble to this Agreement.
"Business Day" shall mean a day on which (i) Lender is open
for the conduct of commercial banking business at its Nashville,
Tennessee offices, and (ii) for purposes of selecting a Libor Rate,
shall also mean a day on which banks are quoting rates for United
States dollar deposits in the interbank eurodollar market.
"Capitalized Leases" shall mean leases, the obligations under
which have been, or in accordance with GAAP are required to be,
recorded on the books of Borrower or any of its Subsidiaries as
capital leases.
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"Change in Control" shall mean the acquisition after the date
hereof by any Person or Persons acting in concert of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission promulgated under the Securities Exchange Act
of 1934, as amended, or any successor, replacement or analogous
rule or provision of law) of twenty percent (20%) or more of the
outstanding shares of voting stock of Borrower.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or otherwise modified from time to time.
"Collateral" shall have the meaning assigned thereto in the
Mortgages.
"Compliance Certificate" shall mean a certificate duly
executed by an Authorized Officer of Borrower, substantially in the
form of Exhibit B and including therein, among other things,
calculations supporting compliance by Borrower with Section 8.5.
"Concept" shall mean a division or type of business of
Borrower or any of its Subsidiaries held out to the public with a
particular designation and, as of the date hereof, shall mean and
include the following: (a) "Shoney's" restaurants, (b) "Captain
D's", (c) "Lee's Famous Recipe", (d) "Commissary", (e) "Pargo's",
(f) "Fifth Quarter", (g) "Mike Rose Foods", and (h) BarbWire's.
"Consolidated Capital Expenditures" shall mean, for any
period, the gross amount of additions during such period to fixed
assets, property, plant, and equipment of Borrower and its
Subsidiaries, all as such additions would be reflected on a
consolidated balance sheet of Borrower and its Subsidiaries
prepared in accordance with GAAP consistently applied at the end of
such period when compared to a consolidated balance sheet of
Borrower and its Subsidiaries prepared in accordance with GAAP
consistently applied at the end of a prior applicable period.
"Consolidated Fixed Charge Coverage Ratio" shall mean, as of
the close of any Fiscal Quarter, the ratio computed for the four
consecutive Fiscal Quarters ending on the computation date, of:
(a) the sum for such Fiscal Quarters of (i) EBITDA plus (ii)
Consolidated Lease Expense
to
(b) Consolidated Fixed Charges for such Fiscal Quarters.
"Consolidated Fixed Charges" shall mean, for any period, the
sum of:
(a) Consolidated Interest Expense;
plus
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(b) the amount of any scheduled payment of principal of any
Consolidated Funded Debt (including, without limitation, the amount
of scheduled payments under Capitalized Leases, other than such as
is appropriately allocable to Consolidated Interest Expense) net of
proceeds of insurance recoveries for such period received by
Borrower in respect of certain litigation against Borrower as
reflected in Borrower's Annual Report on Form 10-K for its 1992
Fiscal Year; provided, however, that for purposes of this clause
(b) only, Consolidated Funded Debt shall not include any
Indebtedness permitted under clause (b) of Section 8.4 or any
similar Indebtedness permitted under clause (c) of Section 8.4 so
long as such Indebtedness is, by its terms, renewable and the
provider of such Indebtedness has not declined to so renew such
Indebtedness;
plus
(c) all federal, state and local income taxes of Borrower and
its Subsidiaries;
plus
(d) Consolidated Lease Expense
in each case for such period.
"Consolidated Funded Debt" shall mean, at any time, the sum of
(a) all Indebtedness (including accrued interest on the
Subordinated LYONS Notes and debt incurred with respect to Mortgage
Financing Transactions) of Borrower and its Subsidiaries, other
than any Indebtedness described in clause (f) or (g) of the
definition of Indebtedness contained herein, at such time and (b)
the amount of reserve for litigation settlement, as shown on
Borrower's then most recent consolidated balance sheet delivered
pursuant to clause (a) or (b) of Section 7.2.
"Consolidated Interest Expense" shall mean, for any period,
the aggregate interest expense of Borrower and its Subsidiaries for
such period, as determined in accordance with GAAP, and in any
event including, without duplication, all commissions, discounts
and other fees and charges owed with respect to letters of credit
and banker's acceptances and net costs under Rate Swap Agreements
and the portion of any obligation under Capitalized Leases
allocable to Consolidated Interest Expense, but in any event
excluding (x) any non-cash interest charges and amortization of
transaction costs with respect to Indebtedness and (y) amortization
of bond discount relating to the Subordinated Debentures.
"Consolidated Lease Expense" shall mean, for any period, the
aggregate amount required to be paid during such period by Borrower
and its Subsidiaries, as lessee, net of sublease rentals accrued by
Borrower and its Subsidiaries in accordance with GAAP, under leases
to which Borrower or any of its Subsidiaries is a party or by which
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Borrower or any of its Subsidiaries is bound, excluding amounts
required to be paid under Capitalized Leases during such period.
"Consolidated Net Income" shall mean, for any period, all
amounts which, in conformity with GAAP consistently applied, would
be included under net income on a consolidated income statement of
Borrower and its Subsidiaries for such period.
"Consolidated Net Worth" shall mean, at any time, all amounts
which, in accordance with GAAP consistently applied, would be
included under shareholders' equity on a consolidated balance sheet
of Borrower and its Subsidiaries at such time; provided that, in
any event, such amounts are to be net of amounts carried on the
books of Borrower and the Subsidiaries for (a) any treasury stock
and (b) any write-up in the book value of any assets of Borrower or
any of its Subsidiaries resulting from a revaluation thereof.
"Control" shall mean, with respect to any Person, the power to
direct the management and policies of such Person, directly or
indirectly, whether through legal or beneficial ownership. For
purposes hereof, but without limiting the foregoing, a Person shall
be deemed to Control another Person if such Person possesses,
directly or indirectly, the power to vote in excess of twenty
percent (20%) or more of the securities having ordinary voting
power for the election of directors of such Person.
"Credit Agreement" shall mean that certain $270,000,000
Reducing Revolving Credit Agreement dated as of July 21, 1993,
among Borrower, CIBC Inc., acting through its Atlanta Office,
various other financial institutions now or hereafter parties
thereto as lenders and Canadian Imperial Bank of Commerce, acting
through its New York Agency, as agent for the lenders, as amended
or modified from time to time.
"Credit Termination" shall mean the payment in full of all
Indebtedness owing under the Credit Agreement, together with the
expiration, cancellation or termination of the obligations of the
lenders thereunder to lend.
"Default Condition" shall mean the occurrence of any event
which, after satisfaction of any requirement for the giving of
notice or the lapse of time, or both, would become an Event of
Default.
"Default Rate" shall mean the Rate of Borrowings in effect
from time to time plus two percent (2%) per annum; provided,
however, that in no event shall the Default Rate be less than the
Prime Rate plus 2%.
"Dollars" or "$" shall mean United States dollars.
"EBITDA" shall mean, for any period, an amount equal to the
sum, computed for such period, of
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(a) Consolidated Net Income (excluding extraordinary items of
gain and including extraordinary items of loss, in each case as
determined in accordance with GAAP consistently applied) for such
period;
plus
(b) all federal, state and local income taxes of Borrower and
its Subsidiaries for such period;
plus
(c) Consolidated Interest Expense for such period;
plus
(d) the aggregate amount deducted, in determining
Consolidated Net Income for such period, with respect to
depreciation and amortization in accordance with GAAP consistently
applied and in any event including, but without duplication, the
aggregate amount so deducted for (i) non-cash interest charges and
amortization of transaction costs with respect to Indebtedness and
(ii) amortization of bond discount relating to the Subordinated
Debentures.
"Employee Benefit Plan" shall mean any employee welfare
benefit plan or any employee pension benefit plan, as those terms
are defined in Sections 3(1) and 3(2) of ERISA (other than a
Multiemployer Plan), for the benefit of employees of Borrower or
any Subsidiary or any other entity which is a member of a
"controlled group" or under "common control" with Borrower, as such
terms are defined in Section 4001(a)(14) of ERISA.
"Environmental Complaint" shall mean any complaint, order,
citation, notice or other written communication from any Person
with respect to the existence or alleged existence of a violation
of or liability resulting from any Relevant Environmental Laws.
"Environmental Lien" shall mean a Lien in favor of any
Governmental Authority for (a) any liability under any Relevant
Environmental Laws, or (b) damages arising from, or costs incurred
by such Governmental Authority in response to, a release or
threatened release of any Hazardous Material into the environment.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import,
together with the regulations thereunder, in each case as in effect
from time to time. References to sections of ERISA shall be con-
strued to also refer to any successor sections.
"Event of Default" shall mean the occurrence of any of the
events specified in Article 9.
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"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100th of 1%)
equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by the Federal Reserve Bank of New York on the Business
Day next succeeding such day as published in the Federal Reserve
Statistical Release H.15(519), as published by the Board of
Governors of the Federal Reserve System, or any successor
publication by the Board of Governors of the Federal Reserve
System, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on
the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds
Rate for such day shall be the average rate charged to members of
the Federal Reserve System on such day on such transactions.
"Fiscal Quarter" shall mean any quarter of a Fiscal Year and,
in the case of Borrower's initial Fiscal Quarter of a Fiscal Year,
means a period of sixteen consecutive weeks, in the case of each of
Borrower's second and third Fiscal Quarters of a Fiscal Year, means
a period of twelve consecutive weeks and, in the case of Borrower's
final Fiscal Quarter of a Fiscal Year, means a period of twelve
consecutive weeks if the Fiscal Year is comprised of fifty-two
weeks and thirteen consecutive weeks if the Fiscal Year is
comprised of fifty-three weeks.
"Fiscal Year" shall mean any period of fifty-two or fifty-
three consecutive calendar weeks ending on the last Sunday in
October of each calendar year; references to a Fiscal Year with a
number corresponding to any calendar year (e.g. the "1994 Fiscal
Year") refer to the Fiscal Year ending on the last Sunday in
October occurring during such calendar year.
"Fixed Rate" shall mean a fixed annual percentage rate based
on a Libor Rate.
"Fixed Rate Portion" shall mean any portion of principal out-
standing under the Term Loan on which interest is accruing pursuant
hereto at a Fixed Rate.
"Floating Provisions" shall mean Sections 7.2, 8.3, 8.4, 8.5
and 8.7 and the defined terms used in those Sections which
correspond to defined terms used in the Credit Agreement.
"Floating Rate" shall mean at any time, the greater of (i) the
Prime Rate plus one-half of one percent (1/2 of 1%) per annum, or
(ii) the Federal Funds Rate plus one percent (1%) per annum
(adjusted as appropriate as of the opening of business on each day
on which the Prime Rate or the Federal Funds Rate changes).
"Floating Rate Portion" shall mean the portion of principal
outstanding under the Term Loan on which interest is accruing
pursuant hereto at a rate based on the Floating Rate.
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"Franchisee Acquisitions" shall mean (a) any additions to
property, plant or equipment of Borrower or any of its Subsidiaries
constituting restaurant or related properties that are acquired
from Concept franchisees of Borrower or (b) the acquisition of
capital stock or other ownership interests in such franchisees.
"Funded Debt Ratio" shall mean, at any date, the ratio of
(a) Borrower's Consolidated Funded Debt at such time;
to
(b) Borrower's EBITDA for the four Fiscal Quarter Period
ending on or just prior to such date.
"GAAP" shall mean generally accepted accounting principles,
consistently applied for the period involved, in effect from time
to time.
"Governmental Authority" shall mean any national government,
any federal, state, local or other political subdivision or agency
thereof and any central bank thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranty" shall mean any agreement, undertaking, or arrange-
ment by which any Person guarantees, endorses, or otherwise becomes
or is contingently liable upon (by direct or indirect agreement,
contingent or otherwise, to provide funds for payment, to
"keep-well" or supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the debt,
obligation, or other liability of any Person (other than by
endorsements of instruments in the ordinary course of collection),
or guarantees the payment of dividends or other distributions upon
the shares of any other Person. The amount of the obligor's
obligation under any Guaranty shall (subject to any limitation set
forth therein) be deemed to be the amount of the debt, obligation,
or other liability guaranteed or supported thereby.
"Hazardous Materials" shall mean any toxic or hazardous
substances, wastes or contaminants, polychlorinated biphenyls,
paint containing lead, urea formaldehyde foam insulation, petroleum
or crude oil (or any fraction thereof), and discharges of sewage or
effluent, and solid waste associated with the exploration and
development of oil, gas and geothermal resources, as any of those
terms is defined from time to time in or for the purposes of any
Relevant Environmental Laws, and Asbestos.
"Impermissible Qualification" shall mean, relative to the
opinion or certification of any Independent Public Accountant as to
any financial statement of Borrower, any qualification or exception
to such opinion or certification
(a) which is of a "going concern" or similar nature;
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(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of
which would be to cause Borrower to be in default of any of its
obligations under Section 8.5.
"Improvements" shall have the meaning attributable thereto in
the Mortgages.
"Indebtedness" of any Person, at a particular time, means all
items which, in conformity with GAAP, would be classified as
liabilities on a balance sheet of such Person as at such time and
which constitute (a) indebtedness for borrowed money or the
deferred purchase price of assets or other Property (including,
without limitation, all notes payable and drafts accepted
representing extensions of credit and all obligations evidenced by
bonds, debentures, notes or other similar instruments but excluding
trade payables incurred in the ordinary course of business payable
within ninety days of the date thereof); provided, that for pur-
poses of Section 8.5 the amount of Indebtedness in respect of the
Subordinated LYONS Notes and all other Indebtedness issued on a
zero coupon basis shall be the original issue price thereof plus
the amount of accrued interest thereon, (b) obligations with
respect to any conditional sale agreement or title retention
agreement, (c) indebtedness arising under acceptance facilities, in
connection with surety or other similar bonds, and the outstanding
amount of all letters of credit issued for the account of such
Person and, without duplication, all drafts drawn thereunder, (d)
all liabilities secured by any Lien in any Property owned by such
Person even though it has not assumed or otherwise become liable
for the payment thereof, (e) obligations under Capitalized Leases,
(f) obligations with respect to Rate Swap Agreements, and (g) any
asserted withdrawal liability of such Person or a commonly
controlled entity to a Multiemployer Plan.
"Independent Public Accountant" means Ernst & Young or any
other public accounting firm of recognized national standing
selected by Borrower and consented to by Lender.
"Instrument" means any contract, agreement, indenture, mort-
gage or other document or writing (whether by formal agreement,
letter, or otherwise) under which any obligation is evidenced,
assumed, or undertaken, or any right to any Lien is granted or
perfected.
"Interest Adjustment Date" shall mean with respect to the
first Libor Interest Period, the date of the first borrowing here-
under based on a Libor Rate, and with respect to each Libor
Interest Period thereafter, (x) if such Libor Interest Period is
selected with respect to an existing Fixed Rate Portion, the last
day of the immediately preceding Libor Interest Period, and (y) if
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such Libor Interest Period is selected with respect to an existing
Floating Rate Portion, the day such Libor Interest Period is to
commence, as selected in an Interest Notice.
"Interest Notice" shall mean a written notice by Borrower for
the continuation or conversion of Rates of Borrowing pursuant to
Subsection 4.1.3, which shall be substantially in the form of
Exhibit C. The substantive terms and conditions of the form of
Interest Notice are incorporated herein as if fully set out in this
Agreement.
"Interest Payment Date" shall mean (i) with respect to any
Fixed Rate Portion, the last day of each Libor Interest Period
applicable thereto and, with respect to any Libor Interest Period
of six (6) months duration, the date which falls three (3) months
after the beginning of such Libor Interest Period, and (ii) with
respect to the Floating Rate Portion, the first Business Day of
each month.
"Investment" shall mean, when used with reference to any
investment of Borrower or any of its Subsidiaries,
(a) any loan, advance or other extension of credit made
by it to any other Person (excluding commission, travel,
salary, relocation expenses, and similar advances to officers
and employees made in the ordinary course of business);
(b) any Guaranty made by such Person; and
(c) any capital contribution by such Person to, or
purchase of stock or other securities or partnership interests
by such Person in, any other Person, or any other investment
evidencing an ownership or similar interest of such Person in
any other Person;
and the amount of any Investment shall be the original principal or
capital amount thereof less (i) all cash returns of principal or
equity thereon and (ii) in the case of any Guaranty, any reduction
in the aggregate amount of liability under such Guaranty to the
extent that such reduction is made strictly in accordance with the
terms of such Guaranty (and, in each case, without adjustment by
reason of the financial condition of such other Person).
"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Lending Office" shall mean the office of Lender located at
One NationsBank Plaza, Nashville, Tennessee 37239, or such other
office or offices of Lender as Lender may from time to time specify
in writing to Borrower as its Lending Office.
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"Libor" shall mean, for any Libor Interest Period, the rate
(rounded upward, if necessary, to the next higher 1/16th of 1%)
quoted by Lender at approximately 10:00 a.m., prevailing Central
time, two (2) Business Days prior to the first day of such Libor
Interest Period, for eurodollar deposits offered to Lender for a
period comparable to such Libor Interest Period in an amount
comparable to the principal amount of the applicable Fixed Rate
Portion.
"Libor Interest Period" shall mean a period selected by
Borrower hereunder with respect to an interest rate based on a
Libor Rate, which commences on the Interest Adjustment Date for
such Libor Interest Period, and which shall be equal to one (1),
two (2), three (3) or six (6) months; provided, however, that in no
event shall any Libor Interest Period extend beyond the Termination
Date. If a Libor Interest Period would otherwise expire on a day
which is not a Business Day, such Libor Interest Period shall be
extended to the next succeeding Business Day, unless the next
succeeding Business Day shall fall in the next succeeding calendar
month, in which event the last day of such Libor Interest Period
shall be the immediately preceding Business Day. If there exists
no day in the month in which a Libor Interest Period ends
numerically corresponding to the day in the month in which such
Libor Interest Period began, such Libor Interest Period shall end
on the last Business Day of such month. Notwithstanding any
provision herein to the contrary, the Libor Rate applicable hereto
on any Interest Adjustment Date shall be the Libor Rate applicable
to the Libor Interest Period which commences on such Interest
Adjustment Date.
"Libor Rate" shall mean interest at a rate per annum equal to
Libor, as selected by Borrower pursuant and subject to the
provisions of Section 4.1.
"Lien" shall mean any deed to secure debt, deed of trust,
mortgage or similar instrument, and any lien, security interest,
preferential arrangement which has the practical effect of
constituting a security interest, security title, pledge, charge,
encumbrance or servitude of any kind, whether by consensual
agreement or by operation of statute or other law, and whether
voluntary or involuntary, including, without limitation, any
conditional sale or other title retention agreement or lease in the
nature thereof.
"Limited Partnerships" shall mean, collectively, Shoney's
Manassas Limited Partnership, Captain D's Manassas Limited
Partnership, Pargo's Manassas Limited Partnership, Shoney's of
Eufala, Ltd. and Shoney's - Captain D's Winchester Limited
Partnership, as to each of which Borrower is the general partner
and each of which owns restaurant(s) which are leased to Borrower
and/or motel(s) which are leased to ShoLodge, Inc.
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"Loan Documents" shall mean, collectively, this Agreement, the
Term Note, the Mortgages, and any and all other documents, instru-
ments, certificates and agreements executed and/or delivered by
Borrower in connection herewith or related hereto, or any one, more
or all of the foregoing as the context shall require.
"LYONS Indenture" shall mean the indenture, dated as of April
1, 1989, by Borrower in favor of NationsBank of Tennessee, N.A.
(formerly known as Sovran Bank/Central South), as Trustee, with
respect to the Subordinated LYONS Notes as in effect on the date
hereof.
"Marriott" shall mean the Marriott Corporation, a Delaware
corporation or its Affiliates.
"Materially Adverse Effect" shall mean, with respect to any
event, act, condition or occurrence of whatever nature (including
any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in
conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related,
a material adverse change in, or a material adverse effect upon,
any of (a) the financial condition, operations, business,
properties or prospects of Borrower and its Subsidiaries, on a
consolidated basis; (b) the rights and remedies of Lender under the
Loan Documents, or the ability of Borrower to perform its
obligations under the Loan Documents; or (c) the legality, validity
or enforceability of any Loan Document.
"Maximum Rate" shall have the meaning assigned thereto in
Subsection 4.1.7.
"Memorandum" shall mean the Confidential Information
Memorandum dated April, 1994, compiled by Canadian Imperial Bank of
Commerce based on information provided by the Borrower.
"Mortgage Financing Collateral" shall mean (a) those
properties listed on Item 1.1 of the Disclosure Schedule attached
to the Credit Agreement and on Exhibit D ("Mortgage Financing
Collateral") (including buildings placed thereon) that have been or
are to be used to collateralize the debt incurred by Borrower in
the Mortgage Financing Transactions; and (b) certain parcels of
undeveloped real property and buildings placed thereon owned or
acquired by Borrower or its Subsidiaries; provided, that at no time
shall there be Mortgage Financing Collateral properties under this
clause (b) which have a cost (excluding any construction costs
relating to such properties) in excess of $36,000,000.
"Mortgage Financing Transaction" shall mean any program of
acquiring or financing
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(a) land and buildings for restaurant facilities, either
listed on Exhibit D ("Mortgage Financing Collateral") or opened
after the date hereof, to be owned and operated by Borrower or its
Subsidiaries; and
(b) land, buildings and/or equipment for manufacturing and
distribution facilities to be owned and operated by Borrower or its
Subsidiaries,
in each case in which the lenders granting such financing will be
granted a Lien 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 Borrower
or its Subsidiaries of industrial revenue bonds) and evidenced by
Mortgage Financing Transaction Documents.
"Mortgage Financing Transaction Document" shall mean each
agreement, mortgage, security agreement, deed of trust, indenture,
note and each other document and instrument relating to a Mortgage
Financing Transaction. "Mortgage Financing Transaction Documents"
means all such agreements, mortgages, indentures, notes and other
documents and instruments.
"Mortgages" shall mean, collectively, the counterparts of that
certain Master Mortgage Indenture, Deed of Trust and Deed to Secure
Debt with Assignment of Leases and Rents, Security Agreement and
Fixture Filing dated of even date herewith by Borrower in favor of
Lender and/or the applicable trustees named therein, as the case
may be, as amended or modified from time to time.
"Multiemployer Plan" shall have the meaning set forth in
Section 4001(a)(3) of ERISA.
"Obligations" shall mean any and all Indebtedness of Borrower
to Lender pursuant to or arising out of or related to this
Agreement or any of the other Loan Documents, including without
limiting the generality of the foregoing, any indebtedness,
liability or obligation of Borrower to Lender arising hereunder or
as a result hereof, whether evidenced by the Term Note or
otherwise, and any and all extensions or renewals thereof in whole
or in part; any indebtedness, liability or obligation of Borrower
to Lender under any later or future advances or loans made by
Lender to Borrower pursuant to this Agreement, and any and all
extensions or renewals thereof in whole or in part.
"Other Taxes" shall have the meaning assigned thereto in
Subsection 4.9.1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean, as to the Collateral, "Permitted
Exceptions", as that term is defined in the Mortgages.
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"Person" shall mean any individual, sole proprietorship, part-
nership, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government
(whether territorial, national, federal, state, county, city,
municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean a "pension plan", as such term is defined in
ERISA, which is subject to title IV of ERISA (other than a
Multiemployer Plan) and to which Borrower or any corporation, trade
or business that is, along with Borrower, a member of a controlled
group of corporations or a controlled group of trades or businesses
(as described in Sections 414(b) and 414(c), respectively, of the
Code or Section 4001 of ERISA) may have any liability, including
any liability by reason of having been a substantial employer
within the meaning of Section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA.
"Prime Rate" shall mean the fluctuating rate of interest of
Lender as established and declared as the Prime Rate of Lender at
any time and from time to time, which rate is not necessarily the
lowest rate of interest charged by Lender to borrowers.
"Property" shall mean any interest in any property or asset of
any kind, whether real, personal or mixed, or tangible or
intangible.
"Rate of Borrowing" shall mean any Rate of Borrowing estab-
lished pursuant to Section 4.1.
"Rate Swap Agreement" shall mean any interest rate swap or
cap, interest rate collar agreement or similar arrangement entered
into from time to time, by Borrower and Lender or any other bank or
financial institution.
"Realco" shall mean Shoney's Real Estate, Inc., a special
purpose corporation that is a wholly-owned Subsidiary of Borrower,
incorporated under the laws of the State of Tennessee.
"Relevant Environmental Laws" shall mean all Requirements of
Law from time to time applicable to Borrower or any of its
Subsidiaries or to any Property now or formerly owned, operated,
leased, used or affected by Borrower or any of its Subsidiaries or
any part thereof with respect to (a) the installation, existence or
removal of Asbestos; (b) the existence, discharge, generation, use,
release, treatment, storage, disposal, remediation or removal of
Hazardous Materials; (c) exposure to Hazardous Materials; (d) air
emissions, water discharges, noise emissions, solid wastes and any
other environmental, health or safety matters; (e) pollution or
other effects on the environment; and (f) state laws addressing oil
and gas exploration and production wastes.
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"Remodeling Expenses" shall mean expenses for the remodeling
of restaurant properties recorded on the books and records of
Borrower or its Subsidiaries as additions to property, plant or
equipment of Borrower or such Subsidiary in accordance with GAAP.
"Reportable Event" shall mean any of the events described in
Section 4043(b) of ERISA.
"Requirements of Law" as to any Person, shall mean the
articles of incorporation and bylaws or other organizational or
governing documents of such Person, and any applicable federal,
state or local statute, ordinance, treaty, rule or regulation,
permit, license or standard, or final determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or
to which such Person or any of its Property is subject, and shall
include, without limitation, all Relevant Environmental Laws.
"Reserve Percentage" shall mean, for any day, that percentage
(expressed as a decimal) as prescribed by the Board of Governors of
the Federal Reserve System (or any other governmental body having
jurisdiction with respect thereto), that is applicable on such day
in respect of Eurocurrency liabilities, as defined in Regulation D
of such Board, including, without limitation, any basic, marginal,
emergency, supplemental, special, transitional or other reserves,
if Lender in its sole discretion determines that it is required to
maintain any such reserves on such day, and disregarding any off-
setting amounts that may be available to Lender to decrease such
requirements to the extent such offsetting amounts arose under
transactions other than those pursuant to this Agreement.
"Stated Rate" shall have the meaning assigned thereto in
Subsection 4.1.7.
"Subordinated Debentures" shall mean Borrower's 12%
subordinated debentures due July, 2000.
"Subordinated Debt" shall mean, collectively:
(a) the Subordinated Debentures;
(b) the Subordinated LYONS Notes; and
(c) any other indebtedness (other than indebtedness arising
out of Mortgage Financing Transactions) of Borrower for
borrowed money and permitted to be outstanding under
the terms of the Credit Agreement and which is
subordinated in form and substance to the Obligations,
and which has subordination provisions, terms of
payment, interest rates, covenants, remedies, defaults
and other material terms, in each case reasonably
satisfactory in form and substance to the Agent (as
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defined in the Credit Agreement), as evidenced by its
written approval thereof.
"Subordinated Indenture" shall mean the Indenture, dated as of
July 1, 1988, between Borrower and NationsBank of Georgia, N.A. (as
successor to The Citizens and Southern National Bank), as the same
may be amended, supplemented or otherwise modified from time to
time in accordance with the provisions of this Agreement.
"Subordinated LYONS Notes" shall mean those zero coupon
subordinated, liquid yield option notes due 2004 in an aggregate
face amount of $201,250,000 issued on April 11, 1989, as in effect
on the date hereof.
"Subsidiary" shall mean any corporation, partnership, business
association or other entity (including any Subsidiary of any of the
foregoing) of which Borrower owns, directly or indirectly, in
excess of 50% of the capital stock or equity interest having
ordinary power for the election of directors or others performing
similar functions.
"Taxes" shall have the meaning assigned thereto in Subsection
4.9.1.
"Term Loan" shall mean the term loan made by Lender to
Borrower in the amount of $28,000,000.00 pursuant to the provisions
of Section 2.1, which term loan is evidenced by the Term Note.
"Term Note" shall mean the term promissory note of Borrower,
as amended or supplemented from time to time, payable to the order
of Lender, in the principal amount of the Term Loan, together with
any renewals or extensions thereof, in whole or in part. The Term
Note shall be substantially in the form of Exhibit A.
"Termination Date" means December 22, 1999.
"Tranche C Agreements" shall mean those certain Transfer
Agreements dated May 15, 1990 among Borrower and the lender parties
thereto, as amended or modified from time to time.
"Tranche C Notes" shall mean, collectively, all promissory
notes in the aggregate principal amount of $160,000,000 issued from
time to time pursuant to the terms of the Tranche C Agreements.
"UCC" shall mean the Uniform Commercial Code as in effect on
the date hereof in the State of Tennessee.
"Welfare Plan" means a "welfare plan", as such term is defined
in ERISA.
1.2 Use of Defined Terms. All terms defined in this
Agreement and any exhibits hereto shall have the same defined
meanings when used in the Term Note, the Mortgages, the other Loan
Documents or any other documents, instruments, certificates and
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agreements executed and/or delivered by Borrower in connection
herewith, unless otherwise defined therein or the context shall
require otherwise.
1.3 Terminology. Except where the context clearly means
otherwise, all personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all
other genders; the singular shall include the plural, and the
plural shall include the singular. The table of contents hereof
and titles of Articles and Sections in this Agreement are for
convenience only, and neither limit nor amplify the provisions of
this Agreement, and all references in this Agreement to Articles,
Sections, Subsections, paragraphs, clauses, or subclauses or
Exhibits shall refer to the corresponding Article, Section,
Subsection, paragraph, clause or subclause of, or Exhibit attached
to, this Agreement, unless specific reference is made to the
articles, sections or other subdivisions of, or exhibit to, another
document or instrument.
1.4 Accounting Matters. All accounting terms not
specifically defined herein shall have the meanings generally
attributed to such terms under GAAP. To enable the ready determi-
nation of compliance with the covenants set forth herein, Borrower
will not change its Fiscal Year (except that Borrower may change
its Fiscal Year provided (x) such change is clearly reflected in
its annual audit report, (y) such change has been concurred in by
Borrower's independent certified public accountants and (z) this
Agreement has been amended to the extent necessary, as determined
in the opinion of Lender, to reflect such changes in the financial
covenants and other terms and conditions of this Agreement).
1.5 Exhibits. All Exhibits attached hereto are by reference
made a part hereof.
1.6 UCC Terms. The terms "accounts", "chattel paper",
"instruments", "general intangibles", "inventory" and "equipment",
as and when used in the Loan Documents, shall have the same
meanings given such terms under the UCC.
ARTICLE 2
THE TERM LOAN
2.1 Term Loan. Lender agrees, subject to and upon compliance
with the terms and conditions of this Agreement, to make the Term
Loan to Borrower.
2.2 Lending Office. The Term Loan shall be made and
maintained at Lender's Lending Office.
2.3 Term Note. The Term Loan shall be evidenced by the Term
Note, which Term Note shall be executed and delivered
simultaneously herewith by Borrower to Lender. Lender shall
maintain on its books, in accordance with its usual practice,
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information relating to the Term Loan, setting forth the applicable
interest rates and the amounts of principal, interest and other
sums paid and payable by Borrower from time to time hereunder. In
the case of any dispute, action or proceeding relating to any
amount payable hereunder, the entries in such books shall be prima
facie evidence of such amount, absent manifest error.
2.4 Use of Proceeds. The proceeds of the Term Loan shall be
used by Borrower to reimburse Borrower for expenses incurred by it
in connection with the acquisition and construction of the
Collateral.
ARTICLE 3
REPAYMENTS AND PREPAYMENTS
3.1 Repayments. Subject to the mandatory prepayment
provisions of Section 3.2, the principal amount of the Term Loan
shall be due and payable in nine (9) consecutive semi-annual
installments, the first eight (8) of which shall be in the amount
of Nine Hundred Thirty-Three Thousand Three Hundred Eighty Dollars
($933,380.00) and the last of which shall be in the amount of
Twenty Million Five Hundred Thirty-Two Thousand Nine Hundred Sixty
Dollars ($20,532,960.00), the first such installment being due on
December 22, 1995, with such installments continuing to be due on
each June 22 and December 22 thereafter through and including
December 22, 1999, on which date the entire remaining unpaid
principal amount of the Term Loan together with all accrued
interest thereon shall be due and payable.
3.2 Mandatory Prepayments. (a) Upon the occurrence of any
Change in Control and at any time within six (6) months after
Lender has received written notice thereof, Lender shall have the
right, exercisable in its sole discretion, to require prepayment in
full of the Term Loan and all of the other Obligations, in which
case Borrower shall, on the fifth Business Day following the date
notice of such prepayment is given, prepay the Term Loan and all of
the other Obligations. Borrower agrees to give Lender prompt (but,
in any event, within three (3) days after the occurrence thereof)
notice of the occurrence of any Change in Control.
(b) At the request of Lender (which request shall specify the
required date of such prepayment which shall be at least thirty
(30) days after the date of such request), Borrower shall make a
prepayment of the Term Loan in an amount equal to the amount, if
any, by which the outstanding principal amount of the Term Loan
exceeds eighty percent (80%) of the aggregate value of the
Collateral, as determined by the appraisals of the Collateral or
any other reasonable method employed by Lender.
(c) Upon the sale of any portion of the Collateral, Borrower
shall prepay the Term Loan as required by Section 1.23 of the
Mortgages in the respective amounts set forth on Exhibit E.
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3.3 Optional Prepayments. Borrower shall have the right,
exercisable by giving Lender not less than three (3) Business Days
irrevocable notice by telephone (followed by prompt written confir-
mation) of the amount to be prepaid and the date on which Borrower
desires to make the prepayment, to prepay the Term Loan in whole or
in part at any time and from time to time, provided that (i) no
partial prepayment of the Term Loan shall be made in an amount less
than $1,000,000 (unless otherwise required or permitted by some
other provision of the Loan Documents), and (ii) all accrued
interest on the prepaid portion of the Term Loan shall be paid at
the time of prepayment.
3.4 Application of Payments. (a) Mandatory prepayments made
under subsections 3.2(b) and (c) and optional prepayments made
under Section 3.3 shall be applied to reduce the scheduled
principal installments of the Term Loan due under Section 3.1 in
their chronological order of maturity.
(b) All scheduled principal installments of the Term Loan due
under Section 3.1 and all other payments and prepayments of
principal of the Term Loan shall be applied first to pay or prepay
the Floating Rate Portion until the Floating Rate Portion is paid
or prepaid in full and then to pay or prepay the Fixed Rate
Portions.
(c) If any portion of any scheduled principal installment of
the Term Loan due under Section 3.1 or any portion of any other
payment or prepayment of principal of the Term Loan is applied to
pay or prepay any portion of a Fixed Rate Portion on a date other
than the last day of a Libor Interest Period or other interest
period applicable thereto, Borrower shall pay to Lender the amount
or amounts specified in Section 4.4 with respect thereto. It shall
be the sole responsibility of Borrower, to the extent it determines
to do so, to choose a Fixed Rate Portion, Fixed Rate Portions and
the Floating Rate Portion from time to time and to choose Libor
Interest Periods from time to time that will minimize the amounts
Borrower is required to pay under Section 4.4 in connection with
payments and prepayments of principal of the Term Loan.
ARTICLE 4
INTEREST, PROTECTIONS, FEES AND PAYMENTS
4.1 Interest Rates.
4.1.1 Rates of Borrowing. Interest shall accrue and be
payable on the outstanding principal amount of the Term Loan (or
portions thereof as permitted hereunder) at a rate or rates per
annum (each, a "Rate of Borrowing"), computed on the daily out-
standing principal amount thereof, which shall be the Floating Rate
plus the Applicable Margin as it exists from time to time for the
Floating Rate Portion or, at the option of Borrower, may be any
Libor Rate selected pursuant to this Section 4.1 plus the
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Applicable Margin as it exists from time to time for each Fixed
Rate Portion.
4.1.2 Interest Payments. Accrued interest on the Term
Loan shall be due and payable on each Interest Payment Date, on the
date of repayment (whether by maturity, acceleration or otherwise)
or prepayment of any portion of the Term Loan on the amount so
repaid or prepaid and, in the case of the Floating Rate Portion, on
each date such Floating Rate Portion is converted to a Fixed Rate
Portion.
4.1.3 Selection of Interest Rates. Borrower shall
initially select an interest rate or rate(s) with respect to the
Term Loan on the second Business Day prior to the disbursement of
the proceeds of the Term Loan by delivery to Lender of an Interest
Notice by 11:00 a.m. (prevailing Central time) on the second
Business Day prior to the disbursement of such proceeds. No more
than three (3) different Rates of Borrowing shall be in effect at
any one time. Upon delivery of an Interest Notice to Lender, which
shall be irrevocable, Borrower, subject to all other conditions and
limitations set forth in this Agreement, may (x) continue any Fixed
Rate Portion on the expiration of the Libor Interest Period
applicable thereto, or (y) convert (i) any portion of the Floating
Rate Portion to a Fixed Rate Portion, (ii) any Fixed Rate Portion
to a Floating Rate Portion and (iii) any Fixed Rate Portion to some
other Fixed Rate Portion. Borrower shall deliver Interest Notices
to Lender no later than 11:00 a.m. (prevailing Central time) (x)
one (1) Business Day prior to the date of a conversion to a
Floating Rate Portion or (y) three (3) Business Days prior to the
continuation of, or conversion into, a Fixed Rate Portion. All
continuations or conversions shall occur on Business Days.
4.1.4 Amounts. The Floating Rate Portion and each Fixed
Rate Portion of the Term Loan shall be in the minimum amount of
$5,000,000.
4.1.5 Failure to Select. If, prior to 11:00 a.m.
(prevailing Central time) on the third Business Day prior to the
expiration of any Libor Interest Period relating to a Fixed Rate
Portion, Borrower shall have failed to select a new Libor Interest
Period with respect thereto, Borrower will be deemed to have
elected to convert such Fixed Rate Portion into a Floating Rate
Portion effective as of the expiration date of such Libor Interest
Period.
4.1.6 Default. During the continuation of any Default
Condition or Event of Default, Borrower shall not be allowed to
select any Libor Interest Period. From and after the occurrence of
any Event of Default, interest on the entire principal balance of
the Term Note shall accrue at the Default Rate and be payable on
demand.
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4.1.7 Usury. Notwithstanding the foregoing provisions of
this Section 4.1, if at any time the rate of interest set forth
above on any portion of the Term Loan (the "Stated Rate") exceeds
the maximum nonusurious interest rate permissible for Lender to
charge commercial borrowers such as Borrower under applicable law
(the "Maximum Rate"), the rate of interest charged hereunder shall
be limited to the Maximum Rate.
In the event the Stated Rate that has theretofore been subject
to the limitation specified in the preceding paragraph subsequently
is less than the Maximum Rate, the principal amount of each portion
of the Obligations shall bear interest at the Maximum Rate until
the total amount of interest paid or accrued on the Obligations
hereunder equals the amount of interest which would have been paid
or accrued on the Obligations hereunder if the Stated Rate had at
all times been in effect at less than the Maximum Rate.
In the event, upon payment in full of all amounts payable
under this Subsection 4.1.7, the total amount of interest paid to
Lender or accrued on the Obligations under the terms of this
Agreement is less than the total amount of interest which would
have been paid to Lender or accrued on the Obligations if the
Stated Rate had, at all times, been in effect at less than the
Maximum Rate, then Borrower shall, to the extent permitted by
applicable law, pay to Lender an amount equal to the difference
between (a) the lesser of (i) the amount of interest which could
have accrued on the Obligations if the Maximum Rate had at all
times been in effect or (ii) the amount of interest which would
have accrued on the Obligations if the Stated Rate had at all times
been in effect and (b) the amount of interest actually paid to or
accrued on the Obligations under this Agreement.
4.2 Libor Rate Protection.
4.2.1 Suspension. If, with respect to any Fixed Rate
Portion, Lender notifies Borrower that an interest rate based on a
Libor Rate for any Libor Interest Period will not adequately
reflect the cost to Lender of maintaining such Fixed Rate Portion
for such Libor Interest Period, the obligations of Lender to allow
an interest rate based on a Libor Rate as a Rate of Borrowing
hereunder shall be suspended until Lender shall notify Borrower
that the circumstances causing such suspension no longer exist.
4.2.2 Reserve Adjustment. Borrower shall pay to Lender
additional interest on the unpaid principal amount of the portion,
if any, of the Term Loan bearing interest based on a Libor Rate
until such principal amount thereof is paid in full at an interest
rate per annum equal at all times to: (i) the rate obtained by
dividing such Libor Rate by a percentage equal to 100% minus the
Reserve Percentage actually incurred by Lender for such Libor
Interest Period minus (ii) the Libor Rate for the Libor Interest
Period for such advance. Such additional interest, if any, shall
be payable on each date on which interest is payable on
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such amount or portion; provided, however, that Borrower shall not
be responsible for increased costs pursuant to this Subsection
4.2.2 until Lender shall have notified Borrower of such increased
costs; provided, further, that the failure by Lender to so notify
Borrower in any one instance shall not be deemed to be a waiver of
Lender's right to assert any claim based upon this Subsection 4.2.2
at a later date for any such other increased costs. Such
additional interest, if any, shall be determined by Lender;
provided, however, that, in making such determination, Lender shall
treat Borrower consistently with other borrowers of the same class
and type. Lender shall notify Borrower of such additional interest
which notice shall be accompanied by a certificate showing the
computation of such amount and which notice shall be final and
conclusive absent manifest error.
4.3 Increased Costs; Illegality; Capital Adequacy.
4.3.1 Increased Costs. If Lender should suffer any
increased cost in connection with maintaining any Fixed Rate
Portion as a result of the imposition or increase of any reserve,
insurance, tax or assessment requirement (other than a tax
assessable on Lender's net income) or the compliance with any
guideline or request from any Governmental Authority (whether or
not having the force of law), Lender shall promptly, upon becoming
aware of such increased costs, notify Borrower thereof (and such
notice shall be accompanied by a certificate showing the computa-
tion of such amount and which notice shall be final and conclusive
absent manifest error; provided, however, that, in determining the
amount of such costs, Lender shall treat Borrower consistently with
other borrowers of the same class and type), whereupon Borrower
shall have the option either to: (i) repay in full the Term Note
(subject to the provisions of Section 4.4); or (ii) pay Lender on
subsequent Interest Payment Dates such additional amounts
(excluding amounts paid under Section 4.2.2) as will compensate
Lender for such increased cost; provided, however, that Borrower or
Lender may terminate the right of Borrower to select interest rates
based on a Libor Rate as a Rate of Borrowing, upon the payment of
such increased costs as are suffered by Lender prior to or as a
result of the termination of such right to select interest rates
based on the Libor Rate; and provided, further that Borrower shall
not be responsible for increased costs pursuant to this Subsection
4.3.1 until Lender shall have notified Borrower of such increased
costs. The failure by Lender to so notify Borrower in any one
instance shall not be deemed to be a waiver of Lender's right to
assert any claim based upon this Subsection 4.3.1 at a later date
for any such other increased costs.
4.3.2 Illegality. If the introduction of or any
change in any applicable law, rule or regulation or in the
interpretation or administration thereof or compliance by Lender
with any request or directive (whether or not having the force of
law) of any Governmental Authority shall make it unlawful for
Lender to make, fund or maintain any Fixed Rate Portion, Lender
shall promptly notify Borrower whereupon: (i) the right of
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Borrower to select interest rates based on a Libor Rate as a Rate
of Borrowing shall immediately be terminated and all portions of
the Term Loan accruing interest at a Fixed Rate shall be converted
to portions thereof in the same principal amount accruing interest
at the Floating Rate; and (ii) Borrower shall pay in full such
amounts as will compensate Lender for any losses (not including
lost profits) or expenses which Lender shall have sustained or
incurred as a result of the applicability of such situation to the
Term Loan (and the determination of which by Lender shall be final
and conclusive absent manifest error; provided, however, that in
determining the amount of such losses, Lender shall treat Borrower
consistently with other borrowers of the same class and type);
provided, however, that Borrower shall not be responsible for such
losses until Lender shall have notified Borrower thereof.
4.3.3 Capital Adequacy. If, after the date hereof,
the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or adminis-
tration thereof by any Governmental Authority, central bank or
comparable agency charged with the administration thereof, or
compliance by Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, affects or is
likely to affect the amount of capital required or expected to be
maintained by Lender or any corporation in Control of Lender and
the amount of that capital is increased by or based upon Lender's
obligations hereunder, then from time to time, within fifteen (15)
days after demand by Lender, Borrower shall pay to Lender such
additional amount or amounts as will compensate Lender in light of
such circumstances, to the extent that such increase in capital is
allocable to its obligations hereunder. Borrower shall not be
responsible for such compensation until Lender shall have notified
Borrower thereof. Any notice under this Subsection 4.3.3 shall be
accompanied by a certificate showing the computation of such amount
and which notice shall be final and conclusive absent manifest
error; provided, however, that in determining the amount of such
compensation, Lender shall treat Borrower consistently with other
borrowers of the same class and type.
4.4 Compensation. Borrower shall pay to Lender, upon the
request of Lender, such amount or amounts as are necessary (in the
reasonable opinion of Lender) to compensate Lender for any loss,
cost or expense incurred by Lender as a result of any payment or
prepayment of a Fixed Rate Portion of the Term Loan or any portion
thereof, or any conversion of the interest rate applicable to a
Fixed Rate Portion of the Term Loan, on a date other than the last
day of the Libor Interest Period or other interest period
applicable thereto, or as a result of any failure by Borrower to
borrow at a Fixed Rate after giving an Interest Notice stating that
it would do so. Such amount or amounts shall include, without
limitation, an amount equal to the greater of (A) $100, or (B) the
excess, if any, of (i) the interest that Lender would have received
on such Fixed Rate Portion or portion thereof (as reasonably
determined by Lender) if such payment, prepayment, conversion or
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failure had not occurred, for the period from the date of such
payment, prepayment, conversion or failure to the last day of the
Libor Interest Period then in effect for such Fixed Rate Portion or
portion thereof (or, in the case of a failure to borrow, the last
day of the Libor Interest Period for such Fixed Rate Portion which
would have commenced on the date of such failure to borrow), at the
Fixed Rate that would have been in effect hereunder for such Libor
Interest Period if such payment, prepayment, conversion or failure
had not occurred, over (ii) the interest that Lender would receive
with respect to such Fixed Rate Portion or portion thereof during
the same period if Lender's cost of funds (as reasonably determined
by Lender) were the applicable interest rate.
4.5 Computation of Interest.
4.5.1 Computation. All computations of interest under
this Agreement shall be made on the basis of a year of 360 days and
actual days elapsed. Interest shall accrue during each period
during which interest is computed from the first day thereof up to
(but not including) the last day thereof.
4.5.2 Determination. Each determination of an interest
rate by Lender pursuant to any provision of this Agreement shall be
conclusive and binding on Borrower in the absence of manifest
error.
4.6 Payments. Except to the extent otherwise provided
herein, all payments of principal, interest, and other amounts to
be made by Borrower hereunder and under the Term Note shall be made
in Dollars, in immediately available funds, to such account as
Lender shall designate from time to time by notice to Borrower, not
later than 12:00 p.m. (prevailing Central time) on the date on
which such payment shall become due (each such payment made after
such time on such due date to be deemed to have been made on the
next succeeding Business Day). Borrower shall, at the time of
making each payment hereunder or under the Term Note and consistent
with Section 3.4, specify to Lender the loans or other amounts
payable by Borrower hereunder to which such payment is to be
applied (and in the event that it fails to so specify, or if an
Event of Default has occurred and is continuing, Lender may apply
such payment as it may elect in its sole discretion, but subject to
the other terms and conditions of this Agreement). Except as
provided in the definitions of Interest Payment Date and Libor
Interest Period, if the due date of any payment hereunder or under
the Term Note would otherwise fall on a day which is not a Business
Day, such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended for
the period of such extension. All sums payable by Borrower
hereunder or under the Term Note shall be paid without relief from
valuation and appraisement laws.
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4.7 Indemnification of Lender. At all times prior to and
after the consummation of the transactions contemplated by this
Agreement, Borrower will hold Lender, its directors, officers,
employees, agents, Affiliates, successors and assigns harmless from
and indemnify Lender, its directors, officers, employees, agents,
Affiliates, successors and assigns against all loss, damages, costs
and expenses (including, without limitation, reasonable attorneys'
fees and expenses) incurred by any of the foregoing, whether direct
or indirect, as a result of or arising from or relating to any
"Proceedings" (as defined below) by any Person, whether threatened
or initiated, asserting a claim for any legal or equitable remedy
against any Person under any statute, case or regulation,
including, without limitation, any federal or state securities laws
or under any common law or equitable case or otherwise, arising
from or in connection with this Agreement or any other Loan
Documents and any of the other transactions contemplated hereby or
thereby except to the extent such losses, damages, costs or
expenses are due to the willful misconduct or gross negligence of
Lender. As used herein, "Proceedings" shall mean actions, suits or
proceedings before any court, governmental or regulatory authority.
At the request of Lender, Borrower will indemnify any Person who is
a successor Lender hereunder or to whom Lender transfers or sells
all or any portion of its interest in the Term Note or participa-
tions therein on terms substantially similar to the terms set forth
above.
4.8 Survival. The obligations of Borrower under Sections
4.3, 4.4, 4.7 and 4.9 shall survive termination of this Agreement
and payment of the Term Note and the other Obligations.
4.9 Taxes.
4.9.1 Payments. Any and all payments by Borrower to
Lender under this Agreement or any of the other Loan Documents
shall be made free and clear of, and without deduction or with-
holding for, any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with
respect thereto incurred in connection with any borrowing pursuant
to this Agreement, excluding (i) such taxes (including income taxes
or franchise taxes or branch profit taxes) as are imposed on or
measured by Lender's net income and (ii) such taxes as are imposed
by a jurisdiction other than the United States of America or any
political subdivision thereof and that would not have been imposed
but for the existence of a connection between Lender and the
jurisdiction imposing such taxes (other than a connection arising
principally by reason of this Agreement) (all such nonexcluded
taxes, levies, imposts, deductions, charges, withholdings and
liabilities being herein referred to as "Taxes"). In addition,
Borrower agrees to pay any present or future stamp or documentary
taxes or any other sales, excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Document (herein
referred to as "Other Taxes").
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4.9.2 Indemnity. Borrower agrees to indemnify and
hold harmless Lender for the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.9) paid by Lender as a result
of this Agreement, any of the other Loan Documents or any of the
transactions contemplated herein or therein, and any liability
(including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted; provided
Borrower shall have the right to contest such Taxes and Other Taxes
with the appropriate taxing authority provided no Event or Default
or Default Condition shall exist and provided further that Borrower
shall provide such indemnities to Lender and maintain such reserves
with respect thereto as Lender shall reasonably request. This
indemnification shall be made within thirty (30) days from the date
Lender makes written demand therefor.
4.9.3 Adjustment for Deduction or Withholding. If
Borrower shall be required by law to deduct or withhold any Taxes
or Other Taxes from or in respect or any sum payable hereunder to
Lender, then,
(i) the sum payable shall be increased as may be
necessary so that after making all required deductions for
Taxes and Other Taxes (including deductions applicable to
additional sums payable under this Section 4.9) Lender
receives an amount equal to the sum it would have received had
no such deductions been made; provided, however, that Borrower
shall only be responsible for any such adjustments required by
this Subsection 4.9.3 occurring after Borrower shall have
received notice of same from Lender;
(ii) Borrower shall make such deductions; and
(iii) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance
with applicable law.
4.9.4 Receipt. Within thirty (30) days after the
date of any payment by Borrower of Taxes or Other Taxes under this
Section 4.9, Borrower will furnish to Lender the original or a
certified copy of a receipt evidencing payment thereof or other
evidence of payment reasonably satisfactory to Lender.
4.9.5 Other Documents. Within sixty (60) days of the
written request of Borrower, Lender shall execute and deliver to
Borrower such certificates, forms or other documents, prepared at
Borrower's expense, which can be reasonably furnished consistent
with the facts and which are reasonably necessary to assist
Borrower in applying for refunds of Taxes and Other Taxes remitted
hereunder.
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4.9.6 Minimization. Lender shall use reasonable
efforts to avoid or minimize any amounts which might otherwise be
payable pursuant to this Section 4.9; provided, however, that such
efforts shall not include the taking of any actions by Lender that
would result in any tax, cost or other expense to Lender (other
than a tax, cost or expense for which Lender shall have been reim-
bursed or indemnified by Borrower pursuant to this Agreement or
otherwise) or any action which would in the reasonable opinion of
Lender have an adverse effect upon its financial condition,
operations, business or properties.
ARTICLE 5
CONDITIONS PRECEDENT, POST CLOSING REQUIREMENTS
5.1 Conditions Precedent. The obligation of Lender to
make the Term Loan is subject to satisfaction of the following
conditions precedent, each of which shall have been fulfilled to
the satisfaction of Lender or waived by Lender:
(a) Corporate Documents. Lender shall have received
certified copies of the charter and by-laws of Borrower and a
certificate of existence for Borrower from the Secretary of State
of the State of Tennessee and a certificate of authority to
transact business for the Borrower from the secretaries of state of
Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Louisiana,
Maryland, Michigan, Mississippi, Missouri, Nebraska, Ohio,
Oklahoma, Texas, Virginia and West Virginia, in each case as of a
date reasonably close (and not more than thirty (30) days prior) to
the date of this Agreement.
(b) Board Resolutions/Incumbency Certificates. Lender
shall have received certificates of the Secretary or Assistant
Secretary of Borrower certifying the resolutions of the Board of
Directors of Borrower approving the transactions contemplated
hereby and thereby and the incumbency and signatures of the
officers authorized to act with respect to each Loan Document, upon
which certificates Lender may conclusively rely until it shall have
received written notice to the contrary from the Secretary or
Assistant Secretary of Borrower.
(c) Loan Documents. Lender shall have received each
Loan Document duly completed, executed and delivered by Borrower.
(d) Opinion of Counsel. Lender shall have received an
opinion of counsel of Borrower in substantially the form of
Exhibit F from Tuke Yopp & Sweeney.
(e) Governmental and Third Party Consents and Approvals.
Lender shall have received copies of all approvals, permits,
consents, certificates, waivers, exemptions, filings and registra-
tions from any Governmental Authority or any third party required
or appropriate in connection with the execution and delivery of any
or all of the Loan Documents or the performance thereof or the
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completion of any transaction contemplated thereby or a
certificate, dated the date hereof, that no such approvals,
permits, consents, waivers, certificates, exemptions, filings or
registrations are required.
(f) Expenses. Borrower shall have paid all costs and
expenses due under Section 11.13 (including recording costs, legal
fees and expenses) which may be then due and payable.
(g) Insurance Certificate. Lender shall have received
a certificate or certificates respecting all insurance required
under this Agreement.
(h) Lien Priority; Title Insurance. Each of the
Mortgages shall have been duly recorded in each office where such
recording is required to constitute the same as a valid first Lien
on the Collateral covered thereby in favor of Lender (or Lender
shall have received evidence satisfactory to Lender that the title
insurance company has agreed to provide "gap" title insurance
coverage acceptable to Lender); and Borrower shall have delivered
to Lender mortgagee title insurance policies duly issued by a title
insurance company satisfactory to Lender, or irrevocable
commitments or binders to issue the same, insuring Lender as
mortgagee or beneficiary in amounts satisfactory to Lender, and
which (i) contain such endorsements and affirmative coverages as
are requested by Lender, (ii) contain only such requirements to
coverage and exceptions to title as are acceptable to Lender, and
(iii) are otherwise in form and substance satisfactory to Lender.
(i) Surveys. With respect to each property constituting
a portion of the Collateral covered by the Mortgages, Lender shall
have received a survey of such property satisfactory to Lender,
showing no encroachments unacceptable to Lender, prepared by a
certified land surveyor and otherwise in form and substance
satisfactory to Lender.
(j) Environmental Reports/Information. Lender shall
have received evidence satisfactory to Lender that none of the
Collateral covered by the Mortgages is presently being used for the
handling, storage, transportation, disposal or other use of any
Hazardous Materials except in strict accordance with all Relevant
Environmental Laws and that all of the Collateral is in compliance
with all Relevant Environmental Laws. Such evidence shall include
(ii) a written report of a licensed engineer satisfactory to Lender
and in such detail as Lender may request in the case of the
Collateral described on Exhibit G, and (ii) such other environ-
mental checklists, reports and information as may be acceptable to
Lender in the case of the other Collateral.
(k) Appraisals. Intentionally Omitted.
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(l) Financing Statements. Where necessary for perfec-
tion of Lender's security interest in fixtures, Lender shall have
received Uniform Commercial Code fixture filings signed by
Borrower, otherwise in form and substance satisfactory to Lender
and receipted to show that they have been filed in the appropriate
filing and recording offices to perfect Lender's security interest.
(m) CIBC Consent. Lender shall have received evidence
satisfactory to Lender that Borrower has obtained all consents and
approvals of the transactions described herein that are required
under the Credit Agreement.
(n) Post-Closing Requirements. In addition to the
conditions precedent to the making of the Term Loan described in
Section 5.1, Borrower agrees that, on or before ninety (90) days
after the date of the Term Note, it shall satisfy each of the
additional post-closing requirements specified on Exhibit M to the
satisfaction of Lender.
ARTICLE 6
GENERAL REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement,
Borrower hereby represents and warrants to Lender as set forth in
this Article 6.
6.1 Corporate Existence and Qualification. Borrower is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Tennessee. Borrower is duly
qualified as a foreign corporation in good standing in Alabama,
Florida, Georgia, Illinois, Indiana, Kansas, Louisiana, Maryland,
Michigan, Mississippi, Missouri, Nebraska, Ohio, Oklahoma, Texas,
Virginia and West Virginia, and in any other state wherein the
failure to so qualify would have a Materially Adverse Effect.
6.2 Corporate Authority; Validity and Binding Effect.
Borrower has the power to make, deliver and perform under the Loan
Documents, and to borrow hereunder, and has taken all necessary and
appropriate corporate action to authorize the execution, delivery
and performance of the Loan Documents. This Agreement constitutes,
and the remainder of the Loan Documents, when executed and
delivered for value received, will constitute, the valid obliga-
tions of Borrower, legally binding upon it and enforceable against
it in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, or other similar laws affecting
the enforceability of creditors' rights in general and except as
subject to general principles of equity. The undersigned officers
of Borrower are duly authorized and empowered to execute, attest
and deliver this Agreement and the remainder of the Loan Documents
for and on behalf of Borrower, and to bind Borrower accordingly
thereby.
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6.3 No Material Litigation. Except as to matters described
on Exhibit I, there are no proceedings pending or, so far as
Borrower or its officers know, threatened, before any court or
administrative agency, which, if adversely determined, might have
a Materially Adverse Effect.
6.4 Taxes. Each of Borrower and all of its Subsidiaries has
filed all tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges thereby
showing to be owing, except any such taxes or charges which are
being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set
aside on its books. No tax liens have been filed with respect to
Borrower or any Subsidiary and, to the knowledge of Borrower, no
claims are being asserted with respect to any such taxes or
charges.
6.5 Corporate Organization. The charter and bylaws of
Borrower are in full force and effect under the laws of the State
of Tennessee and all amendments to said charter and bylaws have
been duly and properly made under and in accordance with all
applicable laws.
6.6 Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the disbursement of the proceeds
of the Term Loan under this Agreement, Borrower will not be
"insolvent" as that term is defined in Section 101 of the
Bankruptcy Code, or be unable to pay its debts generally as such
debts become due, or have an unreasonably small capital.
6.7 Margin Stock. Borrower is not engaged principally, or as
one of its important activities, in the business of purchasing or
carrying any margin stock, and no part of the proceeds of any
borrowing made pursuant hereto will be used to purchase or carry
any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock, or be used for any purpose
which violates, or which is inconsistent with, the provisions of
Regulation U of the Board of Governors of the Federal Reserve
System. In connection herewith, if requested by Lender, Borrower
will furnish Lender a statement in conformity with the requirements
of Federal Reserve Form U-1 referred to in Regulation U of said
Board.
6.8 No Violations. The execution, delivery and performance
by Borrower of the Loan Documents have been duly authorized by all
necessary corporate action and do not and will not require any con-
sent or approval of the shareholders of Borrower, violate any
provision of any law, rule, regulation (including, without limita-
tion, Regulation U of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to Borrower or of
the charter or bylaws of Borrower, or result in a breach of or
constitute a default under any indenture or loan or credit agree-
ment or any other agreement, lease or instrument to which Borrower
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is a party or by which it or its properties may be bound or
affected, the breach of which or default under which will have a
Materially Adverse Effect; and Borrower is not in breach of or in
default under any such law, rule, regulation, order, writ, judg-
ment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument, the breach of which or
default under which will have a Materially Adverse Effect.
6.9 ERISA. Borrower has no Plans or Employee Benefit Plans
and is not a party to any Multiemployer Plan.
6.10 Financial Statements. All balance sheets, all statements
of income, shareholders' equity, and cash flows, and all other
financial statements which have been delivered pursuant hereto or
shall hereafter be furnished by or on behalf of Borrower to Lender
for the purposes of or in connection with this Agreement or any
transaction contemplated hereby or concurrently with the filing
thereof by Borrower with the Securities and Exchange Commission,
have been prepared in accordance with GAAP throughout the periods
involved (except as disclosed therein) and present fairly (subject,
in the case of the interim unaudited financial statements, to the
ultimate outcome of normal recurring accruals) the consolidated
financial condition of the corporations covered thereby as at the
dates thereof and the results of their operations for the periods
then ended. Borrower, on the date hereof, has no contingent
liability or liabilities for taxes, long-term leases or unusual
forward or long-term commitments which are material and not
reflected in the financial statements described above or in the
notes thereto.
6.11 Environmental Matters.
(a) Except as disclosed on Exhibit J, neither Borrower nor
any of its Subsidiaries has received an Environmental Complaint
regarding (i) Borrower or its Subsidiaries or its operations, (ii)
any real Property now or formerly owned, or (iii) to the best of
Borrower's knowledge, any real Property now or formerly operated,
leased, used or affected by Borrower or its Subsidiaries, which, in
each instance, remains unresolved and could reasonably be expected
to result in liabilities which would have a Materially Adverse
Effect.
(b) Neither Borrower nor any of its Subsidiaries is or will
be liable for any costs or expenses involving the removal of
Hazardous Materials from, or remediation of any condition involving
Hazardous Materials on, any real Property now or formerly owned,
operated, leased, used or affected by Borrower or its Subsidiaries
or in connection with the transportation of any Hazardous Materials
to any site listed or proposed for listing on the National
Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act or 1980 ("CERCLA"), 42 U.S.C. Section
9601, et seq., as amended, or any similar list under any analogous
state statute, in any instance which could reasonably be expected
to have a Materially Adverse Effect.
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(c) To the best of Borrower's knowledge, there are no
Environmental Liens on or affecting any of the Collateral.
(d) Borrower and each of its Subsidiaries has all material
permits, certificates, licenses, approvals, registrations and other
authorizations which are required for the operation of their
facilities under all Relevant Environmental Laws and are in
compliance with all Relevant Environmental Laws except for
instances in which failure to have such authorizations or to so
comply has not had or will not have a Materially Adverse Effect.
(e) No consent, approval or authorization of, or registration
or filing with any environmental Governmental Authority, is
required in connection with the transactions contemplated by this
Agreement.
(f) Borrower acknowledges and agrees that Lender has not
expressed any opinion with respect to or exerted any control over
Borrower or any of its Subsidiaries with regard to any decisions
made or to be made by Borrower or any of its Subsidiaries
concerning environmental compliance or waste disposal decisions.
6.12 Possession of Franchises, Licenses. Etc. Borrower
possesses, to the extent material, all franchises, certificates,
licenses, permits and other authorizations from governmental
political subdivisions or regulatory authorities, and all patents,
trademarks, service marks, trade names, copyrights, licenses and
other rights that are necessary for the ownership, maintenance and
operation of its material Property and assets, and Borrower is not
in violation of any thereof, which might have a Materially Adverse
Effect.
6.13 No Burdensome Provisions. Neither Borrower nor any
Subsidiary is a party to any contract, agreement, lease or
licensing agreement, the performance of which has a reasonable
likelihood of having a Materially Adverse Effect.
6.14 Labor Matters. Except as to matters disclosed on Exhibit
K, there are no strikes or other labor disputes or grievances or
charges or complaints with respect to any employee or group of
employees pending or, to the best knowledge of Borrower, threatened
against Borrower which have a reasonable likelihood of having a
Materially Adverse Effect.
6.15 Investment Company Act. Borrower is not an "investment
company" or an "affiliated person" of or "promoter" or "principal
underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended.
6.16 Governmental Contracts. Borrower is not a party to any
contract or agreement with a Governmental Authority, the
termination or renegotiation of which would have a Materially
Adverse Effect.
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6.17 Accuracy of Information. All factual information hereto-
fore or contemporaneously furnished by or on behalf of Borrower in
writing to Lender in connection with this Agreement or any transac-
tion contemplated hereby is and will be true and accurate in every
material respect on the date as of which such information is dated
or certified and as of the date of execution and delivery of this
Agreement by Lender and not incomplete or omitting to state any
material fact necessary to make such information not misleading.
ARTICLE 7
GENERAL AFFIRMATIVE COVENANTS
Borrower covenants to Lender that from and after the date
hereof and until the Term Note and all other Obligations are paid
in full, it will comply with the covenants set forth in this
Article 7.
7.1 Right to Inspect. Lender (or any Person or Persons
designated by it) shall, in its sole discretion, have the right to
call at any offices of Borrower at reasonable times and intervals
upon reasonable notice, and, without hindrance or delay, to
inspect, audit, check and make extracts from Borrower's books,
records, journals, orders, receipts and any correspondence and
other data relating to Borrower's business or to any other trans-
actions between the parties hereto arising out of this Agreement.
Lender agrees that any confidential information obtained by it in
the course of such inspection, audit or check or pursuant to
Section 7.2 shall not be used by it or communicated to any other
Person or entity except: (i) as required by law or by judicial or
administrative process or by appropriate regulatory authorities or
as such information is or becomes public knowledge other than by
virtue of Lender's disclosure; (ii) to Lender's attorneys and
accountants; and (iii) otherwise to the extent that Lender, in its
reasonable judgment, needs to disclose such information in order to
protect its own interests with respect to this Agreement, the other
Loan Documents or any transactions contemplated hereby or arising
in connection herewith or to collect all or any part of the
Obligations.
7.2 Financial Information, etc. Borrower will furnish, or
will cause to be furnished, to Lender copies of the following
financial statements, reports and information:
(a) promptly when available and in any event within ninety
(90) days after the close of each Fiscal Year,
(i) a copy of Borrower's Annual Report on Form 10-K
(excluding exhibits, other than financial statement schedules,
unless specifically requested by Lender, which requests may be
made at any time) and related Annual Report to Shareholders
for such Fiscal Year, including therein a consolidated balance
sheet at the close of such Fiscal Year
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then ended, and related consolidated statements of income,
shareholders' equity, and cash flows (or a statement analogous
to such a statement) for such Fiscal Year, of Borrower and its
Subsidiaries, such statements for such Fiscal Year to be
audited and accompanied by an audit report issued without
Impermissible Qualification by an Independent Public
Accountant,
(ii) a copy of the Director's Report issued by
Borrower's management to Borrower's Board of Directors for
such Fiscal Year, including therein a capital expenditure
budget for the next Fiscal Year broken down by Concept and
otherwise substantially in the form of, and covering in scope
and detail the same matters as, the Director's Report for
Borrower's 1993 Fiscal Year heretofore delivered to Lender,
accompanied by a consolidated statement of income for the last
Fiscal Quarter of such Fiscal Year, setting forth comparative
figures for the corresponding Fiscal Quarter of the prior
Fiscal Year,
(iii) a written statement of the Independent Public
Accountant, setting forth in reasonable detail a calculation
of the financial tests contained in Section 8.5 at the close
of such Fiscal Year, to the effect that it has read the
provisions of this Agreement and the Compliance Certificate
then being furnished pursuant to clause (a)(iv) immediately
below at the date of such statement and is not aware of any
miscalculation in such Compliance Certificate of such
financial tests or of any default of a financial nature in the
performance by Borrower of any obligation to be performed by
it hereunder, except such miscalculation or default, if any,
as may be disclosed in such statement, and
(iv) a Compliance Certificate calculated as of the close
of such Fiscal Year;
(b) promptly when available and in any event within
forty-five (45) days after the close of each of the first three
Fiscal Quarters of each Fiscal Year,
(i) a copy of Borrower's Quarterly Report on Form 10-Q
(excluding exhibits unless specifically requested by Lender,
which requests may be made at any time) for such Fiscal
Quarter, including therein (or accompanied by) a consolidated
balance sheet at the close of such Fiscal Quarter, and related
consolidated statements of income and cash flows (or a state-
ment analogous to such a statement) for such Fiscal Quarter,
of Borrower and its Subsidiaries executed by the principal
accounting or financial Authorized Officer of Borrower,
(ii) a copy of the Director's Report issued by
Borrower's management to Borrower's Board of Directors for
such Fiscal Quarter, substantially in the form of, and
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covering in scope and detail the same matters as, the
Director's Report dated August 7, 1994 for the Fiscal Quarter
of Borrower ended on such date heretofore delivered to Lender,
and
(iii) a Compliance Certificate calculated as of the close
of such Fiscal Quarter;
(c) promptly upon receipt thereof, copies of all detailed
financial reports, if any, submitted to Borrower by an Independent
Public Accountant in connection with each annual or interim audit
made by such Independent Public Accountant of the books of Borrower
or any of its Subsidiaries;
(d) in addition to (but without duplication of) any such
filings required to be delivered above, promptly upon any filing
thereof by Borrower with the Securities and Exchange Commission,
any annual, periodic or special report or registration statement
(without exhibits) generally available to the public;
(e) promptly upon completion or receipt thereof, a copy of
all notices, documents, or other Instruments required to be
delivered by Borrower (other than the Subordinated Debentures,
Subordinated LYONS Notes, and the Tranche C Notes), or received by
Borrower, pursuant to the Subordinated Indenture, the LYONS
Indenture or the Tranche C Agreements and not otherwise required to
be delivered hereunder;
(f) promptly but in no event later than ninety (90) days
after the close of each Fiscal Year of Borrower, a copy of updated
projections of Borrower and its Subsidiaries for the next two
Fiscal Years, all in detail comparable to those contained in the
Memorandum and reasonably satisfactory to Lender; and
(g) promptly, such additional financial and other information
with respect to Borrower and its Subsidiaries as Lender may from
time to time reasonably request.
7.3 Payment of Taxes. Borrower shall pay and discharge all
taxes, assessments and governmental charges upon it, its income,
the Collateral and, to the extent failure to make such payments
would have a Materially Adverse Effect, its other Property prior to
the date on which penalties attach thereto, unless and to the
extent only that (i) such taxes, assessments and governmental
charges are being contested in good faith and by appropriate
proceedings by Borrower and (ii) Borrower maintains reasonable
reserves on its books therefor in accordance with GAAP.
7.4 Maintenance of Insurance; Insurance and Condemnation
Proceeds. (a) Borrower will at all times maintain or cause to be
maintained on the Improvements and on all other Collateral, all
insurance reasonably required at any time or from time to time by
Lender, and in any event: (a) all-risk property insurance covering
fire, extended coverage, vandalism and malicious mischief and such
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other insurance coverage customarily obtained from time to time by
prudent owners of properties of similar character and use as the
Collateral, in an amount which is not less than the full
replacement cost from time to time (which replacement cost shall be
subject to Lender's reasonable approval) of the Collateral without
consideration for depreciation; (b) insurance against flood if
required by the Federal Flood Disaster Protection Act of 1973 and
regulations issued thereunder; (c) comprehensive general public
liability insurance protecting Borrower and Lender in an amount
reasonably acceptable to Lender; (d) during construction, builder's
completed value risk insurance against "all risks of physical loss"
(including collapse and transit coverage); and (e) all other
insurance commonly or, in the reasonable judgment of Lender,
prudently maintained by those whose business, improvement to and
use of real estate is similar to that of Borrower, including
(without limitation), if applicable, boiler explosion, sprinkler
leakage, and employer's liability insurance, all in amounts
satisfactory to Lender, but in any event with a single limit of not
less than $1,000,000.00 in respect of personal injury or death to
any one person, of not less than $1,000,000.00 in respect of any
one occurrence, of not less than $2,000,000.00 in respect of any
one location for personal injury and property damage, and an
umbrella policy or policies in an amount not less than
$20,000,000.00, each such coverage to be subject to a deductible,
if any, not to exceed $500,000.00 per occurrence, provided,
however, Borrower shall maintain adequate reserves therefor, and
all of such insurance to be maintained in such form and with such
companies as shall be reasonably approved by Lender, and to deliver
to and keep deposited with Lender original certificates and, at the
request of Lender, certified copies of all policies of such
insurance and renewals thereof with premiums paid prior to the
deadline for payment thereof and with clauses, attached thereto in
favor of Lender, and its successors and assigns, that (1) name
Lender as an additional insured party thereunder, as its interests
may appear; (2) provide for any losses to be payable notwith-
standing (i) any act, failure to act or negligence of or violation
of warranties, declarations or conditions contained in such policy
by any person other than the person claiming, (ii) the occupation
or use of the Collateral for purposes more hazardous than permitted
by the terms of the policy, or (iii) any foreclosure or other
proceedings or notice of sale relating to the Collateral, or any
change in title to or ownership of any of the Collateral; (3)
include effective waivers by the insurer of all claims for insur-
ance premiums and rights of subrogation against Lender; (4) provide
that each policy shall be primary without right of contribution
from any other insurance that may be carried; and (5) provide for
not less than thirty (30) days' prior written notice to be given to
Lender of cancellation (including, without limitation, cancellation
for non-payment or expiration of the term of such policy) or
material modification of such policies or any portion thereof.
Borrower's making any payments and deposits required by the provi-
sions of Section 1.21 of the Mortgages shall not relieve Borrower
of, or diminish in any way, its obligations as set out in this
Section 7.4. All of the above-mentioned original insurance
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policies or certified copies of such policies and certificates of
such insurance reasonably satisfactory to Lender, together with
receipts for the payment of premiums thereon, shall be delivered to
and held by Lender, which delivery shall constitute assignment to
Lender of all return premiums to be held as additional security
hereunder (subject to any prior assignment of any return premiums);
provided, however, that prior to any Event of Default any such
premiums may be retained by Borrower. Certificates (or binders
covering the time periods and with the renewal and cancellation
provisions set forth in the following sentence) evidencing all
renewal and replacement policies shall be delivered to Lender upon
the renewal or replacement of the expiring policies. All binders
provided in accordance with the provisions of the preceding
sentence shall be for a term of not less than ninety (90) days
which term shall be deemed extended until written notice of
cancellation thereof is given to Lender not less than thirty (30)
days prior to the effective date of such cancellation or
expiration; provided, however, that in no event shall any insurance
binder expire less than ninety (90) days after the issuance
thereof. If Borrower is unable to deliver to Lender the evidence
described herein of renewal or replacement insurance policies not
less than fifteen (15) days prior to the expiration date of the
expiring policies, Borrower shall, not less than fifteen (15) days
nor more than thirty (30) days prior to such expiration date,
deliver to Lender a certificate from an officer of Borrower,
stating (a) Borrower's progress in obtaining renewal or replacement
policies and the anticipated date of issuance thereof; (b) that
Borrower has received no notice of non-renewal or cancellation of
any existing policy of insurance; and (c) that Borrower has no
knowledge of the cancellation or non-renewal of such policies of
insurance or of any facts or circumstances which, if known to an
insurer, would cause it to cancel or refuse renewal or issuance of
any policy of insurance. Nothing contained in the preceding
sentence or elsewhere in this Agreement shall excuse Borrower from
continuously maintaining in full force and effect until all
Obligations are paid in full all insurance required under the
provisions hereof. Borrower shall not obtain nor permit the lessee
under any "Occupancy Lease" (as defined in the Mortgages) to obtain
or carry policies of insurance concurrent in form or contribution
in the event of loss with those required to be maintained under
this Section 7.4 unless Lender is included therein as a named
insured and otherwise in accordance with this Section 7.4.
Borrower will immediately give Lender written notice of (a)
any casualty to the Collateral reasonably anticipated to result in
damage over $250,000.00 or (b) any condemnation or eminent domain
proceedings or transfer in lieu thereof as provided in Section 1.9
of the Mortgages. Borrower agrees that any loss paid to Lender
under any of such insurance policies or in connection with any such
condemnation or eminent domain proceedings or transfer in lieu
thereof shall be applied, at the option of Lender, toward prepay-
ment of the Term Note and/or any other Obligations, or to the
rebuilding or repairing of the damaged, destroyed or affected
Improvements or other Collateral, as Lender in its sole and
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unreviewable discretion may elect (which election shall not relieve
Borrower of the duty to rebuild or repair); provided, however, that
any proceeds of insurance or of any such condemnation or eminent
domain proceedings or transfer shall be made available, if at all,
to the extent required, as determined by Lender in its reasonable
discretion, for the rebuilding or repairing of the damaged,
destroyed or affected Improvements or other Collateral only under
the following conditions:
(i) no Default Condition or Event of Default shall have
occurred or be continuing (and if such an event shall occur
during restoration, Lender may, at its election, apply any
insurance proceeds then remaining in the hands of Lender to
the prepayment of the Term Note and any other Obligations);
(ii) Borrower shall have submitted to Lender plans and
specifications for the restoration which shall be reasonably
satisfactory to Lender, which plans and specifications shall
not be substantially or materially modified, changed or
revised without Lender's prior written consent, which consent
shall not be unreasonably withheld, delayed or conditioned,
and shall be in conformity with all governmental regulations,
including, without limitation, building, zoning, land use and
environmental regulations, provided, however, that so long as
no Event of Default has occurred and is continuing, the
provisions of this clause shall not apply if the value of the
Collateral which has suffered a casualty or been otherwise
affected is less than $1,000,000.00;
(iii) Borrower, if so requested by Lender, shall have
submitted to Lender fixed price contracts with good and
responsible contractors and materialmen covering all work and
materials necessary to complete restoration and providing for
a total completion price not in excess of the amount of
insurance or other proceeds available for restoration, or, if
a deficiency shall exist, Borrower shall have deposited the
amount of such deficiency with Lender unless Borrower has made
other arrangements or furnished other evidence which is
satisfactory to Lender of Borrower's ability to pay such
deficiency in full, provided, however, that so long as no
Event of Default has occurred and is continuing, the
provisions of this clause shall not apply if the value of the
Collateral which has suffered a casualty or been otherwise
affected is less than $1,000,000.00;
(iv) any insurance or other proceeds in excess of
$250,000.00 to be released pursuant to the foregoing provi-
sions may, at the option of Lender, be disbursed from time to
time as restoration progresses to pay for restoration work
completed and in place and such disbursements may, at Lender's
option, be made directly to Borrower or to or through any
contractor or materialman to whom payment is due
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or to or through a construction escrow to be maintained by a
title insurer reasonably acceptable to Lender;
(v) Lender may impose such further conditions upon the
release of insurance or other proceeds (including the receipt
of title insurance) as are customarily imposed by prudent
construction lenders to ensure the completion of the
restoration work free and clear of all liens or claims for
lien;
(vi) all title insurance charges and other costs and
expenses paid to or for the account of Borrower in connection
with the release of such insurance or other proceeds shall
constitute so much additional Indebtedness hereby secured to
be payable in accordance with this Agreement, the Mortgages,
and the Term Note with interest thereafter at the Default
Rate, and any such costs and expenses may be deducted by
Lender from insurance or other proceeds at any time standing
in its hands; and
(vii) if Borrower fails to complete restoration as
promptly as possible under the circumstances, but in all
cases in compliance with any time period provided under
applicable requirements of governmental authorities and
insurance underwriters, Lender shall have the right, but not
the obligation, to restore or rebuild the Improvements and the
other Collateral, or any part thereof, for or on behalf
of Borrower in lieu of applying such proceeds to the Term
Note or the Obligations and for such purpose may do all
necessary acts, including using funds deposited by Borrower
as aforesaid and advancing additional funds for the purpose
of restoration, all such additional funds to constitute part
of the Obligations payable with interest at the Default
Rate. Borrower hereby empowers Lender, in its discretion,
to settle, compromise and adjust any and all claims or
rights under any insurance policy maintained by Borrower
relating to the Collateral; provided, however, that prior to
the occurrence of any Event of Default, (i) Borrower shall
have the right to settle, adjust and compromise claims which
are reasonably anticipated to result in proceeds in an
amount less than $500,000.00, and (ii) Borrower shall have the
right to settle, adjust and compromise claims which are
reasonably anticipated to result in proceeds in an amount
equal to or more than $500,000.00 jointly with Lender. In
the event of foreclosure of the Mortgages, exercise of power
of sale or other transfer of title to the Collateral in
extinguishment of the Obligations, all right, title and
interest of Borrower in and to any insurance policies then
in force shall pass to the purchaser or grantee. Nothing
contained in this Agreement shall create any responsibility or
obligation on Lender to collect any amounts owing on any
insurance policy or resulting from any condemnation, to
rebuild or replace any damaged or destroyed Improvements or
other Collateral or to perform any other act hereunder.
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Lender shall not, by the fact of approving, disapproving,
accepting, preventing, obtaining or failing to obtain any
insurance, incur any liability for or with respect to the
amount of insurance carried, the form or legal sufficiency of
insurance contracts, solvency of insurance companies, or
payment or defense of lawsuits, and Borrower hereby expressly
assumes full responsibility therefor and all liability, if
any, with respect thereto.
(b) In addition to and cumulative with any other requirements
imposed on Borrower herein or in the Mortgages with respect to
insurance, Borrower shall maintain insurance, in such amounts and
against such risks as is customarily maintained by similar
businesses (it being understood and agreed that Borrower may self-
insure for worker's compensation, group medical and physical damage
to automobiles and may self-insure public liability claims to a
maximum of $250,000 per claim), but in any event to include general
liability, workers' compensation, damage, flood, windstorm, fire,
theft and extended coverage insurance in amounts satisfactory to
management of Borrower acting in good faith. Borrower shall file
with Lender upon its request at reasonable intervals a detailed
list of such insurance then in effect stating the names of the
insurance companies, the amounts and rates of insurance, the date
of expiration thereof, the Property and risks covered thereby and
the insured with respect thereto.
7.5 Maintenance of Property and Records. Borrower shall
maintain in good working condition, reasonable wear and tear
excepted, the Collateral, and its other Property when failure to so
maintain its other Property would have a Materially Adverse Effect.
Borrower shall maintain true and accurate books and records.
7.6 Preservation of Corporate Existence. Borrower shall
preserve and maintain its respective corporate existence, rights,
franchises and privileges in the State of Tennessee, and qualify
and remain qualified as a foreign corporation in each jurisdiction
in which any of the Collateral is located and in each other
jurisdiction where failure to so qualify could have a Materially
Adverse Effect.
7.7 Compliance With Laws. Borrower shall comply with the
requirements of, and obtain and maintain all permits, licenses and
other authorizations which are required under, all applicable laws,
rules, regulations and orders of any Governmental Authority,
noncompliance with which could have a Materially Adverse Effect.
7.8 Notices. Borrower will, upon obtaining knowledge
thereof, give notice (accompanied by a reasonably detailed
explanation with respect thereto and what action Borrower
proposes to take with respect thereto) promptly to Lender of:
(a) any litigation, arbitration, or governmental investiga-
tion or proceeding not previously disclosed by Borrower to Lender
which has been instituted or, to the knowledge of Borrower, is
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threatened against Borrower or to which any of its Property is
subject which
(ii) if adversely determined, would have a Materially
Adverse Effect, provided that, for purposes of this subclause
(i), any uninsured litigation, arbitration, or governmental
investigation or proceeding which involves a damage claim of
$1,500,000 or less need not be the subject of any such notice
unless it is one of a series of claims arising out of the
same set of facts or circumstances which, in the aggregate,
exceed $10,000,000, or
(ii) relates to this Agreement, any other Loan Document
or any specific transaction financed or to be financed in
whole or in part directly or indirectly with the proceeds of
the Term Loan;
(b) any material adverse development which shall occur in any
litigation, arbitration, or governmental investigation or
proceeding previously disclosed by Borrower to Lender;
(c) any development in the business, operations, financial
condition or prospects of Borrower which, in the reasonable judg-
ment of Borrower, has reasonable likelihood of having a Materially
Adverse Effect;
(d) any Default Condition or Event or Default;
(e) the occurrence of a Reportable Event under, or the
institution of steps by Borrower to withdraw from, or the institu-
tion of any steps to terminate, any Plan or, to the best of
Borrower's knowledge, any Multiemployer Plan, or the failure to
make a required contribution to any Plan or, to the best of
Borrower's knowledge, any Multiemployer Plan if such failure is
sufficient to give rise to a lien under Section 302(f) of ERISA, or
the taking of any action with respect to a Plan or, to the best of
Borrower's knowledge, any Multiemployer Plan which could result in
the requirement that Borrower furnish a bond or other security to
the PBGC or such Plan or Multiemployer Plan, or the occurrence of
any event with respect to any Plan or, to the best of Borrower's
knowledge, any Multiemployer Plan which could result in the
incurrence by Borrower of any material liability, fine or penalty,
or the occurrence of any material increase in the contingent
liability of Borrower with respect to any post-retirement Welfare
Plan benefit, and in each case the action which Borrower proposes
to take with respect thereto; and
(f) any material damage to, loss of or other change in the
composition of the Collateral or any other event that would have a
materially adverse effect on the aggregate value of the Collateral
or the Liens created by the Loan Documents with respect thereto.
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7.9 Environmental Matters.
(a) Borrower hereby indemnifies Lender and agrees to defend
and hold Lender harmless from and against any and all losses,
damages (including, without limitation, all foreseeable and unfore-
seeable consequential damages), costs, claims, liabilities,
penalties, fees, injuries or expenses of whatever kind or nature
(including, without limitation, reasonable counsel fees and costs),
which Lender may sustain or incur in connection with: any
Environmental Complaint or any claim, demand, or complaint asserted
against Lender relating to any environmental pollution, any
Hazardous Materials release, disposal, recycling, storage,
handling, treatment or exposure, or any environmental cleanup
(including, without limitation, any remedial, removal, or response
action) in connection with or relating to (i) Borrower's premises,
including, without limitation, any real or other Property now or
formerly owned, operated, leased, used or affected by Borrower; or
(ii) Borrower's operations, whether such operations took place
before or after the date of this Agreement. The indemnification in
this Section 7.9 shall survive termination of this Agreement and
the other Loan Documents as well as the payment of all Obligations.
(b) Borrower agrees to notify Lender promptly of any
Environmental Complaint received by it relating to a condition or
event which has a reasonable likelihood of resulting in a liability
of Borrower of an amount in excess of $1,000,000. Such notice
shall include, without limitation, a statement of any such
Environmental Complaint's impact and expected impact, if any, on
Borrower's business, prospects and financial condition, and whether
it would or might have a Materially Adverse Effect.
(c) To the full extent permitted by applicable law, Borrower
hereby releases Lender from any claim of contribution with respect
to any environmental matter.
ARTICLE 8
NEGATIVE COVENANTS
Borrower covenants to Lender that from and after the date
hereof until the Term Note and all other Obligations are paid in
full, it will not, without the prior written consent of Lender, do
any of the things or acts set forth in this Article 8.
8.1 No Liens. Except for Permitted Liens, Borrower will not,
and will not permit its Subsidiaries to, create, assume, or suffer
to exist any Lien of any kind on any of the Collateral except:
(a) Liens in favor of Lender under the Mortgages to secure
the Term Loan and the other Obligations;
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(b) Liens of carriers, warehousemen, mechanics, materialmen
and landlords incurred in the ordinary course of business for sums
not overdue or being contested in good faith, by appropriate
proceedings and for which appropriate reserves with respect thereto
have been established and maintained on the consolidated books of
Borrower in accordance with GAAP to the extent required under GAAP;
(c) Liens incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance, or
other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases, and
contracts (other than for borrowed money) entered into in the
ordinary course of business or to secure obligations on surety or
appeal bonds;
(d) easements, rights-of-way, zoning and similar restrictions
and other similar encumbrances or title defects which, in the
aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of
Borrower; and
(e) judgment liens securing amounts not in excess of
$1,000,000 in the aggregate in existence less than thirty (30) days
after the entry thereof or with respect to which execution has been
stayed or with respect to which the appropriate insurance carrier
has agreed in writing that there is full coverage (subject to a
customary deductible not in excess of $1,000,000) by insurance.
8.2 Merger, Acquisition or Sale. Except as otherwise
provided in the Credit Agreement, Borrower will not dissolve or
otherwise terminate its corporate status or enter into any merger,
reorganization or consolidation (except that Borrower and any
Subsidiaries may merge with each other provided that Borrower shall
be the surviving entity), or acquire any substantial businesses
(either stock or assets), or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of
transactions) all, substantially all or any substantial part of its
Property or assets (other than sales in the ordinary course of
business), or make any substantial change in the basic type of
business conducted by Borrower as of the date hereof.
8.3 Transactions with Affiliates. Borrower will not enter
into, or cause, suffer, or permit to exist
(a) any arrangement or contract with any of its Affiliates
(other than a Subsidiary, Limited Partnership or franchisee of
Borrower) of a nature customarily entered into by Persons which are
Affiliates of each other (including management or similar contracts
or arrangements relating to the allocation of revenues, taxes, and
expenses or otherwise) requiring any payments to be made by
Borrower or any of its Subsidiaries to any Affiliate (other than a
Subsidiary of Borrower) unless such arrangement is fair and
equitable to Borrower or such Subsidiary; or
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(b) any other transaction, arrangement, or contract with any
of its Affiliates (other than a Subsidiary, Limited Partnership or
franchisee of Borrower) which would not be entered into by a
prudent Person in the position of Borrower or such Subsidiary with,
or which is on terms which are less favorable than are obtainable
from, any Person which is not one of its Affiliates.
8.4 Indebtedness. Borrower will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness other
than:
(a) Indebtedness of Borrower evidenced by the Term Note;
(b) unsecured revolving Indebtedness of Borrower in an
aggregate principal amount not to exceed $30,000,000 at
any one time outstanding (inclusive of the aggregate
outstanding principal amount of unsecured revolving
Indebtedness of Borrower disclosed on Exhibit L);
(c) other Indebtedness of Borrower or any of its Subsidiaries
outstanding on October 30, 1994, and either (1) reflected
in the financial statements delivered to the Lender prior
to the date hereof pursuant to Section 6.10 or (2)
disclosed on Exhibit L, so long as no such Indebtedness
is secured by any of the Collateral;
(d) Indebtedness of Borrower or any of its Subsidiaries
(other than Realco) which is an Investment permitted by
the Credit Agreement;
(e) Indebtedness in an aggregate principal amount not to
exceed $3,000,000 in the aggregate at any time out-
standing which is incurred by Borrower or any of its
Subsidiaries (other than Realco) to one or more vendors
of any assets to finance its acquisition of such assets;
(f) obligations of Borrower under Capitalized Leases;
provided that the aggregate capitalized amount payable
under all such Capitalized Leases shall not exceed
$30,000,000;
(g) Indebtedness of Borrower in respect of trade or
commercial letters of credit in an aggregate amount not
to exceed $20,000,000 at any one time outstanding and
Indebtedness in respect of 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 $20,000,000
at any one time outstanding;
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(h) Indebtedness incurred by Borrower under and in connection
with any Rate Swap Agreement; and
(i) Indebtedness incurred by 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 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
1993 $25,000,000
1994 $30,000,000
1995 $30,000,000
1996 $30,000,000
1997 $30,000,000
; provided, however, to the extent that the maximum amount of
Indebtedness in connection with Mortgage Financing
Transactions permitted to be incurred by Borrower, without
giving effect to this proviso, exceeds the aggregate amount
actually incurred during such Fiscal Year, one hundred percent
(100%) of the amount of such excess may be carried over to
succeeding Fiscal Years;
provided that no Indebtedness otherwise permitted to be incurred
shall be permitted to be incurred if, after giving effect to the
incurrence thereof, any Event of Default shall have occurred and be
continuing.
8.5 Financial Condition. 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
Fourth Fiscal Quarter of
Fiscal Year 1994 $(145,000,000)
First Three Fiscal Quarters
of Fiscal Year 1995 $(145,000,000)
Fourth Fiscal Quarter of
Fiscal Year 1995 $ (60,000,000)
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First Three Fiscal Quarters
of Fiscal Year 1996 $ (60,000,000)
Fourth Fiscal Quarter
of Fiscal Year 1996 $ 40,000,000
First Three Fiscal Quarters
of Fiscal Year 1997 $ 40,000,000
Fourth Fiscal Quarter of
Fiscal Year 1997 $ 100,000,000
First Three Fiscal Quarters
of Fiscal Year 1998 $ 100,000,000
Fourth Fiscal Quarter of
Fiscal Year 1998 and
thereafter $ 200,000,000
(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:
Maximum Funded
Period Debt Ratio
Fourth Fiscal Quarter
of Fiscal Year 1994 3.7:1.00
First Three Fiscal Quarters
of Fiscal Year 1995 3.7:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 3.0:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 3.0:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 and
thereafter 2.5:1.00
(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 Consolidated
Period Debt
Fourth Fiscal Quarter of
Fiscal Year 1994 $660,000,000
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First Three Fiscal Quarters
of Fiscal Year 1995 $660,000,000
Fourth Fiscal Quarter of
Fiscal Year 1995 $600,000,000
First Three Fiscal Quarters
of Fiscal Year 1996 $600,000,000
Fourth Fiscal Quarter of
Fiscal Year 1996 and
thereafter $550,000,000
(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
Fourth Fiscal Quarter
of Fiscal Year 1994 2.0:1.00
First Three Fiscal Quarters
of Fiscal Year 1995 2.0:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 2.75:1.00
First Three Fiscal Quarters
of Fiscal Year 1996 2.75:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 and
thereafter 3.75:1.00; 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
Fourth Fiscal Quarter
of Fiscal Year 1994 .85:1.00
First Three Fiscal Quarters
of Fiscal Year 1995 .85:1.00
Fourth Fiscal Quarter
of Fiscal Year 1995 1.15:1.00
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First Three Fiscal Quarters
of Fiscal Year 1996 1.15:1.00
Fourth Fiscal Quarter
of Fiscal Year 1996 and
thereafter 1.30:1.00
8.6 Inconsistent Agreements. Borrower shall not enter into
any contract or other agreement which is inconsistent with the
terms of this Agreement or the other Loan Documents or which limits
or otherwise restricts the ability of Borrower to perform its obli-
gations under this Agreement or the other Loan Documents.
8.7 Consolidated Capital Expenditures, etc. Borrower will
not, and will not permit any of its Subsidiaries to, make any
Consolidated Capital Expenditures, except Borrower and its
Subsidiaries may make Consolidated Capital Expenditures during any
Fiscal Year which do not exceed, in the aggregate, the amount set
forth opposite such Fiscal year below:
Fiscal Year Maximum Amount
1994 $ 74,000,000
1995 $ 78,000,000
1996 $ 89,000,000
1997 $ 99,000,000
1998 $125,000,000
1999 $130,000,000
provided, however, that (i) to the extent that the maximum amount
of Consolidated Capital Expenditures permitted to be made by
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
(100%) of the amount of such excess or $5,000,000 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 Borrower is required
to acquire restaurant properties from Marriott or Thompson
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 Thompson 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
(i) Franchisee Acquisitions, (ii) Remodeling Expenses and (iii)
expenses incurred in connection with undeveloped real estate
designated as Mortgage Financing Collateral prior to such time that
restaurants constructed on such real estate are open and operating.
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ARTICLE 9
EVENTS OF DEFAULT
The occurrence of any events or conditions described in this
Article 9 shall constitute an Event of Default hereunder, provided
that any requirement for the giving of notice or the lapse of time,
or both, has been satisfied.
9.1 Term Note. Borrower shall fail to make any payment or
prepayment of principal of the Term Loan when due or any payment of
interest on the Term Loan within five days of the date when due.
9.2 Obligations. Borrower or any Subsidiary shall fail to
make any payments of principal of or interest or fees on any other
Obligations (other than principal of and interest on the Term Note)
to Lender within five (5) days after the date on which due.
9.3 Misrepresentations. Borrower shall make any representa-
tions or warranties in this Agreement or any of the other Loan
Documents or in any certificate or statement furnished at any time
under or in connection herewith or therewith which was untrue or
misleading in any material respect when made or furnished or when
deemed made or furnished hereunder.
9.4 Covenants. Borrower shall (x) default in the observance
or performance of any of its obligations under Section 5.2, Section
7.8(d) or Section 8.2, 8.4, 8.5 or 8.7, or (y) default in the
observance or performance of any other covenant or agreement
contained in this Agreement or any other Loan Document, and (i)
with respect to defaults under this Agreement, such default shall
continue for a period of thirty (30) days after the Chairman of the
Board (if at the time an officer), President, Chief Financial
Officer (regardless of title), Treasurer, Corporate Controller or
Secretary of Borrower shall have knowledge thereof, or (ii) with
respect to any defaults under any of the other Loan Documents, any
grace or cure period specified therein shall have expired.
9.5 Other Debts. Any default shall occur under the terms
applicable to any Indebtedness or Guaranty of Borrower or any of
its Subsidiaries in an aggregate amount exceeding $5,000,000
representing any borrowing or financing or Guaranty or arising
under any other material agreement from, by or with any Person, and
such default shall:
(a) consist of the failure to pay monetary obligations under
such Indebtedness or Guaranty when due; or
(b) continue unremedied (and not have been waived by the
holder of such Indebtedness or Guaranty) for a period of time
sufficient to permit the acceleration of such Indebtedness.
9.6 Voluntary Bankruptcy. Borrower shall file a voluntary
petition in bankruptcy or a voluntary petition or answer seeking
liquidation, reorganization, arrangement, readjustment of its
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debts, or for any other relief under the Bankruptcy Code, or under
any other act or law pertaining to insolvency or debtor relief,
whether state, federal, or foreign, now or hereafter existing;
Borrower shall enter into any agreement indicating its consent to,
approval of, or acquiescence in, any such petition or proceeding;
Borrower shall apply for or permit the appointment by consent or
acquiescence of a receiver, custodian or trustee of Borrower for
all or a substantial part of its Property; Borrower shall make an
assignment for the benefit of creditors; Borrower shall be unable
or shall fail to pay its debts generally as such debts become due;
or Borrower shall admit, in writing, its inability or failure to
pay its debts generally as such debts become due.
9.7 Involuntary Bankruptcy. There shall have been filed
against Borrower an involuntary petition in bankruptcy or seeking
liquidation, reorganization, arrangement, readjustment of its debts
or for any other relief under the Bankruptcy Code, or under any
other act or law pertaining to insolvency or debtor relief, whether
state, federal or foreign, now or hereafter existing, and either
(x) such case or proceeding is not dismissed within sixty (60)
days, or (y) an "order for relief" is entered at any time in any
such case under the Bankruptcy Code; the involuntary appointment of
a receiver, custodian or trustee of Borrower for all or a
substantial part of the Property of Borrower, if such appointment
is not terminated within sixty (60) days; or the issuance of a
warrant of attachment, execution or similar process against all or
any substantial part of the Property of Borrower.
9.9 Judgments. A judgment or order for the payment of money
is rendered against Borrower in the amount in excess of $1,000,000
(exclusive of amounts covered by insurance), and same shall not
have been paid, stayed on appeal or otherwise contested in good
faith within thirty (30) days after the rendering thereof.
9.10 Nonmonetary Judgments. A final nonappealable nonmonetary
judgment or order is rendered against Borrower which has or has a
reasonable possibility of having a Materially Adverse Effect.
9.10 ERISA. A contribution failure shall occur with respect
to any Plan sufficient to give rise to a lien under Section 302(f)
of ERISA or any of the following events shall occur with respect to
any Plan:
(a) such Plan shall be terminated or a receiver to administer
such Plan shall have been appointed (or steps shall be instituted
to effect such termination or appointment);
(b) Borrower shall withdraw from such Plan (or shall
institute steps to effect such withdrawal); or
(c) any Reportable Event shall occur with respect to such
Plan which would present a material risk to Borrower of incurring
a liability on account of such Plan,
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and there shall exist a deficiency in the assets available to
satisfy the benefit liabilities under ERISA with respect to such
Plan, and such occurrence shall result in a liability of Borrower
in excess of $5,000,000.
9.11 Impairment. Except as expressly permitted in any Loan
Document, any Loan Document shall terminate or cease in whole or in
part to be the legally valid, binding and enforceable obligation of
Borrower, or Borrower or any Person acting for or on behalf of
Borrower contests such validity, binding effect or enforceability
or purports to revoke any Loan Document.
ARTICLE 10
REMEDIES
Upon the occurrence or existence of any Acceleration Event
(unless Lender in its sole discretion shall have accepted the cure
of such Acceleration Event or waived the same, at which time the
parties hereto shall be returned to their respective positions as
they existed prior to such Acceleration Event), or at any time
thereafter, without prejudice to the rights of Lender to enforce
its claims against Borrower for damages for failure by Borrower to
fulfill any of its obligations hereunder, subject only to prior
receipt by Lender of payment in full of all Obligations then
outstanding in a form acceptable to Lender, Lender shall have all
of the rights and remedies described in this Article 10, and Lender
may exercise any one, more, or all of such remedies, in its sole
discretion, without thereby waiving any of the others.
10.1 Acceleration of the Obligations. Lender may declare all
of the Obligations of Borrower to Lender (including, but not
limited to, that portion thereof evidenced by the Term Note) to be
immediately due and payable, and in the event a voluntary case is
commenced under the Bankruptcy Code or an involuntary case
commenced under the Bankruptcy Code is not dismissed in sixty (60)
days by or against Borrower as a debtor, all such Obligations
automatically will be due and payable without any notice or
declaration by Lender, whereupon the same shall become immediately
due and payable without any other presentment, demand, protest,
notice of demand, protest or nonpayment, notice of intent to
accelerate, notice of acceleration or any other notice required by
law relative thereto, all of which are hereby expressly waived by
Borrower to the extent permitted by law, anything contained herein
to the contrary notwithstanding. If any note of Borrower to Lender
evidencing any of the Obligations shall be a demand instrument,
however, the recitation of the right of Lender to declare any and
all such Obligations to be immediately due and payable, whether
such recitation is contained in such note or in this Agreement, as
well as the recitation of the above events permitting Lender to
declare all such Obligations due and payable, shall not constitute
an election by Lender to waive its right to demand payment under
such note under a demand at any time and in any event, as Lender in
its discretion may deem appropriate. Thereafter, Lender at its
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option, may, but shall not be obligated to, accept less than the
entire amount of such Obligations due, if tendered, provided,
however, that unless then agreed to in writing by Lender, no such
acceptance shall be or shall be deemed to constitute a waiver of
any Event of Default or a reinstatement of any commitments of
Lender hereunder.
10.2 Other Remedies. Unless and except to the extent
expressly provided for to the contrary herein, the rights of Lender
specified herein shall be in addition to, and not in limitation of,
Lender's rights under any statute or rule of law or equity, or
under the provisions of any other document, instrument or other
writing executed by Borrower or any third party in favor of Lender,
including, without limitation, the Mortgages, all of which may be
exercised successively or concurrently.
All collections of amounts due to Lender under any of the Loan
Documents (whether by payment, levy on assets, set off or
otherwise) shall be paid and applied in the following order: (i)
reimbursement of fees and expenses (including reasonable attorneys'
fees and expenses) incurred by Lender; (ii) payment of fees due to
Lender; (iii) without duplication, payment of accrued and unpaid
interest owed to Lender; (iv) payment of outstanding principal owed
to Lender and (v) to the Persons legally entitled thereto.
ARTICLE I.
MISCELLANEOUS
11.1 Waiver of Default. Any waiver hereunder shall be in
writing and shall be for such period and subject to such conditions
as shall be specified in any such notice. In the case of any
waiver, Borrower and Lender shall be restored to their former
position and rights hereunder and under the Term Note and any
Default Condition or any Event of Default so waived shall be deemed
to be cured and not continuing during the period such waiver shall
be effective; but no such waiver shall extend to any subsequent or
other Default Condition or Event of Default, or impair any right
and/or remedy consequent thereon.
11.2 Notices. All notices, requests and demands to or upon
the respective parties hereto shall be deemed to have been given or
made when personally delivered or received by facsimile or
telecopier addressed as follows or to such other address as may
hereafter be designated in writing by the respective parties
hereto:
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Borrower:
Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Attention: F. E. McDaniel, Jr.
Telecopier No.: (615) 231-2428
Confirmation No. (615) 231-2253
Lender:
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239-1697
Attn: John E. Ball
Telecopier No: (615) 749-4640
Confirmation No. (615) 749-3469
Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be
deemed to be receipt of the notice, demand or request sent. By
giving at least thirty (30) days written notice thereof, Borrower
and Lender shall have the right from time to time and at any time
to change their respective addresses and each shall have the right
to specify any other address within the continental United States
of America.
11.3 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Lender, any right,
power, or privilege hereunder, shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights
and remedies herein provided are cumulative and not exclusive of
any rights or remedies provided by law.
11.4 Amendments. The provisions of this Agreement may be
amended or modified by Lender and Borrower at any time and from
time to time and any such amendment or modification shall be
binding upon the parties hereto; provided, however, that no amend-
ment, waiver or consent shall be effective unless given or made in
writing by the party against whom enforcement is sought. Notwith-
standing the foregoing and notwithstanding anything to the contrary
contained in this Agreement, in the event any of the provisions of
the Credit Agreement corresponding to the Floating Provisions are
modified, amended or waived, the applicable Floating Provisions
shall be deemed to be automatically (and without the need of
further writings by the parties hereto) likewise and similarly
modified, amended or waived; provided that if the Credit Agreement
is terminated for any reason the Floating Provisions shall be
deemed to be those corresponding provisions of the Credit Agreement
as it existed on the day immediately preceding termination.
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11.5 Assignments and Participations. No assignment hereof
shall be made by Borrower without the prior written consent of
Lender. Lender may assign and sell participations in its right,
title and interest herein and in the Loan Documents at any time
hereafter; provided, however, that Borrower shall not be required
to pay any amount to Lender under Section 4.9 that is greater than
the amount which it would have been required to pay had Lender not
assigned or sold participations.
11.6 Counterparts. This Agreement may be executed in any
number of counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
11.7 Governing Law. This Agreement and the Term Note and the
rights and obligations of the parties hereunder and thereunder
shall be governed by, and construed and interpreted in accordance
with, the laws of the State of Tennessee.
11.8 Severability. In case any one or more of the provisions
contained in this Agreement or the Term Note should be invalid,
illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
11.9 Entire Agreement. This Agreement and the other Loan
Documents constitute the entire agreement between the parties
hereto with respect to the subject matter hereof. Neither this
Agreement and the other Loan Documents nor any provision hereof or
thereof may be changed, waived, discharged, modified or terminated
orally, but only by an instrument in writing signed by the parties
hereto.
11.10 Time of the Essence. Time is of the essence in this
Agreement and the Term Note.
11.11 Interpretation. No provision of this Agreement, the
Term Note or the other Loan Documents shall be construed against or
interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such
provision.
11.12 Lender Not Joint Venturer. Neither this Agreement, the
other Loan Documents nor any agreements, instruments, documents or
transactions contemplated hereby (including the Term Note) shall in
any respect be interpreted, deemed or construed as making Lender a
partner or joint venturer with Borrower or as creating any similar
relationship or entity, and Borrower agrees that it will not make
any contrary assertion, contention, claim or counterclaim in any
action, suit or other legal proceeding involving Lender and
Borrower.
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11.13 Reimbursement. Borrower shall pay to Lender on demand
all reasonable out-of-pocket costs and expenses that Lender pays or
incurs in connection with the negotiation, preparation,
consummation, enforcement and termination of this Agreement and the
other Loan Documents, including, without limitation: (a) reason-
able attorneys' fees and paralegals' fees and disbursements of
counsel, (b) reasonable costs and expenses (including reasonable
attorneys' and paralegals' fees and disbursements) for any amend-
ment, supplement, waivers, consent or subsequent closing in
connection with the Loan Documents and the transactions
contemplated thereby; (c) reasonable and actual costs and expenses
of lien and title searches; (d) actual taxes, fees and other
charges for filing financing statements and continuations, and
other actions to perfect, protect and continue the Lien of Lender
on the Collateral; (e) sums paid or incurred to be paid by Lender
to pay for any amount or take any action required of Borrower under
the Loan Documents that Borrower fails to pay or take; (f) if an
Event of Default exists, reasonable costs of appraisals,
inspections and verifications of the Collateral, including, without
limitation, reasonable costs of travel, lodging, and meals for
inspections of the Collateral and Borrower's operations by Lender;
(g) pursuant to Section 11.16, reasonable costs and expenses of
preserving and protecting the Collateral; and (h) after an Event of
Default, costs and expenses (including reasonable attorneys' and
paralegals' fees and disbursements) paid or incurred to obtain pay-
ment of the Term Note and the other Obligations, enforce the Lien
of Lender in the Collateral or any part thereof, sell or otherwise
realize on the Collateral and otherwise enforce the provisions of
the Loan Documents or to defend any claims made or threatened
against Lender arising out of the transactions contemplated hereby
(including, without limitation, preparations for and consultations
concerning any such matters). The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by Borrower. Any Person seeking
indemnification pursuant to this Section 11.13 shall submit a
statement to Borrower therefor, which Borrower shall promptly pay,
absent manifest error, and in any event, all of the foregoing costs
and expenses may, in the discretion of Lender, be charged to the
Term Note. In the event Borrower becomes a debtor under the
Bankruptcy Code, Lender's secured claims in such case shall include
interest on the Obligations and all fees, costs and charges
provided for herein (including, without limitation, reasonable
attorneys' fees paid or incurred by Lender).
11.14 Waiver of Trial by Jury. TO THE FULLEST EXTENT
PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES TRIAL BY
JURY IN ANY JUDICIAL PROCEEDING TO WHICH IT IS A PARTY INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE
RELATIONSHIP ESTABLISHED HEREUNDER AND WHETHER ARISING OR ASSERTED
BEFORE OR AFTER THE DATE HEREOF OR BEFORE OR AFTER THE PAYMENT,
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OBSERVANCE AND PERFORMANCE IN FULL OF BORROWER'S OBLIGATIONS
HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS.
11.15 Termination Statements and Partial Release. Borrower
agrees that Lender shall not be required to file UCC termination
statements unless and until all Obligations have been paid in full
and Lender shall have no further commitment hereunder; provided,
however, that Lender will execute appropriate partial releases of
Collateral in connection with any sale or other transfer or convey-
ance of Collateral made prior to such time to the extent such sale
or other transfer or conveyance is expressly permitted hereunder or
under any of the other Loan Documents or is consented to in writing
by Lender.
11.16 Cure of Defaults. If Borrower hereafter defaults in the
performance of any duty or obligation to Lender hereunder, Lender
may, at its option, but without obligation, cure such default and
any costs, fees and expenses incurred by Lender in connection
therewith including, without limitation, for the purchase of
insurance, the payment of taxes and the removal or settlement of
liens and claims, shall be deemed to be advances under the Term
Loan, whether or not this creates an over-advance under the Term
Note, and shall be payable in accordance with its terms.
11.17 Attorney-in-Fact. Borrower hereby irrevocably
designates, appoints and empowers Lender as its attorney-in-fact at
Borrower's cost and expense, during the existence of any Event of
Default, to do in the name of Borrower any and all actions which
Lender may deem necessary or advisable to carry out the terms
hereof upon the failure, refusal or inability of Borrower to do so
and Borrower hereby agrees to indemnify and hold Lender harmless
from any costs, damages, expenses or liabilities arising against or
incurred by Lender in connection therewith. This power of
attorney, being coupled with an interest, shall be irrevocable,
shall continue until all Obligations have been satisfied in full or
waived by Lender and this Agreement has been terminated by Lender
in writing and shall be in addition to Lender's other rights,
powers and remedies.
IN WITNESS WHEREOF, Borrower and Lender have each caused this
Agreement to be duly executed by its duly authorized officer, as of
the day and year first above written.
"BORROWER"
SHONEY'S, INC.
By:
-------------------------------
Title:
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"LENDER"
NATIONSBANK OF TENNESSEE, N.A.
By:
-------------------------------
Title:
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EXHIBIT A
TERM NOTE
$28,000,000.00 December __, 1994
Nashville, Tennessee
FOR VALUE RECEIVED, the undersigned, SHONEY'S, INC., a
Tennessee corporation ("Borrower"), promises to pay to the order of
NATIONSBANK OF TENNESSEE, N.A., a national banking association
("Lender"), at One NationsBank Plaza, Nashville, Tennessee 37239,
or at such other place as Lender hereafter may direct in writing,
in legal tender of the United States of America, the principal sum
of TWENTY EIGHT MILLION DOLLARS ($28,000,000.00), or so much
thereof as may remain outstanding from time to time hereafter of
that certain Term Loan made by Lender to Borrower pursuant to the
terms of that certain Loan Agreement dated as of December 1, 1994,
between Borrower and Lender (as it may be amended or supplemented
from time to time, the "Agreement"), the terms and provisions of
which are hereby incorporated herein by reference and made a part
hereof (capitalized terms which are defined in the Agreement and
which are used herein and not otherwise defined herein shall have
the same meanings when used herein as assigned thereto in the
Agreement), payable on the terms and dates and in the amounts as
hereinafter provided, and to pay interest thereon from the date
hereof until paid in full at the rate or rates established from
time to time pursuant to the Agreement.
Subject to the mandatory and optional prepayment provisions
described in the Agreement, the principal amount of this Term Note
shall be due and payable in nine (9) consecutive semi-annual
installments, the first eight (8) of which shall be in the amount
of Nine Hundred Thirty-Three Thousand Three Hundred Eighty Dollars
($933,380.00) and the last of which shall be in the amount of
Twenty Million Five Hundred Thirty-Two Thousand Nine Hundred Sixty
Dollars ($20,532,960.00), the first such installment being due on
December 22, 1995, with such installments continuing to be due on
each June 22 and December 22 thereafter through and including
December 22, 1999, on which date the entire remaining unpaid
principal amount of this Term Note together with all accrued
interest thereon shall be due and payable.
Accrued interest on the unpaid principal balance hereof shall
be due and payable on each Interest Payment Date, on the
Termination Date and otherwise as provided in the Agreement.
Each payment made on account of principal, and each Rate of
Borrowing in effect from time to time, shall be recorded by Lender,
and such information so recorded shall be conclusive with respect
to such matters absent manifest error.
Upon an Event of Default, the rate of interest on amounts then
outstanding hereunder shall increase automatically and without
notice to the Default Rate and such interest shall be payable on
demand.
Borrower agrees, in the event that this Term Note or any
portion hereof is collected by legal action or through an attorney
at law, to pay all costs of collection, including, without
limitation, reasonable attorneys' fees.
This Term Note evidences a borrowing under, is subject to, and
shall be paid, matured and enforced in accordance with, the terms
of the Agreement, and is the "Term Note" defined in Section 1.1
thereof. Borrower shall have the right and shall be required to
prepay this Term Note as provided in and subject to the conditions
set forth in the Agreement, and without premium or penalty except
as provided in the Agreement.
Nothing herein shall limit any right granted Lender by any
other instrument or by law.
Borrower hereby waives presentment, demand, protest, notice of
demand, protest and nonpayment, notice of intent to accelerate,
notice of acceleration and any other notice required by law
relative hereto, except to the extent as otherwise may be provided
for in the Agreement.
IN WITNESS WHEREOF, Borrower has caused this Term Note to be
executed by its duly authorized officer as of the day and year
first above written.
"BORROWER"
SHONEY'S, INC.
By:_____________________________
Title:
Attest:_________________________
Title:
EXHIBIT B
COMPLIANCE CERTIFICATE
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: John E. Ball
Re: Shoney's, Inc. -- Loan Agreement
dated as of December 1, 1994
Ladies and Gentlemen:
This Compliance Certificate is being delivered pursuant to the
Loan Agreement dated as of December 1, 1994 (together with all
amendments, supplements, amendments and restatements and other
modifications, if any, from time to time made thereto, the
"Agreement"), between Shoney's, Inc., a Tennessee corporation (the
"Borrower"), and NationsBank of Tennessee, N.A., a national banking
association (the "Lender"). Capitalized terms used herein without
definition shall have the meanings assigned to such terms in
Section 1.1 of the Agreement. All computations performed herein
shall conform to the method of computation required by the
Agreement.
The Borrower hereby certifies, represents and warrants that as
of __________ __, 19__ (the "Computation Date"):
(a) Consolidated Net Worth was $________________ as computed on
Attachment I hereto.
The minimum Consolidated Net Worth required pursuant to clause
(a) of Section 8.5 of the Agreement on the Computation Date
was $_________________.
(b) The Funded Debt Ratio was _____ to 1:00, as computed on
Attachment 2 hereto.
The maximum Funded Debt Ratio required pursuant to clause (b)
of Section 8.5 of the Agreement on the Computation Date was
____:1.00.
(c) The Consolidated Funded Debt was $_____________ as computed on
Attachment 3 hereto.
The maximum Consolidated Funded Debt required pursuant to
clause (c) of Section 8.5 of the Agreement on the Computation
Date was $_________________.
(d) The Adjusted Interest Coverage Ratio was _____:1.00, as
computed on Attachment 4 hereto.
The minimum Adjusted Interest Coverage Ratio required pursuant
to clause (d) of Section 8.5 of the Agreement on the
Computation Date was _____:1.00.
(e) The Consolidated Fixed Charge Coverage Ratio was ____:1.00, as
computed on Attachment 5 hereto.
The minimum Consolidated Fixed Charge Coverage Ratio required
pursuant to clause (e) of Section 8.5 of the Agreement on the
Computation Date was ____:1.00.
(f) Consolidated Capital Expenditures made thus far for the 19__
Fiscal Year were $____________.
The maximum amount of Consolidated Capital Expenditures
permitted pursuant to Section 8.7 of the Agreement (including
$____________ in carry over from prior Fiscal Years) on the
Computation Date was $____________.
(g) The aggregate amount of unsecured revolving indebtedness
outstanding on the Computation Date was $_______________.
The maximum aggregate principal amount of unsecured revolving
indebtedness permitted pursuant to clause (b) of Section 8.4
of the Agreement on the Computation Date was $_____________.
(h) Indebtedness of the Borrower and its Subsidiaries (other than
Realco) to one or more vendors of any assets to finance its
acquisition of such assets on the Computation Date was
$____________.
The maximum aggregate amount outstanding in respect of
Indebtedness of the Borrower and its Subsidiaries (other than
Realco) to a vendor of any assets to finance its acquisition
of such assets pursuant to clause (e) of Section 8.4 of the
Agreement on the Computation Date was $_____________.
(I) The aggregate capitalized amount payable under Capitalized
Leases was $______________.
The maximum aggregate capitalized amounts payable under
Capitalized Leases permitted pursuant to clause (f) of Section
8.4 of the Agreement on the Computation Date was $__________.
(J) The Indebtedness of the Borrower in respect of trade or
commercial letters of credit was $_____________.
The maximum aggregate amount outstanding in respect of trade
or commercial letters of credit permitted pursuant to
clause (g) of Section 8.4 of the Agreement on the Computation
Date was $_____________.
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(k) Indebtedness of the Borrower in respect of standby letters of
credit (other than any standby letters of credit issued in
connection with Mortgage Financing Transactions) was
$_____________.
The maximum aggregate amount outstanding in respect of standby
letters of credit permitted pursuant to clause (g) of Section
8.4 of the Agreement on the Computation Date was $__________.
(l) Indebtedness incurred by the Borrower under and in connection
with Mortgage Financing Transactions thus far for the 1994
Fiscal Year was $__________.
The maximum amount of Indebtedness with respect to Mortgage
Financing Transactions permitted pursuant to clause (i) of
Section 8.4 of the Agreement in respect of the current Fiscal
Year on the Computation Date was $__________.
(m) No Default Condition or Event of Default has occurred and is
continuing.
IN WITNESS WHEREOF, the Borrower has caused this Certificate
to be executed and delivered by its duly Authorized Officer on this
_____ day of ______________, 19__.
SHONEY'S, INC.
By:
---------------------------
Its
-3-
COMPLIANCE CERTIFICATE
Attachment 1
CONSOLIDATED NET WORTH
1. Shareholders' equity (deficit)
per Balance Sheet $_____________
2. Adjustments
(a) Treasury stock (to the extent not
included in item 1) $_____________
(b) Write-up in book value of assets
resulting from revaluation $_____________
(c) Total Adjustments (item (a)
plus item b)) $_____________
3. Consolidated Net Worth (deficit)
(item (1) minus item 2 (c)) $_____________
MINIMUM AMOUNT ALLOWABLE PER COVENANT
Consolidated Net Worth as of __________ __, 19__ $_____________
Attachment 2
FUNDED DEBT RATIO
1. Indebtedness (as computed in
accordance with the definition of
such term in the Agreement)
(including accrued interest on the
Subordinated LYONS Notes and debt
incurred with respect to Mortgage
Financing Transactions) plus the
amount of reserve for litigation
settlement $_____________
2. Adjustments
(a) Obligations with respect to
Rate Swap Agreements $_____________
(b) Any withdrawal liability to
a Multiemployer Plan $_____________
(c) Total Adjustments
(item (a) plus item (b)) $_____________
3. Consolidated Funded Debt (item 1
minus item 2 (c)) $_____________
4. Consolidated Net Income $_____________
5. Adjustments
(a) All income taxes $_____________
(b) Consolidated Interest Expense $_____________
(c) Non-cash interest charges,
depreciation, amortization and
amortization of transaction costs
with respect to Indebtedness and
amortization of bond discount
relating to the Subordinated
Debentures (to the extent not
included in item 4.) $_____________
(d) Total adjustments
(item (a) plus item (b)
plus item (c)) $_____________
6. EBITDA (Item 4 plus 5(d)) $_____________
7. Item 3 divided by item 6 ____
-2-
Attachment 3
CONSOLIDATED FUNDED DEBT
1. Indebtedness (as computed in
accordance with the definition of
such term in the Agreement)
(including accrued interest on the
Subordinated LYONS Notes and debt
incurred with respect to Mortgage
Financing Transactions) plus the
amount of reserve for litigation
settlement $_____________
2. Adjustments
(a) Obligations with respect to
Rate Swap Agreements $_____________
(b) Any withdrawal liability to a
Multiemployer Plan $_____________
(c) Total adjustments
(item (a) plus item (b)) $_____________
3. Consolidated Funded Debt (item 1
minus item 2(c)) $_____________
Attachment 4
ADJUSTED INTEREST COVERAGE RATIO
1. Adjusted EBITDA
(EBITDA minus Consolidated Capital
Expenditures (other than in respect
of Franchisee Acquisitions)) $_____________
2. Consolidated Interest Expense
paid or payable in cash $_____________
3. Adjusted Interest Coverage Ratio
(item 1 divided by item 2) _____
Attachment 5
CONSOLIDATED FIXED-CHARGE COVERAGE RATIO
1. EBITDA $_____________
2. Consolidated Lease Expense $_____________
3. Consolidated Interest Expense $_____________
4. Scheduled payments of any Consolidated
Funded Debt (including, without
limitation, the amount of scheduled
payments under Capitalized Leases,
other than such as is appropriately
allocable to Consolidated Interest
Expense) net of proceeds of insurance
recoveries for such period received
by the Borrower in respect of certain
litigation against the Borrower as
reflected in the Borrower's Annual
Report on Form 10-K for its 19__ Fiscal
Year; provided, however, that for purposes
of this clause (b) only, Consolidated
Funded Debt shall not include any
Indebtedness permitted under clause
(b) of Section 8.4 or any similar
indebtedness permitted under clause
(c) of Section 8.4 so long as such
Indebtedness is, by its terms,
renewable and the provider of such
Indebtedness has not declined to so
renew such Indebtedness $_____________
5. All federal, state and local income
taxes of the Borrower and its
Subsidiaries $_____________
6. Consolidated Fixed Charges (item 2
plus item 3 plus item 4 plus item 5) $_____________
7. Item 1 plus item 2 $_____________
8. Item 7 divided by item 6 _____
-2-
EXHIBIT C
INTEREST NOTICE
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Attention: John E. Ball
Re: Shoney's, Inc. ("Borrower"); Loan Agreement
dated as of December 1, 1994
Ladies and Gentlemen:
This Interest Notice is delivered to you pursuant to Section
4.1.3 of the above referenced Loan Agreement (together with all
amendments, if any, from time to time made thereto, the
"Agreement"). Unless otherwise defined herein or the context
otherwise requires, terms used herein have the meanings provided in
the Agreement.
Borrower hereby requests that on ________________, 19____:
1. $_____________ of the presently outstanding principal
amount of the Term Loan,
2. be [converted into] [continued as],
3. [a Fixed Rate Portion bearing interest at a rate based on
a Libor Rate having an Interest Period of ___________ months] [a
Floating Rate Portion].
Borrower has caused this Interest Notice to be executed and
delivered, and the certification and warranties contained herein to
be made, by its duly authorized officer this _____ day of
___________, 19__.
SHONEY'S, INC.
By:____________________________
Title:_________________________
EXHIBIT D
MORTGAGE FINANCING COLLATERAL
Omitted due to immateriality
EXHIBIT E
EXHIBIT E
RELEASE AMOUNTS
LEE'S RESTAURANTS
STORE NO. LOCATION RELEASE AMOUNT
5761 Birmingham, AL $322,562
8532 Jacksonville, FL $444,459
5764 St. Charles, MO $451,472
5763 Dellwood, MO $437,488
5765 Franklin, TN $438,592
CAPTAIN D'S RESTAURANTS
STORE NO. LOCATION RELEASE AMOUNT
3533 Anniston, AL $291,788
3319 Florence, AL
Lot 1 $480,471
Lot 2 $146,206
3371 Jacksonville, FL $333,106
3528 Macon Rd., Columbus, GA
Lot 1 $254,006
Lot 2 $0
3601 Victory Dr.,
Columbus, GA $205,085
3563 Joseph, MO $396,504
3600 Jackson, MS $348,029
3411 Oklahoma City, OK $236,604
3671 Tullahoma, TN $275,371
3521 Huntington, WV $408,745
SHONEY'S RESTAURANTS
STORE NO. LOCATION RELEASE AMOUNT
1439 St. Augustine, FL $834,196
1525 Fairview Heights, IL $904,100
1319 Valparaiso, IN $656,696
1320 Portage, IN $674,498
1190 Merriam, KS $868,101
1604 Hutchinson, KS $534,448
8600 Lake Charles, LA $741,328
1510 Jennings, LA $580,717
1623 Birch Run, MI $811,361
1318 Benton Harbor, MI $605,571
1361 Taylor, MI $774,473
1238 St. Louis, MO $625,723
1261 Hattiesburg, MS $522,751
1531 Omaha, NE $891,076
1454 Mansfield, OH $679,841
1463 Reynoldsburg, OH $982,233
1464 St. Clairsville, OH $760,000
1554 Ardmore, OK $644,348
1232 Hendersonville, TN $792,159
1214 Cookeville, TN $475,421
1231 Franklin, TN $660,690
1255 Manchester, TN $687,054
1386 Fry Rd., Katy, TX $815,083
1385 I-810 Kirby,
Houston, TX $856,490
1384 Hillcroft Ave.,
Houston, TX $801,066
1111 Huntington, WV $725,848
PARGO'S RESTAURANTS
STORE NO. LOCATION RELEASE AMOUNT
7709 Frederick, MD $1,102,396
7712 Chesapeake, VA $1,258,586
7713 Virginia Beach, VA $1,320,992
EXHIBIT F
December 21, 1994
NationsBank of Tennessee, N.A.
One NationsBank Plaza
Nashville, Tennessee 37239
Re: Loan Agreement, dated as of December 1, 1994 (the
"Agreement") between Shoney's, Inc., a Tennessee
corporation (the "Borrower"), and NationsBank of
Tennessee, N.A., a National Banking Association (the
"Lender")
Ladies and Gentlemen:
We have acted as general counsel for the Borrower in
connection with the execution and delivery of the Agreement and
counterparts of the Master Mortgage Indenture, Deed of Trust and
Deed to Secure Debt with Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated as of December 1, 1994 (the
"Mortgages"), and have participated on the Borrower's behalf in
connection with the closing of the loan contemplated by the
Agreement (the "Loan") in Nashville, Tennessee. This Opinion
Letter is provided to the Lender at the request of the Borrower
pursuant to Section 5.1(d) of the Agreement. This Opinion Letter
is governed by, and shall be interpreted in accordance with, the
Legal Opinion Accord (the "Accord") of the ABA Section of Business
Law (1991). As a consequence, all opinions set forth in this
Opinion Letter are subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other
limitations, including but not limited to the General
Qualifications set forth in the Accord, all as more particularly
described in the Accord, and this Opinion Letter should be read in
conjunction therewith. Also, except as otherwise indicated herein,
capitalized terms used in this Opinion Letter and not otherwise
defined herein shall have the meanings ascribed thereto in the
Agreement or the Accord and, in the event of an inconsistency
between the definitions in the Agreement and the Accord, the
definitions in the Agreement shall govern.
In connection with the foregoing, we have examined, among
other things, the following documents:
(a) an executed copy of the Agreement;
(b) the executed Term Note;
NationsBank of Tennessee, N.A.
December 21, 1994
Page 2
(c) executed counterparts of the Mortgages;
(d) all other documents furnished by the Borrower pursuant to
Section 5.1 of the Agreement and in connection with the
closing of the Loan;
(e) the Constituent Documents of the Borrower;
(f) a Certificate of Existence for the Borrower issued by the
Secretary of State of Tennessee dated December 19, 1994
(the "Certificate of Existence"); and
(g) the documents filed (including those incorporated by
reference) by the Borrower with the Securities and
Exchange Commission as exhibits to the Borrower's Annual
Report on Form 10-K for the fiscal year ended October 31,
1993 (the "Borrower Agreements") and Court Orders covered
by the opinion set forth in paragraph (6) below.
For purposes of this Opinion Letter, we have relied upon
factual information provided by others (including factual
representations by the Borrower in the Loan Documents and
certificates of officers of the Borrower) and information set forth
in Public Authority Documents. The Law covered by the opinions set
forth below is limited to the federal law of the United States of
America and the Law of the State of Tennessee.
Based upon and subject to the other provisions of this Opinion
Letter, it is our opinion that:
1. In sole reliance upon the Certificate of Existence, a
copy of which has been delivered to you, the Borrower is a
corporation validly existing and in good standing under the laws of
the State of Tennessee. In accordance with T.C.A. Section 48-11-309(c),
the Certificate of Existence is "conclusive evidence that the
corporation is in existence or is authorized to transact business"
in the State of Tennessee and "is in good standing." We have
relied upon this statute in rendering this opinion.
2. The Borrower has the corporate power and authority to
execute, deliver, and perform under the Loan Documents and has
taken all necessary and appropriate corporate action to authorize
the execution, delivery, and performance of the Loan Documents to
which the Borrower is a party.
3. Assuming the valid execution by the parties thereto, if
any, other than the Borrower, the Agreement, the Term Note, and the
Mortgages (to the extent governed by the Laws of the State
NationsBank of Tennessee, N.A.
December 21, 1994
Page 3
of Tennessee) constitute valid and legally binding obligations of
the Borrower, enforceable against the Borrower in accordance with
their respective terms.
4. No consent or authorization of or notice or filing with
any of the Borrower's stockholders or any Governmental Authority of
the United States of America or the State of Tennessee is required
in connection with the execution, delivery, or performance by the
Borrower of the Loan Documents to which the Borrower is a party.
5. Those officers of Borrower listed in the resolutions of
the Board of Directors of the Borrower adopted October 13, 1994 and
the incumbency certificate from the Borrower dated as of the date
hereof, are duly authorized and empowered to execute, attest, and
deliver the Loan Documents to which the Borrower is a party for and
on behalf of the Borrower.
6. Execution and delivery by the Borrower of, and
performance of its agreements in, the Loan Documents do not: (a)
violate the Constituent Documents of the Borrower; (b) breach, or
result in a default under, any existing obligations of the Borrower
under any material contracts of the Borrower of which we have
knowledge or under the Borrower Agreements; (c) breach or otherwise
violate any existing obligation of the Borrower under any Court
Orders applicable to the Borrower of which we have knowledge; or
(d) violate any applicable provisions of statutory law or
regulations.
7. To our knowledge, except as set forth in Exhibit I to the
Agreement, there are no proceedings pending or threatened before
any court or administrative agency which might have a Materially
Adverse Effect.
The opinions expressed herein are also subject to the
following assumption and qualifications:
(a) We have assumed that the Floating Rate plus the
Applicable Margin, the Fixed Rate plus the Applicable Margin,
and the Default Rate at any time during which either the
Floating Rate plus the Applicable Margin, the Fixed Rate plus
the Applicable Margin, or the Default Rate applies, does not
exceed the greater of: (i) the "formula rate" (defined in
T.C.A. Section 47-14-102 as an "annual rate of interest four (4%)
percentage points above the average prime loan rate (or the
average short-term business loan rate, however denominated)
for the most recent week for which such an average rate has
been published by the board of governors of the Federal
Reserve System of the United States, or twenty-four percent
NationsBank of Tennessee, N.A.
December 21, 1994
Page 4
(24%) per annum, whichever is less") existing on the date hereof;
or (ii) the "formula rate" existing at any such time as either the
Floating Rate plus the Applicable Margin, the Fixed Rate plus the
Applicable Margin, or the Default Rate applies.
(b) We express no opinion as to any matter not
specifically stated to be and numbered as an opinion.
(c) We express no opinion as to the enforceability of
any provision in the Agreement, the Term Note, or the
Mortgages, which purports: (i) to impose on the Lender
standards for the care of Collateral in the possession of the
Lender; or (ii) to provide for or effect a confession of
judgment on the part of the Borrower in any amount.
(d) We express no opinion as to the Borrower's ability
to repay or otherwise satisfy the Loan.
The opinions expressed herein are solely for the benefit of
the Lender, its successors and any assignees and participants
permitted under the Agreement, and may not be relied upon by, and
may not be copied or distributed to, any other person or entity
without our express written consent.
Very truly yours,
TUKE YOPP & SWEENEY
EXHIBIT G
PROPERTIES WITH
ENVIRONMENTAL REPORTS
(Section 5.1(j))
Location Store State Concept
Dellwood, Missouri 5763 Missouri Lee's Famous Recipe
EXHIBIT H
APPRAISED PROPERTIES
(Section 5.1(k))
Location Store State Concept
Hendersonville 1232 Tennessee Shoney's
Florence 3319 Alabama Captain D's
Franklin 5765 Tennessee Lee's Famous
Recipe
Virginia Beach 7713 Virginia Pargo's
EXHIBIT I
MATERIAL PENDING OR THREATENED LITIGATION
Termination of Danner Stock Purchase Agreement: On June 30,
1993, and in a Current Report on Form 8-K dated June 30, 1993 and
filed with the Securities and Exchange Commission on July 8, 1993,
Shoney's, Inc. (the "Borrower") reported the termination of the
Stock Purchase Agreement, dated March 18, 1993 (the "Stock Purchase
Agreement"), between the Borrower and R.L. Danner, who was a
director of the Borrower, and certain affiliates of Mr. Danner. In
the Stock Purchase Agreement, the Borrower had agreed to purchase
4,632,701 shares of the Borrower's common stock owned by Mr. Danner
and his affiliates at a price of Twenty-Two and 875/1000 Dollars
($22.875) per share, which amounted in the aggregate to
$105,973,035. Completion of the proposed purchase was subject to:
(i) approval of the Borrower's lenders; (ii) receipt by the
Borrower of suitable financing; (iii) receipt by the Borrower of a
favorable opinion indicating that the purchase was fair to the
Borrower and its shareholders from a financial point of view and
that, following the purchase, the Borrower would be able to pay its
debts as they became due in the usual course of business and the
value of the Borrower's assets would exceed its liabilities; and
(iv) completion of any necessary regulatory filings. The purchase
originally was expected to be concluded on or before June 30, 1993.
The Stock Purchase Agreement was terminated due to the
Borrower's inability to satisfy certain contingencies with respect
to the transaction. Mr. Danner's attorneys advised the Borrower
that they considered the Borrower's failure to close under the
Stock Purchase Agreement to be a breach of the Stock Purchase
Agreement and that they reserved all rights to pursue all
responsible parties for all damages occasioned thereby. In
addition, Mr. Danner's attorneys are reported to have stated that
an action to enforce the Stock Purchase Agreement is an option
available to them. No action has been commenced at this time.
J&J Seafood v. Shoney's, Inc.: United States District
Court, Middle District of Tennessee (No. 3:94-1116). On December
l6, l994 counsel for J&J Seafood, Inc. ("J&J"), a franchisee of one
of the Borrower's "Captain D's" restaurants, informed counsel for
the Borrower, that unless by December 19, 1994, the Borrower
settled a pending case brought in Tennessee state court by J&J by
paying J&J $1,650,000 plus assumption of equipment leases at J&J's
Mt. Juliet, Tennessee store, J&J would file a class action anti-
trust and consumer protection act case against the Borrower. The
draft complaint alleges violations of Sections 1 and 2 of the
Sherman Act and a violation of the Tennessee Consumer Protection
Act. The thrust of the allegations are that the Borrower imposes a
"tying" arrangement requiring franchisees to purchase food and food
products from the Borrower's commissary. The complaint seeks up to
$500,000,000 in damages for the class and treble damages. The
claims to be asserted in this federal case are essentially the same
as certain claims made in the state court case; however, in that
earlier case the claims were made only by J&J (as distinguished
from being made on behalf of a class) and were identified as
consumer protection act claims, rather than as anti-trust claims.
The Borrower has filed a motion for summary judgment in the state
court case seeking dismissal of all claims. That motion is pending.
The Borrower rejected J&J's settlement demand and the threatened
federal case was filed on December 19, 1994.
EXHIBIT J
ENVIRONMENTAL MATTERS
Arnold, Missouri Property. Shoney's, Inc. (the "Borrower")
received a letter dated October 4, 1993 from Steven J. and Sandra
J. Zimmermann, giving notice of their intent to file suit under the
citizen suit provisions of the Clean Water Act, 33 U.S.C. Section
1365(a), and the Resource Conservation and Recovery Act, 42 U.S.C.
Section 7972(a), as well as under the Oil Pollution Act of 1990 and the
common law. Their letter alleges that petroleum hydrocarbons have
been discovered on the Zimmermanns' property, and that the source
is the Borrower, which they claim has violated the Clean Water Act
and the Resource Conservation and Recovery Act by unlawfully
discharging and disposing of diesel fuel on or at the site of a
restaurant the Borrower owns and operates at 1220 Big Bill Road in
Arnold, Missouri. The property was formerly operated as a service
station prior to its purchase by the Borrower in 1992. A release
of diesel fuel from underground storage tanks was documented at the
site in 1991, but the tanks were removed and the site remediated
under the oversight of the Missouri Department of Natural
Resources. The Borrower has not maintained any sources of diesel
fuel on the property since its purchase.
No suit has yet been filed against the Borrower. If suit is
filed, however, the Borrower anticipates filing a motion for
summary judgment seeking dismissal of the claims asserted against
it. The Borrower will assert that the alleged petroleum release
cannot have its source on the Borrower's property because there are
no current diesel fuel tanks on the premises and the property was
fully remediated in 1991. In addition, there are other potential
sources of hydrocarbon contamination in the area.
The Missouri Department of Natural Resources also is
investigating the Borrower's site as well as several neighboring
properties to determine the source of the contamination. At the
present time, the Missouri Department of Natural Resources has not
initiated an enforcement action; however, such an action is an
option available to it. The Borrower and potentially responsible
parties in the area have made certain limited investigations in an
attempt to locate the source of the contamination. To date, their
investigations have not resolved the issue of the source.
EXHIBIT K
Labor Matters
(Section 6.14)
NONE
EXHIBIT L
Existing Indebtedness
Omitted due to immateriality
EXHIBIT M
POST-CLOSING REQUIREMENTS
Borrower shall deliver each of the following to Lender:
1. As-built survey for Jackson, Mississippi store (#3600).
2. Comprehensive, access and survey endorsements for
Jackson, Mississippi store's (#3600) title policy in the
forms reasonably available from Chicago Title Insurance
Company.
3. Evidence of subdivision approval or plat revision for St.
Clairesville, Ohio store (#1464) and Houston, Texas
(Hillcroft) store (#1384) or other evidence that the lack
of such subdivision approval of plat revision will not
impair Lender's ability to foreclose on and sell those
stores upon an Acceleration Event.
4. Certification from the Borrower that a variance approves
the location of the Birmingham, Alabama store (#5761).
5. Evidence that the zoning ordinance applicable to the
Ardmore, Oklahoma store (#1554) would prohibit drilling
on the property or that drilling on the property is not
reasonably likely to occur.
6. Evidence that the loss of month-to-month leased property
adjoining the Oklahoma City, Oklahoma store (#3411) would
not cause the property to be in violation of the
applicable zoning regulations or that such violation
would not prevent the normal operation of the store.
7. Evidence that the access easement for the St. Augustine,
Florida store (#1493) is contiguous to Route 208 or that
access is otherwise available.
8. Subordination agreement relating to the Lake Charles,
Louisiana store (#8600) reasonably satisfactory to
Lender.
9. Written appraisals of the properties identified on
Exhibit H to the Loan Agreement to which this Exhibit M
is attached.