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EXHIBIT
4.02
EXECUTION VERSION
EIGHTH
AMENDMENT TO CREDIT AGREEMENT
THE STEAK N SHAKE
COMPANY , an Indiana corporation (the
“Company”) and FIFTH THIRD BANK,
a Michigan banking corporation, formerly known as Fifth Third
Bank (Central Indiana), and Fifth Third Bank, Indiana
(Central) (the “Bank”), being parties to that
certain Credit Agreement dated as of November 16, 2001, as
previously amended (collectively, the
“Agreement”), agree to further amend the
Agreement by this Eighth Amendment to Credit Agreement (this
“Amendment”) as follows.
1.
DEFINITIONS
. All defined terms used herein not otherwise
defined in this Amendment shall have their respective
meanings set forth in the Agreement.
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(a)
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Amended Definitions . The following definitions
appearing under Section 1 of the Agreement are hereby amended and
restated in their respective entireties as follows:
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c.
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"
Applicable
Spread " means that number of Basis Points to be taken into
account in determining the LIBOR-based Rate determined by reference
to the Company’s ratio of Funded Debt to EBITDA as
follows:
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Ratio of
Funded Debt to EBITDA
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Applicable Spread
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> 4.00
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250
b.p.
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> 3.00 but < 4.00
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200
b.p.
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> 2.00 but < 3.00
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150
b.p.
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<
2.00
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100
b.p.
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Effective
as of the date of the Eighth Amendment, the Applicable Spread shall
be the highest tier. Thereafter, the Applicable Spread shall be
determined as of the end of each fiscal quarter upon receipt of the
Company’s quarterly financial statements delivered in
accordance with Section 5(b)(ii) herein.
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x.
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“
Loan
Document ” means any of this Agreement, the Revolving
Note, the Guaranties, all Reimbursement Agreements, the Security
Agreement, the Intercreditor Agreement, and any other instrument or
document which evidences or secures the Loan or Letters of Credit,
or which expresses an agreement as to terms applicable to the Loan
or Letters of Credit, and in the plural means any two or more of
the Loan Documents, as the context requires.
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jj.
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“
Prudential Note
Purchase Agreement” means that certain Amended and
Restated Note Purchase and Private Shelf Agreement dated as of
September 20, 2002, entered into by and among the Company,
Prudential, Prudential Investment Management, Inc., and each
Prudential Affiliate party thereto, as amended, and as it may
hereafter be amended, modified, or restated from time to
time.
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(b)
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New Definitions . The following new definitions
are hereby added to Section 1 of the Agreement as
follows:
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vv.
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“
Collateral
” is used as defined in Section 4(a) herein.
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ww.
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“
Eighth
Amendment ” means that certain agreement entitled
“Eighth Amendment to Credit Agreement” entered into by
and between the Company and the Bank dated as of May 16, 2008, for
the purpose of amending this Agreement.
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xx.
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“
Intercreditor
Agreement ” is used as defined in Section 4(b)
herein.
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yy.
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“
Noteholders
” means Prudential Investment Management, Inc., The
Prudential Insurance Company of America, Pruco Life Insurance
Company, and United of Omaha Life Insurance Company, and their
respective successors and assigns.
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zz.
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“
Security
Agreement ” is used as defined in Section 4(a)
herein.
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2.
THE
REVOLVING LOAN . Sections 2(a)(i) and
2(a)(iv) and the first sentence of Section 2(a)(ii) of the
Agreement are hereby amended and restated in their respective
entireties, and a new Section 2(a)(vi) is hereby added to the
Agreement, all as follows:
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(i)
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The Commitment -- Use of Proceeds . From the date
of the Eighth Amendment and until the Revolving Loan Maturity Date,
the Bank agrees to make Advances (collectively, the
“Revolving Loan”) to the Company from time to time
under a revolving line of credit of amounts not exceeding in the
aggregate principal amount at any time outstanding the amounts
shown for the corresponding periods (such amount for each period
hereinafter called the “Commitment”) in the following
chart:
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Period
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Commitment
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Commencing
on the date of the Eighth Amendment and until and on
7/31/08
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$45,000,000
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On
8/1/08, and at all times thereafter until the Revolving Loan
Maturity Date
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$40,000,000
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Proceeds
of the Revolving Loan may be used by the Company only to fund
general corporate purposes.
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(ii)
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Method of Borrowing . The obligation of the
Company to repay the Revolving Loan shall be evidenced by a
Promissory Note of the Company in the form of Exhibit
“A” attached to the Eighth Amendment (the
“Revolving Note”).
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(iv)
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Unused Fee . The Company shall pay to
the Bank a facility or unused fee for each partial or
full calendar quarter during which the Commitment is outstanding
equal to, as of the date of the Eighth Amendment, thirty (30) Basis
Points per annum of the average daily excess of the Commitment over
the aggregate outstanding principal balance of the Revolving
Loan. For purposes of calculating the unused fee, the
aggregate amount available to be drawn under all outstanding
Letters of Credit shall be added to the aggregate outstanding
principal balance of the Revolving Loan for the same
period. Unused fees for each calendar quarter shall be
due and payable within ten (10) calendar days following the Bank's
submission of a statement of the amount due, and if not paid by
such date, then such fees may be debited by the Bank to any demand
deposit account of the Company carried with the Bank without
further authority. Such fees shall be calculated on the
basis of a year of 360 days and actual days elapsed.
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(vi)
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Excess Utilization Fee.
In
addition to the payment of accrued interest and the unused fee
provided in Section 2(a)(iv) herein, commencing on the date of the
Eighth Amendment, the Company shall also pay to the Bank an excess
utilization fee equal to fifty (50) Basis Points per annum on the
daily amount by which the aggregate outstanding principal amount of
the Revolving Loan on and after May 1, 2008, and until and on July
31, 2008, is in excess of $40,000,000. The excess utilization fee
shall be due and payable monthly within ten (10) calendar days
following the Bank's submission of a statement of the amount due,
and if not paid by such date, then such fees may be debited by the
Bank to any demand deposit account of the Company carried with the
Bank without further authority. Such fees shall be calculated on
the basis of a year of 360 days and actual days
elapsed.
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3.
FINANCIAL
COVENANTS . Sections 5(g)(i) and 5(g)(ii) of
the Agreement are hereby amended and restated in their
respective entireties as follows:
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(i)
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Maximum Ratio of Funded Debt to EBITDA . As of the end of
each period of four (4) consecutive fiscal quarters ending as of
the last day of each fiscal quarter commencing with the period of
four (4) consecutive fiscal quarters ending on April 9, 2008, the
Company shall maintain a ratio of Funded Debt to EBITDA of not more
than 4.75 to 1.00.
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(ii)
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Debt Service Coverage Ratio . As of the end
of each period of four (4) consecutive fiscal quarters ending as of
the last day of each fiscal quarter commencing with the period of
four (4) consecutive fiscal quarters ending on Aril 9, 2008, the
Company shall maintain a debt service coverage ratio of not less
than .70 to 1.00. For purposes of this covenant, the
phrase "debt service coverage ratio" means the ratio of: (A) the
sum of net income, interest expense, plus rent expense, to (B) the
sum of interest expense, rent expense, the Current
Portion of all lease obligations, plus the Current Portion of all
long term debt. The term “Current Portion” means all
payments scheduled to be paid over the twelve (12) month period
immediately following the date of determination.
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4.
SECURITY
AGREEMENT. New Section 4(a) is hereby
added to the Agreement as follows:
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a.
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Security Agreement . The Obligations shall be
secured by a security interest in all of the Company's equipment,
inventory, accounts receivable, chattel paper, software, general
intangibles and all deposit accounts maintained by the Company
individually or jointly with the Bank or any of the Bank's
affiliates, all whether now owned or hereafter acquired,
and in all proceeds thereof (all such business assets on which a
lien is granted to the Bank hereinafter collectively referred to as
the “Collateral”), which security interest will be
created by a Security Agreement in the form attached to
the Eighth Amendment as Exhibit "E"
(the "Security Agreement"). The Security Agreement shall
provide a security interest in the Collateral described therein
subject only to liens and security interests described in the
exceptions enumerated in Section 6(b) herein.
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b.
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Intercreditor Agreement . The liens on the Collateral
granted to the Bank and also granted to the Noteholders will be
given equal priority and treated as pari passu
pursuant to the terms of the Intercreditor and Collateral Agency
Agreement entered into by the Noteholders and the Bank, both in its
individual capacity and in the role of collateral agent for itself
and the Noteholders, contemporaneously with execution of the Eighth
Amendment in the form of Exhibit
“F” attached to thereto (the
“Intercreditor Agreement”).
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5.
NEW
STORES. New Section 6(k) is hereby added
to the Agreement as follows:
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k.
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Additional Stores. The Company shall not open
more than nine (9) new stores during its 2008 fiscal
year.
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6.
EVENTS
OF DEFAULT. New Section 8(h) is hereby
added to the Agreement as follows:
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h.
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Default under Prudential Note Purchase Agreement.
Default shall occur under the Prudential Note Purchase
Agreement, or there shall occur an event under the Prudential Note
Purchase Agreement, if the effect of such default or occurrence is
to accelerate the maturity of the indebtedness provided thereunder
or to permit the holders of such indebtedness to cause such
indebtedness to become due and payable prior to its scheduled
maturity.
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7.
REPRESENTATIONS
AND WARRANTIES . In order to induce the Bank
to enter into this Amendment, the Company affirms that the
representations and warranties contained in the Agreement are
correct as of the date of this Amendment, except that (i) they
shall be deemed to also refer to this Amendment as well as all
documents named herein and, (ii) Section
3(d) of the Agreement shall
be deemed also to refer to the most recent audited and
unaudited financial statements of the Company delivered to the
Bank.
8.
EVENTS
OF DEFAULT . The Company certifies to the
Bank that no Event of Default or Unmatured Event of Default
under the Agreement, as amended by this Amendment, has
occurred and is continuing as of the date of this
Amendment.
9.
CONDITIONS
PRECEDENT . As conditions precedent to the
effectiveness of this Amendment, the Bank shall have received
the following contemporaneously with execution and delivery
of this Amendment, each duly executed, dated and in form and
substance satisfactory to the Bank:
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(i)
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This
Amendment duly executed by the Company.
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(ii)
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The
Revolving Note in the form of Exhibit "A"
attached hereto duly executed by the Company.
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(iii)
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The
Reaffirmation of Guaranty Agreement in the form attached hereto as
Exhibit
"B" duly executed by Steak n Shake Operations,
Inc.
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(iv)
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The
Reaffirmation of Guaranty Agreement in the form attached hereto as
Exhibit
"C" duly executed by Steak n Shake Enterprises,
Inc.
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(v)
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The
Reaffirmation of Guaranty Agreement in the form attached hereto as
Exhibit
"D" duly executed by SnS Investment Company.
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(vi)
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A
Security Agreement in the form attached hereto as Exhibit "E"
duly executed by the Company.
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(vii)
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The
Intercreditor Agreement executed by Prudential and the Prudential
Affiliates, and acknowledged by the Company, in the form attached
hereto as Exhibit
“F.”
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(viii)
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Resolutions
of the Board of Directors of the Company authorizing the execution,
delivery and performance, respectively, of this Amendment, the
Revolving Note, Security Agreement, and all other Loan Documents
provided for in this Amendment to which the Company is a party
certified by the Secretary of the Board of Directors of the Company
as being in full force and effect and duly adopted as of the date
hereof.
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(ix)
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The
Certificate of the Secretary of the Board of Directors of the
Company certifying the names of the officer or officers authorized
to execute this Amendment, the Revolving Note, Security Agreement,
and all other Loan Documents provided for in this Amendment to
which the Company is a party, together with a sample of the true
signature of each such officer, dated as of the date of this
Amendment.
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(x)
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Resolutions
of the Board of Directors of Steak n Shake Operations, Inc., an
Indiana corporation, authorizing the execution, delivery and
performance, respectively, of its Reaffirmation of Guaranty
Agreement and all other Loan Documents provided for in this
Amendment to which Steak n Shake Operations, Inc. is a party
certified by the Secretary of the Board of Directors of Steak n
Shake Operations, Inc. as being in full force and effect and duly
adopted as of the date hereof.
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(xi)
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The
Certificate of the Secretary of the Board of Directors of Steak n
Shake Operations, Inc. certifying the names of the officer or
officers authorized to execute its Reaffirmation of Guaranty
Agreement and all other Loan Documents provided for in this
Amendment to which Steak n Shake Operations, Inc. is a party,
together with a sample of the true signature of each such officer,
dated as of the date of this Amendment.
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(xii)
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Resolutions
of the Board of Directors of Steak n Shake Enterprises, Inc., an
Indiana corporation, authorizing the execution, delivery and
performance, respectively, of its Reaffirmation of Guaranty
Agreement and all other Loan Documents provided for in this
Amendment to which Steak n Shake Enterprises, Inc. is a party
certified by the Secretary of the Board of Directors of Steak n
Shake Enterprises, Inc. as being in full force and effect and duly
adopted as of the date hereof.
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(xiii)
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The
Certificate of the Secretary of the Board of Directors of Steak n
Shake Enterprises, Inc. certifying the names of the officer or
officers authorized to execute its Reaffirmation of Guaranty
Agreement and all other Loan Documents provided for in this
Amendment to which Steak n Shake Enterprises, Inc. is a party,
together with a sample of the true signature of each such officer,
dated as of the date of this Amendment.
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(xiv)
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Resolutions
of the Board of Directors of SnS Investment Company, an Indiana
corporation, authorizing the execution, delivery and performance,
respectively, of its Reaffirmation of Guaranty Agreement and all
other Loan Documents provided for in this Amendment to which SnS
Investment Company is a party certified by the Secretary of the
Board of Directors of SnS Investment Company as being in full force
and effect and duly adopted as of the date hereof.
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(xv)
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The
Certificate of the Secretary of the Board of Directors of SnS
Investment Company certifying the names of the officer or officers
authorized to execute its Reaffirmation of Guaranty Agreement and
all other Loan Documents provided for in this Amendment to which
SnS Investment Company is a party, together with a sample of the
true signature of each such officer, dated as of the date of this
Amendment.
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(xvi)
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An
amendment fee in the amount of $100,000 payable to the Bank by the
Company contemporaneously with the execution of this
Amendment.
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10.
WAIVERS
. The Bank hereby consents to, and waives the
prohibition provided in Section 6(b) of the Agreement against,
the Company granting to the noteholders under the Prudential
Note Purchase Agreement a security interest in the Collateral
on the condition that the priority of such lien is equal to
and pari
passu with the lien granted by the Company to the Bank
in the Collateral, pursuant to the terms of the Intercreditor
Agreement in form and content satisfactory to the
Bank. The Bank also waives
the prohibition provided in Section 6(c) of the Agreement
against the Company or any Subsidiary guaranteeing the
obligations of any other person, in order to allow Steak n
Shake Operations, Inc., an Indiana corporation, Steak n Shake
Enterprises, Inc., an Indiana corporation, and SnS Investment
Company, an Indiana corporation, to guarantee the
Company’s obligations to the Noteholders under the
Prudential Note Purchase Agreement. Nothing contained herein
shall be deemed to be a waiver of the violation of any other
term or provision of the Agreement, whether now or in the
future, nor shall the Bank be deemed to have waived the same
or similar provisions in the future, unless specifically
stated by the Bank in writing.
11.
PRIOR
AGREEMENTS . The
Agreement, as amended by this Amendment, supersedes all
previous agreements and commitments made or issued by the
Bank with respect to the Loans and all other subjects of this
Amendment, including, without limitation, any oral or written
proposals which may have been made or issued by the
Bank.
12.
EFFECT
OF AMENDMENT . The
provisions contained herein shall serve to supplement and
amend the provisions of the Agreement. To the
extent that the terms of this Amendment conflict with the
terms of the Agreement, the provisions of this Amendment
shall control in all respects.
13.
REAFFIRMATION
. Except as expressly amended by this Amendment,
all of the terms and conditions of the Agreement shall remain
in full force and effect as originally written and as
previously amended.
14.
COUNTERPARTS
.
This Amendment may be executed in any number of counterparts,
each of which shall be an original and all of which when
taken together shall be one and the same
agreement.
IN WITNESS
WHEREOF , the Company and the Bank have executed and
delivered in Indiana this Eighth Amendment Credit Agreement
by their respective duly authorized officers as
of May 16, 2008.
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THE STEAK N SHAKE COMPANY , an Indiana
corporation
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Vice
President, General Counsel and Corporate Secretary
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FIFTH THIRD BANK, a Michigan
banking corporation, formerly known as Fifth Third Bank (Central
Indiana), and Fifth Third Bank, Indiana
(Central)
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By:
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/s/ William J.
Krummen
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William
J. Krummen, Vice President
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SCHEDULE
OF EXHIBITS
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Exhibit
"A"
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Promissory
Note (Revolving Loan) ($45,000,000.00) (The Steak n Shake
Company)
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Exhibit
"B"
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-
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Reaffirmation
of Guaranty Agreement (Steak n Shake Operations, Inc.)
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Exhibit
"C"
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-
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Reaffirmation
of Guaranty Agreement (Steak n Shake Enterprises,
Inc.)
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Exhibit
"D"
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Reaffirmation
of Guaranty Agreement (SnS Investment Company)
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Exhibit
“E”
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Security
Agreement (The Steak n Shake Company)
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Exhibit
“F”
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Intercreditor
and Collateral Agency Agreement (Prudential Investment Management,
Inc., The Prudential Insurance Company of America, Pruco Life
Insurance Company, United of Omaha Life Insurance Company, and
Fifth Third Bank, individually and as Collateral
Agent)
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Exhibit
"A"
PROMISSORY NOTE
(Revolving Loan)
$45,000,000.00
Indianapolis,
Indiana
Dated: May 16, 2008
Final Maturity: January
30, 2009
On or before January 30,
2009 (“Final Maturity”), THE STEAK N SHAKE
COMPANY , an Indiana corporation (the
“Maker”) promises to pay to the order of
FIFTH THIRD
BANK, a Michigan banking corporation, formerly known
as Fifth Third Bank (Central Indiana), and Fifth Third Bank,
Indiana (Central) (the “Bank”) at the principal
office of the Bank at Indianapolis, Indiana, the principal
sum of Forty-Five Million and 00/100 Dollars
($45,000,000.00), or so much of the principal amount of the
Loan represented by this Note as may be disbursed by the Bank
pursuant to the terms of the Credit Agreement described
below, and to pay interest on the unpaid principal balance
outstanding from time to time as provided in this
Note.
This Note evidences
indebtedness (the “Loan”) incurred or to be
incurred by the Maker under a revolving line of credit
extended to the Maker by the Bank under a Credit Agreement
dated as of November 16, 2001, as amended (the “Credit
Agreement”). All references in this Note to
the Credit Agreement shall be construed as references to that
Agreement as it may be amended from time to
time. The Loan is referred to in the Credit
Agreement as the “Revolving
Loan.” Subject to the terms and conditions
of the Credit Agreement, the proceeds of the Loan may be
advanced and repaid and re-advanced until Final
Maturity. The principal amount of the Loan
outstanding from time to time shall be determined by
reference to the books and records of the Bank on which all
Advances under the Loan and all payments by the Maker on
account of the Loan shall be recorded. Such books
and records shall be deemed prima
facie to
be correct as to such matters. The terms
“Advance” and “Banking Day” are used
in this Note as defined in the Credit Agreement.
Interest on the unpaid
principal balance of the Loan outstanding from time to time
prior to and after maturity will accrue at the rate or rates
provided in the Credit Agreement. Prior to
maturity, accrued interest shall be due and payable on the
last Banking Day of each month commencing on the last Banking
Day of April, 2008. After maturity, interest shall
be due and payable as accrued and without
demand. Interest will be calculated by applying
the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance
is outstanding.
The entire outstanding
principal balance of this Note shall be due and payable,
together with accrued interest, at Final
Maturity. Principal may be prepaid, but only as
provided in the Credit Agreement.
If any installment of
interest due under the terms of this Note is not paid when
due, then the Bank or any subsequent holder of this Note may,
subject to the terms of the Credit Agreement, at its option
and without notice, declare the entire principal amount of
the Note and all accrued interest immediately due and
payable. Reference is made to the Credit Agreement
which provides for acceleration of the maturity of this Note
upon the happening of other “Events of Default”
as defined therein.
If any inst
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