SEVENTH AMENDMENT TO CREDIT AGREEMENT

EXECUTION VERSION

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 Seventh 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.

(a)

Amended Definitions.  The following definitions appearing under Section 1 of the Agreement are hereby amended and restated in their respective entireties as follows:

·	"Applicable Spread" means that number of Basis Points to be taken into account in determining the per annum at which the LIBOR-based Rate of interest on the Revolving Loan shall be calculated, and which shall be 70 Basis Points at all times on and after the date of the Seventh Amendment.

·	"Revolving Loan Maturity Date" means January 30, 2009.

(b)

New Definition.  The following new definition is hereby added to Section 1 of the Agreement as follows:

·	“Seventh Amendment” means that certain agreement entitled “Seventh Amendment to Credit Agreement” entered into by and between the Company and the Bank dated as of December 7, 2007, for the purpose of amending this Agreement.

2.           RENEWAL OF THE LOAN.  In order to document the renewal of the Loan, the first sentence of Section 2(a)(ii) of the Agreement is hereby amended and restated in its entirety as follows:

(ii)

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 Seventh Amendment (the “Revolving Note”).

3.           UNUSED FEE.  Section 2(a)(iv) of the Agreement is hereby amended and restated in its entirety as follows:

(iv)

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, effective as of the date of the Seventh Amendment, ten (10) 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) days following the Bank's submission of a statement of the amount due.  Such fees may be debited by the Bank when due 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.

 

4.           FINANCIAL COVENANTS.  Section 5(g)(i) is hereby amended and restated in its entirety and a new Section 5(g)(ii) is hereby added to the Agreement as follows:

(i)

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 shown in the table below, commencing with the period of four (4) consecutive fiscal quarters ending on December 19, 2007, the Company shall maintain a ratio of Funded Debt to EBITDA of not more than that shown opposite such fiscal quarter:

Period

Ratio

first fiscal quarter of fiscal year 2008

3.75 to 1.00

second fiscal quarter of fiscal year 2008

4.00 to 1.00

third fiscal quarter of fiscal year 2008

3.75 to 1.00

fourth fiscal quarter of fiscal year 2008

3.50 to 1.00

first fiscal quarter of fiscal year 2009, and as of the end of each fiscal quarter thereafter

2.75 to 1.00

 

(ii)

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 shown in the table below, commencing with the period of four (4) consecutive fiscal quarters ending on December 19, 2007, the Company shall maintain a debt service coverage ratio of not less than that shown opposite such fiscal quarter:

Period

Ratio

 

first fiscal quarter of fiscal year 2008

.95 to 1.00

second fiscal quarter of fiscal year 2008

.90 to 1.00

third fiscal quarter of fiscal year 2008

.95 to 1.00

fourth fiscal quarter of fiscal year 2008

1.05 to 1.00

first fiscal quarter of fiscal year 2009, and as of the end of each fiscal quarter thereafter

1.25 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.

5.           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.

6.           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.

7.           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:

(i)

This Amendment duly executed by the Company.

(ii)

The Revolving Note in the form of Exhibit "A" attached hereto duly executed by the Company.

(iii)

The Reaffirmation of Guaranty Agreement in the form attached hereto as Exhibit "B" duly executed by Steak n Shake Operations, Inc.

(iv)

The Reaffirmation of Guaranty Agreement in the form attached hereto as Exhibit "C" duly executed by Steak n Shake Enterprises, Inc.

(v)

The Reaffirmation of Guaranty Agreement in the form attached hereto as Exhibit "D" duly executed by SnS Investment Company.

 

(vi)

Resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance, respectively, of this Amendment 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.

(vii)

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 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.

(viii)

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.

(ix)

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.

(x)

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.

(xi)

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.

(xii)

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.

(xiii)

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.

8.           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.

9.           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.

10.           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.

11.           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 Seventh Amendment Credit Agreement by their respective duly authorized officers as of December 7, 2007.

THE STEAK N SHAKE COMPANY, an Indiana corporation

By:

/s/ David C. Milne

 

David C. Milne, Vice President, General Counsel and Corporate Secretary

FIFTH THIRD BANK, a Michigan banking corporation, formerly known as Fifth Third Bank (Central Indiana), and Fifth Third Bank, Indiana (Central)

 

By:

/s/ Andrew M. Cardimen

Andrew M. Cardimen, VicePresident and Senior RelationshipManager

Exhibit "A"

Promissory Note (Revolving Loan)($50,000,000.00) (The Steak n Shake Company)

Exhibit "B"

Reaffirmation of Guaranty Agreement (Steak n Shake Operations, Inc.)

Exhibit "C"

Reaffirmation of Guaranty Agreement (Steak n Shake Enterprises, Inc.)

Exhibit "D"

Reaffirmation of Guaranty Agreement (SnS Investment Company)

 

 

Indianapolis, Indiana

$50,000,000.00                                                                                            Dated: December 7, 2007

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 Fifty Million and 00/100 Dollars ($50,000,000.00), or so much of the principal amount of the Loan represented by this Note as may be disbursed by the Bank under 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.  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 primafacie 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 December, 2007.  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.  Reference is made to the Credit Agreement for provisions requiring prepayment of principal under certain circumstances.  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 installment of interest due under the terms of this Note prior to maturity is not paid in full within ten (10) days when due, then the Bank at its option and without prior notice to the Maker, may assess a late payment fee in an amount equal to the greater of $20.00 or five percent (5%) of the amount past due.  Each late payment fee assessed shall be due and payable on the earlier of the next regularly scheduled interest payment date or the maturity of this Note.  Waiver by the Bank of any late payment fee assessed, or the failure of the Bank in any instance to assess a late payment fee shall not be construed as a waiver by the Bank of its right to assess late payment fees thereafter.

All payments on account of this Note shall be applied first to expenses of collection, next to any late payment fees which are due and payable, next to interest which is due and payable, and only after satisfaction of all such expenses, fees and interest, to principal.

The Maker and any endorsers severally waive demand, presentment for payment and notice of nonpayment of this Note, and each of them consents to any renewals or extensions of the time of payment of this Note without notice. All amounts payable under the terms of this Note shall be payable with expenses of collection, including attorneys' fees, and without relief from valuation and appraisement laws.

This Note supersedes and replaces that certain Promissory Note (Revolving Loan) made by the Maker payable to the order of the Bank dated January 30, 2005, in the principal amount of $50,000,000.00 and maturing on January 30, 2008.

This Note is made under and will be governed in all cases by the substantive laws of the State of Indiana, notwithstanding the fact that Indiana conflicts of law rules might otherwise require the substantive rules of law of another jurisdiction to apply.

THE STEAK N SHAKE COMPANY, an Indiana corporation

  By:      /s/ David C. Milne

 

David C. Milne, Vice President, General Counsel and Corporate Secretary

Exhibit B
 

 

(Steak n Shake Operations, Inc.)

The undersigned (the “Guarantor”), being the Guarantor under that certain Guaranty Agreement dated as of November 16, 2001 (the “Guaranty”), pursuant to which the undersigned guaranteed the obligations of THE STEAK N SHAKE COMPANY, an Indiana corporation (the “Company”) to FIFTH THIRD BANK, a Michigan banking corporation, formerly known as Fifth Third Bank (Central Indiana),and  Fifth Third Bank, Indiana (Central) (the “Bank”) under the terms  of that certain Credit Agreement (the “Agreement”) dated as of November 16, 2001, entered into by and between the Company and the Bank, as previously amended, hereby consents to the execution of that certain Seventh Amendment to Credit Agreement to be entered into by and between the Company and the Bank dated as of even date herewith (the “Amendment”), and hereby agrees that the Obligations (as defined in the Guaranty) shall include the obligations of the Company to the Bank under the Agreement as amended by the Amendment, which Amendment, among other things, renews the maturity date of that certain Revolving Loan (as described in the Agreement)  to January 30, 2009, and the undersigned reaffirms its Obligations under, and agrees to be bound by, the terms of the Guaranty.

Further, the Guarantor acknowledges that while it may be the present practice of the Bank to obtain the undersigned’s consent to the execution and delivery of the Amendment, the Bank may discontinue any such practice in the future and such discontinuance shall not be construed as a waiver of the Bank’s right, in its discretion, to enter into any further amendments to or grant any further waivers of any of the terms and conditions of the Agreement without the consent of the undersigned, and the Bank’s failure to request or obtain the consent of the undersigned to any such amendment or waiver shall not affect the liability of the undersigned to the Bank under the Guaranty.

IN WITNESS WHEREOF, the undersigned has executed this Reaffirmation of Guaranty Agreement as of December 7, 2007.

STEAK N SHAKE OPERATIONS, INC., an Indiana corporation

 

 

 

STATE OF INDIANA

SS:

COUNTY OF  Marion

Before me, a Notary Public in and for said County and State, personally appeared David C. Milne, the Vice President, General Counsel and Corporate Secretary of STEAK N SHAKE OPERATIONS, INC., an Indiana corporation, who as such authorized officer acknowledged execution of the foregoing Reaffirmation of Guaranty Agreement on behalf of said corporation this 10th day of December, 2007.

Signature:                       /s/ Donna Haynes                                   

Printed:                              Donna Haynes                                     Notary Public

My Commission Expires:  2-17-2008  

My County of Residence: Marion     

 

 

(Steak n Shake Enterprises, Inc.)

The undersigned (the “Guarantor”), being the Guarantor under that certain Guaranty Agreement dated as of August 21, 2006 (the “Guaranty”), pursuant to which the undersigned guaranteed the obligations of THE STEAK N SHAKE COMPANY, an Indiana corporation (the “Company”) to FIFTH THIRD BANK, a Michigan banking corporation, formerly known as Fifth Third Bank (Central Indiana), and Fifth Third Bank, Indiana (Central) (the “Bank”) under the terms  of that certain Credit Agreement (the “Agreement”) dated as of November 16, 2001, entered into by and between the Company and the Bank, as previously amended, hereby consents to the execution of that certain Seventh Amendment to Credit Agreement to be entered into by and between the Company and the Bank dated as of even date herewith (the “Amendment”), and hereby agrees that the Obligations (as defined in the Guaranty) shall include the obligations of the Company to the Bank under the Agreement as amended by the Amendment, which Amendment, among other things, renews the maturity date of that certain Revolving Loan (as described in the Agreement) to January 30, 2009, and the undersigned reaffirms its Obligations under, and agrees to be bound by, the terms of the Guaranty.

Further, the Guarantor acknowledges that while it may be the present practice of the Bank to obtain the undersigned’s consent to the execution and delivery of the Amendment, the Bank may discontinue any such practice in the future and such discontinuance shall not be construed as a waiver of the Bank’s right, in its discretion, to enter into any further amendments to or grant any further waivers of any of the terms and conditions of the Agreement without the consent of the undersigned, and the Bank’s failure to request or obtain the consent of the undersigned to any such amendment or waiver shall not affect the liability of the undersigned to the Bank under the Guaranty.

IN WITNESS WHEREOF, the undersigned has executed this Reaffirmation of Guaranty Agreement as of December 7, 2007.

STEAK N SHAKE ENTERPRISES, INC., an Indiana corporation

STATE OF INDIANA

SS:

COUNTY OF  Marion

Before me, a Notary Public in and for said County and State, personally appeared David C. Milne, the Vice President, General Counsel and Corporate Secretary of STEAK N SHAKE ENTERPRISES, INC., an Indiana corporation, who as such authorized officer acknowledged execution of the foregoing Reaffirmation of Guaranty Agreement on behalf of said corporation this 10th day of December, 2007.

 

(SnS Investment Company)

The undersigned (the “Guarantor”), being the Guarantor under that certain Guaranty Agreement dated as of November 16, 2001 (the “Guaranty”), pursuant to which the undersigned guaranteed the obligations of THE STEAK N SHAKE COMPANY, an Indiana corporation (the “Company”) to FIFTH THIRD BANK, a Michigan banking corporation, formerly known as Fifth Third Bank (Central Indiana), a Michigan banking corporation and formerly known as Fifth Third Bank, Indiana (Central) (the “Bank”) under the terms  of that certain Credit Agreement (the “Agreement”) dated November 16, 2001, entered into by and between the Company and the Bank, as previously amended, hereby consents to the execution of that certain Seventh Amendment to Credit Agreement to be entered into by and between the Company and the Bank dated as of even date herewith (the “Amendment”), and hereby agrees that the Obligations (as defined in the Guaranty) shall include the obligations of the Company to the Bank under the Agreement as amended by the Amendment, which Amendment, among other things, renews the maturity date of that certain Revolving Loan (as described in the Agreement) to January 30, 2009, and the undersigned reaffirms its Obligations under, and agrees to be bound by, the terms of the Guaranty.

Further, the Guarantor acknowledges that while it may be the present practice of the Bank to obtain the undersigned’s consent to the execution and delivery of the Amendment, the Bank may discontinue any such practice in the future and such discontinuance shall not be construed as a waiver of the Bank’s right, in its discretion, to enter into any further amendments to or grant any further waivers of any of the terms and conditions of the Agreement without the consent of the undersigned, and the Bank’s failure to request or obtain the consent of the undersigned to any such amendment or waiver shall not affect the liability of the undersigned to the Bank under the Guaranty.

IN WITNESS WHEREOF, the undersigned has executed this Reaffirmation of Guaranty Agreement as of December 7, 2007.

SnS INVESTMENT COMPANY, an Indiana corporation

STATE OF INDIANA

 SS:

COUNTY OF  Marion

Before me, a Notary Public in and for said County and State, personally appeared David C. Milne, the Vice President, General Counsel and Corporate Secretary  of SnS INVESTMENT COMPANY, an Indiana corporation, who as such authorized officer acknowledged execution of the foregoing Reaffirmation of Guaranty Agreement on behalf of said corporation this 10th day of December, 2007.