<PAGE>   1
                                                                    EXHIBIT 10.2



                                 AMENDMENT NO. 1

                                                       Dated as of June 16, 1998

To the banks, financial institutions
     and other institutional lenders
     (collectively, the "Lender Parties") party 
     to the Credit Agreement referred to 
     below, NationsBank.N.A., as 
     administrative agent (the "Administrative
     Agent") for the Lender Parties, and 
     NationsBanc Montgomery Securities, Inc., 
     as syndication agent for the Lender Parties


Ladies and Gentlemen:

                  We refer to the Credit Agreement dated as of November 28, 1997
(the "Credit Agreement") among Shoney's, Inc. (the "Borrower") and you.
Capitalized terms not otherwise defined in this Amendment No. 1 have the same
meanings as specified in the Credit Agreement.

                  It is hereby agreed by you and the Borrower as follows:

                  The Credit Agreement is, effective as of the date of this
Amendment No. 1, hereby amended as follows:

                  (a) Section 1.01 of the Credit Agreement is hereby amended by
         adding the following definitions in the correct alphabetical order:

                  " 'Approved Fund' means, with respect to any Lender that is a
                  fund that invests in bank loans, any other fund that invests
                  in bank loans and is advised or managed by the same investment
                  advisor as such Lender or by an Affiliate of such investment
                  advisor."

                  " 'Captain D's Lease Program' means a program entered into by
                  the Borrower and its Subsidiaries for the expansion of the
                  Captain D's system."



<PAGE>   2
                                       2


                  " 'New Distribution Facility' means the new distribution
                  facility to be operated by the Borrower and located in the
                  southeastern United States."

                  (b) Section 5.02(b)(iv)(C) of the Credit Agreement is hereby
         amended in full to read as follows:

                           "(C)(i) Capitalized Leases (other than those
                           permitted by subclauses (ii) and (iii) of this clause
                           (C) and those permitted by clause (E) below) not to
                           exceed in the aggregate $15,000,000 at any time
                           outstanding, (ii) Capitalized Leases in connection
                           with the Captain D's Lease Program not to exceed in
                           the aggregate $5,000,000 in any Fiscal Year plus, in
                           any Fiscal Year ending in 1999 or thereafter, an
                           amount up to $5,000,000 equal to the excess (if any)
                           of the amount of Capitalized Leases permitted to be
                           incurred in the immediately preceding Fiscal Year in
                           connection with the Captain D's Lease Program over
                           the aggregate amount of Capitalized Leases in
                           connection with the Captain D's Lease Program
                           actually incurred in the immediately preceding Fiscal
                           Year, (iii) Capitalized Leases in connection with the
                           New Distribution Facility not to exceed $5,000,000 at
                           any time outstanding and (iv) in the case of
                           Capitalized Leases to which any Subsidiary of the
                           Borrower is a party, Debt of the Borrower of the type
                           described in clause (i) of the definition of "Debt"
                           guaranteeing the Obligations of such Subsidiary under
                           the Capitalized Leases permitted under this clause
                           (C),"

                  (c) Section 5.02(e) of the Credit Agreement is hereby amended
         by (i) deleting the figure "$10,000,000" in clause (iv) thereof and
         replacing such figure with the figure "$100,000,000" and (ii) amending
         in full clause (viii) thereof to read as follows:

                           "(viii) the sale of Insurex Agency, Inc. and Insurex
                           Benefits Administrators, Inc. and any tradenames or
                           trademarks related thereto, provided that at least
                           30% of the total consideration for any such sale
                           shall be in cash,".

                  (d) Section 5.02(f) of the Credit Agreement is hereby amended
         by (i) deleting the word "and" at the end of clause (vii) thereof, (ii)
         replacing the period at the end of clause (viii) thereof with "; and"
         and (iii) adding a new clause (ix) at the end thereof that reads as
         follows:

                           "(ix) Investments constituting non-cash proceeds of
                           asset sales to the extent permitted by Section
                           5.02(e)(viii)."



<PAGE>   3
                                       3


                  (e) Section 5.02(p) of the Credit Agreement is hereby amended
         by adding to the end thereof the following:

                           "; provided, however, that the foregoing calculation
                           of Capital Expenditures made by the Borrower and its
                           Subsidiaries in any Fiscal Year shall exclude (i) any
                           Capital Expenditures made in such Fiscal Year in
                           connection with the Captain D's Lease Program and
                           (ii) any Capital Expenditures made in such Fiscal
                           Year in connection with the New Distribution
                           Facility."

                  (f) Section 5.02(o) of the Credit Agreement is hereby amended
         by adding to the end thereof the following:

                           "and except for futures contracts relating to the
                           purchase by the Borrower and its Subsidiaries of up
                           to 80% of the diesel fuel needs for any Fiscal Year
                           for Commissary Operations, Inc."

                  (g) Section 5.04(a) of the Credit Agreement is hereby amended
         by deleting the ratio in the chart therein for February 14, 1999 and
         replacing such ratio with the ratio "2.50:1".

                  (h) Section 5.04(c) of the Credit Agreement is hereby amended
         by deleting the ratios in the chart for October 25, 1998 and February
         14, 1999 and replacing each such ratio with the ratio "5.50:1".

                  (i) Section 5.04(d) of the Credit Agreement is hereby amended
         by deleting the final proviso therein and replacing such proviso with
         the following:

                           "; provided further that for purposes of calculating
                           the fixed charge coverage ratio for each of the
                           fiscal quarters other than year end fiscal quarters,
                           the Capital Expenditure component of such ratio shall
                           not exceed $35,000,000".

                  (j) Section 8.07(a) of the Credit Agreement is hereby amended
         by adding immediately after the first reference in clause (ii) thereof
         to "Lender" the phrase ", an Affiliate of any Lender or an Approved
         Fund of any Lender".

                  This Amendment No. 1 shall become effective as of the date
first above written when, and only when the Administrative Agent shall have
received counterparts of this Amendment No. 1 executed by the Borrower and the
Required Lenders or, as to any of the Lenders, advice satisfactory to the
Administrative Agent that such Lender has executed this Amendment No. 1, and the
consent attached hereto executed by each other Loan Party. This Amendment No. 1
is subject to the provisions of Section 8.01 of the Credit Agreement.



<PAGE>   4
                                       4



                  On and after the effectiveness of this Amendment No. 1, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or
words of like import referring to the Credit Agreement, and each reference in
the Notes and each other of the other Loan Documents to "the Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement, as amended by
this Amendment No. 1.

                  The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Amendment No. 1, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, the Collateral
Documents and all of the Collateral described therein do and shall continue to
secure the payment of all Obligations of the Loan Parties under the Loan
Documents, in each case as amended by this Amendment No. 1. The execution,
delivery and effectiveness of this Amendment No. 1 shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender or the Administrative Agent under any of the Loan Documents, nor
constitute a waiver of any provision of any of the Loan Documents.

                  If you agree to the terms and provisions hereof, please
evidence such agreement by executing and returning at least two counterparts of
this Amendment No. 1 to Maura E. O'Sullivan at Shearman & Sterling, 599
Lexington Avenue, New York, NY 10022 (Telecopier No. (212) 848-7179).

                  This Amendment No. 1 may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Amendment No. 1 by telecopier shall be
effective as delivery of a manually executed counterpart of this Amendment No.
1.

                  This Amendment No. 1 shall be governed by, and construed in
accordance with, the laws of the State of New York.

                                        Very truly yours,

                                        SHONEY'S, INC.



                                        By  /s/ Lloyd W. Baldridge, Jr.   
                                            ----------------------------------- 
                                            Title: Vice President and Treasurer



<PAGE>   5
                                       5



AGREED AS OF THE DATE FIRST ABOVE WRITTEN:

NATIONSBANK, N.A.
         as Administrative Agent, as Lender
         and as Issuing Bank


By  /s/ Richard Parkhurst              
    --------------------------------
    Title: Senior Vice President

GENERAL ELECTRIC CAPITAL
   CORPORATION


By  /s/ J.K. Williams                    
    --------------------------------
    Title: 

PRIME INCOME TRUST


By  /s/ Sheila A. Finnerty             
    --------------------------------
    Title: Vice President

MERRILL LYNCH SENIOR FLOATING
   RATE FUND, INC.


By  /s/ John M. Johnson               
    --------------------------------
    Title: Authorized Signatory


ML CLO XII PILGRIM AMERICA
     (CAYMAN) LTD.


By  /s/ Howard Tiffen                   
    --------------------------------
    Title: Senior Vice President





<PAGE>   6
                                       6


TCW LEVERAGED INCOME TRUST, L.P.
By: TCW Advisors (Bermuda), Ltd.

By  /s/ Mark L. Gold
    -------------------------------
    Title: Managing Director

By: TCW Investment Management
    Company, as Investment Advisor

By  /s/ Jonathan R. Insull                                  
    --------------------------------
    Title: Vice President


FREMONT FINANCIAL CORPORATION


By  /s/ Cheri L. Rittman             
    --------------------------------
    Title: Vice President

CRESCENT/MACH I
   PARTNERS, L.P.,
By:  TCW Asset Management
     Company, as Investment Manager


By  /s/ Jonathan R. Insull              
    --------------------------------
    Title: Vice President


VAN KAMPEN AMERICAN
   CAPITAL PRIME
   RATE INCOME TRUST


By  /s/ Jeffrey W. Maillet             
    --------------------------------
    Title: Senior Vice President
           & Director


FIRST AMERICAN NATIONAL BANK



By  /s/ Russell S. Rogers              
    --------------------------------
    Title: Senior Vice President



<PAGE>   7
                                       7


THE LONG-TERM CREDIT
   BANK OF JAPAN, LTD.


By  /s/ A. Haruyama                     
    --------------------------------
    Title: Head of Southeast Region

SENIOR HIGH INCOME PORTFOLIO, INC.


By  /s/ John M. Johnson               
    --------------------------------
    Title: Authorized Signatory

CAPTIVA II FINANCE LTD.


By  /s/ John H. Cullinane                
    --------------------------------
    Title: Director

AERIES FINANCE LTD.


By  /s/ Andrew Wignall
    --------------------------------
    Title: Director



<PAGE>   8
                                       8




SENIOR DEBT PORTFOLIO

By: Boston Management and Research
    as Investment Advisors

By  /s/ Scott H. Page                    
    --------------------------------
    Title: Vice President

STRATA FUNDING LTD.


By  /s/ John H. Cullinane              
    --------------------------------
    Title: Director

ML CBO IV (CAYMAN) LTD.

By: Protective Asset Management
    Company, as Collateral Manager

By  /s/ Mark K. Okada                    
    --------------------------------
    Title: Executive Vice President

CYPRESSTREE INVESTMENT PARTNERS I, LTD.

By: CypressTree Investment Management Company, Inc.

By  /s/ Catherine C. McDermott         
    --------------------------------
    Title: Portfolio Manager

CERES FINANCE LTD.


By  /s/ John H. Cullinane            
    --------------------------------
    Title: Director

HELLER FINANCIAL, INC.



By  /s/ David West                       
    --------------------------------
    Title:



<PAGE>   9
                                       9



TRANSAMERICA BUSINESS CREDIT
   CORPORATION


By  /s/ Perry Vovoutes                 
    --------------------------------
    Title: Senior Vice President

DEUTSCHE FINANCIAL SERVICES
   CORPORATION



By  /s/ Pamela D. Petrick               
    --------------------------------
    Title: Vice President

GREEN TREE FINANCIAL SERVICING
   CORPORATION


By_________________________________
     Title: Senior Vice President
            & General Manager

THE TORONTO DOMINION BANK



By  /s/ Duncan M. Robertson             
    --------------------------------
    Title: Director


<PAGE>   10
                                       10




BALANCED HIGH-YIELD FUND I LTD., as Assignee
By:  BHF-BANK AKTIENGESELLSCHAFT
     acting through its New York Branch,
     as attorney-in-fact

By  /s/ John Sykes              Hans-Jurgen Scholz
    ----------------------------------------------
    Title: Vice President       AVP


<PAGE>   11
                                       11



MERRILL LYNCH, PIERCE, FENNER & SMITH
      INCORPORATED


By  /s/ Neil Brisson                      
    --------------------------------
    Title: Director



<PAGE>   12


                                     CONSENT


                            Dated as of June 16, 1998

         Each of the undersigned as a Loan Party under the Loan Documents
relating to the Credit Agreement referred to in the foregoing Amendment No. 1,
hereby consents to such Amendment No. 1 and hereby confirms and agrees that (a)
notwithstanding the effectiveness of such Amendment No. 1, each Loan Document to
which such Loan Party is a party is, and shall continue to be, in full force and
effect and is hereby ratified and confirmed in all respects, except that, on and
after the effectiveness of such Amendment No. 1, each reference to the "Credit
Agreement", "thereunder", "thereof" or words of like import shall mean and be a
reference to the Credit Agreement, as amended by such Amendment No. 1, and (b)
the Collateral Documents to which such Loan Party is a party and all of the
Collateral described therein do, and shall continue to, secure the payment of
all of the Secured Obligations (in each case, as defined therein).


                                            TPI RESTAURANTS, INC.


                                            By /s/ Lloyd W. Baldridge, Jr. 
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary


                                            TPI PROPERTIES, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.    
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant  Secretary



                                            SHN PROPERTIES, LLC

                                            By: Corporate Benefit Services, 
                                                Incorporated of Nashville, its 
                                                Managing Member

                                            By /s/ Lloyd W. Baldridge, Jr. 
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary

                                            By /s/ F. E. McDaniel, Jr.          
                                               ---------------------------------
                                               Title: Secretary





<PAGE>   13
                                       2



                                            SHONEY'S OF MICHIGAN, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            COMMISSARY OPERATIONS, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            PARGO'S OF FREDERICK, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            SHONEY'S EQUIPMENT CORPORATION


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            CORPORATE BENEFIT SERVICES, 
                                            INCORPORATED OF NASHVILLE


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            PARGO'S OF YORK, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary





<PAGE>   14
                                       3


                                            SHONEY'S INVESTMENTS, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            TPI ENTERTAINMENT, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary




                                            TPI TRANSPORTATION, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary


                                            TPI COMMISSARY, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary



                                            INSUREX AGENCY, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary


                                            INSUREX BENEFITS
                                            ADMINISTRATORS, INC.


                                            By /s/ Lloyd W. Baldridge, Jr.   
                                               ---------------------------------
                                               Title: Vice President, Treasurer
                                                      and Assistant Secretary