EXHIBIT 10.49
EXECUTION VERSION
MODIFICATION AGREEMENT
This Modification Agreement (the "Agreement") is effective as of the
16th day of January, 2004 and is by and between Schlotzsky's Franchisor, L.L.C.,
a Delaware limited liability company (the "Borrower"), and Xxxx X. Xxxxxx and
Xxxxxxx X. Xxxxxx (collectively, the "Lender").
RECITALS:
The Borrower is legally obligated to pay that certain promissory note
(the "Note") in the original principal amount of Two Million Five Hundred
Thousand and no/100 ($2,500,000.00), less certain expenses, dated November 14,
2003, executed by the Borrower, payable to the order of the Lender, and secured
by the Collateral Agreements (as defined in the Note). The Collateral Agreements
include the Security Agreement dated of even date with the Note.
Pursuant to that certain Subordination Agreement dated December 29,
2003, between NS Associates I, Ltd., Borrower, Lender and other parties, certain
of Lender's rights under this Agreement and the Note have been subordinated and
are subject to certain limitations until the terms of the Subordination
Agreement are either released or terminated (the "Subordination End-Date").
The Borrower and Lender now desire to modify certain terms of the Note
and to extend and carry forward the liens created by the Collateral Agreements.
AGREEMENTS:
NOW, THEREFORE, in consideration of the agreements of the Lender and
the modification of other terms of the Note as hereinafter set forth by the
Lender as the legal owner and holder thereof, the Borrower and the Lender hereby
agree as follows:
1. The Borrower hereby renews the Note and indebtedness
represented thereby and promises to pay to the order of the Lender at 203
Colorado, Xxxxxx, Xxxxxx County, Texas, Two Million Five Hundred Thousand and
no/100 ($2,500,000.00), or the outstanding principal amount advanced under the
Note, whichever is less, together with interest on the outstanding portion
thereof for the period such amounts are unpaid prior to the Maturity Date (as
defined in Paragraph 2(a) below) at the Applicable Interest Rate (as defined
below) as set forth herein.
(a) Prior to maturity, the term "Applicable Interest
Rate" means a varying rate per annum equal to the sum
of the Index (hereinafter defined) and 250 basis
points. After maturity, the term "Applicable Interest
Rate" means a varying rate per annum equal to the
lower of (y) sum of the Index plus 500 basis points
(but never less than 6% per annum) or (z) the Maximum
Lawful Rate. The rate per annum at which interest
accrues hereunder shall be adjusted without notice to
the Makers on the effective date of any change in the
Index or the Maximum Lawful Rate, as the case may be.
(b) The term "Index" means the annual lending rate of
interest announced from time to time by X.X. Xxxxxx
Chase & Co., New York, New York, as its prime rate,
or in the event no such rate is announced, then a
comparable rate reasonably selected by the Payee and
specified in a written notice to the Makers. The
Index in effect as of November 14, 2003 (the date the
Note was printed) was 4.0%. The Makers understand
that the Index may not be the lowest rate of interest
charged to or paid by customers of the Payee or of
any financial institution, that the Index is not
necessarily more favorable than another rate or
index, and that rates on other loans or credit
facilities may be based on indices other than the
Index.
(c) Matured unpaid amounts shall bear interest at the
Maximum Lawful Rate (as defined in the Note).
2. The Note as modified hereby, is due and payable as follows,
to-wit:
(a) Principal shall be due and payable in monthly
installments of Seventy-eight Thousand One Hundred
Twenty Five and 00/100 Dollars ($78,125.00) each,
payable on the 15th day of each and every calendar
month, beginning May 15, 2004 and continuing
regularly thereafter until the earlier of December
15, 2006 (the "Maturity Date") or the Subordination
End-Date.
(b) Interest shall be due and payable on the 15th day of
each and every calendar month, beginning February 15,
2004 and continuing regularly thereafter until the
Maturity Date or the Note is paid in full.
(c) Interest shall be calculated on the unpaid principal
to the date of each installment paid and the payment
made credited first to the discharge of the interest
accrued and the balance to the reduction of the
principal.
(d) The entire amount hereof, principal and interest
remaining unpaid, shall be due and payable in full on
the earlier of the Maturity Date or the Subordination
End-Date.
3. The Borrower agrees to pay all costs and expenses incurred by
the Lender in connection with the preparation, execution, performance, delivery
and enforcement of the this Agreement and any other documents related thereto,
including without limitation the fees and expenses of Lender's counsel incurred
and to be incurred by the Lender.
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4. The Borrower hereby ratifies and confirms the liens created by
the Collateral Agreements until the Note as so modified has been fully paid and
all obligations performed or paid, and agrees that such modification shall in no
manner affect or impair the Note or the liens created by the Collateral
Agreements and that the liens created by the Collateral Agreements shall not in
any manner be waived, the purpose of this Agreement being simply to modify the
time of payment and the terms of payment of the Note and to carry forward all
liens securing the same, which the Borrower hereby acknowledges to be valid and
subsisting. It is the intention of the parties hereto that this Agreement shall
not constitute a novation and shall in no way adversely affect or impair the
priority of the liens created by the Collateral Agreements.
5. The Borrower agrees that all terms and provisions of the Note
and of the Collateral Agreements shall be and remain in full force and effect as
therein written, except as otherwise expressly provided herein. The Borrower
represents and warrants to the Lender that the Note and the Collateral
Agreements are not in default after giving effect to this extension and renewal
thereof and that there are no defenses, offsets or counterclaims to or against
either the Note or the Collateral Agreements.
6. It is the intention of the Borrower and the Lender to conform
strictly to the applicable laws of usury. All agreements and transactions among
the Borrower and the Lender, whether now existing or hereafter arising, whether
contained herein or in any other instrument, and whether written or oral, are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of the maturity hereof, late payment, prepayment,
demand for prepayment or otherwise, shall the amount contracted for, charged or
received by the Lender from the Borrower for the use, forbearance, or detention
of the principal indebtedness or interest hereof, which remains unpaid from time
to time, exceed the maximum amount permissible under applicable law. Any
interest payable hereunder or under any other instrument relating to the loan
evidenced hereby that is in excess of the legal maximum, shall, in the event of
acceleration of maturity, late payment, prepayment, demand or otherwise, be
applied to a reduction of the principal indebtedness hereof and not to the
payment of interest, or if such excessive interest exceeds the unpaid balance of
such principal, such excess shall be refunded to the Borrower. To the extent not
prohibited by law, determination of the legal maximum amount of interest shall
at all times be made by amortizing, prorating, allocating and spreading all
interest at any time contracted for, charged or received from the Borrower in
connection with the loan in equal parts during the period of the full term of
the loan evidenced hereby until repayment in full of the principal (including
the period of any renewal or extension hereof), so that the actual rate of
interest on account of such indebtedness does not exceed the maximum amount
permitted under applicable law.
7. The Borrower, and all endorsers, guarantors and sureties of
the Note (collectively, the "Obligated Parties") severally waive presentment for
payment, demand, notice of intent to accelerate, notice of acceleration, protest
and notice of protest, and of dishonor and diligence in collecting and the
bringing of suit against any other party, and agree to all renewals, extensions,
partial payments, releases, subordinations and substitutions of security, in
whole or in part, with or without notice, before or after maturity. The failure
by the Lender to exercise any of its rights, remedies, recourses, or powers upon
the occurrence of one or more defaults shall not constitute a waiver of the
right to exercise the same or any other right, remedy, recourse, or
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power at any subsequent time in respect to the same or any other default. The
acceptance by the Lender of any payment hereunder which is less that payment in
full of all amounts due and payable at the time of such payment shall not
constitute a waiver of the right to exercise any of the Lender's rights,
remedies, recourses, or powers at that time, or any subsequent time, or nullify
any prior exercise of any such right, remedy, recourse or power without the
written consent of the Lender, except as and to the extent otherwise required by
applicable law.
8. NO OTHER AGREEMENTS. THIS AGREEMENT, THE NOTE AND THE
COLLATERAL DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
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EXECUTED in duplicate, to be EFFECTIVE AS OF the 16th day of January
2004.
BORROWER:
SCHLOTZSKY'S FRANCHISOR, L.L.C.
a Delaware limited liability company
By: /s/ XXXXX XXXXX
---------------------------------
Xxxxx X. Xxxxx
Senior Vice President
LENDER:
XXXX X. XXXXXX
/s/ XXXX X. XXXXXX
---------------------------------
Xxxx X. Xxxxxx
XXXXXXX X. XXXXXX
/s/ XXXXXXX X. XXXXXX
---------------------------------
Xxxxxxx X. Xxxxxx
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