FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
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THIS FIRST AMENDMENT TO THE THIRD AMENDED AND RESTATED LOAN AGREEMENT
(hereinafter referred to as the "AMENDMENT") is to be effective as of March 28,
2004, between PIZZA INN, INC., a Missouri corporation ("BORROWER") and XXXXX
FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a national banking association (the
"BANK").
RECITALS
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A. WHEREAS, Bank and Borrower entered into a Third Amended and Restated Loan
Agreement, dated as of January 22, 2003, but effective as of December 29,
2002 (the "LOAN AGREEMENT").
B. Bank and Borrower desire to amend the Loan Agreement as hereinafter set
forth.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized terms used in this Amendment, to the
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extent not otherwise defined herein, shall have the same meaning as in the
Agreement, as amended hereby.
ARTICLE II
AMENDMENTS
Section 2.01. Amendment to Section 1.1. Certain defined terms in Section
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1.1 of the Loan Agreement are hereby amended as follows:
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(a) "Default Rate" means the lesser of (i) the Maximum Rate or (ii) the sum
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of the Prime Rate in effect from day to day plus five percent (5.00%).
(b) "Facility Fee" means Ten Thousand and No/100th Dollars ($10,000.00).
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(c) "LIBOR Rate Margin" means 1.25%.
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(d) "Prime Rate Margin" means 0.00%.
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(e) "Revolving Credit Commitment" means the obligation of the Bank to make
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Revolving Credit Advances hereunder in an aggregate principal amount at any one
time outstanding up to but not exceeding Four Million and No/100th Dollars
($4,000,000.00), as the same may be terminated pursuant to Section 13.2.
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(f) "Revolving Credit Note" means the Seventh Amended and Restated Revolving
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Credit Note executed by the Borrower and payable to the order of the Bank in the
aggregate principal amount of the Revolving Credit Commitment, in substantially
the form of Exhibit A hereto, together with all amendments, modification and
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renewals thereof.
(g) "Termination Date" means 10:00 A.M. Dallas, Texas time on October 1,
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2005, or such earlier date and time on which the Revolving Credit Commitment
terminates as provided in this Agreement; provided, however, if such date is not
a Business Day, the "Termination Date" shall be the first Business Day following
such date.
(h) A new definition shall be inserted after "Subsidiary" to read as
follows:
"Tangible Net Worth" means stockholders' equity minus the aggregate of any
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treasury stock, any intangible assets and any obligations due from stockholders,
employees and/or affiliates.
Section 2.02. Amendment to Section 2.7. Section 2.7 shall be deleted in its
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entirety and replaced with the following:
"Section 2.7 Commitment Fee/Facility Fee.
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(a) The Borrower agrees to pay to the Bank a Commitment Fee (herein so
called) on the daily average unused amount of the Revolving Credit Commitment,
for the period from and including the date of this Agreement to and including
the Termination Date, at the Commitment Fee Rate based on a 360 day year and the
actual number of days elapsed. The accrued Commitment Fee shall be payable in
arrears on each Monthly Payment Date and on the Termination Date. For the
purpose of calculating the Commitment Fee, the Revolving Credit Commitment shall
be deemed utilized to the extent of all outstanding Revolving Credit Advances
and Letter of Credit Liabilities.
(b) Borrower also agrees to pay to the Bank annually the Facility Fee
payable in advance on each March 28th during the term of this Agreement and on
the Termination Date."
Section 2.03. Amendment to Section 2.8. Section 2.8 shall be deleted in its
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entirety and replaced with the following:
"Section 2.8 Intentionally Deleted."
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Section 2.04. Amendment to Article XII, Financial Covenants. Article XII
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shall be deleted in its entirety and replace with the following:
"ARTICLE XII.
Financial Covenants
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The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants, such
performance and observance to be evidenced and tested for compliance as of the
end of each fiscal quarter:
Section 12.1. Fixed Charge Coverage Ratio. The Borrower will maintain,
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for the 12-month period ending on the last day of each fiscal quarter, a Fixed
Charge Coverage Ratio of not less than 1.50 to 1.00.
Section 12.2 Tangible Net Worth. Borrower will maintain at all times
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Tangible Net Worth of not less than $5,500,000 plus 75% of net income after
taxes, excluding any fiscal quarters in which net income is negative.
Section 12.3 Profitable Operations. Borrower will not sustain (i) a
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net loss in excess of $100,000 for any fiscal quarter, (ii) an aggregate net
loss for any two (2) consecutive fiscal quarters, or (iii) a net loss for any
fiscal year."
Section 2.05. Amendment to Section 13.1(a). Section 13.1(a) shall be
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amended by deleting the words "Section 2.8 or" in the first sentence.
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ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions. The effectiveness of this Amendment is subject to
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the satisfaction of the following conditions precedent, unless specifically
waived by Bank:
(a) Bank shall have received the following documents, each in form and
substance satisfactory to Bank:
(i) This Amendment, duly executed by Borrower;
(ii) The Seventh Amended and Restated Revolving Credit Note duly executed by
Borrower; and
(iii) Officer's Certificate dated as of the date of this Amendment, in form
and substance satisfactory to Bank, certified by the Secretary of the Borrower
certifying among other things, that the party signing this Amendment on behalf
of the Borrower has full authority to do so;
(b) The representations and warranties contained herein, in the Loan
Agreement, as amended hereby, and in each other Loan Document shall be true and
correct as of the date hereof, as if made on the date hereof;
(c) No Event of Default shall have occurred and be continuing and no Default
shall exist, unless such Event of Default or Default has been specifically
waived in writing by Bank;
(d) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all documents, instruments and other legal
matters incident thereto, shall be satisfactory to Bank; and
(e) Borrower shall have paid to the Bank the Facility Fee.
ARTICLE IV
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 4.01. Ratifications. The terms and provisions set forth in this
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Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and except as expressly modified and superseded by
this Amendment, the terms and provisions of the Loan Agreement and the other
Loan Documents are ratified and confirmed and shall continue in full force and
effect. Borrower and Bank agree that the Loan Agreement, as amended hereby, and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
Section 4.02. Representations and Warranties. Borrower hereby represents and
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warrants to Bank as follows:
(a) the execution, delivery and performance of this Amendment and any
and all other Loan Documents executed and/or delivered in connection herewith
have been authorized by all requisite corporate action on the part of Borrower
and do not and will not conflict with or violate any provision of any applicable
law, the Articles of Incorporation or Bylaws of Borrower or any agreement,
document, judgment, license, order or permit applicable to or binding upon any
of the Borrower or its Collateral. No consent, approval, authorization or order
of and no notice to or filing with, any court or governmental authority or third
person is required in connection with the execution, delivery or performance of
this Amendment or to consummate the transactions contemplated hereby;
(b) the representations and warranties contained in the Loan Agreement, as
amended hereby, and any other Loan Document are true and correct on and as of
the date hereof as though made on and as of the date hereof, except to the
extent such representations and warranties relate to an earlier date;
(c) Borrower is in full compliance with all covenants and agreements
contained in the Loan Agreement, as amended hereby, and the other Loan
Documents; and
(d) Borrower has not amended its Articles of Incorporation or Bylaws or
other organizational documents since the date of the execution of the Loan
Agreement.
ARTICLE V
MISCELLANEOUS
Section 5.01. Survival of Representations and Warranties. All
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representations and warranties made in this Amendment or any other document or
documents relating thereto, including, without limitation, any Loan Document
furnished in connection with this Amendment, shall survive the execution and
delivery of this Amendment and the other Loan Documents, and no investigation by
Bank shall affect the representations and warranties or the right of Bank
to rely upon them.
Section 5.02. Reference to Loan Agreement. Each of the Loan Documents,
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including the Loan Agreement and any and all other agreements, documents or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Loan Agreement, as amended hereby, are hereby
amended so that any reference in such Loan Documents to the Loan Agreement shall
mean a reference to the Loan Agreement, as amended hereby.
Section 5.03. Expenses of Agent. As provided in the Loan Agreement,
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Borrower agrees to pay on demand all reasonable costs and expenses incurred by
Bank in connection with the preparation, negotiation and execution of this
Amendment and the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements hereto, including, without
limitation, the reasonable costs and fees of Bank's legal counsel, and all
reasonable costs and expenses incurred by Bank in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any other Loan Document, including, without limitation, the
reasonable costs and fees of Bank's legal counsel.
Section 5.04. RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
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COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE OBLIGATIONS OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM THE BANK. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES BANK, ITS PREDECESSORS, AGENTS, EMPLOYEES,
DIRECTORS, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR
UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST THE BANK, ITS PREDECESSORS, AGENTS, EMPLOYEES, DIRECTORS,
SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
ARISING FROM ANY OF THE OBLIGATIONS, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE LOAN AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR
AND EXECUTION OF THIS AMENDMENT.
Section 5.05. Severability. Any provision of this Amendment held by a court
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of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.06. APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
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EXECUTED PURSUANT HERTO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN DALLAS, TEXAS, AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
Section 5.07. Successors and Assigns. This Amendment is binding upon and
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shall inure to the benefit of Bank and Borrower and their respective successors
and assigns, except Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Bank.
Section 5.08. Counterparts. This Amendment may be executed in one or more
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counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument. The parties agree that this Amendment may be executed and delivered
via facsimile and any such facsimile copy of any such document shall be
considered to have the same binding legal effect as an original copy and each
party hereby agrees that it shall not raise the use of a facsimile copy as a
defense to this Amendment and forever waives any such defense. Furthermore, at
the request of any party, a party executing and delivering this Amendment by
facsimile copy shall re-execute an original copy in replacement.
Section 5.09. Effect of Waiver. No consent or waiver, express or implied,
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by Bank to or for any breach of or deviation from any covenant or condition of
this Amendment shall be deemed a consent or waiver to or of any other breach of
the same or any other covenant, condition or duty.
Section 5.10. Headings. The headings, captions, and arrangements used in
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this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.11. FINAL AGREEMENT. THE LOAN AGREEMENT, AS AMENDED HEREBY, AND
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THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
RELATED TO THE SUBJECT MATTER HEREOF 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.
[The Remainder of this Page Intentionally Left Blank]
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
IN WITNESS WHEREOF, the Borrower and Bank have caused this Amendment to be
executed on the date first written above by their duly authorized officers.
PIZZA INN, INC.
a Missouri corporation
By:/s/Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a national banking association
By: /s/Xxxxx Xxxx III
Name: Xxxxx X. Xxxx III
Title: Assistant Vice President
