EXHIBIT 10.48
MODIFICATION OF NOTE AND SECURITY AGREEMENT
This Modification of Note and Security Agreement (the "MODIFICATION"), is
dated effective as of the 29th day of December 2003 (the "EFFECTIVE DATE"), and
is by and between SCHLOTZSKY'S FRANCHISOR, LLC, a Delaware limited liability
company (the "DEBTOR"), and XXXX X. XXXXXX AND XXXXXXX X. XXXXXX (collectively,
the "SECURED PARTY"), with respect to that certain Security Agreement (the
"SECURITY AGREEMENT") dated as of November 12, 2003, by and between the Debtor
and Secured Party.
Recitals
Reference is here made to that certain Promissory Note (the "NOTE") dated
as of November 12, 2003, executed by the Debtor and payable to the order of the
Secured Party. The Note is more fully described in and secured by a Security
Agreement (herein so called) by and between the Debtor and Secured Party.
The Debtor and Secured Party desire to amend certain of the terms of the
Note and Security Agreement. This Modification is entered into in order to
accomplish such purpose.
Agreements
NOW, THEREFORE, for and in consideration Ten and 00/100 Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows.
1. RECITALS; DEFINED TERMS. Each and all of the introductory paragraph and
all of the Recitals to this Modification are hereby incorporated into this
Modification by this reference for all purposes. Capitalized terms which are
used in this Modification and are not otherwise defined are used with the
meanings provided for them in the Security Agreement, unless the context clearly
requires otherwise.
2. SECURED INDEBTEDNESS. Article III, Section 2 of the Security Agreement
is hereby amended to provide as follows:
2. All obligations of any one or more of the Debtor, Schlotzsky's,
Inc. a Texas corporation ("SCHLOTZSKY'S"), Schlotzsky's NAMF Funding, LLC,
a Delaware limited liability company ("NAMF") and Schlotzsky's
Restaurants, Inc., a Texas corporation ("SRI") , to either or both of the
Secured Party arising by way of subrogation, contribution, or otherwise in
connection with any guaranty by either or both of the Secured Party of any
indebtedness or obligation of any one or more of the Debtor, Schlotzsky's,
NAMF and SRI in connection with the following described transactions, but
not otherwise:
(a) in an amount not in excess of $4,300,000 in connection with that
certain loan by Commerce National Bank, a branch of Lubbock National Bank
("CNB"), to NAMF in the original principal amount of up to $4,300,000.00
evidenced by promissory note in said amount dated as of June 12, 2003,
executed by NAMF and payable to the order of CNB (including any and all
amendments, modifications, renewals, extensions, rearrangements and
consolidations thereof so long as the principal amount
of the obligations secured directly or indirectly by the Collateral is not
increased as a result thereof).
(b) in an aggregate amount not in excess of $1,000,000 in connection
with that certain Operating Lease dated as of May 27, 1994, by and between
Xxxxxxx X. Xxxxxxx and Xxxxx X'Xxxxx Xxxxxxx, as husband and wife, Xxxxxxx
X. Xxxxxxx, Trustee of the Xxxxxxx Xxxx Xxxxxxx Children's Trust Created
under the Will of Xxxx X. Xxxxxxx, as tenants in common, as lessor, and
SRI, as lessee, a Memorandum of which is recorded in Volume 12214, Page
1981 of the Real Property Records of Xxxxxx County, Texas, with respect to
the property located in Xxxxxx County, Texas, more fully described in said
Memorandum (reference to which instrument and its record is hereby made
for a description of the property covered by said Operating Lease and
Memorandum) (including any and all amendments and modifications thereof,
so long as the principal amount of the obligations secured directly or
indirectly by the Collateral is not increased as a result thereof).
For purposes of this Article III, Section 2, the pledging of collateral
shall operate and be construed as a "guaranty".
3. EVENTS OF DEFAULT. Article V of the Security Agreement is hereby
amended by the addition of the following new subsection 5 immediately following
Section 4 thereof:
5. The acceleration of all or any material portion of the "Senior
Obligations," as defined in that certain Subordination Agreement dated as
of December 29, 2003, by and among the Debtor, Secured Party,
Schlotzsky's, Inc., Schlotzsky's Franchise Operations, LLC, DFW Restaurant
Transfer Corp., and NS Associates I, Ltd.
4. RATIFICATION. The Debtor hereby ratifies and confirms the liens and
security interests on the Collateral (as modified hereby) 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
security interests and that the security interests shall not in any manner be
waived, the purpose of this instrument being simply to modify the amount, time,
or manner of payment of the Note and to carry forward all security interests
securing the same, which the Debtor 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 security interests.
5. FULL FORCE AND EFFECT. The Debtor agrees that all terms and provisions
of the Note and of the Security Agreement shall be and remain in full force and
effect as therein written, except as otherwise expressly provided herein. The
Debtor represents and warrants to the Secured Party that the Note and the
Security Agreement are not in default after giving effect to this Modification
and that there are no defenses, offsets or counterclaims to or against either
the Note or the Security Agreement.
6. MISCELLANEOUS.
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(a) The section headings appearing in this instrument have been
inserted for convenience only and shall be given no substantive meaning or
significance whatever in construing the terms and provisions of this instrument.
Terms used in this instrument which are defined in the Texas Uniform Commercial
Code are used with the meanings as therein defined.
(b) The law governing this secured transaction shall be that of the
State of Texas in force at the date of this instrument.
(c) Actions hereunder by the Secured Party shall require the
unanimous approval of all the persons comprising the "Secured Party" hereunder.
[Signatures Appear on Following Signature Page]
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[Signature Page To Modification of Note and Security Agreement]
EXECUTED to be EFFECTIVE AS OF, but not necessarily on, the Effective Date.
DEBTOR: SECURED PARTY:
Schlotzsky's Franchisor, LLC,
a Delaware limited liability company
By: /s/ XXXXX XXXXX /s/ XXXX X. XXXXXX
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Xxxxx X. Xxxxx, Xxxx X. Xxxxxx
Senior Vice President
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Signature Page
