Third Amendment to the Second Amended and Restated Loan Agreement (2) 10
THIRD AMENDMENT TO THE SECOND AMENDED
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AND RESTATED LOAN AGREEMENT
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This THIRD AMENDMENT TO THE SECOND AMENDED AND RESTATED LOAN AGREEMENT (the
"AMENDMENT"), effective as of June 25, 2002, and dated as of September 26, 2002,
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is by and between PIZZA INN, INC., a Missouri corporation (the "BORROWER"), and
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XXXXX FARGO BANK TEXAS, NATIONAL ASSOCIATION, a national banking association
(successor by consolidation to Xxxxx Fargo Bank (Texas), National Association)
(the "BANK").
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RECITALS:
A. The Borrower and the Bank entered into that certain Second Amended and
Restated Loan Agreement dated as of March 31, 2000 (the "AMENDED AND RESTATED
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LOAN AGREEMENT").
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B. In connection with the Amended and Restated Loan Agreement, Xxxxx Realty,
Inc., a Texas corporation, R-Check, Inc., a Texas corporation, and Pizza Inn of
Delaware, Inc., a Delaware corporation (collectively, the "GUARANTORS"),
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executed that certain Second Amended and Restated Guaranty dated as of March 31,
2000 in favor of the Bank (as the same may be amended, restated or modified from
time to time, the "GUARANTY").
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C. The Borrower and the Bank amended the Amended and Restated Loan
Agreement pursuant to that certain First Amendment to Second Amended and
Restated Loan Agreement dated as of December 28, 2000 (the "FIRST AMENDMENT")
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and that certain Second Amendment to Amended and Restated Loan Agreement and
Related Loan Documents dated as of January 31, 2002, but effective as of
December 23 2001 (the "SECOND AMENDMENT"). The Amended and Restated Loan
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Agreement, as amended by the First Amendment and by the Second Amendment, is
hereinafter referred to as the "LOAN AGREEMENT."
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D. The Borrower and the Bank now desire to amend the Loan Agreement as
herein 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 hereto agree as follows:
ARTICLE I.
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DEFINITIONS
Section 1.1 DEFINITIONS
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Capitalized terms used in this Amendment, to the extent not otherwise
defined herein, shall have the same meanings as in the Loan Documents as amended
hereby.
ARTICLE II.
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AMENDMENTS TO LOAN AGREEMENT
Section 2.1 AMENDMENT TO DEFINITIONS
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Effective as of the Effective Date, the following definitions in Section 1.1
of the Loan Agreement are hereby amended and restated in their entirety to read
as follows:
"CHANGE OF CONTROL" means (a) the merger or consolidation of the Borrower
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with any other corporation with the effect that the then existing shareholders
of the Borrower will hold less than fifty percent (50%) of the total voting
power of the surviving corporation, (b) the acquisition of at least thirty-three
and one-third percent (33 1/3%) of the voting power or voting stock of the
Borrower by any Person or related group of Persons other than the executive
officers of the Borrower, (c) the sale, transfer, or disposition of common stock
by Mr. C. Xxxxxxx Xxxxxx such that his beneficial interest in the Borrower falls
below fifteen percent (15%) of the issued and outstanding common stock of the
Borrower, or (d) Xxxxxx Xxxxxx shall cease to be the chief executive officer of
the Borrower.
"EBITDA" means, for the preceeding 12 month period, Consolidated Net Income
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calculated before federal income taxes, plus (a) depreciation and amortization
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and interest expenses, plus (b) terminated rent expenses prior to and ending on
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November 30, 2001, to include (i) rent expense, including, without limitation,
base rent, CAM charges and repairs and maintenance, and (ii) associated rent
expenses incurred in connection with the Norco distribution warehouse located at
000 Xxxxxx X, Xxxxx 000, Xxxxx Xxxxxxx, Xxxxx 00000, the Borrower's corporate
headquarters located at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, and
the Borrower's training center located at 0000 Xxxxxx Xxxxxxx, Xxxxxxx, Xxxxx
00000, minus (c) any extraordinary gains or losses of the Borrower during the
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period in question, plus (d) any write-off (whether as a bad debt expense or
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otherwise) resulting directly from the loan made by the Borrower to C. Xxxxxxx
Xxxxxx on October 6, 1999 in the original principal amount of $1,949,697.51 or
minus any recovery resulting directly from such loan.
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"LIBOR RATE MARGIN" means, (a) with respect to the Term Loan, one and one-half
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percent (1.50%) and (b) with respect to the Revolving Credit Loans, at such time
and from time to time as the relevant Funded Debt Ratio is in one of the
following ranges, the percentage per annum set forth opposite such Funded Debt
Ratio:
PERCENTAGE FOR REVOLVING
FUNDED DEBT RATIO CREDIT LOANS
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Less than 2.0 to 1.0 1.25%
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2.0 to 1.0 or greater and less than 2.5 to 1.0 1.50%
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2.5 to 1.0 or greater and less than 3.0 to 1.0 1.75%
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3.0 to 1.0 or greater and less than 3.25 to 1.0 2.00%
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3.25 to 1.0 or greater 2.25%
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The Borrower shall give written notice to the Bank of any changes in the Funded
Debt Ratio which results in a change to the LIBOR Rate Margin concurrently with
its delivery of the items required under Section 10.1(c) hereof, and any change
to the LIBOR Rate Margin shall be effective with respect to any Interest Period
commencing after the Bank has received such information.
Section 2.2 AMENDMENT TO SECTION 10.1. Effective as of the Effective Date,
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subsections (b) and (c) of Section 10.1 of the Loan Agreement are hereby amended
and restated in their entirety to read as follows:
(b) Quarterly and Monthly Financial Statements. (i) As soon as
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available, and in any event within sixty (60) days after the end of each of the
first three (3) quarters of each fiscal year of the Borrower, a copy of an
unaudited financial report of the Borrower and the Subsidiaries as of the end of
such fiscal quarter and for the portion of the fiscal year then ended,
containing, on a consolidated and (to the extent required by GAAP) consolidating
basis, balance sheets and statements of income, and cash flow, in each case
setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail certified by an Authorized
Officer of the Borrower to have been prepared in accordance with GAAP and to
fairly and accurately present (subject to the absence of footnotes and year-end
audit adjustments) the financial condition and results of operations of the
Borrower and the Subsidiaries, on a consolidated and (to the extent required by
GAAP) consolidating basis, at the date and for the periods indicated therein,
and (ii) as soon as available, and in any event within thirty (30) days after
the end of each fiscal month of each fiscal year of the Borrower, a copy of an
unaudited financial report of the Borrower and the Subsidiaries as of the end of
each fiscal month and for the portion of the fiscal year then ended, containing,
on a consolidated basis, balance sheets and statements of income, and cash flow,
in each case setting forth in comparative form the figures for the corresponding
period of the preceding fiscal year, all in reasonable detail certified by an
Authorized Officer of the Borrower to have been prepared in accordance with GAAP
and to fairly and accurately present (subject to the absence of footnotes and
year-end audit adjustments) the financial condition and results of operations of
the Borrower and the Subsidiaries, on a consolidated basis, at the date and for
the periods indicated therein;
(c) Monthly Calculations. As soon as available, and in any event within
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thirty (30) days after the end of each fiscal month of the Borrower, (i) a
certificate of an Authorized Officer of the Borrower in substantially the form
of Exhibit E hereto (A) stating to the best of such officer's knowledge, no
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Default has occurred and is continuing, or if a Default has occurred and is
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continuing, a statement as to the nature thereof and the action that is proposed
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to be taken with respect thereto, and (B) showing in reasonable detail the most
recent calculations demonstrating compliance with Article XII and (ii) if
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applicable, the notice required under the definition of "LIBOR Rate Margin."
Section 2.3 AMENDMENT TO SECTION 12.2. Effective as of June 27, 2002, Section
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12.2 of the Loan Agreement is hereby amended and restated in its entirety as
follows:
Section 12.2 Funded Debt Ratio. The Borrower will maintain, as of the end
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of each fiscal month, a Funded Debt Ratio of not greater than (a) 3.25 to 1.00
for the fiscal month ending on or about June 30, 2002 and continuing through the
fiscal month ending on or about August 30, 2002, (b) 3.00 to 1.00 for each
fiscal month commencing with the fiscal month ending on or about September 30,
2002 and continuing through May 31, 2003, and (b) 2.75 to 1.00 for each fiscal
month commencing with the fiscal month ending on or about June 30, 2003, and at
all times thereafter.
Section 2.4 AMENDMENT TO SECTION 12.3. Effective as of June 27, 2002, Section
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12.3 of the Loan Agreement is hereby amended and restated in its entirety as
follows:
Section 12.3 Fixed Charge Coverage Ratio. The Borrower will maintain, as
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of the end of each fiscal month, a Fixed Charge Coverage Ratio of not less than
1.25 to 1.00 at all times.
ARTICLE III.
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CONDITIONS PRECEDENT
Section 3.1 CONDITIONS. The effectiveness of this Amendment is subject to the
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satisfaction of the following conditions precedent on or prior to September __,
2002 (where applicable):
(a) The Bank shall have received all of the following, in form and substance
satisfactory to the Bank:
(1) Resolutions. Resolutions of the Board of Directors of the Borrower and
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each Guarantor certified by its Secretary or an Assistant Secretary which
authorize the execution, delivery, and performance by the Borrower and each
Guarantor of this Amendment and the other Loan Documents to which the Borrower
or such Guarantor is or is to be a party hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified by the
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Secretary or an Assistant Secretary of the Borrower and each Guarantor
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certifying the names of the officers of the Borrower and each Guarantor
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authorized to sign this Amendment and each of the other Loan Documents to which
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the Borrower or such Guarantor is or is to be a party hereunder (including the
certificates contemplated herein), together with specimen signatures of such
officers;
(3) Articles of Incorporation. A certificate certified by the Secretary or
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an Assistant Secretary of the Borrower and each Guarantor certifying that the
articles of incorporation of the Borrower and each Guarantor have not been
amended or modified since March 31, 2000 and are still in full force and effect;
(4) Bylaws. A certificate certified by the Secretary or an Assistant
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Secretary of the Borrower and each Guarantor certifying that the bylaws of the
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Borrower and each Guarantor have not been amended or modified since March 31,
2000 and are still in full force and effect; and
(5) Governmental Certificates. Certificates of the appropriate government
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officials of the state of incorporation of the Borrower and each Guarantor as to
the existence and good standing of the Borrower and each Guarantor, each dated
no earlier than ten (10) days prior to the date hereof.
(b) The Borrower shall have paid to Bank a waiver and amendment fee in the
amount of $10,000.
(c) The representations and warranties contained herein and in all other
Loan Documents, as amended hereby, shall be true and correct as of the date
hereof as if made on the date hereof.
(d) No Event of Default shall have occurred and be continuing and no event
or condition shall have occurred that with the giving of notice or lapse of time
or both would be an Event of Default.
(e) 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 the Bank and its legal
counsel, Xxxxxx & Xxxxxx L.L.P.
ARTICLE IV.
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RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
Section 4.1 RATIFICATIONS
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The terms and provisions set forth in this 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 are ratified and confirmed and shall
continue in full force and effect. The Borrower and the Bank agree that the
Loan Agreement as amended hereby shall continue to be legal, valid, binding and
enforceable in accordance with its terms.
Section 4.2 REPRESENTATIONS AND WARRANTIES
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The Borrower hereby represents and warrants to the Bank that (i) the
execution, delivery and performance of this Amendment and any and all other
agreements, documents and instruments executed and/or delivered in connection
herewith have been authorized by all requisite corporate action on the part of
the Borrower and will not violate the articles of incorporation or bylaws of the
Borrower, (ii) 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, (iii)
no Event of Default has occurred and is continuing and no event or condition has
occurred that with the giving of notice or lapse of time or both would be an
Event of Default, and (iv) the Borrower is in material compliance with all
covenants and agreements contained in the Loan Agreement as amended hereby.
ARTICLE V.
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MISCELLANEOUS
Section 5.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
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All representations and warranties made in this Amendment or any other
Loan Document shall survive the execution and delivery of this Amendment and the
other Loan Documents, and no investigation by the Bank or any closing shall
affect the representations and warranties or the right of the Bank to rely upon
them.
Section 5.2 REFERENCE TO AGREEMENT
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Each of the Loan Documents, 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 5.3 EXPENSES OF BANK
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As provided in the Loan Agreement, the Borrower agrees to pay on demand
all costs and expenses incurred by the Bank in connection with the preparation,
negotiation, and execution of this Amendment and any and all amendments,
modifications, and supplements thereto, including, without limitation, the costs
and fees of the Bank's legal counsel in connection therewith, and all costs and
expenses incurred by the 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 costs and fees of the Bank's legal
counsel.
Section 5.4 SEVERABILITY
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Any provision of this Amendment held by a court 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 5.5 APPLICABLE LAW
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This Amendment and all other Loan Documents executed pursuant hereto
shall be deemed to have been made and to be performable in Dallas, Dallas
County, Texas and shall be governed by and construed in accordance with the laws
of the State of Texas.
Section 5.6 SUCCESSORS AND ASSIGNS
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This Amendment is binding upon and shall inure to the benefit of the
Bank and the Borrower and their respective successors and assigns, except the
Borrower may not assign or transfer any of its rights or obligations hereunder
without the prior written consent of the Bank.
Section 5.7 COUNTERPARTS
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This Amendment may be executed in one or more 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. Facsimiles shall
be effective as originals.
Section 5.8 EFFECT OF WAIVER
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No consent or waiver, express or implied, by the Bank to or for any
breach of or deviation from any covenant, condition or duty by the Borrower or
any of the Guarantors shall be deemed a consent or waiver to or of any other
breach of the same or any other covenant, condition or duty.
Section 5.9 HEADINGS
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The headings, captions, and arrangements used in this Amendment are for
convenience only and shall not affect the interpretation of this Amendment.
Section 5.10 ENTIRE AGREEMENT
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THIS AMENDMENT AND ALL OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS
EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT EMBODY THE FINAL,
ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENT AMONG THE PARTIES HERETO.
[Remainder of Page Intentionally Left Blank]
Executed as of the date first written above.
Borrower:
PIZZA INN, INC.
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Chief Executive Officer
Bank:
XXXXX FARGO BANK TEXAS,
NATIONAL ASSOCATION
By:/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Vice President
Each of the Guarantors hereby consents and agrees to this Amendment and agrees
that the Guaranty shall remain in full force and effect and shall continue to be
the legal, valid and binding obligation of such Guarantor enforceable against
such Guarantor in accordance with its terms.
Guarantors:
XXXXX REALTY, INC.
R-CHECK, INC.
PIZZA INN OF DELAWARE, INC.
By: /s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
President
