SECOND AMENDMENT TO SYNDICATED LOAN AGREEMENT
This Second Amendment to Syndicated Loan Agreement ("Second Amendment") is
made this 2nd day of September, 1998, by and among Piercing Pagoda, Inc.
("PPI"), a Delaware corporation having its chief executive office at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Piercing Pagoda of Florida, Inc. ("PPF"),
a Florida corporation having its chief executive office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (PPI and PPF are hereinafter
collectively referred to and obligated as "Borrower"), the financial
institutions now or hereafter parties hereto and their respective successors and
assigns (each a "Lender" and collectively, the "Lenders"), Summit Bank
("Summit"), a New Jersey bank having offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and First Union National Bank ("FUNB"), a national bank
having offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
successor by merger to CoreStates Bank, N.A. ("CoreStates"). Summit and FUNB are
co-agent for Lenders (in such capacity, each an "Agent" and collectively, the
"Agents"), and FUNB is administrative agent and issuing bank for the Lenders (in
such capacity, the "Administrative Agent").
BACKGROUND
Pursuant to the terms and subject to the conditions set forth in that
certain Syndicated Loan Agreement dated March 27, 1997 by and among PPI,
Lenders, Agents and Administrative Agent as amended by that certain First
Amendment to Syndicated Loan Agreement dated November 21, 1997, by and among
such parties (as amended, the "Loan Agreement"), PPI is currently indebted to
Lenders for repayment of various loans, advances and extensions of credit made
by Lenders to or for the benefit of PPI under a revolving credit facility in the
principal sum of up to Eighty Million ($80,000,000.00) Dollars (the "Revolving
Loan"), which indebtedness is evidenced by those certain Replacement Revolving
Loan Notes dated November 21, 1997, executed and delivered by PPI to each Lender
(in the amount of each such Lender's Commitment).
Effective April 28, 1998, CoreStates was merged into and succeeded by
FUNB. As a consequence of said merger, FUNB has succeeded to and assumed
CoreStates' interest in and obligations under the Loan Agreement, the Loan
Documents and the Revolving Loan, including the Commitment then held by
CoreStates.
PPI has notified Lenders that it intends to purchase from ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ ("▇▇▇▇") all of the issued and outstanding capital stock of PPF, a
franchisee of PPI.
PPI has requested that: (i) each Lender approve the acquisition by
PPI of all of the issued and outstanding capital stock of PPF from ▇▇▇▇, (ii)
FUNB temporarily increase its Commitment under the Revolving Loan by the amount
of Ten Million ($10,000,000.00) Dollars (the "Temporary Commitment Increase"),
(iii) in conjunction with the Temporary Commitment Increase, the Cash Advance
Sublimit under the Revolving Loan be temporarily increased by Ten Million
($10,000,000.00) Dollars to Sixty Million ($60,000,000.00) Dollars, and (iv) the
Line Limit under the Revolving Loan be temporarily increased by Ten Million
($10,000,000.00) Dollars to Ninety Million ($90,000,000.00) Dollars; and the
Lenders are willing to do so under the terms and subject to the conditions set
forth in this Second Amendment and the instruments, agreements and documents to
be executed and/or delivered pursuant to this Second Amendment.
NOW, THEREFORE, with the foregoing Background deemed incorporated
hereinafter by this reference and hereby made a part hereof, the parties hereto,
intending to be legally bound, hereby covenant and agree as follows:
SECTION 1. DEFINITIONS.
1.01 Capitalized Terms. All capitalized terms not otherwise defined in
this Second Amendment shall have the meanings ascribed to such terms in the Loan
Agreement.
SECTION 2. CONFIRMATION OF EXISTING INDEBTEDNESS AND RATIFICATION
OF LOAN DOCUMENTS.
2.01 Confirmation of Existing Indebtedness. Borrower hereby
unconditionally acknowledges and confirms that: the aggregate outstanding
principal balance of PPI to Lenders evidenced by the Replacement Revolving Loan
Notes is, as of August 31, 1998, Sixty-Seven Million Three Hundred Nineteen
Thousand Thirteen and 55/100 ($67,319,013.55) Dollars; the aggregate face amount
of Letters of Credit issued by the Administrative Agent on behalf of each Lender
for the Account of PPI under the Revolving Loan is, as of the date hereof,
Forty-Two Million One Hundred Ninteen Thousand Thirteen and 55/100
($42,119,013.55) Dollars; interest on the Obligations has been paid through July
31, 1998; and the foregoing indebtedness, together with continually accruing
interest and related costs, fees and expenses is, as of the date hereof, owing
without claim, counterclaim, right of recoupment, defense or set-off of any kind
or of any nature whatsoever.
2.02 Ratification of Loan Documents.
(A) Borrower hereby unconditionally ratifies and confirms and
reaffirms in all respects and without condition, all of the terms, covenants and
conditions set forth in the Loan Documents, and agrees that it remains
unconditionally liable to Bank in accordance with the respective terms,
covenants and conditions of such instruments, agreements and documents.
(B) Without limiting the generality of the immediately preceding
Subparagraph 2.02(A), Borrower hereby unconditionally ratifies and confirms and
reaffirms in all respects and without condition, the provisions of the Loan
Documents permitting
Lenders to Confess Judgment against Borrower.
SECTION 3. AMENDMENTS TO FINANCING AGREEMENTS.
3.01 The Revolving Loan.
(A) Paragraph 1.15 of the Loan Agreement is hereby amended to
temporarily increase the Cash Advance Sublimit from Fifty Million
($50,000,000.00) Dollars to Sixty Million ($60,000,000.00) Dollars; on November
1, 1998, the Cash Advance Sublimit shall, without further notice to Borrower or
any other action on the part of Lenders or the Administrative Agent to be taken,
be reduced to Fifty Million ($50,000,000.00) Dollars;
(B) Paragraph 1.17 of the Loan Agreement is hereby amended to provide
that the aggregate "Commitment" of the Lenders is hereby temporarily increased
by the sum of Ten Million ($10,000,000.00) Dollars to the sum of Ninety Million
($90,000,000.00) Dollars; on November 1, 1998, the aggregate Commitment of
Lenders shall, without further notice to Borrower or any other action on the
part of Lenders or the Administrative Agent to be taken, be reduced to Eighty
Million ($80,000,000.00) Dollars;
(C) FUNB's Commitment shall be increased from Fifty-Three Million
Three Hundred Thirty-Five Thousand ($53,335,000.00) Dollars (inclusive of the
Commitment of CoreStates prior to its merger into FUNB) to Sixty-Three Million
Three Hundred Thirty-Five Thousand ($63,335,000.00) Dollars;
(D) Paragraph 1.45 of the Loan Agreement is hereby temporarily
amended to increase the Line Limit by the sum of Ten Million ($10,000,000.00)
Dollars to the sum of Ninety Million ($90,000,000.00) Dollars; on November 1,
1998, the Line Limit shall be reduced to Eighty Million ($80,000,000.00)
Dollars; and
(E) Paragraph 1.52 of the Loan Agreement is hereby amended to
redefine the term "Notes" to mean, collectively, the "Second Replacement
Revolving Loan Notes" (as hereinafter defined).
3.02 The Second Replacement Revolving Loan Notes. Contemporaneously
herewith, to evidence FUNB's increase in its Commitment, the merger of
CoreStates into FUNB, the joinder of PPF to the Loan Documents and the Temporary
Commitment Increase, Borrower shall execute and deliver to each Lender its
Second Replacement Revolving Loan Note in an amount equal to each Lender's
Commitment. Each Second Replacement Revolving Loan Note shall replace and
supersede (but not extinguish any unpaid Obligations evidenced by) the
Replacement Revolving Loan Notes dated November 21, 1997, executed and delivered
by Borrower to each Lender (and CoreStates).
3.03 Joinder of PPF to Loan Documents. In consideration of the mutual
covenants set forth herein, PPF, hereby joins in and agrees to be jointly and
severally liable and obligated to Lenders as a Borrower under the Loan Agreement
and the other Loan Documents and agrees to be bound by all the terms and
conditions set forth therein. Effective as of the date hereof, the term
"Borrower" as used in the Loan Agreement and the other Loan Documents shall
jointly and severally refer to PPI and PPF.
3.04 Repayment of the Temporary Commitment Increase. On or before October
31, 1998, Borrower shall repay to FUNB the Temporary Commitment Increase, or so
much thereof as shall have been advanced by FUNB, together with all accrued and
unpaid interest. Commencing November 1, 1998, FUNB's Commitment shall be
permanently reduced to Fifty-Three Million Three Hundred Thirty-Three Thousand
($53,333,000.00) Dollars.
SECTION 4. WARRANTIES AND REPRESENTATIONS.
4.01 Reaffirmation of Warranties and Representations. All warranties and
representations set forth in the Loan Agreement and the other Loan Documents are
hereby reasserted and restated by PPI as of the date hereof as if set forth at
length herein. Borrower hereby acknowledges that such warranties and
representations, and the warranties and representations set forth below, are
being specifically relied upon by Lenders as a material inducement to Lenders to
enter into this Second Amendment and increase aggregate Commitment, the Line
Limit and the Cash Advance Sublimit under the Revolving Loan.
4.02 Additional Warranties and Representations. To induce Lenders to enter
into this Second Amendment, Borrower further represents and warrants to Lenders
that:
(A) Borrower has the power, authority and capacity to enter into and
perform this Second Amendment and all related instruments, agreements and
documents, and to incur the Obligations herein and therein provided for, and
Borrower has taken all proper and necessary corporate action to authorize the
execution, delivery and performance of this Second Amendment and related
instruments, agreements and documents;
(B) This Second Amendment is valid, binding and enforceable against
Borrower in accordance with its terms;
(C) PPI has acquired all of the issued and outstanding shares of
stock of PPF pursuant to a Stock Purchase Agreement dated August 31, 1998
between PPI and ▇▇▇▇ (the "Stock Purchase Agreement") and all applicable Law;
and
(D) No consent, approval or authorization of, or filing, registration
or qualification with, any Person is required to be obtained by Borrower in
connection with the execution and delivery of this Second Amendment or any
related instrument, agreement or document, or undertaking or performance of any
Obligation hereunder or thereunder.
SECTION 5. CONDITIONS PRECEDENT.
This Second Amendment is subject to the following conditions precedent
(all instruments, agreements and documents to be in form and substance
satisfactory to each Lender and its counsel):
5.01 Documents Required for Closing. Borrower shall have duly executed
and/or delivered (or caused to be duly executed and/or delivered) to
Administrative Agent the following:
(A) This Second Amendment, the Second Replacement Revolving Loan
Notes, Explanations and Waivers of Rights regarding Confession of Judgment with
respect to the Second Replacement Revolving Loan Notes and each other
instrument, agreement and document to be executed and/or delivered pursuant to
this Second Amendment and/or the instruments, agreements and documents referred
to in this Second Amendment;
(B) A certified (as of the date of this Second Amendment) copy of
resolutions of Borrower's Board of Directors authorizing the execution, delivery
and performance of this Second Amendment and each other document to be executed
and/or delivered pursuant hereto and any other instrument, agreement or document
referred to herein;
(C) A certificate (dated the date of this Second Amendment) of
Borrower's corporate secretary as to the incumbency and specimen signatures of
the officers of Borrower executing this Second Amendment and each other document
to be executed and/or delivered pursuant hereto;
(D) Receipt and approval by Lenders of the Stock Purchase Agreement,
all schedules thereto, and all related instruments, agreements and documents;
(E) EARS, Inc., a Delaware corporation, a guarantor and surety for
the Obligations, shall unconditionally reaffirm in writing its suretyship for
the Obligations and consent to this Second Amendment; and
(F) Such other instruments, agreements and documents as may be
required by each Lender and/or its counsel.
SECTION 6. MISCELLANEOUS.
6.01 Integrated Agreement. This Second Amendment and all of the
instruments, agreements and documents executed and/or delivered in conjunction
with this Second Amendment shall be effective upon the date of execution hereof
and thereof by all parties hereto and thereto, and shall be deemed incorporated
into and made a part of the Loan Agreement and the other Loan Documents. All
such instruments, agreements and documents, and this Second Amendment, shall be
construed as integrated and complementary of each other, and as augmenting and
not restricting Lender's rights, remedies, benefits and security. If, after
applying the foregoing, an inconsistency still exists, the provisions of this
Second Amendment shall constitute an amendment thereto and shall govern and
control.
6.02 Expenses of Lenders and Administrative Agent. Borrower will pay, on
demand, all reasonable out-of-pocket expenses, including the reasonable fees and
expenses of legal counsel for each Lender and the Administrative Agent, incurred
in connection with this Second Amendment and all instruments, agreements and
documents executed and/or delivered in connection with this Second Amendment.
Subject to Paragraph 2.11(B) of the Loan Agreement, any Agent may charge any
deposit account of Borrower maintained at such Agent for all or any part of any
amount due hereunder.
6.03 Counterpart Execution. This Second Amendment may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to Syndicated Loan Agreement to be duly executed and exchanged as of the day and
year first above written.
ATTEST: PIERCING PAGODA, INC.
By:_____________________________
By:______________________________
Name: Name:
Title: Title:
[Corporate Seal]
ATTEST: PIERCING PAGODA OF FLORIDA,
INC.
By:_____________________________
By:______________________________
Name: Name:
Title: Title:
[Corporate Seal]
Commitment: $26,665 ,000.00
SUMMIT BANK, for itself and as Agent
for Lenders
By:______________________________
Name:
Title:
[Signatures continue on following page.]
[Signatures continued from previous page.]
Commitment: $63,335,000.00 FIRST UNION NATIONAL
BANK, N.A., for itself, as successor to CoreStates Bank, N.A.,
and as Agent and Administrative Agent for Lenders
By:
Name:
Title:
PHIL1\144598-1