THIRD AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
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AND
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SECOND AMENDMENT TO REAL ESTATE NOTE
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THIS THIRD AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT AND
SECOND AMENDMENT TO REAL ESTATE NOTE (hereinafter referred to as the
"AMENDMENT") is to be effective as of June 26, 2005, between PIZZA INN, INC., a
Missouri corporation ("BORROWER") and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
(successor to ▇▇▇▇▇ Fargo Bank (Texas), National Association, herein "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 (as amended by that certain First Amendment to Third Amended and Restated
Loan Agreement dated as of March 28, 2004, and that certain Second Amendment to
Third Amended and Restated Loan Agreement dated as of December 26, 2004, the
"LOAN AGREEMENT").
B. WHEREAS, Borrower executed and delivered to Bank that certain Eighth
Amended and Restated Revolving Credit Note dated as of December 26, 2004 in the
original principal amount of $3,000,000 (the "REVOLVING CREDIT NOTE").
C. Bank and Borrower desire to amend the Loan Agreement and the Revolving
Credit Note 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 OF THE LOAN AGREEMENT. The following
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defined terms in Section 1.1 of the Loan Agreement are hereby amended and
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restated in their entirety to read as follows:
(a) "Borrowing Base" - Intentionally Deleted.
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(b) "Commitment Fee Rate" means the percentage per annum determined by
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reference to the Funded Debt Ratio then existing as set forth below:
Funded Debt Ratio Percentage
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Less than 1.50 to 1.0 0.350%
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1.50 to 1.0 or greater and less than 2.50 to 1.0 0.375%
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2.50 to 1.0 or greater and less than 3.50 to 1.0 0.400%
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3.50 to 1.0 or greater and less than 4.50 to 1.0 0.450%
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4.50 to 1.0 or greater and less than 5.50 to 1.0 0.475%
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5.50 to 1.0 or greater 0.500%
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(c) "LIBOR Rate Margin" means, with respect to the Term Loan and the
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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:
Funded Debt Ratio Percentage
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Less than 1.50 to 1.0 1.25%
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1.50 to 1.0 or greater and less than 2.50 to 1.0 1.75%
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2.50 to 1.0 or greater and less than 3.50 to 1.0 2.25%
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3.50 to 1.0 or greater and less than 4.50 to 1.0 2.75%
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4.50 to 1.0 or greater and less than 5.50 to 1.0 3.25%
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5.50 to 1.0 or greater 3.75%
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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.
(d) "Prime Rate Margin" means, with respect to the Term Loan and the
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Revolving Credit Loans, at any time, the following percentage determined by
reference to the Funded Debt Ratio then existing:
Funded Debt Ratio Percentage
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Less than 1.50 to 1.0 -0.75%
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1.50 to 1.0 or greater and less than 2.50 to 1.0 -0.25%
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2.50 to 1.0 or greater and less than 3.50 to 1.0 0.25%
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3.50 to 1.0 or greater and less than 4.50 to 1.0 0.75%
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4.50 to 1.0 or greater and less than 5.50 to 1.0 1.25%
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5.50 to 1.0 or greater 1.75%
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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 Prime Rate Margin concurrently with
its delivery of the items required under Section 10.1(c) hereof, and any change
to the Prime Rate Margin shall be effective immediately after the Bank has
received such information or otherwise becomes aware of the change in the Funded
Debt Ratio.
(e) "Revolving Credit Commitment" means the obligation of 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 Six Million and No/100 Dollars
($6,000,000.00), as the same may be terminated pursuant to Section 13.2.
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(f) "Revolving Credit Note" means the Ninth Amended and Restated Revolving
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Credit Note executed by the Borrower and payable to the order of 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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2007, 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.
Section 2.02. AMENDMENT TO SECTION 1.1 OF THE LOAN AGREEMENT. The following
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defined term is hereby added to Section 1.1 of the Loan Agreement and shall
read in its entirety as follows:
(a) "Third Amendment Effective Date" means June 26, 2005.
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Section 2.03. AMENDMENT TO SECTION 2.1 OF THE LOAN AGREEMENT. Section 2.1
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of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
Section 2.1 Revolving Credit Commitment. Subject to the terms and
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conditions of this Agreement, Bank agrees to make one or more additional
Revolving Credit Advances to the Borrower from time to time from the Closing
Date to and including the Termination Date, provided that the aggregate amount
of all Revolving Credit Advances at any time outstanding shall not exceed the
lesser of (a) the amount of the Revolving Credit Commitment minus all
outstanding Letter of Credit Liabilities. Subject to the foregoing limitations,
and the other terms and provisions of this Agreement, the Borrower may borrow,
repay, and reborrow hereunder the amount of the Revolving Credit Commitment by
means of Prime Rate Advances and LIBOR Advances and, until the Termination Date,
the Borrower may Convert Revolving Credit Advances of one Type into Revolving
Credit Advances of another Type. Revolving Credit Advances of each Type made by
Bank shall be made and maintained at Bank's Applicable Lending Office for
Revolving Credit Advances of such Type.
Section 2.04. AMENDMENT TO SECTION 2.7 OF THE LOAN AGREEMENT. Section 2.7
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of the Loan Agreement is hereby amended and restated in its entirety to delete
the Facility Fee and read as follows:
Section 2.7 Commitment Fee. The Borrower agrees to pay to the Bank a
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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.
Section 2.05. AMENDMENT TO SECTION 10.1(B) OF THE LOAN AGREEMENT.
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Section 10.1(b) of the Loan Agreement is hereby amended and restated in its
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entirety to read as follows:
(b) Monthly Financial Statements. As soon as available, and in any
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event within thirty (30) days after the end of each month, a copy of an
unaudited financial report of the Borrower and the Subsidiaries as of the end of
such month 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, retained earnings, 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;
Section 2.06. AMENDMENT TO SECTION 10.1(C) OF THE LOAN AGREEMENT.
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Section 10.1(c) of the Loan Agreement is hereby amended and restated in its
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entirety to read as follows:
(c) Monthly Calculations/Accounts Receivable Report. As soon as
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available, and in any event within thirty (30) days after the end of each month,
(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
continuing, a statement as to the nature thereof and the action that is proposed
to be taken with respect thereto, and (B) showing in reasonable detail the most
recent calculations demonstrating compliance with Article XII and (ii) an
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account receivable aging, classifying the Borrower's accounts receivable in
categories of 0-30, 31-60, 61-90 and over 90 days from date of invoice, and in
such form and detail as Bank shall require, account payable aging by categories
of 0-30, 31-60 and over 60, from date of invoice, also in such detail as Bank
shall reasonably require, and in each case certified by the chief financial
officer of the Borrower and, at any time requested by Bank, a listing of all
account debtors that includes names, addresses and phone numbers of the account
debtors;
Section 2.07. AMENDMENT TO ARTICLE XII, FINANCIAL COVENANTS, OF THE LOAN
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AGREEMENT. Article XII is hereby deleted in its entirety and replaced with the
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following:
ARTICLE XII.
Financial Covenants
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Section 12.1 Fixed Charge Coverage Ratio. At no time shall the Fixed
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Charge Coverage Ratio, defined as EBITDA plus rent expense less treasury stock
purchases less dividends plus increases in subordinated debt or contributed
capital divided by current maturities of long-term debt plus current maturities
of subordinated debt plus prepayments on subordinated debt plus rent expense
plus capital lease payments plus cash taxes plus interest expense (net of
capitalized interest), be less than 0.90x from Closing through November 30,
2005, 1.10x from December 31, 2005 through January 31, 2006, 1.25x from February
28, 2006 through May 31, 2006 and 1.35x for every period thereafter.
Section 12.2 Consolidated Liabilities to Tangible Net Worth. Borrower will
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maintain a ratio of Consolidated Liabilities less Subordinated Debt (as
hereinafter defined) to Tangible Net Worth of not more than 1.75x from Closing
through November 30, 2005, 1.65x from December 31, 2005 through April 30, 2006
and 1.50x for every period thereafter. "Subordinated Debt" shall mean Debt of
Borrower and its Subsidiaries that is subordinated to the Obligations in form
and substance satisfactory to Bank.
Section 12.3 Profitable Operations. Excluding the month of June 2005,
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Borrower will not sustain (i) a net loss in excess of $100,000 for any fiscal
month, (ii) an aggregate net loss in excess of $200,000 for any fiscal quarter
and (iii) a net loss for any fiscal year.
Section 12.4 Capital Expenditures. The Borrower will not permit the
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aggregate Capital Expenditures of the Borrower and the Subsidiaries not financed
with Debt excluding the Revolving Credit Commitment, (a) for the fiscal year
2006, to exceed $3,000,000 and, (b) for each fiscal year after 2006, (i) to
exceed $1,750,000 if the Fixed Charge Coverage Ratio at fiscal year end is 1.50
or less or (ii) to exceed $3,000,000 if the Fixed Charge Coverage Ratio at
fiscal year end is greater than 1.50.
Section 12.5 Operating Lease Payments. Operating lease payments are limited
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to $2,500,000 per fiscal year.
Section 12.6 Purchase Money Debt. Purchase money debt is limited to
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$1,000,000 in the aggregate.
Section 2.08. AMENDMENT TO REAL ESTATE NOTE.
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(a) The following terms in the Fixed Rate Agreement attached as Exhibit A to
the Real Estate Note are hereby amended and restated in their entirety to
read as follows:
(i) "Eurodollar Rate Margin" means, at such time and from time to time as
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the relevant Funded Debt Ratio is in one of the following ranges, the percentage
per annum set forth opposite such Funded Debt Ratio:
Funded Debt Ratio Percentage
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Less than 1.50 to 1.0 1.25%
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1.50 to 1.0 or greater and less than 2.50 to 1.0 1.75%
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2.50 to 1.0 or greater and less than 3.50 to 1.0 2.25%
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3.50 to 1.0 or greater and less than 4.50 to 1.0 2.75%
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4.50 to 1.0 or greater and less than 5.50 to 1.0 3.25%
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5.50 to 1.0 or greater 3.75%
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The Borrower shall give written notice to the Lender of any changes in the
Funded Debt Ratio which results in a change to the Eurodollar Rate Margin
concurrently with its delivery of the items required under Section 10.1(c) of
the Third Amended and Restated Loan Agreement, and any change to the Eurodollar
Rate Margin shall be effective with respect to any Interest Period commencing
after the Lender has received such information.
(ii) "Prime Rate Margin" means, at any time, the following percentage
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determined by reference to the Funded Debt Ratio then existing:
Funded Debt Ratio Percentage
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Less than 1.50 to 1.0 -0.75%
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1.50 to 1.0 or greater and less than 2.50 to 1.0 -0.25%
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2.50 to 1.0 or greater and less than 3.50 to 1.0 0.25%
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3.50 to 1.0 or greater and less than 4.50 to 1.0 0.75%
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4.50 to 1.0 or greater and less than 5.50 to 1.0 1.25%
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5.50 to 1.0 or greater 1.75%
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The Borrower shall give written notice to the Lender of any changes in the
Funded Debt Ratio which results in a change to the Prime Rate Margin
concurrently with its delivery of the items required under Section 10.1(c) of
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the Third Amended and Restated Loan Agreement, and any change to the Prime Rate
Margin shall be effective immediately after the Lender has received such
information or otherwise becomes aware of the change in the Funded Debt Ratio.
(b) The following defined terms are hereby added to the Fixed Rate Agreement
attached as Exhibit A to the Real Estate Note and shall read in its
entirety as follows:
(i) "Funded Debt Ratio" has the meaning specified in the Third Amended and
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Restated Loan Agreement.
(ii) "Third Amended and Restated Loan Agreement" means that certain Third
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Amended and Restated Loan Agreement, dated as of January 22, 2003, between
Lender and Borrower, as amended, modified, extended, renewed or supplemented
from time to time.
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, each in form and substance
satisfactory to Bank:
(i) This Amendment, duly executed by Borrower together with the Consent and
Ratification (the "RATIFICATION") attached hereto, duly executed by each
Guarantor;
(ii) The Ninth Amended and Restated Revolving Credit Note duly executed by
Borrower;
(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; and
(iv) An amendment fee of $7,500 from Borrower.
(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; and
(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.
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 the Revolving Credit Note 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 and the Revolving Credit Note, 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 and the Revolving Credit Note, 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 AND THE REVOLVING CREDIT NOTE.
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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 and
the Revolving Credit Note, as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Loan Agreement and the Revolving Credit
Note shall mean a reference to the Loan Agreement and the Revolving Credit Note,
as amended hereby.
Section 5.03. EXPENSES OF BANK. As provided in the Loan Agreement, Borrower
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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 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 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 HERETO 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 AND THE REVOLVING CREDIT
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NOTE, AS AMENDED HEREBY, AND 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]
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CFO/Treasurer
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, a national banking association
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ III
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ III
Title: Vice President
By its signature above, Borrower acknowledges that Bank's address for notices
under each of the Loan Documents is as follows:
Bank's Address for Notices:
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▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
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CONSENT AND RATIFICATION
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The undersigned, ▇▇▇▇▇ REALTY, INC., a Texas corporation, R-CHECK, INC., a
Texas corporation, and PIZZA INN OF DELAWARE, INC., a Delaware corporation (each
a "GUARANTOR" and collectively the "GUARANTORS") have executed certain Loan
Documents in favor of ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION (successor to ▇▇▇▇▇
Fargo Bank (Texas), National Association) ("BANK") in connection with that
certain Third Amended and Restated Loan Agreement dated as of January 22, 2003
(as amended by that certain First Amendment to Third Amended and Restated Loan
Agreement dated as of March 28, 2004, and that certain Second Amendment to Third
Amended and Restated Loan Agreement dated as of December 26, 2004, the "LOAN
AGREEMENT") by and between Pizza Inn, Inc. ("BORROWER") and Bank. All
capitalized terms used herein unless otherwise defined herein shall have the
meanings given to them in the Loan Agreement. The Guarantors hereby consent and
agree to the terms of the Third Amendment to Third Amended and Restated Loan
Agreement and Amendment to Revolving Credit Note effective as of June 26, 2005
(the "AMENDMENT"), executed by Borrower and Bank, a copy of which is attached
hereto, and the undersigned agree that the Loan Documents to which they are a
party shall remain in full force and effect and shall continue to be the legal,
valid and binding obligation of the Guarantors, enforceable against the
Guarantors in accordance with their terms. Furthermore, each Guarantor hereby
agrees and acknowledges that (a) none of the Loan Documents to which it is a
party is subject to any claims, defenses or offsets, (b) nothing contained in
this Amendment or any other Loan Document shall adversely affect any right or
remedy of Bank under the any of the Loan Documents to which it is a party, (c)
the execution and delivery of the Amendment shall in no way reduce, impair or
discharge any indebtedness, liability or obligation of the undersigned under any
of the Loan Documents to which it is a party and shall not constitute a waiver
by Bank of any of Bank's rights against the undersigned, (d) by virtue hereof
and by virtue of each of Loan Documents to which it is a party, each Guarantor
ratifies in full all of its indebtedness, liabilities and obligations arising
under each of the Loan Documents to which it is a party, (e) the Guarantors'
consent is not required to the effectiveness of the Amendment, and (f) no
consent by the Guarantors is required for the effectiveness of any future
amendment, modification, forbearance or other action with respect to the
Agreement or any present or future Loan Document.
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GUARANTORS:
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▇▇▇▇▇ REALTY, INC.,
a Texas corporation
By:/s/ ▇▇▇ ▇▇▇▇
Name: ▇▇▇ ▇▇▇▇
Title: President
R-CHECK, INC.,
a Texas corporation
By:/s/ ▇▇▇ ▇▇▇▇
Name: ▇▇▇ ▇▇▇▇
Title: President
PIZZA INN OF DELAWARE, INC.,
a Delaware corporation
By:/s/ ▇▇▇ ▇▇▇▇
Name: ▇▇▇ ▇▇▇▇
Title: President
