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FIRST AMENDMENT TO THE SECOND AMENDED
AND RESTATED LOAN AGREEMENT
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This FIRST AMENDMENT TO THE SECOND AMENDED AND RESTATED LOAN AGREEMENT
(this "Amendment"), dated as of December 28, 2000, is by and between PIZZA INN,
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INC., a Missouri corporation ("Borrower"), and ▇▇▇▇▇ FARGO BANK TEXAS, NATIONAL
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ASSOCIATION, a national banking association (successor by consolidation to ▇▇▇▇▇
Fargo Bank (Texas), National Association) (the "Bank").
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R E C I T A L S:
A. The Borrower entered into that certain Second Amended and Restated Loan
Agreement dated as of March 31, 2000 with the Bank (the "Loan Agreement").
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B. In connection with the Loan Agreement, ▇▇▇▇▇ Realty, Inc., a Texas
corporation, R-Check, Inc., a Texas corporation, and Pizza Inn of Delaware,
Inc., a Delaware corporation (collectively, the "Guarantors"), executed that
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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 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
Definitions
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Section 1.1 Definitions. Capitalized terms used in this Amendment, to the
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extent not otherwise defined herein, shall have the same meanings as in the Loan
Agreement as amended hereby.
ARTICLE II
Amendments
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Section 2.1 Amendment to Definitions. Effective as of the date hereof, the
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following definitions in Section 1.1 of the Loan Agreement are hereby amended
and restated in their entirety to read as follows:
"Fixed Charge Coverage Ratio" means, at any time, the quotient determined
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by dividing (a) the sum of (1) EBITDA for the preceding twelve (12) calendar
months, plus (2) for the fiscal year ending on or around June 24, 2001, rent
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expense including without limitation, base rent, CAM charges and repairs and
maintenance, incurred in connection with the Norco distribution warehouse
located at ▇▇▇ ▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ the Borrower's corporate
headquarters located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and
the Borrower's training center located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
minus (3) treasury stock purchases made by the Borrower for the preceding twelve
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(12) calendar months but excluding such purchases of treasury stock made prior
to June 24, 2000, minus (4) dividends paid by the Borrower during the preceding
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twelve (12) calendar months, but excluding any dividends paid for the fiscal
years prior to the fiscal year ending on or around June 24, 2001 by (b) the sum
of (i) all scheduled payments on all Long Term Debt of the Borrower and the
Subsidiaries and all scheduled payments under Capital Lease Obligations of the
Borrower and the Subsidiaries to be paid during the next twelve (12) calendar
months, plus (ii) interest expenses and tax expenses (to the extent paid in
cash) of the Borrower and the Subsidiaries for the preceding twelve (12)
calendar months.
"Real Estate Maturity Date" means 10:00 a.m. Dallas, Texas time on December 28,
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2007, or such earlier date and time in which the Real Estate Commitment
terminates as provided in this Agreement; provided, however, if such date is not
a Business Day, the "Real Estate Maturity Date" shall be the first Business Day
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following such date.
Section 2.2 Amendment to Section 11.4. Effective as of the date hereof,
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Section 11.4 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
Section 11.4 Restricted Payments. The Borrower will not declare or pay
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any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or permit any of its
Subsidiaries to purchase or otherwise acquire any capital stock of the Borrower
or another Subsidiary, or set apart any money for a sinking or other analogous
fund for any dividend or other distribution on its capital stock or for any
redemption, purchase, retirement, or other acquisition of any of its capital
stock; provided that the foregoing restrictions do not prohibit (a) the purchase
of common stock of the Borrower in open market transactions, so long as no
Default or Event of Default exists at the time of such purchase nor would result
after giving effect thereto; (b) dividend payments on any class of capital stock
payable solely in shares of capital stock of the Borrower; (c) payments of
dividends from any Subsidiary to the Borrower; (d) payments in lieu of taxes to
the Borrower or a Subsidiary pursuant to a tax sharing agreement; (e) any
exchange of stock not involving any cash consideration pursuant to a stock
option plan for employees or directors of the Borrower; (f) payments of cash
dividends on any class of capital stock of Borrower so long as no Default or
Event of Default exists at the time of such payment nor would result after
giving effect thereto at the time of such payment; and (g) any other redemption,
purchase, retirement or the acquisition of the Borrower's capital stock upon
obtaining the prior written approval of the Bank (clauses (a) through and
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including (g) being hereinafter referred to as "Permitted Restricted Payments").
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Notwithstanding anything to the contrary contained herein, (i) the Permitted
Restricted Payments shall not at any time exceed $2,000,000 in the aggregate
during any fiscal year of the Borrower, (ii) upon the occurrence of a violation
of any provision of Article XII, the Borrower may not make any Permitted
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Restricted Payment for a period of at least six (6) months following the curing
or the waiver of such violation, and (iii) the Borrower may make Permitted
Restricted Payments so long as no Default or Event of Default has occurred or
would result from such Permitted Restricted Payment.
Section 2.3 Amendment to Section 12.2. Effective as of the date
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hereof, Section 12.2 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
Section 12.2 Funded Debt Ratio. Beginning with the fiscal quarter
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ending on or around December 24, 2000, the Borrower will maintain, as of the end
of each fiscal quarter, a Funded Debt Ratio of not greater than (a) 3.25 to 1.00
during the fiscal year ending on or around June 24, 2001, (b) 3.00 to 1.00
during the fiscal year ending on or around June 24, 2002, and (c) 2.75 to 1.00
thereafter.
Section 2.4 Amendment to Section 12.3. Effective as of the date hereof,
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Section 12.3 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
Section 12.3 Fixed Charge Coverage Ratio. Beginning with the fiscal
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quarter ending on or around September 24, 2000, the Borrower will maintain, as
of the end of each fiscal quarter, a Fixed Charge Coverage Ratio of not less
than 1.25 to 1.0 at all times.
Section 2.5 Amendment to Section 10.13. Effective as of the date hereof,
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Section 10.13 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
Section 10.13 Interest Rate Protection. The Borrower will, within
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one hundred eighty (180) days after December 28, 2000 and at all times
thereafter, cause at least one hundred percent (100%) of the aggregate
outstanding principal amount of the Real Estate Loan to be either (a) subject to
a fixed interest rate or (b) subject to Interest Rate Agreements with the Bank
and/or with a bank or other financial institution having capital, surplus and
undivided profits of at least $500,000,000 on terms satisfactory to the Bank.
Section 2.6 Amendment to Exhibit E. Effective as of the date hereof, all
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references in the Loan Agreement to "Exhibit E" shall be deemed to mean the
"Exhibit E" attached hereto as Exhibit E.
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ARTICLE III
Conditions Precedent
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Section 3.1 Conditions. The effectiveness of this Amendment is subject to
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the satisfaction of the following conditions precedent:
(a) The Bank shall have received all of the following, each dated (unless
otherwise indicated) as of the date hereof, in form and substance satisfactory
to the Bank:
(1) Resolutions. Resolutions of the Board of Directors of the Borrower
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and 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
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the Secretary or an Assistant Secretary of the Borrower and each Guarantor
certifying the names of the officers of the Borrower and each Guarantor
authorized to sign this Amendment and each of the other Loan Documents to which
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
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Secretary or 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
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
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government 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 within ten (10) days prior to the date hereof.
(b) 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.
(c) 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.
(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 the Bank and its legal
counsel, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
ARTICLE IV
Ratifications, Representations and Warranties
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Section 4.1 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 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. The Borrower hereby represents
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and warrants to the Bank that (i) 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 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) Borrower is in material compliance with
all covenants and agreements contained in the Loan Agreement as amended hereby.
ARTICLE V
Miscellaneous
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Section 5.1 Survival of Representations and Warranties. All representations
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and warranties made in this Amendment or any other Loan Document including
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 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. Each of the Loan Documents, including
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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. As provided in the Loan Agreement, the
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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 the other Loan Documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including without limitation
the costs and fees of the Bank's legal counsel, 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. 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 5.5 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, 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. This Amendment is binding upon and
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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. 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.
Section 5.8 Effect of Waiver. No consent or waiver, express or implied, by
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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. The headings, captions, and arrangements used in this
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Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
Section 5.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
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DOCUMENTS AND AGREEMENTS 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
AGREEMENTS AMONG THE PARTIES HERETO.
[Remainder of Page Intentionally Left Blank]
Executed as of the date first written above.
Borrower:
PIZZA INN, INC.
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
BANK:
▇▇▇▇▇ FARGO BANK TEXAS, NATIONAL ASSOCIATION
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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:
▇▇▇▇▇ REALTY, INC.
R-CHECK, INC.
PIZZA INN OF DELAWARE, INC.
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
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DALLAS_1\3422778\1
01/15/2001 - 4814-129
DALLAS_1\3422778\1
01/15/2001 - 4814-129