THIRD AMENDMENT TO THIRD AMENDED
AND RESTATED LOAN AGREEMENT
This Third Amendment to Third Amended and Restated Loan Agreement
("Amendment") is made this 5th day of September, 1996 by and between Piercing
Pagoda, Inc. ("Borrower"), a Delaware corporation having its chief executive
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Summit Bank,
successor-in-interest to First Valley Bank ("Bank"), a Pennsylvania bank having
offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BACKGROUND
A. Pursuant to the terms and subject to the conditions set forth in that
certain Third Amended and Restated Loan Agreement dated February 13, 1995 by and
between Borrower and Bank (under its former name), as amended pursuant to a
letter agreement dated April 21, 1995 between Borrower and Bank (under its
former name), that certain Amendment to Third Amended and Restated Loan
Agreement dated August 4, 1995 between Borrower and Bank (under its former
name), and as amended by that certain Second Amendment to Third Amended and
Restated Loan Agreement dated November 21, 1995 between Borrower and Bank (under
its former name) (as amended, the "Loan Agreement") and related instruments,
agreements and documents (collectively, along with the Loan Agreement, the
"Financing Agreements"), Borrower is currently indebted to Bank for repayment of
various loans, advances and extensions of credit made by Bank from time to time
to or for the benefit of Borrower under a certain revolving credit facility in
the sum of up to Forty Million ($40,000,000.00) Dollars (the "Revolving Loan"),
which indebtedness is evidenced by that certain Tenth Replacement Revolving Loan
Note dated November 21, 1995 in the principal sum of Forty-Three Million
($43,000,000.00) Dollars executed and delivered by Borrower to Bank (under its
former name) (the "Tenth Replacement Revolving Loan Note").
B. Borrower has requested that Bank (a) increase the amount of the
Revolving Loan, (b) extend the maturity date of the Revolving Loan and (c)
otherwise amend and modify certain of the other terms and conditions set forth
in the Loan Agreement and the other Financing Agreements, and Bank is willing to
do so under the terms and subject to the conditions set forth in this Amendment
and in the instruments, agreements and documents to be executed and/or delivered
pursuant to this Third 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 further covenant and agree as follows:
SECTION 1. DEFINITIONS.
1.01 Capitalized Terms. All capitalized terms not otherwise defined in this
Amendment shall have the meanings ascribed to such terms in the Loan Agreement.
SECTION 2. CONFIRMATION OF EXISTING INDEBTEDNESS AND RATIFICATION OF
FINANCING AGREEMENTS.
2.01 Confirmation of Existing Indebtedness. Borrower hereby unconditionally
acknowledges and confirms that: the outstanding principal balance of Borrower to
Bank evidenced by the Tenth Replacement Revolving Loan Note is, as of the date
hereof, Fourteen Million Two-Hundred Fifty-Four Thousand Eight Hundred and
Thirty-Three and 36/100 ($14,254,833.36) Dollars; the aggregate face amount of
Letters of Credit issued by Bank or CoreStates Bank, N.A., successor-in-interest
to Meridian Bank for the account of Borrower under the Revolving Loan is, as of
the date hereof, Twenty-Two Million One-hundred Sixty-
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Three Thousand Three-hundred and 00/100 ($22,163,300.00) Dollars; interest on
the Obligations has been paid through August 15, 1996; 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 Financing Agreements.
(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 Financing Agreements, 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), the Borrower hereby unconditionally ratifies and confirms
and reaffirms in all respects and without condition, the provisions of the
Financing Agreements permitting Bank to Confess Judgment against the Borrower.
SECTION 3. AMENDMENTS TO FINANCING AGREEMENTS.
(A) The text of Paragraph 1.2.1 of the Loan Agreement is deleted in
its entirety and replaced with the following:
"Revolving Loan Termination Date" means October 31, 1996, unless such
date is extended by Bank and evidenced by a confirming written notice
to Borrower.
3.01 The Revolving Loan.
(A) For the period from the date of this Third Amendment through
Revolving Loan Termination Date, the Line Limit shall be Fifty Million
($50,000,000.00) Dollars and the Cash Advance Sublimit shall be Thirty Million
($30,000,000.00) Dollars.
3.02 The Eleventh Replacement Revolving Loan Note. Contemporaneously
herewith, Borrower shall execute and deliver to Bank its note in the principal
sum of Fifty Million ($50,000,000.00) Dollars (the "Eleventh Replacement
Revolving Loan Note") to evidence Borrower's Obligations to repay Bank, on the
Revolving Loan Termination Date, with interest at the applicable Rate set forth
at Paragraph 2.08 of the Loan Agreement, for all loans, advances and extensions
of credit made or to be made by Bank to or for the benefit of Borrower under the
Revolving Loan, all as more fully described in the Eleventh Replacement
Revolving Loan Note, the terms, covenants and conditions of which are hereby
deemed incorporated herein by this reference and made a part hereof. The term
"Note" is hereby amended to mean and include the Eleventh Replacement Revolving
Loan Note.
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 Financing
Agreements are hereby reasserted and restated by Borrower as of the date hereof
as if set forth at length herein, except as modified by information previously
provided, in writing, to Bank or acknowledged, in writing, by Bank. Borrower
hereby acknowledges that such warranties and representations, and the warranties
and representations set forth below, are being specifically relied upon by Bank
as a material inducement to Bank to enter into this Third Amendment and increase
the amount of the Revolving Loan.
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4.02 Additional Warranties and Representations. To induce Bank to enter
into this Third Amendment, Borrower represents and warrants to Bank that:
(A) Borrower has the power, authority and capacity to enter into and
perform this Third Amendment, the Eleventh Replacement Revolving Loan Note 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
Third Amendment, the Eleventh Replacement Revolving Loan Note and related
instruments, agreements and documents;
(B) This Third Amendment is, and the Eleventh Replacement Revolving
Loan Note when delivered will be, valid, binding and enforceable against
Borrower in accordance with their respective terms; and
(C) 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 Third Amendment, the Eleventh
Replacement Revolving Loan Note or any related instrument, agreement or
document, or undertaking or performance of any Obligation hereunder or
thereunder.
SECTION 5. CONDITIONS PRECEDENT.
This Third Amendment is subject to the following conditions precedent (all
instruments, agreements and documents to be in form and substance satisfactory
to Bank 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 Bank the
following:
(A) The Eleventh Replacement Revolving Loan Note and each other
instrument, agreement and document to be executed and/or delivered pursuant to
this Amendment and/or the instruments, agreements and documents referred to in
this Amendment;
(B) A certified (as of the date of this Third Amendment) copy of
resolutions of Borrower's Board of Directors authorizing the execution, delivery
and performance of this Third Amendment, the Eleventh Replacement Revolving Loan
Note and each other document to be executed and/or delivered pursuant hereto and
any other instrument, agreement or document referred to herein;
(C) A certification that Borrower's certificate of incorporation and
by-laws remain unchanged from Closing;
(D) A certificate (dated the date of this Third Amendment) of
Borrower's corporate secretary as to the incumbency and specimen signatures of
the officers of Borrower executing this Third Amendment, the Eleventh
Replacement Revolving Loan Note and each other document to be executed and/or
delivered pursuant hereto or thereto; and
(E) Such other instruments, agreements and documents as may be
required by Bank and/or its counsel.
SECTION 6. MISCELLANEOUS.
6.01 Integrated Agreement. This Third Amendment and all of the instruments,
agreements and documents executed and/or delivered in conjunction with this
Third Amendment shall be effective upon the date of execution hereof and thereof
by all parties hereto and thereto,
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and shall be deemed incorporated into and made a part of the Loan Agreement and
the other Financing Agreements. All such instruments, agreements and documents,
and this Third Amendment, shall be construed as integrated and complementary of
each other, and as augmenting and not restricting Bank's rights, remedies,
benefits and security. If, after applying the foregoing, an inconsistency still
exists, the provisions of this Third Amendment shall constitute an amendment
thereto and shall govern and control.
6.02 Expenses of Bank. Borrower will pay, on demand, all reasonable
out-of-pocket expenses, including the reasonable fees and expenses of legal
counsel for Bank, incurred in connection with this Third Amendment and all
instruments, agreements and documents executed and/or delivered in connection
with this Third Amendment. Subject to Paragraph 2.07 of the Loan Agreement, Bank
may charge any deposit account of Borrower maintained at Bank for all or any
part of any amount due hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
Third Amended and Restated Loan Agreement to be duly executed and exchanged as
of the day and year first above written.
PIERCING PAGODA, INC.,
a Delaware corporation
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President,
Attest: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
(Corporate Seal)
SUMMIT BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
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