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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) FEBRUARY 11, 2005
PIZZA INN, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 0-12919 47-0654575
(State or other jurisdiction of incorporation) (Commission File Number) (IRS
Employer Identification No.)
3551 PLANO PARKWAY, THE COLONY, TEXAS 75056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (469) 384-5000
NOT APPLICABLE
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On February 11, 2005, the Company and Wells Fargo Bank, National
Association ("Wells Fargo") entered into a Second Amendment to Third Amended and
Restated Loan Agreement and Amendment to Real Estate Note amending the Company's
existing revolving credit and term loan agreements with Wells Fargo. The
amendment provides for a $3.0 million revolving credit line that will expire
December 23, 2005, replacing a $4.0 million credit line that was due to expire
October 1, 2005. Additionally, the amendment modifies the interest rates and
certain financial covenants for the revolving credit and term loans. Interest is
provided for on the revolving credit loan at a rate equal to prime plus 0.50%,
or, at the Company's option, at the LIBOR rate plus 2.75%. Interest is provided
for on the term loan at prime rate or the LIBOR rate plus 2.25%, at the
Company's option.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
99.1 Second Amendment to Third Amended and Restated Loan Agreement and Amendment
- ---- to Real Estate Note dated February 11, 2005, to be effective as of December
26, 2004 (furnished herewith and incorporated herein by reference)
99.2 Eighth Amended and Restated Revolving Credit Note dated February 11,
- ----- 2005, to be effective as of December 26, 2004 (furnished herewith and
incorporated herein by reference)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Pizza Inn, Inc.
Date: February 15, 2005 By: /s/ Rod J. McDonald
Name: Rod J. McDonald
Title: Secretary
SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT
-------------------------------------------------------------
AND
---
AMENDMENT TO REAL ESTATE NOTE
-----------------------------
THIS SECOND AMENDMENT TO THIRD AMENDED AND RESTATED LOAN AGREEMENT AND
AMENDMENT TO REAL ESTATE NOTE (hereinafter referred to as the "AMENDMENT") is to
be effective as of December 26, 2004, between PIZZA INN, INC., a Missouri
corporation ("BORROWER") and WELLS FARGO BANK, NATIONAL ASSOCIATION (successor
to Wells Fargo Bank (Texas), National Association, herein "BANK").
RECITALS
--------
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, the "LOAN AGREEMENT").
B. WHEREAS, Borrower executed and delivered to Bank that certain Promissory
Note dated December 28, 2000 in the original principal amount of $8,125,000 (the
"REAL ESTATE NOTE").
C. Bank and Borrower desire to amend the Loan Agreement and the Real Estate
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
-----------
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. Certain
---------------------------------------------------
defined terms in Section 1.1 of the Loan Agreement are hereby amended and
------------
restated in their entirety to read as follows:
(a) "Change of Control" means (a) the merger or consolidation of the
-------------------
Borrower with any other Person 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) a majority of the members
of the Board of Directors do not constitute Continuing Directors, or (c)
Borrower ceases to directly own and control 100% of the outstanding capital
Stock of each of its Subsidiaries extant as of the Closing Date.
(b) "LIBOR Rate Margin" means 2.75%.
-------------------
(c) "Prime Rate Margin" means 0.50%.
-------------------
(d) "Revolving Credit Commitment" means the obligation of Bank to make
-----------------------------
Revolving Credit Advances hereunder in an aggregate principal amount at any one
time outstanding up to but not exceeding Three Million and No/100 Dollars
($3,000,000.00), as the same may be terminated pursuant to Section 13.2.
------------
(e) "Revolving Credit Note" means the Eighth Amended and Restated Revolving
----------------------
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
----------
renewals thereof.
(f) "Termination Date" means 10:00 A.M. Dallas, Texas time on December 23,
-----------------
2005, 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
----------------------------------------------
defined terms are hereby added to Section 1.1 of the Loan Agreement and
-----------
shall read in their entirety as follows:
(a) "Board of Directors" means the board of directors (or comparable
--------------------
managers) of Borrower or any committee thereof duly authorized to act on behalf
thereof.
(b) "Borrowing Base" means, at any time, an amount equal to the sum of
---------------
eighty percent (80%) of the value of Eligible Accounts.
(c) "Continuing Director" means (a) any member of the Board of Directors who
-------------------
was a director (or comparable manager) of Borrower on the Second Amendment
Effective Date, (b) any individual who becomes a member of the Board of
Directors by replacing Ronald Parker as a member of the Board of Directors, and
(c) any individual who becomes a member of the Board of Directors after the
Second Amendment Effective Date if such individual was appointed or nominated
for election to the Board of Directors by a majority of the Continuing
Directors, but excluding any such individual originally proposed for election in
opposition to the Board of Directors in office at the Second Amendment Effective
Date in an actual or threatened election contest relating to the election of the
directors (or comparable managers) of Borrower (as such terms are used in Rule
14a-11 under the Securities Exchange Act of 1934, as in effect from time to
time.) and whose initial assumption of office resulted from such contest or the
settlement thereof.
(d) "Eligible Accounts" means, at any time, all accounts receivable of the
------------------
Borrower created in the ordinary course of business that are acceptable to Bank
and satisfy the following conditions:
1. The account complies with all applicable laws, rules, and regulations,
including, without limitation, usury laws, the Federal Truth in Lending Act, and
Regulation Z of the Board of Governors of the Federal Reserve System;
2. The account has not been outstanding for more than 90 days past the
original date of invoice;
3. The account does not represent a commission and the account was created
in connection with (i) the sale of goods by the Borrower in the ordinary course
of business and such sale has been consummated and such goods have been shipped
and delivered and received by the account debtor, or (ii) the performance of
services by the Borrower in the ordinary course of business and such services
have been completed and accepted by the account debtor;
4. The account arises from an enforceable contract, the performance of which
has been completed by the Borrower;
5. The account does not arise from the sale of any good that is on a
bill-and-hold, guaranteed sale, sale-or-return, sale on approval, consignment,
or any other repurchase or return basis;
6. The Borrower has good and indefeasible title to the account and the
account is not subject to any Lien except Liens in favor of Bank;
7. The account does not arise out of a contract with or order from, an
account debtor that, by its terms, prohibits or makes void or unenforceable the
grant of a security interest by the Borrower to Bank in and to such account;
8. The account is not subject to any setoff, counterclaim, defense, dispute,
recoupment, or adjustment other than normal discounts for prompt payment;
9. The account debtor is not insolvent or the subject of any bankruptcy or
insolvency proceeding and has not made an assignment for the benefit of
creditors, suspended normal business operations, dissolved, liquidated,
terminated its existence, ceased to pay its debts as they become due, or
suffered a receiver or trustee to be appointed for any of its assets or affairs;
10. The account is not evidenced by chattel paper or an instrument;
11. No default exists under the account by any party thereto;
12. The account debtor has not returned or refused to retain, or otherwise
notified the Borrower of any dispute concerning, or claimed nonconformity of,
any of the goods from the sale of which the account arose;
13. The account is not owed by an Affiliate, employee, officer, director or
shareholder of the Borrower, except certain trade accounts arising in the
ordinary course of business from director owned franchises that would otherwise
be Eligible Accounts;
14. The account is payable in Dollars by the account debtor;
15. The account is not owed by an account debtor whose accounts Bank in its
sole discretion has chosen to exclude from Eligible Accounts;
16. The account shall be ineligible if (a) the account debtor is domiciled
in any country other than the United States of America and (b) the aggregate
amount of accounts owed by account debtors domiciled outside the United States
of America is in excess of $500,000, to the extent of such excess;
17. The account shall be ineligible if more than twenty percent (20%) of the
aggregate balances then outstanding on accounts owed by such account debtor and
its Affiliates to the Borrower are more than 90 days past the dates of their
original invoices;
18. The account shall be ineligible if the account debtor is the United
States of America or any department, agency, or instrumentality thereof, and the
Federal Assignment of Claims Act of 1940, as amended, shall not have been
complied with; and
19. The Account is otherwise acceptable in the sole discretion of Bank;
provided that Bank shall have the right to create and adjust eligibility
standards and related reserves from time to time in its good faith credit
judgment.
The amount of the Eligible Accounts owed by an account debtor to the
Borrower shall be reduced by the amount of all "contra accounts" and other
obligations owed by the Borrower to such account debtor.
(e) "Second Amendment Effective Date" means December 26, 2004.
----------------------------------
Section 2.03. Amendment to Section 2.1 of the Loan Agreement. Section 2.1
----------------------------------------------- -----------
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
-----------------------------
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 or (b) the Borrowing Base 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
----------------------------------------------- -----------
of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
Section 2.7 Facility Fee. Borrower agrees to pay to Bank annually the
-------------
Facility Fee payable in advance on each March 28th during the term of this
Agreement and on the Termination Date.
Section 2.05. Amendment to Section 5.3 of the Loan Agreement. Section 5.3
----------------------------------------------- -----------
of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
Section 5.3 Mandatory Prepayment. If at any time the outstanding
---------------------
principal amount of all Revolving Credit Advances exceeds the lesser of (i)
Revolving Credit Commitment or (ii) the Borrowing Base, the Borrower shall
immediately prepay the amount of excess plus accrued and unpaid interest on the
amount so prepaid. Any such mandatory prepayments shall be applied to such
excess in the following order: first to Prime Rate Advances and then to LIBOR
Advances.
Section 2.06. Amendment to Section 10.1(c) of the Loan Agreement.
---------------------------------------------------------
Section 10.1(c) of the Loan Agreement is hereby amended and restated in its
----------
entirety to read as follows:
(c) Quarterly Calculations/Accounts Receivable Report. As soon as
----------------------------------------------------
available, and in any event within forty-five (45) days after the end of each
fiscal quarter 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 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 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 Section 10.12 of the Loan Agreement. Section
------------------------------------------------ -------
10.12 of the Loan Agreement is hereby amended and restated in its entirety to
- -----
read as follows:
- --
Section 10.12 Intentionally Deleted.
----------------------
Section 2.08. Amendment to Section 12.2 of the Loan Agreement. Section 12.2
----------------------------------------------- ------------
of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
Section 12.2 Consolidated Liabilities to Tangible Net Worth. Borrower
----------------------------------------------
will maintain a ratio of Consolidated Liabilities less Subordinated Debt (as
hereinafter defined) to Tangible Net Worth of not more than 1.50 to 1.00.
As used herein, "Subordinated Debt" shall mean Debt of Borrower and it
Subsidiaries that is subordinated to the Obligations in form and substance
satisfactory to Bank.
Section 2.09. New Section 12.4 of the Loan Agreement. A new Section 12.4 is
-------------------------------------- ------------
hereby added to the Loan Agreement and shall read in its entirety as
follows:
Section 12.4 Capital Expenditures. The Borrower will not permit the
---------------------
aggregate Capital Expenditures of the Borrower and the Subsidiaries not financed
with Debt to exceed $500,000 during any fiscal year.
Section 2.10. Amendment to Section 13.1(n) of the Loan Agreement. Section
--------------------------------------------------- -------
13.1(n) of the Loan Agreement is hereby amended and restated in its entirety to
------
read as follows:
(n) A Change of Control shall occur.
Section 2.11. Amendment to Real Estate Note. Certain defined 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:
(a) "Eurodollar Rate Margin" means two and one-quarter of one percent
------------------------
(2.25%).
(b) "Prime Rate Margin" means zero percent (0.00%).
-------------------
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions. The effectiveness of this Amendment is subject to
----------
the satisfaction of the following conditions precedent, unless specifically
waived by Bank:
(a) Bank shall have received the following documents, 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; and
(ii) The Eighth 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;
(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
-------------
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement and the Real Estate 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 Real Estate 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
------------------------------
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 Real Estate 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
----------------------------------------------
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 Real Estate Note. 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 Real Estate Note, as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Loan Agreement and the Real Estate Note
shall mean a reference to the Loan Agreement and the Real Estate Note, as
amended hereby.
Section 5.03. Expenses of Bank. As provided in the Loan Agreement, Borrower
----------------
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,
-------
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
------------
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
---------------
EXECUTED PURSUANT HERTO 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
------------------------
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
------------
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,
-----------------
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
--------
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 REAL ESTATE 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.
Section 5.12. Acknowledgment. Bank acknowledges and agrees that this
--------------
Amendment satisfies the conditions, terms and provisions related to the "Second
Amendment" defined and described in correspondence dated February 8, 2005,
issued by Bank to, and acknowledged by, Borrower.
[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/ Robert B. Page
Name: Robert B. Page
Title: Chief Executive Officer
WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association
By: /s/ Ralph C. Hamm III
Name: Ralph C. Hamm III
Title: Vice President
CONSENT AND RATIFICATION
------------------------
The undersigned, BARKO 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 WELLS FARGO BANK, NATIONAL ASSOCIATION (successor to Wells
Fargo Bank (Texas), National Association) ("BANK") in connection with that
certain Third Amended and Restated Loan Agreement (as amended by that certain
First Amendment to Third Amended and Restated Loan Agreement dated as of March
28, 2004, the "LOAN AGREEMENT") dated as of January 22, 2003 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
Second Amendment to Third Amended and Restated Loan Agreement and Amendment to
Real Estate Note effective as of December 26, 2004 (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.
- ------
GUARANTORS:
----------
BARKO REALTY, INC.,
a Texas corporation
By:/s/ Shawn M. Preator
Name: Shawn M. Preator
Title: Vice President
R-CHECK, INC.,
a Texas corporation
By:/s/ Shawn M. Preator
Name: Shawn M. Preator
Title: Vice President
PIZZA INN OF DELAWARE, INC.,
a Delaware corporation
By:/s/ Shawn M. Preator
Name: Shawn M. Preator
Title: Vice President
EIGHTH AMENDED AND RESTATED REVOLVING CREDIT NOTE
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$3,000,000.00 DALLAS, TEXAS TO BE EFFECTIVE AS OF DECEMBER 26, 2004
FOR VALUE RECEIVED, the undersigned, PIZZA INN, INC., a Missouri
corporation (the "BORROWER"), hereby promises to pay to the order of WELLS FARGO
BANK, NATIONAL ASSOCIATION (successor to Wells Fargo Bank (Texas), National
Association, herein "BANK"), at its office located at 1445 Ross Avenue, Dallas,
Texas 75202, on or before December 23, 2005, in lawful money of the United
States of America and in immediately available funds, the principal sum of Three
Million and No/100 Dollars ($3,000,000.00) or such lesser amount as shall equal
the aggregate unpaid principal amount of the Revolving Credit Loans and any
additional Advances made by the Bank to the Borrower under Article II of the
Loan Agreement referred to below, and to pay interest on the amount of each such
Advance, at such office, in like money and funds, for the period commencing on
the date of such Advance until such Advance shall be paid in full, at the rates
per annum and on the dates provided in the Loan Agreement (as hereinafter
defined).
The Borrower hereby authorizes the Bank to record in Bank's internal
records the amount and Type of Advances made to the Borrower by the Bank and all
Continuations, Conversions, and payments of principal in respect of such
Advances, which records shall, in the absence of manifest error, be conclusive
as to the outstanding principal amount of all such Advances; provided, however,
that the failure to make such notation with respect to any such Advance or
payment shall not limit or otherwise affect the obligations of the Borrower
under the Loan Agreement or this Note.
This Note is the Eighth Amended and Restated Revolving Credit Note referred
to in the 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 and Amendment to Real Estate Note effective as of December 26, 2004,
the "LOAN AGREEMENT"), and evidences the Revolving Credit Loans and all
additional Advances made by the Bank pursuant to Article II thereof. The Loan
Agreement, among other things, contains provisions for acceleration of the
maturity of this Note upon the happening of certain stated events and also for
prepayments of Advances prior to the maturity of this Note upon the terms and
conditions specified in the Loan Agreement. Capitalized terms used in this Note
and not otherwise defined herein have the respective meanings assigned to them
in the Loan Agreement.
Notwithstanding anything to the contrary contained herein, no provision of
this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Note or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither the Borrower nor the sureties,
guarantors, successors or assigns of the Borrower shall be obligated to pay the
excess amount of such interest, or any other excess sum paid for the use,
forbearance or detention of sums loaned pursuant hereto. If for any reason
interest in excess of the Maximum Rate shall be deemed charged, required or
permitted by any court of competent jurisdiction, any such excess shall be
applied as a payment and reduction of the principal of indebtedness evidenced by
this Note; and, if the principal amount hereof has been paid in full, any
remaining excess shall forthwith be paid to the Borrower. In determining
whether or not the interest paid or payable exceeds the Maximum Rate, the
Borrower and the Bank shall, to the extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
indebtedness evidenced by this Note so that the interest for the entire term
does not exceed the Maximum Rate.
This Note shall be governed by and construed in accordance with the laws of
the State of Texas and the applicable laws of the United States of America.
This Note is performable in Dallas County, Texas.
This Note is given in renewal, extension and modification of, but not
extinguishment or novation of, the indebtedness evidenced by that certain
Seventh Amended and Restated Revolving Credit Note effective as of March 28,
2004, in the original principal amount of $4,000,000 executed by the Borrower
and payable to the order of the Bank.
The Borrower and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
PIZZA INN, INC.
By: /s/ Robert B. Page
Name: Robert B. Page
Title: Chief Executive Officer