Exhibit 10.1
 
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT
 
This First Amendment to Loan and Security Agreement (this “First Amendment”) is
entered into as of June 13, 2013, by and among The F&M Bank & Trust Company, as
agent for certain lenders (“Agent”), the lenders party to the Loan Agreement (as
defined below) (collectively, the “Lenders”), PIZZA INN, INC., a Missouri
corporation (“Pizza Inn”) and PIE FIVE PIZZA COMPANY, INC., a Texas corporation
(“Pie Five”, together with Pizza Inn, individually and collectively, jointly and
severally, “Borrower”).
 
RECITALS
 
A. WHEREAS, Agent, the Lenders and Borrower entered into that certain Loan and
Security Agreement dated as of August 28, 2012 (as further amended, modified or
supplemented, the “Loan Agreement”);
 
B. WHEREAS, Borrower has advised Agent and the Lenders that Parent intends to
issue additional common stock in an aggregate amount up to $3,000,000, the
details of which are set forth in Parent’s registration statement on Form S-3
filed with the Securities Exchange Commission on May 3, 2013, as amended or
supplemented to date (the “Proposed Equity Issuance”).
 
C. WHEREAS, Borrower has requested that Agent and the Lenders amend certain
financial covenant definitions as set forth herein; and
 
D. WHEREAS, the parties desire to amend the Loan Agreement as set forth herein.
 
NOW, THEREFORE, in consideration of the parties’ mutual promises in this First
Amendment, and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, the parties agree as follows:
 
AGREEMENT
 
1.           Recitals.  The Recitals are incorporated in this First Amendment as
set forth above.
 
2.           Definitions.  Any capitalized terms not specifically defined herein
will have the meaning ascribed to them in the Loan Agreement.
 
3.           Amendment to Certain Defined Terms.  Effective as of the date
hereof, the following definitions contained in Section 1.1 of the Loan Agreement
are hereby deleted in their entirety and replaced with the following:
 
“Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal
period, the ratio of (a) EBITDA for such period minus the sum of (i) the excess
of (Y) all unfinanced Capital Expenditures by Parent and its Subsidiaries made
during such period (other than reinvested net proceeds of Asset Dispositions
pursuant to subsection 2.4(B)(2)), net of any tenant improvement allowances,
over (Z) the aggregate proceeds from the Proposed Equity Issuance (as defined in
the First Amendment) at any time received by Parent and not previously applied
to reduce unfinanced Capital Expenditures, (ii) all income taxes actually paid
in cash during
 
 
 

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such period by Parent and its Subsidiaries, and (iii) any Restricted Junior
Payments made by Parent pursuant to clauses (b) and (c) of Section 7.5 hereof to
(b) Total Debt Payments during such period, in each case for the trailing
twelve-month period on a consolidated basis immediately preceding the date of
determination thereof, each calculated as of the last day of any fiscal quarter.
 
“EBITDA” means, for any period, without duplication, the total of the following
for Parent and its Subsidiaries on a consolidated basis, each calculated for
such period:
 
(a) net income determined in accordance with GAAP; plus,
 
(b) to the extent included in the calculation of net income, the sum of (i)
income taxes paid or accrued; (ii) interest expenses paid or accrued; (iii)
non-cash stock compensation; (iv) amortization and depreciation; (v)
non-recurring litigation expenses, provided, the aggregate amount under this
subsection (v) shall not exceed 10% of EBITDA for any period (excluding such
item); (vi) transactions fees and expenses in connection with this Agreement
which are set forth on Schedule 1.1 hereof; (vii) Pre-Opening Soft Costs in an
aggregate amount not to exceed $37,500 per store; and (viii) other non-cash
charges not to exceed $750,000 for the applicable trailing twelve month period,
plus or minus
 
(c) the net change in deferred franchise and development fees.
 
4.           Addition of a Defined Term.  Effective as of the date hereof, the
following definition is hereby added to Section 1.1 of the Loan Agreement in its
proper alphabetical order to read as follows:
 
“First Amendment” means the First Amendment to Loan and Security Agreement by
and among the Borrower, the Agent and the Lenders dated as June 13, 2013.
 
5.           No Other Waiver.  Nothing contained in this First Amendment shall
be construed as a waiver by Agent or any Lender of any covenant or provision of
the Loan Agreement, the other Loan Documents, or of any other contract or
instrument between any Loan Party and Agent and any Lender, and the failure of
Agent or Lenders at any time or times hereafter to require strict performance by
any Loan Party of any provision thereof shall not waive, affect or diminish any
rights of Agent or Lenders to thereafter demand strict compliance
therewith.  Agent and Lenders hereby reserve all rights granted under the Loan
Agreement, the other Loan Documents and any other contract or instrument between
any Loan Party and Agent or any Lender.
 
6.           Conditions.  In order to induce Agent and the Lenders to enter into
this First Amendment, Borrower hereby agrees:
 
 
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(i)
to deliver the First Amendment duly executed by Borrowers and the Consent,
Ratification and Release duly executed by the Guarantors, in each case, in form
and substance satisfactory to the Agent;

 
 
(ii)
to pay to Agent and the Lenders a non-refundable amendment fee in the amount of
$5,000 which shall be deemed fully earned and non-refundable on the date hereof
and to pay to Agent and the Lenders all other fees, costs, and expenses owed to
and/or incurred by Agent in connection with this First Amendment; and

 
 
(iii)
that all corporate proceedings taken by Borrower in connection with the
transactions contemplated by this First Amendment and all documents, instruments
and other legal matters incident thereto shall be satisfactory to Agent and its
legal counsel.

 
7.           Representations and Warranties.  Borrower expressly reaffirms all
of its representations and warranties in the Loan Agreement as true and correct
in all material respects as of the date of this First Amendment (except such
representations and warranties that expressly relate to an earlier date),
including without limitation all representations and warranties in Section 4 of
the Loan Agreement.
 
8.           No Waiver.  All of the terms and conditions of the Loan Agreement
remain in full force and effect and none of such terms and conditions are, or
shall be construed as, otherwise amended or modified, except as specifically set
forth herein and nothing in this Agreement shall constitute a waiver by the
Agent or Lenders of any Default or Event of Default, or of any right, power or
remedy available to the Agent or the Lenders under the Loan Agreement, whether
any such defaults, rights, powers or remedies presently exist or arise in the
future.
 
9.           Signatures.  This First Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one and the same instrument.
 
10.           Ratification.  The Loan Agreement, together with this First
Amendment and any related documents, instruments and agreements, shall hereafter
refer to the Loan Agreement, as amended hereby.
 
11.           Release.  EACH BORROWER HEREBY ACKNOWLEDGES AND AGREES 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 AGENT AND THE LENDERS WHICH ARE KNOWN TO IT
AS OF THE DATE HEREOF.  EACH BORROWER HEREBY VOLUNTARILY AND KNOWINGLY RELEASES
AND FOREVER DISCHARGES AGENT, THE LENDERS AND EACH OF THEIR RESPECTIVE
PREDECESSORS, AGENTS, EMPLOYEES, AFFILIATES, SUCCESSORS AND ASSIGNS
(COLLECTIVELY, THE “RELEASED PARTIES”) FROM ALL KNOWN CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES AND LIABILITIES WHATSOEVER,
ANTICIPATED OR
 
 
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UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, OR AT
LAW OR IN EQUITY, IN ANY CASE ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE
DATE THIS AMENDMENT IS EXECUTED THAT ANY BORROWER MAY NOW OR HEREAFTER HAVE
AGAINST THE RELEASED PARTIES, IF ANY, IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND
THAT ARISE FROM ANY OF THE LOANS, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND/OR THE NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE.
 
 
 
[Signature Pages to Follow]
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed as of the date first above written.
 
BORROWER:

PIZZA INN, INC.

By:                      
Name:                     
Title:                     
 
BORROWER:

PIE FIVE RESTAURANTS, INC.
 
By:                      
Name:                     
Title:                    _

 

AGENT AND LENDER:

THE F&M BANK & TRUST COMPANY

By:                      
Name:                     
Title:                    _

[Signature Page to First Amendment to Credit Agreement]

 
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CONSENT, RATIFICATION AND RELEASE

Each undersigned hereby consents to the terms of the First Amendment to Loan and
Security Agreement (the “First Amendment”), dated as of June 13, 2013, among The
F&M Bank & Trust Company, as agent for certain lenders (“Agent”), the lenders
party to the Loan Agreement (as defined below) (collectively, the “Lenders”) and
PIZZA INN, INC., a Missouri corporation, PIE FIVE PIZZA COMPANY, INC., a Texas
corporation (collectively, “Borrower”), and confirms and ratifies the terms of
that certain Guaranty executed by each undersigned Guarantor in favor of Agent
and the other Lenders.  Capitalized terms used herein shall have the meaning
assigned to them in the Loan Agreement. Each undersigned acknowledges that its
Guaranty is in full force and effect and ratifies the same, acknowledges that no
undersigned has any defense, counterclaim, set-off or any other claim known to
it to diminish any undersigned’s liability under such documents, that no
undersigned’s consent is required to the effectiveness of the foregoing First
Amendment, and that no consent by any undersigned is required for the
effectiveness of any future amendment, modification, forbearance or other action
with respect to the Obligations, the Collateral, or any of the Loan
Documents.  EACH UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES THAT IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND
KNOWN TO IT 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 AGENT AND THE LENDERS.  EACH
UNDERSIGNED HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES
AGENT, THE LENDERS AND EACH OF THEIR RESPECTIVE PREDECESSORS, AGENTS, EMPLOYEES,
AFFILIATES, SUCCESSORS AND ASSIGNS (COLLECTIVELY, THE “RELEASED PARTIES”) FROM
ALL KNOWN CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES
AND LIABILITIES WHATSOEVER, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR
UNSUSPECTED, FIXED, CONTINGENT OR CONDITIONAL, OR AT LAW OR IN EQUITY, IN ANY
CASE ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE HEREOF THAT ANY
UNDERSIGNED NOW OR HEREAFTER HAS AGAINST THE RELEASED PARTIES, IF ANY,
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND THAT ARISE FROM ANY OF THE LOANS, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE LOAN AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS, AND/OR THE NEGOTIATION FOR AND EXECUTION OF THE FIRST AMENDMENT,
INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING,
COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE.
 

 
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IN WITNESS WHEREOF, each undersigned hereto has caused this Consent,
Ratification and Release to be executed as of the date first above written.
 

PIZZA INN HOLDINGS, INC.
 
By:                      
Name:                     
Title:                     
 

PIE FIVE RESTAURANTS, INC.
 
By:                      
Name:                     
Title:                     
 
 
PIBC HOLDING, INC.
 
 
By:                      
Name:                     
Title:                     
 
 
 
PIZZA INN BEVERAGE CORP.
 
 
By:                      
Name:                     
Title:                     
 
 
                PIE FIVE BEVERAGE CORP.

 
By:                      
Name:                     
Title:                     

[Signature Page to First Amendment to Loan Agreement]

 
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