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PROMISSORY NOTE
$8,125,000.00 Dallas, Texas
December 28, 2000
FOR VALUE RECEIVED, the undersigned PIZZA INN, INC., a Missouri corporation
("Borrower"), promise(s) to pay to the order of WELLS FARGO BANK TEXAS, NATIONAL
ASSOCIATION ("Lender"), at the Disbursement and Operations Center in El Segundo,
California, or at such other place as may be designated in writing by Lender,
the principal sum of EIGHT MILLION ONE HUNDRED TWENTY-FIVE THOUSAND AND
NO/100THS DOLLARS ($8,125,000.00) or so much thereof as may from time to time be
owing hereunder by reason of advances by Lender to or for the benefit or account
of Borrower, with interest thereon, per annum, at the Applicable Rate calculated
in accordance with the terms and provisions of the Fixed Rate Agreement attached
hereto as Exhibit A and a Fixed Rate Notice described on Exhibit B attached
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hereto (based on a 360-day year and charged on the basis of actual days
elapsed). All sums owing hereunder are payable in lawful money of the United
States of America, in immediately available funds.
All terms used herein with initial capital letters and not defined shall have
the meanings specified in the Fixed Rate Agreement attached hereto as Exhibit A.
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Accrued and unpaid interest on this Note ("Note") shall be payable as follows:
(i) in the case of all advances subject to the Prime Rate Advances, on each
Monthly Payment Date;
(ii) in the case of Eurodollar Advances of this Note on the last day of the
Interest Period applicable thereto and, with respect to any Interest Period
exceeding three (3) months, on the last day of the third (3rd) month after the
commencement of such Interest Period; and
(iii) on the Maturity Date.
If the Loan Conversion occurs, the outstanding principal balance of this Note
shall be payable in monthly installments on each Monthly Payment Date occurring
after the effective date of the Loan Conversion in an amount sufficient to
amortize the then unpaid principal at the Applicable Rate hereunder on a
straight line basis over an amortization term of twenty (20) years.
The outstanding principal balance of this Note, together with all accrued and
unpaid interest, shall be due and payable in full on the Maturity Date.
This Note is secured by, among other things, that certain Construction Deed of
Trust with Absolute Assignment of Leases and Rents, Security Agreement and
Fixture Filing ("Deed of Trust") dated of even date herewith, executed by
Borrower, as grantor, to a trustee for the benefit of Lender.
In order to assure timely payment to Lender of accrued interest, principal, fees
and late charges due and owing under the loan evidenced by this Note, Borrower
hereby irrevocably authorizes Lender to directly debit Borrower's demand deposit
account with Lender for payment when due of all such amounts payable to Lender.
Borrower represents and warrants to Lender that Borrower is the legal owner of
said account. Written confirmation of the amount and purpose of any such direct
debit shall be given to Borrower by Lender not less frequently than monthly. In
the event any direct debit hereunder is returned for insufficient funds,
Borrower shall pay Lender upon demand, in immediately available funds, all
amounts and expenses due and owing to Lender.
If a Default (as defined in the Loan Agreement) occurs, THEN Lender may, at its
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sole option, declare all sums owing under this Note immediately due and payable;
provided, however, that if any of the Loan Documents or the Master Agreement
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provide for automatic acceleration of payment of sums owing hereunder, all sums
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owing hereunder shall be automatically due and payable in accordance with the
terms of that document.
If any attorney is engaged by Lender to enforce or defend any provision of this
Note or the Loan Documents, or as a consequence of any Default, with or without
the filing of any legal action or proceeding, then Borrower shall pay to Lender
immediately upon demand all reasonable attorneys' fees and all costs incurred by
Lender in connection therewith, together with interest thereon from the date of
such demand until paid at the rate of interest applicable to the principal
balance owing hereunder as if such unpaid attorneys' fees and costs had been
added to the principal.
No previous waiver and no failure or delay by Lender in acting with respect to
the terms of this Note or the Loan Documents shall constitute a waiver of any
breach, default, or failure of condition under this Note or the Loan Documents.
A waiver of any term of this Note or the Loan Documents must be made in writing
and shall be limited to the express written terms of such waiver. In the event
of any inconsistencies between the terms of this Note and the terms of any other
Loan Documents, the terms of this Note shall prevail.
If this Note is executed by more than one person or entity as Borrower, the
obligations of each such person or entity shall be joint and several. No person
or entity shall be a mere accommodation maker, but each shall be primarily and
directly liable hereunder. If Borrower is a partnership, each general partner
of Borrower shall be jointly and severally liable hereunder, and each such
general partner hereby waives any requirement of law that in the event of a
default hereunder Lender exhaust any assets of Borrower before proceedings
against such general partner's assets. Except as otherwise provided in any Loan
Document, Borrower, and any endorsers and guarantors hereof, severally waive:
presentment; demand; notice of dishonor; notice of default or delinquency;
notice of intention to accelerate; notice of acceleration; notice of protest and
nonpayment; notice of costs, expenses or losses and interest thereon; notice of
late charges; and diligence in taking any action to collect any sums owing under
this Note or in proceeding against any of the rights or interests in or to
properties securing payment of this Note. Borrower, and any endorsers or
guarantors hereof, agree that the time for any payments hereunder may be
extended from time to time without notice and consent, to the acceptance of
further collateral, and/or the release of any existing collateral for the
payment of this Note, all without in any manner affecting their liability under
or with respect to this Note. No extension of time for the payment of this Note
or any installment hereof shall affect the liability of Borrower under this Note
or any endorser or guarantor hereof even though Borrower or such endorser or
guarantor is not a party to such agreement.
Time is of the essence with respect to every provision hereof. This Note shall
be construed and enforced in accordance with the laws of the State of Texas,
except to the extent that federal laws preempt the laws of the State of Texas,
and all persons and entities in any manner obligated under this Note consent to
the jurisdiction of any federal or state court within the State of Texas having
proper venue and also consent to service of process by any means authorized by
Texas or federal law. This Note is performable in Dallas County, Texas.
It is expressly stipulated and agreed to be the intent of Borrower and Lender at
all times to comply with applicable Texas law governing the maximum rate or
amount of interest payable on this Note or the indebtedness ("Indebtedness")
evidenced hereby or evidenced or secured by the other Loan Documents (or
applicable United States Federal law to the extent that it permits Lender to
contract for, charge, take, reserve, or receive a greater amount of interest
than under Texas law) and that this section shall control every other covenant
and agreement in this Note. If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the Indebtedness, or Lender's exercise of
the option to accelerate the maturity of this Note, or any prepayment by
Borrower results in Borrower having paid or Lender having received any interest
in excess of that permitted by applicable law, then it is Borrower's and
Lender's express intent that all excess amounts theretofore collected by Lender
shall be credited on the principal balance of this Note and all other
Indebtedness (or, if this Note and all other Indebtedness have been or would
thereby be paid in full, refunded to Borrower), and the provisions of this Note
and the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new documents, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder or thereunder; provided, however, if this Note has been paid in full
before the end of the stated term of this Note, then Borrower and Lender agree
that Lender shall, with reasonable promptness after Lender discovers or is
advised by Borrower that interest was received in an amount in excess of the
Maximum Lawful Rate, either refund such excess interest to Borrower or credit
such excess interest against any other Indebtedness then owing by Borrower to
Lender. Borrower hereby agrees that as a condition precedent to any claim
seeking usury penalties against Lender, that Borrower will provide written
notice to Lender, advising Lender in reasonable detail of the nature and amount
of the violation, and Lender shall have sixty (60) days after receipt of such
notice in which to correct such usury violation, if any, by either refunding
such excess interest to Borrower or crediting such excess interest against any
other indebtedness then owing by Borrower to Lender. All sums contracted for,
charged or received by Lender for the use, forbearance or detention of the
Indebtedness shall, to the extent permitted by applicable law, be amortized or
spread, using the actuarial method, throughout the stated term of the
Indebtedness until payment in full so that the rate or amount of interest on
account of the Indebtedness does not exceed the Maximum Lawful Rate from time to
time in effect and applicable to the Indebtedness for so long as the
Indebtedness is outstanding. In no event shall the provisions of Chapter 346 of
the Texas Finance Code (which regulates certain revolving credit loan accounts
and revolving triparty accounts) apply to the Indebtedness. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lender to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration.
As used herein, the term "Maximum Lawful Rate" shall mean the maximum lawful
rate of interest which may be contracted for, charged, taken, received or
reserved by Lender in accordance with the applicable laws of the State of Texas
(or applicable United States Federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (as herein defined) made in
connection with the transaction evidenced by this Note and the other Loan
Documents. As used herein, the term "Charges" shall mean all fees and charges,
if any, contracted for, charged, received, taken or reserved by Lender in
connection with the transactions relating to this Note and the other Loan
Documents or the Indebtedness, which are treated as interest under applicable
law. To the extent that Lender is relying on Chapter 303 of the Texas Finance
Code, as amended, to determine the Maximum Lawful Rate payable on the
Indebtedness, Lender will utilize the weekly ceiling from time to time in effect
as provided in Chapter 303, as amended. To the extent United States Federal
law permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law, Lender will rely on United States
Federal law instead of such Chapter 303, as amended, for the purpose of
determining the Maximum Lawful Rate. Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lender may, at its option and from
time to time, implement any other method of computing the Maximum Lawful Rate
under such Chapter 303, as amended, or under other applicable law by giving
notice, if required, to Borrower as provided by applicable law now or hereafter
in effect. Borrower and Lender hereby agree that any and all suits alleging the
contracting for, charging or receiving of usurious interest shall lie in Dallas
County, Texas, and each irrevocably waive the right to venue in any other
county.
Notwithstanding anything in this Note to the contrary, if at any time (i)
interest at the Applicable Rate, and (ii) the Charges computed over the full
term of this Note, exceed the Maximum Lawful Rate, then the rate of interest
payable hereunder, together with all Charges, shall be limited to the Maximum
Lawful Rate; provided, however, that any subsequent reduction in the Applicable
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Rate shall not cause a reduction of the rate of interest payable hereunder below
the Maximum Lawful Rate until the total amount of interest earned hereunder,
together with all Charges, equals the total amount of interest which would have
accrued at the Applicable Rate if such interest rate had at all times been in
effect. Changes in the Applicable Rate resulting from a change in the Prime
Rate shall be subject to the provisions of this paragraph.
All notices or other communications required or permitted to be given pursuant
to this Note shall be given to the Borrower or Lender at the address and in the
manner provided for in the Loan Agreement.
THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF
BORROWER AND LENDER AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF BORROWER AND LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN BORROWER AND
LENDER. The provisions of this Note and the other Loan Documents may be amended
or revised only by an instrument in writing signed by the Borrower and Lender.
Addendum to Promissory Note and Exhibit A are attached hereto and incorporated
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herein by reference.
"BORROWER"
PIZZA INN, INC.,
a Missouri corporation
By:/s/Ronald W. Parker
Name: Ronald W. Parker
Title: President
ADDENDUM TO PROMISSORY NOTE
THIS ADDENDUM is attached to and made a part of that certain promissory note
executed by PIZZA INN, INC., a Missouri corporation ("Borrower") and payable to
the order of WELLS FARGO BANK TEXAS, NATIONAL ASSOCIATION, ("Lender"), dated as
of December 28, 2000, in the principal amount of EIGHT MILLION ONE HUNDRED
TWENTY-FIVE THOUSAND AND NO/100 DOLLARS ($8,125,000.00) ("Note").
The following arbitration provision is hereby incorporated into the Note:
A R B I T R A T I O N
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1. ARBITRATION. Upon the demand of any party, any dispute shall be resolved
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by binding arbitration (except as set forth in Paragraph 5 below) in accordance
with the terms of this Note. A "Dispute" shall mean any action, dispute, claim
or controversy of any kind, whether in contract or tort, statutory or common
law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, this Note and each other document,
contract and instrument required hereby or now or hereafter delivered to Lender
in connection herewith (collectively, the "Loan Documents"), or any past,
present or future extensions of credit and other activities, transactions or
obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
2. GOVERNING RULES. Arbitration proceedings shall be administered by the
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American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted in Dallas, Texas. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation
applicable to any Dispute shall apply to any arbitration proceeding. All
discovery activities shall be expressly limited to matters directly relevant to
the Dispute being arbitrated. Judgment upon any award rendered in an arbitration
may be entered in any court having jurisdiction; provided however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under Section 91 of Title 12 of the United States
Code or any similar applicable state law.
3. NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision
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hereof shall limit the right of any party to exercise self-help remedies such as
setoff, foreclosure against or sale of any real or personal property collateral
or security, or to obtain provisional or ancillary remedies, including without
limitation, injunctive relief, sequestration, attachment, garnishment or the
appointment of a receiver from a court of competent jurisdiction before, after
or during the pendency of any arbitration or other proceeding. The exercise of
any such remedy shall not waive the right of any party to compel arbitration
hereunder.
4. ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. Arbitrators must be active
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members of the Texas State Bar, with expertise in the substantive law applicable
to the subject matter of the Dispute. Arbitrators are empowered to resolve
Disputes by summary rulings in response to motions filed prior to the final
arbitration hearing. Arbitrators (i) shall resolve all Disputes in accordance
with the substantive law of the State of Texas, (ii) may grant any remedy or
relief that a court of the State of Texas could order or grant within the scope
hereof and such ancillary relief as is necessary to make effective any award,
and (iii) shall have the power to award recovery of all costs and fees, to
impose sanctions and to take such other actions as they deem necessary to the
same extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Texas Rules of Civil Procedure or other applicable law. Any Dispute in which
the amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each
party expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be decided
by majority vote of a panel of three arbitrators; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
5. JUDICIAL REVIEW. Notwithstanding anything herein to the contrary, in any
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arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the State of
Texas, and (iii) the parties shall have in addition to the grounds referred to
in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (1) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (2) whether the
conclusions of law are erroneous under the substantive law of the State of
Texas. Judgment confirming an award in such a proceeding may be entered only if
a court determines the award is supported by substantial evidence and not based
on legal error under the substantive law of the State of Texas.
6. MISCELLANEOUS. To the maximum extent practicable, the AAA, the
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arbitrators and the parties shall take all action required to conclude any
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arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. If any provision of this Note shall be held to be prohibited by
or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or any remaining provisions of this Note. This arbitration
provision shall survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties.
EXHIBIT A
FIXED RATE AGREEMENT
Exhibit A to Promissory Note ("Note"), dated December 28, 2000, made by PIZZA
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INN, INC., a Missouri corporation, as Borrower, to the order of WELLS FARGO BANK
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TEXAS, NATIONAL ASSOCIATION, as Lender.
R E C I T A L S
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Borrower has requested and Lender has agreed to provide a fixed rate option as a
basis for calculating the applicable rate of interest on amounts owing under
this Note. Borrower acknowledges the following: (i) it understands the process
of exercising the fixed rate option as provided herein; (ii) amounts owing under
this Note may bear interest at different rates and for different time periods;
and (iii) absent the terms and conditions hereof, it would be extremely
difficult to calculate Lender's additional costs, expenses, and damages in the
event of a Default or prepayment by Borrower hereunder. Given the above,
Borrower agrees that the provisions herein (including, without limitation, the
Fixed Rate Price Adjustment defined below) provide for a reasonable and fair
method for Lender to recover its additional costs, expenses and damages in the
event of a Default or prepayment by Borrower.
1. RATES AND TERMS DEFINED. Various rates and terms not otherwise defined
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herein are defined and described as follows:
"Additional Costs" has the meaning specified in paragraph 4 below.
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"Adjusted Eurodollar Rate" means, for any Eurodollar Advance for any Interest
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Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/16
-
of 1%) determined by Lender to be equal to the quotient of (a) the Eurodollar
Rate for such Eurodollar Advance for such Interest Period divided by (b) 1 minus
the Reserve Requirement for such Eurodollar Advance for such Interest Period.
"Advance" means any advance of funds by Lender pursuant to the Loan Agreement.
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"Advance Request Form" means, a certificate, in form and substance acceptable to
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Lender, properly completed and signed by the Borrower requesting an Advance.
"Applicable Lending Office" means, for each Type of Advance, the lending office
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of the Lender or such other office of Lender as Lender may from time to time
specify to the Borrower as the office by which its Advances of such Type are to
be made and maintained.
"Applicable Rate" means: (a) during the period that an Advance is a Prime Rate
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Advance, the Prime Rate plus the Prime Rate Margin applicable to such Advance;
and (b) during the period that an Advance is a Eurodollar Advance, the Adjusted
Eurodollar Rate plus the Eurodollar Rate Margin applicable to such Advance.
"Basle Accord" means the proposals for risk-based capital framework described by
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the Basic Committee on Banking Regulations and Supervisory Practices in its
paper entitled "International Convergence of Capital Measurement and Capital
Standards" dated July 1988, as amended, supplemented and otherwise modified and
in effect from time to time, or any replacement thereof.
"Business Day" means (a) any day on which commercial banks are not authorized or
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required to close in Dallas, Texas, and (b) with respect to all borrowings,
payments, Conversions, Continuations, Interest Periods, and notices in
connection with Eurodollar Advances, any day which is a Business Day described
in clause (a) above and which is also a day on which dealings in Dollar deposits
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are carried out in the London interbank market.
"Continue," "Continuation," and "Continued" shall refer to the continuation
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pursuant to a Eurodollar Advance as a Eurodollar Advance from one Interest
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Period to the next Interest Period.
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"Convert," "Conversion," and "Converted" shall refer to a conversion pursuant to
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one Type of Advance into another Type of Advance.
"Default Rate" means the lesser of (i) the Maximum Lawful Rate or (ii) the sum
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of the Prime Rate in effect from day to day plus three and twenty-five
one-hundredths percent (3.25%).
"Dollars" and "$" mean lawful money of the United States of America.
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"Eurodollar Advances" means Advances the interest rates on which are determined
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on the basis of the rates referred to in the definition of "Adjusted Eurodollar
Rate".
"Eurodollar Rate" means, for any Eurodollar Advance for any Interest Period, the
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rate per annum quoted by the Reference Bank at approximately 11:00 A.M. London
time (or as soon thereafter as practicable) two (2) Business Days prior to the
first day of such Interest Period for the offering by the Reference Bank to
leading banks in the London interbank market of Dollar deposits in immediately
available funds having a term comparable to such Interest Period and in an
amount comparable to the principal amount of the Eurodollar Advance to be made
by the Reference Bank to which such Interest Period relates.
"Eurodollar Rate Margin" means one and one-half percent (1.50%).
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"Governmental Authority" means any nation or government, any state or political
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subdivision thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Interest Period" means the period commencing, with respect to any Eurodollar
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Advances, on the date such Eurodollar Advances are made or Converted from
-
Advances of another Type or, in the case of each subsequent, successive Interest
-
Period applicable to a Eurodollar Advance, the last day of the next preceding
Interest Period with respect to such Advance, and ending on the numerically
corresponding day in the first, second, third or sixth calendar month
thereafter, as the Borrower may select, except that each such Interest Period
which commences on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (a) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day or, if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day; (b) any Interest
Period which would otherwise extend beyond the Maturity Date shall end on the
Maturity Date; and (d) no more than three (3) Interest Periods shall be in
effect at the same time.
"Loan Agreement" is that certain Construction Loan Agreement dated of even date
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with this Note between Borrower and Lender.
"Loan Conversion" the conversion of the Loan from the Construction Loan to the
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Mini-Perm Loan all in accordance with the terms of the Loan Agreement.
"Loan Documents" are the documents defined as such in the Loan Agreement.
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"Master Agreement" has the meaning specified in the Loan Agreement.
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"Maturity Date" means (a) at all times prior to Loan Conversion, January 1,
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2002, and (b) if Loan Conversion occurs on or before January 1, 2002, then
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December 28, 2007.
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"Monthly Payment Date" means the seventh (7th) day of each calendar month.
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"Prime Rate" means, at any time, the rate of interest per annum then most
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recently established by Wells Fargo Bank Texas, National Association as its
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prime rate, which rate may not necessarily be the lowest rate of interest
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charged by Wells Fargo Bank Texas, National Association to its borrowers. Each
---
change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect without notice to
the Borrower at the time of such change in the Prime Rate.
"Prime Rate Advances" means Advances that bear interest at rates based upon the
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Prime Rate.
"Prime Rate Margin" means a deduction of (a) one-half of one percent (-0.50%)
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prior to Loan Conversion and (b) three-fourths of one percent (-.75%) following
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Loan Conversion.
"Reference Bank" means Wells Fargo Bank Texas, National Association. If for any
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reason Wells Fargo Bank Texas, National Association shall no longer participate
in the Eurodollar market, then "Reference Bank" shall thereafter mean such
financial institution as Lender may from time to time specify to the Borrower.
"Regulation D" means Regulation D of the Board of Governors of the Federal
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Reserve System as the same may be amended or supplemented from time to time.
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"Regulatory Change" means any change after the date of this Agreement in United
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States federal, state, or foreign laws or regulations (including Regulation D)
or the adoption or making after such date of any interpretations, directives, or
requests applying to a class of banks including Lender of or under any United
States federal or state, or any foreign, laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reserve Requirement" means, for any Eurodollar Advance for any Interest Period,
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the average maximum rate at which reserves (including any marginal, supplemental
or emergency reserves) are required to be maintained during such Interest Period
under Regulation D by member banks of the Federal Reserve System in New York
City with deposits exceeding one billion Dollars against "Eurocurrency
Liabilities" as such term is used in Regulation D. Without limiting the effect
of the foregoing, the Reserve Requirement shall reflect any other reserves
required to be maintained by such member banks by reason of any Regulatory
Change against (i) any category of liabilities which includes deposits by
reference to which the Adjusted Eurodollar Rate is to be determined, or (ii) any
category of extensions of credit or other assets which include Eurodollar
Advances.
"Type" means a type of Advance consisting of either a Prime Rate Advance or a
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Eurodollar Advance.
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Terms used with initial capital letters and not otherwise defined shall have the
meanings specified in the Loan Agreement.
2. APPLICABLE RATE. The unpaid principal amount of this Note shall bear
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interest at a varying rate per annum equal from day to day to the lesser of (a)
the Maximum Lawful Rate, or (b) the Applicable Rate. If at any time the
Applicable Rate for any Advance shall exceed the Maximum Lawful Rate, thereby
causing the interest accruing on such Advance to be limited to the Maximum
Lawful Rate, then any subsequent reduction in the Applicable Rate for such
Advance shall not reduce the rate of interest on such Advance below the Maximum
Lawful Rate until the aggregate amount of interest accrued on such Advance
equals the aggregate amount of interest which would have accrued on such Advance
if the Applicable Rate had at all times been in effect. Accrued and unpaid
interest on the Advances shall be due and payable as follows:
(i) in the case of all Prime Rate Advances, on each Monthly Payment
Date;
(ii) in the case of all Eurodollar Advances, on the last day of each
Interest Period applicable thereto, and with respect to any Interest Period
exceeding three (3) months, on the last day of the third month after the
commencement of such Interest Period; and
(iii) on the Maturity Date.
During such time as a Default exists under the Loan Agreement or any of the Loan
Documents; or from and after the date on which all sums owing under this Note
become due and payable by acceleration or otherwise; or from and after the date
on which the property encumbered by the Deed of Trust or any portion thereof or
interest therein, is sold, transferred, mortgaged, assigned, or encumbered,
whether voluntarily or involuntarily, or by operation of law or otherwise,
without Lender's prior written consent (whether or not the sums owing under this
Note become due and payable by acceleration); or from and after the Maturity
Date; then at the option of Lender, the interest rate applicable to the then
outstanding principal balance of this Note shall be the lesser of the Default
Rate or the Maximum Lawful Rate.
3. CONVERSIONS AND CONTINUATIONS. The Borrower shall have the right from
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time to time to Convert all (but not less than all) of an Advance of one Type
into an Advance of another Type or to Continue Eurodollar Advances as Eurodollar
Advances by giving the Lender written notice at least one (1) Business Day
before Conversion into a Prime Rate Advance and at least three (3) Business Days
before Conversion into or Continuation of a Eurodollar Advance, specifying: (a)
the Conversion or Continuation date, (b) the amount of the Advance to be
Converted or Continued, (c) in the case of Conversions, the Type of Advance to
be Converted into, and (d) in the case of a Continuation of or Conversion into a
Eurodollar Advance, the duration of the Interest Period applicable thereto;
provided that (i) except for Conversions into Prime Rate Advances, no
Conversions shall be made while a Default has occurred and is continuing, and
(ii) no more than three (3) Interest Periods shall be in effect at the same
time. All notices by the Borrower under this paragraph shall be irrevocable and
shall be given to the Lender not later than 10:00 A.M. Dallas, Texas time on the
day which is not less than the number of Business Days specified above for such
notice. If the Borrower shall fail to give the Lender the notice as specified
above for Continuation or Conversion of a Eurodollar Advance prior to the end of
the Interest Period with respect thereto, such Eurodollar Advance shall be
Converted automatically into a Prime Rate Advance on the last day of the then
current Interest Period for such Eurodollar Advance.
4. ADDITIONAL COSTS.
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(a) The Borrower shall pay directly to the Lender from time to time such
amounts as the Lender may determine to be necessary to compensate it for any
costs incurred by the Lender which the Lender reasonably determines are
attributable to its making or maintaining of any Eurodollar Advances hereunder
or its obligation to make any of such Advances hereunder, or any reduction in
any amount receivable by the Lender hereunder in respect of any such Advances or
such obligation (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
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Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to the Lender under
this Note in respect of any of such Advances (other than taxes imposed on
the overall net income of the Lender or its Applicable Lending Office for any of
such Advances by the jurisdiction in which the Lender has its principal office
or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum capital,
capital ratio, or similar requirement relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or commitments of,
the Lender (including any of such Advances or any deposits referred to in the
definition of "Eurodollar Rate");
(iii) imposes any other condition affecting this Note or any of such
extensions of credit or liabilities or commitments.
Lender will notify the Borrower of any event occurring after the date hereof
which will entitle the Lender to compensation pursuant to this paragraph as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation (provided that any claim by the Lender for
compensation pursuant to this paragraph shall be made within ninety (90) days
after the initial occurrence of the event giving rise to such claim), and will
designate a different Applicable Lending Office for the Advances affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of the Lender, violate any
law, rule, or regulation or be in any way disadvantageous to the Lender,
provided that the Lender shall have no obligation to so designate an Applicable
Lending Office located in the United States of America. Lender will furnish the
Borrower with a certificate setting forth the basis and the amount of each
request of the Lender for compensation under this paragraph. If the Lender
requests compensation from the Borrower under this paragraph, the Borrower may,
by notice to the Lender suspend the obligation of the Lender to make or Continue
making, or Convert Advances into, Advances of the Type with respect to which
such compensation is requested until the Regulatory Change giving rise to such
request ceases to be in effect (in which case the provisions of paragraph 7
below shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
paragraph 4, in the event that, by reason of any Regulatory Change, the Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
the Lender which includes deposits by reference to which the interest rate on
Eurodollar Advances is determined as provided in this Note or a category of
extensions of credit or other assets of the Lender which includes Eurodollar
Advances or (ii) becomes subject to restrictions on the amount of such a
category of liabilities or assets which it may hold, then, if the Lender so
elects by notice to the Borrower, the obligation of the Lender to make or
Continue making, or Convert Advances into, Advances of such Type hereunder shall
be suspended until such Regulatory Change ceases to be in effect (in which
case the provisions of paragraph 7 below shall be applicable).
(c) Determinations and allocations by the Lender for purposes of this
paragraph 4 of the effect of any Regulatory Change on its costs of maintaining
its obligations to make Advances or of making or maintaining Advances or on
amounts receivable by it in respect of Advances, and of the additional amounts
required to compensate the Lender in respect of any Additional Costs, shall be
conclusive, provided that such determinations and allocations are made in good
faith and on a reasonable basis and without duplication of the Reserve
Requirement.
5. LIMITATION ON TYPES OF ADVANCES. Anything herein to the contrary
-----------------------------------
notwithstanding, if with respect to any Eurodollar Advances for any Interest
Period therefor, the Lender determines (which determination shall be conclusive
if made in good faith) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" are not being
provided in the relative amounts or for the relative maturities for purposes of
determining the rate of interest for such Advances as provided in this Note,
then the Lender shall give the Borrower prompt notice thereof specifying the
relevant amounts or periods, and so long as such condition remains in effect,
the Lender shall be under no obligation to make additional Eurodollar Advances
or to Convert Prime Rate Advances into Eurodollar Advances and the Borrower
shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Advances, either prepay such Eurodollar Advances or
Convert such Eurodollar Advances into Prime Rate Advances in accordance with the
terms of this Note. The Lender shall be deemed to have acted in good faith
under this paragraph if the Lender is giving notice to its customers generally
of the occurrence of either of the conditions specified in this paragraph.
6. ILLEGALITY. Notwithstanding any other provision of this Note, in the
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event that it becomes unlawful for the Lender or its Applicable Lending Office
to (a) honor its obligation to make Eurodollar Advances hereunder or (b)
maintain Eurodollar Advances hereunder, then the Lender shall promptly notify
the Borrower thereof and the Lender's obligation to make or maintain Eurodollar
Advances and to Convert Prime Rate Advances into Eurodollar Advances hereunder
shall be suspended until such time as the Lender may again make and maintain
Eurodollar Advances (in which case the provisions of paragraph 7 below shall be
applicable).
7. TREATMENT OF AFFECTED ADVANCES. If the Eurodollar Advances of the Lender
------------------------------
(such Eurodollar Advances being hereinafter called "Affected Advances") are to
-----------------
be Converted pursuant to paragraphs 4 or 6 hereof, the Lender's Affected
Advances shall be automatically Converted into Prime Rate Advances on the last
day(s) of the then current Interest Period(s) for the Affected Advances (or, in
the case of a Conversion required by paragraphs 4 or 6 hereof, on such earlier
date as the Lender may specify to the Borrower), and, unless and until the
Lender gives notice as provided below that the circumstances specified in
paragraphs 4 or 6 hereof which gave rise to such Conversion no longer exist:
(a) To the extent that the Lender's Affected Advances have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to the Lender's Affected Advances shall be applied instead to its Prime
Rate Advances; and
(b) All Advances which would otherwise be made or Continued by the Lender as
Eurodollar Advances shall be made as or Converted into Prime Rate Advances and
all Advances of the Lender which would otherwise be Converted into Eurodollar
Advances shall remain as Prime Rate Advances.
8. COMPENSATION. The Borrower shall pay to the Lender, upon the request of
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the Lender, which request shall be made within one hundred eighty (180) days
after the occurrence of any event specified in subsection (a) or (b) below, such
-------------- ---
amount or amounts as shall be sufficient (in the reasonable opinion of the
Lender) to compensate it for any loss, cost, or expense incurred by it as a
result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Advance for any
reason on a date other than the last day of an Interest Period for such
Eurodollar Advance; or
(b) Any failure by the Borrower for any reason to borrow, Convert, or prepay
a Eurodollar Advance on the date for such borrowing, Conversion, or prepayment,
specified in the relevant notice of borrowing, prepayment, or Conversion under
this Agreement.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Eurodollar
Advance (or, in the case of a failure to borrow, the Interest Period for such
Eurodollar Advance which would have commenced on the date specified for such
borrowing) at the applicable rate of interest for such Eurodollar Advance
provided for herein minus (ii) the interest component of the amount the Lender
would have bid in the London interbank market.
9. CAPITAL ADEQUACY. If, after the date hereof, the Lender shall have
-----------------
determined in good faith that the adoption or implementation of any applicable
law, rule, or regulation regarding capital adequacy (including, without
limitation, any law, rule, or regulation implementing the Basle Accord), or any
change therein, or any change in the interpretation or administration thereof by
any central bank or other Governmental Authority charged with the interpretation
or administration thereof, or compliance by the Lender (or its parent) with any
guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on the Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
the Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration the Lender's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time, within ten (10) Business Days after demand
by the Lender, the Borrower shall pay to the Lender such additional amount or
amounts as will compensate the Lender (or its parent) for such reduction;
provided that any claim by the Lender for compensation pursuant to this
paragraph shall be made within ninety (90) days after the initial occurrence of
the event giving rise to such claim. A certificate of the Lender claiming
compensation under this paragraph and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive, provided that the
determination thereof is made in good faith and on a reasonable basis. In
determining such amount or amounts, the Lender may use any reasonable averaging
and attribution methods.
10. BORROWING PROCEDURE. The Borrower shall give Lender notice by means of
--------------------
an Advance Request Form of each requested Advance at least one (1) Business Day
before the requested date of each Prime Rate Advance and at least three (3)
Business Days before the requested date of each Eurodollar Advance, specifying:
(a) the requested date of such Advance (which shall be a Business Day), (b) the
amount of such Advance, (c) the Type of the Advance, and (d) in the case of a
Eurodollar Advance, the duration of the Interest Period for such Advance.
Lender at its option may accept telephonic requests for Advances, provided that
such acceptance shall not constitute a waiver of Lender's right to delivery of
an Advance Request Form in connection with subsequent Advances. Any telephonic
request for an Advance by the Borrower shall be promptly confirmed by submission
of a properly completed Advance Request Form to Lender. Each Eurodollar Advance
shall be in the minimum amount of One Hundred Thousand Dollars ($100,000) or an
integral multiple of Fifty Thousand Dollars ($50,000). Not later than 1:00 p.m.
Dallas, Texas time on the date specified for each Advance hereunder, and subject
to the other terms and conditions of this Note, Lender will make each Advance
available to the Borrower by depositing the same, in immediately available
funds, in an account of the Borrower (designated by the Borrower) maintained
with the Bank. All notices by the Borrower under this paragraph shall be
irrevocable and shall be given not later than 10:00 A.M. Dallas, Texas, time on
the day which is not less than the number of Business Days specified above for
such notice. No more than three (3) Interest Periods shall be in effect at the
same time for Advances.
11. MISCELLANEOUS. As used in this Exhibit, the plural shall mean the
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singular and the singular shall mean the plural as the context requires.
Addresses for the Fixed Rate Notice shall be the same as those for notices under
the Loan Agreement executed in connection with this Note.
This Agreement is executed concurrently with and as part of this Note referred
to and described first above.
"BORROWER"
PIZZA INN, INC.,
a Missouri corporation
By: /s/Ronald W. Parker
Name: Ronald W. Parker
Title: President
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