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LOAN FACILITY AGREEMENT
AND GUARANTY
by and among
XXXXX RENTS, INC.,
SUNTRUST BANK, as Servicer
and
EACH OF THE PARTICIPANTS PARTY HERETO
Dated as of March 30, 2001
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Table of Contents
EXHIBITS
Exhibit A - Form of Assignment and Acceptance Agreement
Exhibit B - Form of Established Franchisee Loan Agreement
Exhibit C - Form of Guaranty Agreement
Exhibit D - Form of Participation Certificate
Exhibit E - Form of Startup Franchisee Loan Agreement
Exhibit F - Form of Monthly Servicing Report
SCHEDULES
Schedule 1.1 - Pricing Grid
(i)
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LOAN FACILITY AGREEMENT AND GUARANTY
THIS LOAN FACILITY AGREEMENT AND GUARANTY (the "AGREEMENT") made as of
this 30th day of March, 2001, by and among XXXXX RENTS, INC., a Georgia
corporation having its principal place of business and chief executive office at
1100 Xxxxx Building, 000 Xxxx Xxxxx Xxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx 00000
("SPONSOR"), SUNTRUST BANK ("SUNTRUST") and each of the other lending
institutions listed on the signature pages hereto (SunTrust, such lenders,
together with any assignees thereof becoming "Participants" pursuant to the
terms of this Agreement, the "PARTICIPANTS") and SUNTRUST BANK, a banking
corporation organized and existing under the laws of Georgia having its
principal office in Atlanta, Georgia, as Servicer (in such capacity, the
"SERVICER").
W I T N E S S E T H:
WHEREAS, Sponsor has established franchise relationships with certain
rental store operators (the "FRANCHISEES") across the United States to own and
operate rental stores under the "Aaron's Rental Purchase" franchise;
WHEREAS, in connection therewith, Sponsor has established a loan
program with the Servicer pursuant to that certain Amended and Restated Loan
Facility Agreement and Guaranty, dated as of November 3, 1999, as amended by
that certain Amendment No. 1 to Amended and Restated Loan Facility Agreement and
Guaranty, dated as of June 20, 2000, as amended by that certain Amendment No. 2
to Amended and Restated Loan Facility Agreement, dated as of August 22, 2000,
and as amended by that certain Amendment No. 3 to Amended and Restated Loan
Facility Agreement, dated as of October 31, 2000, and as amended by that certain
Amendment No. 4 to Amended and Restated Loan Facility Agreement, dated as of
December __, 2000, by and among the Sponsor, the Servicer and the certain other
lending institutions a party thereto (the "EXISTING LOAN FACILITY AGREEMENT"),
to provide lines of credit to the Franchisees for business purposes arising in
connection with the acquisition of such franchise rights and the opening of
rental stores and ongoing inventory financing in connection therewith;
WHEREAS, Sponsor has requested that the Participants increase their
Commitments (as defined under the Existing Loan Facility Agreement) and make
certain other changes to the Existing Loan Facility Agreement, and the
Participants are willing to do so subject to the replacement of the Existing
Loan Facility Agreement with this Agreement, pursuant to which the Participants
shall purchase participations in the Commitment and the loans to Franchisees of
Sponsor outstanding thereunder, and subject to the other terms and conditions
hereof;
WHEREAS, Sponsor is willing, subject to the limitations set forth
herein, to repurchase such loans upon the occurrence of certain events, all as
more fully set forth below;
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THEREFORE, upon the terms and conditions hereinafter stated, and in
consideration of the mutual premises set forth above and other adequate
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree that the Existing Loan
Facility Agreement is amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. In addition to the other terms
defined herein, the following terms used herein shall have the meanings herein
specified (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"AARON'S PROPRIETARY SYSTEM" shall mean the Sponsor's proprietary point
of sale software system, as modified from time to time, used by the Sponsor and
its franchisees.
"ACQUISITION" means any transaction in which the Sponsor or any of its
Subsidiaries directly or indirectly (i) acquires any property with which an
ongoing business is conducted or is to be conducted, (ii) acquires all or
substantially all of the assets of any Person or division thereof, whether
through a purchase of assets, merger or otherwise, (iii) acquires (in one
transaction or as the most recent transaction in a series of transactions)
control of at least a majority of the voting stock of a corporation, other than
the acquisition of voting stock of a wholly-owned Subsidiary solely in
connection with the organization and capitalization of that Subsidiary by the
Sponsor or another Guarantor, or (iv) acquires control of more than 50%
ownership interest in any partnership, joint venture or limited liability
company.
"ADJUSTED LIBO RATE" shall mean, with respect to each Payment Period,
the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined pursuant to the following formula:
"Adjusted LIBO Rate" = LIBOR
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1.00 - LIBOR Reserve Percentage
As used herein, LIBOR Reserve Percentage shall mean, for any Payment Period for
any Funded Participant's Interest outstanding hereunder, the reserve percentage
(expressed as a decimal) equal to the then stated maximum rate of all reserve
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency liabilities as defined in
Regulation D (or against any successor category of liabilities as defined in
Regulation D).
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"ADVANCE" shall mean a funding of an advance to a Borrower by the
Servicer pursuant to such Borrower's Loan Commitment.
AFFILIATE" shall mean, as to any Person, any other Person that
directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with, such Person. For purposes of
this definition "CONTROL" shall mean the power, directly or indirectly, either
to (i) vote 10% or more of securities having ordinary voting power for the
election of directors (or persons performing similar functions) of a Person or
(ii) direct or cause the direction of the management and policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
The terms "CONTROLLING", "CONTROLLED BY", and "UNDER COMMON CONTROL WITH" have
meanings correlative thereto.
"AGREEMENT" shall mean this Loan Facility Agreement and Guaranty, as
amended, restated, supplemented or modified from time to time.
"AMORTIZATION PERIOD" shall mean (x) 18 months with respect to any
Advance to a Startup Franchisee Borrower other than an Electronic Equipment
Advance and (y) 24 months with respect to any Electronic Equipment Advance;
provided, however, in the event any Startup Franchisee Loan Commitment to a
Startup Franchisee Borrower is terminated upon 90 days' notice from the
Servicer, all amounts due and payable with respect to Electronic Equipment
Advances shall be due and payable in full no later than the 18-month anniversary
of the termination of the Startup Franchisee Loan Commitment.
"APPLICABLE ESTABLISHED MARGIN" shall mean, with respect to all Funded
Established Franchisee Participant's Interest, as of any date, the percentage
per annum determined by reference to the applicable Total Debt to EBITDA Ratio
in effect on such date for Established Franchisee Loans as set forth on Schedule
1.1 attached hereto; provided, that a change in the Applicable Established
Margin resulting from a change in the Total Debt to EBITDA Ratio shall be
effective on the second day after which the Sponsor has delivered the financial
statements required by Section 6.1(a) or (b) and the compliance certificate
required by Section 6.1(c); provided, further, that if at any time the Sponsor
shall have failed to deliver such financial statement and such certificate, the
Applicable Established Margin shall be at Level IV until such time as such
financial statements and certificates are delivered, at which time the
Applicable Established Margin shall be determined as provided above.
Notwithstanding the foregoing, the Applicable Established Margin from the
Effective Date until the financial statement and compliance certificate for the
fiscal quarter ending on March 31, 2001 are delivered shall be at Level III.
"APPLICABLE PERCENTAGE" shall mean, with respect to the Commitment Fee,
as of any date, the percentage per annum determined by reference to the
applicable Total Debt to EBITDA Ratio in effect on such date as set forth on
Schedule 1.1 attached hereto; provided, that a change in the Applicable
Percentage resulting from a change in the Total Debt to EBITDA Ratio shall be
effective on the second day after which the Sponsor has delivered the financial
statements
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required by Section 6.1(a) or (b) and the compliance certificate required by
Section 6.1(c); provided, further, that if at any time the Sponsor shall have
failed to deliver such financial statement and such certificate, the Applicable
Percentage shall be at Level IV until such time as such financial statements and
certificates are delivered, at which time the Applicable Percentage shall be
determined as provided above. Notwithstanding the foregoing, the Applicable
Percentage from the Effective Date until the financial statement and compliance
certificate for the fiscal quarter ending on March 31, 2001 are delivered shall
be at Level III.
"APPLICABLE STARTUP MARGIN" shall mean, with respect to all Funded
Startup Franchisee Participant's Interest, as of any date, the percentage per
annum determined by reference to the applicable Total Debt to EBITDA Ratio in
effect on such date for Startup Franchisee Loans as set forth on Schedule 1.1
attached hereto; provided, that a change in the Applicable Startup Margin
resulting from a change in the Total Debt to EBITDA Ratio shall be effective on
the second day after which the Sponsor has delivered the financial statements
required by Section 6.1(a) or (b) and the compliance certificate required by
Section 6.1(c); provided, further, that if at any time the Sponsor shall have
failed to deliver such financial statement and such certificate, the Applicable
Startup Margin shall be at Level IV until such time as such financial statements
and certificates are delivered, at which time the Applicable Startup Margin
shall be determined as provided above. Notwithstanding the foregoing, the
Applicable Startup Margin from the Effective Date until the financial statement
and compliance certificate for the fiscal quarter ending on March 31, 2001 are
delivered shall be at Level III.
"ASSET DISPOSITION" shall mean (i) all sales of Merchandise; (ii) all
Rental/Purchase Contracts with respect to Merchandise with a "same as cash
option" regardless of term (i.e., 90, 120, 180 days); (iii) all Merchandise
which is determined to have been stolen; (iv) all Merchandise that is destroyed,
lost or otherwise removed from the premises of a Borrower other than pursuant to
a Rental/Purchase Contract or by outright sale or for repair work; and (v) all
"skipped" Merchandise which is Merchandise subject to a Rental/Purchase
Contract.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Participant and an Eligible Assignee in accordance with the
terms of this Agreement and substantially in the form of Exhibit A.
"AUTHORIZED SIGNATORY" shall mean each officer of Sponsor specified
from time to time in an appropriate certificate to the Servicer as authorized to
execute Funding Approval Notices and other such documents relating to the Loan
Documents.
"BANKRUPTCY CODE" shall mean The Bankruptcy Code of 1978, as amended
and in effect from time to time (11 U.S.C. ss.101 et seq.).
"BORROWER" shall mean either an Established Franchisee Borrower or a
Startup Franchisee Borrower, as the case may be.
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"BORROWER GROUP" shall mean, for any Borrower, collectively, such
Borrower and each other Person directly or indirectly controlling, controlled
by, or under common control with, such Borrower, whether through the ownership
of voting securities, by contract or otherwise. For purposes of this definition,
"control" of any person or entity means the possession, directly or indirectly,
of the right to vote at least 25% of the issued and outstanding shares of voting
securities policies of that person or entity.
"BORROWER RATE" shall mean, with respect to each Loan, the Prime Rate
per annum plus any additional margin per annum specified for such Loan by
Sponsor in the applicable Funding Approval Notice, such margin not to exceed ten
percent (10.0%) per annum calculated based upon the actual number of days
elapsed in a 360 day year; provided that, at no time may there be more than two
different Borrower Rates applicable to the Startup Franchisee Loans or more than
two different Borrower Rates applicable to the Established Franchisee Loans.
"BUSINESS DAY" shall mean (i) any day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia are authorized or
required by law to close and (ii) if such day relates to Adjusted LIBOR, any day
on which dealings in Dollars are carried on in the London interbank market.
"CAPITAL LEASE OBLIGATIONS" of any Person shall mean all obligations of
such Person to pay rent or other amounts under any lease (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"CHANGE IN CONTROL" shall mean the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in a single
transaction or a series of related transactions) of all or substantially all of
the assets of the Sponsor to any Person or "group" (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder in effect on the date hereof), (b) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
"group" (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof) other than the Xxxxxxxxxx Family of 33 1/3 % or more of the total voting
power of shares of stock entitled to vote in the election of directors of the
Sponsor; or (c) occupation of a majority of the seats (other than vacant seats)
on the board of directors of the Sponsor by Persons who were neither (i)
nominated by the current board of directors or (ii) appointed by directors so
nominated.
"CLOSING DATE" shall mean, for any Loan, the date upon which the Loan
Documents with respect to such Loan are executed and delivered and the Loan
Commitment is established thereunder.
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"CODE" shall mean the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"COLLATERAL" shall mean, with respect to any Loan, all property of the
Borrower and all guarantors obligated with respect to such Loan that secures
such Loan, which property shall be designated by the Sponsor and may include all
accounts receivable, inventory, Rental/Purchase Contracts and other business
assets of such Borrower and guarantors.
"COLLATERAL AGREEMENT" shall mean an agreement executed by a Borrower
and any other Persons primarily or secondarily liable for all or part of the
Loan or granting a security interest to the Servicer in specified Collateral as
security for such Loan, including without limitation, any Loan Agreements and
any Personal Guaranties.
"COMMITMENTS" shall mean, collectively, the Startup Franchisee
Commitment and the Established Franchisee Commitment.
"COMMITMENT FEE" shall have the meaning set forth in Section 2.4.
"COMMITMENT TERMINATION DATE" shall have the meaning set forth in
Section 2.1(a).
"CONSOLIDATED COMPANIES" shall mean, collectively, Sponsor and all of
its Subsidiaries.
"CONSOLIDATED EBITDA" shall mean, for the Sponsor and its Subsidiaries
for any period, an amount equal to the sum of (a) Consolidated Net Income for
such period plus (b) to the extent deducted in determining Consolidated Net
Income for such period, (i) Consolidated Interest Expense, (ii) income tax
expense, (iii) depreciation (excluding depreciation of rental merchandise) and
amortization and (iv) all other non-cash charges, determined on a consolidated
basis in accordance with GAAP in each case for such period.
"CONSOLIDATED EBITDAR" shall mean, for the Sponsor and its Subsidiaries
for any period, an amount equal to the sum of (a) Consolidated EBITDA and (b)
Consolidated Lease Expense.
"CONSOLIDATED FIXED CHARGES" shall mean, for the Sponsor and its
Subsidiaries for any period, the sum (without duplication) of (a) Consolidated
Interest Expense for such period and (b) Consolidated Lease Expense for such
period.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for the Sponsor and its
Subsidiaries for any period determined on a consolidated basis in accordance
with GAAP, total cash interest expense, including without limitation the
interest component of any payments in respect of Capital Leases Obligations
capitalized or expensed during such period (whether or not actually paid during
such period).
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"CONSOLIDATED LEASE EXPENSE" shall mean, for any period, the aggregate
amount of fixed and contingent rentals payable by the Sponsor and its
Subsidiaries with respect to leases of real and personal property (excluding
Capital Lease Obligations) determined on a consolidated basis in accordance with
GAAP for such period.
"CONSOLIDATED NET INCOME" shall mean, for any period, the net income
(or loss) of the Sponsor and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, but excluding therefrom (to the
extent otherwise included therein) (i) any extraordinary gains or losses, (ii)
any gains attributable to write-ups of assets and (iii) any equity interest of
the Sponsor or any Subsidiary of the Sponsor in the unremitted earnings of any
Person that is not a Subsidiary and (iv) any income (or loss) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Sponsor or any Subsidiary on the date that such Person's
assets are acquired by the sponsor or any Subsidiary.
"CONSOLIDATED NET WORTH" shall mean, as of any date of determination,
the Sponsor's total shareholders' equity, determined in accordance with GAAP.
"CONSOLIDATED TOTAL ADJUSTED CAPITAL" shall mean, as of any date of
determination with respect to the Sponsor, the sum of (i) Consolidated Total
Adjusted Debt as of such date and (ii) Consolidated Net Worth as of such date.
"CONSOLIDATED TOTAL ADJUSTED DEBT" shall mean, as of any date of
determination, (i) Consolidated Total Debt, plus (ii) to the extent not included
in clause (i), all operating lease obligations of Sponsor and its Subsidiaries
measured at the present value of such obligations (using a 10% discount rate).
"CONSOLIDATED TOTAL DEBT" shall mean, at any time, all then currently
outstanding obligations, liabilities and indebtedness of the Sponsor and its
subsidiaries on a consolidated basis of the types described in the definition of
Indebtedness (other than as described in subsection (xi) thereof).
Notwithstanding anything contained herein to the contrary, for purposes of
calculating Consolidated Total Debt as of any date, the obligations, liabilities
and indebtedness of the Sponsor under this Agreement shall be limited to fifty
percent (50%) of the aggregate outstanding principal amount of the Loans on such
date.
"CREDIT EVENT" shall have the meaning set forth in Article IX of this
Agreement.
"CREDIT PARTIES" shall mean, collectively, each of the Sponsor and the
Guarantors.
"DEFAULT WAIVER LETTER" shall mean a waiver letter sent by Sponsor to
the Servicer which such waiver letter shall (i) waive and cure a Loan Payment
Default or (ii) waive a covenant default with respect to a Loan that does not
constitute a Loan Default, such waiver letter to be substantially in the form
required in the Servicing Agreement.
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"DEFAULTED BORROWER" shall mean a Borrower under a Defaulted Loan.
"DEFAULTED LOAN" shall mean a Loan evidenced by Loan Documents under
the terms of which exist one or more Loan Defaults that have not been cured or
waived as permitted herein.
"DOLLAR" and "U.S. DOLLAR" and the sign "$" shall mean lawful money of
the United States of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary that is incorporated or
organized under the laws of any State of the United States, the District of
Columbia or Puerto Rico.
"EFFECTIVE DATE" shall mean the date upon which all conditions
precedent to the effectiveness of this Agreement have been satisfied.
"ELECTRONIC EQUIPMENT" shall mean all computers, computer equipment,
big screen televisions and any other types of inventory designated by the
Sponsor from time to time.
"ELECTRONIC EQUIPMENT ADVANCES" shall mean all advances under Startup
Franchisee Loan Commitments made to purchase Electronic Equipment for which the
Sponsor and the Startup Franchisee Borrower have agreed that the Amortization
Period shall be 24 months.
"ELECTRONIC EQUIPMENT ASSET DISPOSITIONS" shall mean all Asset
Dispositions of Electronic Equipment for which the Sponsor and the Startup
Franchisee Borrower have agreed that the Amortization Period shall be 24 months.
"ELECTRONIC RENTAL REVENUE" shall mean, with respect to any Borrower
for any period, the gross revenues of such Borrower from rentals to the public
of such Borrower's Electronic Equipment, including without limitation, all
customer deposits, advance rental payments, waiver fees, late fees, delivery
fees, nonsufficient funds fees, reinstatement fees, but excluding all retail
sales proceeds and sales taxes.
"ELIGIBLE ASSIGNEE" shall mean (i) a commercial bank organized under
the laws of the United States or any state thereof having total assets in excess
of $1,000,000,000.00 or any commercial finance or asset-based lending Affiliate
of any such commercial bank and (ii) any Participant.
"ENVIRONMENTAL LAWS" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.
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"ENVIRONMENTAL LIABILITY" shall mean any liability, contingent or
otherwise (including any liability for damages, costs of environmental
investigation and remediation, costs of administrative oversight, fines, natural
resource damages, penalties or indemnities), of the Sponsor or any Subsidiary
directly or indirectly resulting from or based upon (a) any actual or alleged
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
any actual or alleged exposure to any Hazardous Materials, (d) the Release or
threatened Release of any Hazardous Materials or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated), which, together with the Sponsor, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for the purposes of Section
302 of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Sponsor or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Sponsor or any ERISA Affiliate
from the PBGC or a plan administrator appointed by the PBGC of any notice
relating to an intention to terminate any Plan or Plans or to appoint a trustee
to administer any Plan; (f) the incurrence by the Sponsor or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any Plan or Multiemployer Plan; or (g) the receipt by the Sponsor or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Sponsor or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.
"ESTABLISHED FRANCHISEE" shall mean a Franchisee that (x) has been a
Franchisee for at least 18 months; (y) has had at least two Xxxxx Rents' stores
open for a minimum of 12 months; and (z) has at least four Xxxxx Rents' stores
open or under executed area development agreements.
"ESTABLISHED FRANCHISEE BORROWER" shall mean an Established Franchisee
who is primarily liable for repayment of an Established Franchisee Loan as a
result of having executed Loan Documents as maker, or its permitted assignee.
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"ESTABLISHED FRANCHISEE BORROWING BASE" shall mean, with respect to
each Established Franchisee Borrower, on any date of determination, the sum of:
(i) $300,000 for each Xxxxx Rents franchisee store operated by
such Borrower where less than 7 calendar months have elapsed since the
Opening Date of such store, plus
(ii) an amount equal to 5.5 multiplied by the sum of (x) the
Rental Revenue from the most recently ended calendar month for all
Xxxxx Rents franchisee stores operated by such Borrower where at least
6 calendar months but less than 12 calendar months have elapsed since
the Opening Date of each such store, plus (y) the average monthly
Rental Revenue for the three most recently ended calendar months from
all Xxxxx Rents franchisee stores operated by such Borrower where at
least 12 calendar months have elapsed since the Opening Date of each
such store, in each case as reported to Servicer by Sponsor pursuant to
the Servicing Agreement, plus
(iii) an amount equal to 11.0 multiplied by the sum of (x) the
Electronic Rental Revenues from the most recently ended calendar month
for all franchisee stores operated by such Borrower where at least 6
calendar months but less than 12 calendar months have elapsed since the
Opening Date of each such store, plus (y) the average monthly
Electronic Rental Revenues for the three most recently ended calendar
months from all Xxxxx Rents franchisee stores operated by such Borrower
where at least 12 calendar months have elapsed since the Opening Date
of such store, in each case as reported to Servicer by Sponsor pursuant
to the Servicing Agreement.
"ESTABLISHED FRANCHISEE COMMITMENT" shall have the meaning set forth in
Section 2.1(b).
"ESTABLISHED FRANCHISEE LOAN" shall mean the aggregate Advances made to
an Established Franchisee Borrower under its Established Franchisee Loan
Commitment.
"ESTABLISHED FRANCHISEE LOAN AGREEMENt" shall mean a Line of Credit and
Security Agreement setting forth the terms and conditions, as between an
Established Franchisee Borrower and the Servicer, under which the Servicer has
established a Loan Commitment to make Advances to such Established Franchisee
Borrower pursuant to the Established Qualified Franchisee Loan Commitment,
substantially in the form of Exhibit B, with such changes as the Sponsor and the
Servicer shall agree to, [SUBJECT TO SECTION 3.1(B)]; provided, however, that
any Established Franchisee Loan Agreement executed prior to the Effective Date
shall be substantially in the form required under the Existing Facility
Agreement.
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"ESTABLISHED FRANCHISEE LOAN COMMITMENT" shall mean a commitment to
make Established Franchisee Loans to an Established Franchisee Borrower pursuant
to an Established Franchisee Loan Agreement.
"ESTABLISHED FRANCHISEE MASTER NOTE" shall mean that certain Master
Note, executed by an Established Franchisee Borrower in favor of the Servicer,
evidencing such Established Franchisee Borrower's obligation to repay all
Advances made to it pursuant to an Established Franchisee Loan Commitment,
substantially in the form of Exhibit A to the Established Franchisee Loan
Agreement, with such changes as the Sponsor and the Servicer shall agree to,
[SUBJECT TO SECTION 3.1(B)]; provided, however, that any Established Franchisee
Master Note executed prior to the Effective Date shall be substantially in the
form required under the Existing Loan Facility Agreement.
"EXISTING COMMITMENTS" means any of the commitments to make loans made
by the Servicer pursuant to the Existing Loan Facility Agreement as in effect
from time to time.
"EXISTING LOAN FACILITY AGREEMENT" shall have the meaning set forth in
the recitals hereof.
"EXISTING LOAN" means any of the loans made by the Servicer pursuant to
the Existing Loan Facility Agreement as in effect from time to time.
"EXISTING NOTE" means any of the promissory notes from the Borrowers to
the Servicer substantially in the form attached to the Existing Loan Facility
Agreement as in effect from time to time.
"FACILITY" shall mean either the loan facility established pursuant to
the Startup Franchisee Commitment or the loan facility established pursuant to
the Established Franchisee Commitment, as the case may be.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with member banks
of the Federal Reserve System arranged by Federal funds brokers, as published by
the Federal Reserve Bank of New York on the next succeeding Business Day or if
such rate is not so published for any Business Day, the Federal Funds Rate for
such day shall be the average rounded upwards, if necessary, to the next 1/100th
of 1% of the quotations for such day on such transactions received by the
Servicer from three Federal funds brokers of recognized standing selected by the
Servicer.
"FEE LETTER" shall mean that certain letter agreement dated as of even
date herewith, by and between the Sponsor and the Servicer, setting forth
certain fees applicable to the loan facility described herein, either as
originally executed or as hereafter amended or modified.
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"FINAL TERMINATION DATE" shall mean the date that is ninety (90) days
after the last Maturity Date of the Loans.
"FINANCING STATEMENT" shall mean, with respect to a Loan, a document
that among other things, describes the Sponsor and the Collateral, the proper
filing of which perfects a security interest in the Collateral described therein
under the laws of the state in which such document is filed.
"FISCAL YEAR" shall mean a fiscal year of the Sponsor; references to a
Fiscal Year with a number corresponding to any calendar year (e.g., the "Fiscal
Year 2000") refers to the Fiscal Year ending during such calendar year.
"FIXED CHARGE COVERAGE RATIO" shall mean, at any date, the ratio of (a)
Consolidated EBITDAR for the four consecutive fiscal quarters of the Sponsor
ending on such date to (b) Consolidated Fixed Charges for the four consecutive
fiscal quarters of the Sponsor ending on such date.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"FRANCHISE AGREEMENT" shall mean the written agreement between Sponsor
and a Franchisee whereby the Franchisee is authorized to establish an "Aaron's
Rental Purchase" franchise.
"FRANCHISEE" shall have the meaning set forth in the recitals hereof.
"FRANCHISEE LOAN PROGRAM" shall mean the transaction evidenced by (i)
this Agreement wherein the Sponsor has guaranteed, to the extent set forth
herein, certain obligations of Franchisees of the Sponsor, and (ii) the other
Operative Documents executed in connection herewith and therewith.
"FUNDED ESTABLISHED FRANCHISEE PARTICIPANT'S INTEREST" shall mean the
aggregate outstanding amount of Advances made by a Participant hereunder with
respect to the Established Franchisee Loans, and shall include, with respect to
SunTrust, the aggregate outstanding amount of Swing Line Advances made with
respect to Established Franchisee Loans.
"FUNDED PARTICIPANT'S INTEREST" shall mean, with respect to any
Participant, the sum of such Participant's Funded Startup Franchisee
Participant's Interest plus such Participant's Funded Established Franchisee's
Participant's Interest.
"FUNDED STARTUP FRANCHISEE PARTICIPANT'S INTEREST" shall mean the
aggregate outstanding amount of Advances made by a Participant hereunder with
respect to the Startup Franchisee Loans, and shall include, with respect to
SunTrust, the aggregate outstanding amount of Swing Line Advances made with
respect to Startup Franchisee Loans.
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"FUNDING APPROVAL NOTICE" shall mean a written notice to the Servicer
from Sponsor setting forth the conditions of a proposed Loan Commitment,
consistent with the requirements therefor as set forth in this Agreement, and
containing such information and in substantially such form as shall be agreed to
by Servicer and Sponsor pursuant to the Servicing Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States applied on a consistent basis and subject to the terms of Section
1.2.
"GOVERNMENTAL AUTHORITY" shall mean the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") shall mean any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly and including any obligation, direct or indirect, of the guarantor
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued in support of
such Indebtedness or obligation; provided, that the term "Guarantee" shall not
include endorsements for collection or deposits in the ordinary course of
business. The amount of any Guarantee shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
Guarantee is made or, if not so stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith. The term
"Guarantee" used as a verb has a corresponding meaning.
"GUARANTEED OBLIGATIONS" shall mean the aggregate amount of all Loan
Indebtedness of all Borrowers outstanding under all Loan Documents to include,
without limitation (i) all principal, interest and commitment fees due with
respect to all Loans, including post-petition interest in any proceeding under
federal bankruptcy laws, (ii) all fees, expenses, and amounts payable by all
Borrowers for reimbursement or indemnification under the terms of all Loan
Agreements and all other Loan Documents executed in connection with the Loan to
such Borrower, (iii) all amounts advanced by Servicer to protect or preserve the
value of any security for the Loans, and (iv) all renewals, extensions,
modifications, and refinancings (in whole or in part) of any of the amounts
referred to in clauses (i) and (ii) above).
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"GUARANTORS" shall mean, collectively, Xxxxx Investment Company, Xxxxx
Rents, Inc. Puerto Rico and all other subsidiaries of the Sponsor that from time
to time become parties to the Guaranty Agreement and their respective successors
and permitted assigns.
"GUARANTY AGREEMENT" shall mean the Guaranty Agreement executed by each
of the Subsidiaries of the Sponsor in favor of the Servicer and the
Participants, substantially in the form of Exhibit C, as the same may be
amended, restated, supplemented or otherwise modified from time to time
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"INDEBTEDNESS" of any Person shall mean, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person in respect of the deferred purchase price of
property or services (other than trade payables incurred in the ordinary course
of business; provided, that for purposes of Section 9.6, trade payables overdue
by more than 120 days shall be included in this definition except to the extent
that any of such trade payables are being disputed in good faith and by
appropriate measures), (iv) all obligations of such Person under any conditional
sale or other title retention agreement(s) relating to property acquired by such
Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (vii) all Guarantees of such Person
of the type of Indebtedness described in clauses (i) through (vi) above, (viii)
all Indebtedness of a third party secured by any Lien on property owned by such
Person, whether or not such Indebtedness has been assumed by such Person, (ix)
all obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any common stock of such Person, and (x)
Off-Balance Sheet Liabilities. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, except to the extent that the terms of such
Indebtedness provide that such Person is not liable therefor.
"INDEMNITY AND CONTRIBUTION AGREEMENT" shall mean the Indemnity,
Subrogation and Contribution Agreement, substantially in the form of Exhibit H,
among the Sponsor, the Guarantors and the Servicer, as amended, restated,
supplemented or otherwise modified from time to time.
"INFORMATION MEMORANDUM" shall mean the Confidential Information
Memorandum dated February 2001 relating to the Sponsor and the transactions
contemplated by this Agreement.
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"LIBOR" shall mean, for each Payment Period, the offered rate for
deposits in U.S. Dollars, for a period of one month and in an amount comparable
to the aggregate outstanding Funded Participant's Interests as of the first day
of such Payment Period, appearing on the display designated as Page 3750 on the
Dow Xxxxx Markets Service (or such other page on that service or such other
service designated by the British Banker's Association for the display of such
Association's Interest Settlement Rates for Dollar deposits) as of 11:00 A.M.
(London, England time) on the day that is two Business Days prior to the first
day of the Payment Period. If such Page 3750 is unavailable for any reason at
such time, the rate which appears on the Reuters Screen ISDA Page as of such
date and such time; provided, that if the Servicer determines that the relevant
foregoing sources are unavailable for the relevant Payment Period, LIBOR shall
mean the rate of interest determined by the Servicer to be the average (rounded
upward, if necessary, to the nearest 1/100th of 1%) of the rates per annum at
which deposits in Dollars are offered to the Servicer two (2) Business Days
preceding the first day of such Interest Period by leading banks in the London
interbank market as of 10:00 a.m. for delivery on the first day of such Payment
Period, for the number of days comprised therein and in an amount comparable to
the amount of the Funded Participant's Interest of the Servicer.
"LIEN" shall mean any mortgage, pledge, security interest, lien
(statutory or otherwise), charge, encumbrance, hypothecation, assignment,
deposit arrangement, or other arrangement having the practical effect of the
foregoing or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement and any capital lease having
the same economic effect as any of the foregoing). A covenant not to xxxxx x
Xxxx or a "Negative Pledge" shall not be determined a Lien for purposes of this
Agreement.
"LOAN" shall mean either a Startup Franchisee Loan, an Established
Franchisee Loan or an Existing Loan, as the case may be.
"LOAN AGREEMENT" shall mean either a Startup Franchisee Loan Agreement
or an Established Franchisee Loan Agreement as the case may be.
"LOAN COMMITMENT" shall mean the commitment to make Advances
established by the Servicer in favor of any Borrower in the amount not
exceeding, and upon the terms described in, the applicable Funding Approval
Notice and the applicable Loan Documents, which Loan Commitment may be either a
Startup Franchisee Loan Commitment or an Established Franchisee Loan Commitment.
"LOAN DEFAULT" shall mean the occurrence of one or more of the
following events with respect to any Loan: (i) a Loan Payment Default, (ii) the
bankruptcy or insolvency of the Borrower or any Guarantor of such Loan, or the
appointment of a receiver, trustee, custodian or similar fiduciary for such
Borrower or Guarantor, or the assignment for the benefit of creditors by such
Borrower or Guarantor, or the offering of settlement or composition to the
unsecured
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creditors of such Borrower or Guarantor generally or (iii) the termination of
(or failure to renew) the Franchise Agreement to which the Borrower of such Loan
is a party.
"LOAN DOCUMENTS" shall mean, with respect to any Loan, the Loan
Agreement, the Master Note, any Personal Guaranty, any Spousal Consent, the
Collateral Agreements, in each case relating to such Loan, any other documents
relating to such Loan delivered by any Borrower or any guarantor or surety
thereof to the Servicer and any amendments thereto (provided that such
amendments are made with the consent of Sponsor, where such consent is required
under this Agreement).
"LOAN INDEBTEDNESS" shall mean all amounts due and payable by a
Borrower under the terms of the Loan Documents governing the Loan to such
Borrower, including, without limitation, outstanding principal, accrued
interest, any commitment fees, and all reasonable costs and expenses of any
legal proceeding brought by the Servicer to collect any of the foregoing
(including without limitation, reasonable attorneys' fees actually incurred).
"LOAN PAYMENT DEFAULT" shall mean the failure of a Borrower to make a
payment of principal, accrued interest thereon or any other amounts, within the
cure period following the due date therefor, as provided under the applicable
Loan Documents.
"LOAN TERM" shall mean, with respect to any Loan, the prescribed term
of the Loan Commitment relating to such Loan, as documented in the applicable
Loan Documents, and any term-out period thereafter; provided, however, that the
Loan Term shall not exceed (x) in the case of any Startup Franchisee Loan
Commitment, one (1) year subject to extension in accordance with the terms of
the applicable Startup Franchisee Loan Agreement, plus, in the event that the
Startup Franchisee Loan Commitment is terminated upon ninety (90) days' prior
notice from the Servicer, the Amortization Period and (y) in the case of an
Established Franchisee Loan Commitment, four (4) years.
"XXXXXXXXXX FAMILY" shall mean, collectively, Xxxxxx Xxxxxxx
Xxxxxxxxxx, Xx., his spouse, his children, his grandchildren and any trust which
may be now or hereafter established for the sole benefit of any of the foregoing
persons.
"MARGIN REGULATIONS" shall mean Regulation T, Regulation U and
Regulation X of the Board of Governors of the Federal Reserve System, as the
same may be in effect from time to time.
"MASTER NOTE" shall mean either a Startup Franchisee Master Note or an
Established Franchisee Master Note, as the case may be.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singularly or in conjunction with any
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other event or events, act or acts, condition or conditions, occurrence or
occurrences whether or not related, a material adverse change in, or a material
adverse effect on, (i) the business, results of operations, financial condition,
assets, liabilities or prospects of the Sponsor and its Subsidiaries taken as a
whole, (ii) the ability of Sponsor or the Credit Parties taken as a whole to
perform any of their respective obligations under the Operative Documents (iii)
the rights and remedies of the Servicer and the Participants under any of the
Operative Documents or (iv) the legality, validity or enforceability of any of
the Operative Documents.
"MATERIAL INDEBTEDNESS" shall mean Indebtedness of any one or more of
the Sponsor and the Subsidiaries in an aggregate principal amount exceeding
$500,000.
"MATURITY DATE" shall mean, with respect to any Loan, the date set
forth under the applicable Loan Documents when the related Loan Commitment has
terminated and all principal and interest with respect to such Loan shall become
due and payable in full; provided that, each Maturity Date shall be a Payment
Date.
"MAXIMUM AMOUNT" shall have the meaning set forth in Section 10.2.
"MAXIMUM COMMITMENT AMOUNT" shall mean $90,000,000, as such amount may
be reduced pursuant to Section 2.7, Section 2.8 or Section 15.2.
"MERCHANDISE" shall mean goods distributed or sold to Franchisees
through Sponsor.
"MINIMUM PURCHASE PRICE" shall mean, with respect to any Established
Franchisee Loan, the lesser of (x) the outstanding Loan Indebtedness thereof and
(y) the sum of (i) the Established Franchisee Borrowing Base in effect on the
date of the occurrence of the relevant Loan Default, or if greater, during the
last full calendar month preceding the date of the occurrence of the relevant
Loan Default, plus (ii) all advances made between the date that such Established
Franchisee Borrowing Base is reported to the Servicer by the Sponsor and the
date which is two Business Days thereafter.
"MONTHLY SERVICING REPORT" shall have the meaning set forth in Section
3.3.
"MOODY'S" shall mean Xxxxx'x Investors Service, Inc.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"OFF-BALANCE SHEET LIABILITIES" of any Person shall mean (i) any
repurchase obligation or liability of such Person with respect to accounts or
notes receivable sold by such Person, other than indemnity obligations for any
breach of any representation or warranty which are customary in non-recourse
sales of such assets, (ii) any liability of such Person under any sale and
leaseback transactions which do not create a liability on the balance sheet of
such Person, (iii) any liability of such Person under any so-called "synthetic"
lease transaction or (iv) any
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obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheet of such Person.
"OPENING DATE" shall mean, with respect to each store location, the
date determined by the Sponsor to be the opening date of such location in
accordance with its standard practice, as notified to the Servicer in accordance
with the terms hereof.
"OPERATIVE DOCUMENTS" shall mean this Agreement, the Guaranty
Agreement, the Indemnity, Subrogation and Contribution Agreement, the Servicing
Agreement, the Fee Letter and any other documents delivered by Sponsor or any
Guarantor to the Servicer or the Participants in connection herewith or
therewith.
"PARTICIPANT" shall mean SunTrust, the other lending institutions
listed on the signature pages hereof and each assignee thereof, if any, pursuant
to the terms hereof.
"PARTICIPATING COMMITMENT" shall mean the commitment of each
Participant to fund its Pro Rata Share of outstanding Loans in an amount not to
exceed such Participant's Participating Commitment Amount.
"PARTICIPATING COMMITMENT AMOUNT" shall mean the amount set forth
opposite each Participant's name on the signature pages hereof, as such amount
may be modified by assignment pursuant to the terms hereof; provided, that,
following the termination of the Commitments, each Participant's Participating
Commitment Amount shall be deemed to be its Pro Rata Share of the aggregate
principal amount of all Loan Commitments.
"PARTICIPANT FUNDING" shall mean a funding by the Participants of their
respective Pro Rata Shares of Advances or Loans outstanding under either or both
Facilities.
"PARTICIPANT'S INTEREST" shall have the meaning set forth in Section
2.2.
"PARTICIPANT'S UNUSED COMMITMENT" shall mean, with respect to any
Participant, the difference between such Participant's Participating Commitment
Amount and such Participant's Funded Participant's Interest.
"PARTICIPATION CERTIFICATE" shall mean a certificate issued by the
Servicer to a Participant, substantially in the form of Exhibit D attached
hereto, evidencing such Participant's ownership interest conveyed hereunder.
"PAYMENT DATE" shall mean the last day of each calendar month;
provided, however, if such day is not a Business Day, the next succeeding
Business Day
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"PAYMENT PERIOD" shall mean a period of one (1) month; provided that
(i) the first day of a Payment Period must be a Business Day, (ii) any Payment
Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day, (iii) the first Payment Period
hereunder shall commence on the date hereof and shall end on the last day of the
next succeeding calendar month and (iv) the first day of any succeeding Payment
Period shall be the last day of the preceding Payment Period and shall end on
the last day of the next succeeding calendar month.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA, and any successor entity performing similar functions.
"PERMITTED ACQUISITION" shall mean any Acquisition so long as (a) at
the time of such Acquisition, no Credit Event is in existence, (b) after giving
effect to such Acquisition, no Credit Event is in existence, (c) such
Acquisition has been approved by the board of directors of the Person being
acquired prior to any public announcement thereof, (d) the total consideration
(including all cash, debt, stock and other property, and assumption of
obligations for borrowed money) of any single Acquisition or series of related
Acquisitions does not exceed $10,000,000, and (e) the total consideration
(including all cash, debt, stock and other property, and assumption of
obligations for borrowed money) of all Acquisitions during any fiscal year does
not exceed $20,000,000. As used herein, Acquisitions will be considered related
Acquisitions if the sellers under such Acquisitions are the same Person or any
Affiliate thereof.
"PERMITTED ENCUMBRANCES" shall mean
(i) Liens imposed by law for taxes not yet due or which
are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves are being maintained in accordance
with GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in
accordance with GAAP;
(iii) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(iv) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(v) judgment and attachment liens not giving rise to a
Credit Event or Liens created by or existing from any litigation or
legal proceeding that are currently being
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contested in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP;
and
(vi) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations
and do not materially detract from the value of the affected property
or materially interfere with the ordinary conduct of business of the
Sponsor and its Subsidiaries taken as a whole;
(vii) other Liens incidental to the conduct of its business
or the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or
credit, and which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use thereof in
the operation of its business; and
(viii) Liens on insurance policies owned by the Sponsor on
the lives of its officers securing policy loans obtained from the
insurers under such policies, provided that (A) the aggregate amount
borrowed on each policy shall not exceed the loan value thereof, and
(B) the Sponsor shall not incur any liability to repay any such loan;
provided, that the term "Permitted Encumbrances" shall not include any
Lien securing Indebtedness.
"PERMITTED INVESTMENTS" shall mean:
(i) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the United
States (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States), in each case
maturing within one year from the date of acquisition thereof;
(ii) commercial paper having an A or better rating, at the
time of acquisition thereof, of S&P or Moody's and in either case
maturing within one year from the date of acquisition thereof;
(iii) certificates of deposit, bankers' acceptances and
time deposits maturing within one year of the date of acquisition
thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States or any
state thereof which has a combined capital and surplus and undivided
profits of not less than $500,000,000;
(iv) fully collateralized repurchase agreements with a
term of not more than 30 days for securities described in clause (i)
above and entered into with a financial institution satisfying the
criteria described in clause (iii) above; and
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(v) mutual funds investing solely in any one or more of
the Permitted Investments described in clauses (i) through (iv) above.
"PERSON" shall mean any individual, partnership, firm, corporation,
association, joint venture, limited liability company, trust or other entity, or
any Governmental Authority.
"PERSONAL GUARANTY" shall mean any guaranty from a principal of a
Borrower substantially in the form required by the Servicing Agreement.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Sponsor or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PRIME RATE" shall mean the per annum rate of interest designated from
time to time by SunTrust to be its prime rate. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate of interest that
is being offered by SunTrust to its borrowers.
"PRO RATA SHARE" shall mean, with respect to each of the Participants,
the percentage designated as such Participant's Pro Rata Share on the signature
pages hereof, as such percentage may change from time to time as a result of
assignments or amendments pursuant to this Agreement.
"QUARTERLY DATE" shall have the meaning set forth in Section 2.4.
"REGULATION D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time.
"RELEASE" means any release, spill, emission, leaking, dumping,
injection, pouring, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
"RENTAL/PURCHASE CONTRACT" shall mean a contract between a Franchisee
and a customer to rent Merchandise in the form approved by the Sponsor (and
which may included purchase options).
"RENTAL REVENUE" shall mean, with respect to any Borrower for any
period, the gross revenues of such Borrower from rentals to the public of such
Borrower's furniture inventory and rental equipment, including without
limitation, all customer deposits, advance rental payments, waiver fees, late
fees, delivery fees, nonsufficient funds fees, reinstatement fees, but excluding
all Electronic Rental Revenues, all retail sales proceeds and sales taxes.
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"REPORTABLE EVENT" shall have the meaning assigned to such term in
ERISA.
"REQUIRED PARTICIPANTS" shall mean (x) at any time prior to termination
of the Commitments, Participants holding at least 66 2/3% of the sum of (x) the
aggregate Funded Participant's Interests, plus (y) the Participant's Unused
Commitments, and (y) at any time on and after the termination of the
Commitments, Participants holding at least 66 2/3% of the aggregate outstanding
Funded Participant's Interests at such time.
"REQUIREMENT OF LAW" for any person shall mean the articles or
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"RESPONSE PERIOD" shall mean (i) with respect to any Startup Franchise
Loan, a period of seventy (70) days commencing on the day next succeeding the
day on which the Sponsor receives a notice from the Servicer that a Loan Payment
Default has occurred and is continuing, and (ii) with respect to any Established
Franchisee Loan, a period of five (5) Business Days commencing on the day next
succeeding the day on which the Sponsor receives a notice from the Servicer that
a Loan Payment Default has occurred and is continuing, provided, however, that
the Response Period for any Established Franchisee Loan shall automatically
extend by an additional 60 days if the Sponsor assumes operation of the stores
operated by the Defaulted Borrower during the initial five (5) Business Day
Response Period; provided, further, no Response Period for any Loan shall extend
beyond the Final Termination Date.
"RESPONSIBLE OFFICER" shall mean any of the president, the chief
executive officer, the chief operating officer, the chief financial officer, the
treasurer, the controller or a vice president of the Sponsor or such other
representative of the Sponsor as may be designated in writing by any one of the
foregoing with the consent of the Servicer; and, with respect to the financial
covenants only, the chief financial officer, the treasurer or the controller of
the Sponsor.
"RESTRICTED PAYMENT" shall have the meaning given to such term in
Section 8.5.
"REUTERS SCREEN" shall mean, when used in connection with any
designated page and LIBOR, the display page so designated on the Reuters Monitor
Money Rates Service (or such other page as may replace that page on that service
for the purpose of displaying rates comparable to LIBOR).
"REVOLVING CREDIT AGREEMENT" shall mean that certain Revolving Credit
Agreement, dated as of the date hereof, by and among Sponsor, SunTrust,
individually and as administrative agent, and the other lenders named therein,
as amended, restated, modified or supplemented from time to time.
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"REVOLVING CREDIT DOCUMENTS" shall mean, collectively, the Revolving
Credit Agreement and any and all other instruments, agreements, documents and
writings executed in connection with the foregoing.
"S&P" shall mean Standard & Poor's
"SERVICING AGREEMENT" shall mean that certain Servicing Agreement,
dated as of the date hereof, by and between the Sponsor and the Servicer, as
amended, restated, supplemented or otherwise modified from time to time.
"SERVICING FEE" shall mean the fee payable to the Servicer pursuant to
the terms of the Servicing Agreement.
"SERVICER" shall mean SunTrust Bank and its successors and assigns.
"SOUTHTRUST LOAN FACILITY AGREEMENT" means that certain Loan Facility
Agreement and Guaranty dated as of August 31, 2000, by and between the Sponsor
and SouthTrust Bank, as amended, restated, supplemented or otherwise modified
from time to time.
"SPONSOR'S FEE" shall have the meaning set forth in the Servicing
Agreement.
"SPOUSAL CONSENT" shall mean any agreement provided by the spouse of
any Person executing a Guaranty to the extent such spouse has not personally
executed a Guaranty, to be substantially in the form provided by the Servicer.
"STARTUP FRANCHISEE BORROWER" shall mean a Franchisee who is primarily
liable for repayment of a Startup Franchisee Loan as a result of having executed
Loan Documents as maker, or its permitted assignee.
"STARTUP FRANCHISEE COMMITMENT" shall have the meaning set forth in
Section 2.1(a).
"STARTUP FRANCHISEE LOAN" shall mean the aggregate Advances made to a
Startup Franchisee Borrower under its Startup Franchisee Loan Commitment.
"STARTUP FRANCHISEE LOAN AGREEMENT" shall mean a Line of Credit and
Security Agreement setting forth the terms and conditions, as between a Startup
Franchisee Borrower and the Servicer, under which the Servicer has established a
Startup Franchisee Loan Commitment to make Advances to the Startup Franchisee
Borrower, substantially in the form of Exhibit E, with such changes as the
Sponsor and the Servicer shall agree to, subject to Section 3.1(b); provided,
however, that any Startup Franchisee Loan Agreement executed prior to the
Effective Date shall be substantially in the form required under the Existing
Loan Facility Agreement.
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"STARTUP FRANCHISEE LOAN COMMITMENT" shall mean a commitment to make
Startup Franchisee Loans extended to a Startup Franchisee Borrower pursuant to a
Startup Franchisee Loan Agreement.
"STARTUP FRANCHISEE MASTER NOTE" shall mean that certain Master Note,
executed by a Startup Franchisee Borrower in favor of the Servicer, evidencing
such Startup Franchisee Borrower's obligation to repay all Advances made to it
pursuant to a Startup Franchisee Loan Commitment, substantially in the form of
Exhibit A to the Startup Franchisee Loan Agreement, with such changes as the
Sponsor and the Servicer shall agree to, subject to Section 3.1(b); provided,
however, that any Startup Franchisee Master Note executed prior to the Effective
Date shall be substantially in the form required under the Existing Facility
Agreement.
"STORE OPENING INFORMATION SHEET" shall have the meaning assigned to
such term in the Servicing Agreement.
"SUBORDINATED DEBT" shall have the meaning set forth in Section 10.7.
"SUBSIDIARY" shall mean, with respect to any Person (the "PARENT"), any
corporation, partnership, joint venture, limited liability company, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, partnership, joint venture, limited liability company,
association or other entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power, or in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, by the parent or one
or more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent. Unless otherwise indicated, all references to "Subsidiary"
hereunder shall mean a Subsidiary of the Sponsor.
"SWING LINE ADVANCES" shall have the meaning set forth in Section 2.3.
"SYNTHETIC LEASE DOCUMENTS" shall mean, collectively, the Master
Agreement, dated as of September 30, 1996, among the Sponsor, SunTrust Banks,
Inc., as lessor (the "Lessor"), SunTrust Bank and SouthTrust Bank of Georgia,
N.A., as lenders, and SunTrust Bank, as agent, the Lease Agreement, dated as of
September 30, 1996, between the Lessor and the Sponsor and any supplements
thereto, the Construction Agency Agreement, dated as of September 30, 1996,
among the Lessor and the Sponsor, the Guaranty, dated as of September 30, 1996,
executed by the Sponsor in favor of the Funding Parties (as defined therein),
and any and all Security Agreements and Assignments (Construction Contract,
Architect's Agreement, Permits, Licenses and Governmental Approvals, and Plans
and Specifications and Drawings) executed from time to time by the Sponsor in
favor of the Lessor, and any modifications of or replacements for any or all of
the foregoing.
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"TAXES" shall mean any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TOTAL ADJUSTED DEBT TO TOTAL ADJUSTED CAPITAL RATIO" shall mean, at
any date of determination, the ratio of (a) Consolidated Total Adjusted Debt as
of such date to (b) Consolidated Total Adjusted Capital as of such date.
"TOTAL DEBT TO EBITDA RATIO" shall mean, at any date of determination,
the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated
EBITDA for the four consecutive fiscal quarters of the Sponsor ending on such
date.
"TRANSACTION DOCUMENTS" shall mean, collectively, the Operative
Documents and the Revolving Credit Documents.
"UNMATURED CREDIT EVENT" shall mean any condition or event which, with
notice or the passage of time or both, would constitute a Credit Event.
"WIND-DOWN EVENT" shall mean the event that the Commitments are not
extended for any reason and the Commitment Termination Date occurs.
"WITHDRAWAL LIABILITY" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.2. ACCOUNTING TERMS AND DETERMINATION. Unless
otherwise defined or specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with GAAP as in effect from time to time, applied on a basis
consistent with the most recent audited consolidated financial statement of the
Sponsor delivered pursuant to Section 6.1(a); provided, that if the Sponsor
notifies the Servicer that the Sponsor wishes to amend any covenant in Article
VII to eliminate the effect of any change in GAAP on the operation of such
covenant (or if the Servicer notifies the Sponsor that the Required Participants
wish to amend Article VII for such purpose), then the Sponsor's compliance with
such covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner satisfactory to the Sponsor
and the Required Participants.
SECTION 1.3. Other Definitional Terms. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article, Section, Schedule, Exhibit and like references are
to this Agreement unless otherwise specified.
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SECTION 1.4. Exhibits and Schedules. All Exhibits and
Schedules attached hereto are by reference made a part hereof.
ARTICLE II
LOAN FACILITY
SECTION 2.1. Establishment of Commitments; Terms of Loans.
(a) Startup Franchisee Commitment. Subject to and upon the
terms and conditions set forth in this Agreement and the other Operative
Documents, and in reliance upon the guaranty and other obligations of the
Sponsor set forth herein, the Servicer hereby establishes a commitment to the
Sponsor to establish Startup Franchisee Loan Commitments and to make Advances
thereunder to such Startup Franchisee Borrowers as may be designated by the
Sponsor in its Funding Approval Notices during a period commencing on the date
hereof and ending on March 29, 2002 (as such period may be extended for one or
more subsequent 364-day periods pursuant to Section 2.8, the "COMMITMENT
TERMINATION DATE") in an aggregate committed amount at any one time outstanding
not to exceed NINETY MILLION AND NO/100 DOLLARS ($90,000,000) (the "STARTUP
FRANCHISEE COMMITMENT"); provided that, notwithstanding any provision of this
Agreement to the contrary, at no time shall the sum of aggregate committed
amounts of all Loan Commitments outstanding pursuant to the Commitments, or,
following the termination of any such Loan Commitment, Advances outstanding
thereunder, exceed the Maximum Commitment Amount.
(b) Established Franchisee Commitment. Subject to and upon the
terms and conditions set forth in this Agreement and the other Operative
Documents, and in reliance upon the guaranty and other obligations of the
Sponsor set forth herein, the Servicer hereby establishes a commitment to the
Sponsor to establish Established Franchisee Loan Commitments and to make
Advances thereunder to such Established Franchisees as may be designated by the
Sponsor in its Funding Approval Notices during a period commencing on the date
hereof and ending on the Commitment Termination Date in an aggregate committed
amount at any one time outstanding not to exceed NINETY MILLION AND NO/100
DOLLARS ($90,000,000) (the "ESTABLISHED FRANCHISEE COMMITMENT"); provided that,
notwithstanding any provision of this Agreement to the contrary, at no time
shall the sum of aggregate committed amounts of all Loan Commitments outstanding
pursuant to the Commitments, or, following the termination of any such Loan
Commitment, Advances outstanding thereunder, exceed the Maximum Commitment
Amount.
(c) Authorization of Loan Commitments Pursuant to Startup
Franchisee Commitment; Loan Terms. Within the limits of the Startup Franchisee
Commitment and in accordance with the procedures set forth in this Agreement and
the Servicing Agreement, the
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Sponsor may authorize the Servicer to establish a Startup Franchisee Loan
Commitment pursuant to the Startup Franchisee Commitment in favor of a
Franchisee who meets the credit criteria established by the Sponsor. The amount
of each Startup Franchisee Loan Commitment shall be determined by the Sponsor
but shall not be less than $100,000 for any Franchisee. Pursuant to the Startup
Franchisee Loan Commitment, the Servicer shall agree to make Advances to the
Startup Franchisee Borrower thereunder. Each Startup Franchisee Loan shall bear
interest at the Borrower Rate designated by Sponsor in the applicable Funding
Approval Notice, and interest shall be payable on each Payment Date and on the
Maturity Date of such Startup Franchisee Loan when all principal and interest
shall be due and payable in full. Each Startup Franchisee Loan may be prepaid in
full or in part on any Business Day, without premium or penalty. The Loan Term
of each Startup Franchisee Loan Commitment shall be, initially, one year, but
shall automatically renew unless terminated by ninety (90) days' prior written
notice by Servicer to the Startup Franchisee Borrower prior to the first
anniversary date and may thereafter be terminated at any time by Servicer upon
ninety (90) days' prior written notice by Servicer to the Startup Franchisee
Borrower; provided that the amounts outstanding thereunder shall be allowed to
term out over the Amortization Period as provided below. The proceeds of each
Advance made pursuant to the Startup Franchisee Loan Commitments shall be used
solely to purchase inventory, and to the extent permitted by Sponsor, to pay
state sales and use taxes and freight charges. At the end of each month, the
aggregate Advances (other than Electronic Equipment Advances) made to each
Startup Franchisee Borrower during such month (net of any prepayments during
such month other than Electronic Equipment Asset Disposition proceeds to the
extent applied to offset Electronic Equipment Advances as provided below) shall
be amortized (in accordance with a straight-line amortization schedule) over the
Amortization Period. At the end of the month, the aggregate Electronic Equipment
Advances made to each Startup Franchisee Borrower during such month (net of
proceeds of Electronic Equipment Asset Dispositions received during such month)
shall be amortized (in accordance with a straight-line amortization schedule)
over the Amortization Period. In the event that the Startup Franchisee Loan
Commitment of any Startup Franchisee Borrower is terminated by the Servicer as
provided above, such Startup Franchisee Borrower shall, notwithstanding the
other provisions of this Section 2.1(c), amortize all outstanding Advances over
the Amortization Period (in accordance with a straight-line amortization
schedule), with all Electronic Equipment Advances due and payable in full no
later than 18 months after termination. In the event that the Startup Franchisee
Borrower terminates the Startup Franchisee Loan Commitment, all amounts advanced
to such Startup Franchisee Borrower shall be due and payable in full on the
termination date, together with all accrued and unpaid interest thereon. Each
Startup Franchisee Borrower shall agree to pay a commitment fee on its unused
Startup Franchisee Loan Commitment in an amount to be determined by the Sponsor
but in any event not to exceed 1.00% per annum, such commitment fee to be paid
quarterly, in arrears.
(d) Authorization of Loan Commitments Pursuant to Established
Franchisee Commitment; Loan Terms. Within the limits of the Established
Franchisee Commitment and in accordance with the procedures set forth in this
Agreement and the Servicing Agreement, the Sponsor may authorize the Servicer to
establish an Established Franchisee Loan Commitment
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pursuant to the Established Franchisee Commitment in favor of an Established
Franchisee who meets the credit criteria established by the Sponsor. The amount
of each Established Franchisee Loan Commitment shall be determined by the
Sponsor, but shall not be less than $100,000. Pursuant to the Established
Franchisee Loan Commitment, the Servicer shall agree to make Advances to the
Established Franchisee Borrower thereunder. Each Established Franchisee Loan
shall bear interest at the Borrower Rate designated by Sponsor in the applicable
Funding Approval Notice, and interest shall be payable on each Payment Date and
on the Maturity Date of such Established Franchisee Loan when all principal and
interest shall be due and payable in full. Each Established Franchisee Loan may
be prepaid in full or in part on any Business Day, without premium or penalty.
The Loan Term of each Established Franchisee Loan shall not exceed four years.
The proceeds of each Advance made pursuant to the Established Franchisee Loan
Commitments shall be used for general corporate purposes. Each Established
Franchisee Borrower shall agree to pay a commitment fee on the unused
Established Franchisee Loan Commitment in an amount to be determined by the
Sponsor but in any event not to exceed 1.00% per annum, such commitment fee to
be paid quarterly, in arrears. At no time, except as otherwise provided in the
form of Established Franchisee Loan Agreement, shall the aggregate outstanding
principal amount of any and all Established Franchisee Loans made to any
Borrower exceed the Established Franchisee Borrowing Base of such Borrower as in
effect at such time.
(e) Conditions to Obligation of Servicer to Establish Loan
Commitments. Servicer's obligation to establish each Loan Commitment under the
Operative Documents is subject to the fulfillment of the following conditions as
of the Closing Date of such Loan:
(i) this Agreement and each of the other Operative Documents
shall be in full force and effect;
(ii) the representations and warranties of the Sponsor
contained in Article 5 shall be true and correct in all material
respects with the same effect as though such representations and
warranties had been made on the Closing Date of such Loan;
(iii) the Servicer shall have received from the Sponsor a
Funding Approval Notice authorizing such Loan Commitment and a Store
Opening Information Sheet;
(iv) all conditions precedent to the Loan Commitment
specified in the Servicing Agreement, together with such additional
conditions precedent as may, at Sponsor's election, be included in the
applicable Funding Approval Notice, shall have been completed to the
Servicer's reasonable satisfaction; and
(v) no Credit Event, Unmatured Credit Event, Change of
Control or Wind-Down Event shall have occurred and be continuing.
SECTION 2.2. Conveyance of Participant's Interest.
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(a) The Servicer hereby sells, assigns, transfers and conveys
to the Participants, without recourse or warranty, and each Participant hereby
purchases from the Servicer, an undivided percentage ownership interest (which
percentage shall be equal to each Participant's Pro Rata Share) in (i) the
Commitments, (ii) the Loan Commitments, including, without limitation, the
Existing Loan Commitments, (iii) the Loans, including, without limitation, the
Existing Loans, (iv) the Collateral, (v) all rights against any guarantor of any
Loan, including the Sponsor, (vi) the Loan Documents, (vii) all rights pursuant
to the Guaranty Agreement and (viii) all right, title and interest to any
payment or right to receive payment with respect to the foregoing (collectively,
the "PARTICIPANT'S INTEREST"). Notwithstanding the foregoing, each Participant's
right to receive payments of interest, commitments fees or other fees with
respect to the Commitment, the Loan Commitments and the Loans shall not exceed
the amounts which such Participant is entitled to receive pursuant to the terms
of this Agreement.
(b) In consideration of the entry by each Participant into
this Agreement and the obligation of each Participant hereunder, the Servicer
shall issue to each Participant on the Closing Date, a Participation
Certificate. Each Participation Certificate shall be in an amount equal to the
relevant Participant's Participating Commitment Amount, and the Funded
Participant's Interest outstanding thereunder shall bear interest as hereinafter
set forth and shall be payable as hereinafter set forth.
(c) In accordance with the terms and conditions hereof, and in
consideration of the sale of the Participant's Interest to such Participant,
each Participant severally agrees from time to time, during the period
commencing on the Effective Date and ending on the Final Termination Date, to
fund its Pro Rata Share of outstanding Loans made by the Servicer to the
Borrowers in accordance with the terms hereof in an aggregate amount at any one
outstanding not to exceed such Participant's Participating Commitment Amount
(subject to each Participant's obligations pursuant to Section 2.3(d)).
SECTION 2.3. Funding of Advances; Swing Line; Funding of
Participant's Interest in Loans.
(a) Funding of Advances. The Servicer shall fund Advances
requested by the Borrowers in accordance with the terms of the applicable Loan
Documents and the Servicing Agreement. On the date of any such funding, the
Servicer shall elect whether or not to require the Participants to fund their
respective Pro Rata Share of the Advances to be made on such date. In the event
that the Servicer elects not to require the Participants to fund their Pro Rata
Share of the Advances to be made on such date, the Servicer shall make such
Advances (each, a "SWING LINE ADVANCE") to the Borrowers for the account of the
Servicer; provided that the aggregate amount of Swing Line Advances outstanding
on any date shall not exceed $8,000,000 and further provided the sum of (x) the
aggregate outstanding Swing Line Advances plus (y) the aggregate outstanding
Funded Participant's Interests (exclusive of the Swing Line Advances) shall not
exceed the Maximum Commitment Amount. If (i) any Credit Event, Change of Control
or Wind-Down Event shall have occurred, (ii) after giving effect to any
requested Advance, the
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aggregate Swing Line Advances outstanding hereunder would exceed $8,000,000, or
(iii) the Servicer otherwise determines in its sole discretion to request a
Participant Funding hereunder, then the Servicer shall notify the Participants
pursuant to subsection (b) requesting a Participant Funding.
(b) Notification of Participant Funding. In the event that the
Servicer desires that the Participants fund their respective Pro Rata Shares of
Advances or Loans made or outstanding pursuant to the Loan Documents, the
Servicer shall deliver written or telecopy notice to the Participants (or
telephonic notice promptly confirmed in writing or by telecopy) (a "PARTICIPANT
FUNDING REQUEST") by no later than 10:00 a.m. (Atlanta, Georgia time) on the
date which is the requested date of the Participant Funding which shall specify
(x) the date of the Participant Funding, which shall be a Business Day, and (y)
each Participant's Pro Rata Share of the Advances or Loans outstanding to be
funded in connection with such Participant Funding.
(c) Each Participant shall make available its Pro Rata Share
of the requested Participant Funding on the proposed date thereof by wire
transfer of immediately available funds to the Servicer in Atlanta, Georgia by
not later than 2:00 P.M. (Atlanta, Georgia time). Unless the Servicer shall have
received notice from a Participant prior to the date of any Participant Funding
that such Participant will not make available to the Servicer such Participant's
Pro Rata Share of such Participant Funding, the Servicer may assume that the
Participant has made such portion available to the Servicer on the date of such
Participant Funding in accordance with this subsection (c) and the Servicer may,
in reliance on such assumption, make available to the Borrowers a corresponding
amount or credit the same to Swing Line Advances. If and to the extent that such
Participant shall not have made such portion available to the Servicer, such
Participant and the Sponsor shall severally agree to repay the Servicer
forthwith (on demand in the case of the Participant and within three (3) days of
such demand in the case of the Sponsor), without duplication, such amount with
interest at the Federal Funds Rate plus 2% per annum and, until such time as
such Participant has repaid to the Servicer such amount, such Participant shall
(i) have no right to vote regarding any issue on which voting is required or
advisable under this Agreement or the other Operative Documents, and (ii) shall
not be entitled to receive any payments of interest, fees or repayment of the
principal amount of such Advance or Loan which the Participant has failed to pay
to the Servicer. If such Participant shall repay to the Servicer such amount,
then such amount shall constitute part of such Participant's Funded
Participant's Interest.
(d) Each Participant's obligations to fund its Pro Rata Share
of any requested Participant Funding shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any setoff, counterclaim, recoupment, defense, or other right which such
Participant may have against the Servicer, the Sponsor, any Borrower or any
other Person for any reason whatsoever, (ii) the occurrence of any Credit Event,
Unmatured Credit Event, Change of Control or Wind-Down Event, (iii) the
occurrence of any Loan Default or any other "event of default" under any Loan
Documents, (iv) any adverse change in the
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condition (financial or otherwise) of the Sponsor, any other Credit Party or any
Borrower, (v) the acceleration or maturity of any Loan or the Sponsor's
obligations hereunder or the termination of the Commitments, Loan Commitments or
the Participating Commitments after the making of any Swing Line Advance, (vi)
any breach of this Agreement by the Sponsor or any other Participant, or (vii)
any other circumstance, happening or event whatsoever, whether or not similar to
any of the foregoing.
(e) Notwithstanding the foregoing provisions of this Section
2.3, no Participant shall be required to fund its Pro Rata Share of any
requested Participant Funding for purposes of refunding a Swing Line Advance
pursuant to subsection (d) above if a Loan Default with respect to the relevant
Loan has occurred and is continuing and, prior to the making by the Servicer of
such Swing Line Advance, the Servicer had received written notice from Sponsor,
the relevant Borrower or any Participant specifying that such Loan Default had
occurred and was continuing (and identifying the same as a Loan Default, as the
case may be) which has not been cured or waived; provided that, in the case of a
Loan Default arising from an Unmatured Credit Event or Credit Event where the
Participants are not pursuing remedies, the Participants will be obligated to
fund their respective Pro Rata Shares of Swing Line Advances.
SECTION 2.4. Commitment Fees.
(a) Each Participant will receive, from amounts paid by the
Borrowers under the Loan Documents and the Sponsor under the Operative
Documents, a commitment fee (the "COMMITMENT FEE") equal to the average daily
amount of its Participant's Unused Commitment for the period commencing on the
Effective Date and ending on the Final Termination Date, or such earlier date as
the Participating Commitment shall expire or terminate, multiplied by the
Applicable Percentage per annum, such Commitment Fee to be payable in arrears on
each third Payment Date (a "QUARTERLY DATE"), commencing on March 31, 2001, for
the preceding Payment Period, calculated on the basis of a 360-day year and the
actual number of days elapsed.
(b) All Commitment Fees shall be paid on the dates due, in
immediately available funds, to the Participants by the Servicer from amounts
received from the Borrowers and Sponsor.
(c) In the event that the commitment fees received by the
Servicer from the Borrowers and the Sponsor are not sufficient on any Quarterly
Date to pay the Commitment Fees to the Participants required pursuant hereto,
the Sponsor shall, upon demand of the Servicer, immediately fund such difference
to the Servicer (with such payment allocated to specific Loan Payment Defaults
as agreed by Sponsor and Servicer, if applicable) and either, at the election of
the Sponsor, (x) the Sponsor shall be reimbursed by the Servicer upon receipt of
such amount from a Borrower, (y) the Loan Indebtedness shall be deemed to be
reduced by such amount for purposes of a repayment or purchase of such Defaulted
Loan by Sponsor in accordance with the terms of this Agreement or (z) if elected
by Sponsor and if such amount is sufficient to cure any
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Loan Payment Default such amount shall be deemed to have satisfied Sponsor's
obligation to cure such Loan Payment Default hereunder.
SECTION 2.5. Interest on Funded Participant's Interest.
(a) Funded Startup Franchisee Participant's Interest. Subject
to the provisions of Section 2.6, each Participant's Funded Startup Franchisee
Participant's Interest shall bear interest (computed on the basis of the actual
number of days elapsed over a year of 360 days) at rate per annum equal to the
Adjusted LIBO Rate for the Payment Period in which such Funded Startup
Franchisee Participant's Interest is outstanding (with the Adjusted LIBO Rate
applicable to all amounts outstanding during any Payment Period being
automatically reset on the first day of each Payment Period regardless of the
date of any Participant Funding hereunder) plus the Applicable Startup Margin
then in effect.
(b) Funded Established Franchisee Participant's Interest.
Subject to the provisions of Section 2.6, each Participant's Funded Established
Franchisee Participant's Interest shall bear interest (computed on the basis of
the actual number of days elapsed over a year of 360 days) at rate per annum
equal to the Adjusted LIBO Rate for the Payment Period in which such Funded
Established Franchisee Participant's Interest is outstanding (with the Adjusted
LIBO Rate applicable to all amounts outstanding during any Payment Period being
automatically reset on the first day of each Payment Period regardless of the
date of any Participant Funding hereunder) plus the Applicable Established
Margin then in effect.
(c) Payment of Interest. Interest on each Participant's Funded
Participant's Interest shall be payable by the Servicer to the Participants on
each Payment Date from interest payments received on the Loans under such
Facility on such Payment Date for the preceding Payment Period and from other
amounts received from the Sponsor.
(d) Sponsor's Obligation. In the event that the interest
received by the Servicer from the Borrowers on any Payment Date is not
sufficient to pay the interest to the Participants required pursuant hereto, the
Sponsor shall, upon demand of the Servicer, immediately fund such difference to
the Servicer (with such payment allocated to specific Loan Payment Defaults as
agreed by Sponsor and Servicer) and if such shortfall results from Loan Payment
Defaults rather than interest rate variances, either, at the election of the
Sponsor, (x) the Sponsor shall be reimbursed by the Servicer upon receipt of
such amount from the applicable Borrower, (y) the Loan Indebtedness of such
Borrower shall be deemed to be reduced by such amount for purposes of a
repayment or purchase of such Defaulted Loan by Sponsor in accordance with the
terms of this Agreement or (z) if elected by Sponsor and if such amount is
sufficient to cure any Loan Payment Default, such amount shall be deemed to have
satisfied Sponsor's obligation to cure such Loan Payment Default hereunder.
(e) In the event that LIBOR is not determinable by the Bank or
it becomes impossible or illegal for the Bank to determine the Funded
Participants Interest based upon LIBOR, the parties agree that in such event the
Funded Participants Interest shall bear interest at
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a rate per annum equal to the Prime Rate plus a mutually agreed upon spread
based upon current market conditions.
SECTION 2.6. Default Interest. If any amount payable to the
Servicer or the Participants by the Sponsor under the Operative Documents is not
paid on the date due hereunder, such amount shall bear interest (to the extent
permitted by law) for each day from such date up to (but not including) the date
of actual payment (after as well as before judgment) at a rate per annum
(computed on the basis of the actual number of days elapsed over a year of 360
days) equal to the rate set forth in Section 2.5 for each Facility plus an
additional two percent (2.0%) per annum.
SECTION 2.7. Voluntary Reduction of the Unutilized Commitment.
Upon at least three (3) Business Days' prior telephonic notice (promptly
confirmed in writing) to the Servicer, Sponsor shall have the right, without
premium or penalty, to terminate the Commitments, in part or in whole, provided
that (i) any such termination shall apply to proportionately and permanently
reduce each Facility, (ii) any such termination shall apply to proportionately
and permanently reduce the Participating Commitments of each of the
Participants, (ii) any partial termination pursuant to this Section 2.7 shall be
in an amount of at least $5,000,000 and integral multiples of $1,000,000, and
(iii) the Commitments may not be reduced if, as a result thereof, the amount of
either Facility is less than the aggregate sum of all outstanding Loan
Commitments pursuant to such Facility.
SECTION 2.8. Extension of Commitments.
(a) The Sponsor may, by written notice to the Servicer (which
shall promptly deliver a copy to each of the Participants), given not more than
sixty (60) days prior to any anniversary of the date of this Agreement while the
Commitments are effect, request that the Participants extend the then scheduled
Commitment Termination Date (the "EXISTING DATE") for an additional 364-day
period. Each Participant shall, by notice to the Sponsor and the Servicer given
within fifteen (15) Business Days after receipt of such request, advise the
Sponsor and the Servicer whether or not such Participant consents to the
extension request (and any Participant which does not respond during such 15-day
period shall be deemed to have advised the Sponsor and the Servicer that it will
not agree to such extension).
(b) In the event that, on the 15th Business Day after receipt
of the notice delivered pursuant to subsection (a) above, all of the
Participants shall have agreed to extend their respective Participating
Commitments, the Commitment Termination Date shall be deemed to have been
extended, effective as of the Existing Date, to the date which is 364 days
thereafter.
(c) In the event that, on the 15th Business Day after receipt
of the notice delivered pursuant to subsection (a) above, all of the
Participants shall not have agreed to extend their respective Participating
Commitments, the Sponsor and the Servicer shall notify the consenting
Participants ("CONSENTING PARTICIPANTS") of the aggregate Participating
Commitment Amounts of the non-extending Participants ("NON-CONSENTING
PARTICIPANTS") and such
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Consenting Participants shall, by notice to the Sponsor and the Servicer given
within ten (10) Business Days after receipt of such notice, advise the Servicer
and Sponsor whether or not such Participant wishes to purchase all or a portion
of the Participating Commitments of the Non-Consenting Participants (and any
Participant which does not respond during such 10-Business Day period shall be
deemed to have rejected such offer). In the event that more than one Consenting
Participant agrees to purchase all or a portion of such Participating
Commitments, the Sponsor and the Servicer shall allocate such Participating
Commitments among such Consenting Participants so as to preserve, to the extent
possible, the relative pro rata shares of the Consenting Participants of the
Participating Commitments prior to such extension request. If Consenting
Participants do not elect to assume all of the Participating Commitments of the
Non-Consenting Participants, the Sponsor shall have the right, subject to the
terms and conditions of Section 15.6, to arrange for one or more banks (any such
bank being called a "NEW PARTICIPANT") to purchase the Participating Commitment
of any Non-Consenting Participant. Each Non-Consenting Participant shall assign
its Participating Commitment and its Participant's Interest outstanding
hereunder to the Consenting Participant or New Participant purchasing such
Participating Commitment in accordance with Section 15.6, in return for payment
in full of all principal, interest and other amounts owing to such
Non-Consenting Participant hereunder, on or before the Existing Date and, as of
the effective date of such assignment, shall no longer be a party hereto,
provided that each New Participant shall be subject to the approval of the
Servicer (which approval shall not be unreasonably withheld). If (and only if)
Participants (including New Participants) holding Participating Commitments
representing at least an amount equal to the greater of (x) the sum of all
outstanding Loan Commitments under both Facilities and (y) 66 2/3 % of the
aggregate Participating Commitments on the date of such extension request shall
have agreed to such extension by the Existing Date (the "Continuing
Participants"), then (i) the Commitment Termination Date shall be extended for
an additional 364-day period and (ii) the Participating Commitment of any
Non-Consenting Participant which has not been assigned to a Consenting
Participant or a New Participant shall terminate (with the result that the
amount of the Commitments shall be decreased proportionately by the amount of
such Participating Commitment), and all amounts owing to such Non-Consenting
Participant, together with all interest accrued thereon and all other amounts
owed to such Non-Consenting Participant hereunder, shall be reallocated to the
remaining Participating Commitments on the Existing Date applicable to such
Participant without giving effect to any extension of the Commitment Termination
Date.
SECTION 2.9. Wind-Down Events.
(a) In the event a Wind Down Event occurs, then (x) the
Sponsor shall not have the right to request that any further Loan Commitments be
established, and (y) the Servicer shall, within a reasonable period of time and
in any event no later than thirty (30) days after the Commitment Termination
Date, give notice to each of the Startup Franchisee Borrowers terminating the
Startup Franchisee Loan Commitments as of the date which is ninety (90) days
after delivery of such notice, subject, in each case, to the right of the
Startup Franchisee Borrowers to term out the amounts outstanding under their
Loan Commitments as set forth in
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Section 2.1(c); provided, however, that the occurrence of such Wind-Down Event
shall not affect the obligation of (i) the Servicer to make Advances pursuant to
existing Startup Franchisee Loan Commitments, except to the extent that the
Startup Franchisee Loan Commitments are terminated pursuant to clause (y) above,
(ii) the Participants to fund their Participant's Interest as provided herein,
except to the extent that the Startup Franchisee Loan Commitments are terminated
pursuant to clause (y) above or (iii) the Credit Parties under the Operative
Documents.
(b) In the event that a Wind Down Event occurs, then the
Sponsor shall not have the right to request that any further Established
Franchisee Loan Commitments be established; provided, however, that the
occurrence of such Wind-Down Event shall not affect the obligation of (x) the
Servicer to make Advances pursuant to existing Established Franchisee Loan
Commitments, (y) the Participants to fund their Participant's Interest as
provided herein, or (z) the Credit Parties under the Operative Documents.
SECTION 2.10. Reserve Requirements; Change in Circumstances;
Change in Lending Offices.
(a) Notwithstanding any other provision herein, if, by reason
of (i) after the date hereof, the introduction of or any change (including any
change by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority or
quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law), any reserve
(including any imposed by the Federal Reserve Board), special deposit or similar
requirement (including a reserve, special deposit or similar requirement that
takes the form of a tax) against assets of, deposits with or for the account of,
or credit extended by, any Participant's office through which it funds its
obligations hereunder shall be imposed or deemed applicable or any other
condition affecting its obligation to make or maintain its Funded Participant's
Interest at a rate based upon the Adjusted LIBO Rate shall be imposed on any
Participant or its office through which it funds its obligations hereunder or
the interbank Eurodollar market; and as a result thereof there shall be any
increase in the cost to such Participant of agreeing to make or making, funding
or maintaining funds its obligations hereunder (except to the extent already
included in the determination of the applicable Adjusted LIBO Rate), or there
shall be a reduction in the amount received or receivable by that Participant or
its office through which it funds its obligations hereunder, then the Sponsor
shall from time to time, upon written notice from and demand by the Participant
(with a copy of such notice and demand to the Servicer), pay to the Servicer for
the account of that Participant within five Business Days after the date
specified in such notice and demand, additional amounts sufficient to indemnify
that Participant against such increased cost. A certificate as to the amount of
such increased cost submitted to the Sponsor and the Servicer by that
Participant, shall, except for manifest error, be final, conclusive and binding
for all purposes.
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(b) If while the Commitments or any Loan Commitments are
outstanding, any Participant (including any the Servicer) determines that the
adoption of any law, rule or regulation regarding capital adequacy or capital
maintenance, or any change in any of the foregoing or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Participant (or any lending office of such Participant) or any
Participant's holding company with any request or directive regarding capital
adequacy or capital maintenance (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the effect
of reducing the rate of return on such Participant's capital or on the capital
of such Participant's holding company, if any, as a consequence of this
Agreement, the Loan Documents or the purchases made by such Participant pursuant
hereto to a level below that which such Participant or such Participant's
holding company could have achieved but for such adoption, change or compliance
(taking into consideration such Participant's policies and the policies of such
Participant's holding company with respect to capital adequacy) by an amount
reasonably deemed by such Participant to be material, then from time to time,
within 15 days after written demand by such Participant, the Sponsor pay to such
Participant such additional amount or amounts as will compensate such
Participant or such Participant's holding company for such reduction. A
certificate as to the amount of any such additional amount or amounts, submitted
to the Sponsor and the Servicer by such Participant, shall, except for manifest
error, be final, conclusive and binding for all purposes.
(c) Each Participant agrees that, if requested by the Sponsor,
it will use reasonable efforts (subject to overall policy considerations of such
Participant) to designate an alternate lending office with respect to any of its
Funded Participant's Interest affected by the matters or circumstances described
above to reduce the liability of the Sponsor or avoid the results provided
thereunder, so long as such designation is not disadvantageous to such
Participant as determined by such Participant, which determination if made in
good faith, shall be conclusive and binding on all parties hereto. Nothing in
this Section 2.10(c) shall affect or postpone any of the obligations of the
Sponsor or any right of any Participant provided hereunder.
SECTION 2.11. Pro Rata Treatment. Subject to the application
of payments pursuant to Article 3 and except as specifically provided therein,
each payment of principal of any Funded Participant's Interest, each payment of
interest with respect to the Funded Participant's Interest, each payment of the
Commitment Fees and each reduction of the Commitments shall be allocated pro
rata among the Participants in accordance with their respective applicable Pro
Rata Share of the applicable Facility or Commitments, as appropriate. Each
Participant agrees that in computing such Participant's portion of any Funded
Participant's Interest to be made hereunder, the Servicer may, in its
discretion, round each Participant's percentage of such Participant Funding
Request to the next higher or lower whole dollar amount.
SECTION 2.12. Payments.
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(a) The Sponsor shall make each payment required to be made by
Sponsor hereunder and under any other Operative Document to any Participant or
the Servicer not later than 1:00 p.m. (Atlanta, Georgia time), on the date when
due in dollars to the Servicer at its offices in Atlanta, Georgia in immediately
available funds.
(b) Whenever any payment hereunder or under any other
Operative Document shall become due, or otherwise would occur, on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest or Commitment Fees, if applicable.
SECTION 2.13. Sharing of Setoffs. Each Participant agrees that
if it shall, in accordance with applicable law, through the exercise of a right
of banker's lien, setoff or counterclaim against the Sponsor or any Borrower, or
pursuant to a secured claim under Section 506 or Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by the Participant under any applicable bankruptcy, insolvency
or other similar law or otherwise, or by any other means, obtain payment
(voluntary or involuntary) in respect of any Funded Participant's Interest under
this Agreement as a result of which the unpaid principal portion of its Funded
Participant's Interest shall be proportionately less than the unpaid principal
portion of the Funded Participant's Interest of any other Participant, it shall
be deemed simultaneously to have purchased from such other Participant at face
value, and shall promptly pay to such other Participant the purchase price for,
a participation in the Funded Participant's Interest of such other Participant,
so that the aggregate unpaid principal amount of the Funded Participant's
Interest and participations in Funded Participant's Interests held by each
Participant shall be in the same proportion to the aggregate unpaid principal
amount of all Funded Participant's Interests then outstanding as the principal
amount of its Purchases prior to such exercise of banker's lien, setoff or
counterclaim or other event was to the principal amount of all Funded
Participant's Interests outstanding prior to such exercise of banker's lien,
setoff or counterclaim or other event; provided, however, that, if any such
purchase or purchases or adjustments shall be made pursuant to this Section and
the payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Servicer and each Participant hereby further agrees that any set-off amount
received with respect to any Borrower, the Sponsor or any Guarantor shall first
be applied to amounts outstanding under the Franchisee Loan Program prior to
application to any other obligations of any such Person to the Servicer or such
Participant. The Sponsor expressly consents to the foregoing arrangements and
agrees, to the extent permitted by applicable law, that any Participant holding
a Funded Participant's Interest or a participation in a Funded Participant's
Interest deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Sponsor to such Participant by reason thereof.
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ARTICLE III
SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS
SECTION 3.1. Servicer's Obligations with Respect to Loans;
Collateral; Non-Recourse.
(a) The Servicer shall, for itself and the benefit of all of
the Participants and the Sponsor, (i) document, close, manage, administer and
collect the Loans in accordance with the terms of this Agreement and the
Servicing Agreement and exercise all discretionary powers involved in such
management, administration and collection and (ii) shall distribute the funds
received with respect to the Loans and from the Sponsor in accordance with the
terms of this Agreement. The Servicer agrees that it will exercise the same care
in administering the Loans as it exercises with respect to loans of similar size
and type and in accordance with the terms of the Servicing Agreement and Section
10.13 hereto.
(b) The forms of Loan Agreement and Master Note used by the
Servicer as documentation for each Loan on and after the Effective Date shall be
substantially in the forms attached hereto. The Sponsor shall have the right to
direct the Servicer to make modifications to such forms and amendments thereto
from time but the Sponsor may not direct the Servicer to revise or amend such
forms so as to be inconsistent with the terms of Section 2.1 (c) and (d).
(c) Notwithstanding anything in this Agreement to the
contrary, each of the Participants acknowledges and agrees that the Servicer
shall have no obligation to the Participants with respect to the obtaining or
retention of any guaranties required by the Sponsor (other than to distribute
any proceeds therefrom in accordance with the terms of this Article 3). The
Participants acknowledge and agree that the Sponsor has the right to release or
modify the terms of, or not require, any Personal Guaranty or any Spousal
Consent.
(d) In addition, each of the Participants acknowledges and
agrees that the obligations of the Servicer with respect to the Collateral shall
be expressly limited to the filing of financing statements (but not fixture
filings) in the locations indicated in the applicable Funding Approval Notice
for each Borrower and filing continuation statements with respect thereto and
taking enforcement action in accordance with Section 10.13 hereto.
(e) Each of the Participants acknowledges and agrees that all
payments made to the Participants pursuant to this Agreement by the Servicer
shall be made solely from amounts received from the Sponsor, the Borrowers and
other obligors or Collateral under the applicable Loan Documents and the
Servicer shall have no personal liability for any amounts payable to the
Participants hereunder. Each of the Participants acknowledges and agrees that
the Servicer shall be relying solely upon the Sponsor for purposes of
calculating and ensuring compliance by Established Franchisee Borrowers with the
Established Franchisee Borrowing Base for each Established Franchisee Loan.
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(f) Each of the Participants acknowledges and agrees that any
payments of delinquent payment fees received from the Borrowers pursuant to the
Loan Agreements shall be for the sole account of the Sponsor and that the
Participants shall have no right to receive such payments unless a Credit Event
has occurred and is continuing; provided that, with respect to any payments
received from a Borrower, such payments shall be first applied to pay all
accrued but unpaid interest and principal and other fees due and owing from such
Borrower before application of such payment to any delinquent payment fees.
(g) Each Participant hereby acknowledges and agrees that the
Servicer has no ability to halt an ACH transfer upon the inputting of such
transfer request by Sponsor from the Aaron's Proprietary System into the ACH
system (other than the ability to retrieve ACH transfers which are sent to the
wrong party or otherwise manifestly erroneous as provided in the ACH Agreement
with Sponsor), and Sponsor hereby accepts full responsibility for any
overadvance created by such inputting of information and shall indemnify the
Servicer and the Participants therefor as provided herein.
SECTION 3.2. Application of Payments.
(a) The Servicer and the Sponsor shall instruct each Borrower
to make payments with respect to Loans and the Loan Commitments directly to the
Servicer, either by mail, wire transfer or debit pursuant to an ACH
Authorization.
(b) On each Quarterly Date, all payments of Commitment Fees
shall be distributed by the Servicer to the Participants pro rata in accordance
with Section 2.4, with any remainder to be applied as set forth in the Servicing
Agreement.
(c) On each Payment Date, all payments of interest received by
the Servicer from the Borrowers under each Facility and from the Sponsor
pursuant to its guaranty of each Facility contained herein with respect to the
Loans and not previously distributed by the Servicer, shall be applied to pay
all accrued but unpaid interest on the Funded Participant's Interest under the
applicable Facility pursuant to this Agreement, then to pay all accrued but
unpaid Servicing Fees and then to pay the Sponsor's Fee, in accordance with the
terms of the Servicing Agreement and Fee Letter.
(d) On any Business Day on which the Servicer shall receive
any payment in respect of the principal amount of any Loan, whether from a
Borrower, the Sponsor pursuant to its guaranty contained herein, or any other
obligor with respect thereto, the Servicer may elect, in its sole discretion to
(i) apply such principal payment to fund any requested Advances, (ii) apply such
amount to repay any outstanding Swing Line Advances, or (iii) to either (x)
distribute such amount to the Participants to reduce each Participant's Funded
Participant's Interest under such Facility or (y) apply such amount to
SunTrust's Funded Participant's Interest under such Facility only (with the
understanding that the Funded Participant's Interest of each Participant shall
not be deemed to have been repaid until such amount is actually received by such
Participant); provided that, in the event that the Servicer elects to apply any
repayment to reduce SunTrust's
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Funded Participant's Interest without a corresponding reduction of the other
Participant's Funded Participant's Interest, SunTrust shall be obligated to make
a payment to each Participant equal to such Participant's Pro Rata Share of such
payment upon the earlier of (i) the next Payment Date and (ii) the occurrence of
a Credit Event hereunder.
(e) If during any period when no Credit Event has occurred and
is continuing, amounts received by Servicer are not capable of being allocated
to any specific Loan or, in the case of amounts allocable to a specific Loan,
are not sufficient to repay all obligations then due and owing with respect
thereto, such amounts shall be applied by the Servicer as follows: (i) first, to
the payment of Commitment Fees owing to the Participants hereunder, (ii) second,
to the payment of accrued interest on the Funded Participant's Interest
hereunder, pro rata between the two Facilities, (iii) third, to the payment of
the Servicing Fees owing under the Servicing Agreement, (iv) fourth, to the
repayment of the Funded Participant's Interests outstanding hereunder pro rata
between the two Facilities, (v) fifth, to the payment of all other amounts owing
to the Servicer or any Participant hereunder, and (vi) sixth, if all obligations
of the Sponsor pursuant to the Operative Documents have been satisfied in full,
to the Sponsor.
(f) During any period when a Credit Event has occurred and is
continuing, any amounts received by Servicer with respect to the Loans shall be
applied, after deduction of any expenses incurred in the collection of any such
amounts, as follows (i) first, to the payment of any accrued and unpaid
Servicing Fee, (ii) second, to each Participant in accordance with Pro Rata
Share, and (iii) thereafter, to such Persons as may be legally entitled thereto.
(g) If not sooner repaid, all amounts due and payable to the
Servicer and the Participants under the Operative Documents shall be due and
payable in full on the Final Termination Date.
SECTION 3.3. Monthly Servicing Report. On each Payment Date,
the Servicer shall telecopy to the Sponsor and each Participant a servicing
report in the form of Exhibit F (the "MONTHLY SERVICING REPORT") setting forth
the following information with respect the Loans:
(a) the aggregate principal balance of the Loans under each
Facility as of the close of business on the last day of the preceding Payment
Period and on such Payment Date;
(b) the aggregate amount of Loans repurchased by the Sponsor
or amounts collected with respect to the Collateral for the Loans with respect
to each Facility since the last Payment Date;
(c) the aggregate Loan Commitments under each Facility as of
the close of business on the last Business Day of the preceding Payment Period
and on such Payment Date; and
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(d) each Loan which is past due (including the past due amount
and the number of days past due) under each Facility.
ARTICLE IV
LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND
SECTION 4.1. Notice Of Loan Default. The Servicer shall notify
the Sponsor and the relevant Borrower of a Loan Payment Default within fifteen
(15) Business Days following the occurrence thereof and of any other Loan
Default of which the Servicer has actual knowledge in accordance with the terms
of the Servicing Agreement.
SECTION 4.2. Waiver or Cure By The Sponsor of Covenant
Defaults and Loan Payment Defaults.
(a) Unless a Credit Event or an Unmatured Credit Event has
occurred and is continuing, the Sponsor shall be entitled (but not obligated) to
request that the Servicer waive any default by the Borrower or any Guarantor
under the Loan Documents to which it is a party, other than a Loan Default or a
default arising based upon the action or inaction of the Sponsor or any of its
Subsidiaries, by sending to the Servicer for execution a Default Waiver Letter,
which Servicer agrees to execute and mail to the appropriate Borrower if such
Default Waiver Letter is in form and substance satisfactory to the Servicer.
(b) Notwithstanding the foregoing clause (a), unless a Credit
Event or an Unmatured Credit Event has occurred and is continuing, the Sponsor
shall be entitled (but not obligated) to request that the Servicer waive any
Loan Payment Default (including a Loan Payment Default resulting from the
failure of a Borrower to remain in compliance with the borrowing base
requirements of the applicable Established Franchisee Loan Agreement) by sending
to the Servicer for execution a Default Waiver Letter, which Servicer agrees to
execute and mail to the appropriate Borrower if such Default Waiver Letter is in
form and substance satisfactory to the Servicer, curing such Loan Payment
Default in full; provided, however, that (i) Sponsor shall not waive and cure
more than two (2) consecutive Loan Payment Defaults for any Loan nor more than a
total of four (4) Loan Payment Defaults in any four year period for any Loan and
(ii) such Loan Payment Default must be cured by Sponsor, and the Default Waiver
Letter for such Loan Payment Default received by Servicer, during the Response
Period for such Loan.
SECTION 4.3. Obligations of Sponsor With Respect to
Established Franchisee Loans.
(a) If Sponsor does not waive and cure any Loan Payment
Default with respect to any Established Franchisee Loan during the Response
Period, then Sponsor must use its reasonable efforts to exercise its rights
pursuant to the applicable Franchise Agreement with such Defaulted Borrower to
assume the operation of the stores of such Defaulted Borrower during the five
(5) Business Day Response Period, and during any period that Sponsor operates
the stores of
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any Defaulted Borrower, Sponsor shall make all payments due and owing to the
Servicer pursuant to the applicable Operative Documents.
(b) If the Sponsor assumes operation of the stores of any such
Defaulted Borrower pursuant to paragraph (a) above, the Sponsor will use its
reasonable efforts to locate a purchaser for such stores. In the event that the
Sponsor has not resold the franchise and inventory of such Defaulted Borrower
within the extended Response Period in accordance with the terms of the
applicable Franchise Agreement for a purchase price equal to or in excess of the
Minimum Purchase Price (which amount shall be paid directly to the Servicer in
return for the assignment to the Sponsor of the Defaulted Loan, the related Loan
Commitment and the Liens of the Servicer thereon, and applied by the Servicer to
the Sponsor's purchase of the outstanding Loan Indebtedness of such Defaulted
Loan and related Loan Commitment, with any deficiency recovered pursuant to the
next paragraph), Sponsor shall purchase the outstanding Loan Indebtedness of
such Defaulted Loan and any related Loan Commitment from the Servicer for the
Minimum Purchase Price and any deficiency amount may be collected by the
Servicer, for the benefit of the Participants, pursuant to subsection (c) below.
(c) In the event that (i) during the initial Response Period
for any Established Franchisee Loan of a Defaulted Borrower, the Sponsor has not
waived or cured any Loan Payment Default, and has not assumed the operation of
the stores of the Defaulted Borrower, or (ii) the Sponsor has not resold the
franchise and inventory of the Defaulted Borrower during the extended Response
Period in accordance with the terms of the applicable Franchise Agreement, or
has resold the franchise and inventory for an amount less than the Minimum
Purchase Price, then the Sponsor will purchase, upon demand by the Servicer, the
Established Franchisee Loan and the related Loan Commitment of such Defaulted
Borrower for an amount equal to the outstanding Loan Indebtedness of the
Defaulted Loan pursuant to its guaranty set forth in Section 10.1, subject to
the limitations in Section 10.2.
(d) Notwithstanding the foregoing, to the extent that the
Sponsor is prohibited by applicable law, court order or other legal impediment
from exercising the options set forth in subsection (a) or (b) above, the
Servicer may, with the consent of the Required Participants and shall, upon the
written request of the Required Participants, require that the Sponsor promptly
purchase the Loan pursuant to subsection (c) above.
SECTION 4.4. Rights during Response Period. Unless a Credit
Event or an Unmatured Credit Event has occurred and is continuing, the Servicer
shall refrain during any Response Period from taking any legal action against
the Defaulted Borrower under the Defaulted Loan which is the subject of such
Response Period, and from accelerating payment of the Loan Indebtedness under
such Defaulted Loan but the Servicer shall cease funding any further Advances
pursuant to the Loan Commitment to such Defaulted Borrower. If the Sponsor
waives and cures any Loan Payment Default prior to the expiration of a Response
Period, then as to each Loan Payment Default so waived and cured, the Defaulted
Borrower's and the Servicer's respective rights and obligations under the Loan
Documents shall be restored to the same status
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as if such waived Loan Payment Default never occurred. In addition, if the
Sponsor takes over the operation of the business of an Established Franchisee
Borrower as provided in Section 4.3, the Servicer shall refrain from exercising
remedies against such Borrower for as long as the Sponsor is complying with
Section 4.3, unless a Credit Event has occurred and is continuing or the
Required Participants otherwise agree.
SECTION 4.5. Rights after Response Period and for Loan
Defaults other than Loan Payment Defaults. In the event that any Loan Default
other than a Loan Payment Default occurs and is continuing after the expiration
of the Response Period, or that any Loan Payment Default is not cured during the
applicable Response Period, (i) the Servicer shall have the right to (A) demand
that Sponsor comply with its obligations with respect to such Defaulted Loan set
forth in Article 10 and (B) administer and enforce such Loan as it deems
appropriate, without regard to any limitations or restrictions set forth herein
(but subject to Article 3 in all events) or in any other Operative Document, and
(ii) notwithstanding anything contained in this Article to the contrary, the
Sponsor shall, within five (5) Business Days of its receipt of a written demand
from the Servicer instructing it to do so, (A) purchase the Loan Indebtedness of
the Defaulted Loan and assume the Loan Commitment related thereto, subject to
the limitations in Section 10.2, or (B) at the request of the Servicer, made
either at its option or at the request of the Required Participants, exercise
any or all of the remedies set forth in Section 4.3 with respect to such
Defaulted Loan except to the extent prohibited by applicable law in the case of
the bankruptcy of the Defaulted Borrower. Notwithstanding any other provision of
the Operative Documents to the contrary, the repurchase by the Sponsor of any
Loan or Loan Commitment upon termination (or failure to renew) of the relevant
Borrower's Franchise Agreement by the Sponsor for any reason other than default
thereunder by such Borrower shall not be deemed to be a payment pursuant to
Article 10 and shall not reduce the Maximum Amount thereunder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Sponsor represents and warrants to the Servicer and each
Participant as follows:
SECTION 5.1. EXISTENCE; POWER. The Sponsor and each of its
Subsidiaries (i) is duly organized, validly existing and in good standing as a
corporation under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to carry on its business as now conducted, and
(iii) is duly qualified to do business, and is in good standing, in each
jurisdiction where such qualification is required, except where a failure to be
so qualified could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.2. ORGANIZATIONAL POWER; AUTHORIZATION. The
execution, delivery and performance by each Credit Party of the Transaction
Documents to which it is a party are within such Credit Party's organizational
powers and have been duly authorized by all necessary
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organizational, and if required, stockholder, action. This Agreement has been
duly executed and delivered by the Sponsor, and constitutes, and each other
Transaction Document to which any Credit Party is a party, when executed and
delivered by such Credit Party, will constitute, valid and binding obligations
of the Sponsor or such Credit Party (as the case may be), enforceable against it
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity.
SECTION 5.3. GOVERNMENTAL APPROVALS; NO CONFLICTS. The
execution, delivery and performance by the Sponsor of this Agreement, and by
each Credit Party of the other Transaction Documents to which it is a party (a)
do not require any consent or approval of, registration or filing with, or any
action by, any Governmental Authority, except those as have been obtained or
made and are in full force and effect or where the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect, (b) will not violate any applicable law or regulation
or the charter, by-laws or other organizational documents of the Sponsor or any
of its Subsidiaries or any judgment or order of any Governmental Authority
binding on the Sponsor or any of its Subsidiaries, (c) will not violate or
result in a default under any indenture, material agreement or other material
instrument binding on the Sponsor or any of its Subsidiaries or any of its
assets or give rise to a right thereunder to require any payment to be made by
the Sponsor or any of its Subsidiaries and (d) will not result in the creation
or imposition of any Lien on any asset of the Sponsor or any of its
Subsidiaries, except Liens (if any) created under the Operative Documents.
SECTION 5.4. FINANCIAL STATEMENTS. The Sponsor has furnished
to each Participant (i) the audited consolidated balance sheet of the Sponsor
and its Subsidiaries as of December 31, 1999, and the related consolidated
statements of income, shareholders' equity and cash flows for the fiscal year
then ended prepared by Ernst & Young and (ii) the unaudited consolidated balance
sheet of the Sponsor and its Subsidiaries as at the end of the September 30,
2000, and the related unaudited consolidated statements of income and cash flows
for the fiscal quarter and year-to-date period then ending, certified by a
Responsible Officer. Such financial statements fairly present the consolidated
financial condition of the Sponsor and its Subsidiaries as of such dates and the
consolidated results of operations for such periods in conformity with GAAP
consistently applied, subject to year end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii). Since
December 31, 1999, there have been no changes with respect to the Sponsor and
its Subsidiaries which have had or could reasonably be expected to have, singly
or in the aggregate, a Material Adverse Effect.
SECTION 5.5. LITIGATION AND ENVIRONMENTAL MATTERS.
(a) No litigation, investigation or proceeding of or before
any arbitrators or Governmental Authorities is pending against or, to the
knowledge of the Sponsor, threatened against or affecting the Sponsor or any of
its Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination that could reasonably be expected to have, either
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individually or in the aggregate, a Material Adverse Effect or (ii) which in any
manner draws into question the validity or enforceability of this Agreement or
any other Transaction Document.
(b) Except for the matters set forth on Schedule 5.5, neither
the Sponsor nor any of its Subsidiaries (i) has failed to comply in any material
respect with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability in excess of $500,000, (iii) has
received notice of any claim with respect to any Environmental Liability in
excess of $500,000 or (iv) knows of any basis for any Environmental Liability in
excess of $500,000.
SECTION 5.6. COMPLIANCE WITH LAWS AND AGREEMENTS. The Sponsor
and each Subsidiary is in compliance with (a) all applicable laws, rules,
regulations and orders of any Governmental Authority, and (b) all indentures,
agreements or other instruments binding upon it or its properties, except where
non-compliance, either singly or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.7. INVESTMENT COMPANY ACT, ETC. Neither the Sponsor
nor any of its Subsidiaries is (a) an "investment company", as defined in, or
subject to regulation under, the Investment Company Act of 1940, as amended, (b)
a "holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended or (c) otherwise subject to any
other regulatory scheme limiting its ability to incur debt.
SECTION 5.8. TAXES. The Sponsor and its Subsidiaries and each
other Person for whose taxes the Sponsor or any Subsidiary could become liable
have timely filed or caused to be filed all Federal income tax returns and all
other material tax returns that are required to be filed by them, and have paid
all taxes shown to be due and payable on such returns or on any assessments made
against it or its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority, except (i) to the
extent the failure to do so would not have a Material Adverse Effect or (ii)
where the same are currently being contested in good faith by appropriate
proceedings and for which the Sponsor or such Subsidiary, as the case may be,
has set aside on its books adequate reserves. The charges, accruals and reserves
on the books of the Sponsor and its Subsidiaries in respect of such taxes are
adequate, and no tax liabilities that could be materially in excess of the
amount so provided are anticipated.
SECTION 5.9. RESERVED
SECTION 5.10. ERISA. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such ERISA
Events for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than $1,000,000
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the fair market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $1,000,000 the fair market value of the assets of
all such underfunded Plans.
SECTION 5.11. OWNERSHIP OF PROPERTY.
(a) Each of the Sponsor and its Subsidiaries has good title
to, or valid leasehold interests in, all of its real and personal property
material to the operation of its business.
(b) Each of the Sponsor and its Subsidiaries owns, or is
licensed, or otherwise has the right, to use, all patents, trademarks, service
marks, tradenames, copyrights and other intellectual property material to its
business, and the use thereof by the Sponsor and its Subsidiaries does not
infringe on the rights of any other Person, except for any such infringements
that, individually or in the aggregate, would not have a Material Adverse
Effect.
SECTION 5.12. DISCLOSURE. The Sponsor has disclosed to the
Participants all agreements, instruments, and corporate or other restrictions to
which the Sponsor or any of its Subsidiaries is subject, and all other matters
known to any of them, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. Neither the Information
Memorandum nor any of the reports (including without limitation all reports that
the Sponsor is required to file with the Securities and Exchange Commission),
financial statements, certificates or other written information furnished by or
on behalf of the Sponsor to the Servicer or any Participant in connection with
the negotiation or syndication of this Agreement or any other Operative Document
or delivered hereunder or thereunder (as modified or supplemented by any other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, taken as a
whole, in light of the circumstances under which they were made, not misleading;
provided, that with respect to projected financial information, the Sponsor
represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time.
SECTION 5.13. LABOR RELATIONS. There are no strikes, lockouts
or other material labor disputes or grievances against the Sponsor or any of its
Subsidiaries, or, to the Sponsor's knowledge, threatened against or affecting
the Sponsor or any of its Subsidiaries, and no significant unfair labor
practice, charges or grievances are pending against the Sponsor or any of its
Subsidiaries, or to the Sponsor's knowledge, threatened against any of them
before any Governmental Authority. All payments due from the Sponsor or any of
its Subsidiaries pursuant to the provisions of any collective bargaining
agreement have been paid or accrued as a liability on the books of the Sponsor
or any such Subsidiary, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
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SECTION 5.14. SUBSIDIARIES. Schedule 5.14 sets forth the name
of, the ownership interest of the Sponsor in, the jurisdiction of incorporation
of, and the type of, each Subsidiary and identifies each Subsidiary that is a
Guarantor, in each case as of the Effective Date.
SECTION 5.15. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO
SPECIFIC LOANS. The Sponsor represents and warrants to the Servicer and each
Participant with respect to each Loan Commitment established and each Advance
made pursuant to the Operative Documents that:
(a) The Franchise Agreement, the Master Note, the Loan
Agreement and each other Loan Document executed in connection with such Loan
Commitment each constitutes a valid and binding agreement of each Borrower or
guarantor party thereto and is enforceable against each such party in accordance
with its terms.
(b) The Master Note and accompanying Loan Documents executed
in connection with such Loan and delivered to the Servicer are the only
contracts evidencing the transaction described therein and constitute the entire
agreement of the parties thereto with respect to such transaction and Sponsor
has not made any other promises, agreements or representations and warranties
with respect to the transactions evidenced by such Master Note.
(c) The Master Note and each accompanying Loan Document
executed in connection with such Loan is genuine and all signatures, names,
amounts and other facts and statements therein and thereon are true and correct.
(d) All disclosures required to be made under applicable
federal and state law in connection with such Loan have been properly and
completely made with respect to each Master Note, the other Loan Documents and
the Loan and each such Master Note, other Loan Documents and Loan is in full
compliance with all applicable federal and state laws, including without
limitation, applicable state and federal usury laws and regulations.
The proceeds of each Master Note will be solely for the purpose of financing the
acquisition and expansion of stores franchised by the Sponsor and operated by
the relevant Borrower, for the acquisition of inventory and equipment with
respect to the ongoing operations thereof, for Sponsor-approved payment of state
use tax and freight charges and, in the case of Established Franchisee
Borrowers, for Sponsor-approved working capital purposes, but excluding in all
cases any non-business purposes.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Sponsor covenants and agrees that it will, as long as
either of the Commitments is in effect or the Servicer is committed to make
Advances under any Loan
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Documents and thereafter so long as any Loans remain outstanding under this
Agreement or Sponsor has any other unsatisfied obligations under the Operative
Documents:
SECTION 6.1. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Sponsor will deliver to the Servicer and each Participant:
(a) as soon as available and in any event within 90 days after
the end of each fiscal year of Sponsor, a copy of the annual audited report for
such fiscal year for the Sponsor and its Subsidiaries, containing a consolidated
and unaudited consolidating balance sheet of the Sponsor and its Subsidiaries as
of the end of such fiscal year and the related consolidated and unaudited
consolidating statements of income, stockholders' equity and cash flows
(together with all footnotes thereto) of the Sponsor and its Subsidiaries for
such fiscal year, setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and reported on by Ernst &
Young or other independent public accountants of nationally recognized standing
(without a "going concern" or like qualification, exception or explanation and
without any qualification or exception as to scope of such audit) to the effect
that such financial statements present fairly in all material respects the
financial condition and the results of operations of the Sponsor and its
Subsidiaries for such fiscal year on a consolidated basis in accordance with
GAAP and that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with generally
accepted auditing standards;
(b) as soon as available and in any event within 45 days after
the end of each fiscal quarter of each fiscal year of the Sponsor (other than
the last fiscal quarter), an unaudited consolidated and consolidating balance
sheet of the Sponsor and its Subsidiaries as of the end of such fiscal quarter
and the related unaudited consolidated and consolidating statements of income
and cash flows of the Sponsor and its Subsidiaries for such fiscal quarter and
the then elapsed portion of such fiscal year, setting forth in each case in
comparative form the figures for the corresponding quarter and the corresponding
portion of Sponsor's previous fiscal year, all certified by the chief financial
officer, treasurer or controller of the Sponsor as presenting fairly in all
material respects the financial condition and results of operations of the
Sponsor and its Subsidiaries on a consolidated basis in accordance with GAAP,
subject to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, a certificate of a Responsible
Officer, (i) certifying as to whether there exists a Credit Event or an
Unmatured Credit Event on the date of such certificate, and if a Credit Event or
an Unmatured Credit Event then exists, specifying the details thereof and the
action which the Sponsor has taken or proposes to take with respect thereto,
(ii) setting forth in reasonable detail calculations demonstrating compliance
with Article VII and (iii) stating whether any change in GAAP or the application
thereof has occurred since the date of the Sponsor's audited financial
statements referred to in Section 5.4 and, if any change has occurred,
specifying the effect of such change on the financial statements accompanying
such certificate;
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(d) concurrently with the delivery of the financial
statements referred to in clause (a) above, a certificate of the accounting firm
that reported on such financial statements stating whether they obtained any
knowledge during the course of their examination of such financial statements of
any Credit Event or Unmatured Credit Event (which certificate may be limited to
the extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and other materials
filed with the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all functions of said Commission, or with any national
securities exchange, or distributed by the Sponsor to its shareholders
generally, as the case may be; and
(f) promptly following any request therefor, such other
information regarding the results of operations, business affairs and financial
condition of the Sponsor or any Subsidiary as the Servicer or any Participant
may reasonably request; and
(g) as soon as available and in any event within 30 days
after the end of each fiscal year of the Sponsor, a forecasted income statement,
balance sheet, and statement of cash flows for the following fiscal year.
SECTION 6.2. NOTICES OF MATERIAL EVENTS. The Sponsor will
furnish to the Servicer and each Participant prompt written notice of the
following:
(a) the occurrence of any Credit Event or Unmatured
Credit Event;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or, to
the knowledge of the Sponsor, affecting the Sponsor or any Subsidiary which, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;
(c) the occurrence of any event or any other development
by which the Sponsor or any of its Subsidiaries (i) fails to comply in any
material respect with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) becomes subject to any Environmental Liability in excess of $500,000, (iii)
receives notice of any claim with respect to any Environmental Liability in
excess of $500,000, or (iv) becomes aware of any basis for any Environmental
Liability in excess of $500,000 and in each of the preceding clauses, which
individually or in the aggregate, could reasonably be expected to result in a
Material Adverse Effect;
(d) the occurrence of any ERISA Event that alone, or
together with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Sponsor and its Subsidiaries in an
aggregate amount exceeding $1,000,000; and
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(e) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
(f) Each notice delivered under this Section shall be
accompanied by a written statement of a Responsible Officer setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 6.3. EXISTENCE; CONDUCT OF BUSINESS. The Sponsor will,
and will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and maintain in full force and effect its legal
existence and its respective rights, licenses, permits, privileges, franchises,
patents, copyrights, trademarks and trade names material to the conduct of its
business and will continue to engage in the same business as presently conducted
or such other businesses that are reasonably related thereto; provided, that
nothing in this Section shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 8.3.
SECTION 6.4. COMPLIANCE WITH LAWS, ETC. The Sponsor will, and
will cause each of its Subsidiaries to, comply with all laws, rules, regulations
and requirements of any Governmental Authority applicable to its properties,
except where the failure to do so, either individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 6.5. PAYMENT OF OBLIGATIONS. The Sponsor will, and
will cause each of its Subsidiaries to, pay and discharge at or before maturity,
all of its obligations and liabilities (including without limitation all tax
liabilities and claims that could result in a statutory Lien) before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Sponsor or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 6.6. BOOKS AND RECORDS. The Sponsor will, and will
cause each of its Subsidiaries to, keep proper books of record and account in
which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities to the extent necessary
to prepare the consolidated financial statements of Sponsor in conformity with
GAAP.
SECTION 6.7. VISITATION, INSPECTION, ETC.
(a) The Sponsor will, and will cause each of its
Subsidiaries to, permit any representative of the Servicer or any Participant,
to visit and inspect its properties, to examine its books and records and to
make copies and take extracts therefrom, and to discuss its affairs, finances
and accounts with any of its officers and with its independent certified public
accountants, all at such reasonable times and as often as the Servicer or any
Participant may reasonably request after reasonable prior notice to the Sponsor;
provided, however, if a Credit
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Event or Unmatured Credit Event has occurred and is continuing, no prior notice
shall be required. All reasonable expenses incurred by the Servicer and, at any
time after the occurrence and during the continuance of a Credit Event, any
Participants in connection with any such visit, inspection, audit, examination
and discussions shall be borne by the Sponsor.
SECTION 6.8. MAINTENANCE OF PROPERTIES; INSURANCE. The Sponsor
will, and will cause each of its Subsidiaries to, (a) keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear except where the failure to do so, either
individually or it the aggregate, could not reasonably be expected to result in
a Material Adverse Effect and (b) maintain with financially sound and reputable
insurance companies, insurance with respect to its properties and business, and
the properties and business of its Subsidiaries, against loss or damage of the
kinds customarily insured against by companies in the same or similar businesses
operating in the same or similar locations. In addition, and not in limitation
of the foregoing, the Sponsor shall maintain and keep in force insurance
coverage on its inventory, as is consistent with best industry practices. The
Sponsor shall at all times cause the Servicer to be named as additional insured
on all of its casualty and liability policies.
SECTION 6.9. USE OF PROCEEDS AND LETTERS OF CREDIT. The
Sponsor will use the proceeds of all Loans to finance working capital needs, to
refinance existing debt, to finance Permitted Acquisitions and for other general
corporate purposes of the Sponsor and its Subsidiaries. No part of the proceeds
of any Loan will be used, whether directly or indirectly, for any purpose that
would violate any rule or regulation of the Board of Governors of the Federal
Reserve System, including Regulations T, U or X. All Letters of Credit will be
used for general corporate purposes.
SECTION 6.10. ADDITIONAL SUBSIDIARIES.
(a) The Sponsor may, after the Effective Date, acquire or
form additional Domestic Subsidiaries so long as the Sponsor, within ten (10)
business days after any such Domestic Subsidiary is acquired or formed, (i)
notifies the Servicer and the Participants thereof and (ii) causes such Domestic
Subsidiary to become a Guarantor by executing agreements in the form of Annex I
to the Guaranty Agreement and Annex I to Indemnity and Contribution Agreement
and (iii) causes such Domestic Subsidiary to deliver simultaneously therewith
similar documents applicable to such Domestic Subsidiary described in Section
13.1 as reasonably requested by the Servicer.
(b) The Sponsor shall not acquire or form any additional
Foreign Subsidiaries; provided, however, that the Sponsor may acquire or form
additional Subsidiaries incorporated under the laws of Canada so long as the
Sponsor, within ten (10) business days after any such Foreign Subsidiary is
acquired or formed, (i) notifies the Servicer and the Participants thereof, (ii)
delivers stock certificates and related pledge agreements, in form satisfactory
to a collateral agent acceptable to the Servicer, evidencing the pledge of 66%
(or such greater percentage which would not result in material adverse tax
consequences) of the issued and outstanding capital stock entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding
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capital stock not entitled to vote (within the meaning of Treas. Reg. Section
1.956-2(c)(2)) of each such Subsidiary directly owned by the Sponsor or any
Domestic Subsidiary to secure the Guaranteed Obligations, (iii) causes such
Subsidiary to deliver simultaneously therewith similar documents applicable to
such Foreign Subsidiary described in Section 13.1 as reasonably requested by the
Servicer, and (iv) the Servicer enters into an intercreditor agreement, in form
and substance satisfactory to the Required Participants, with all other
creditors of the Sponsor having a similar covenant with the Sponsor.
ARTICLE VII
FINANCIAL COVENANTS
The Sponsor covenants and agrees that so long as either of the
Commitments remains outstanding or any Loans remain outstanding or the Sponsor
has any obligations under the Operative Documents, and until the full and final
payment of all indebtedness of all Borrowers incurred pursuant to the Loan
Documents and unless otherwise consented to in writing by the Required
Participants:
SECTION 7.1. TOTAL DEBT TO EBITDA RATIO. The Sponsor and its
Subsidiaries shall maintain, as of the last day of each fiscal quarter of the
Sponsor, commencing with the fiscal quarter ending March 31, 2001, a Total Debt
to EBITDA Ratio of not greater than 3.00:1.00.
SECTION 7.2. TOTAL ADJUSTED DEBT TO TOTAL ADJUSTED CAPITAL
RATIO. The Sponsor and its Subsidiaries shall maintain, as of the last day of
each fiscal quarter of the Sponsor, commencing with the fiscal quarter ending
March 31, 2001, a Total Adjusted Debt to Total Adjusted Capital Ratio of not
greater than 0.60:1.00.
SECTION 7.3. FIXED CHARGE COVERAGE RATIO. The Sponsor and its
Subsidiaries shall maintain, as of the last day of each fiscal quarter of the
Sponsor, commencing with the fiscal quarter ending March 31, 2001, a Fixed
Charge Coverage Ratio of not less than 2:00 to 1:00.
SECTION 7.4. MINIMUM CONSOLIDATED NET WORTH. The Sponsor and
its Subsidiaries shall maintain a Consolidated Net Worth of an amount equal to
the sum of (i) $187,675,200.00, plus (ii) 50% of cumulative positive
Consolidated Net Income accrued during each fiscal quarter ending thereafter,
since the end of such fiscal quarter of the Sponsor, commencing with the fiscal
quarter ending March 31, 2001, plus (iii) 100% of the net proceeds from any
public or private offering of common stock of the Sponsor after the Closing
Date, calculated quarterly on the last day of each fiscal quarter; provided,
that if Consolidated Net Income is negative in any fiscal quarter the amount
added for such fiscal quarter shall be zero and such negative Consolidated Net
Income shall not reduce the amount of Consolidated Net
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Income added from any previous fiscal quarter. Promptly upon the consummation of
any offering of common stock of the Sponsor, the Sponsor shall notify the
Servicer in writing of the amount of the proceeds thereof.
ARTICLE VIII
NEGATIVE COVENANTS
The Sponsor covenants and agrees that so long as either of the
Commitments remains outstanding or any Loans remain outstanding or the Sponsor
has any obligations under the Operative Documents, and until the full and final
payment of all indebtedness of all Borrowers incurred pursuant to the Loan
Documents and unless otherwise consented to in writing by the Required
Participants:
SECTION 8.1. INDEBTEDNESS. The Sponsor will not, and will not
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness created pursuant to the Operative
Documents;
(b) Indebtedness existing on the date hereof and set
forth on Schedule 8.1 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof
(immediately prior to giving effect to such extension, renewal or replacement)
or shorten the maturity or the weighted average life thereof;
(c) Indebtedness of the Sponsor or any Subsidiary
incurred after the Effective Date to finance the acquisition, construction or
improvement of any fixed or capital assets, including Capital Lease Obligations
and any Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition thereof;
provided, that such Indebtedness is incurred prior to or within 90 days after
such acquisition or the completion of such construction or improvements or
extensions, renewals, and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof (immediately prior to giving
effect to such extension, renewal or replacement) or shorten the maturity or the
weighted average life thereof; provided further, that the aggregate principal
amount of such Indebtedness does not exceed $5,000,000 at any time outstanding;
(d) Indebtedness of the Sponsor owing to any Credit Party
and of any Credit Party owing to the Sponsor or any other Credit Party;
(e) Guarantees by the Sponsor of Indebtedness of any
Credit Party and by any Credit Party of Indebtedness of the Sponsor or any other
Credit Party;
(f) Indebtedness under the Revolving Credit Agreement;
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(g) Indebtedness or contingent liability under the
Synthetic Lease Documents provided that the aggregate outstanding principal
amount of all such Indebtedness does not exceed $25,000,000 at any one time;
(h) Guarantees by the Sponsor of Indebtedness of certain
franchise operators of the Sponsor, provided such guarantees are given by the
Sponsor in connection with (1) loans made pursuant to the terms of this
Agreement, (2) loans made pursuant to the SouthTrust Loan Facility Agreement in
an aggregate principal amount not to exceed $5,000,000 and (3) loans made by
SunTrust Bank to finance the purchase of equity interests in certain franchises
of the Sponsor in an aggregate principal amount not to exceed $5,000,000;
(i) endorse negotiable instruments for collection in the
ordinary course of business;
(j) Guarantees by Sponsor of Indebtedness of Foreign
Subsidiaries, provided that the amount of such Guaranteed Indebtedness, together
with the principal amount any loans to Foreign Subsidiaries permitted to be made
under clause (l) below, does not exceed $10,000,000 at any time;
(k) Loans by Sponsor to its Foreign Subsidiaries,
provided that the amount of such loans, together with the amount of Guaranteed
Indebtedness permitted to be incurred under clause (k) above, does not exceed
$10,000,000 at any time; and
(l) other unsecured Indebtedness in an aggregate
principal amount not to exceed $10,000,000 at any time outstanding.
SECTION 8.2. NEGATIVE PLEDGE. The Sponsor will not, and will
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any Lien on any of its assets or property now owned or hereafter acquired or,
except:
(a) Permitted Encumbrances;
(b) any Liens on any property or asset of the Sponsor or
any Subsidiary existing on the Effective Date set forth on Schedule 8.2;
provided, that such Lien shall not apply to any other property or asset of the
Sponsor or any Subsidiary;
(c) purchase money Liens upon or in any fixed or capital
assets to secure the purchase price or the cost of construction or improvement
of such fixed or capital assets or to secure Indebtedness incurred solely for
the purpose of financing the acquisition, construction or improvement of such
fixed or capital assets (including Liens securing any Capital Lease
Obligations); provided, that (i) such Lien secures Indebtedness permitted by
Section 8.1(c), (ii) such Lien attaches to such asset concurrently or within 90
days after the acquisition, improvement or completion of the construction
thereof; (iii) such Lien does not extend to any other asset; and (iv) the
Indebtedness secured thereby does not exceed the cost of acquiring,
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constructing or improving such fixed or capital assets together with all
interest, fees and costs incurred in connection therewith;
(d) any Lien (i) existing on any asset of any Person at
the time such Person becomes a Subsidiary of the Sponsor, (ii) existing on any
asset of any Person at the time such Person is merged with or into the Sponsor
or any Subsidiary of the Sponsor or (iii) existing on any asset prior to the
acquisition thereof by the Sponsor or any Subsidiary of the Sponsor; provided,
that any such Lien was not created in the contemplation of any of the foregoing
and any such Lien secures only those obligations which it secures on the date
that such Person becomes a Subsidiary or the date of such merger or the date of
such acquisition;
(e) extensions, renewals, or replacements of any Lien
referred to in paragraphs (a) through (d) of this Section; provided, that the
principal amount of the Indebtedness secured thereby is not increased and that
any such extension, renewal or replacement is limited to the assets originally
encumbered thereby; and
(f) Liens granted under the Synthetic Lease Documents in
the real or personal property financed thereunder and in certain related rights
of the Sponsor to secure the Sponsor's indebtedness and liabilities under the
Synthetic Lease Documents to the extent permitted under Section 8.1;
(g) Liens securing the obligations of the Sponsor under
the Revolving Credit Agreement; and
(h) Liens on shares of stock of any Foreign Subsidiary to
the extent that the Guaranteed Obligations are secured pari passu with any other
Indebtedness or obligations secured thereby.
SECTION 8.3. FUNDAMENTAL CHANGES.
(a) The Sponsor will not, and will not permit any
Subsidiary to, merge into or consolidate into any other Person, or permit any
other Person to merge into or consolidate with it, or sell, lease, transfer or
otherwise dispose of (in a single transaction or a series of transactions) all
or substantially all of its assets (in each case, whether now owned or hereafter
acquired) or all or substantially all of the stock of any of its Subsidiaries
(in each case, whether now owned or hereafter acquired) or liquidate or
dissolve; provided, that if at the time thereof and immediately after giving
effect thereto, no Default or Event of Default shall have occurred and be
continuing (i) the Sponsor or any Subsidiary may merge with a Person if the
Sponsor (or such Subsidiary if the Sponsor is not a party to such merger) is the
surviving Person, (ii) any Subsidiary may merge into another Subsidiary or the
Sponsor; provided, however, that if the Sponsor is a party to such merger, the
Sponsor shall be the surviving Person, provided, further, that if any Subsidiary
to such merger is a Guarantor, the Guarantor shall be the surviving Person,
(iii) any Subsidiary may sell, transfer, lease or otherwise dispose of all or
substantially all of its assets to the Sponsor or to a Guarantor, (iv) Xxxxx
Rents Puerto Rico, Inc. may liquidate or
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dissolve into the Sponsor if the Sponsor determines in good faith that such
liquidation or dissolution is in the best interests of the Sponsor and is not
materially disadvantageous to the Participants, (v) any other Subsidiary may
liquidate or dissolve if the Sponsor determines in good faith that such
liquidation or dissolution is in the best interests of the Sponsor, is not
materially disadvantageous to the Participants, and such Subsidiary dissolves
into another Guarantor or the Sponsor; provided, that any such merger involving
a Person that is not a wholly-owned Subsidiary immediately prior to such merger
shall not be permitted unless also permitted by Section 8.4.
(b) The Sponsor will not, and will not permit any of its
Subsidiaries to, engage in any business other than businesses of the type
conducted by the Sponsor and its Subsidiaries on the date hereof and businesses
reasonably related thereto.
SECTION 8.4. INVESTMENTS, LOANS, ETC. The Sponsor will not,
and will not permit any of its Subsidiaries to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a wholly-owned
Subsidiary prior to such merger), any common stock, evidence of indebtedness or
other securities (including any option, warrant, or other right to acquire any
of the foregoing) of, make or permit to exist any loans or advances to, any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person (all of the foregoing being collectively called
"INVESTMENTS"), or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person that constitute a business unit,
or create or form any Subsidiary, except:
(a) Investments (other than Permitted Investments)
existing on the date hereof and set forth on Schedule 8.4 (including Investments
in Subsidiaries);
(b) Permitted Investments;
(c) Permitted Acquisitions;
(d) Investments made by the Sponsor in or to any other
Credit Party and by any other Credit Party to the Sponsor or in or to another
Credit Party;
(e) loans or advances to employees, officers, directors
or stockholders of the Sponsor or any Subsidiary in the ordinary course of
business; provided, however, that the aggregate amount of all such loans and
advances does not exceed $350,000 at any time;
(f) loans to franchise operators and owners of franchises
acquired or funded pursuant to this Agreement;
(g) acquire and own stock, obligations or securities
received in settlement of debts (created in the ordinary course of business)
owing to any Guarantor or any of their Subsidiaries;
(h) loans to Foreign Subsidiaries to the extent permitted
under Section 8.1;
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(i) loans to franchise operators to extent permitted
under Section 8.1; and
(j) other Investments not to exceed $500,000 at any time;
SECTION 8.5. RESTRICTED PAYMENTS. The Sponsor will not, and
will not permit its Subsidiaries to, declare or make, or agree to pay or make,
directly or indirectly, any dividend on any class of its stock, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, retirement, defeasance or other acquisition of,
any shares of common stock or Indebtedness subordinated to the Guaranteed
Obligations of the Sponsor or any options, warrants, or other rights to purchase
such common stock or such subordinated Indebtedness, whether now or hereafter
outstanding (each, a "RESTRICTED PAYMENT"), except for (i) dividends payable by
the Sponsor solely in shares of any class of its common stock, (ii) Restricted
Payments made by any Guarantor to the Sponsor or to another Guarantor and (iii)
so long as no Credit Event or Unmatured Credit Event has occurred and is
continuing at the time such dividend is paid or redemption or stock purchase is
made, dividends, distributions, redemptions and stock repurchases paid in cash
which do not exceed fifty percent (50%) of Consolidated Net Income of Sponsor
(if greater than $0) for the immediately preceding Fiscal Year; provided, that
if the aggregate amount of all such dividends and distributions paid in cash in
any Fiscal Year are less than the amount permitted by clause (iii) above, the
excess permitted amount for such year may be carried forward once to the next
succeeding Fiscal Year.
SECTION 8.6. SALE OF ASSETS. The Sponsor will not, and will
not permit any of its Subsidiaries to, convey, sell, lease, assign, transfer or
otherwise dispose of, any of its assets, business or property, whether now owned
or hereafter acquired, or, in the case of any Subsidiary, issue or sell any
shares of such Subsidiary's common stock to any Person other than the Sponsor or
a Guarantor (or to qualify directors if required by applicable law), except (a)
the sale or other disposition for fair market value of obsolete or worn out
property or other property not necessary for operations disposed of in the
ordinary course of business; (b) the sale of inventory and Permitted Investments
in the ordinary course of business, (c) sales and dispositions permitted under
Section 8.3(a) and (d), and (e) other sales of assets not to exceed $5,000,000
in book value in the aggregate.
SECTION 8.7. TRANSACTIONS WITH AFFILIATES. The Sponsor will
not, and will not permit any of its Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favorable to the Sponsor or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties,
(b) transactions between or among the Sponsor and its wholly-owned Subsidiaries
not involving any other Affiliates and (c) any Restricted Payment permitted by
Section 8.5.
SECTION 8.8. RESTRICTIVE AGREEMENTS. The Sponsor will not, and
will not permit any Subsidiary to, directly or indirectly, enter into, incur or
permit to exist any agreement that
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prohibits, restricts or imposes any condition upon (a) the ability of the
Sponsor or any Subsidiary to create, incur or permit any Lien upon any of its
assets or properties, whether now owned or hereafter acquired, or (b) the
ability of any Subsidiary to pay dividends or other distributions with respect
to its common stock, to make or repay loans or advances to the Sponsor or any
other Subsidiary, to Guarantee Indebtedness of the Sponsor or any other
Subsidiary or to transfer any of its property or assets to the Sponsor or any
Subsidiary of the Sponsor; provided, that (i) the foregoing shall not apply to
restrictions or conditions imposed by law or by this Agreement or any other
Transaction Document or the SouthTrust Loan Facility Agreement, (ii) the
foregoing shall not apply to customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is sold and such
sale is permitted hereunder, (iii) clause (a) shall not apply to restrictions or
conditions imposed by any agreement relating to secured Indebtedness permitted
by this Agreement if such restrictions and conditions apply only to the property
or assets securing such Indebtedness, and (iv) clause (a) shall not apply to
customary provisions in leases restricting the assignment thereof.
SECTION 8.9. SALE AND LEASEBACK TRANSACTIONS. The Sponsor will
not, and will not permit any of the Subsidiaries to, enter into any arrangement,
directly or indirectly, whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or hereinafter
acquired, and thereafter rent or lease such property or other property that it
intends to use for substantially the same purpose or purposes as the property
sold or transferred; provided, however, the Sponsor may engage in such sale and
leaseback transactions so long as the aggregate fair market value of all assets
sold and leased back does not exceed $30,000,000 during the term of this
Agreement.
SECTION 8.10. AMENDMENT TO MATERIAL DOCUMENTS. The Sponsor
will not, and will not permit any Subsidiary to, amend, modify or waive any of
its rights in a manner materially adverse to the Participants under its
certificate of incorporation, bylaws or other organizational documents.
SECTION 8.11. ACCOUNTING CHANGES. The Sponsor will not, and
will not permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Sponsor or of any Subsidiary, except to change the fiscal
year of a Subsidiary to conform its fiscal year to that of the Sponsor.
ARTICLE IX
CREDIT EVENTS AND REMEDIES
In the event that:
SECTION 9.1. the Sponsor shall fail to pay any amount due
hereunder; or
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SECTION 9.2. any representation or warranty made or deemed
made by or on behalf of the Sponsor or any Subsidiary in or in connection with
this Agreement or any other Operative Document (including the Schedules attached
thereto) and any amendments or modifications hereof or waivers hereunder, or in
any certificate, report, financial statement or other document submitted to the
Servicer or the Participants by any Credit Party or any representative of any
Credit Party pursuant to or in connection with this Agreement or any other
Operative Document shall prove to be incorrect in any material respect when made
or deemed made or submitted; or
SECTION 9.3. the Sponsor shall fail to observe or perform any
covenant or agreement contained in Sections 6.1, 6.2, 6.3 (solely with respect
to the Sponsor's existence) or Articles VII or VIII; or
SECTION 9.4. any Credit Party shall fail to observe or perform
any covenant or agreement contained in this Agreement (other than those referred
to in clauses 9.1, 9.2 and 9.3 above), and such failure shall remain unremedied
for 30 days after the earlier of (i) any officer of the Sponsor becomes aware of
such failure, or (ii) notice thereof shall have been given to the Sponsor by the
Servicer or any Participant; or
SECTION 9.5. any event of default (after giving effect to any
grace period) shall have occurred and be continuing under the Revolving Credit
Documents or, the SouthTrust Loan Facility Agreement, or all or any part of the
obligations due and owing under the Revolving Credit Agreement or the
obligations due and owing under the SouthTrust Loan Facility Agreement are
accelerated, is declared to be due and payable is required to be prepaid or
redeemed, in each case prior to the stated maturity thereof;
SECTION 9.6. the Sponsor or any Subsidiary (whether as primary
obligor or as guarantor or other surety) shall fail to pay any principal of or
premium or interest on any Material Indebtedness that is outstanding, when and
as the same shall become due and payable (whether at scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the agreement
or instrument evidencing such Indebtedness; or any other event shall occur or
condition shall exist under any agreement or instrument relating to such
Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and payable;
or required to be prepaid or redeemed (other than by a regularly scheduled
required prepayment or redemption), purchased or defeased, or any offer to
prepay, redeem, purchase or defease such Indebtedness shall be required to be
made, in each case prior to the stated maturity thereof; or
SECTION 9.7. the Sponsor or any Subsidiary shall (i) commence
a voluntary case or other proceeding or file any petition seeking liquidation,
reorganization or other relief under
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any federal, state or foreign bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a custodian, trustee,
receiver, liquidator or other similar official of it or any substantial part of
its property, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (i) of
this Section, (iii) apply for or consent to the appointment of a custodian,
trustee, receiver, liquidator or other similar official for the Sponsor or any
such [Material] Subsidiary or for a substantial part of its assets, (iv) file an
answer admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of creditors, or
(vi) take any action for the purpose of effecting any of the foregoing; or
SECTION 9.8. an involuntary proceeding shall be commenced or
an involuntary petition shall be filed seeking (i) liquidation, reorganization
or other relief in respect of the Sponsor or any Subsidiary or its debts, or any
substantial part of its assets, under any federal, state or foreign bankruptcy,
insolvency or other similar law now or hereafter in effect or (ii) the
appointment of a custodian, trustee, receiver, liquidator or other similar
official for the Sponsor or any Subsidiary or for a substantial part of its
assets, and in any such case, such proceeding or petition shall remain
undismissed for a period of 60 days or an order or decree approving or ordering
any of the foregoing shall be entered; or
SECTION 9.9. the Sponsor or any Subsidiary shall become unable
to pay, shall admit in writing its inability to pay, or shall fail to pay, its
debts as they become due; or
SECTION 9.10. an ERISA Event shall have occurred that when
taken together with other ERISA Events that have occurred, could reasonably be
expected to result in liability to the Sponsor and the Subsidiaries in an
aggregate amount exceeding $1,000,000 or otherwise having a Material Adverse
Effect; or
SECTION 9.11. any judgment or order for the payment of money
in excess of $1,000,000 in the aggregate shall be rendered against the Sponsor
or any Subsidiary, and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be a
period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
SECTION 9.12. any non-monetary judgment or order shall be
rendered against the Sponsor or any Subsidiary that could reasonably be expected
to have a Material Adverse Effect, and there shall be a period of 30 consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
SECTION 9.13. a Change in Control shall occur or exist; or
SECTION 9.14. any provision of any Guaranty Agreement shall
for any reason cease to be valid and binding on, or enforceable against, any
Guarantor, or any Guarantor shall so state in writing, or any Guarantor shall
seek to terminate its Guaranty Agreement; or
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SECTION 9.15. There shall exist or occur any event of default
as provided under the terms of any other Operative Document, or any Operative
Document ceases to be in full force and effect or the validity or enforceability
thereof is disaffirmed by or on behalf of Sponsor or any other Credit Party, or
at any time it is or becomes unlawful for Sponsor or any other Credit Party to
perform or comply with its obligations under any Operative Document, or the
obligations of Sponsor or any other Credit Party under any Operative Document
are not or cease to be legal, valid and binding on Sponsor or any such Credit
Party;
then upon the occurrence and during the continuation of any such event (each, a
"Credit Event"):
the Servicer may, with the consent of the Required Participants, and upon the
written request of the Required Participants, shall, take any or all of the
following actions, without prejudice to the rights of the Servicer or any
Participant to enforce its claims against Sponsor, any other Credit Party, any
Borrower or other obligor with respect to any Loan: (i) declare the Commitments
terminated, whereupon the Commitments shall terminate immediately and any unpaid
Commitment Fee shall forthwith become due and payable without any other notice
of any kind (with the express understanding that such termination of the
Commitments shall not result in a termination of the Participating Commitments
of each Participant or of the obligation of the Servicer to fund any Loan
Commitment); (ii) demand that the Sponsor purchase specified or all outstanding
Loans and Loan Commitments by paying to the Servicer the Loan Indebtedness of
each such Loan and assuming the Servicer's obligations under each Loan
Commitment, whereupon such amount shall become, forthwith due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Sponsor (with the express understanding the limitations
on Sponsor's guaranty obligations set forth in Article 10 shall not apply); and
(iii) take any other action and exercise any other remedy available by contract
or at law; provided, that, if a Credit Event specified in Sections 9.7, 9.8 or
9.9 shall occur, the result which would occur upon the giving of notice by the
Servicer to any Credit Party, shall occur automatically without the giving of
any such notice.
In addition, the Servicer may, with the consent of the Required Participants and
shall, upon the written request of the Required Participants, (A) to the extent
authorized to do so pursuant to the Established Franchisee Loan Agreements
(which authorization is limited to certain specified Credit Events), (x) cease
funding further Advances pursuant to the Established Franchisee Loan Commitments
and (y) declare all Loan Indebtedness outstanding pursuant to the Established
Franchisee Loan Commitments to be immediately due and payable in accordance with
the terms of the applicable Operative Documents and exercise all rights and
remedies provided under the Operative Documents, and (B) give notice to the
Startup Franchisee Borrowers that the Startup Franchisee Loan Commitments shall
be terminated upon the date which is ninety (90) days after receipt by each such
Startup Franchisee Borrower of such notice of termination, subject to such
Startup Franchisee Borrower's right to term out advances for the Amortization
Period.
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ARTICLE X
GUARANTY
In addition to its obligations upon the occurrence of a Credit Event or
a Change of Control and its other obligations pursuant to the Operative
Documents, the Sponsor hereby agrees as follows:
SECTION 10.1. Unconditional Guaranty. The Sponsor hereby
unconditionally and irrevocably guarantees to the Servicer, each Participant and
any transferee of the Participants, the full and prompt payment of all of the
Guaranteed Obligations relating to the Loans and all costs, charges and expenses
(including reasonable attorneys' fees) actually incurred or sustained by the
Servicer or any Participant in enforcing the obligations of the Sponsor
hereunder or the obligations of the Borrowers under the applicable Operative
Documents, subject to the limitations set forth in Section 10.2 below. If any
portion of the Loan Indebtedness with respect to any Defaulted Loan is not paid
by the date specified herein, Sponsor hereby agrees to and will immediately pay
the same, without resort by Servicer or any Participant to any other person or
party. The obligation of Sponsor to Servicer and the Participants hereunder is
primary, absolute and unconditional, except as may be specifically set forth
herein. This is a guaranty of payment and not of collection. The obligations of
the Sponsor pursuant to this Article 10 constitute a guarantee that is
continuing in nature.
The Servicer may, with the consent of the Required Participants and shall, upon
the written request of the Required Participants, in the event that the
obligations of the Sponsor with respect to a Defaulted Loan have arisen
hereunder, request that the Sponsor purchase the Defaulted Loan and related Loan
Commitment from the Servicer prior to the acceleration of the Defaulted Loan
pursuant to the terms of the applicable Operative Documents for an amount equal
to the Loan Indebtedness with respect to such Defaulted Loan, and Sponsor shall
promptly upon receipt of such request, but subject to Section 10.2 below,
purchase such Defaulted Loan and assume the Loan Commitment related thereto, and
such purchase by the Sponsor shall be deemed to be a payment hereunder in such
amount.
SECTION 10.2. Limitation on Guaranty of Loans. The obligation
of the Sponsor pursuant to this Article 10 with respect to the Loans and Loan
Commitments shall be limited, as of any date of determination, to an amount (the
"MAXIMUM AMOUNT") equal to the greater of (a) fifty percent (50%) of the
aggregate outstanding principal amount of the Loans on such date (after giving
effect to any payments, recoveries on Collateral or other recoveries made by the
Servicer or any Participant on such date with respect to the Loans), (b) three
(3) times the largest aggregate amount of all Loan Commitments (or if the Loan
Commitments have been terminated, all outstanding Loans) made to any Borrower
and its Borrower Group and (c) $25,000,000; provided that, the Maximum Amount
shall not on any date of determination exceed the aggregate outstanding Loan
Indebtedness of the Loans. As a material inducement to the Servicer's and each
Participant's entering into this Agreement, the parties hereto expressly agree
that the Maximum Amount shall be redetermined (and the obligation of the Sponsor
to pay such
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replenished Maximum Amount shall be enforceable by the Servicer and the
Participants hereunder) on each day that any Loan Indebtedness remains
outstanding pursuant to any Loan regardless of (i) any previous payments made by
the Sponsor hereunder on any prior date, whether or not constituting the Maximum
Amount payable on such prior date, or (ii) the number of prior demands made by
the Servicer or the Participants hereunder; provided that, for purposes of
calculating the Maximum Amount, (x) any Defaulted Loan for which a demand has
previously been made, or deemed to have been made, pursuant to this Section 10.2
shall not be deemed to be outstanding and (y) demand shall automatically be
deemed to have been made with respect to each Defaulted Loan on the date on
which the Servicer is authorized to make a demand on the Sponsor with respect to
such Defaulted Loan pursuant to Section 4.3 of this Agreement unless such Loan
Default arises solely from the occurrence of a Credit Event in which case demand
shall be deemed to be made only upon receipt of written request from the
Servicer. The foregoing limitation shall not in any way limit the obligation of
the Sponsor to purchase the Loans and assume the Loan Commitments relating
thereto upon the occurrence of a Credit Event without regard to any limitations
set forth in this Article 10.
SECTION 10.3. Continuing Guaranty. The obligations of the
Sponsor pursuant to this Article 10 constitute a guarantee which is continuing
in nature and shall be effective with respect to the full amount outstanding
under all Guaranteed Obligations, now existing or hereafter made or extended,
regardless of the amount, subject only to the limitations set forth in the
preceding Section 10.2.
SECTION 10.4. Waivers. The Sponsor hereby waives notice of
Servicer's and each Participant's acceptance of this Agreement and the creation,
extension or renewal of any Loans or other Guaranteed Obligations. Sponsor
hereby consents and agrees that, at any time or times, without notice to or
further approval from Sponsor, and without in any way affecting the obligations
of Sponsor hereunder, Servicer and the Participants may, with or without
consideration (i) release, compromise with, or agree not to xxx, in whole or in
part, any Borrower or any other obligor, guarantor, endorser or surety on any
Loans or any other Guaranteed Obligations, (ii) renew, extend, accelerate, or
increase or decrease the principal amount of any Loans or other Guaranteed
Obligations, either in whole or in part, (iii) amend, waive, or otherwise modify
any of the terms of any Loans or other Guaranteed Obligations or of any
mortgage, deed of trust, security agreement, or other undertaking of any of the
Borrowers or any other obligor, endorser, guarantor or surety in connection with
any Loans or other Guaranteed Obligations, and (iv) apply any payment received
from Borrowers or from any other obligor, guarantor, endorser or surety on the
Loans or other Guaranteed Obligations to any of the liabilities of Borrowers or
of such other obligor, guarantor, endorser, or surety which Servicer may choose,
subject, however, to the rights of Sponsor to bring a separate action for any
breach of the Operative Documents pursuant to Section 10.11.
SECTION 10.5. Additional Actions. Subject to Section 10.11,
Sponsor hereby consents and agrees that the Servicer may at any time or times,
either with or without consideration, surrender, release or receive any property
or other Collateral of any kind or nature
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whatsoever held by it or for its account securing any Loans or other Guaranteed
Obligations, or substitute any Collateral so held by Servicer for other
Collateral of like or different kind, without notice to or further consent from
Sponsor, and such surrender, receipt, release or substitution shall not in any
way affect the obligations of Sponsor hereunder. Subject to Section 10.11,
Servicer shall have full authority to adjust, compromise, and receive less than
the amount due upon any such Collateral, and may enter into any accord and
satisfaction agreement with respect to the same as Servicer may deem advisable
without affecting the obligations of Sponsor hereunder. Servicer shall be under
no duty to undertake to collect upon such Collateral or any part thereof, and
Sponsor's obligations hereunder shall not be affected by Servicer's alleged
negligence or mistake in judgment in handling, disposing of, obtaining, or
failing to collect upon or perfect a security interest in, any such Collateral.
SECTION 10.6. Additional Waivers. Sponsor hereby waives
presentment, demand, protest, and notice of dishonor of any of the liabilities
guaranteed hereby. Neither Servicer nor any Participant shall have any duty or
obligation (i) to proceed or exhaust any remedy against any Borrower, any other
obligor, guarantor, endorser, or surety on any Loans or other Guaranteed
Obligations, or any other security held by Servicer or any Participant for any
Loans or other Guaranteed Obligations, or (ii) to give any notice whatsoever to
Borrowers, Sponsor, or any other obligor, guarantor, endorser, or surety on any
Loans or other Guaranteed Obligations, before bringing suit, exercising rights
to any such security or instituting proceedings of any kind against Sponsor, any
Borrower, or any of them, and Sponsor hereby waives any requirement for such
actions by Servicer or any Participant. Upon default by any Borrower and
Servicer's demand to Sponsor hereunder, Sponsor shall be held and bound to
Servicer and each Participant directly as principal debtor in respect of the
payment of the amounts hereby guaranteed, such liability of Sponsor being joint
and several with each Borrower and all other obligors, guarantors, endorsers and
sureties on the Loans or other Guaranteed Obligations, subject, however, to the
rights of Sponsor to bring a separate action for any breach of the Operative
Documents pursuant to Section 10.11.
SECTION 10.7. Postponement of Obligations. Until the Loan and
other Guaranteed Obligations of any Borrower to the Servicer and the
Participants have been paid in full (i) all present and future indebtedness of
such Borrower to Sponsor (the "SUBORDINATED DEBT") is hereby postponed to the
present and future indebtedness of such Borrower to Servicer and each
Participant, and all monies received from such Borrower or for its account by
Sponsor with respect to such Subordinated Debt shall be received in trust for
Servicer and the Participants, and promptly upon receipt, shall be paid over to
Servicer for distribution to the Participants in accordance herewith until such
Borrower's indebtedness to Servicer and the Participants is fully paid and
satisfied, all without prejudice to and without in any way affecting the
obligations of Sponsor hereunder; provided that unless a Loan Default or Loan
Payment Default has occurred and is continuing, the Sponsor may accept and
retain any payments made by any Borrower to the Sponsor in the ordinary course
of business, and (ii) Sponsor shall not have any rights of subrogation or
otherwise to participate in any security held by the Servicer for any Loan to
such
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Borrower or any other Guaranteed Obligations arising therefrom, and Sponsor
hereby waives such rights until such time as such Loan and other Guaranteed
Obligations have been paid in full to the Servicer and each Participant (whether
by repurchase by the Sponsor, pursuant to this Article 10 or otherwise).
SECTION 10.8. Effect on Additional Guaranties. The obligations
of the Sponsor pursuant to this Article 10 are in addition to, and are not
intended to supersede or be a substitute for any other guarantee, suretyship
agreement, or instrument which Servicer may hold in connection with any Loans or
other Guaranteed Obligations.
SECTION 10.9. Reliance on Guaranty and Purchase Obligation;
Disclaimer of Liability Sponsor expressly acknowledges and agrees that each of
the Servicer and the Participants, in making its credit decision with regard to
the funding of the Loans, will rely solely upon the guaranty and purchase
obligation of Sponsor set forth above and that neither the Servicer nor any
Participant is under any obligation or duty to perform any credit analysis or
investigation with regard to the creditworthiness of any Borrower. In addition,
the Servicer expressly disclaims any responsibility or liability for the
authenticity of signatures on any of the Loan Documents (other than the
Servicer's), the authority of the Persons executing the Loan Documents (other
than the Servicer) or the enforceability or compliance with laws of any of the
Loan Documents.
SPONSOR EXPRESSLY ACKNOWLEDGES AND AGREES THAT SPONSOR'S GUARANTY
OBLIGATIONS TO PURCHASE LOANS UNDER THIS AGREEMENT ARE ABSOLUTE AND
UNCONDITIONAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
SPONSOR'S OBLIGATION SHALL NOT BE AFFECTED BY THE EXISTENCE OF ANY
DEFAULT BY ANY BORROWER UNDER THE APPLICABLE LOAN DOCUMENTS, ANY
EXCHANGE, RELEASE OR NONPERFECTION OF ANY LIEN WITH RESPECT TO ANY
COLLATERAL SECURING PAYMENT OF ANY LOAN, THE SUBSTITUTION OR RELEASE OF
ANY ENTITY PRIMARILY OR SECONDARILY LIABLE FOR ANY LOAN, ANY LACK OF
ENFORCEABILITY OF ANY LOAN DOCUMENT, ANY LAW, REGULATION, OR ORDER OF
ANY JURISDICTION AFFECTING ANY LOAN OR LOAN DOCUMENT OR THE RIGHTS OF
THE HOLDER THEREOF, ANY CHANGE IN THE CONDITION OR PROSPECTS OF THE
SPONSOR, INCLUDING WITHOUT LIMITATION, INSOLVENCY, BANKRUPTCY,
REORGANIZATION OR SIMILAR PROCEEDING, OR ANY OTHER CIRCUMSTANCE WHICH
MIGHT, BUT FOR THE PROVISIONS OF THIS PARAGRAPH, CONSTITUTE A LEGAL OR
EQUITABLE DISCHARGE OF SPONSOR'S OBLIGATIONS HEREUNDER. SPONSOR'S
OBLIGATIONS HEREUNDER SHALL NOT BE AFFECTED BY ANY SET-OFF OR CLAIM
WHICH IT MIGHT HAVE AGAINST THE SERVICER OR ANY PARTICIPANT, WHETHER
ARISING OUT OF THIS AGREEMENT OR OTHERWISE, BUT SUBJECT TO SECTION
10.12 BELOW.
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SECTION 10.10. Reinstatement of Obligations. The obligations
of the Sponsor pursuant to the Operative Documents shall continue to be
effective or be reinstated, as the case may be, if at any time payment or any
part thereof, of principal of, interest on or any other amount with respect to
any Loan or any obligation of Sponsor pursuant to the Operative Documents is
rescinded or must otherwise be restored by the Servicer or any Participant upon
the bankruptcy or reorganization of Sponsor, any Borrower or any guarantor or
otherwise.
SECTION 10.11. Right to Bring Separate Action. Nothing
contained in this Article 10 shall be construed to affect any other right that
Sponsor may otherwise have under this Agreement, or any Operative Document or
Loan Documents, at law or in equity to institute an action or assert a claim
against the Servicer or any Participant based upon a breach of Servicer's or
such Participant's obligations set forth in the Operative Documents or Loan
Documents or to assert a compulsory counterclaim with respect thereto and any
waiver of notice or other matter set forth in this Article 10 shall not affect
Sponsor's right to seek damages arising from the failure of the Servicer to give
such notice otherwise required by the terms of the Operative Documents or Loan
Documents.
SECTION 10.12. Subordination of Liens. The Sponsor hereby
subordinates the lien and priority of the Sponsor's existing and future liens
and other interests, if any, in and to the Collateral to the Servicer's existing
and future interest in the Collateral under the Loan Documents notwithstanding
the time of attachment of the interests of the Sponsor or the Servicer or the
time the Loan Indebtedness or the Subordinated Debt is incurred. Notwithstanding
anything to the contrary contained in this Agreement, under applicable law or
otherwise, in the event that the liens of the Servicer are at any time
unperfected with respect to any or all of the Collateral, the lack of perfection
by the Servicer as to any such Collateral shall not affect the validity,
enforceability or priority of any lien on the Collateral in favor of the
Sponsor. In any such event, the liens of the Sponsor shall have priority over
any and all other Liens in favor of any third party with respect to the
Collateral (including, but not limited to any trustee under the Bankruptcy Code)
and the Sponsor shall be, and is hereby constituted, as the Servicer's agent and
bailee for purposes of perfection of the Liens of the Servicer in the Collateral
such that the Lien in favor of the Sponsor shall be held by the Sponsor for the
benefit of the Servicer and the proceeds of any disposition of the Collateral of
any Borrower shall be and are in all respects subject to the priority of right
to payment and satisfaction of first, the Loan Indebtedness of such Borrower and
then, the Subordinated Debt with respect to such Borrower. The lien priorities
provided in this Section shall not be altered or otherwise affected by any
amendment, modification, supplement, extension, renewal, restatement or
refinancing of either the applicable Loan Indebtedness or the Subordinated Debt,
nor by any action or inaction which either the Servicer or the Borrowers may
take or fail to take in respect of the Collateral, except as otherwise provided
above in this subsection.
SECTION 10.13. Exercise of Remedies With Respect to
Collateral.
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(a) Until the Loan Indebtedness of any Borrower has been
fully and indefeasibly paid in cash, the Sponsor shall not, without the prior
written consent of the Servicer, ask, demand, assign, declare a default under,
xxx for, liquidate, sell, foreclose, set off, collect, accept a surrender,
petition, commence or otherwise initiate any bankruptcy action (or join any
other Person in so doing) against the Borrower or its assets or otherwise
realize or seek to realize upon all or any part of the Collateral without the
prior written consent of the Servicer or as expressly authorized hereunder. In
the event that following the occurrence of a Loan Default, the Servicer may from
time to time execute releases, partial releases, terminations, reconveyances,
subordinations or other documents releasing or otherwise limiting the Servicer's
interests in the Collateral in connection with the exercise of the Servicer's
remedies or the refinancing of the Defaulted Loan, the Sponsor agrees to execute
and deliver at such time such further documents as the Servicer may require to
effect a corresponding change to the Sponsor's position in the same Collateral.
(b) In the event that the Loan Indebtedness of any
Defaulted Loan is not repaid or repurchased by the Sponsor as set forth herein,
the Servicer, on behalf of the Participants, shall have the exclusive right to
exercise and enforce all privileges and rights with respect to the Collateral
according to the Servicer's discretion and the exercise of its business
judgment, including, without limitation, the exclusive right to take or retake
control or possession of such Collateral and to hold, prepare for sale, process,
sell, lease, dispose of, or liquidate such Collateral. (c) Only the Servicer,
acting on behalf of the Participants, shall have the right to restrict or
permit, or approve or disapprove, the sale, transfer or other disposition of
Collateral following the occurrence of a Loan Default where the Loan
Indebtedness is not repaid or repurchased by the Sponsor in accordance with the
terms hereof. In the event the Servicer releases its Liens on all or any part of
the Collateral, the Sponsor will, immediately upon the request of the Servicer,
release its Liens upon the same Collateral, but only to the extent such
Collateral is sold or otherwise disposed of by the Borrower with the consent of
the Servicer or in a commercially reasonable manner by the Servicer or its
agents. The Sponsor will immediately deliver such releases, acknowledgments and
other documents as the Servicer may require in connection therewith.
(d) (i) In exercising its rights pursuant to this Section
10.13, the Servicer agrees that it will not release Liens or Collateral or
commence enforcement actions under the Loan Documents without the direction of
the Required Participants. The Servicer agrees to administer the Loan Documents
and the Collateral and to make such demands and give such notices thereunder as
the Required Participants may request and to take such action to enforce the
Loan Documents and to realize upon, collect and dispose of the Collateral as the
Required Participants may direct. The Servicer shall not be required to take any
action that is, in its opinion, contrary to law or the terms of the Loan
Documents or the Operative Documents or that would, in the opinion of the
Servicer, subject it or any of its officers, employees, agents or directors to
liability and the Servicer shall not be required to take any action unless and
until it is
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indemnified to its satisfaction by the Participants for any loss, cost or
liability resulting from any required action.
(ii) The Servicer may at any time request directions from
the Required Participants as to any course of action or other matter relating
hereto or relating to any of the Loan Documents. Except as otherwise provided in
this Agreement, directions of the Required Participants shall be binding on all
Participants hereunder.
(iii) Nothing set forth in this Section 10.13 shall modify
the rights of the Servicer set forth in Section 3.1.
SECTION 10.14. Rights Of Sponsor Upon Payment; Cooperation By
Servicer. Upon receipt by the Servicer of payment in full of the Loan
Indebtedness of a Defaulted Loan by Sponsor, Sponsor shall be subrogated to the
rights of the Servicer with respect to the Loan and the Servicer shall be deemed
to have assigned to Sponsor, and Sponsor shall, to the extent permitted by
applicable law, automatically, immediately and without further action by any
Person, be entitled to, all rights and remedies that the Servicer may have had
against the Defaulted Borrower and any other Persons primarily or secondarily
liable on such Defaulted Loan, including without limitation the right to resort
to any and all Collateral which secures the Defaulted Loan, and the Sponsor
shall, automatically, immediately and without further action, be deemed to have
assumed all obligations of the Servicer under the Loan Commitment and the
Operative Documents with respect to such Defaulted Loan, and the Servicer shall
be released from any further obligations with respect thereto. The Servicer
agrees that, upon receipt of payment in full of the Loan Indebtedness, the
Servicer shall:
(a) execute on a timely basis, without recourse,
representation or warranty of any kind (except as to its own title), all such
instruments and documents as are reasonably requested in order to evidence
Sponsor's rights hereunder or permit Sponsor to exercise such rights;
(b) permit Sponsor at reasonable times and as often as
may be reasonably requested to discuss with appropriate Servicer employees and
officers the Servicer's experience, relationships, books, accounts and files and
to review the Servicer's loan files relating to the purchased Defaulted Loan
(and Sponsor hereby agrees to keep all such information confidential); and
(c) otherwise reasonably cooperate with Sponsor in the
exercise of Sponsor's rights.
Sponsor shall reimburse the Servicer for its expenses reasonably and actually
incurred in complying with this Section.
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ARTICLE XI
INDEMNIFICATION
SECTION 11.1. Indemnification.
(a) In addition to the other rights of the Servicer and
the Participants hereunder, Sponsor hereby agrees to protect, indemnify and save
harmless the Servicer, each Participant, and the officers, directors,
shareholders, employees, agents and representatives thereof (each an
"Indemnified Party") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs (including, without
limitation, reasonable attorney fees and costs actually incurred), expenses or
disbursements of any kind or nature whatsoever, whether direct, indirect,
consequential or incidental, with respect to or in connection with or arising
out of (i) the execution and delivery of this Agreement, any other Operative
Document or any agreement or instrument contemplated hereby or thereby,
including without limitation, the Loan Documents, the performance by the parties
hereto or thereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby, (ii) the making or
administration of the Loan Commitments, the Loans or any of them, including any
violation of federal or state usury or other laws, provided that with respect to
clauses (i) and (ii), Sponsor shall have no obligation to indemnify the Servicer
and all Participants for more than one (1) counsel's reasonable fees and
expenses, (iii) the enforcement, performance and administration of this
Agreement or the Loan Documents or any powers granted to the Servicer hereunder
or under any Loan Documents, (iv) any misrepresentation of the Sponsor
hereunder, (v) any matter arising pursuant to any Environmental Laws as a result
of the Collateral or (vi) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory, whether or not the Indemnified Party is a
named party thereto, except to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnified Party or arise solely from
the nonpayment of any Loan Indebtedness notwithstanding the performance by
Sponsor of all of its obligations under the Operative Documents relating to such
Loan Indebtedness.
(b) Without limiting the generality of the foregoing, and
separate and apart from any obligation of Sponsor pursuant to Article 10,
Sponsor agrees to indemnify and hold harmless each Indemnified Party from and
against, and on demand will pay or reimburse any Indemnified Party for, any and
all (i) liabilities arising from a breach of any representation or warranty made
by Sponsor hereunder (whether or not Sponsor's obligations under Article 10 have
been satisfied), (ii) any breach by Sponsor of its agreements with the
Borrowers, (iii) any overadvance to any Borrower caused by the transfer of ACH
transfer instructions from the Aaron's Proprietary System to the Servicer by
Sponsor resulting in aggregate advances to such Borrower in excess of the Loan
Commitment to such Borrower, and (iv) any breach by Sponsor of the terms of its
MicroACH Service Agreement with the Servicer or any failure by Sponsor to
maintain such agreement in full force and effect.
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(c) This indemnity shall survive the termination of this
Agreement.
SECTION 11.2. Notice Of Proceedings; Right To Defend
(a) Any Person with an indemnification claim (or
potential claim) pursuant to Section 11.1 ("POTENTIAL INDEMNITEE") agrees to
notify Sponsor (the "Potential Indemnitor") in writing within a reasonable time
after receipt by it of written notice of the commencement of any administrative,
legal or other proceeding, suit or action by a Person (other than Indemnitee or
an affiliate thereof), if a claim for indemnification may be made by the
Potential Indemnitee against the Potential Indemnitor under this Article 11.
(b) Following receipt by the Potential Indemnitor of any
such notice from a Potential Indemnitee, (an "INDEMNITY NOTICE"), the Potential
Indemnitor shall be entitled at its own cost and expense to investigate and
participate in the proceeding, suit or action referred to in the Indemnity
Notice. At such time as the Potential Indemnitor shall have acknowledged in
writing to the Potential Indemnitee that it will pay any judgment, damages, or
losses incurred by the Potential Indemnitee in the proceeding, suit or action
referred to in the Indemnity Notice other than those for gross negligence or
willful misconduct on the part of the Potential Indemnitee (at which time the
"Potential Indemnitor" shall be deemed to be the "Indemnitor" and the "Potential
Indemnitee" shall be deemed to be the "Indemnitee"), the Indemnitor shall be
entitled, to the extent that it shall desire, to assume the defense of such
proceeding, suit or action, with counsel reasonably satisfactory to the
Indemnitee. If the Indemnitor shall so assume the defense of such proceeding,
suit or action, the Indemnitor shall conduct such defense with due diligence and
at its own cost and expense.
(c) In the event that the Indemnitor so assumes the
defense of such proceeding, suit or action, the Indemnitor shall not be entitled
to settle such proceeding, suit or action without the written consent of the
Indemnitee, provided that in the event that the Indemnitee does not consent to
such settlement not to be unreasonably withheld or delayed (i) the Indemnitor's
indemnification liability in connection with such proceeding, suit or action
shall not exceed the amount of such proposed settlement and (ii) Indemnitee
shall assume and pay all costs and expenses, including reasonable attorneys'
fees, incurred by Indemnitor from the date that the Indemnitor presented the
Indemnitee the terms of the proposed settlement. An Indemnitor shall not be
liable to an Indemnitee for any settlement of a claim in any proceeding, suit or
other action referred to in an Indemnity Notice, consented to by the Indemnitee
without the consent of the Indemnitor.
(d) A Potential Indemnitor shall be liable to a Potential
Indemnitee for a settlement of a claim in any proceeding, suit or other action
referred to in an Indemnity Notice consented to by such Potential Indemnitee
only if (i) such Potential Indemnitor first had a reasonable opportunity to
investigate such claim and participate in such proceeding, suit or action, (ii)
the Potential Indemnitee gave the Potential Indemnitor at least ten (10)
Business Days notice of the proposed terms of such settlement prior to entering
into such settlement and (iii) the
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Potential Indemnitor did not acknowledge in writing to the Potential Indemnitee,
by the expiration of such ten (10) Business Days period, or such longer period
as may be agreed to by the Potential Indemnitee and Potential Indemnitor that it
would pay any judgment, damages or losses incurred by the Potential Indemnitee
in such proceeding suit or action.
SECTION 11.3. Third Party Beneficiaries No Persons shall be
deemed to be third party beneficiaries of this Agreement. Except as expressly
otherwise provided in this Agreement, this Agreement is solely for the benefit
of Sponsor and the Servicer, the Participants and their respective successors
and permitted assigns, and no other Person shall have any right, benefit,
priority or interest under, or because of the existence of, this Agreement.
ARTICLE XII
SURVIVAL OF LOAN FACILITY
The terms of this Loan Facility Agreement shall survive the termination
of the Commitments hereunder and the termination of any Loan Commitment
established pursuant the terms hereof until the indefeasible payment in full of
each of the Loans outstanding hereunder and Article 13 shall survive the
termination of this Agreement upon such repayment.
ARTICLE XIII
CONDITIONS PRECEDENT
This Agreement shall not become effective, the Existing Loan Facility
Agreement shall remain in full force and effect, the Sponsor shall have no
rights under this Agreement and neither the Servicer nor the Participants shall
be obligated to take, fulfill or perform any action hereunder, until the
following conditions have been fulfilled to the satisfaction of the Servicer:
SECTION 13.1. Receipt of Documents.
The Servicer shall have received the following, each dated as of the
Effective Date, in form and substance satisfactory to the Servicer and
(except in the case of the Fee Letter) the Participants:
(a) Duly executed counterparts of this Agreement.
(b) Duly executed counterparts of the Servicing Agreement
and the Fee Letter.
(c) Duly executed counterparts of the Guaranty Agreement.
(d) A duly executed closing certificate of Sponsor, in
form and substance satisfactory to the Servicer and each Participant.
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(e) A duly executed certificate of Sponsor identifying
the Authorized Signatories, in form and substance satisfactory to the Servicer
and each Participant;
(f) Copies of the organizational papers of Sponsor and
each Guarantor, certified as true and correct by the Secretaries of State of
their respective States of incorporation, and certificates from the Secretaries
of State of such States of incorporation certifying Sponsor's and each
Guarantor's good standing as a corporation in such State.
(g) A certificate of the Secretary or Assistant Secretary
of each of Sponsor and each Guarantor certifying (i) the names and true
signatures of the officers of Sponsor and each Guarantor authorized to execute
the Guaranty Agreement, this Agreement, the Servicing Agreement and the other
Operative Documents to be delivered hereunder to which each is a party, (ii) the
bylaws of Sponsor and each Guarantor, respectively, and (iii) the resolutions of
the Board of Directors of each of Sponsor and each Guarantor, respectively,
approving the Operative Documents to which each is a party and the transactions
contemplated hereby.
(h) A favorable written opinion of Xxxxxxxxxx Xxxxxxxx,
LLP, counsel for Sponsor and Guarantors, in a form satisfactory to the Servicer
and each Participant and covering such matters relating to the transactions
contemplated hereby as the Servicer may reasonably request.
(i) All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all documents
incident hereto or delivered in connection therewith shall be satisfactory in
form and substance to the Servicer and the Participants.
In addition, each of the Participants shall have received a duly executed
Participation Certificate from the Servicer.
SECTION 13.2. EFFECT OF AMENDMENT AND RESTATEMENT. Upon this
Agreement becoming effective pursuant to Section 13.1:
(a) the terms and conditions of the Existing Loan
Facility Agreement shall be amended as set forth herein and, as so amended,
shall be restated in their entirety, but only with respect to the rights, duties
and obligations between Sponsor, Servicer and Participants accruing from and
after the Effective Date;
(b) this Agreement shall not in any way release or impair
the rights, duties, or obligations created pursuant to the Existing Loan
Facility Agreement and any other Operative Document or affect the relative
priorities thereof, in each case to the extent in force and effect thereunder as
of the Effective Date and except as modified hereby or by documents, instruments
and agreements executed and delivered in connection herewith, and all of such
rights, duties, and obligations are assumed, ratified and affirmed by Sponsor;
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(c) all indemnification obligations of Sponsor under the
Existing Loan Facility Agreement and any other Operative Documents shall survive
the execution and delivery of this Agreement and shall continue in full force
and effect for the benefit of Servicer, each Participant and any other Person
indemnified under the Existing Loan Facility Agreement or any other Operative
Document at any time prior to the Effective Date;
(d) all Existing Loans, Existing Loan Commitments and
Existing Notes shall, to the extent outstanding on the Effective Date, be deemed
to be Loans, Loan Commitments and Notes, respectively, outstanding under this
Agreement and shall not be deemed to be paid, released, discharged or otherwise
satisfied by the execution of this Agreement, and this Agreement shall not
constitute a refinancing, substitution or novation of such Loans, Loan
Commitments and Notes, or any of the other rights, duties and obligations of the
parties hereunder; and
(e) any and all references to the Existing Loan Facility
Agreement shall, without further action of the parties, be deemed a reference to
the Existing Loan Facility Agreement, as amended and restated by this Agreement,
and as this Agreement shall be further amended or amended and restated from time
to time hereafter.
ARTICLE XIV
THE SERVICER
SECTION 14.1. Appointment of Servicer as Agent. To the extent
of its ownership interest in the Loans, each Participant hereby designates
Servicer as its agent to administer all matters concerning the Loans and to act
as herein specified. Each Participant hereby irrevocably authorizes the Servicer
to take such actions on its behalf under the provisions of this Agreement, the
other Operative Documents, and all other instruments and agreements referred to
herein or therein, and to exercise such powers and to perform such duties
hereunder and thereunder as are specifically delegated to or required of the
Servicer by the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Servicer may perform any of its duties hereunder by or
through its agents or employees.
SECTION 14.2. Nature of Duties of Servicer. The Servicer shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Operative Documents. None of the Servicer nor any of its
respective officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The
Servicer shall not have by reason of this Agreement a fiduciary relationship in
respect of any Participant; and nothing in this Agreement, express or implied,
is intended to or shall be so construed as to impose upon the Servicer any
obligations in respect of this Agreement or the other Operative Documents except
as expressly set forth herein.
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SECTION 14.3. Lack of Reliance on the Servicer.
(a) Independently and without reliance upon the Servicer, each
Participant, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of the Credit Parties in connection with the taking or not taking of any
action in connection herewith, and (ii) its own appraisal of the
creditworthiness of the Credit Parties, and, except as expressly provided in
this Agreement, the Servicer shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Participant with any credit
or other information with respect thereto, whether coming into its possession
before the making of the Loans or at any time or times thereafter.
(b) The Servicer shall not be responsible to any Participant
for any recitals, statements, information, representations or warranties herein
or in any document, certificate or other writing delivered in connection
herewith or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, priority or sufficiency of this Agreement, the
Guaranty Agreement, and Loan Document or any other documents contemplated hereby
or thereby, or the financial condition of the Credit Parties or any Borrower, or
be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this Agreement, the Guaranty
Agreement or the other documents contemplated hereby or thereby, or the
financial condition of the Credit Parties or any Borrower, or the existence or
possible existence of any Unmatured Credit Event or Credit Event.
SECTION 14.4. Certain Rights of the Servicer. If the Servicer
shall request instructions from the Required Participants with respect to any
action or actions (including the failure to act) in connection with this
Agreement, the Servicer shall be entitled to refrain from such act or taking
such act, unless and until the Servicer shall have received instructions from
the Required Participants; and the Servicer shall not incur liability in any
Person by reason of so refraining. Without limiting the foregoing, no
Participant shall have any right of action whatsoever against the Servicer as a
result of the Servicer acting or refraining from acting hereunder in accordance
with the instructions of the Required Participants.
SECTION 14.5. Reliance by Servicer. The Servicer shall be
entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cable gram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Servicer may
consult with legal counsel (including counsel for any Credit Party), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken by it in good faith in accordance with
the advice of such counsel, accountants or experts.
SECTION 14.6. Indemnification of Servicer. To the extent the
Servicer is not reimbursed and indemnified by the Credit Parties, each
Participant will reimburse and indemnify the Servicer, ratably according to the
respective Pro Rata Shares, in either case, for and against
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any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Servicer in performing its duties hereunder, in any
way relating to or arising out of this Agreement or the other Operative
Documents; provided that no Participant shall be liable to the Servicer for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Servicer's
gross negligence or willful misconduct.
SECTION 14.7. The Servicer in its Individual Capacity. With
respect to its obligations under this Agreement and the amounts advanced by it,
the Servicer shall have the same rights and powers hereunder as any other
Participant and may exercise the same as though it were not performing the
duties specified herein; and the terms "Participants", "Required Participants",
or any similar terms shall, unless the context clearly otherwise indicates,
include the Servicer in its individual capacity. The Servicer may accept
deposits from, lend money to, and generally engage in any kind of banking,
trust, financial advisory or other business with the Consolidated Companies or
any affiliate of the Consolidated Companies as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Consolidated Companies for services in connection with this Agreement and
otherwise without having to account for the same to the Participants.
SECTION 14.8. Holders of Participation Certificates. The
Servicer may deem and treat the payee of any Participation Certificate as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Servicer. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Participation
Certificate shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Participation Certificate or of any Participation
Certificate or Certificates issued in exchange therefor.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, telecopy or similar teletransmission or writing) and shall be given to
such party at its address or applicable teletransmission number set forth on the
signature pages hereof, or such other address or applicable teletransmission
number as such party may hereafter specify by notice to the Servicer and
Sponsor. Each such notice, request or other communication shall be effective (i)
if given by telex, when such telex is transmitted to the telex number specified
in this Section and the appropriate answerback is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (iii) if given by telecopy, when
such telecopy
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is transmitted to the telecopy number specified in this Section and the
appropriate confirmation is received, or (iv) if given by any other means
(including, without limitation, by air courier), when delivered or received at
the address specified in this Section; provided that notices to the Servicer
shall not be effective until received.
SECTION 15.2. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the other Operative Documents, nor consent to any
departure by any Credit Party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Participants (and in the
case of any amendment, the applicable Credit Party), and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided that no amendment, waiver or consent shall,
unless in writing and signed by all the Participants do any of the following:
(i) waive any of the conditions specified in Section 2.1 or 11.1, (ii) increase
the Participating Commitment Amounts or contractual obligations of the
Participants to Servicer or Sponsor under this Agreement, (iii) reduce the
principal of, or interest on, the Participation Certificates or any fees
hereunder, (iv) postpone any date fixed for the payment in respect of principal
of, or interest on, the Participation Certificates or any fees hereunder, (v)
agree to release any Guarantor from its obligations under any Guaranty Agreement
or the Sponsor from its obligations pursuant to this Agreement, (vi) modify the
definition of "Required Participants," or (vii) modify Section 2.9, Article 4,
Article 10 or this Section 15.2. Notwithstanding the foregoing, no amendment,
waiver or consent shall, unless in writing and signed by the Servicer in
addition to the Participants required hereinabove to take such action, affect
the rights or duties of the Servicer under this Agreement or under any other
Operative Document or Loan Document. In addition, notwithstanding the foregoing,
the Servicer and the Sponsor may, without the consent of or notice to the
Participants, enter into amendments, modifications or waivers with respect to
the Servicing Agreement and the Fee Letter as long as such amendments or
modifications do not conflict with the terms of this Agreement.
SECTION 15.3. No Waiver; Remedies Cumulative. No failure or
delay on the part of the Servicer or any Participant in exercising any right or
remedy hereunder or under any other Operative Document, and no course of dealing
between any Credit Party and the Servicer or any Participant shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
hereunder or under any other Operative Document preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder or
thereunder. The rights and remedies herein expressly provided are cumulative and
not exclusive of any rights or remedies which the Servicer or any Participant
would otherwise have. No notice to or demand on any Credit Party not required
hereunder or under any other Operative Document in any case shall entitle any
Credit Party to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Servicer or the
Participants to any other or further action in any circumstances without notice
or demand.
SECTION 15.4. Payment of Expenses, Etc. Sponsor shall:
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(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable, out-of-pocket costs and expenses of the
Servicer in the administration (both before and after the execution hereof and
including reasonable expenses actually incurred relating to advice of counsel as
to the rights and duties of the Servicer and the Participants with respect
thereto) of, and in connection with the preparation, execution and delivery of,
preservation of rights under, enforcement of, and, after a Unmatured Credit
Event or Credit Event, refinancing, renegotiation or restructuring of, this
Agreement and the other Operative Documents and the documents and instruments
referred to therein, and any amendment, waiver or consent relating thereto
(including, without limitation, the reasonable fees actually incurred and
disbursements of counsel for the Servicer), and in the case of enforcement of
this Agreement or any Operative Document after a Credit Event, all such
reasonable, out-of-pocket costs and expenses (including, without limitation, the
reasonable fees actually incurred and reasonable disbursements and changes of
counsel), for any of the Participants; and
(b) Pay and hold the Servicer and each of the Participants
harmless from and against any and all present and future stamp, documentary, and
other similar Taxes with respect to this Agreement, the Participation
Certificates, the Loan Documents and any other Operative Documents, any
collateral described therein, or any payments due thereunder, and save the
Servicer and each Participant harmless from and against any and all liabilities
with respect to or resulting from any delay or omission to pay such Taxes.
SECTION 15.5. Right of Setoff. In addition to and not in
limitation of all rights of offset that any Participant may have under
applicable law, each Participant shall, upon the occurrence of any Credit Event
and whether or not such Participant has made any demand or any Credit Party's
obligations have matured, have the right to appropriate and apply to the payment
of any Credit Party's obligations hereunder and under the other Operative
Documents, all deposits of any Credit Party (general or special, time or demand,
provisional or final) then or thereafter held by and other indebtedness or
property then or thereafter owing by such Participant or other holder to any
Credit Party, whether or not related to this Agreement or any transaction
hereunder.
SECTION 15.6. Benefit of Agreement; Assignments;
Participations.
(a) This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties hereto, provided that Sponsor may not assign or transfer any of its
interest hereunder without the prior written consent of the Participants.
(b) Any Participant may make, carry or transfer Loans at, to
or for the account of, any of its branch offices or the office of an Affiliate
of such Participant.
(c) Each Participant may assign all of its interests, rights
and obligations under this Agreement (including all of its Participating
Commitments and the Funded
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Participant's Interest at the time owing to it and the Participation
Certificates held by it) to any Eligible Assignee; provided, however, that (i)
the Sponsor and the Servicer shall each have given its prior written consent to
such assignment (which consent shall not be unreasonably withheld or delayed)
unless such assignment is to an Affiliate of the assigning Participant or, in
the case of the Sponsor, unless a Credit Event has occurred and is continuing
hereunder, (ii) unless the Participant is assigning its entire Participating
Commitment, the Participating Commitment Amount of the assigning Participant
subject to each assignment (determined as of the date the assignment and
acceptance with respect to such assignment is delivered to the Servicer) shall
not be less than the lesser of (x) 50% of the amount of its Original
Participating Commitment or (y) $1,000,000 and shall be divided pro rata between
the two Facilities, and (iii) the parties to each such assignment shall execute
and deliver to the Servicer an Assignment and Acceptance, together with the
Participation Certificate subject to such assignment and, unless such assignment
is to an Affiliate of such Participant, a processing and recordation fee of
$1,000. Within ten (10) Business Days after receipt of the notice and the
Assignment and Acceptance, Servicer shall execute and deliver, in exchange for
the surrendered Participation Certificate, a new Participation Certificate to
the order of the assignor and such assignee in a principal amount equal to the
applicable Participating Commitment Amount retained and assumed by it,
respectively, pursuant to such Assignment and Acceptance. Such new Participation
Certificate shall be in an aggregate principal amount equal to the aggregate
principal amount of such surrendered Participation Certificate, shall be dated
the date of the surrendered Participation Certificate which it replaces, and
shall otherwise be in substantially the form attached hereto.
(d) Each Participant may, without the consent of Sponsor
or the Servicer, sell participations to one or more banks or other entities in
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Participating Commitment and the Funded Participant's
Interest owing to it), provided, however, that (i) no Participant may sell a
participation in its Participating Commitment (after giving effect to any
permitted assignment hereof) unless it retains an aggregate exposure of 25% of
its original Participating Commitment Amount, provided, however, sales of
participations to an Affiliate of such Participant shall not be included in such
calculation; provided, however, no such maximum amount shall be applicable to
any such participation sold at any time there exists an Credit Event hereunder,
(ii) such Participant's obligations under this Agreement shall remain unchanged,
(iii) such Participant shall remain solely responsible to the other parties
hereto for the performance of such obligations, and (iv) the participating bank
or other entity shall not be entitled to the benefit (except through its selling
Participant) of the cost protection provisions contained in Article 2 of this
Agreement, and (v) Sponsor, Servicer and the other Participants shall continue
to deal solely and directly with each Participant in connection with such
Participant's rights and obligations under this Agreement and the other
Operative Documents, and such Participant shall retain the sole right to enforce
the obligations of Sponsor relating to the Loans and to approve any amendment,
modification or waiver of any provisions of this Agreement (other than an
amendment requiring approval of 100% of the Participants). Each Participant
shall promptly notify in writing the Servicer and the Sponsor of any sale of a
participation hereunder and shall certify to Sponsor and Servicer its compliance
with the terms hereof.
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(e) Any Participant or participant may, in connection with the
assignment or participation or proposed assignment or participation, pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to Sponsor or the other Consolidated
Companies furnished to such Participant by or on behalf of Sponsor or any other
Consolidated Company. With respect to any disclosure of confidential,
non-public, proprietary information, such proposed assignee or participant shall
agree to use the information only for the purpose of making any necessary credit
judgments with respect to this credit facility and not to use the information in
any manner prohibited by any law, including without limitation, the securities
laws of the United States. The proposed participant or assignee shall agree not
to disclose any of such information except (i) to directors, employees, auditors
or counsel to whom it is necessary to show such information, each of whom shall
be informed of and shall acknowledge the confidential nature of the information,
(ii) in any statement or testimony pursuant to a subpoena or order by any court,
governmental body or other agency asserting jurisdiction over such entity, or as
otherwise required by law (provided prior notice is given to Sponsor and the
Servicer unless otherwise prohibited by the subpoena, order or law), and (iii)
upon the request or demand of any regulatory agency or authority with proper
jurisdiction. The proposed participant or assignee shall further agree to return
all documents or other written material and copies thereof received from any
Participant, the Servicer or Sponsor relating to such confidential information
unless otherwise properly disposed of by such entity.
(f) Any Participant may at any time assign all or any portion
of its rights in this Agreement to a Federal Reserve Bank; provided that no such
assignment shall release the Participant from any of its obligations hereunder.
(g) Notwithstanding any provision of this Agreement to the
contrary, the Servicer, together with its Affiliates, shall at all times retain
a Participating Commitment in an amount at least equal to 20% of the aggregate
principal amount of all outstanding Loan Commitments.
SECTION 15.7. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE
STATE OF GEORGIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT MAY BE BROUGHT IN THE SUPERIOR COURT
OF XXXXXX COUNTY, GEORGIA, OR ANY OTHER COURT OF THE STATE OF GEORGIA OR OF THE
UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF GEORGIA, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, SPONSOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
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AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND
SPONSOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) Nothing herein shall affect the right of the Servicer, any
Participant, or any Credit Party to commence legal proceedings or otherwise
proceed against Sponsor in any other jurisdiction.
SECTION 15.8. Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
SECTION 15.9. Severability. In case any provision in or
obligation under this Agreement or the other Operative Documents shall be
invalid, illegal or unenforceable, in whole or in part, in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 15.10. Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or be otherwise within the limitation of, another
covenant, shall not avoid the occurrence of a Unmatured Credit Event or an
Credit Event if such action is taken or condition exists.
SECTION 15.11. No Joint Venture. Nothing in this Agreement,
the Servicing Agreement or any of the Loan Documents shall be construed as
constituting Sponsor and the Servicer or any Participant as partners or joint
venturers or as creating the relationship of employer and employee, master and
servant, principle and agent, or franchisor or franchisee between Sponsor and
the Servicer or any Participant. Neither Sponsor nor Servicer or any Participant
shall have any right or authority to bind the other party or to assume or create
any obligation or responsibility, express or implied, on behalf of the other
party or in the other party's name. All rights, duties and obligations under
this Agreement and the Operative Documents are exclusively for the benefit of
Sponsor and the Servicer and Participants, as the case may be, and shall not be
deemed to affect any agreement between either of such parties and any third
party (including, without limitation, any Borrower).
SECTION 15.12. Repurchase Right. Sponsor may at any time (upon
thirty (30) days' prior written notice to Servicer) purchase from Servicer all
Loans and Loan Commitments and all rights, titles and interests of the Servicer
and the Participants in and to the Loan Documents
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and the Collateral relating thereto for a purchase price (payable in immediately
available funds) equal to the aggregate Loan Indebtedness, plus all amounts
otherwise owing by the Sponsor pursuant to the Operative Documents, and the
Servicer shall assign, without recourse, representation or warranty (except as
to its own title), its right, title and interest therein to Sponsor upon the
Servicer's receipt of such purchase price. Thereafter, Servicers shall have no
responsibility with respect to any Loans or Loan Commitments.
SECTION 15.13. Confidentiality. Each Participant agrees that
it will maintain in confidence and will not disclose, publish or disseminate, to
any Person, any confidential information which it has or shall acquire during
the term of this Agreement relating to the business, operations and condition,
financial or otherwise of the Sponsor or any Borrower, except that such
information may be disclosed by such Participant if and to the extent that:
(a) such information is in the public domain at the time of
disclosure;
(b) such information is required to be disclosed by subpoena
or similar process of applicable law or regulations;
(c) such information is required to be disclosed to any
regulatory or administrative body or commission to whose jurisdiction such
Participant or any of its Affiliates may be subject;
(d) such information is disclosed to counsel, auditors or
other professional advisors to such Participant or to affiliates of such
Participant provided that such affiliates agree to keep such information
confidential as set forth herein;
(e) such information is disclosed with the prior written
consent of the Sponsor or the relevant Borrower, as the case may be, which
consent shall not be unreasonably withheld or delayed;
(f) such information is disclosed in connection with any
litigation or dispute between such Participant and the Sponsor or any Borrower
concerning the Operative Documents or the Loan Documents of such Borrower;
(g) such information is disclosed in connection with a
prospective assignment, grant of a participation interest in or other transfer
by such Participant of any of its interest in the Operative Documents, provided
that the Person to whom such information shall be disclosed shall have agreed to
keep such information confidential as set forth herein;
(h) such information was in the possession of such Person or
such Person's affiliates without obligation of confidentiality prior to such
Participant furnishing it to such Person; or
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(i) such information is received by such Participant, without
restriction as to its disclosure or use, from a Person, who, to such
Participant's knowledge or reasonable belief, was not prohibited from disclosing
it by any duty of confidentiality.
(j) Each Participant agrees to use its best efforts to give
the Sponsor prompt notice of any subpoena or similar process referred to in
clause (ii) above, provided that such Participant shall have no liability in
event such notice is not given.
SECTION 15.14. Headings Descriptive; Entire Agreement. The
headings of the several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement. This Agreement, the other Operative
Documents, and the agreements and documents required to be delivered pursuant to
the terms of this Agreement constitute the entire agreement among the parties
hereto and thereto regarding the subject matters hereof and thereof and
supersede all prior agreements, representations and understandings related to
such subject matters.
[Signatures Set Forth on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Address for Notices: XXXXX RENTS, INC.
000 Xxxx Xxxxx Xxxxx Xxxx, XX By:
Xxxxxxx, Xxxxxxx 00000 --------------------------------
Attn: Xxxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxxxxx
Telecopy: 000-000-0000 Executive Vice President and
Chief Financial Officer
[Corporate Seal]
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: SUNTRUST BANK, as Servicer
000 Xxxxxxxxx Xxxxxx XX, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Rents Program Manager By:
Telecopy No. (000) 000-0000 -------------------------------
Title:
with a copy to:
000 Xxxxxxxxx Xxxxxx XX, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxxx
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: SUNTRUST BANK
000 Xxxxxxxxx Xxxxxx, XX, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Rents Program Manager By:
Telecopy No.: (000) 000-0000 --------------------------------
Name:
Title:
with a copy to:
000 Xxxxxxxxx Xxxxxx XX, 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxxxxx
Participating Commitment: $22,500,000.00
Pro Rata Share: 25%
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: FIRST UNION NATIONAL BANK
One South Penn Square
PA 4843 By:
Xxxxxxx Xxxxxxxx, 00xx Xxxxx --------------------------------
Xxxxxxxxxxxx, XX 00000 Name:
Attn: Xxxx Xxxxxxxx Title:
Telecopy: (000) 000-0000
Participating Commitment: $20,000,000.00
Pro Rata Share: 22.22%
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: SOUTHTRUST BANK
000 Xxxx Xxxxxxxxx Xxxxxx By:
22nd Floor ----------------------------
Xxxxxxx, Xxxxxxx 00000 Name:
Attn: Xxxxxx Xxxxxxxx Title:
Telecopy: (000) 000-0000
Participating Commitment: $17,500,000.00
Pro Rata Share: 19.44%
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: REGIONS BANK
0000 Xxxxxxx Xxxx By:
Xxxxxxx, XX 00000 -----------------------------
Attn: Xxxxxxx X. Xxx Name:
Telecopy: (000) 000-0000 Title:
Participating Commitment: $15,000,000.00
Pro Rata Share: 16.67%
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: BRANCH BANKING & TRUST CO.
000 Xxxx Xxxxx Xxxxx Xx. By:
Xxxxxxx, XX 00000 --------------------------------
Attn: Xxxx XxXxxxxxxx Name:
Telecopy: (000) 000-0000 Title:
Participating Commitment: $10,000,000.00
Pro Rata Share: 11.11%
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Address for Notices: ISRAEL DISCOUNT BANK
0000 X.X. 000xx Xxxxxx By:
Suite 300 -------------------------------
Xxxxx, XX 00000 Name:
Attn: Xxxxxxx Xxxxx Title:
Telecopy: (000) 000-0000
Participating Commitment: $5,000,000.00
Pro Rata Share: 5.55%
[SIGNATURE PAGE TO
LOAN FACILITY AGREEMENT]
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Schedule 1.1
Pricing Grid
(Basis Points Per Annum) Total Debt to EBITDA
-----------------------------------------------------------------------------------
Xxxxx X Xxxxx XX Xxxxx XXX Xxxxx XX
--------------- ------------------ ------------------- -----------------
(greater than (greater than
or equal to)1.50 & or equal to) 2.00 & (greater than
PROGRAM PRICING (less than)1.50 (less than)2.00 (less than) 2.50 or equal to) 2.50
--------------- ------------------ ------------------- -----------------
STARTUP FRANCHISEE MARGIN 137.5 150.0 175.0 200.0
ESTABLISHED FRANCHISEE MARGIN 162.5 175.0 200.0 225.0
APPLICABLE PERCENTAGE 15.0 20.0 25.0 30.0
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EXHIBIT C
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF GUARANTY AGREEMENT
This Guaranty Agreement (this "Agreement"), dated as of March
__, 2001, among each of the Subsidiaries listed on Schedule I hereto (each such
subsidiary individually, a "Guarantor" and collectively, the "Guarantors") of
XXXXX RENTS, INC., a Georgia corporation (the "Sponsor"), the various
Participants (as defined in the Loan Facility Agreement referenced below) and
SUNTRUST BANK, a Georgia banking corporation as servicer (the "Servicer").
Reference is made to the Loan Facility Agreement and
Guaranty, dated as of March __, 2001 (as amended, supplemented or otherwise
modified from time to time, the "Loan Facility Agreement"), among the Sponsor,
the lending institutions listed on the signature pages thereto (the
"Participants") and SunTrust Bank, as Servicer (the "Servicer") (the Servicer
and the Participants shall be referred to collectively as the "Guaranteed
Parties"). Capitalized terms used herein and not defined herein shall have the
meanings assigned to such terms in the Loan Facility Agreement.
The Participants have agreed to provide lines of credit to
Franchisees of the Sponsor pursuant to, and upon the terms and subject to the
conditions specified in, the Loan Facility Agreement. Each of the Guarantors is
a direct or indirect wholly-owned Subsidiary of the Sponsor and acknowledges
that it will derive substantial benefit from the Loan Facility Agreement. The
obligations of the Participants to make Loans are conditioned on, among other
things, the execution and delivery by the Guarantors of a Guaranty Agreement in
the form hereof. As consideration therefor and in order to induce the
Participants to make Loans, the Guarantors are willing to execute this
Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Guarantor unconditionally
guarantees, jointly with the other Guarantors and severally, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of all
obligations owing by the Sponsor to the Guaranteed Parties, including fees,
costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
under the Loan Facility Agreement and the other Operative Documents and (b) the
due and punctual performance of all covenants, agreements, obligations and
liabilities of the Sponsor under or pursuant to the Loan Facility Agreement and
the other Operative Documents (all the monetary and other obligations referred
to in the preceding clauses (a) and (b) being collectively called the
"Obligations"). Each Guarantor further agrees that the
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Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Guarantor waives presentment to, demand of
payment from and protest to the Sponsor of any of the Obligations, and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Guarantor hereunder shall not be affected by (a) the failure of any
Guaranteed Party to assert any claim or demand or to enforce or exercise any
right or remedy against the Sponsor or any other Guarantor under the provisions
of the Loan Facility Agreement, any other Operative Document or otherwise, (b)
any rescission, waiver, amendment or modification of, or any release from any
of the terms or provisions of, this Agreement, any other Operative Document,
any Guarantee or any other agreement, including with respect to any other
Guarantor under this Agreement, or (c) the failure to perfect any security
interest in, or the release of, any of the security held by or on behalf of any
Guaranteed Parties.
SECTION 3. Guarantee of Payment. Each Guarantor further
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection, and waives any right to require that any resort be had by any
Guaranteed Party to any of the security held for payment of the Obligations or
to any balance of any deposit account or credit on the books of any Guaranteed
Party in favor of the Sponsor or any other person.
SECTION 4. No Discharge or Diminishment of Guarantee. The
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim
of waiver, release, surrender, alteration or compromise of any of the
Obligations, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of any
Guaranteed Party to assert any claim or demand or to enforce any remedy under
the Loan Facility Agreement, any other Operative Document or any other
agreement, by any waiver or modification of any provision of any thereof, by
any default, failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission that may or might in any manner or
to the extent vary the risk of any Guarantor or that would otherwise operate as
a discharge of each Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
SECTION 5. Defenses of Borrower Waived. To the fullest extent
permitted by applicable law, each Guarantor waives any defense based on or
arising out of any defense of the Sponsor or the unenforceability of the
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Sponsor, other than the final and indefeasible payment
in full in cash of the Obligations. The Guaranteed Parties may, at their
election, foreclose on any security held by one or more of them by one or more
judicial or nonjudicial
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sales, accept an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Obligations, make any other accommodation
with the Sponsor or any other guarantor, without affecting or impairing in any
way the liability of any Guarantor hereunder except to the extent the
Obligations have been fully, finally and indefeasibly paid in cash. Pursuant to
applicable law, each Guarantor waives any defense arising out of any such
election even though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation or other
right or remedy of such Guarantor against the Sponsor or any other Guarantor or
guarantor, as the case may be, or any security.
SECTION 6. Agreement to Pay; Subordination. In furtherance of
the foregoing and not in limitation of any other right that any Guaranteed
Party has at law or in equity against any Guarantor by virtue hereof, upon the
failure of any Credit Party to pay any Obligation when and as the same shall
become due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, each Guarantor hereby promises to and will forthwith pay, or cause
to be paid, to the Servicer for the benefit of the Participants in cash the
amount of such unpaid Obligations. Upon payment by any Guarantor of any sums to
the Servicer, all rights of such Guarantor against the Sponsor arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all the
Obligations. In addition, any indebtedness of the Sponsor now or hereafter held
by any Guarantor is hereby subordinated in right of payment to the prior
payment in full in cash of the Obligations. If any amount shall erroneously be
paid to any Guarantor on account of (i) such subrogation, contribution,
reimbursement, indemnity or similar right or (ii) any such indebtedness of the
Sponsor, such amount shall be held in trust for the benefit of the Guaranteed
Parties and shall forthwith be paid to the Servicer to be credited against the
payment of the Obligations, whether matured or unmatured, in accordance with
the terms of the Operative Documents.
SECTION 7. Information. Each Guarantor assumes all
responsibility for being and keeping itself informed of the Sponsor's financial
condition and assets, and of all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks
that such Guarantor assumes and incurs hereunder, and agrees that none of the
Guaranteed Parties will have any duty to advise any of the Guarantors of
information known to it or any of them regarding such circumstances or risks.
SECTION 8. Representations and Warranties. Each Guarantor
represents and warrants as to itself that all representations and warranties
relating to it (as a Subsidiary of the Sponsor) contained in the Loan Facility
Agreement are true and correct.
SECTION 9. Termination. The guarantees made hereunder (a)
shall terminate when all the Obligations have been paid in full in cash and the
Participants have no further commitment to lend under the Loan Facility
Agreement and (b) shall continue to be effective or be reinstated, as the case
may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Participant or any Guarantor
upon the bankruptcy or reorganization of any Credit Party or otherwise. In
connection with the foregoing, the Servicer shall execute and deliver to such
Guarantor or Guarantor's designee, at such
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Guarantor's expense, any documents or instruments which such Guarantor shall
reasonably request from time to time to evidence such termination and release.
SECTION 10. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Guarantors
that are contained in this Agreement shall bind and inure to the benefit of
each party hereto and their respective successors and assigns. This Agreement
shall become effective as to any Guarantor when a counterpart hereof executed
on behalf of such Guarantor shall have been delivered to the Servicer, and a
counterpart hereof shall have been executed on behalf of the Servicer, and
thereafter shall be binding upon such Guarantor and the Servicer and their
respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Guaranteed Parties, and their respective successors and assigns,
except that no Guarantor shall have the right to assign its rights or
obligations hereunder or any interest herein (and any such attempted assignment
shall be void). If all of the capital stock of a Guarantor is sold, transferred
or otherwise disposed of pursuant to a transaction permitted by the Loan
Facility Agreement, such Guarantor shall be released from its obligations under
this Agreement without further action. This Agreement shall be construed as a
separate agreement with respect to each Guarantor and may be amended, modified,
supplemented, waived or released with respect to any Guarantor without the
approval of any other Guarantor and without affecting the obligations of any
other Guarantor hereunder.
SECTION 11. Waivers; Amendment. (a) No failure or delay of
the Servicer if any in exercising any power or right hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and of the Servicer hereunder and of the
Participants under the other Operative Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by any Guarantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver and consent shall be effective only
in the specific instance and for the purpose for which given. No notice or
demand on any Guarantor in any case shall entitle such Guarantor to any other
or further notice in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may
be waived, amended or modified except pursuant to a written agreement entered
into between the Guarantors with respect to which such waiver, amendment or
modification relates and the Servicer, with the prior written consent of the
Required Participants (except as otherwise provided in the Loan Facility
Agreement).
SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA (WITHOUT
GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF).
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98
SECTION 13. Notices. All communications and notices hereunder
shall be in writing and given as provided in Section 15.1 of the Loan Facility
Agreement. All communications and notices hereunder to each Guarantor shall be
given to it at its address set forth on Schedule I attached hereto.
SECTION 14. Survival of Agreement; Severability. (a) All
covenants, agreements representations and warranties made by the Guarantors
herein and in the certificates or other instruments prepared or delivered in
connection with or pursuant to this Agreement or the other Operative Documents
shall be considered to have been relied upon by the Guaranteed Parties and
shall survive the making by the Participants of the Loans regardless of any
investigation made by any of them or on their behalf, and shall continue in
full force and effect as long as the principal of or any accrued interest on
any Loan or any other fee or amount payable under this Agreement or any other
Operative Document is outstanding and unpaid and as long as the Commitments
have not been terminated.
(b) In the event one or more of the provisions contained
in this Agreement or in any other Operative Document should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other jurisdiction).
The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 15. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this Agreement.
SECTION 16. Rules of Interpretation. The rules of
interpretation specified in Section 1.3 of the Loan Facility Agreement shall be
applicable to this Agreement.
SECTION 17. Jurisdiction; Consent to Service of Process. (a)
Each Guarantor hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any Georgia State court or
Federal court of the United States of America sitting in Xxxxxx County,
Georgia, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or the other Operative Documents,
or for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such Georgia
State court or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any
C-5
99
Guaranteed Party may otherwise have to bring any action or proceeding relating
to this Agreement or the other Operative Documents against any Guarantor or its
properties in the courts of any jurisdiction.
(b) Each Guarantor hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Operative Documents in any Georgia State or Federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such action
or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 13. Nothing in
this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
OPERATIVE DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER OPERATIVE
DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 18.
SECTION 19. Additional Guarantors. Pursuant to Section 6.10
of the Loan Facility Agreement, each Domestic Subsidiary that was not in
existence on the date of the Loan Facility Agreement is required to enter into
this Agreement as a Guarantor upon becoming a Domestic Subsidiary. Upon
execution and delivery after the date hereof by the Servicer and such
Subsidiary of an instrument in the form of Annex 1, such Subsidiary shall
become a Guarantor hereunder with the same force and effect as if originally
named as a Guarantor herein. The execution and delivery of any instrument
adding an additional Guarantor as a party to this Agreement shall not require
the consent of any other Guarantor hereunder. The rights and obligations of
each Guarantor hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Agreement.
SECTION 20. Right of Setoff. If a Credit Event shall have
occurred and be continuing, each Participant is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other Indebtedness at any time owing by such
Participant to or for the credit or the account of any Guarantor against any or
all the obligations of such Guarantor now or hereafter existing under this
Agreement and the other Operative
C-6
100
Documents held by such Participant, irrespective of whether or not such Person
shall have made any demand under this Agreement or any other Operative Document
and although such obligations may be unmatured. The rights of each Participant
under this Section 20 are in addition to other rights and remedies (including
other rights of setoff) which such Participant may have.
SECTION 21. Indemnity, Contribution, and Subrogation.
(a) In addition to all such rights of indemnity and
subrogation as each Guarantor may have under applicable law, the Servicer
agrees that (i) in the event a payment shall be made on behalf of the Sponsor
by any Guarantor hereunder, the Sponsor shall indemnify such Guarantor for the
full amount of such payment and such Guarantor shall be subrogated to the
rights of the person to whom such payment shall have been made to the extent of
such payment, and (ii) in the event any assets of any Guarantor shall be sold
to satisfy a claim of any Guaranteed Party hereunder, the Sponsor shall
indemnify such Guarantor in an amount equal to the greater of the book value or
the fair market value of the assets so sold.
(b) Each Guarantor (a "Contributing Guarantor") agrees
that, in the event a payment shall be made by any other Guarantor hereunder, or
assets of any other Guarantor shall be sold to satisfy a claim of any
Guaranteed Party hereunder, and such other Guarantor (the "Claiming Guarantor")
shall not have been fully indemnified by the Sponsor as provided in paragraph
(a) above, each Contributing Guarantor shall indemnify each Claiming Guarantor
in an amount equal to the amount of such payment or the greater of the book
value or the fair market value of such assets, as the case may be, in each case
multiplied by a fraction of which the numerator shall be the net worth of such
Contributing Guarantor on the date hereof and the denominator shall be the
aggregate net worth of the Sponsor and all of the Guarantors on the date hereof
(or, in the case of any Guarantor becoming a party hereto pursuant to Section
19, the date of the Supplement hereto executed and delivered by such
Guarantor). Any Contributing Guarantor making any payment to a Claiming
Guarantor pursuant to this paragraph (b) shall be subrogated to the rights of
such Claiming Guarantor under paragraph (a) above to the extent of such
payment. As used herein, the term "net worth" shall mean, as at any date of
determination, the consolidated shareholders' equity of the Sponsor and the
Guarantors, as determined in each case on a consolidated basis in accordance
with GAAP.
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
XXXXX INVESTMENT COMPANY, as
Guarantor
By:
-------------------------------
Name:
Title:
XXXXX RENTS, INC. PUERTO RICO, as
Guarantor
By:
-------------------------------
Name:
Title:
SUNTRUST BANK, as
Servicer
By:
-------------------------------
Name:
Title:
C-8
102
SCHEDULE I TO THE
SUBSIDIARY GUARANTEE AGREEMENT
Guarantor(s) Address
------------ -------
Xxxxx Investment Company
Xxxxx Rents, Inc. Puerto Rico
103
ANNEX 1 TO THE
SUBSIDIARY GUARANTY AGREEMENT
This SUPPLEMENT NO. [ ] (this "Supplement"), dated as of [ ],
to the Guaranty Agreement (the "Guaranty Agreement") dated as of March __,
2001, among each of the subsidiaries listed on Schedule I thereto (each such
Subsidiary individually, a "Guarantor" and collectively, the "Guarantors") of
XXXXX RENTS, INC., a Georgia corporation (the "Sponsor") and SUNTRUST BANK, a
Georgia banking corporation, as Servicer (the "Servicer") for the Participants
(as defined in the Loan Facility Agreement referred to below) (the Servicer and
the Participants shall hereafter be referred to collectively as the Guaranteed
Parties).
A. Reference is made to the Loan Facility Agreement and
Guaranty, dated as of March __, 2001 (as amended, supplemented or otherwise
modified from time to time, the "Loan Facility Agreement"), among the Sponsor,
the lending institutions listed on the signature pages thereto (the
"Participants") and the Servicer.
B. Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Guaranty
Agreement and the Loan Facility Agreement.
C. The Guarantors have entered into the Guaranty
Agreement in order to induce the Participants to extend credit to Franchisees
of the Sponsor. Pursuant to Section 6.10 of the Loan Facility Agreement, each
Domestic Subsidiary of the Sponsor that was not in existence or not a
Subsidiary Credit Party on the date of the Loan Facility Agreement is required
to enter into the Guaranty Agreement as a Guarantor upon becoming a Domestic
Subsidiary. Section 19 of the Guaranty Agreement provides that additional
Subsidiaries of the Sponsor may become Guarantors under the Guaranty Agreement
by execution and delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary of the Sponsor (the "New Guarantor") is executing this
Supplement in accordance with the requirements of the Loan Facility Agreement
to become a Guarantor under the Guaranty Agreement in order to induce the
Participants to make additional Loans and as consideration for Loans previously
made.
Accordingly, the Servicer and the New Guarantor agree as
follows:
SECTION 1. In accordance with Section 19 of the Guaranty
Agreement, the New Guarantor by its signature below becomes a Guarantor under
the Guaranty Agreement with the same force and effect as if originally named
therein as a Guarantor and the New Guarantor hereby (a) agrees to all the terms
and provisions of the Guaranty Agreement applicable to it as Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Guarantor thereunder are true and correct on and as
of the date hereof. Each reference to a Guarantor in the Guaranty Agreement
shall be deemed to include the New Guarantor. The Guaranty Agreement is hereby
incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Guaranteed Parties that this Supplement has been duly authorized, executed and
delivered by it and
104
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement shall become
effective when the Servicer shall have received counterparts of this Supplement
that, when taken together, bear the signatures of the New Guarantor and the
Servicer. Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a manually signed
counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Guaranty Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA (WITHOUT GIVING
EFFECT TO CONFLICTS OF LAW PRINCIPLES THEREOF).
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and in the Guaranty Agreement shall not in any way
be affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 7. All communications and notices hereunder shall be
in writing and given as provided in Section 13 of the Guarantee Agreement. All
communications and notices hereunder to the New Guarantor shall be given to it
at the address set forth under its signature below, with a copy to the Sponsor.
SECTION 8. The New Guarantor agrees to reimburse the Servicer
for its out-of-pocket expenses in connection with this Supplement, including
the fees, disbursements and other charges of counsel for the Servicer.
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105
IN WITNESS WHEREOF, the New Guarantor and the Servicer have
duly executed this Supplement to the Guaranty Agreement as of the day and year
first above written.
[Name of New Guarantor]
By:
-------------------------------
Name:
Title:
Address:
SUNTRUST BANK, as
Servicer
By:
-------------------------------
Name:
Title:
C-11
106
EXHIBIT A
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT (the "ASSIGNMENT
AGREEMENT") dated as of _______________________, 20__ between __________
("ASSIGNOR") and __________________________________ ("ASSIGNEE"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Loan Facility Agreement and
Guaranty referred to below.
WITNESSETH:
WHEREAS, Assignor is a party to that certain Loan Facility Agreement
and Guaranty, dated as of March __, 2001 (as amended, restated, modified or
supplemented from time to time, the "LOAN FACILITY AGREEMENT"), by and among
Xxxxx Rents, Inc., a Georgia corporation (the "SPONSOR"), SunTrust Bank
("SUNTRUST") and each of the other lending institutions party thereto
(SunTrust, such lenders, together with any assignees thereof becoming
"PARTICIPANTS"), and SunTrust Bank, a banking corporation organized and
existing under the laws of Georgia, as servicer and agent for the Participants
(in such capacity, the "Servicer"); and
WHEREAS, Assignor has a Participating Commitment in the amount of
$___________ under the Loan Facility Agreement pursuant to which it has
outstanding a Funded Startup Franchisee Participant's Interest of
$______________, and a Funded Established Franchisee Participant's Interest of
$_______________, for a total Funded Participant's Interest of
$_______________; and
WHEREAS, Assignor and Assignee wish Assignor to assign to Assignee its
rights under the Loan Facility Agreement with respect to a portion of its
Participating Commitment and of its outstanding Funded Participant's Interest;
and
WHEREAS, Assignor and Assignee wish Assignee to assume the obligations
of Assignor under the Loan Facility Agreement to the extent of the rights so
assigned;
THEREFORE, upon the terms and conditions hereafter stated, and in
consideration of the mutual premises set forth above and other adequate
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
107
1. Assignment. Assignor hereby assigns to Assignee, without
recourse, representation or warranty (other than expressly provided herein) and
subject to Section 4(b) hereof, ___% as the "Assignee's Share" ("Assignee's
Share") of all of Assignor's rights, title and interest arising under the Loan
Facility Agreement relating to Assignor's Participating Commitment and Funded
Participant's Interest heretofore made by the Assignor under the Loan Facility
Agreement. The dollar amount of Assignee's Share of Assignor's Participating
Commitment is $__________ and the dollar amount of Assignee's Share of
Assignor's outstanding Funded Participant's Interest is $__________.
2. Assumption. Assignee hereby assumes from Assignor all of
Assignor's obligations arising under the Loan Facility Agreement relating to
Assignee's Share of Assignor's Participating Commitment and Funded
Participant's Interest. It is the intent of the parties hereto that Assignor
shall be released from all of its obligations under the Loan Facility Agreement
relating to Assignee's Share.
3. Assignments; Participations. Assignee may not assign all or
any part of the rights granted to it hereunder or grant participations in all
or any part of the rights granted to it hereunder except in accordance with the
provisions of Section 15.6 of the Loan Facility Agreement.
4. Payment of Interest and Fees to Assignee. Notwithstanding
anything to the contrary contained in this Assignment Agreement, if and when
Assignor receives or collects any payment of interest on its Funded
Participant's Interest attributable to Assignee's Share or any payment of the
Commitment Fee attributable to Assignee's Share, Assignor shall distribute to
Assignee such payment but only to the extent such interest or fee accrued after
the Assignment Effective Date (as hereinafter defined).
5. Payments on Assignment Effective Date. In consideration of
the assignment by Assignor to Assignee of Assignee's Share of Assignor's
Participating Commitment and Funded Participant's Interest as set forth above,
Assignee agrees to pay to Assignor on or prior to the Assignment Effective Date
an amount specified by Assignor in writing on or prior to the Assignment
Effective Date which represents Assignee's Share of the principal amount of the
Funded Participant's Interest of Assignor outstanding on the Assignment
Effective Date.
6. Effectiveness.
a. This Assignment Agreement shall become effective on the date
(the "Assignment Effective Date") (which is at least five days after the date
hereof) on which (i) Assignor and Assignee shall have signed a copy hereof
(whether the same or different copies) and, in the case of Assignee, shall have
delivered same to Assignor, (ii) the Sponsor shall have consented hereto, (iii)
a copy of the fully executed Assignment Agreement, a fee of $1,000 and the
Participation Certificate evidencing the Participating Commitment and Funded
Participant's Interest assigned hereby shall have been delivered to the
Servicer, and (iv) Assignee shall have paid to Assignor the amount set forth in
Section 5.
108
b. It is agreed that all interest attributable to Assignee's
Share of the Funded Participant's Interest of Assignor and all Commitment Fees
attributable to Assignee's Share, which, in each case, accrues on and after the
Assignment Effective Date shall be paid directly to the Assignee in accordance
with the Loan Facility Agreement.
7. Amendment of Loan Facility Agreement. On the Assignment
Effective Date the Loan Facility Agreement shall be amended by deeming the
signature of Assignee herein as a signature to the Loan Facility Agreement. The
Assignee shall be deemed a "Participant" for all purposes under the Loan
Facility Agreement and shall be subject to and shall benefit from all of the
rights and obligations of a Participant under the Loan Facility Agreement. The
address of the Assignee for notice purposes shall be as set forth below, and
the Loan Facility Agreement shall be amended by deeming such signature page and
address to be included thereon. Without limiting the generality of the
foregoing, Assignee agrees that it will perform its obligations as a
Participant under the Loan Facility Agreement as required by the terms thereof
and Assignee appoints and authorizes the Servicer to take such actions as
Servicer on its behalf and exercise such powers under the Loan Facility
Agreement and the other Operative Documents as are delegated to the Servicer by
the terms of the Loan Facility Agreement and the other Operative Documents,
together with such powers as are reasonably incidental thereto.
8. Representations and Warranties. Each of the Assignor and the
Assignee represents and warrants to the other party as follows:
a. it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment Agreement and to fulfill its
obligations under, and to consummate the transactions contemplated by, this
Assignment Agreement;
b. the making and performance by it of this Assignment Agreement
and all documents required to be executed and delivered by it hereunder do not
and will not violate any law or regulation of the jurisdiction of its
incorporation or any other law or regulation applicable to it;
c. this Assignment Agreement has been duly executed and
delivered by it and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms; and
d. all consents, licenses, approvals, authorizations,
exemptions, registrations, filings, opinions and declarations from or with any
agency, department, administrative authority, statutory corporation or judicial
entity necessary for the validity or enforceability of its obligations under
this Assignment Agreement have been obtained, and no governmental
authorizations other than any already obtained are required in connection with
its execution, delivery and performance of this Assignment Agreement.
109
9. Expenses. The Assignor and the Assignee agree that each party
shall bear its own expenses in connection with the preparation and execution of
this Assignment Agreement.
10. Miscellaneous.
a. Assignor shall not be responsible to Assignee for the
execution (by any party other than the Assignor), effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of the Loan Facility
Agreement, or the Participation Certificates or for any representations,
warranties, recitals or statements made therein or in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents made or furnished or made available by
Assignor to Assignee or by or on behalf of the Sponsor or any Guarantor to
Assignor or Assignee in connection with the Loan Facility Agreement or the
Participation Certificates and the transactions contemplated thereby. Assignor
shall not be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements
contained in the Loan Facility Agreement or the Participation Certificates or
as to the existence or possible existence of any event which constitutes a
Credit Event or an Unmatured Credit Event.
b. Assignee represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Sponsor
and each Guarantor in connection with the assignment of Assignee's Share of
Assignor's Participating Commitment to Assignee hereunder and has made and
shall continue to make its own appraisal of the creditworthiness of the Sponsor
and each Guarantor. Assignor shall have no duty or responsibility either
initially or on a continuing basis to make any such investigation or any such
appraisal on behalf of Assignee or to provide Assignee with any credit or other
information with respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter and shall further have
no responsibility with respect to the accuracy of, or the completeness of, any
information provided to Assignee, whether by Assignor or by or on behalf of
either the Sponsor or any Guarantor.
c. THIS ASSIGNMENT AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE AND BE GOVERNED BY THE
LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE
STATE OF GEORGIA.
d. No amendment or waiver of any provisions of this Assignment
Agreement shall in any event be effective unless the same shall be in writing
and signed by both parties.
e. This Assignment Agreement may be executed in any number of
counterparts and the different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original but all of which
together shall constitute one and the same instrument.
f. The Assignor may at any time or from time to time grant to
others assignments or
110
participations in its Participating Commitment or its Funded Participant's
Interest but not in the portions thereof assigned to Assignee pursuant to this
Assignment Agreement. The Assignor represents and warrants that it has not at
any time prior to the Assignment Effective Date encumbered or assigned the
portion of its Participating Commitment or its Funded Participant's Interest
being assigned hereunder.
g. All payments hereunder or in connection herewith shall be
made in Dollars and in immediately available funds, if payable to the Assignor,
to the account of the Assignor at its address as designated in the Loan
Facility Agreement, and, if payable to the Assignee, to the account of the
Assignee's address, as designated on the signature page hereof.
h. This Assignment Agreement shall be binding upon and inure to
the benefit of and be enforceable by the respective successors and assigns of
the parties hereto, provided that neither of the parties may assign or transfer
any of its rights or obligations under this Assignment Agreement without the
prior consent of the other party.
i. All representations and warranties made herein and
indemnities provided for herein shall survive the consummation of the
transaction contemplated hereby.
j. The Assignee acknowledges receipt of copies of the documents
received in connection with the transactions contemplated by the Loan Facility
Agreement and this Assignment Agreement.
111
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement to be duly executed as of the day and year date first
above written.
[NAME OF ASSIGNOR]
By:
-------------------------------
Title:
Assignee's Share of [NAME OF ASSIGNEE]
Participating Commitment:
$ By:
---------------------------------- -------------------------------
Title:
Assignee's Share of
Funded Participant's Interest:
$
----------------------------------
Assignee's Share of
Funded Startup Franchisee
Participant's Interest:
$
----------------------------------
Assignee's Share of Funded
Established Franchisee
Participant's Interest:
$
----------------------------------
Address:
Tel. No:
----------------------------------
Fax No:
----------------------------------
112
CONSENTED TO AS OF THE
DATE SET FORTH ABOVE:
XXXXX RENTS, INC.
By:
-----------------------------------------
Title:
-----------------------------------
SUNTRUST BANK, as Servicer
By:
-----------------------------------------
Title:
-----------------------------------
113
EXHIBIT B
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
LINE OF CREDIT AND SECURITY AGREEMENT
(Established Franchisee Borrower)
THIS LINE OF CREDIT AND SECURITY AGREEMENT (this "Agreement") dated as
of ____________ ___, 200__, is made between _______________________, [a
__________ corporation] [a ____________ partnership] [a __________ limited
liability company] ("Borrower"), and SUNTRUST BANK ("Bank"), a Georgia banking
corporation having its principal office in Atlanta, Georgia.
WITNESSETH:
WHEREAS, Borrower engages in the business of renting and selling
furniture, electronics, appliances, jewelry and other household goods and is a
franchisee of Xxxxx Rents, Inc., a Georgia corporation ("Xxxxx");
WHEREAS, Borrower has requested and Bank has agreed to establish a
line of credit for Borrower in order for Borrower to (i) purchase inventory for
use in connection with its Aaron's Rental Purchase franchise and (ii) borrow
working capital, to the extent approved by Xxxxx; and
WHEREAS, Borrower and Bank wish to enter into this Agreement to set
forth the terms and conditions of Bank's establishment of a revolving line of
credit for Borrower;
THEREFORE, upon the terms and conditions hereinafter stated, and in
consideration of the mutual premises set forth above and other adequate
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1. As used in this Agreement, the following terms shall have the
meanings set forth below (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
"Aaron's Proprietary System" shall mean Aaron's proprietary point of
sale software
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system, as modified from time to time, used by Xxxxx and its franchisees, such
as Borrower.
"Account" means any right of Borrower to payment for goods sold or
leased or for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not earned by performance.
"Account Debtor" means any Person who is liable on an Account.
"Advance" shall mean an advance of funds by Bank on behalf of Borrower
pursuant to the Master Note executed by Borrower.
"Agreement" means this Line of Credit and Security Agreement and all
exhibits, riders and schedules at any time executed by the parties and made a
part hereof by reference, either as originally executed or as hereafter
amended, modified or supplemented from time to time.
"Applicable Law" means all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in question,
including, without limitation, all applicable law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes, rules,
regulations and orders of governmental bodies; and all orders, judgments and
decrees of all courts and arbitrators.
"Approved Invoice" means an invoice for the aggregate purchase price
of Merchandise purchased by Borrower with a purchase order approved by Xxxxx.
"Asset Disposition" shall mean (i) all sales of Merchandise; (ii) all
Rental/Purchase Contracts with respect to Merchandise with a "same as cash
option" regardless of term (i.e., 90, 120, 180 days); (iii) all Merchandise
which is determined to have been stolen; (iv) all Merchandise that is
destroyed, lost or otherwise removed from the premises of Borrower other than
pursuant to a Rental/Purchase Contract or by outright sale or for repair work;
and (v) all "skipped" Merchandise which is Merchandise subject to a
Rental/Purchase Contract.
"Balances" means all monies and funds of Borrower at any time on
deposit with Bank.
"Bank" shall mean SunTrust Bank and its successors and assigns.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as may be
amended from time to time.
"Books and Records" means all of Borrower's books and records
evidencing or relating to its business, financial condition or the Collateral,
including, but not limited to, all customer lists, ledgers, invoices, purchase
orders, financial statements, computer tapes and disks.
"Borrowing Base" shall mean, on any date of determination, the sum of:
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(i) $300,000 for each franchisee store operated by the
Borrower where less than 7 calendar months have elapsed since the
Opening Date of each such store, plus
(ii) an amount equal to 5.5 multiplied by the sum of (x)
the Rental Revenue from the most recently ended calendar month from
all franchisee stores operated by the Borrower where at least 6
calendar months but less than 12 calendar months have elapsed since
the Opening Date of each such store, plus (y) the average monthly
Rental Revenue for the three most recently ended calendar months from
all franchisee stores operated by the Borrower where at least 12
calendar months have elapsed since the Opening Date of each such
store, in each case as reported to the Bank by Xxxxx pursuant to
Section 2.2(d) hereof, plus
(iii) an amount equal to 11.0 multiplied by the sum of (x)
the Electronic Rental Revenues from the most recently ended calendar
month from all franchisee stores operated by the Borrower where at
least 6 calendar months but less than 12 calendar months have elapsed
since the Opening Date of each such store, plus (y) the average
monthly Electronic Rental Revenues for the three most recently ended
calendar months from any and all franchisee stores operated by the
Borrower where at least 12 calendar months have elapsed since the
Opening Date of such store, in each case as reported to the Bank by
Xxxxx pursuant to Section 2.2(d) hereof.
"Borrowing Base Report" shall have the meaning set forth in Section
2.2(d) hereof.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in Atlanta, Georgia are authorized by law to
close.
"Chattel Paper" shall have the meaning ascribed to it in the Code.
"Closing Date" means the date upon which the initial Advance with
respect to the Loan is funded.
"Closing Fee" shall have the meaning given to such term in Section 2.9
hereof.
"Code" means the Uniform Commercial Code as in effect from time to
time in the State of Georgia.
"Collateral" shall have the meaning given to such term in Section 3.1
hereof.
"Collateral Agreement" means an agreement executed by Borrower and any
other Persons primarily or secondarily liable for all or part of the Loan or
granting a security interest to Bank in specified Collateral as security for
the Loan, including without limitation, this Agreement and any Guaranties.
"Commitment Fee" shall have the meaning set forth in Section 2.10
hereof.
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"DDA Account" shall mean Borrower's Demand Deposit Account into which
Bank shall deposit the Advances.
"Debt" means (i) indebtedness for borrowed money or for the deferred
purchase price of property or services (other than trade accounts payable on
customary terms in the ordinary course of business), (ii) financial obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
financial obligations as lessee under leases which shall have been or should
be, in accordance with GAAP, recorded as capital leases, and (iv) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or financial obligations of
others of the kinds referred to in clauses (i) through (iii) above.
"Default Condition" means the occurrence of any event which, after
satisfaction of any requirement for the giving of notice or the lapse of time,
or both, would become an Event of Default.
"Default Rate" means the annual percentage interest rate applied to
the principal of the Loan not paid when due under the terms of the applicable
Loan Documents, which rate shall equal the sum of two percent (2%) per annum
plus the Floating Rate.
"Delinquent Payment Fee" shall have the meaning given to such term in
Section 2.11 hereof.
"Documents" shall have the meaning ascribed to it in the Code.
["EBIT" SHALL MEAN, WITH RESPECT TO BORROWER, FOR ANY PERIOD, (I) NET
INCOME OF BORROWER FOR SUCH PERIOD, PLUS (II) TO THE EXTENT DEDUCTED IN
DETERMINING NET INCOME, INTEREST AND TAXES BASED ON INCOME FOR SUCH PERIOD,
EACH AS DETERMINED IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED.]
"Electronic Equipment" shall include all computers, computer
equipment, big screen televisions, and any other types of inventory designated
by Xxxxx from time to time.
"Electronic Rental Revenue" shall mean, with respect to the Borrower
for any period, the gross revenues of the Borrower from rentals to the public
of the Borrower's Electronic Equipment inventory, including without limitation,
all customer deposits, advance rental payments, waiver fees, late fees,
delivery fees, nonsufficient funds fees, reinstatement fees, but excluding all
retail sales proceeds and sales taxes.
"Environment" means navigable waters, waters of the contiguous zone,
ocean waters, natural resources, surface waters, ground water, drinking water
supply, land surface, subsurface strata, ambient air, both inside and outside
of buildings and structures.
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"Environmental Laws" means federal, state, local and foreign laws,
principles of common law, regulations and codes, as well as orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder
relating to pollution, protection of the environment or public health and
safety, including, but not limited to the release or threatened release of
Hazardous Substances into the Environment or otherwise relating to the
presence, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
"Equipment" means all machinery, equipment, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of
Borrower, including, but not limited to, all items described on the Equipment
Schedule (if attached) and all substitutions and replacements thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning given to such term in
Section 9 hereof.
"Floating Rate" means a rate of interest per annum equal to the Prime
Rate plus an additional ____ percent (____%) per annum, such rate to change as
and when the Prime Rate changes.
"Franchise Agreement" means the written agreement between Xxxxx and
Borrower whereby Borrower is authorized to establish an "Aaron's Rental
Purchase" franchise.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied.
"General Intangibles" shall have the meaning ascribed to it in the
Code and shall include, without limitation, all of Borrower's tax refund
claims, patents, copyrights, licenses, trademarks, trade names, service marks,
patent applications and choses in action.
"Guarantor" means each Person who now or hereafter guarantees payment
of the whole or any part of the Loan Indebtedness.
"Guaranty" means any guaranty agreement executed by each of the
partners, shareholders, and where not prohibited by law, the spouses of such
persons, of Borrower, or such other Persons as may be required by the Bank, in
favor of the Bank with respect to the obligations of Borrower with respect to
the Loan in the form provided by the Bank, as the same may be amended, restated
or supplemented from time to time.
"Hazardous Substances" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste, or any
constituent of any such substance or waste, in-
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cluding without limitation, any such substance regulated under or defined by
any Environmental Law.
"Instrument" shall have the meaning ascribed to it in the Code.
"Inventory" means all inventory of Borrower, including, without
limitation, all raw materials, work-in-process, finished goods, goods being
leased pursuant to Rental/Purchase Contracts, and other goods held by Borrower
for sale or lease or furnished under contracts of service.
"Investment Property" shall have the meaning ascribed to it in the
Code.
"Lien" means any interest in property securing an obligation, whether
such interest is based on the common law, statute or contract, including,
without limitation, a security interest, lien or security title arising from a
security agreement, mortgage, security deed, trust deed, pledge or condition
sale, or a lease, consignment or bailment for security purposes.
"Loan" means, as of any date of determination, the aggregate amount of
Advances outstanding pursuant to the Loan Commitment from the Bank to Borrower
established pursuant to Section 2 hereof.
"Loan Account" means the internal bank loan account established by the
Bank for Borrower.
"Loan Commitment" means the committed amount of the loan facility
established by the Bank in favor of Borrower in the amount not exceeding, and
upon the terms described in, this Agreement.
"Loan Documents" means this Agreement, the Master Note, the Collateral
Agreements, any other documents relating to the Loan delivered by Borrower or
any guarantor or surety thereof to the Bank and any amendments thereto.
"Loan Indebtedness" means all amounts due and payable by Borrower
under the terms of the Loan Documents with respect to the Loan Commitment and
the Advances made thereunder, including, without limitation, outstanding
principal, accrued interest, any late charges, and all reasonable costs and
expenses of any legal proceeding brought by the Bank to collect any of the
foregoing (including without limitation, reasonable attorneys' fees).
"Loan Term" shall have the meaning set forth in Section 2.4 hereof.
"Master Note" means the note of Borrower, substantially in the form
attached hereto as Exhibit A, setting forth the obligation of Borrower to repay
the Loan.
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"Materially Adverse Effect" shall mean any materially adverse change
in (i) the business, results of operations, financial condition, assets or
prospects of the Borrower, taken as a whole, (ii) the ability of the Borrower
to perform its obligations under this Agreement, or (iii) the ability of the
Guarantors (taken as a whole) to perform their respective obligations under the
Guaranty.
"Maturity Date" shall have the meaning set forth in Section 2.3
hereof.
"Merchandise" means goods distributed or sold to Borrower through
Xxxxx.
"Net Book Value" means, for any item of Merchandise, the cost of such
Merchandise less accumulated depreciation as calculated in accordance with the
Aaron's Proprietary System.
"Opening Date" shall mean with respect to each store location, the
date determined by Xxxxx to be the opening date of such location in accordance
with its standard practice, as notified to the Bank.
"Payment Date" shall mean the last day of each calendar month;
provided, however, if such day is not a Business Day, the next succeeding
Business Day
"Payment Period" shall mean a period of one (1) month; provided that
(i) the first day of a Payment Period must be a Business Day, (ii) any Payment
Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day, (iii) the first Payment Period
hereunder shall commence on the date hereof and shall end on the last day of
the next succeeding calendar month, and (iv) the first day of any succeeding
Payment Period shall be the last day of the preceding Payment Period and shall
end on the last day of the next succeeding calendar month.
"Permitted Liens" means Liens in favor of Bank or Xxxxx; Liens for
taxes not yet due or payable; statutory Liens securing the claims of
materialmen, mechanics, carriers and landlords for labor, materials, supplies
or rentals incurred in the ordinary course of Borrower's business, but only if
payment thereof is not at the time required and such Liens are at all times
junior in priority to the Liens in favor of Bank; Liens shown on Exhibit B (if
any); and Liens hereafter consented to by Bank in writing.
"Person" means a corporation, an association, partnership, an
organization, a business, a business trust, a limited liability company, an
individual, a government or political subdivision thereof or a governmental
agency.
"Prime Rate" means the per annum rate of interest designated from time
to time by the Bank to be its prime rate, with any change in the rate of
interest resulting from a change in the Prime Rate to be effective as of the
opening of business of the Bank on the day of such change. The prime rate is
one of several reference rates used by the Bank and the Bank makes loans at
rates both higher and lower than the Prime Rate.
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"Quarterly Covenant Compliance Report" shall mean that Quarterly
Covenant Compliance Report substantially in the form of Exhibit D attached
hereto.
"Rental/Purchase Contract" means a contract between Borrower and a
customer to rent Merchandise in the form approved by Xxxxx (and which may
included purchase options).
"Rental Revenue" means, for any period, the gross revenues of Borrower
from rentals to the public of Borrower's furniture inventory and rental
equipment including, without limitation, all customer deposits, advance rental
payments, waiver fees, late fees, delivery fees, nonsufficient fund fees,
reinstatement fees, but excluding Electronic Rental Revenues, all retail sales
proceeds and sales taxes.
"Solvent" means, as to any Person, such Person (i) is able to pay, and
does pay, its debts as they mature and (ii) has a positive tangible net worth
determined in accordance with GAAP.
"Spousal Consent" shall mean any agreement provided by the spouse of
any Person executing a Guaranty to the extent such spouse has not personally
executed a Guaranty, to be substantially in the form provided by the Bank.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by Borrower.
["TANGIBLE NET WORTH" MEANS, WITH RESPECT TO THE BORROWER AS OF ANY
DATE OF DETERMINATION, THE EXCESS OF THE TOTAL ASSETS OF THE BORROWER OVER THE
TOTAL LIABILITIES OF THE BORROWER, DETERMINED IN ACCORDANCE WITH GAAP
CONSISTENTLY APPLIED, EXCLUDING FROM THE CALCULATION OF TOTAL ASSETS THE NOTES
RECEIVABLES FROM SHAREHOLDERS OF THE BORROWER AND INCLUDING IN SUCH CALCULATION
OF TOTAL ASSETS THE FRANCHISE FEES AS SHOWN ON THE BALANCE SHEET OF THE BORROWER
AS OF SUCH DATE.]
["TOTAL LIABILITIES" MEANS, WITH RESPECT TO THE BORROWER, AS OF ANY
DATE OF DETERMINATION, TOTAL LIABILITIES DETERMINED IN ACCORDANCE WITH GAAP
CONSISTENTLY APPLIED, BUT EXCLUDING THEREFROM DEBT OF THE BORROWER WHICH IS
SUBORDINATED TO THE LOAN INDEBTEDNESS OWING TO THE BANK PURSUANT TO A
SUBORDINATION AGREEMENT IN FORM AND SUBSTANCE SATISFACTORY TO THE BANK.]
1.2. Accounting Terms and Determination. Accounting terms used in
this Agreement such as "amortization," "depreciation," "interest expense," and
"tangible net worth" shall have the meaning normally given them by, and shall be
calculated (both as to amounts and classification of items) in accordance with,
GAAP. Any pronoun used herein shall be deemed to cover all genders. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations, and all references to any
instruments or agreements, including, without limitation, references to any of
the Loan
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Documents, shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.
2. LOAN; USE OF PROCEEDS.
2.1. Establishment of DDA Account; Loan Account. (a) Prior to the
Closing Date, Bank shall establish a DDA Account for Borrower.
(b) Prior to the Closing Date, Bank shall also establish
on its books an internal loan account in Borrower's name (the "Loan Account") in
which Bank shall record, in accordance with customary accounting practice, all
charges, expenses and other items properly chargeable to Borrower; all payments
made by Borrower on account of indebtedness evidenced by the Loan Account; all
proceeds of Collateral which are finally paid to Bank at its office in cash or
solvent credits; and other appropriate debits and credits. The debit balance of
the Loan Account shall reflect the amount of Borrower's Loan Indebtedness from
time to time by reason of the Loan and other appropriate charges hereunder. At
least once each month, Bank shall render a statement of account for the Loan
Account, which statement shall be considered correct, and accepted by and
conclusively binding upon Borrower, unless Borrower notifies Bank to the
contrary within thirty (30) days after Bank's sending of said statement to
Borrower.
2.2. Advances. Upon Borrower's execution of this Agreement and
compliance with its terms and subject to Bank's confirmation if requested by
Xxxxx that Bank has a first priority security interest in the Collateral, Bank
shall notify Borrower that Borrower may request Advances pursuant to the Loan
Commitment. Bank shall make such Advances into the DDA Account for the sole
purposes of honoring requests from Borrower, made through the Aaron's
Proprietary System, for ACH transfers to (i) suppliers of Merchandise in payment
of Approved Invoices, and (ii) to other accounts as may be specified by Borrower
for Advances made for working capital purposes, subject to the approval of
Xxxxx, such approval to be evidenced by the granting of a vendor identification
number to Borrower to use in requesting such working capital Advance through the
Aaron's Proprietary System. Borrower shall not use the DDA Account for any other
purpose. The maximum principal amount of Advances at any time outstanding
pursuant to this Agreement shall not exceed the lesser of (x)
____________________ ($ ___________) (the "Loan Commitment") and (y) the
Borrowing Base, as most recently reported by Xxxxx to Bank pursuant to Section
2.2(d) hereof (such lesser amount herein referred to as the "Revolver
Availability"). Each Advance shall be in the amount of not less than $500.
(b) Borrower shall submit purchase order requests for
Merchandise to Xxxxx. In the event that the purchase order is authorized
pursuant to the Franchise Agreement, Xxxxx will prepare the purchase order and
submit the same to the appropriate supplier requested by Borrower. The supplier
will be instructed to ship all Merchandise directly to Borrower and Borrower
will be responsible for (i) inspecting all Merchandise and resolving all
disputes regarding the Merchandise with such supplier and (ii) paying all
freight and other shipping and/or insurance charges arising in connection
therewith with funds other than Loan Proceeds. The supplier will invoice
Borrower for such Merchandise in accordance with normal industry practice. When
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Borrower wishes to pay such invoice, Borrower, subject to the Revolver
Availability of the Loan Commitment, shall pay such invoice by directing the
Bank, through the Aaron's Proprietary System, to pay such invoice by means of an
ACH transfer from its DDA Account. Any directions for ACH transfers correctly
inputted into the Aaron's Proprietary System prior to 12:00 Midnight (Atlanta,
Georgia time) on any Business Day, shall be paid by the Bank no later than the
third Business Day thereafter, unless Borrower is otherwise notified by Xxxxx or
the Bank.
(c) Upon receipt of the request for an ACH transfer
(provided that such request relates to an Approved Invoice), the Bank shall
honor such request by making an Advance pursuant to the Loan Commitment in the
amount of such request into the Borrower's DDA Account and automatically
forwarding such amount to the supplier by means of an ACH transfer in accordance
with the instructions of Borrower. In the event that a request for an ACH
transfer is presented for payment and Borrower's availability pursuant to the
Loan Commitment is insufficient to honor such request, the Bank may, but shall
have no obligation to, make such overadvance, which shall be an Advance for all
purposes hereunder, but shall be due and payable upon demand. At the end of each
calendar month, Bank shall provide Borrower with a monthly DDA Account statement
in the form customarily used by Bank for its commercial customers and a loan
account statement.
(d) On the fifth Business Day of each month (as
determined on the last day of the preceding calendar month), Xxxxx shall
calculate the Borrowing Base and report the same to Bank in writing (the
"Borrowing Base Report"), and Bank shall be entitled to rely conclusively upon
such information. Upon receipt of the Borrowing Base Report, Bank shall input
such information into Bank's loan records to be effective as of the date which
is two Business Days after receipt of such information. On the 10th day of each
calendar month, Bank shall mail to Borrower a xxxx setting forth the total
amount of principal (to the extent that the outstanding principal amount of the
Loan exceeds the Borrowing Base as set forth in the most recent Borrowing Base
Report) and interest due on the next Payment Date which xxxx shall be considered
correct, and accepted by and conclusively binding upon Borrower, unless Borrower
notifies Bank to the contrary within thirty (30) days after Bank's sending of
said xxxx to Borrower. In addition, Bank, on the date which is two Business Days
after receipt of the Borrowing Base Report from Xxxxx, shall notify Borrower in
writing (including facsimile) of the new Borrowing Base for Borrower and shall
require that Borrower repay on the next Payment Date any additional Advances
made since the date of the preparation of the statement for such Payment Date if
necessary to avoid any overadvance as of such date and such amount (in addition
to any amounts set forth in the xxxx to Borrower) shall be due and payable on
the next Payment Date.
2.3. Master Note; Repayment. The Loan Commitment shall be evidenced
by a note executed by Borrower in favor of Bank, substantially in the form of
Exhibit A attached hereto (the "Master Note"). The Master Note shall be dated as
of the date hereof and shall be payable to the order of Bank in the stated
principal amount of the Loan Commitment. Payments of principal shall be due and
payable by Borrower to Bank, subject to the provisions of Section
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2.6(b) below, on the effective date of termination of the Loan (the "Maturity
Date"), unless sooner accelerated in accordance with the terms hereof. Except as
provided below, all payments of principal of, or interest on, the Loan Documents
and all other sums due under the terms of the Loan shall be made in either (x)
immediately available funds (including ACH transfers), or (y) checks or money
orders made payable to the Bank at its principal office in Atlanta, Georgia in
accordance with written instructions provided by the Bank. All voluntary
prepayments of the Loan shall be made to the Bank at its Strategic Partner
Programs Department in Atlanta, Georgia using preprinted envelopes provided by
the Bank for such purpose or, if such envelopes are unavailable, mailed to the
following address:
SunTrust Bank
Strategic Partner Programs Department
Attn: Xxxxx Rent's Program Manager
X.X. Xxx 0000
Mail Code 1923
Xxxxxxx, XX 00000
2.4. Loan Term; Voluntary Termination. The term of the Loan
Commitment shall be a period of four years from the Closing Date (the "Loan
Term"), subject to Section 10 hereof. Upon the termination of the Loan
Commitment, the principal of and all accrued but unpaid interest on the Loan
Indebtedness shall be forthwith due and payable, but all of the duties and
covenants of Borrower hereunder, and all rights, remedies and privileges of Bank
under this Agreement and Bank's security interest in the Collateral, shall
continue in full force and effect until all of the Loan Indebtedness is fully
and finally paid.
2.5. Interest. (a) From and after the date hereof, interest shall
accrue on the unpaid principal amount of the Loan Indebtedness at the Floating
Rate. Interest shall be calculated daily and shall be computed on the basis of
actual days elapsed over the period of a 360 day year. Interest shall be payable
in arrears on each Payment Date and on the Maturity Date, whether due to
acceleration or otherwise. After the occurrence of an Event of Default and
during the continuance thereof, the outstanding principal balance of the Loan
shall bear interest at the Default Rate, which shall be payable upon demand.
(b) In no contingency or event whatsoever shall the
amount paid or agreed to be paid to Bank for the use, forbearance or detention
of money advanced under this Agreement exceed the highest lawful rate
permissible under Applicable Law. It is the intent hereof that Borrower will not
pay or contract to pay, and that Bank not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be charged to and paid by Borrower under Applicable Law. All interest
(and charges deemed interest) paid or agreed to be paid to Bank shall, to the
extent permitted by Applicable Law, be amortized, pro rated, allocated and
spread in equal parts throughout the full term hereof until payment in full of
the principal amount of the Loan Indebtedness owing hereunder (including the
period of any renewal or extension hereof) so that interest on the principal
amount of the Loan Indebtedness
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outstanding hereunder for such full period will not exceed the maximum amount
permitted by Applicable Law.
2.6. Loan Prepayment. (a) Voluntary Prepayment. Borrower shall have
the right to prepay the Loan in whole or in part upon at least two (2) Business
Days' prior written notice to Bank, provided, however, that any voluntary
partial prepayment of the Loan shall be in a minimum amount of $1,000.
(b) Mandatory Prepayment. On any Payment Date on which
the aggregate outstanding principal amount of the Loan exceeds the Borrowing
Base, as most recently reported to Borrower by Bank pursuant to Section 2.2(d)
hereof, Borrower shall prepay the Loan in the amount of such overadvance, as
notified to Borrower by Bank.
2.7. Audits. Borrower hereby consents and authorizes Xxxxx or the
Bank or any agent or representative thereof to conduct periodic field audits of
Borrower. Such field audits may include, without limitation, examinations of the
payment receipts, tax returns, bank statements, loan statements, Rental/Purchase
Contracts, inventory on hand, computer-generated reports of Asset Dispositions,
Rental Revenue and other financial data necessary to determine the accuracy and
validity of the reports, compliance certificates, financial reports and other
information forwarded to either of the Bank or Xxxxx by Borrower in connection
with the Loan.
2.8. Tracking of Merchandise. All Merchandise financed by the Bank
must be serialized by means of the Aaron's Proprietary System for appropriate
reconciliation of Advances and receipt of Merchandise. Borrower shall be
obligated to furnish serial numbers for all Merchandise purchased directly to
Xxxxx on a weekly basis (and, if available, on a daily basis) by transmittal of
Borrower's receiving report (containing Aaron's Proprietary System numbers)
directly to Xxxxx on the Aaron's Proprietary System. As set forth more fully
below, Xxxxx will maintain and track such information as agent for the Bank and
the Bank shall at all times have access to such information.
2.9. Closing Fee. On the Closing Date of the Loan, Borrower shall
pay to Bank a closing fee ("Closing Fee") in the amount of $500 per store
location [PLUS $5,000]1.
2.10. Commitment Fees. (a) Borrower shall pay a commitment fee (the
"Commitment Fee") on any unused portion of the Loan Commitment in the amount of
____ percent (___%) per annum, such Commitment Fee to be paid quarterly in
arrears on every third Payment Date, commencing on ________________.
(b) All Commitment Fees shall be paid on the dates due,
in immediately available funds, to the Bank.
---------------
(1) Note: in the case of an Established Franchisee Borrower that has customized
financial covenants as specified by Sponsor in accordance with Section 6 hereof,
an additional $5,000 fee will be charged.
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2.11. Delinquent Payment Fees. In the event that any payment due and
payable hereunder is not received by the Bank on the Payment Date when due, the
Borrower shall, upon request from the Bank, pay to the Bank a delinquent payment
fee (the "Delinquent Payment Fee") in an amount equal to the greater of (i) one
percent (1%) of the amount of the late payment and (ii) $500.00.
3. COLLATERAL AND INSURANCE.
3.1. Granting of Security Interest in Collateral. As security for
the payment and performance of all of the Loan Indebtedness, Bank shall have and
Borrower hereby grants to Bank a continuing security interest in the following
described property of Borrower, whether now in existence or hereafter created or
acquired and wherever located (collectively, the "Collateral"): all Accounts,
Merchandise, Inventory, Investment Property, Equipment, General Intangibles,
Documents, Instruments, Chattel Paper (including, but not limited to, the
Rental/Purchase Contracts), Balances, and Books and Records, and all products
and proceeds of the foregoing (including insurance proceeds). The Loan
Indebtedness shall also be secured by any other property (whether real or
personal) in which Borrower may have heretofore or concurrently herewith
granted, or may hereafter grant, a Lien in favor of Bank.
3.2. Form of Rental/Purchase Contracts. All Rental/Purchase
Contracts will be (a) in a form prescribed by Xxxxx for use by its franchisees,
(b) be transferable to Bank and (c) contain the following provision directly
above Borrower's customer's signature:
"NOTWITHSTANDING ANYTHING SET FORTH IN THIS AGREEMENT TO THE CONTRARY,
THE UNDERSIGNED ACKNOWLEDGES AND CONSENTS TO THE TRANSFER OF, OR GRANT
OF A SECURITY INTEREST IN, ANY OR ALL OF THE LESSOR'S RIGHT, TITLE AND
INTEREST (RESIDUAL OR OTHERWISE) IN AND UNDER THIS AGREEMENT TO ANY
THIRD PARTY. NO SUCH TRANSFER OR GRANT OF SECURITY INTEREST WILL: (A)
AFFECT THE UNDERSIGNED'S LOAN INDEBTEDNESS; (B) CHANGE ANY DUTIES OF,
OR INCREASE ANY BURDENS OR RISKS IMPOSED ON, THE PARTIES TO THIS
AGREEMENT; OR (C) GIVE RISE TO ANY RIGHTS OR REMEDIES PROVIDED UNDER
SECTION 2A-303(1)(b) OF THE UNIFORM COMMERCIAL CODE, AS ADOPTED IN THE
APPLICABLE JURISDICTION. NO ENFORCEMENT OF ANY SECURITY INTEREST WILL
CONSTITUTE A TRANSFER THAT CHANGES ANY DUTIES OF, OR INCREASES ANY
BURDENS OR RISK IMPOSED ON, THE PARTIES TO THIS AGREEMENT. THE
UNDERSIGNED WAIVES ALL RIGHTS AND REMEDIES PROVIDED UNDER SECTION
2A-303 OF THE UNIFORM COMMERCIAL CODE, AS ADOPTED IN THE APPLICABLE
JURISDICTION."
Immediately upon execution of the same, all Rental/Purchase Contracts shall be
hereby assigned to Bank, and, immediately upon Bank's request, delivered to Bank
together with any and all related documents, and will contain, by way of a stamp
or as a part of the preprinted rental contract or lease agreement form, the
following legend directly below Borrower's customer's signature:
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"FOR VALUE RECEIVED, THIS AGREEMENT HAS BEEN ASSIGNED TO SUNTRUST BANK
AND THERE ARE NO DEFENSES AGAINST THE ASSIGNEE."
Borrower will not assign, sell, pledge, convey or by any other means transfer to
any person other than Bank any Rental/Purchase Contracts or Chattel Paper,
without Bank's prior written consent.
3.3. Other Documents. Borrower shall execute and deliver, or shall
be caused to be executed and delivered, to Bank such other instruments,
agreements, assignments, notifications or other documents relating to the
Collateral as Bank may from time to time request in order to evidence, perfect
or continue the perfection of Bank's Liens upon any of the Collateral.
3.4. Insurance. Borrower shall maintain and keep in force insurance
of the types and in the amounts customarily carried in lines of business similar
to Borrower's and such other insurance as Bank may require, including, without
limitation, theft, fire, public liability, business interruption, casualty,
property damage, and worker's compensation insurance, which insurance shall be
carried with companies and in amounts satisfactory to Bank. All casualty and
property damage insurance shall name Bank as mortgagee or loss payee, as
appropriate. Borrower shall deliver to Bank from time to time, at Bank's
request, copies of all such insurance policies and certificates of insurance and
schedules setting forth all insurance then in effect. Each policy of insurance
shall contain a clause requiring the insurer to give not less than thirty (30)
days' prior written notice to Bank in the event of cancellation of the policy
for any reason whatsoever and a clause that the interest of Bank shall not be
impaired or invalidated by any act or neglect of Borrower or owner of the
property nor by the occupation of the premises for purposes more hazardous than
are permitted by said policy. All such insurance policies shall contain such
other provisions as Bank may require in order to protect Bank's security
interests in the collateral and Bank's right to receive payments under such
policies. Borrower hereby appoints Bank as attorney-in-fact for Borrower to file
claims under any insurance policies, to receive, receipt and give acquittance
for any payments that may be payable to Borrower thereunder, and to execute any
and all endorsements, receipts, releases, assignments, reassignments, or other
documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies, which power of
attorney shall be deemed coupled with an interest and irrevocable so long as
Bank shall have a security interest in any of the Collateral pursuant to this
Agreement. If Borrower shall fail to procure such insurance or to pay any
premium with respect thereto, then Bank may, at its discretion, procure such
insurance or pay such premium and any costs so incurred by Bank shall constitute
a part of the liabilities secured hereby. Bank may apply the proceeds of any
insurance policy received by Bank to the payment of any liabilities, whether or
not due, in such order of application as Bank shall determine. Borrower shall
promptly furnish Bank with certificates or other evidence satisfactory to Bank
indicating compliance with the foregoing insurance requirements.
3.5. Validation and Collection of Accounts. Whether or not a
Default Condition or an Event of Default has occurred, Bank shall have the
right, at any time or times hereafter, in the name of Bank or any designee of
Bank to verify the validity, amount or any other matter relating
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to any Accounts by mail, telephone or otherwise, and Borrower shall fully
cooperate with Bank in an effort to facilitate and promptly conclude any such
verification process. Unless Bank shall at any time following the occurrence of
an Event of Default, elect to give notice to Account Debtors to make payments on
the Accounts directly to Bank, Borrower shall endeavor in the first instance to
make collection of its Accounts for Bank. Borrower shall at the request of Bank
notify the Account Debtors of the security interest of Bank in any Account and
Bank may itself at any time so notify Account Debtors. Upon or after the
occurrence of an Event of Default, Borrower shall (if and to the extent
requested to do so by Bank) notify the Account Debtors to make all payments
owing to Borrower directly to Bank for application to the Loan Indebtedness.
3.6. Maintenance of Collateral. Borrower shall maintain all
Inventory and Equipment in good condition, reasonable wear and tear excepted in
the case of Equipment, and shall, as and when requested by Bank, provide Bank
with a list of all of the Equipment and evidence of ownership thereof. Borrower
shall not permit any of the Equipment to become affixed to any real property so
that such Equipment is deemed a fixture under the real estate laws of the
applicable jurisdiction.
3.7. Expenses Relating to Collateral. Borrower shall pay Bank on
demand an amount equal to any and all expenses, including legal fees, incurred
or paid by Bank in connection with Bank's insuring, maintaining, protecting,
storing, safeguarding, or paying Liens with respect to any of the Collateral or
otherwise discharging any duty or obligation of Borrower with respect to any of
the Collateral.
3.8. Rights to Collateral. Bank shall have no duty to collect,
protect or preserve the underlying value of any Collateral or any income thereon
or to preserve any rights against prior parties. Bank may exercise its rights
and remedies with respect to the Collateral without first resorting (and without
regard) to any other security for the Loan or other sources of payment or
reimbursement for the Loan Indebtedness.
4. CONDITIONS PRECEDENT.
Borrower shall deliver and Bank shall have received the following
documents, each in form and substance satisfactory to Bank, as conditions
precedent of the Loan:
(a) a validly executed copy of this Agreement;
(b) the validly executed Master Note;
(c) a validly executed copy of a Guaranty of each partner
or majority stockholder of Borrower, and to the extent not prohibited
by Applicable Law, the spouse of such Person; provided, however, that
if such spouse is not providing a Guaranty, a validly executed copy of
the Spousal Consent;
00
000
(x) a validly executed Landlord's Waiver for each
location of Borrower where the financed Merchandise is located;
(e) a validly executed Subordination Agreement from each
other debtholder of Borrower;
(f) validly executed Uniform Commercial Code Financing
Statements suitable to enable Bank to perfect the security interest
granted to it under this Agreement;
(g) evidence of Borrower's good standing;
(h) a validly executed Officer's Certificate or such
other evidence acceptable to Bank evidencing Borrower's corporate,
partnership or other necessary authorization of the Loan and
incumbency;
(i) a Certificate of Insurance from an insurer acceptable
to Bank evidencing Borrower's compliance with Section 3.4 hereof and
naming the Bank as loss payee/additional insured as follows:
SunTrust Bank
Strategic Partner Programs Department
Attn: Xxxxx Rents Program Manager
XX Xxx 0000
Xxxx Xxxx 0000
Xxxxxxx, XX 00000
(j) a validly executed authorization to make the ACH
transfers for payments of principal, interest and fees contemplated
hereunder, including without limitation, mandatory prepayments of the
Loan pursuant to Section 2.6(b), which authorization shall be in form
and substance satisfactory to the Bank; and
(k) an initial Borrowing Base Report from Xxxxx.
In addition, Bank shall have satisfied itself that there are no Liens
on any of the Collateral, and Bank shall be satisfied that all
corporate or partnership proceedings necessary for the authorization of
the Loan Commitment shall have been taken and the Bank shall have
received any other documents that it deems necessary or advisable.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES.
To induce Bank to enter into this Agreement, Borrower represents and
warrants as follows:
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5.1. Organization and Qualification of Borrower. Borrower is [a
corporation duly organized, validly existing and in good standing] [a _________
partnership duly formed and validly existing] [a limited liability company duly
organized, validly existing and in good standing] under the laws of the state
shown on the first page hereof, and is qualified to do business in all
jurisdictions where the character of its properties or the nature of its
activities make such qualification necessary.
5.2. Trade Names, Subsidiaries and Location of Assets. Exhibit B
attached hereto and made a part hereof fully and accurately discloses any legal
name, trade name or style ever used by Borrower, any Subsidiaries owned by
Borrower, and each office, other place of business or location of assets of
Borrower.
5.3. Corporate or Other Authority; No Violation of Other
Agreements. The execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents have been duly authorized by all
necessary action on the part of Borrower and do not and will not (i) violate any
provision of Borrower's articles of incorporation, by-laws, or other
organizational documents or any Applicable Law, or (ii) be in conflict with,
result in a breach of, or constitute (following notice or lapse of time or both)
a default under any agreement to which Borrower is a party or by which Borrower
or any of its property is bound.
5.4. Enforceability. This Agreement and each of the other Loan
Documents create legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
5.5. Entire Agreement. The Master Note and accompanying Loan
Documents executed in connection with the Loan and delivered to Bank are the
only contracts evidencing the transaction described herein and constitute the
entire agreement of the parties hereto with respect to the transaction.
5.6. Genuineness of Signatures. The Master Note and each
accompanying Loan Document executed in connection with the Loan is genuine and
all signatures, names, amounts and other facts and statements therein and
thereon are true and correct.
5.7. Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of Borrower, threatened before any
court or administrative or governmental agency that may, individually or
collectively, adversely affect the financial condition or business operations of
Borrower.
5.8. Financial Condition. Borrower's financial statement previously
delivered to Xxxxx, fairly and accurately presents the financial condition of
Borrower as of such date and has been prepared in accordance with GAAP
consistently applied, and since the date of that financial statement, there has
been no material adverse change in the financial condition of Borrower. Borrower
is now and will remain Solvent.
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5.9. Taxes. All federal, state and local tax returns have been duly
filed, and all taxes, assessments and withholdings shown on such returns or
billed to Borrower have been paid, and Borrower maintains adequate reserves and
accruals in respect of all such federal, state and other taxes, assessments and
withholdings. There are no unpaid assessments pending against Borrower for any
taxes or withholdings, and Borrower knows of no basis therefor.
5.10. Compliance with Laws. Borrower has duly complied with, and its
properties and business operations are in compliance in all material respects
with, the provisions of all Applicable Laws, including, without limitation
ERISA, the Fair Labor Standards Act and all Environmental Laws. Borrower
possesses all permits, franchises, licenses, trademark rights, trade names,
patents and other authorizations necessary to enable it to conduct its business
operations as now conducted, and no filing with, and no consent, authorization,
order or license of, any Person is necessary in connection with the execution or
performance of this Agreement or the other Loan Documents.
5.11. No Default. No Default Condition or Event of Default exists.
5.12. Accounts. Each Account arises out of a bona fide lease or sale
and delivery of goods or rendition of services by Borrower and, unless otherwise
indicated by Borrower to Bank in writing promptly after learning thereof, the
facts appearing on the invoice evidencing such Account and Borrower's books
relating thereto are true and accurate and payment thereof is not subject to any
known dispute, offset or claim except for discounts granted in the ordinary
course of Borrower's business that are reflected on the face of such invoice.
5.13. Use of Proceeds. None of the proceeds of any Advances by Bank
have been or will be used to purchase or carry (or to satisfy or refinance any
indebtedness incurred to purchase or carry) any "margin stock" (as defined in
Regulation U of the Federal Reserve Board). Advances shall be made for the sole
purposes of honoring requests for ACH transfers to (i) suppliers of Merchandise
in payment of Approved Invoices, and (ii) other accounts specified by Borrower
with respect to Advances made for working capital purposes, subject to the
approval of Xxxxx, which requests have been entered by the Borrower in the
Aaron's Proprietary System as provided above.
5.14. Experience as Xxxxx Franchisee. Borrower (x) has been a
franchisee of Xxxxx for a period of at least 18 months; (y) has had at least two
Xxxxx Rent's stores open for a minimum of 12 months; and (z) has at least four
Xxxxx Rent's stores open or under executed area development agreements.
Each submission of an Approved Invoice made by Borrower pursuant to this
Agreement or any other Loan Document shall constitute an automatic
representation and warranty by Borrower to Bank that there does not then exist
any Default Condition or Event of Default and a reaffirmation as of the date of
said request that all representations and warranties of Borrower contained in
this Agreement and the other Loan Documents are true in all material respects.
All representations and warranties contained in this Agreement or in any of the
other Loan Documents shall survive
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the execution, delivery and acceptance hereof by Bank and the closing of the
transactions described herein.
6. FINANCIAL COVENANTS.
Borrower shall comply with the following financial covenants:
[(I) DEBT TO EBIT. COMMENCING ON THE FIRST DAY OF THE
CALENDAR QUARTER IN WHICH THE FIRST DAY OF THE 19TH MONTH
FOLLOWING THE OPENING DATE OF THE FIRST STORE OF BORROWER
OCCURS AND MEASURED ON THE LAST DAY OF THE CALENDAR QUARTER IN
WHICH SUCH 19TH MONTH OCCURS AND ON THE LAST DAY OF EACH
CALENDAR QUARTER THEREAFTER, THE RATIO OF BORROWER'S DEBT TO
EBIT FOR SUCH CALENDAR QUARTER SHALL NOT EXCEED 16:1.0;
(II) DEBT TO RENTAL REVENUE. COMMENCING ON THE FIRST
DAY OF THE CALENDAR QUARTER IN WHICH THE FIRST DAY OF THE 19TH
MONTH FOLLOWING THE OPENING DATE OF THE FIRST STORE LOCATION
OF BORROWER OCCURS AND MEASURED AS OF THE LAST DAY OF THE
CALENDAR QUARTER IN WHICH SUCH 19TH MONTH OCCURS AND ON THE
LAST DAY OF EACH CALENDAR QUARTER THEREAFTER, THE RATIO OF
BORROWER'S DEBT TO BORROWER'S RENTAL REVENUE, SHALL NOT EXCEED
5.5:1.0; AND
(III) TOTAL LIABILITIES TO TANGIBLE NET WORTH.
COMMENCING ON THE FIRST DAY OF THE CALENDAR QUARTER IN WHICH
THE FIRST DAY OF THE 13TH MONTH FOLLOWING THE OPENING DATE OF
THE FIRST STORE LOCATION OF BORROWER OCCURS AND MEASURED AS OF
THE LAST DAY OF THE CALENDAR QUARTER IN WHICH SUCH 13TH MONTH
OCCURS AND ON THE LAST DAY OF EACH CALENDAR QUARTER
THEREAFTER, THE RATIO OF BORROWER'S TOTAL LIABILITIES TO
TANGIBLE NET WORTH, SHALL NOT EXCEED 5.5:1.0.
WITH RESPECT TO THE FINANCIAL COVENANTS SET FORTH ABOVE IN
SUBSECTIONS (I) AND (II), WHICH ARE CALCULATED BASED UPON THE OPENING
DATE OF A STORE LOCATION, THE FINANCIAL INFORMATION FROM STORE
LOCATIONS THAT HAVE NOT REACHED THE OPENING DATE ANNIVERSARY
INCORPORATED INTO SUCH COVENANTS SHALL BE EXCLUDED FROM SUCH
CALCULATIONS. DEBT ATTRIBUTABLE TO SUCH LOCATIONS AND DEDUCTED FROM THE
FINAL CALCULATIONS SHALL BE DEDUCTED ON A PRO RATA BASIS CALCULATED BY
DIVIDING SUCH STORES' AGGREGATE NET BOOK VALUE OF MERCHANDISE BY THE
NET BOOK VALUE OF MERCHANDISE FOR ALL STORE LOCATIONS. THE FINANCIAL
COVENANTS SHALL OTHERWISE BE CALCULATED ON A CONSOLIDATED BASIS AS TO
ALL STORE LOCATIONS.]
OR
[FINANCIAL COVENANTS TO BE SPECIFIED BY SPONSOR]
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7. BORROWER'S AFFIRMATIVE COVENANTS.
During the term of this Agreement, and thereafter for so long as there
are is any outstanding Loan Indebtedness to Bank, Borrower covenants that,
unless otherwise consented to by Bank in writing, it shall:
7.1. Financial Reports. Deliver to Xxxxx or cause to be delivered
to Xxxxx:
(i) on or before the twenty-seventh day of each month, an
unaudited balance sheet and income statement accurately reflecting the
financial transactions and status of the Borrower as of the end of the
prior month and on a year to date basis, on a consolidated and per
store basis; prepared in accordance with GAAP in the format recommended
by Xxxxx;
(ii) within 27 days after the end of each calendar quarter (a)
an unaudited balance sheet and income statement accurately reflecting
the financial transactions and status of Borrower as of the end of the
prior month and on a quarterly basis, on a consolidated and per store
basis, prepared in accordance with GAAP in the format recommended by
Xxxxx, and (b) a Compliance Certificate as described below in Section
7.2;
(iii) within 90 days after the end of each fiscal year a
balance sheet and income statement of Borrower as of the end of such
year, compiled by such firm of independent public accountants as may be
designated by Borrower and be satisfactory to Bank as prepared in
accordance with GAAP and, to the extent delivered to Xxxxx, audited
financial statements for such period;
(iv) within 120 days after the end of each fiscal year, an
annual personal financial statement of each Guarantor; and
(v) with reasonable promptness, all reports by Borrower to its
shareholders and such other information as Xxxxx or the Bank may
reasonably request from time to time.
7.2. Compliance Certificate. Prepare and deliver to Xxxxx, in
conjunction with the quarterly financial reports required to be delivered
pursuant to Section 7.1(iii) above, a quarterly Compliance Certificate (the form
of which is attached hereto as Exhibit C) presenting the calculation of the
financial covenants set forth above in Section 6, noting any negative variances
with the covenants and explaining any such variances.
Borrower acknowledges that Xxxxx will review each Compliance Certificate and may
revise the calculations set forth on such Compliance Certificate to be
consistent with the information shown on quarterly detailed Inventory
reconciliation reports and detailed revenue reports prepared by Xxxxx each
quarter showing the amount of Inventory at each of Borrower's stores as of the
end of such quarter and the amount of monthly and quarterly revenue at each of
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Borrower's stores. Borrower acknowledges that Xxxxx will forward copies of each
Compliance Certificate, with revised calculations as appropriate, to Bank and
agrees that Bank shall be entitled to rely each such Compliance Certificate, as
revised by Xxxxx, for purposes of determining whether the covenants set forth in
Section 6 above have been met.
7.3. Books and Records. Maintain its Books and Records and accounts
in accordance with GAAP and permit any Person designated by Bank or Xxxxx to
visit Borrower's premises, inspect any of the Collateral or any of the Books and
Records, and to make copies thereof and take extracts therefrom, and to discuss
Borrower's financial affairs with Borrower's financial officers and accountants.
7.4. Taxes. Promptly file all tax returns and pay and discharge all
taxes, assessments, withholdings and other governmental charges imposed upon it,
its income or profits, or upon any property belonging to it, prior to the date
on which penalties attach thereto.
7.5. Notices to Bank. Promptly notify Bank in writing of (i) the
occurrence of any Default Condition or Event of Default; (ii) any pending or
threatened litigation claiming damages in excess of $25,000 or seeking relief
that, if granted, would adversely affect the financial condition or business
operations of Borrower; (iii) the release or discharge of any Hazardous
Substance on any property owned by Borrower; and (iii) any asserted violation by
Borrower of or demand for compliance by Borrower with any Applicable Law.
7.6. Compliance with Applicable Laws. Comply in all material
respects with all Applicable Laws, including, without limitation, ERISA, the
Fair Labor Standards Act and all Environmental Laws.
7.7. Corporate Existence. Maintain its separate corporate existence
and all rights, privileges and franchises in connection therewith, and maintain
its qualification and good standing in all jurisdictions where the failure to do
so could have a material adverse effect upon its financial condition or ability
to collect the Accounts.
8. NEGATIVE COVENANTS.
During the term of this Agreement, and thereafter for so long as there
are is Loan Indebtedness outstanding, Borrower covenants that unless Bank has
first consented thereto in writing, it will not:
8.1. Merger; Disposal or Moving of Collateral. Merge or consolidate
with or acquire any substantial portion of the assets or stock of any Person;
sell, lease, transfer or otherwise dispose of all or any portion of its
properties (including any of the Collateral), except sales or rentals of
Inventory in the ordinary course of business; or, without having given Bank at
least 60 days prior written notice and having executed such instruments and
agreements as Bank shall require, change its name, the location of any
Collateral or the location of its chief executive office, principal place of
business or the office at which it maintains its Books and Records.
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Notwithstanding the foregoing, to the extent that Borrower is calculating its
compliance with the financial covenants set forth in Section 6 hereof on a
consolidated basis, Borrower may move Inventory from one location included in
such calculation to another of Borrower's Aaron's Rental Purchase locations
without complying with the notice provisions hereof, as long as such Inventory
is properly transferred in the Aaron's Proprietary System.
8.2. Liens. Grant or suffer to exist any Lien upon any of the
Collateral except Permitted Liens.
8.3. Guarantees. Guarantee, assume, endorse or otherwise become
contingently liable for any obligation or indebtedness of any Person, either
directly or indirectly, exceeding $25,000 not existing as of this date, except
by endorsement of items of payment for deposit or collection.
8.4. Loans. Make loans or advances of money to or investments in
any Person, or (except in the ordinary course of business and on fair and
reasonable terms) engage in any transaction with a subsidiary or affiliate.
8.5. Stock of Borrower. Repurchase, or pay or declare any dividend
on, any of its capital stock; provided, however, that if no Default Condition or
Event of Default exists and Borrower remains in compliance with the financial
covenants set forth in Section 6 above after giving effect thereto, it may pay
dividends and make such repurchases.
9. EVENTS OF DEFAULT.
9.1. List of Events of Default. The occurrence of any one or more
of the following conditions or events shall constitute an "Event of Default":
(a) Borrower shall fail to pay any of the Loan Indebtedness
(including any overadvance) within ten (10) days of the due date
thereof (whether due at stated maturity, on demand, upon acceleration
or otherwise);
(b) any warranty, representation, or other statement by
Borrower herein or in any instrument, certificate or financial
statement furnished in compliance herewith proves to have been false or
misleading in any material respect when made;
(c) Borrower shall fail or neglect to perform, keep or observe
any covenant contained in this Agreement, any of the other Loan
Documents or any other agreement now or hereafter entered into with
Bank; Borrower shall fail to abide by the financial covenants set forth
in Section 6 hereof, provided that Xxxxx xxx waive any financial
covenant.
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(d) Borrower or any Guarantor shall fail to pay when due any
amount owed to any creditor (other than Bank) or any Guarantor shall
fail to pay or perform any liability or obligation in accordance with
the terms of any agreement with Bank;
(e) Borrower, Xxxxx or any Guarantor shall cease to be
Solvent, shall die or become incompetent, shall suffer the appointment
of a receiver, trustee, custodian or similar fiduciary, shall make an
assignment for the benefit of creditors, or shall make an offer of
settlement or composition to their respective unsecured creditors
generally;
(f) any petition for an order for relief shall be filed by or
against Borrower or any Guarantor or Xxxxx under the Bankruptcy Code
(if against Borrower or any Guarantor, the continuation of such
proceeding for more than 30 days);
(g) any judgment, writ of attachment or similar process is
entered or filed against Borrower or any Guarantor or any of Borrower's
or any Guarantor's property and such judgment, writ of attachment or
process is not dismissed, satisfied or vacated within ten (10) days
thereafter or results in the creation or imposition of any Lien upon
any Collateral that is not a Permitted Lien;
(h) Any Guarantor shall revoke or attempt to revoke the
guaranty signed by such Guarantor or shall repudiate such Guarantor's
liability thereunder or Xxxxx shall default in its obligations to Bank
with respect to the Loan Indebtedness or repudiate its liability
therefor;
(i) any Person, or group of Persons (whether or not related),
shall have or obtain legal or beneficial ownership of a majority of the
outstanding voting securities or rights of Borrower, other than any
Person, or group of Persons, that has such majority ownership on the
date of execution of this Agreement;
(j) Borrower shall lose its franchise, license or right to
rent or to sell the Inventory or Borrower's Franchise Agreement is
terminated or revoked for any reason;
(k) Borrower shall fail to enter properly any acquisition of
Inventory or Equipment or any Asset Disposition on the Aaron's
Proprietary System; or
(l) Borrower shall use its DDA Account for any use other than
as explicitly authorized pursuant to this Agreement.
9.2. Cure Period. Borrower shall have a five (5) calendar day
period after the Bank gives it notice of the occurrence of an Event of Default
(other than an Event of Default pursuant to Section 9.1(f)) above, during which
it may cure such Event of Default. An Event of Default arising under Section
9.1(a) above shall only be cured by the Bank's receipt of payment in immediately
available funds by wire transfer, money order or cashier's check.
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9.3. Advances. In no event shall the Bank have any obligation to
make an Advance pursuant to the Loan Commitment if there exists a Default
Condition or an Event of Default.
10. REMEDIES.
All of the Loan Indebtedness shall become immediately due and payable
and the Loan Commitment shall be deemed immediately terminated (without notice
to or demand upon Borrower) upon the occurrence of an Event of Default under
Section 9.1(f) of this Agreement; and upon and after the occurrence of any other
Event of Default, subject to the cure period set forth in Section 9.2 hereof,
Bank shall have the right to terminate immediately the Loan Commitment and to
declare the entire unpaid principal balance of and accrued interest with respect
to the Loan Indebtedness to be, and the same shall thereupon become, immediately
due and payable upon receipt by Borrower of written notice and demand. From and
after the date on which the Loan Indebtedness becomes automatically due and
payable or is declared by Bank to be due and payable as aforesaid, Bank shall
have and may exercise from time to time any and all rights and remedies afforded
to a secured party under the Code or any other Applicable Law. If the Loan
Indebtedness is collected by or through an attorney at law, Bank shall be
entitled to collect reasonable attorneys' fees and court costs from Borrower. In
addition to, and without limiting the generality of the foregoing, Bank shall
have the following rights and remedies which it may exercise at any time or
times (all of which rights and remedies shall be cumulative and may be exercised
singularly or concurrently):
(a) The right to notify any Account Debtor to make all payments
owing to Borrower directly to Bank for application to the Loan Indebtedness and
to collect all amounts owing from any such Account Debtor;
(b) The right to sell, lease or otherwise dispose of any or all of
the Collateral at public or private sale, for cash, upon credit or upon such
other terms as Bank deems advisable in its sole discretion, or otherwise to
realize upon the whole or from time to time any part of the Collateral in which
Bank may have a security interest. Any requirement of reasonable notice shall be
met if such notice is sent to Borrower in accordance with Section 12 hereof at
least seven (7) days before the date of sale or other disposition of the
Collateral. Bank may bid and be the purchaser at any such sale if permitted by
Applicable Law;
(c) The right to require Borrower, at Borrower's expense, to
assemble the Collateral and make it available to Bank at a place reasonably
convenient to both parties (and, for purposes hereof, Borrower stipulates that
Bank shall be entitled to the remedy of specific performance). Alternatively,
Bank may peaceably by its own means or with judicial assistance enter Borrower's
premises and take possession of the Collateral or dispose of the Collateral on
Borrower's premises without interference by Borrower;
(d) The right to incur attorneys' fees and expenses in exercising
any of the rights, remedies, powers or privileges provided hereunder, and the
right (but not the obligation) to pay,
24
137
satisfy and discharge, or to bond, deposit or indemnify against, any tax or
other Lien which in the opinion of Bank may in any manner or to any extent
encumber any of the Collateral, all of which fees, payments and expenses shall
become part of Bank's expenses of retaking, holding, preparing for sale and the
like, and shall be added to and become a part of the principal amount of the
Loan Indebtedness;
(e) The right, in Bank's sole discretion, to perform any agreement
of Borrower hereunder which Borrower shall fail to perform and take any other
action which Bank deems necessary for the maintenance or preservation of any of
the Collateral or Bank's interest therein, and Borrower agrees forthwith to
reimburse Bank for all expenses incurred in connection with the foregoing,
together with interest thereon at the Default Rate from the date incurred until
the date of reimbursement;
(f) The right at any time or times, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand) held by Bank for Borrower's account against any of
the Loan Indebtedness, irrespective of whether or not Bank has made any demand
under the this Agreement;
(g) The right to apply the proceeds realized from any collection,
sale, lease or other disposition of the Collateral first to the costs, expenses
and attorneys' fees incurred by Bank for collection and for acquisition,
protection, removal, storage, sale and delivery of the Collateral; secondly, to
interest due upon the principal amount of the Loan Indebtedness; and thirdly, to
the principal amount of the Loan Indebtedness. If any deficiency shall arise,
Borrower and Guarantor shall remain bound and liable to Bank therefor;
(h) The right to act as Borrower's attorney-in-fact (and Borrower
hereby irrevocably appoints Bank as Borrower's agent and attorney-in- fact), in
Borrower's or Bank's name, but at Borrower's cost and expense, to receive, open
and dispose of all mail addressed to Borrower pertaining to any of the
Collateral, to notify postal authorities to change the address and delivery of
mail to Borrower to such address as Bank may designate, to sign Borrower's name
on any xxxx of lading constituting or relating to any Collateral, to send
verifications with respect to the Collateral, to execute in Borrower's name any
affidavits or notices with regard to any all Lien rights and to do all other
acts and things necessary to carry out the terms of this Agreement or to
discharge any obligation of Borrower hereunder, this power, being coupled with
an interest, is to be irrevocable so long as any Loan Indebtedness is
outstanding.
25
138
11. WAIVERS.
Borrower waives notice of Bank's acceptance hereof. Borrower hereby
waives any requirement on the part of Bank to post any bond or other security as
a condition to Bank's right to obtain an immediate writ of possession with
respect to any Collateral. Bank shall not be deemed to have waived any of its
rights upon or remedies hereunder or any Event of Default unless such waiver be
in writing and signed by Bank. No delay or omission on the part of Bank in
exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
12. NOTICES.
All notices and demands to or upon a party hereto shall be in writing
and shall be sent by certified mail, return receipt requested, personal delivery
against receipt or by telecopier or other facsimile transmission and shall be
deemed to have been validly served, given or delivered when delivered against
receipt or one Business Day after deposit in the mail, postage prepaid, or, in
the case of facsimile transmission, when indicated by verification receipt
printed by the sending machine as having been received at the office of the
noticed party, addressed in each case as follows:
If to Borrower:
-------------------------
-------------------------
-------------------------
Attention
---------------
Telecopier No.:
----------
If to Bank: SunTrust Bank
Strategic Partner Program
Attn: Xxxxx Rents Program Manager
000 Xxxxxxxxx Xxxxxx, X.X., 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier No.:(000) 000-0000
or to such other address as each party may designate for itself by like notice
given in accordance with this Section. Any written notice or demand that is not
sent in conformity with the provisions hereof shall nevertheless be effective on
the date that such notice is actually received by the individual to whose
attention such notice is to be sent as specified above or such individual's
successor in office.
13. INDEMNIFICATION.
Borrower hereby agrees to indemnify Bank and hold Bank harmless from
and against any liability, loss, damage, suit, action or proceeding ever
suffered or incurred by Bank as the result
26
139
of Borrower's failure to observe, perform or discharge Borrower's duties
hereunder. Without limiting the generality of the foregoing, this indemnity
shall extend to any claims asserted against Bank by any Person under any
environmental laws. If any taxes, fees or other charges shall be payable by
Borrower or Bank on account of the execution, delivery or recording of any of
the Loan Documents or any loans outstanding hereunder, Borrower will pay (or
reimburse Bank's payment of) all such taxes, fees or other charges, including
any applicable interests and penalties, and will indemnify and hold Bank
harmless from and against liability in connection therewith. The indemnity
obligations of Borrower under this Section shall survive the payment in full of
the Loan Indebtedness.
14. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the other Loan Documents embody the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof, and this Agreement may not be modified or amended except
by an agreement in writing signed by Borrower and Bank.
15. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; but Borrower shall
not assign this Agreement or any right or benefit hereunder to any Person. The
Bank may assign its rights and obligations hereunder at any time and to any
Person, including without limitation, to Xxxxx.
16. ARBITRATION.
ANY CONTROVERSY ARISING WITH RESPECT TO THIS AGREEMENT SHALL BE
DETERMINED BY ARBITRATION IN THE CITY AGREED UPON BY BORROWER AND BANK. IF
BORROWER AND BANK FAIL TO SO AGREE, THEN SUCH ARBITRATION SHALL TAKE PLACE IN
ATLANTA, GEORGIA. ARBITRATION SHALL BE IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION EXCEPT TO THE EXTENT
OTHERWISE SET FORTH IN THIS SECTION. THE DISPUTE SHALL BE DETERMINED BY AN
ARBITRATOR ACCEPTABLE TO BOTH PARTIES WHO SHALL BE SELECTED WITHIN SEVEN (7)
DAYS OF FILING OF NOTICE OF INTENTION TO ARBITRATE. OTHERWISE, THE DISPUTE SHALL
BE DETERMINED BY A PANEL OF THREE ARBITRATORS SELECTED AS FOLLOWS: WITHIN SEVEN
(7) DAYS OF FILING NOTICE OF INTENTION TO ARBITRATE, EACH PARTY WILL APPOINT ONE
ARBITRATOR, WHO SHALL BE AN ATTORNEY ADMITTED BEFORE THE BAR OF ANY STATE OF THE
UNITED STATES (BUT NEITHER SUCH ATTORNEY NOR ANY FIRM WITH WHICH SUCH ATTORNEY
HAS BEEN ASSOCIATED IN THE IMMEDIATELY PRECEDING FIVE YEARS SHALL HAVE BEEN
RETAINED BY SUCH PARTY DURING THE IMMEDIATELY PRECEDING FIVE YEARS). THESE TWO
ARBITRATORS WILL THEN NAME A THIRD ARBITRATOR, WHO SHALL ALSO BE
27
140
AN ATTORNEY ADMITTED BEFORE XXX XXX XX XXX XXXXX XX XXX XXXXXX XXXXXX (BUT
NEITHER SUCH ATTORNEY NOR ANY FIRM WITH WHICH SUCH ATTORNEY HAD BEEN ASSOCIATED
FOR THE IMMEDIATELY PRECEDING FIVE YEARS SHALL HAVE BEEN RETAINED BY EITHER
PARTY DURING THE IMMEDIATELY PRECEDING FIVE YEARS) AND WHO SHALL PRESIDE OVER
THE PANEL. IF EITHER PARTY FAILS TO APPOINT AN ARBITRATOR, OR IF THE TWO
ARBITRATORS DO NOT NAME A THIRD ARBITRATOR WITHIN SEVEN (7) DAYS, EITHER PARTY
MAY REQUEST THE AMERICAN ARBITRATION ASSOCIATION TO APPOINT THE NECESSARY
ARBITRATOR(S) PURSUANT TO THE COMMERCIAL ARBITRATION RULES. ARBITRATORS SHALL BE
COMPENSATED FOR THEIR SERVICES BY THE NON-PREVAILING PARTY AT THE STANDARD
HOURLY RATE CHARGED BY SUCH ARBITRATORS IN THEIR PRIVATE PROFESSIONAL
ACTIVITIES. ALL TESTIMONY SHALL BE TRANSCRIBED BY A PUBLIC STENOGRAPHER OR COURT
REPORTER. THE AWARD OF THE PANEL SHALL BE ACCOMPANIED BY FINDINGS OF FACT AND A
STATEMENT OF REASONS FOR THE DECISION. ALL PARTIES AGREE TO BE BOUND BY THE
RESULTS OF SUCH ARBITRATIONS; JUDGMENT UPON THE AWARD SO RENDERED MAY BE ENTERED
AND ENFORCED IN ANY COURT OF COMPETENT JURISDICTION. TO THE EXTENT REASONABLY
PRACTICABLE, BOTH PARTIES AGREE TO CONTINUE PERFORMING THEIR RESPECTIVE
OBLIGATIONS UNDER THIS AGREEMENT WHILE THE DISPUTE IS BEING RESOLVED.
17. MISCELLANEOUS. Time is of the essence of this Agreement. Bank reserves
the right to participate, sell or assign the Loan made hereunder and provide any
participant or assignee all information in Bank's possession regarding Borrower,
its business and the Collateral. Borrower shall reimburse Bank for Bank's
out-of-pocket expenses and for the fees and expenses and disbursements of Bank's
counsel in connection with the negotiation, documentation and closing of the
transactions contemplated hereby, and Borrower will pay all expenses incurred by
Borrower in connection with the transactions. The Section headings are for
convenience only and shall not limit or otherwise affect any of the terms
hereof. THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS HEREUNDER, INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO THE LAWS OF CONFLICTS
THEREOF) AND IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT.
18. RELATIONS WITH XXXXX.
Borrower recognizes and acknowledges that the Bank has made the Loan
Commitment available to Borrower hereunder at the behest of and as an
accommodation to Xxxxx. Accordingly, Borrower agrees that from time to time the
Bank may release to Xxxxx such information about Borrower and the Loan as Xxxxx
xxx request, and the Bank may condition its agreement to any waiver,
modification or amendment on the prior written consent of Xxxxx. Borrower
further agrees that upon the occurrence of an Event of Default hereunder, the
Bank
28
141
may notify Xxxxx of such Event of Default prior to notifying Borrower thereof,
and the Bank shall not be liable to Borrower for failure to give simultaneous
notice to Borrower. Borrower further agrees that the Bank shall not be liable to
Borrower as a result of any information or document obtained by Bank regarding
Borrower which is shared by Bank with Xxxxx.
29
142
WITNESS the hand and seal of the parties hereto on the date first above
written.
Accepted in Atlanta, Georgia:
BORROWER:
(Seal)
--------------------------
By:
------------------------------
Title:
------------------------
[CORPORATE SEAL]
BANK:
SUNTRUST BANK
By:
------------------------------
Title:
------------------------
30
143
EXHIBIT A
FORM OF
MASTER NOTE
(Established Franchisee Borrower)
[DATE] [$____________]
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, [____________, a
____________ _______________] (the "Borrower"), promises to pay to the order of
SUNTRUST BANK, a Georgia banking corporation (the "Bank"), at Bank's principal
office in Atlanta, Georgia, or at such other place as the holder hereof may
designate by notice in writing to Borrower, in immediately available funds in
lawful money of the United States of America, on the Maturity Date, as set forth
in that certain Line of Credit and Security Agreement, dated as of even date
herewith, by and between the Borrower and Bank (the "Line of Credit Agreement"),
the lesser of (i) principal sum of ________________________________ AND NO/100
DOLLARS ($____________), or (ii) so much thereof as shall have been from time to
time disbursed hereunder in accordance with the Line of Credit Agreement and not
theretofore repaid, as shown on the records of the Bank.
In addition to principal, Borrower agrees to pay interest on
the principal amounts disbursed hereunder from time to time from the date of
each disbursement until paid at such rates of interest per annum and upon such
dates as provided for in the Line of Credit Agreement. Interest shall accrue on
the outstanding principal balance from the date hereof up to and through the
date on which all principal and interest hereunder is paid in full, and shall
be computed on the basis of the actual number of days elapsed in a 360-day
year. Such interest is to be paid to Bank at its address set forth above or as
otherwise provided in the Line of Credit Agreement. For informational purposes,
as of the date hereof the Prime Rate in effect is ____% per annum, thus
producing an initial interest rate under the Line of Credit Agreement on such
date of ____% per annum. Any principal amount due under this Master Note (the
"Note") that is not paid on the due date therefor whether on the Maturity Date,
or resulting from the acceleration of maturity upon the occurrence of an Event
of Default (as defined in the Line of Credit Agreement), shall bear interest
from the date due until payment in full at the Default Rate, as such term is
defined in the Line of Credit Agreement.
This Note evidences a loan incurred pursuant to the terms and
conditions of the Line of Credit Agreement to which reference is hereby made
for a full and complete description of such terms and conditions, including,
without limitation, provisions for the acceleration of the
144
maturity hereof upon the existence or occurrence of certain conditions or
events, and the terms of any permitted prepayments hereof. All capitalized
terms used in this Note shall have the same meanings as set forth in the Line
of Credit Agreement.
Upon the existence or occurrence of any Event of Default, the
principal and all accrued interest hereof shall automatically become, or may be
declared, due and payable in the manner and with the effect provided in the
Line of Credit Agreement. In addition, this Note is subject to mandatory
prepayment upon the terms and conditions of the Line of Credit Agreement.
Bank shall at all times have a right of set-off against any
deposit balances of Borrower in the possession of the Bank and the Bank may
apply the same against payment of this Note or any other indebtedness of
Borrower to the Bank, irrespective of whether or not Bank has made any demand
under the Line of Credit Agreement. The payment of any indebtedness evidenced
by this Note prior to the Maturity Date shall not affect the enforceability of
this Note as to any future, different or other indebtedness incurred hereunder
by the Borrower. In the event the indebtedness evidenced by this Note is
collected by legal action or through an attorney-at-law, the Bank shall be
entitled to recover from Borrower all costs of collection, including, without
limitation, reasonable attorneys' fees if collected by or through an
attorney-at-law.
Borrower acknowledges that the actual crediting of the amount
of any disbursement under the Line of Credit Agreement to an account of
Borrower or recording such amount in the records of the Bank shall, in the
absence of manifest error, constitute presumptive evidence of such disbursement
and that such Advance was made and borrowed under the Line of Credit Agreement.
Such account records shall constitute, in the absence of manifest error,
presumptive evidence of principal amounts outstanding and the payments made
under the Line of Credit Agreement at any time and from time to time, provided
that the failure of Bank to record in such account the type or amount of any
Advance shall not affect the obligation of the undersigned to repay such amount
together with interest thereon in accordance with this Note and the Line of
Credit Agreement.
Failure or forbearance of Bank to exercise any right
hereunder, or otherwise granted by the Line of Credit Agreement or by law,
shall not affect or release the liability of Borrower hereunder, and shall not
constitute a waiver of such right unless so stated by Bank in writing. THIS
NOTE AND THE RIGHTS AND OBLIGATION HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF) OF THE SATE OF GEORGIA. TIME IS OF THE ESSENCE OF THIS
NOTE.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE
HEREBY WAIVED.
A-2
145
Executed under hand and seal of the Borrower as of the day
and year first above written.
[if Borrower is [NAME OF BORROWER]
a corporation:]
By:
-------------------------------
Name:
Title:
[CORPORATE SEAL]
[if Borrower is partnership:]
[if General Partner is [NAME OF GENERAL PARTNER]
a corporation:]
By:
-------------------------------
Name:
Title:
[if General Partner is
an individual:] (Seal)
----------------------------
Name of General Partner]
[if Borrower is [NAME OF BORROWER]
a limited liability company:]
By:
-------------------------------
Name:
Title:
A-3
146
EXHIBIT B
A. PERMITTED LIENS
The following described Liens are Permitted Liens (if none, so state):
Name of Lien Holder Date of Recording Collateral
------------------- ----------------- ----------
B. TRADE NAMES AND STYLES
The following are the only trade names or trade styles ever used by
Borrower (if none, so state):
C SUBSIDIARIES
The following are all of the subsidiaries owned by Borrower (if none,
so state):
D. BUSINESS LOCATIONS
The following are all of the locations where Borrower has an office or
other place of business or owns assets:
147
EXHIBIT C
COMPLIANCE CERTIFICATE OF BORROWER
(Pursuant to Section 7.2 of Line of Credit and Security Agreement
dated ______________, 20___)
[NAME OF BORROWER] (the "Borrower") HEREBY CERTIFIES that:
This Compliance Certificate is furnished pursuant to the Line of
Credit and Security Agreement (the "Agreement") dated ____________, 20___ by
and between the Borrower and SUNTRUST BANK (the "Bank"). Unless otherwise
defined herein, the terms used in this Report have the meanings given to them
in this Agreement.
1. The figures and information for determining compliance by the
Borrower with the financial covenants set forth in the Quarterly Covenant
Compliance Report attached hereto have been prepared based upon the financial
reports accompanied hereby and both the Quarterly Covenant Compliance Report
and such financial reports are true and complete as of the date hereof.
2. The activities of the Borrower during the preceding quarter
have been reviewed by the [president or other authorized officer] or the
employees or agents under his immediate supervision. Based on such review, to
the best knowledge and belief of the [president or other authorized officer],
and as of the date of this Certificate, the Borrower has performed and observed
each and every covenant contained in the Agreement to be performed by it, and
no Event of Default or Default Condition exists, except for the following:
Please describe or indicate "None" if none exist:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
C-2
148
WITNESS my hand this ____ day of __________, ___.
[NAME OF BORROWER]
By:
-------------------------------
Title:
-------------------------
C-3
149
EXHIBIT D
QUARTERLY COVENANT COMPLIANCE REPORT
(Section 6 - Financial Covenants)
--------------------------
For Quarter Ending:
--------------------
With respect to the financial covenants set forth below in I and II,
which are calculated based upon the Opening Date of a store location, the
financial information from store locations that have not reached the Opening
Date anniversary incorporated into such covenants shall be excluded from such
calculations. [DEBT ATTRIBUTABLE TO SUCH LOCATIONS AND DEDUCTED FROM THE FINAL
CALCULATIONS SHALL BE DEDUCTED ON A PRO RATA BASIS CALCULATED BY DIVIDING SUCH
STORES' AGGREGATE NET BOOK VALUE OF MERCHANDISE BY THE NET BOOK VALUE OF
MERCHANDISE FOR ALL STORE LOCATIONS.] The financial covenants shall otherwise
be calculated on a consolidated basis as to all store locations.
[I. DEBT TO EBIT
A. ENTER AMOUNT OF DEBT _______________________
B. ENTER AMOUNT OF DEBT
ATTRIBUTABLE TO STORE LOCATIONS OPEN
LESS THAN 19 MONTHS _______________________
C. SUBTRACT B FROM A _______________________
D. ENTER AMOUNT OF NET INCOME FOR
LAST THREE MONTHS (BACKING OUT INCOME
FOR STORES LESS THAN 19 MONTHS OLD) _______________________
E. ENTER AMOUNT OF INTEREST AND TAXES
BASED UPON INCOME FOR LAST
THREE MONTHS (BACKING OUT
INTEREST AND TAXES FOR
STORES LESS THAN 19 MONTHS OLD) _______________________
F. ADD D PLUS E _______________________
RATIO OF C:F _______________________
150
STANDARD .............. 16.0:1.0
COMPLIANCE? YES ____ NO ____
II. DEBT TO RENTAL REVENUE
A. ENTER AMOUNT OF DEBT. _____________________
B. ENTER AMOUNT OF DEBT ATTRIBUTABLE
TO STORE LOCATIONS OPEN LESS
THAN 19 MONTHS. _____________________
C. SUBTRACT B FROM A. _____________________
D. ENTER AMOUNT OF LAST MONTH'S
RENTAL REVENUE. _____________________
E. ENTER AMOUNT OF LAST MONTH'S RENTAL
REVENUE ATTRIBUTABLE TO STORE LOCATIONS
OPEN LESS THAN 19 MONTHS. _____________________
F. SUBTRACT E FROM D. _____________________
RATIO OF C:F. _____________________
STANDARD .............. 5.5:1.0
COMPLIANCE? YES ____ NO ____
III. TOTAL LIABILITIES TO TANGIBLE NET WORTH
A. ENTER AMOUNT OF TOTAL LIABILITIES. ____________________
B. ENTER AMOUNT OF TANGIBLE NET WORTH. ____________________
C. RATIO OF A:B. ____________________
STANDARD -- COMMENCING ON THE
FIRST DAY OF THE 13TH MONTH FOLLOWING
THE OPENING DATE OF THE FIRST STORE
LOCATION, RATIO NOT GREAT THAN......... 5.5:1.0
COMPLIANCE? YES ____ NO ____]
D-2
151
[TO BE SPECIFIED BY XXXXX]
Note: All terms are those used in generally accepted accounting practices
unless specifically defined in the Agreement.
D-3
152
EXHIBIT D
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF PARTICIPATION CERTIFICATE
SERVICER: SunTrust Bank CERTIFICATE NO. _____
Strategic Partners Program
Attn: Xxxxx Rents Program Manager
000 Xxxxxxxxx Xxxxxx, XX 0xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
DATE: March ___, 2001
This is to certify that SunTrust Bank ("SERVICER"), has sold
to _________________________ ("PARTICIPANT") and Participant has purchased from
Servicer an undivided ______ percent (_%) ownership interest in (i) the
Commitment, (ii) the Loan Commitments, (iii) the Loans, (iv) the Collateral,
(v) all rights against any guarantor of any Loan, including the Sponsor, (vi)
all rights pursuant to the Guaranty Agreement, (vii) the Loan Documents and
(viii) all right, title and interest to any payment or right to receive payment
with respect to the foregoing (collectively, the "PARTICIPANT'S INTEREST").
Notwithstanding the foregoing, each Participant's right to receive payments of
interest, commitments fees or other fees with respect to the Commitment, the
Loan Commitments and the Loans shall not exceed the amounts which such
Participant is entitled to receive pursuant to the terms of the Loan Facility
Agreement referenced below.
This Certificate is issued pursuant to the terms and
conditions of that certain Loan Facility Agreement and Guaranty dated as of
March ___, 2001 by and among Servicer, Participant, Xxxxx Rents, Inc. and
certain other financial institutions named therein and from time to time a
party thereto (as amended, restated, modified or supplemented from time to
time, the "LOAN FACILITY AGREEMENT"). Reference is made to said Loan Facility
Agreement for the terms and conditions of the participation evidenced hereby.
All terms used in this Certificate shall have the same meanings as set forth in
said Loan Facility Agreement.
This Certificate is neither transferable nor negotiable.
SUNTRUST BANK, AS SERVICER
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
153
EXHIBIT E
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
LINE OF CREDIT AND SECURITY AGREEMENT
(Startup Franchisee Borrower)
THIS LINE OF CREDIT AND SECURITY AGREEMENT (this "Agreement") dated as
of ____________ ___, 200__, is made between _______________________, [a
__________ corporation] [a ____________ partnership] [a _________ limited
liability company] ("Borrower"), and SUNTRUST BANK ("Bank"), a Georgia banking
corporation having its principal office in Atlanta, Georgia.
WITNESSETH:
WHEREAS, Borrower engages in the business of renting and selling
furniture, electronics, appliances, jewelry and other household goods and is a
franchisee of Xxxxx Rents, Inc., a Georgia corporation ("Xxxxx");
WHEREAS, Borrower has requested and Bank has agreed to establish a
line of credit for Borrower in order for Borrower to (i) purchase inventory for
use in connection with its Aaron's Rental Purchase franchise and (ii) pay state
use taxes and freight charges, to the extent approved by Xxxxx; and
WHEREAS, Borrower and Bank wish to enter into this Agreement to set
forth the terms and conditions of Bank's establishment of a revolving line of
credit for Borrower;
THEREFORE, upon the terms and conditions hereinafter stated, and in
consideration of the mutual premises set forth above and other adequate
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1. As used in this Agreement, the following terms shall have the
meanings set forth below (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
"Aaron's Proprietary System" shall mean Aaron's proprietary point of
sale software system, as modified from time to time, used by Xxxxx and its
franchisees, such as Borrower.
154
"Account" means any right of Borrower to payment for goods sold or
leased or for services rendered which is not evidenced by an Instrument or
Chattel Paper, whether or not earned by performance.
"Account Debtor" means any Person who is liable on an Account.
"Advance" shall mean an advance of funds by Bank on behalf of Borrower
pursuant to the Master Note executed by Borrower.
"Agreement" means this Line of Credit and Security Agreement and all
exhibits, riders and schedules at any time executed by the parties and made a
part hereof by reference, either as originally executed or as hereafter
amended, modified or supplemented from time to time.
"Applicable Law" means all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant or Loan Documents in question,
including, without limitation, all applicable law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes, rules,
regulations and orders of governmental bodies; and all orders, judgments and
decrees of all courts and arbitrators.
"Approved Invoice" means an invoice for the aggregate purchase price
of Merchandise purchased by Borrower with a purchase order approved by Xxxxx.
"Asset Disposition" shall mean (i) all sales of Merchandise; (ii) all
Rental/Purchase Contracts with respect to Merchandise with a "same as cash
option" regardless of term (i.e., 90, 120, 180 days); (iii) all Merchandise
which is determined to have been stolen; (iv) all Merchandise that is
destroyed, lost or otherwise removed from the premises of Borrower other than
pursuant to a Rental/Purchase Contract or by outright sale or for repair work;
and (v) all "skipped" Merchandise which is Merchandise subject to a
Rental/Purchase Contract.
"Asset Disposition Prepayment" shall have the meaning set forth in
Section 2.8(b) hereof.
"Balances" means all monies and funds of Borrower at any time on
deposit with Bank.
"Bank" shall mean SunTrust Bank and its successors and assigns.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as may be
amended from time to time.
"Books and Records" means all of Borrower's books and records
evidencing or relating to its business, financial condition or the Collateral,
including, but not limited to, all customer lists, ledgers, invoices, purchase
orders, financial statements, computer tapes and disks.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which commercial banks in Atlanta, Georgia are authorized by law to
close.
2
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"Chattel Paper" shall have the meaning ascribed to it in the Code.
"Closing Date" means the date upon which the initial Advance with
respect to the Loan is funded.
"Closing Fee" shall have the meaning given to such term in Section 2.9
hereof.
"Code" means the Uniform Commercial Code as in effect from time to
time in the State of Georgia.
"Collateral" shall have the meaning given to such term in Section 3.1
hereof.
"Collateral Agreement" means an agreement executed by Borrower and any
other Persons primarily or secondarily liable for all or part of the Loan or
granting a security interest to Bank in specified Collateral as security for
the Loan, including without limitation, this Agreement and any Guaranties.
"Commitment Fee" shall have the meaning set forth in Section 2.10
hereof.
"DDA Account" shall mean Borrower's Demand Deposit Account into which
Bank shall deposit the Advances for the purpose of (i) paying, by means of ACH
transfer, Approved Invoices arising from purchases of Merchandise from a
supplier, including any freight charges to the extent Xxxxx consents thereto
and (ii) paying, to Borrower's own account upon the consent of Xxxxx, state use
taxes associated therewith.
"Debt" means (i) indebtedness for borrowed money or for the deferred
purchase price of property or services (other than trade accounts payable on
customary terms in the ordinary course of business), (ii) financial obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
financial obligations as lessee under leases which shall have been or should
be, in accordance with GAAP, recorded as capital leases, and (iv) obligations
under direct or indirect guaranties in respect of, and obligations (contingent
or otherwise) to purchase or otherwise acquire, or otherwise to assure a
creditor against loss in respect of, indebtedness or financial obligations of
others of the kinds referred to in clauses (i) through (iii) above.
"Debt Service" shall mean, for any particular period, the total
required payments of principal (excluding any payments of principal required to
be made as a result of any Asset Disposition), interest and fees made by
Borrower with respect to its Debt during such period to the extent that such
Debt arises pursuant to this Agreement or any other financing arrangement with
respect to Merchandise.
"Default Condition" means the occurrence of any event which, after
satisfaction of any requirement for the giving of notice or the lapse of time,
or both, would become an Event of Default.
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"Default Rate" means the annual percentage interest rate applied to
the principal of the Loan not paid when due under the terms of the applicable
Loan Documents, which rate shall equal the sum of two percent (2%) per annum
plus the Floating Rate.
"Delinquent Payment Fee" shall have the meaning given to such term in
Section 2.11 hereof.
"Documents" shall have the meaning ascribed to it in the Code.
"Electronic Equipment" shall include all computers, computer
equipment, big screen televisions, and any other types of inventory designated
by Xxxxx from time to time.
"Electronic Equipment Advances" shall mean all Advances made to
purchase Electronic Equipment where Xxxxx and the Borrower have agreed that the
amortization period shall be 24 months, subject to termination of the Loan
Commitment as provided below.
"Electronic Equipment Asset Dispositions" shall mean all Asset
Dispositions of Electronic Equipment for which Xxxxx and the Borrower have
agreed that the amortization period shall be 24 months, subject to termination
of the Loan Commitment as provided below.
"Environment" means navigable waters, waters of the contiguous zone,
ocean waters, natural resources, surface waters, ground water, drinking water
supply, land surface, subsurface strata, ambient air, both inside and outside
of buildings and structures.
"Environmental Laws" means federal, state, local and foreign laws,
principles of common law, regulations and codes, as well as orders, decrees,
judgments or injunctions issued, promulgated, approved or entered thereunder
relating to pollution, protection of the environment or public health and
safety, including, but not limited to the release or threatened release of
Hazardous Substances into the Environment or otherwise relating to the
presence, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances.
"Equipment" means all machinery, equipment, furniture, fixtures, motor
vehicles and other tangible personal property (other than Inventory) of
Borrower, including, but not limited to, all items described on the Equipment
Schedule (if attached) and all substitutions and replacements thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning given to such term in
Section 9 hereof.
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"Floating Rate" means a rate of interest per annum equal to the Prime
Rate plus an additional ____ percent (____%) per annum, such rate to change as
and when the Prime Rate changes.
"Franchise Agreement" means the written agreement between Xxxxx and
Borrower whereby Borrower is authorized to establish an "Aaron's Rental
Purchase" franchise.
"GAAP" means generally accepted accounting principles in the United
States, consistently applied.
"General Intangibles" shall have the meaning ascribed to it in the
Code and shall include, without limitation, all of Borrower's tax refund
claims, patents, copyrights, licenses, trademarks, trade names, service marks,
patent applications and choices in action.
"Guarantor" means each Person who now or hereafter guarantees payment
of the whole or any part of the Loan Indebtedness.
"Guaranty" means any guaranty agreement executed by each of the
partners, shareholders, and where not prohibited by law, the spouses of such
persons, of Borrower, or such other Persons as may be required by the Bank, in
favor of the Bank with respect to the obligations of Borrower with respect to
the Loan in the form provided by the Bank, as the same may be amended, restated
or supplemented from time to time.
"Hazardous Substances" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance or waste, petroleum or petroleum-derived substance or waste, or any
constituent of any such substance or waste, including without limitation, any
such substance regulated under or defined by any Environmental Law.
"Instrument" shall have the meaning ascribed to it in the Code.
"Inventory" means all inventory of Borrower, including, without
limitation, all raw materials, work-in-process, finished goods, goods being
leased pursuant to Rental/Purchase Contracts, and other goods held by Borrower
for sale or lease or furnished under contracts of service.
"Investment Property" shall have the meaning ascribed to it in the
Code.
"Lien" means any interest in property securing an obligation, whether
such interest is based on the common law, statute or contract, including,
without limitation, a security interest, lien or security title arising from a
security agreement, mortgage, security deed, trust deed, pledge or conditional
sale, or a lease, consignment or bailment for security purposes.
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"Loan" means, as of any date of determination, the aggregate amount of
Advances outstanding pursuant to the Loan Commitment from the Bank to Borrower
established pursuant to Section 2 hereof.
"Loan Account" means the internal bank loan account established by the
Bank for Borrower.
"Loan Commitment" means the committed amount of the loan facility
established by the Bank in favor of Borrower in the amount not exceeding, and
upon the terms described in, this Agreement.
"Loan Documents" means this Agreement, the Master Note, the Collateral
Agreements, any other documents relating to the Loan delivered by Borrower or
any guarantor or surety thereof to the Bank and any amendments thereto.
"Loan Indebtedness" means all amounts due and payable by Borrower
under the terms of the Loan Documents with respect to the Loan Commitment and
the Advances made thereunder, including, without limitation, outstanding
principal, accrued interest, any late charges, and all reasonable costs and
expenses of any legal proceeding brought by the Bank to collect any of the
foregoing (including without limitation, reasonable attorneys' fees).
"Loan Term" shall have the meaning set forth in Section 2.4 hereof.
"Master Note" means the note of Borrower, substantially in the form
attached hereto as Exhibit A, setting forth the obligation of Borrower to repay
the Loan.
"Materially Adverse Effect" shall mean any materially adverse change
in (i) the business, results of operations, financial condition, assets or
prospects of the Borrower, taken as a whole, (ii) the ability of the Borrower
to perform its obligations under this Agreement, or (iii) the ability of the
Guarantors (taken as a whole) to perform their respective obligations under the
Guaranty.
"Maturity Date" shall have the meaning set forth in Section 2.3
hereof.
"Merchandise" means goods distributed or sold to Borrower through
Xxxxx.
"Net Book Value" means, for any item of Merchandise, the cost of such
Merchandise less accumulated depreciation as calculated in accordance with the
Aaron's Proprietary System.
"Opening Date" shall mean with respect to each store location, the
date determined by Xxxxx to be the opening date of such location in accordance
with its standard practice, as notified to the Bank.
"Payment Date" shall mean the last day of each calendar month;
provided, however, if such day is not a Business Day, the next succeeding
Business Day
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"Payment Period" shall mean a period of one (1) month; provided that
(i) the first day of a Payment Period must be a Business Day, (ii) any Payment
Period that would otherwise end on a day that is not a Business Day shall be
extended to the next succeeding Business Day, (iii) the first Payment Period
hereunder shall commence on the date hereof and shall end on the last day of
the next succeeding calendar month, and (iv) the first day of any succeeding
Payment Period shall be the last day of the preceding Payment Period and shall
end on the last day of the next succeeding calendar month.
"Permitted Liens" means Liens in favor of Bank or Xxxxx; Liens for
taxes not yet due or payable; statutory Liens securing the claims of
materialmen, mechanics, carriers and landlords for labor, materials, supplies
or rentals incurred in the ordinary course of Borrower's business, but only if
payment thereof is not at the time required and such Liens are at all times
junior in priority to the Liens in favor of Bank; Liens shown on Exhibit B (if
any); and Liens hereafter consented to by Bank in writing.
"Person" means a corporation, an association, partnership, an
organization, a business, a business trust, a limited liability company, an
individual, a government or political subdivision thereof or a governmental
agency.
"Prime Rate" means the per annum rate of interest designated from time
to time by the Bank to be its prime rate, with any change in the rate of
interest resulting from a change in the Prime Rate to be effective as of the
opening of business of the Bank on the day of such change. The prime rate is
one of several reference rates used by the Bank and the Bank makes loans at
rates both higher and lower than the Prime Rate.
"Quarterly Covenant Compliance Report" shall mean that Quarterly
Covenant Compliance Report substantially in the form of Exhibit D attached
hereto.
"Rental/Purchase Contract" means a contract between Borrower and a
customer to rent Merchandise in the form approved by Xxxxx (and which may
included purchase options).
"Rental Revenue" means, for any period, the gross revenues of Borrower
from rentals to the public of Borrower's furniture inventory and rental
equipment including, without limitation, all customer deposits, advance rental
payments, waiver fees, late fees, delivery fees, nonsufficient fund fees,
reinstatement fees, but excluding all retail sales proceeds and sales taxes.
"Solvent" means, as to any Person, such Person (i) is able to pay, and
does pay, its debts as they mature and (ii) has a positive tangible net worth
determined in accordance with GAAP.
"Spousal Consent" shall mean any agreement provided by the spouse of
any Person executing a Guaranty to the extent such spouse has not personally
executed a Guaranty, to be substantially in the form provided by the Bank.
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"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are at
the time directly or indirectly owned by Borrower.
"Tangible Net Worth" means, with respect to the Borrower as of any
date of determination, the excess of the total assets of the Borrower over the
Total Liabilities of the Borrower, determined in accordance with GAAP
consistently applied, excluding from the calculation of total assets the notes
receivables from shareholders of the Borrower and including in such calculation
of total assets the franchise fees as shown on the balance sheet of the
Borrower as of such date.
"Total Liabilities" means, with respect to the Borrower, as of any
date of determination, total liabilities determined in accordance with GAAP
consistently applied, but excluding therefrom Debt of the Borrower which is
subordinated to the Loan Indebtedness owing to the Bank pursuant to a
subordination agreement in form and substance satisfactory to the Bank.
1.2. Accounting Terms and Determination. Accounting terms used in
this Agreement such as "amortization," "depreciation," "interest expense," and
"tangible net worth" shall have the meaning normally given them by, and shall
be calculated (both as to amounts and classification of items) in accordance
with, GAAP. Any pronoun used herein shall be deemed to cover all genders. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations, and all references to any
instruments or agreements, including, without limitation, references to any of
the Loan Documents, shall include any and all modifications or amendments
thereto and any and all extensions or renewals thereof.
2. LOAN; USE OF PROCEEDS.
2.1. Establishment of DDA Account; Loan Account. (a) Prior to the
Closing Date, Bank shall establish a DDA Account for Borrower.
(b) Prior to the Closing Date, Bank shall also establish
on its books an internal loan account in Borrower's name (the "Loan Account")
in which Bank shall record, in accordance with customary accounting practice,
all charges, expenses and other items properly chargeable to Borrower; all
payments made by Borrower on account of indebtedness evidenced by the Loan
Account; all proceeds of Collateral which are finally paid to Bank at its
office in cash or solvent credits; and other appropriate debits and credits.
The debit balance of the Loan Account shall reflect the amount of Borrower's
Loan Indebtedness from time to time by reason of the Loan and other appropriate
charges hereunder. At least once each month, Bank shall render a statement of
account for the Loan Account, which statement shall be considered correct, and
accepted by and conclusively binding upon Borrower, unless Borrower notifies
Bank to the contrary within thirty (30) days after Bank's sending of said
statement to Borrower.
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2.2. Advances. Upon Borrower's execution of this Agreement and
compliance with its terms and subject to Bank's confirmation if requested by
Xxxxx that Bank has a first priority security interest in the Collateral, Bank
shall notify Borrower that Borrower may request Advances pursuant to the Loan
Commitment. Bank shall make such Advances into the DDA Account for the sole
purpose of honoring requests from Borrower, made through the Aaron's
Proprietary System, for ACH transfers to suppliers of Merchandise in payment of
Approved Invoices, including any freight charges to the extent Xxxxx consents
thereto, or with Aaron's consent, to Borrower's own account for the payment of
sales use taxes. Borrower shall not use the DDA Account for any other purpose.
The maximum principal amount of Advances at any time outstanding pursuant to
this Agreement shall not exceed ____________________ ($ ___________) (the "Loan
Commitment"). Each Advance shall be in the amount of not less than $500.
(b) Borrower shall submit purchase order requests for
Merchandise to Xxxxx. In the event that the purchase order is authorized
pursuant to the Franchise Agreement, Xxxxx will prepare the purchase order and
submit the same to the appropriate supplier requested by Borrower. The supplier
will be instructed to ship all Merchandise directly to Borrower and Borrower
will be responsible for (i) inspecting all Merchandise and resolving all
disputes regarding the Merchandise with such supplier and (ii) paying all
freight and other shipping and/or insurance charges arising in connection
therewith with funds other than Loan Proceeds, unless otherwise agreed by
Xxxxx. The supplier will invoice Borrower for such Merchandise in accordance
with normal industry practice. When Borrower wishes to pay such invoice,
Borrower, subject to availability of the Loan Commitment, shall pay such
invoice by directing the Bank, through the Aaron's Proprietary System, to pay
such invoice by means of an ACH transfer from its DDA Account. Any directions
for ACH transfers correctly inputted into the Aaron's Proprietary System prior
to 12:00 Midnight (Atlanta, Georgia time) on any Business Day, shall be paid by
the Bank no later than the third Business Day thereafter, unless Borrower is
otherwise notified by Xxxxx or the Bank.
(c) Upon receipt of the request for an ACH transfer
(provided that such request relates to an Approved Invoice), the Bank shall
honor such request by making an Advance pursuant to the Loan Commitment in the
amount of such request into the Borrower's DDA Account and automatically
forwarding such amount to the supplier by means of an ACH transfer in
accordance with the instructions of Borrower. Upon receipt of any request to
deposit funds into an account in the name of Borrower and receipt of Aaron's
approval thereof, the Bank shall honor such request by making an Advance
pursuant to the Loan Commitment in the amount of such request into the
Borrower's DDA Account and automatically forwarding such amount to such account
of the Borrower by means of an ACH transfer in accordance with the instructions
of Borrower. In the event that a request for an ACH transfer is presented for
payment and Borrower's availability pursuant to the Loan Commitment is
insufficient to honor such request, the Bank may, but shall have no obligation
to, make such overadvance, which shall be an Advance for all purposes
hereunder, but shall be due and payable upon demand. At the end of each
calendar month, Bank shall provide Borrower with a monthly DDA Account
statement in the form customarily used by Bank for its commercial customers and
a loan account statement.
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(d) The aggregate amount of Advances (other than
Electronic Equipment Advances) made to Borrower during such month less payments
received by Bank from Borrower with respect to Asset Dispositions (other than
Electronic Equipment Asset Dispositions) plus the Excess Electronic Equipment
Proceeds (as defined below) received since the cut-off date of the last
statement of Borrower shall be amortized into eighteen (18) equal payments of
principal due and payable on the next succeeding Payment Dates. On the last day
of each calendar month, Bank shall determine the aggregate amount of Electronic
Equipment Advances made to Borrower during such month and shall subtract
therefrom payments received by Bank from Borrower with respect to Electronic
Equipment Asset Dispositions (with any excess proceeds referred to herein as
"Excess Electronic Equipment Proceeds") received since the cut-off date of the
last statement of Borrower. The remaining principal amount of the Electronic
Equipment Advances made to Borrower during the month shall be amortized into
twenty-four (24) equal payments of principal due and payable on the next
succeeding Payment Dates; provided that, in the event that the Bank terminates
the Loan Commitment as provided in Section 2.4 below, all outstanding amounts
of such Electronic Equipment Advances shall be due and payable on the 18th
Payment Date following such termination. On the 15th day of each calendar
month, Bank shall mail to Borrower a xxxx setting forth the total amount of
principal and interest due on the next Payment Date which xxxx shall be
considered correct, and accepted by and conclusively binding upon Borrower,
unless Borrower notifies Bank to the contrary within thirty (30) days after
Bank's sending of said xxxx to Borrower.
(e) In the event that Borrower wishes to request an
Electronic Equipment Advance, it shall submit such request to Xxxxx and, in the
event that Xxxxx approves such request, Xxxxx shall communicate such approval
to the Bank and Borrower and Bank shall be entitled to rely upon such
communication from Xxxxx.
2.3. Master Note; Repayment. The Loan Commitment shall be
evidenced by a note executed by Borrower in favor of Bank, substantially in the
form of Exhibit A attached hereto (the "Master Note"). The Master Note shall be
dated as of the date hereof and shall be payable to the order of Bank in the
stated principal amount of the Loan Commitment. Payments of principal and
interest shall be due and payable by Borrower to Bank on each Payment Date and
subject to the provisions of Section 2.4 below, on the effective date of
termination of the Loan (the "Maturity Date"), unless sooner accelerated in
accordance with the terms hereof. Except as provided below, all payments of
principal of, or interest on, the Loan Documents (including Asset Disposition
Prepayments) and all other sums due under the terms of the Loan shall be made
in either (x) immediately available funds (including ACH transfers), or (y)
checks or money orders made payable to the Bank at its principal office in
Atlanta, Georgia in accordance with written instructions provided by the Bank.
All voluntary prepayments of the Loan shall be made to the Bank at its
Strategic Partner Programs Department in Atlanta, Georgia using preprinted
envelopes provided by the Bank for such purpose or, if such envelopes are
unavailable, mailed to the following address:
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SunTrust Bank
Strategic Partner Programs Department
Attn: Xxxxx Rent's Program Manager
X.X. Xxx 0000
Mail Code 1923
Xxxxxxx, XX 00000
2.4. Loan Term; Voluntary Termination. The original term of the
Loan Commitment shall be for a period of one year from the Closing Date (the
"Loan Term"). Thereafter, the Loan Term shall automatically be extended on each
anniversary of the Closing Date for an additional one year period unless either
party terminates the Loan as set forth hereunder. Upon ninety (90) days prior
written notice to the Borrower, the Bank may, at its option, terminate the Loan
Commitment. Upon written notice to the Bank, the Borrower may, at its option,
terminate the Loan Commitment. Bank may also terminate the Loan Commitment
pursuant to Section 10 hereof. Upon the effective date of a termination of the
Loan Commitment effected by Borrower, the principal of and all accrued but
unpaid interest on the Loan Indebtedness shall be forthwith due and payable,
but all of the duties and covenants of Borrower hereunder, and all rights,
remedies and privileges of Bank under this Agreement and Bank's security
interest in the Collateral, shall continue in full force and effect until all
of the Loan Indebtedness is fully and finally paid. In the event Bank elects to
terminate, (i) Bank shall continue to make Advances until the effective date of
the termination and (ii) Advances outstanding at the effective date of the
termination shall be repaid according to an eighteen (18) month amortization
schedule or a twenty-four (24) month amortization schedule provided above with
respect to Electronic Equipment Advances, provided that, notwithstanding the
foregoing all outstanding Loan Indebtedness shall be due and payable in full on
the 18th Payment Date following termination of the Loan Commitment by the Bank.
Nothing set forth in this Section 2.4 shall be deemed to limit the ability of
the Bank to declare all amounts outstanding under the Note immediately due and
payable upon the occurrence of an Event of Default hereunder as provided
herein.
2.5. Interest. (a) From and after the date hereof, interest shall
accrue on the unpaid principal amount of the Loan Indebtedness at the Floating
Rate. Interest shall be calculated daily and shall be computed on the basis of
actual days elapsed over the period of a 360 day year. After the occurrence of
an Event of Default and during the continuance thereof, the outstanding
principal balance of the Loan shall bear interest at the Default Rate, which
shall be payable upon demand.
(b) In no contingency or event whatsoever shall the
amount paid or agreed to be paid to Bank for the use, forbearance or detention
of money advanced under this Agreement exceed the highest lawful rate
permissible under Applicable Law. It is the intent hereof that Borrower will
not pay or contract to pay, and that Bank not receive or contract to receive,
directly or indirectly in any manner whatsoever, interest in excess of that
which may be charged to and paid by Borrower under Applicable Law. All interest
(and charges deemed interest) paid or agreed to be paid to Bank shall, to the
extent permitted by Applicable Law, be amortized, pro rated, allocated and
spread in equal parts throughout the full term hereof until payment in full of
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the principal amount of the Loan Indebtedness owing hereunder (including the
period of any renewal or extension hereof) so that interest on the principal
amount of the Loan Indebtedness outstanding hereunder for such full period will
not exceed the maximum amount permitted by Applicable Law.
2.6. Loan Prepayment. Borrower shall have the right to prepay the
Loan in whole or in part upon at least two (2) Business Days' prior written
notice to Bank, provided, however, that mandatory prepayment shall be required
for Asset Dispositions. Partial prepayments of the Loan (other than proceeds of
Asset Dispositions which shall be applied as set forth in the following Section
2.8(b)) shall be applied to reduce the current month's Advances with any excess
prepayment applied to unpaid principal payments of the Loan in inverse order of
maturity.
2.7. Audits. Borrower hereby consents and authorizes Xxxxx or the
Bank or any agent or representative thereof to conduct periodic field audits of
Borrower. Such field audits may include, without limitation, examinations of
the payment receipts, tax returns, bank statements, loan statements,
Rental/Purchase Contracts, inventory on hand, computer-generated reports of
Asset Dispositions, Rental Revenue and other financial data necessary to
determine the accuracy and validity of the reports, compliance certificates,
financial reports and other information forwarded to either of the Bank or
Xxxxx by Borrower in connection with the Loan.
2.8. Tracking of Merchandise; Asset Dispositions. (a) All
Merchandise financed by the Bank must be serialized by means of the Aaron's
Proprietary System for appropriate reconciliation of Advances and receipt of
Merchandise and for purposes of tracking Asset Dispositions. Borrower shall be
obligated to furnish serial numbers for all Merchandise purchased, excluding
all Electronic Equipment purchased, directly to Xxxxx on a monthly basis (and,
if available, on a weekly basis) by transmittal of Borrower's receiving report
(containing Aaron's Proprietary System numbers) directly to Xxxxx on the
Aaron's Proprietary System. Borrower shall be obligated to furnish serial
numbers for all Electronic Equipment purchased, directly to Xxxxx on a
bi-monthly basis (and, if available, on a monthly basis) no later than the
fifth business day of each month by transmittal of Borrower's receiving report
(containing Aaron's Proprietary System numbers) directly to Xxxxx on the
Aaron's Proprietary System. As set forth more fully below, Xxxxx will maintain
and track such information as agent for the Bank and the Bank shall at all
times have access to such information.
(b) If an Asset Disposition occurs, Borrower shall
immediately report such Asset Disposition to Xxxxx by means of the Aaron's
Proprietary System, such information to include the Aaron's Proprietary System
numbers, and if assigned, the serial numbers of the Merchandise subject to the
Asset Disposition, the Net Book Value of such Merchandise and the proceeds
received by Borrower therefrom and whether or not such Asset Disposition
constituted an Electronic Equipment Asset Disposition. Xxxxx, on a monthly (and
if available, weekly) basis, shall transmit all such information to the Bank in
a summary form. Based solely on such information provided by Xxxxx, the Bank
will notify Borrower on a monthly basis, of the amount of the required
prepayment (the "Asset Disposition Prepayment") of the aggregate outstanding
amount of the Loan due on the next Payment Date which amount shall be equal to
the Net Book
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Value of the Asset Dispositions during the preceding month not applied to
Advances made during such month as set forth above, unless otherwise agreed to
by the Bank. The Borrower shall be notified by the Bank by the 15th day of each
calendar month of the Asset Disposition Prepayment and payment thereof shall be
due on the next succeeding Payment Date.
2.9. Closing Fee. On the Closing Date of the Loan, Borrower shall
pay to Bank a closing fee ("Closing Fee") in the amount of $500 per store
location.
2.10. Commitment Fees. (a) Borrower shall pay a commitment fee (the
"Commitment Fee") on any unused portion of the Loan Commitment in the amount of
____ percent (___%) per annum, such Commitment Fee to be paid quarterly in
arrears on every third Payment Date, commencing on ________________.
(b) All Commitment Fees shall be paid on the dates due,
in immediately available funds, to the Bank.
2.11. Delinquent Payment Fees. In the event that any payment due
and payable hereunder is not received by the Bank on the Payment Date when due,
the Borrower shall, upon request from the Bank, pay to the Bank a delinquent
payment fee (the "Delinquent Payment Fee") in an amount equal to the greater of
(i) one percent (1%) of the amount of the late payment, and (ii) $500.00.
3. COLLATERAL AND INSURANCE.
3.1. Granting of Security Interest in Collateral. As security for
the payment and performance of all of the Loan Indebtedness, Bank shall have
and Borrower hereby grants to Bank a continuing security interest in the
following described property of Borrower, whether now in existence or hereafter
created or acquired and wherever located (collectively, the "Collateral"): all
Accounts, Merchandise, Inventory, Investment Property, Equipment, General
Intangibles, Documents, Instruments, Chattel Paper (including, but not limited
to, the Rental/Purchase Contracts), Balances, and Books and Records, and all
products and proceeds of the foregoing (including insurance proceeds). The Loan
Indebtedness shall also be secured by any other property (whether real or
personal) in which Borrower may have heretofore or concurrently herewith
granted, or may hereafter grant, a Lien in favor of Bank.
3.2. Form of Rental/Purchase Contracts. All Rental/Purchase
Contracts will be (a) in a form prescribed by Xxxxx for use by its franchisees,
(b) be transferable to Bank and (c) contain the following provision directly
above Borrower's customer's signature:
"NOTWITHSTANDING ANYTHING SET FORTH IN THIS AGREEMENT TO THE CONTRARY,
THE UNDERSIGNED ACKNOWLEDGES AND CONSENTS TO THE TRANSFER OF, OR GRANT
OF A SECURITY INTEREST IN, ANY OR ALL OF THE LESSOR'S RIGHT, TITLE AND
INTEREST (RESIDUAL OR OTHERWISE) IN AND UNDER THIS AGREEMENT TO ANY
THIRD PARTY. NO SUCH
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TRANSFER OR GRANT OF SECURITY INTEREST WILL: (A) AFFECT THE
UNDERSIGNED'S LOAN INDEBTEDNESS; (B) CHANGE ANY DUTIES OF, OR INCREASE
ANY BURDENS OR RISKS IMPOSED ON, THE PARTIES TO THIS AGREEMENT; OR (C)
GIVE RISE TO ANY RIGHTS OR REMEDIES PROVIDED UNDER SECTION
2A-303(1)(b) OF THE UNIFORM COMMERCIAL CODE, AS ADOPTED IN THE
APPLICABLE JURISDICTION. NO ENFORCEMENT OF ANY SECURITY INTEREST WILL
CONSTITUTE A TRANSFER THAT CHANGES ANY DUTIES OF, OR INCREASES ANY
BURDENS OR RISK IMPOSED ON, THE PARTIES TO THIS AGREEMENT. THE
UNDERSIGNED WAIVES ALL RIGHTS AND REMEDIES PROVIDED UNDER SECTION
2A-303 OF THE UNIFORM COMMERCIAL CODE, AS ADOPTED IN THE APPLICABLE
JURISDICTION."
Immediately upon execution of the same, all Rental/Purchase Contracts shall be
hereby assigned to Bank, and, immediately upon Bank's request, delivered to
Bank together with any and all related documents, and will contain, by way of a
stamp or as a part of the preprinted rental contract or lease agreement form,
the following legend directly below Borrower's customer's signature:
"FOR VALUE RECEIVED, THIS AGREEMENT HAS BEEN ASSIGNED TO SUNTRUST BANK
AND THERE ARE NO DEFENSES AGAINST THE ASSIGNEE."
Borrower will not assign, sell, pledge, convey or by any other means transfer
to any person other than Bank any Rental/Purchase Contracts or Chattel Paper,
without Bank's prior written consent.
3.3. Other Documents. Borrower shall execute and deliver, or shall
be caused to be executed and delivered, to Bank such other instruments,
agreements, assignments, notifications or other documents relating to the
Collateral as Bank may from time to time request in order to evidence, perfect
or continue the perfection of Bank's Liens upon any of the Collateral.
3.4. Insurance. Borrower shall maintain and keep in force insurance
of the types and in the amounts customarily carried in lines of business similar
to Borrower's and such other insurance as Bank may require, including, without
limitation, theft, fire, public liability, business interruption, casualty,
property damage, and worker's compensation insurance, which insurance shall be
carried with companies and in amounts satisfactory to Bank. All casualty and
property damage insurance shall name Bank as mortgagee or loss payee, as
appropriate. Borrower shall deliver to Bank from time to time, at Bank's
request, copies of all such insurance policies and certificates of insurance and
schedules setting forth all insurance then in effect. Each policy of insurance
shall contain a clause requiring the insurer to give not less than thirty (30)
days' prior written notice to Bank in the event of cancellation of the policy
for any reason whatsoever and a clause that the interest of Bank shall not be
impaired or invalidated by any act or neglect of Borrower or owner of the
property nor by the occupation of the premises for purposes more hazardous than
are permitted by said policy. All such insurance policies shall contain such
other provisions as Bank may require in order to protect Bank's security
interests in the collateral and Bank's right to receive payments under such
policies. Borrower hereby appoints Bank as attorney-in-fact for Borrower to file
claims under any insurance policies, to receive, receipt and
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give acquittance for any payments that may be payable to Borrower thereunder,
and to execute any and all endorsements, receipts, releases, assignments,
reassignments, or other documents that may be necessary to effect the
collection, compromise or settlement of any claims under any such insurance
policies, which power of attorney shall be deemed coupled with an interest and
irrevocable so long as Bank shall have a security interest in any of the
Collateral pursuant to this Agreement. If Borrower shall fail to procure such
insurance or to pay any premium with respect thereto, then Bank may, at its
discretion, procure such insurance or pay such premium and any costs so incurred
by Bank shall constitute a part of the liabilities secured hereby. Bank may
apply the proceeds of any insurance policy received by Bank to the payment of
any liabilities, whether or not due, in such order of application as Bank shall
determine. Borrower shall promptly furnish Bank with certificates or other
evidence satisfactory to Bank indicating compliance with the foregoing insurance
requirements.
3.5. Validation and Collection of Accounts. Whether or not a
Default Condition or an Event of Default has occurred, Bank shall have the
right, at any time or times hereafter, in the name of Bank or any designee of
Bank to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone or otherwise, and Borrower shall fully cooperate
with Bank in an effort to facilitate and promptly conclude any such
verification process. Unless Bank shall at any time following the occurrence of
an Event of Default, elect to give notice to Account Debtors to make payments
on the Accounts directly to Bank, Borrower shall endeavor in the first instance
to make collection of its Accounts for Bank. Borrower shall at the request of
Bank notify the Account Debtors of the security interest of Bank in any Account
and Bank may itself at any time so notify Account Debtors. Upon or after the
occurrence of an Event of Default, Borrower shall (if and to the extent
requested to do so by Bank) notify the Account Debtors to make all payments
owing to Borrower directly to Bank for application to the Loan Indebtedness.
3.6. Maintenance of Collateral. Borrower shall maintain all
Inventory and Equipment in good condition, reasonable wear and tear excepted in
the case of Equipment, and shall, as and when requested by Bank, provide Bank
with a list of all of the Equipment and evidence of ownership thereof. Borrower
shall not permit any of the Equipment to become affixed to any real property so
that such Equipment is deemed a fixture under the real estate laws of the
applicable jurisdiction.
3.7. Expenses Relating to Collateral. Borrower shall pay Bank on
demand an amount equal to any and all expenses, including legal fees, incurred
or paid by Bank in connection with Bank's insuring, maintaining, protecting,
storing, safeguarding, or paying Liens with respect to any of the Collateral or
otherwise discharging any duty or obligation of Borrower with respect to any of
the Collateral.
3.8. Rights to Collateral. Bank shall have no duty to collect,
protect or preserve the underlying value of any Collateral or any income
thereon or to preserve any rights against prior parties. Bank may exercise its
rights and remedies with respect to the Collateral without first resorting (and
without regard) to any other security for the Loan or other sources of payment
or reimbursement for the Loan Indebtedness.
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4. CONDITIONS PRECEDENT.
Borrower shall deliver and Bank shall have received the following
documents, each in form and substance satisfactory to Bank, as conditions
precedent of the Loan:
(a) a validly executed copy of this Agreement;
(b) the validly executed Master Note;
(c) a validly executed copy of a Guaranty of each partner
or majority stockholder of Borrower, and to the extent not prohibited
by Applicable Law, the spouse of such Person; provided, however, that
if such spouse is not providing a Guaranty, a validly executed copy of
a Spousal Consent;
(d) a validly executed Landlord's Waiver for each
location of Borrower where the financed Merchandise is located;
(e) a validly executed Subordination Agreement from each
other debtholder of Borrower;
(f) validly executed Uniform Commercial Code Financing
Statements suitable to enable Bank to perfect the security interest
granted to it under this Agreement;
(g) evidence of Borrower's good standing;
(h) a validly executed Officer's Certificate or such
other evidence acceptable to Bank evidencing Borrower's corporate,
partnership or other necessary authorization of the Loan and
incumbency;
(i) a Certificate of Insurance from an insurer acceptable
to Bank evidencing Borrower's compliance with Section 3.4 hereof and
naming the Bank as loss payee/additional insured as follows:
SunTrust Bank
Strategic Partner Programs Department
Attn: Xxxxx Rent's Program Manager
X.X. Xxx 0000
Xxxx Xxxx 0000
Xxxxxxx, XX 00000
(j) a validly executed authorization to make the ACH
transfers for payments of principal, interest and fees contemplated
hereunder, including without limitation, Asset
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Disposition Prepayments, which authorization shall be in form and
substance satisfactory to the Bank.
In addition, the Bank shall have satisfied itself that there are no
Liens on any of the Collateral, and the Bank shall be satisfied that all
corporate or partnership proceedings necessary for the authorization of the Loan
Commitment shall have been taken and the Bank shall have received any other
documents that it deems necessary or advisable.
5. BORROWER'S REPRESENTATIONS AND WARRANTIES.
To induce Bank to enter into this Agreement, Borrower represents and
warrants as follows:
5.1. Organization and Qualification of Borrower. Borrower is [a
corporation duly organized, validly existing and in good standing] [a _________
partnership duly formed and validly existing] [a limited liability company duly
organized, validly existing and in good standing] under the laws of the state
shown on the first page hereof, and is qualified to do business in all
jurisdictions where the character of its properties or the nature of its
activities make such qualification necessary.
5.2. Trade Names, Subsidiaries and Location of Assets. Exhibit B
attached hereto and made a part hereof fully and accurately discloses any legal
name, trade name or style ever used by Borrower, any Subsidiaries owned by
Borrower, and each office, other place of business or location of assets of
Borrower.
5.3. Corporate or Other Authority; No Violation of Other
Agreements. The execution, delivery and performance by Borrower of this
Agreement and the other Loan Documents have been duly authorized by all
necessary action on the part of Borrower and do not and will not (i) violate any
provision of Borrower's articles of incorporation, by-laws, or other
organizational documents or any Applicable Law, or (ii) be in conflict with,
result in a breach of, or constitute (following notice or lapse of time or both)
a default under any agreement to which Borrower is a party or by which Borrower
or any of its property is bound.
5.4. Enforceability. This Agreement and each of the other Loan
Documents create legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
5.5. Entire Agreement. The Master Note and accompanying Loan
Documents executed in connection with the Loan and delivered to Bank are the
only contracts evidencing the transaction described herein and constitute the
entire agreement of the parties hereto with respect to the transaction.
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5.6. Genuineness of Signatures. The Master Note and each
accompanying Loan Document executed in connection with the Loan is genuine and
all signatures, names, amounts and other facts and statements therein and
thereon are true and correct.
5.7. Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of Borrower, threatened before any
court or administrative or governmental agency that may, individually or
collectively, adversely affect the financial condition or business operations of
Borrower.
5.8. Financial Condition. Borrower's financial statement previously
delivered to Xxxxx, fairly and accurately presents the financial condition of
Borrower as of such date and has been prepared in accordance with GAAP
consistently applied, and since the date of that financial statement, there has
been no material adverse change in the financial condition of Borrower. Borrower
is now and will remain Solvent.
5.9. Taxes. All federal, state and local tax returns have been duly
filed, and all taxes, assessments and withholdings shown on such returns or
billed to Borrower have been paid, and Borrower maintains adequate reserves and
accruals in respect of all such federal, state and other taxes, assessments and
withholdings. There are no unpaid assessments pending against Borrower for any
taxes or withholdings, and Borrower knows of no basis therefor.
5.10. Compliance with Laws. Borrower has duly complied with, and its
properties and business operations are in compliance in all material respects
with, the provisions of all Applicable Laws, including, without limitation
ERISA, the Fair Labor Standards Act and all Environmental Laws. Borrower
possesses all permits, franchises, licenses, trademark rights, trade names,
patents and other authorizations necessary to enable it to conduct its business
operations as now conducted, and no filing with, and no consent, authorization,
order or license of, any Person is necessary in connection with the execution or
performance of this Agreement or the other Loan Documents.
5.11. No Default. No Default Condition or Event of Default exists.
5.12. Accounts. Each Account arises out of a bona fide lease or sale
and delivery of goods or rendition of services by Borrower and, unless otherwise
indicated by Borrower to Bank in writing promptly after learning thereof, the
facts appearing on the invoice evidencing such Account and Borrower's books
relating thereto are true and accurate and payment thereof is not subject to any
known dispute, offset or claim except for discounts granted in the ordinary
course of Borrower's business that are reflected on the face of such invoice.
5.13. Use of Proceeds. None of the proceeds of any Advances by Bank
have been or will be used to purchase or carry (or to satisfy or refinance any
indebtedness incurred to purchase or carry) any "margin stock" (as defined in
Regulation U of the Federal Reserve Board). Advances shall be made for the
purpose of honoring requests for ACH transfers to suppliers of Merchandise in
payment of Approved Invoices which requests have been entered by the
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Borrower in the Aaron's Proprietary System as provided above, or upon the
consent of Xxxxx, for the purpose of payment of state use taxes and freight
charges.
Each submission of an Approved Invoice made by Borrower pursuant to this
Agreement or any other Loan Document shall constitute an automatic
representation and warranty by Borrower to Bank that there does not then exist
any Default Condition or Event of Default and a reaffirmation as of the date of
said request that all representations and warranties of Borrower contained in
this Agreement and the other Loan Documents are true in all material respects.
All representations and warranties contained in this Agreement or in any of the
other Loan Documents shall survive the execution, delivery and acceptance hereof
by Bank and the closing of the transactions described herein.
6. FINANCIAL COVENANTS.
Borrower shall comply with the following financial covenants:
[(I) RENTAL REVENUE TO DEBT SERVICE. COMMENCING
ON THE FIRST DAY OF THE CALENDAR QUARTER IN WHICH THE 25TH
MONTH FOLLOWING THE OPENING DATE OF THE FIRST STORE LOCATION
OF THE BORROWER OCCURS, AND MEASURED AS OF THE LAST DAY OF THE
CALENDAR QUARTER IN WHICH SUCH 25TH MONTH OCCURS AND ON THE
LAST DAY OF EACH CALENDAR QUARTER THEREAFTER, THE RATIO OF THE
BORROWER'S RENTAL REVENUE TO DEBT SERVICE FOR SUCH QUARTER
SHALL NOT BE LESS THAN 2.2:1.00;
(II) DEBT TO RENTAL REVENUE. COMMENCING ON THE
FIRST DAY OF THE CALENDAR QUARTER IN WHICH THE 19TH MONTH
FOLLOWING THE OPENING DATE OF THE FIRST STORE LOCATION OF THE
BORROWER OCCURS AND MEASURED AS OF THE LAST DAY OF THE
CALENDAR QUARTER IN WHICH SUCH 19TH MONTH OCCURS AND ON THE
LAST DAY OF EACH CALENDAR QUARTER THEREAFTER, THE RATIO OF THE
BORROWER'S DEBT TO THE BORROWER'S RENTAL REVENUE, SHALL NOT
EXCEED 5.5:1.0; AND
(III) TOTAL LIABILITIES TO TANGIBLE NET WORTH.
COMMENCING ON THE FIRST DAY OF THE CALENDAR QUARTER IN WHICH
THE 13TH MONTH FOLLOWING THE OPENING DATE OF THE FIRST STORE
LOCATION OF THE BORROWER OCCURS AND MEASURED AS OF THE LAST
DAY OF THE CALENDAR QUARTER IN WHICH SUCH 13TH MONTH OCCURS
AND ON THE LAST DAY OF EACH CALENDAR QUARTER THEREAFTER, THE
RATIO OF BORROWER'S TOTAL LIABILITIES TO TANGIBLE NET WORTH
SHALL NOT EXCEED 6.5:1.0.]
With respect to the financial covenants set forth above in
subsections (i) and (ii), which are calculated based upon the Opening
Date of a store location, the financial information from store
locations that have not reached the Opening Date anniversary
incorporated into such covenants shall be excluded from such
calculations. Debt Service and Debt attributable to such locations and
deducted from the final calculations shall be deducted on a pro rata
basis calculated by dividing such stores' aggregate Net Book
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Value of Merchandise by the Net Book Value of Merchandise for all store
locations. The financial covenant set forth in subsection (iii) above
shall not be applicable to Borrower until the first store location
operated by Borrower has been operating for 12 months. The financial
covenants otherwise shall be calculated on a consolidated basis as to
all store locations of Borrower.
7. BORROWER'S AFFIRMATIVE COVENANTS.
During the term of this Agreement, and thereafter for so long as there
is any outstanding Loan Indebtedness to Bank, Borrower covenants that, unless
otherwise consented to by Bank in writing, it shall:
7.1. Financial Reports. Deliver to Xxxxx or cause to be delivered
to Xxxxx:
(i) on or before the twenty-seventh day of each month, an
unaudited balance sheet and income statement accurately reflecting the
financial transactions and status of the Borrower as of the end of the
prior month and on a year to date basis, on a consolidated and per
store basis; prepared in accordance with GAAP in the format recommended
by Xxxxx;
(ii) within 27 days after the end of each calendar quarter (a)
an unaudited balance sheet and income statement accurately reflecting
the financial transactions and status of Borrower as of the end of the
prior month and on a quarterly basis, on a consolidated and per store
basis, prepared in accordance with GAAP in the format recommended by
Xxxxx, and (b) a Compliance Certificate as described below in Section
7.2;
(iii) within 90 days after the end of each fiscal year a
balance sheet and income statement of Borrower as of the end of such
year, compiled by such firm of independent public accountants as may be
designated by Borrower and be satisfactory to Bank as prepared in
accordance with GAAP and, to the extent delivered to Xxxxx, audited
financial statements for such period;
(iv) within 120 days after the end of each fiscal year, an
annual personal financial statement of each Guarantor; and
(v) with reasonable promptness, all reports by Borrower to its
shareholders and such other information as Xxxxx or Bank may reasonably
request from time to time.
7.2. Compliance Certificate. Prepare and deliver to Xxxxx, in
conjunction with the quarterly financial reports required to be delivered
pursuant to Section 7.1(iii) above, a quarterly Compliance Certificate (the form
of which is attached hereto as Exhibit C) presenting the calculation of the
financial covenants set forth above in Section 6, noting any negative variances
with the covenants and explaining any such variances.
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Borrower acknowledges that Xxxxx will review each Compliance Certificate and may
revise the calculations set forth on such Compliance Certificate to be
consistent with the information shown on quarterly detailed Inventory
reconciliation reports and detailed revenue reports prepared by Xxxxx each
quarter showing the amount of Inventory at each of Borrower's stores as of the
end of such quarter and the amount of monthly and quarterly revenue at each of
Borrower's stores. Borrower acknowledges that Xxxxx will forward copies of each
Compliance Certificate, with revised calculations as appropriate, to Bank and
agrees that Bank shall be entitled to rely each such Compliance Certificate, as
revised by Xxxxx, for purposes of determining whether the covenants set forth in
Section 6 above have been met.
7.3. Books and Records. Maintain its Books and Records and accounts
in accordance with GAAP and permit any Person designated by Bank or Xxxxx to
visit Borrower's premises, inspect any of the Collateral or any of the Books and
Records, and to make copies thereof and take extracts therefrom, and to discuss
Borrower's financial affairs with Borrower's financial officers and accountants.
7.4. Taxes. Promptly file all tax returns and pay and discharge all
taxes, assessments, withholdings and other governmental charges imposed upon it,
its income or profits, or upon any property belonging to it, prior to the date
on which penalties attach thereto.
7.5. Notices to Bank. Promptly notify Bank in writing of (i) the
occurrence of any Default Condition or Event of Default; (ii) any pending or
threatened litigation claiming damages in excess of $25,000 or seeking relief
that, if granted, would adversely affect the financial condition or business
operations of Borrower; (iii) the release or discharge of any Hazardous
Substance on any property owned by Borrower; and (iii) any asserted violation by
Borrower of or demand for compliance by Borrower with any Applicable Law.
7.6. Compliance with Applicable Laws. Comply in all material
respects with all Applicable Laws, including, without limitation, ERISA, the
Fair Labor Standards Act and all Environmental Laws.
7.7. Corporate Existence. Maintain its separate corporate existence
and all rights, privileges and franchises in connection therewith, and maintain
its qualification and good standing in all jurisdictions where the failure to do
so could have a material adverse effect upon its financial condition or ability
to collect the Accounts.
8. NEGATIVE COVENANTS.
During the term of this Agreement, and thereafter for so long as there
are is Loan Indebtedness outstanding, Borrower covenants that unless Bank has
first consented thereto in writing, it will not:
8.1. Merger; Disposal or Moving of Collateral. Merge or consolidate
with or acquire any substantial portion of the assets or stock of any Person;
sell, lease, transfer or otherwise
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dispose of all or any portion of its properties (including any of the
Collateral), except sales or rentals of Inventory in the ordinary course of
business; or, without having given Bank at least 60 days prior written notice
and having executed such instruments and agreements as Bank shall require,
change its name, the location of any Collateral or the location of its chief
executive office, principal place of business or the office at which it
maintains its Books and Records. Notwithstanding the foregoing, to the extent
that Borrower is calculating its compliance with the financial covenants set
forth in Section 6 hereof on a consolidated basis, Borrower may move Inventory
from one location included in such calculation to another of Borrower's Aaron's
Rental Purchase locations without complying with the notice provisions hereof,
as long as such Inventory is properly transferred in the Aaron's Proprietary
System.
8.2. Liens. Grant or suffer to exist any Lien upon any of the
Collateral except Permitted Liens.
8.3. Guarantees. Guarantee, assume, endorse or otherwise become
contingently liable for any obligation or indebtedness of any Person, either
directly or indirectly, exceeding $25,000 not existing as of this date, except
by endorsement of items of payment for deposit or collection.
8.4. Loans. Make loans or advances of money to or investments in
any Person, or (except in the ordinary course of business and on fair and
reasonable terms) engage in any transaction with a subsidiary or affiliate.
8.5. Stock of Borrower. Repurchase, or pay or declare any dividend
on, any of its capital stock; provided, however, that if no Default Condition or
Event of Default exists and Borrower remains in compliance with the financial
covenants set forth in Section 6 above after giving effect thereto, it may pay
dividends and make such repurchases.
9. EVENTS OF DEFAULT.
9.1. List of Events of Default. The occurrence of any one or more
of the following conditions or events shall constitute an "Event of Default":
(a) Borrower shall fail to pay any of the Loan Indebtedness or
to pay for any Asset Disposition within ten (10) days of the due date
thereof (whether due at stated maturity, on demand, upon acceleration
or otherwise);
(b) any warranty, representation, or other statement by
Borrower herein or in any instrument, certificate or financial
statement furnished in compliance herewith proves to have been false or
misleading in any material respect when made;
(c) Borrower shall fail or neglect to perform, keep or observe
any covenant contained in this Agreement, any of the other Loan
Documents or any other agreement now or hereafter entered into with
Bank; Borrower shall fail to abide by the financial
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covenants set forth in Section 6 hereof, provided that Xxxxx xxx waive
any financial covenant.
(d) Borrower or any Guarantor shall fail to pay when due any
amount owed to any creditor (other than Bank) or any Guarantor shall
fail to pay or perform any liability or obligation in accordance with
the terms of any agreement with Bank;
(e) Borrower, Xxxxx or any Guarantor shall cease to be
Solvent, shall die or become incompetent, shall suffer the appointment
of a receiver, trustee, custodian or similar fiduciary, shall make an
assignment for the benefit of creditors, or shall make an offer of
settlement or composition to their respective unsecured creditors
generally;
(f) any petition for an order for relief shall be filed by or
against Borrower or any Guarantor under the Bankruptcy Code (if against
Borrower or any Guarantor, the continuation of such proceeding for more
than 30 days);
(g) any judgment, writ of attachment or similar process is
entered or filed against Borrower or any Guarantor or any of Borrower's
or any Guarantor's property and such judgment, writ of attachment or
process is not dismissed, satisfied or vacated within ten (10) days
thereafter or results in the creation or imposition of any Lien upon
any Collateral that is not a Permitted Lien;
(h) Any Guarantor shall revoke or attempt to revoke the
guaranty signed by such Guarantor or shall repudiate such Guarantor's
liability thereunder;
(i) any Person, or group of Persons (whether or not related),
shall have or obtain legal or beneficial ownership of a majority of the
outstanding voting securities or rights of Borrower, other than any
Person, or group of Persons, that has such majority ownership on the
date of execution of this Agreement;
(j) Borrower shall lose its franchise, license or right to
rent or to sell the Inventory or Borrower's Franchise Agreement is
terminated or revoked for any reason;
(k) Borrower shall fail to enter properly any acquisition of
Inventory or Equipment or any Asset Disposition on the Aaron's
Proprietary System; or
(l) Borrower shall use its DDA Account for any use other than
as explicitly authorized pursuant to this Agreement.
9.2. Cure Period. Borrower shall have a five (5) calendar day
period after the Bank gives it notice of the occurrence of an Event of Default
(other than an Event of Default pursuant to Section 9.1(f)) above, during which
it may cure such Event of Default. An Event of Default arising under Section
9.1(a) above shall only be cured by the Bank's receipt of payment in immediately
available funds by wire transfer, money order or cashier's check.
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9.3. Advances. In no event shall the Bank have any obligation to
make an Advance pursuant to the Loan Commitment if there exists a Default
Condition or an Event of Default.
10. REMEDIES.
All of the Loan Indebtedness shall become immediately due and payable
and the Loan Commitment shall be deemed immediately terminated (without notice
to or demand upon Borrower) upon the occurrence of an Event of Default under
Section 9.1(f) of this Agreement; and upon and after the occurrence of any other
Event of Default, subject to the cure period set forth in Section 9.2 hereof,
Bank shall have the right to terminate immediately the Loan Commitment and to
declare the entire unpaid principal balance of and accrued interest with respect
to the Loan Indebtedness to be, and the same shall thereupon become, immediately
due and payable upon receipt by Borrower of written notice and demand. From and
after the date on which the Loan Indebtedness becomes automatically due and
payable or is declared by Bank to be due and payable as aforesaid, Bank shall
have and may exercise from time to time any and all rights and remedies afforded
to a secured party under the Code or any other Applicable Law. If the Loan
Indebtedness is collected by or through an attorney at law, Bank shall be
entitled to collect reasonable attorneys' fees and court costs from Borrower. In
addition to, and without limiting the generality of the foregoing, Bank shall
have the following rights and remedies which it may exercise at any time or
times (all of which rights and remedies shall be cumulative and may be exercised
singularly or concurrently):
(a) The right to notify any Account Debtor to make all payments
owing to Borrower directly to Bank for application to the Loan Indebtedness and
to collect all amounts owing from any such Account Debtor;
(b) The right to sell, lease or otherwise dispose of any or all of
the Collateral at public or private sale, for cash, upon credit or upon such
other terms as Bank deems advisable in its sole discretion, or otherwise to
realize upon the whole or from time to time any part of the Collateral in which
Bank may have a security interest. Any requirement of reasonable notice shall be
met if such notice is sent to Borrower in accordance with Section 12 hereof at
least seven (7) days before the date of sale or other disposition of the
Collateral. Bank may bid and be the purchaser at any such sale if permitted by
Applicable Law;
(c) The right to require Borrower, at Borrower's expense, to
assemble the Collateral and make it available to Bank at a place reasonably
convenient to both parties (and, for purposes hereof, Borrower stipulates that
Bank shall be entitled to the remedy of specific performance). Alternatively,
Bank may peaceably by its own means or with judicial assistance enter Borrower's
premises and take possession of the Collateral or dispose of the Collateral on
Borrower's premises without interference by Borrower;
(d) The right to incur attorneys' fees and expenses in exercising
any of the rights, remedies, powers or privileges provided hereunder, and the
right (but not the obligation) to pay,
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satisfy and discharge, or to bond, deposit or indemnify against, any tax or
other Lien which in the opinion of Bank may in any manner or to any extent
encumber any of the Collateral, all of which fees, payments and expenses shall
become part of Bank's expenses of retaking, holding, preparing for sale and the
like, and shall be added to and become a part of the principal amount of the
Loan Indebtedness;
(e) The right, in Bank's sole discretion, to perform any agreement
of Borrower hereunder which Borrower shall fail to perform and take any other
action which Bank deems necessary for the maintenance or preservation of any of
the Collateral or Bank's interest therein, and Borrower agrees forthwith to
reimburse Bank for all expenses incurred in connection with the foregoing,
together with interest thereon at the Default Rate from the date incurred until
the date of reimbursement;
(f) The right at any time or times, to the fullest extent
permitted by Applicable Law, to set off and apply any and all deposits (general
or special, time or demand) held by Bank for Borrower's account against any of
the Loan Indebtedness, irrespective of whether or not Bank has made any demand
under this Agreement;
(g) The right to apply the proceeds realized from any collection,
sale, lease or other disposition of the Collateral first to the costs, expenses
and attorneys' fees incurred by Bank for collection and for acquisition,
protection, removal, storage, sale and delivery of the Collateral; secondly, to
interest due upon the principal amount of the Loan Indebtedness; and thirdly, to
the principal amount of the Loan Indebtedness. If any deficiency shall arise,
Borrower and Guarantor shall remain bound and liable to Bank therefor;
(h) The right to act as Borrower's attorney-in-fact (and Borrower
hereby irrevocably appoints Bank as Borrower's agent and attorney-in-fact), in
Borrower's or Bank's name, but at Borrower's cost and expense, to receive, open
and dispose of all mail addressed to Borrower pertaining to any of the
Collateral, to notify postal authorities to change the address and delivery of
mail to Borrower to such address as Bank may designate, to sign Borrower's name
on any xxxx of lading constituting or relating to any Collateral, to send
verifications with respect to the Collateral, to execute in Borrower's name any
affidavits or notices with regard to any and all Lien rights and to do all other
acts and things necessary to carry out the terms of this Agreement or to
discharge any obligation of Borrower hereunder, this power, being coupled with
an interest, is to be irrevocable so long as any Loan Indebtedness is
outstanding.
11. WAIVERS.
Borrower waives notice of Bank's acceptance hereof. Borrower hereby
waives any requirement on the part of Bank to post any bond or other security as
a condition to Bank's right to obtain an immediate writ of possession with
respect to any Collateral. Bank shall not be deemed to have waived any of its
rights upon or remedies hereunder or any Event of Default unless such waiver be
in writing and signed by Bank. No delay or omission on the part of Bank in
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exercising any right shall operate as a waiver of such right or any other right.
A waiver on any one occasion shall not be construed as a bar to or waiver of any
right on any future occasion.
12. NOTICES.
All notices and demands to or upon a party hereto shall be in writing
and shall be sent by certified mail, return receipt requested, personal delivery
against receipt or by telecopier or other facsimile transmission and shall be
deemed to have been validly served, given or delivered when delivered against
receipt or one Business Day after deposit in the mail, postage prepaid, or, in
the case of facsimile transmission, when indicated by verification receipt
printed by the sending machine as having been received at the office of the
noticed party, addressed in each case as follows:
If to Borrower:
-------------------------
-------------------------
-------------------------
Attention
---------------
Telecopier No.:
----------
If to Bank: SunTrust Bank
Strategic Partner Program
Attn: Xxxxx Rents Program Manager
000 Xxxxxxxxx Xxxxxx, XX, 0xx xxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier No.:(000) 000-0000
or to such other address as each party may designate for itself by like notice
given in accordance with this Section. Any written notice or demand that is not
sent in conformity with the provisions hereof shall nevertheless be effective on
the date that such notice is actually received by the individual to whose
attention such notice is to be sent as specified above or such individual's
successor in office.
13. INDEMNIFICATION. Borrower hereby agrees to indemnify Bank and hold Bank
harmless from and against any liability, loss, damage, suit, action or
proceeding ever suffered or incurred by Bank as the result of Borrower's failure
to observe, perform or discharge Borrower's duties hereunder. Without limiting
the generality of the foregoing, this indemnity shall extend to any claims
asserted against Bank by any Person under any environmental laws. If any taxes,
fees or other charges shall be payable by Borrower or Bank on account of the
execution, delivery or recording of any of the Loan Documents or any loans
outstanding hereunder, Borrower will pay (or reimburse Bank's payment of) all
such taxes, fees or other charges, including any applicable interests and
penalties, and will indemnify and hold Bank harmless from and against liability
in
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connection therewith. The indemnity obligations of Borrower under this Section
shall survive the payment in full of the Loan Indebtedness.
14. ENTIRE AGREEMENT; AMENDMENT.
This Agreement and the other Loan Documents embody the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof, and this Agreement may not be modified or amended except
by an agreement in writing signed by Borrower and Bank.
15. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; but Borrower shall
not assign this Agreement or any right or benefit hereunder to any Person. The
Bank may assign its rights and obligations hereunder at any time and to any
Person, including without limitation, to Xxxxx.
16. ARBITRATION.
ANY CONTROVERSY ARISING WITH RESPECT TO THIS AGREEMENT SHALL BE
DETERMINED BY ARBITRATION IN THE CITY AGREED UPON BY BORROWER AND BANK. IF
BORROWER AND BANK FAIL TO SO AGREE, THEN SUCH ARBITRATION SHALL TAKE PLACE IN
ATLANTA, GEORGIA. ARBITRATION SHALL BE IN ACCORDANCE WITH THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION EXCEPT TO THE EXTENT
OTHERWISE SET FORTH IN THIS SECTION. THE DISPUTE SHALL BE DETERMINED BY AN
ARBITRATOR ACCEPTABLE TO BOTH PARTIES WHO SHALL BE SELECTED WITHIN SEVEN (7)
DAYS OF FILING OF NOTICE OF INTENTION TO ARBITRATE. OTHERWISE, THE DISPUTE SHALL
BE DETERMINED BY A PANEL OF THREE ARBITRATORS SELECTED AS FOLLOWS: WITHIN SEVEN
(7) DAYS OF FILING NOTICE OF INTENTION TO ARBITRATE, EACH PARTY WILL APPOINT ONE
ARBITRATOR, WHO SHALL BE AN ATTORNEY ADMITTED BEFORE THE BAR OF ANY STATE OF THE
UNITED STATES (BUT NEITHER SUCH ATTORNEY NOR ANY FIRM WITH WHICH SUCH ATTORNEY
HAS BEEN ASSOCIATED IN THE IMMEDIATELY PRECEDING FIVE YEARS SHALL HAVE BEEN
RETAINED BY SUCH PARTY DURING THE IMMEDIATELY PRECEDING FIVE YEARS). THESE TWO
ARBITRATORS WILL THEN NAME A THIRD ARBITRATOR, WHO SHALL ALSO BE AN ATTORNEY
ADMITTED BEFORE THE BAR OF ANY STATE OF THE UNITED STATES (BUT NEITHER SUCH
ATTORNEY NOR ANY FIRM WITH WHICH SUCH ATTORNEY HAD BEEN ASSOCIATED FOR THE
IMMEDIATELY PRECEDING FIVE YEARS SHALL HAVE BEEN RETAINED BY EITHER PARTY DURING
THE IMMEDIATELY PRECEDING FIVE YEARS) AND WHO SHALL PRESIDE OVER THE PANEL. IF
EITHER PARTY FAILS TO APPOINT AN ARBITRATOR, OR IF THE TWO ARBITRATORS DO NOT
NAME A THIRD ARBITRATOR WITHIN SEVEN (7) DAYS,
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EITHER PARTY MAY REQUEST THE AMERICAN ARBITRATION ASSOCIATION TO APPOINT THE
NECESSARY ARBITRATOR(S) PURSUANT TO THE COMMERCIAL ARBITRATION RULES.
ARBITRATORS SHALL BE COMPENSATED FOR THEIR SERVICES BY THE NON-PREVAILING PARTY
AT THE STANDARD HOURLY RATE CHARGED BY SUCH ARBITRATORS IN THEIR PRIVATE
PROFESSIONAL ACTIVITIES. ALL TESTIMONY SHALL BE TRANSCRIBED BY A PUBLIC
STENOGRAPHER OR COURT REPORTER. THE AWARD OF THE PANEL SHALL BE ACCOMPANIED BY
FINDINGS OF FACT AND A STATEMENT OF REASONS FOR THE DECISION. ALL PARTIES AGREE
TO BE BOUND BY THE RESULTS OF SUCH ARBITRATIONS; JUDGMENT UPON THE AWARD SO
RENDERED MAY BE ENTERED AND ENFORCED IN ANY COURT OF COMPETENT JURISDICTION. TO
THE EXTENT REASONABLY PRACTICABLE, BOTH PARTIES AGREE TO CONTINUE PERFORMING
THEIR RESPECTIVE OBLIGATIONS UNDER THIS AGREEMENT WHILE THE DISPUTE IS BEING
RESOLVED.
17. MISCELLANEOUS. Time is of the essence of this Agreement. Bank reserves
the right to participate, sell or assign the Loan made hereunder and provide any
participant or assignee all information in Bank's possession regarding Borrower,
its business and the Collateral. Borrower shall reimburse Bank for Bank's
out-of-pocket expenses and for the fees and expenses and disbursements of Bank's
counsel in connection with the negotiation, documentation and closing of the
transactions contemplated hereby, and Borrower will pay all expenses incurred by
Borrower in connection with the transactions. The Section headings are for
convenience only and shall not limit or otherwise affect any of the terms
hereof. THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS HEREUNDER, INCLUDING
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, SHALL BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF GEORGIA (WITHOUT REGARD TO THE LAWS OF CONFLICTS
THEREOF) AND IS INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT.
18. RELATIONS WITH XXXXX.
Borrower recognizes and acknowledges that the Bank has made the Loan
Commitment available to Borrower hereunder at the behest of and as an
accommodation to Xxxxx. Accordingly, Borrower agrees that from time to time the
Bank may release to Xxxxx such information about Borrower and the Loan as Xxxxx
xxx request, and the Bank may condition its agreement to any waiver,
modification or amendment on the prior written consent of Xxxxx. Borrower
further agrees that upon the occurrence of an Event of Default hereunder, the
Bank may notify Xxxxx of such Event of Default prior to notifying Borrower
thereof, and the Bank shall not be liable to Borrower for failure to give
simultaneous notice to Borrower. Borrower further agrees that the Bank shall not
be liable to Borrower as a result of any information or document obtained by
Bank regarding Borrower which is shared by Bank with Xxxxx.
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WITNESS the hand and seal of the parties hereto on the date first above
written.
Accepted in Atlanta, Georgia:
BORROWER:
(Seal)
--------------------------
By:
------------------------------
Title:
------------------------
[CORPORATE SEAL]
BANK:
SUNTRUST BANK
By:
------------------------------
Title:
------------------------
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EXHIBIT A
FORM OF
MASTER NOTE
(Franchisee Borrower)
[DATE] [$____________]
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, [____________, a
____________ _______________] (the "Borrower"), promises to pay to the order of
SUNTRUST BANK, a Georgia banking corporation (the "Bank"), at Bank's principal
office in Atlanta, Georgia, or at such other place as the holder hereof may
designate by notice in writing to Borrower, in immediately available funds in
lawful money of the United States of America, on the Maturity Date, as set forth
in that certain Line of Credit and Security Agreement, dated as of even date
herewith, by and between the Borrower and Bank (as amended, restated, modified
or supplemented from time to time, the "Agreement"), the lesser of
(x)_____________($____) and (y) so much principal thereof as shall have been
from time to time disbursed hereunder in accordance with the Agreement and not
theretofore repaid, as shown on the records of the Bank.
In addition to principal, Borrower agrees to pay interest on
the principal amounts disbursed hereunder from time to time from the date of
each disbursement until paid at such rates of interest per annum and upon such
dates as provided for in the Agreement. Interest shall accrue on the outstanding
principal balance from the date hereof up to and through the date on which all
principal and interest hereunder is paid in full, and shall be computed on the
basis of the actual number of days elapsed in a 360-day year. Such interest is
to be paid to Bank at its address set forth above or as otherwise provided in
the Agreement. For informational purposes, as of the date hereof the Prime Rate
in effect is ____% per annum, thus producing an initial interest rate under the
Agreement on such date of ____% per annum. Any principal amount due under this
Master Note (the "Note") that is not paid on the due date therefor whether on
the Maturity Date, or resulting from the acceleration of maturity upon the
occurrence of an Event of Default (as defined in the Agreement), shall bear
interest from the date due until payment in full at the Default Rate, as such
term is defined in the Agreement.
This Note evidences a loan incurred pursuant to the terms and
conditions of the Agreement to which reference is hereby made for a full and
complete description of such terms and conditions, including, without
limitation, provisions for the acceleration of the maturity hereof upon the
existence or occurrence of certain conditions or events, and the terms of any
permitted prepayments hereof. All capitalized terms used in this Note shall have
the same meanings as set forth in the Agreement.
A-1
183
Upon the existence or occurrence of any Event of Default, the
principal and all accrued interest hereof shall automatically become, or may be
declared, due and payable in the manner and with the effect provided in the
Agreement. In addition, this Note is subject to mandatory prepayment upon the
terms and conditions of the Agreement.
Bank shall at all times have a right of set-off against any
deposit balances of Borrower in the possession of the Bank and the Bank may
apply the same against payment of this Note or any other indebtedness of
Borrower to the Bank. The payment of any indebtedness evidenced by this Note
prior to the Maturity Date shall not affect the enforceability of this Note as
to any future, different or other indebtedness incurred hereunder by the
Borrower. In the event the indebtedness evidenced by this Note is collected by
legal action or through an attorney-at-law, the Bank shall be entitled to
recover from Borrower all costs of collection, including, without limitation,
reasonable attorneys' fees if collected by or through an attorney-at-law.
Borrower acknowledges that the actual crediting of the amount
of any disbursement under the Agreement to an account of Borrower or recording
such amount in the records of the Bank shall, in the absence of manifest error,
constitute presumptive evidence of such disbursement and that such Advance was
made and borrowed under the Agreement. Such account records shall constitute, in
the absence of manifest error, presumptive evidence of principal amounts
outstanding and the payments made under the Agreement at any time and from time
to time, provided that the failure of Bank to record in such account the type or
amount of any Advance shall not affect the obligation of the undersigned to
repay such amount together with interest thereon in accordance with this Note
and the Agreement.
Failure or forbearance of Bank to exercise any right hereunder, or
otherwise granted by the Agreement or by law, shall not affect or release the
liability of Borrower hereunder, and shall not constitute a waiver of such right
unless so stated by Bank in writing. THIS NOTE SHALL BE DEEMED TO BE MADE UNDER,
AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY, THE INTERNAL LAWS OF
THE STATE OF GEORGIA (WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS THEREOF).
Time is of the essence of this Note.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE
HEREBY WAIVED.
Executed under hand and seal of the Borrower as of the day and year
first above written.
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184
[if Borrower is [NAME OF BORROWER]
a corporation:]
By:
-------------------------------
Name:
Title:
[CORPORATE SEAL]
[if Borrower is a partnership:]
[if General Partner is [NAME OF GENERAL PARTNER]
a corporation:]
By:
-------------------------------
Name:
Title:
[if General Partner is
an individual:] [___________________________(Seal)
Name of General Partner]
[if Borrower is [NAME OF BORROWER]
a limited liability company:]
By:
-------------------------------
Name:
Title: ]
A-3
185
EXHIBIT B
A. PERMITTED LIENS
The following described Liens are Permitted Liens (if none, so state):
Name of Lien Holder Date of Recording Collateral
------------------- ----------------- ----------
B. TRADE NAMES AND STYLES
The following are the only trade names or trade styles ever used by
Borrower (if none, so state):
C SUBSIDIARIES
The following are all of the subsidiaries owned by Borrower (if none,
so state):
D. BUSINESS LOCATIONS
The following are all of the locations where Borrower has an office or
other place of business or owns assets:
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186
EXHIBIT C
COMPLIANCE CERTIFICATE OF BORROWER
(Pursuant to Section 7.2 of Line of Credit and Security Agreement
dated ______________, 20___)
[NAME OF BORROWER] (the "Borrower") HEREBY CERTIFIES that:
This Compliance Certificate is furnished pursuant to the Line of Credit
and Security Agreement (the "Agreement") dated ____________, 20___ by and
between the Borrower and SUNTRUST BANK (the "Bank"). Unless otherwise defined
herein, the terms used in this Report have the meanings given to them in this
Agreement.
1. The figures and information for determining compliance by the
Borrower with the financial covenants set forth in the Quarterly Covenant
Compliance Report attached hereto as Exhibit D have been prepared based upon the
financial reports accompanied hereby and both the Quarterly Covenant Compliance
Report and such financial reports are true and complete as of the date hereof.
2. The activities of the Borrower during the preceding quarter
have been reviewed by the [president or other authorized officer] or the
employees or agents under his immediate supervision. Based on such review, to
the best knowledge and belief of the [president or other authorized officer],
and as of the date of this Certificate, the Borrower has performed and observed
each and every covenant contained in the Agreement to be performed by it, and no
Event of Default or Default Condition exists, except for the following:
Please describe or indicate "None" if none exist:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3. The Borrower has properly and accurately reported all Asset
Dispositions pursuant to Section 2.8 of the Agreement.
C-1
187
WITNESS my hand this ____ day of __________, ____.
[NAME OF BORROWER]
By:
------------------------
Title:
-------------------
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188
EXHIBIT D
QUARTERLY COVENANT COMPLIANCE REPORT
(Section 6 - Financial Covenants)
--------------------------
For Quarter Ending:
---------------------
With respect to the financial covenants set forth below in Sections I and II
which are calculated based upon the Opening Date of a store location, the
financial data from store locations which have not reached the anniversary dates
incorporated into such covenants shall be excluded from the calculations in
accordance with the Agreement. Debt Service and Debt attributable to such
locations and deducted from the final calculations shall be deducted on a pro
rata basis calculated by dividing such stores' aggregate Net Book Value of
Merchandise by the Net Book Value of Merchandise for all store locations. The
financial covenant in Section III shall not be applicable to Borrower until the
first store location operated by Borrower has been operating for more than 12
months.
I. Rental Revenue to Debt Service
A. Enter amount of quarterly Rental Revenue. $
------------------
B. Enter amount of quarterly Rental Revenue
attributable to store locations
open less than 25 months.
------------------
C. Subtract B from A.
------------------
D. Enter amount of quarter's Debt Service.
------------------
E. Enter amount of quarter's Debt Service
attributable to store locations open less
than 25 months.
------------------
F. Subtract E from D.
------------------
Ratio of C:F.
------------------
STANDARD --- Ratio not less than --- 2.2: 1.0
------------
Compliance? Yes [ ] No [ ]
D-1
189
II. Debt to Rental Revenue
A. Enter amount of Debt.
------------------
B. Enter amount of Debt attributable
to store locations open less
than 19 months.
------------------
C. Subtract B from A.
------------------
D. Enter Amount of last month's
Rental Revenue.
------------------
E. Enter amount of last month's Rental
Income attributable to store locations
open less than 19 months.
------------------
F. Subtract E from D.
------------------
Ratio of C : F.
------------------
STANDARD .............. 5.5 : 1.0
-------------
Compliance? Yes [ ] No [ ]
III. Total Liabilities to Tangible Net Worth
A. Enter amount of Total Liabilities.
------------------
B. Enter amount of Tangible Net Worth.
------------------
C. Ratio of A:B.
STANDARD .............. 6.5:1.0
-----------
Compliance? Yes [ ] No [ ]
Note: All terms are those used in generally accepted accounting practices unless
specifically defined in the Agreement.
D-2
