FRANCHISEE FINANCING AGREEMENT As of August 2, 2010 Between
Exhibit 10.1
As of August 2, 2010
Between
ADMINISTRATOR
|
LENDER | |
ColorTyme Finance, Inc.
|
Citibank, N.A. | |
0000 Xxxxxxxxxxxx Xxxxx
|
0000 X. Xxxxxxx Xxxxxxxxxx | |
Xxxxx, Xxxxx 00000
|
Xxxxx 000 | |
| Xxxxxx, Xxxxx 00000 |
In consideration of the creation of the revolving credit facility described below and the
mutual covenants and agreements contained herein, and intending to be legally bound hereby, Lender
and Administrator agree as follows:
SECTION 1. DEFINITIONS
1.1 Certain Definitions. In addition to any other terms defined herein, the
following terms shall have the meanings set forth with respect thereto:
“Administrator Interest” means that portion of any interest payment made by a Borrower that
accrued at the Administrator Interest Rate (as defined in such Borrower’s Note).
“Aggregate Revolving Loan Principal Debt” means, at any time, with respect to all Borrowers
collectively, the aggregate outstanding principal balance of the Loans made to all Borrowers.
“Agreement” means this Franchisee Financing Agreement and all subsequent modifications and
amendments hereto.
“Bankruptcy Default” means an Event of Default described in Section 9.6.
“Borrower Operating Accounts” means those certain operating accounts of each Borrower held at
Lender, and “Borrower Operating Account” means any one of the Borrower Operating Accounts.
“Borrowers” means, collectively, each franchisee of ColorTyme, Inc. who (a) is approved by
Lender in its sole discretion, and (b) satisfies the conditions in Section 5.6. Franchisees may be
added as Borrowers hereunder from time to time.
“Business Day” means a weekday, Monday through Friday, except a legal holiday or a day on
which banking institutions in Dallas, Texas are authorized or required by law to be closed. Unless
otherwise provided, the term “days” when used herein shall mean calendar days.
“Closing Date”: See Section 4.
“Collateral LC”: See Section 3.4(a).
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“Consolidated Fixed Charge Coverage Ratio” means the “Consolidated Fixed Charge Coverage
Ratio” as such term is defined in the Senior Credit Agreement as of the Closing Date, without
regard to any amendments, modifications, supplements or restatements of the Senior Credit Agreement
after the Closing Date.
“Consolidated Leverage Ratio” means the “Consolidated Leverage Ratio” as such term is defined
in the Senior Credit Agreement as of the Closing Date, without regard to any amendments,
modifications, supplements or restatements of the Senior Credit Agreement after the Closing Date.
“Contested in Good Faith” means, as to any payment, tax, assessment, charge, levy, lien,
encumbrance or claim, contesting the amount, applicability or validity thereof in good faith by
appropriate proceedings or other appropriate actions promptly initiated and diligently conducted in
a manner reasonably satisfactory to Lender, provided (a) an adequate reserve or other appropriate
provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) the
enforcement of the contested payment, tax, assessment, charge, levy, lien, encumbrance or claim is
stayed in a manner reasonably satisfactory to Lender pending the resolution of such contest.
“Corporate Guarantors” means Administrator and Parent
“Corporate Guaranty Agreements”: See Section 3.2.
“Event of Default”: See Section 9.
“Financial Covenant Non-compliance Period” means any period during which (a) either the
Consolidated Leverage Ratio exceeds 3.25 to 1.0 or the Consolidated Fixed Charge Coverage Ratio is
less than 1.35 to 1.0, and (b) the Administrator and Lender are unable to agree on a modification
of such ratios which would cure such non-compliance. The Consolidated Leverage Ratio and the
Consolidated Fixed Charge Coverage Ratio will be calculated for any period of four consecutive
fiscal quarters of Parent.
“Funding Date”: See Section 5.
“GAAP” means generally accepted accounting principles as in effect from time to time, applied
on a basis consistent with the most recent financial statements and financial information of the
Parent delivered to Lender pursuant to Section 6.1(a).
“Governmental Authority” means any nation, country, commonwealth, territory, state, county,
parish, municipality or any political subdivision, agency, department, commission, board or other
instrumentality of any of the foregoing.
“Guarantors” means collectively, the Corporate Guarantors and the Principal Guarantors.
“Guaranty Agreements” means, collectively, the Corporate Guaranty Agreements and the Principal
Guaranty Agreements.
“Loan Documents” means this Agreement, the Notes, the Security Agreements, the Guaranty
Agreements, any applicable UCC-1 financing statements, the Officer’s Certificates, the Notices of
Final Agreement, and all other documents, instruments, guarantees, security agreements, deeds of
trust, pledge agreements, certificates and agreements executed and/or delivered by any Loan Party
in connection with any Loan, together with all renewals, extensions, modifications and amendments
from time to time made of any such documents.
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“Loan Party” means each Borrower, each Guarantor and each other Person who is, or whose
property is, directly or indirectly liable for the Obligations.
“Loans”: See Section 2.1(a).
“Material Adverse Effect” means (i) a material adverse effect upon the validity or
enforceability of any of the Loan Documents, (ii) a material adverse change in, or a material
adverse effect upon, the financial condition, business, assets or operations of the Corporate
Guarantors taken as a whole or the Loan Parties taken as a whole, or (iii) a material impairment of
the ability of either Corporate Guarantor to fulfill its obligations under any of the Loan
Documents.
“Maximum Rate” means the higher of the maximum interest rate allowed by applicable United
States or Texas law as amended from time to time and in effect on the date for which a
determination of interest accrued hereunder is made. The determination of the maximum rate
permitted by applicable Texas law shall be made pursuant to the weekly ceiling as determined
pursuant to Chapter 303 of the Texas Finance Code, but Lender reserves the right to implement from
time to time any other rate ceiling permitted by such law.
“Note Payment Default”: See Section 3.4(a).
“Notes” means those certain revolving promissory notes made by the Borrowers payable to the
order of Lender, and all renewals, extensions, modifications and amendments thereto, and
substitutions therefor.
“Notices of Final Agreement”: See Section 5.6.
“Obligations” means the obligations of each Borrower (severally and not jointly):
(a) to pay all indebtedness arising out of this Agreement, any future
advances under this Agreement, and all renewals, extensions or amendments of such
indebtedness or any part thereof or any such future advances;
(b) to pay the principal of and interest on its Note in accordance with the
terms thereof, and all renewals, extensions, modifications and amendments of such Note or
any part thereof, and any future advances made pursuant thereto;
(c) to repay to Lender all amounts advanced by Lender hereunder or under the
other Loan Documents on behalf of such Borrower, including, without limitation, advances for
principal or interest payments to prior secured parties, mortgagees, or lienors, or for
taxes, levies, insurance, rent, repairs to or maintenance or storage of any of the
collateral;
(d) to pay any and all other indebtedness of such Borrower to Lender of every
kind, nature and description, direct or indirect, primary or secondary, secured or unsecured
(including overdrafts), joint or several, absolute or contingent, due or to become due, now
existing or hereafter arising, regardless of how it may be evidenced, including without
limitation all future advances, whether or not presently contemplated by the parties hereto;
(e) to perform fully all of the terms and provisions of each of the
instruments constituting the Loan Documents; and
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(f) to reimburse Lender, on demand, for all of Lender’s reasonable expenses
and costs, which each Borrower is obligated to pay pursuant to the terms of the Loan
Documents.
| “Parent” means Rent-A-Center, Inc., a Delaware corporation. |
“Person” means a corporation, a limited liability company, an association, a partnership, a
joint venture, an organization, a business, an individual or a government or political subdivision
thereof or any governmental agency.
“Potential Default” means any condition, event or act, which with the giving of notice or the
lapse of time, or both, will constitute an Event of Default hereunder.
“Principal Guarantors” means, collectively, each Principal Owner of a Borrower that executes a
Principal Guaranty Agreement from time to time.
“Principal Guaranty Agreements”: See Section 3.3.
“Principal Owners”: See Section 3.3.
“Program Amount” means the obligation of Lender, subject to the terms and conditions of this
Agreement, to make Loans which shall not exceed at any one time outstanding $25,000,000.
“Responsible Officer” means the chief executive officer, president, chief financial officer,
treasurer, assistant treasurer or any other executive officer of a Loan Party whose signature
incumbency is set forth in a certificate delivered to Lender pursuant to Sections 4.2 or
5.6(d). Any document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party. With respect to
Administrator, the President, Chief Executive Officer, Vice President — Finance and, with respect
to requests for advances and other administrative matters only, the Credit Manager, shall each be
deemed a Responsible Officer until Lender receives written notice from Administrator otherwise.
“Revolving Loan Commitment” means, with respect to each Borrower, the obligation of Lender,
subject to the terms and conditions of this Agreement and the terms of such Borrower’s Note, to
make Loans which shall not exceed the face amount of such Borrower’s Note.
“Revolving Loan Principal Debt” means, at any time, with respect to any Borrower, the
aggregate outstanding principal balance of the Loans made to such Borrower.
“Security Agreements”: See Section 3.1.
“Senior Credit Agreement” means that certain Third Amended and Restated Credit Agreement dated
as of May 28, 2003, as amended and restated as of November 15, 2006, among Parent, the lenders from
time to time party thereto and JPMorgan Chase Bank, N.A. as administrative agent, as amended
pursuant to the terms of that certain First Amendment dated as of December 2, 2009.
“Store” means, with respect to any Borrower, each store operated by such Borrower pursuant to
a franchise or license agreement with ColorTyme, Inc.
1.2 Terms Generally. All other terms contained in this Agreement, unless the
context indicates otherwise, have the same meanings as provided for by the Uniform Commercial Code
as
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adopted in Texas to the extent the same are used or defined therein. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The
words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning and effect as the word
“shall.” Unless the context requires otherwise (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein), and (b) the words
“herein”, “hereof” and “hereunder” and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof.
1.3 Accounting Terms. Unless specified elsewhere herein, all accounting
terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements to be delivered hereunder shall be prepared in accordance with GAAP.
1.4 Counting Days. If any time period referenced herein ends on a day other
than a Business Day, such period shall be deemed to end on the next succeeding Business Day.
1.5 Rounding. Any financial ratio as required to be maintained by any Loan
Party pursuant to this Agreement shall be calculated by dividing the appropriate component by the
other component, carrying the result to one place more than the number of places by which such
ratio is expressed herein and rounding the result up or down to the nearest number (rounding up if
there is no nearest number).
SECTION 2. REVOLVING CREDIT FACILITY
2.1 The Revolving Loans.
(a) Lender agrees, subject to the terms and conditions hereof, to lend to
Borrowers at any time and from time to time sums (each herein called a “Loan” and
collectively the “Loans”) which may be repaid and reborrowed pursuant to the terms of the
Notes. The Aggregate Revolving Loan Principal Debt shall not exceed at any one time
outstanding an amount equal to the Program Amount. The Revolving Loan Principal Debt of any
Borrower shall not exceed such Borrower’s Revolving Loan Commitment.
(b) The proceeds of Loans may be used to finance purchases of inventory for
Borrowers’ Stores from Administrator, to finance working capital and acquisitions, to
refinance certain existing indebtedness of Borrowers to Xxxxx Fargo Capital Finance and
other lenders permitted by Administrator and Lender, and for such other purposes permitted
by Administrator and Lender.
(c) The obligation of each Borrower to repay its Revolving Loan Principal
Debt outstanding at any one time shall be evidenced by a Note which shall (a) be payable for
the amount of the Loans made to such Borrower, (b) be payable as to principal and interest
as provided therein, (c) be entitled to the benefits of this Agreement and the security
provided for herein and the other Loan Documents, and (d) be substantially in the form of
Exhibit B attached hereto.
(d) Lender agrees to, as soon as reasonably practicable but in any event
within five Business Days of its receipt of each repayment of Loans under the Notes, pay to
Administrator an amount equal to that portion of such repayment constituting Administrator
Interest. Except as expressly provided herein to the contrary, all payments on any
Borrower’s Note shall be applied
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in the following order of priority: (a) the payment or reimbursement of any expenses,
costs or obligations (other than the outstanding principal balance hereof and interest
hereon) for which such Borrower shall be obligated or Lender shall be entitled pursuant to
the provisions of such Borrower’s Note or the other Loan Documents related thereto; (b) the
payment to Lender of accrued but unpaid interest on such Borrower’s Note, other than
Administrator Interest; (c) the payment of accrued but unpaid Administrator Interest on such
Borrower’s Note; and (d) the payment to Lender of all or any portion of the principal
balance of such Borrower’s Note then outstanding thereunder, in the direct order of
maturity. If an event of default exists and is continuing under such Borrower’s Note or
under any of the other Loan Documents to which such Borrower or applicable Principal
Guarantor is a party related thereto, then Lender may, at the sole option of Lender, apply
any such payments, at any time and from time to time, to any of the items specified in
clauses (a), (b), (c) or (d) above without regard to the order of priority otherwise
specified in this Section 2.1(d) and any application to the outstanding principal balance of
such Borrower’s Note may be made in either direct or inverse order of maturity. During the
continuance of any Event of Default, Administrator shall not be entitled to receive any
payments (whether for principal, interest or fees) until such Event of Default is cured or
waived other than payments due to Administrator under such Borrower’s franchise agreement.
2.2 Borrowings. Each Loan shall be made upon Administrator’s irrevocable
written notice to Lender given not more than once per calendar month on behalf of the Borrowers.
Each such notice must be received by Lender not later than 11:00 A.M. (Dallas, Texas time), one
Business Day prior to the requested date of any borrowing Loans. Each written request must be in
the form of a Loan Notice in the form of Exhibit A attached hereto (or such other form as agreed to
by both Administrator and Lender) (each such notice, a “Loan Notice”), appropriately completed and
signed by a Responsible Officer of Administrator. Each Loan Notice shall specify (i) each Borrower
for which a Loan is requested, (ii) the requested date of the Loans (which shall be a Business
Day), and (iii) the requested principal amount of each Loan. Each Loan to a Borrower will be
advanced by Lender to Administrator or as otherwise directed by Administrator.
2.3 Credit Approval. Nothing herein shall obligate Lender to accept or
approve any request for financing submitted by or on behalf of a franchisee of ColorTyme, Inc. to
become a new Borrower hereunder. Lender may in its sole discretion reject or otherwise decline to
accept any franchisee of ColorTyme, Inc. as a new Borrower hereunder.
2.4 Modification of Revolving Loan Commitments. Upon written request of
Administrator to Lender on behalf of the Borrowers, Lender may increase, decrease or otherwise
modify the Notes and/or the Revolving Loan Commitments of all or any portion of the Borrowers. Up
to four such modification requests in any calendar year may be made without payment of a
modification fee to Lender. For each modification request during any calendar year after four
previous modification requests have been made during such calendar year, Administrator shall pay to
Lender, as a condition to any modification, a fee equal to $1,000 per Borrower for each
modification request made with respect to such Borrower; provided, however, that no such
modification fee shall be due and payable in connection with any increase of the Revolving Loan
Commitment of any Borrower for which such Borrower pays an upfront fee as provided in such
Borrower’s Note. At the election of Administrator, such fee may be payable by the applicable
Borrower.
2.5 Addition of Franchisees as Borrowers.
(a) In the event that any franchisee (whether existing or prospective) of
ColorTyme, Inc. shall indicate an interest in obtaining financing as a new Borrower
hereunder, then Lender
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shall provide Administrator with Lender’s new account applications for a Borrower
Operating Account and with Lender’s loan application. Administrator shall then provide such
applications to such franchisee.
(b) If the franchisee is a prospective franchisee, prior to delivery of the
new account and loan applications to Lender, Administrator may, but is under no obligation
to, provide Lender with preliminary financial information of such prospective franchisee;
provided, however, that the consent of such prospective franchisee shall be obtained prior
to delivery of such financial information to Lender. Within a reasonable amount of time
following receipt of such financial information, Lender will (i) review such financial
information, (ii) make a preliminary determination of the credit worthiness of such
prospective franchisee as a new Borrower hereunder, and (iii) notify Administrator of such
preliminary determination; provided, however, that such preliminary determination shall be
non-binding on Lender.
(c) After the franchisee (whether existing or prospective) has completed the
new account applications and the loan application and delivered the same to Lender, Lender
may request other financial information to evaluate the credit worthiness of such
franchisee.
(d) If, following completion of its review of the franchisee’s (whether
existing or prospective) new account applications and other financial information of such
franchisee, Lender determines that it will provide financing to such franchisee, it shall
notify such franchisee and Administrator and, upon receipt of the items set forth in Section
5.6 for such franchisee, such franchisee shall become a new Borrower hereunder eligible to
receive Loans as otherwise set forth in this Agreement.
SECTION 3. COLLATERAL
3.1 Assets of Borrowers. The payment and performance by each Borrower of its
Note and all of its other Obligations hereunder and under the Loan Documents shall be secured by a
first and superior lien against all of the assets of such Borrower pursuant to the terms of one or
more security agreements (each a “Security Agreement”), which shall be in form and substance
reasonably satisfactory to Lender. Administrator hereby agrees that to the extent that it has or
obtains any lien on any assets of any Borrower, such lien shall be subordinate and inferior to the
lien of Lender on such assets granted pursuant to the Loan Documents.
3.2 Corporate Guaranty Agreements. The payment and performance of the Notes
and all of the other Obligations hereunder and under the Loan Documents shall be unconditionally
guaranteed by the Corporate Guarantors, pursuant to one or more guaranty agreements (each, as
amended from time to time, a “Corporate Guaranty Agreement”), which shall be reasonably
satisfactory in form and substance to Lender.
3.3 Principal Guaranty Agreements. The payment and performance of each
Borrower’s Note and each Borrower’s Obligations under the Loan Documents shall be unconditionally
guaranteed by such Borrower’s principal owners (the “Principal Owners”) pursuant to one or more
guaranty agreements (each, as amended from time to time, a “Principal Guaranty Agreement”), which
shall be reasonably satisfactory in form and substance to Lender. The Principal Owners for
any Borrower shall be determined by Administrator in its reasonable discretion.
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3.4 Letters of Credit.
(a) If any Borrower fails to make any required payment with respect to a Loan
(for purposes of this Section 3.4, a “Note Payment Default”) and such Note Payment Default
continues for seven days, then within 10 Business Days of receipt of written notice from
Lender Administrator shall either (i) purchase such Loan from Lender for a price equal to
all principal and interest outstanding on the Loan as of the date purchase, or (ii) cause
Parent to deliver to Lender, as beneficiary, a standby letter of credit (a “Collateral LC”)
in an amount not less than 100% of the Revolving Loan Principal Debt of such Borrower. Each
Collateral LC shall be in form and substance reasonably acceptable to Lender. If any Note
Payment Default continues for a period of 30 days, then Lender may draw on the Collateral LC
and use the proceeds thereof to pay all Revolving Loan Principal Debt of such Borrower.
(b) At any time during a Financial Covenant Non-compliance Period, or if any
Event of Default occurs and is continuing, then within 10 Business Days of receipt of
written notice from Lender, Administrator shall cause Parent to deliver to Lender, as
beneficiary, a Collateral LC in an amount not less than 100% of the Aggregate Revolving Loan
Principal Debt not already secured by a Collateral LC issued pursuant to Section 3.4(a).
Each Collateral LC shall permit partial draws and shall be in form and substance reasonably
acceptable to Lender. Lender may draw on the Collateral LC and use the proceeds thereof to
pay the Aggregate Revolving Loan Principal Debt at any time during the continuance of an
Event of Default. If a Collateral LC is issued due to the existence of a Financial Covenant
Non-compliance Period, then (i) such Collateral LC shall be terminated as of the last day of
any fiscal quarter of Parent during which the Financial Covenant Non-compliance Period no
longer exists, and (ii) for so long as such Collateral LC is outstanding, any failure by
Parent to comply with the Consolidated Fixed Charge Coverage Ratio or the Consolidated
Leverage Ratio shall not cause an Event of Default.
(c) If any Collateral LC will mature by its terms at any time during a
Financial Covenant Non-Compliance Period or during the continuance of an Event of Default,
then Lender may in its discretion, within 30 days prior to the date that such Collateral LC
matures, either request that such Collateral LC be renewed for a one year period or draw on
the Collateral LC and use the proceeds to pay the Aggregate Revolving Loan Principal Debt.
(d) If Lender draws on any Collateral LC to pay the outstanding Revolving
Loan Principal Debt of any Borrower, then Lender shall promptly assign such Borrower’s Note
and other Loan Documents to which such Borrower or applicable Principal Guarantor is a party
to Administrator for collection.
SECTION 4. CONDITIONS PRECEDENT TO CLOSING
The closing of the transactions contemplated by this Agreement shall take place on or before
August 2, 2010, as the parties shall agree (the “Closing Date”). The obligations of Lender as set
forth herein are subject to the satisfaction (in the reasonable opinion of Lender), unless waived
in writing by Lender, of each of the following conditions. In the event that any of the conditions
precedent to the closing specified below have not been satisfied and Lender nevertheless elects to
close as an accommodation to Administrator (there being no obligation or agreement that Lender will
do so), such condition(s) shall not be deemed waived and Administrator shall have thirty (30) days
from the Closing Date to comply with such condition(s) to the reasonable satisfaction of Lender.
Administrator’s failure to satisfy or cause the satisfaction of such condition(s) precedent to the
reasonable satisfaction of Lender within such thirty (30) day period shall constitute an Event of
Default hereunder.
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4.1 Effectiveness of this Agreement and the Corporate Guaranty Agreements.
This Agreement and the Corporate Guaranty Agreements shall each be in full force and effect.
4.2 Documentation and Proceedings. Lender shall have received such evidence
as Lender requires as to the existence, good standing, authority and capacity of each Corporate
Guarantor, including: an officer’s certificate of each Corporate Guarantor having attached thereto
(i) a copy of its articles of incorporation and bylaws, and all amendments thereto, a certificate
of incumbency of all of its officers who will be authorized to execute or attest any of the Loan
Documents to which it is a party, and a copy of resolutions approving the Loan Documents to which
it is a party and authorizing the transactions contemplated by this Agreement; and (ii)
certificates of existence and good standing issued by the jurisdiction of its formation.
4.3 No Material Changes. Lender shall have received reasonably satisfactory
evidence that (i) no material adverse change has occurred in the business, assets, liabilities
(actual or contingent), operations or financial condition of either Corporate Guarantor since
December 31, 2009, or (ii) there is no suit, action, investigation or proceeding pending or
threatened in any court or before any arbitrator or Governmental Authority that purports to affect
materially and adversely either Corporate Guarantor.
4.4 Representations and Warranties All representations and warranties
contained herein or in the documents referred to herein or otherwise made in writing in connection
herewith or therewith shall be true and correct with the same force and effect as though such
representations and warranties have been made on and as of this date, except to the extent such
representations and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material respects on and as
of such earlier date.
4.5 Expenses. Administrator shall have paid all reasonable expenses of
Lender in connection with the preparation of the Loan Documents, including but not limited to, the
reasonable fees and expenses of counsel for Lender to the extent invoiced prior to the Closing
Date.
SECTION 5. CONDITIONS PRECEDENT TO LOANS
The obligation of Lender to make Loans to a Borrower is subject, at the time of the funding of
each such Loan (the “Funding Date”), to the satisfaction (in the reasonable opinion of Lender),
unless waived in writing by Lender, of each of the following conditions:
5.1 Loan Notice. Administrator shall have delivered to Lender, within the
time frame specified in Section 2.2(a) hereof, a Loan Notice appropriately completed in compliance
herewith.
5.2 Availability of Commitment. The Aggregate Revolving Loan Principal Debt
plus the amount of the requested Loans shall be equal to or less than the Program Amount.
Furthermore, the Revolving Loan Principal Debt of any Borrower (including such requested Loan)
shall not exceed such Borrower’s Revolving Loan Commitment.
5.3 Expenses. Administrator shall have paid all reasonable costs and
expenses (including without limitation reasonable attorneys’ fees, consultants’ fees, and
miscellaneous expenses) incurred by Lender in connection with the making of the Loans.
5.4 Representations and Warranties. All representations and warranties
contained herein and in the Loan Documents shall be true and correct in all material respects as
though such representations and warranties have been made on and as of the Funding Date, except to
the extent such
FRANCHISEE FINANCING AGREEMENT
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representations and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material respects on and as
of such earlier date.
5.5 No Default. There shall exist no Event of Default or Potential Default
hereunder.
5.6 Borrower Loan Documents. Receipt, prior to the Funding Date, from each
Borrower of the following, in each case in form and substance reasonably acceptable to Lender:
(a) a signed copy of the Note, with the original Note to follow promptly
after the Funding Date;
(b) a signed copy of the Security Agreement, with the original Security
Agreement to follow promptly after the Funding Date;
(c) a signed copy of the Principal Guaranty Agreement, with the original
Principal Guaranty Agreement to follow promptly after the Funding Date;
(d) such evidence as Lender requires as to the existence, good standing,
authority and capacity of such Borrower and related Principal Guarantor as applicable,
including:
(i) For each limited partnership: A partner’s certificate having
attached thereto (A) a true and complete copy of an executed copy of its partnership
agreement and all amendments thereto; (B) a copy of the certificate of limited
partnership issued by the jurisdiction of its formation and, if the jurisdiction of
its formation is other than Texas, reasonably satisfactory evidence of qualification
to do business in good standing in each state where such Borrower’s Stores are
located, and (C) an incumbency provision evidencing the identity, authority and
capacity of each Responsible Officer.
(ii) For each corporation: An officer’s certificate having attached
thereto (A) a copy of its articles of incorporation and bylaws, and all amendments
thereto, a certificate of incumbency of all of its officers who will be authorized
to execute or attest any of the Loan Documents to which it is a party, and a copy of
resolutions approving the Loan Documents to which it is a party and authorizing the
transactions contemplated by this Agreement; (B) certificates of existence and good
standing issued by the jurisdiction of its formation and, if the jurisdiction of its
formation is other than Texas, certificates of qualification to do business and good
standing in each state where such Borrower’s Stores are located, and (C) an
incumbency provision evidencing the identity, authority and capacity of each
Responsible Officer.
(iii) For each limited liability company: an officer’s certificate
having attached thereto (A) a true and complete copy of the articles of organization
and operating agreement, and all amendments thereto, a certificate of incumbency of
all of its [members] [managers and officers] who are authorized to execute or attest
to any of the Loan Documents, and a true and complete copy of resolutions approving
the Loan Documents and authorizing the transactions contemplated in this Agreement
and the other Loan Documents; and (B) certificates of existence, good standing and
qualification to do business issued by appropriate governmental officials in the
state of its formation and, if the jurisdiction of its formation is other than
Texas, certificates of qualification to do business and good standing in each state
where such Borrower’s Stores are located.
(e) a signed copy of such Borrower’s franchise agreement with ColorTyme,
Inc.;
FRANCHISEE FINANCING AGREEMENT
Page 10
(f) a signed copy of a notice in compliance with the provisions of Section
26.02 of the Texas Business and Commerce Code (the “Notice of Final Agreement”), with the
original Notice of Final Agreement to follow promptly after the Funding Date;
(g) a UCC-1 Financing Statement evidencing such Borrower as debtor and Lender
as secured party and identifying the collateral as “all assets of debtor” or a similar
description;
(h) payment, in immediately available funds, of an administration fee in an
amount equal to $1,250 and an upfront fee in an amount equal to 1% of such Borrower’s
Revolving Loan Commitment, which administration fee and upfront fee may be added to the
total amount of such Borrower’s Loan; and
(i) with respect to any franchisee with existing operations, the financial
information set forth in Section 6.1(b) for the previous calendar quarter.
SECTION 6. AFFIRMATIVE COVENANTS
Until full payment and performance of all Obligations of the Borrowers under the Loan
Documents and unless Lender consents otherwise in writing (and without limiting any requirement of
any other Loan Document), Administrator shall:
6.1 Financial Statements and Other Information. Deliver or cause to be
delivered to Lender:
(a) Parent Financial Statements. Concurrently with the delivery of
the same to the lenders party to the Senior Credit Agreement, a copy of Parent’s Compliance
Certificate (as defined in the Senior Credit Agreement) and financial statements delivered
pursuant to Section 6.2(b) of the Senior Credit Agreement.
(b) Quarterly Borrower Financial Information. Within sixty (60) days
of each calendar quarter end, a report from Administrator listing the financial ratios of
each Borrower calculated by Administrator, including average revenue, debt multiple,
operating efficiency, and stale inventory for such quarter.
(c) Additional Information. Such additional information, reports and
statements with respect to the business operations and financial condition of the Loan
Parties as Lender may reasonably request from time to time.
6.2 Adverse Conditions or Events. Promptly advise Lender in writing of (i)
any condition, event or act which comes to its attention that would reasonably be expected to
materially adversely affect either Corporate Guarantor’s financial condition or operations or
Lender’s rights under the Loan Documents, (ii) any litigation filed by or against either Corporate
Guarantor in which the amount in controversy exceeds $30,000,000, (iii) the occurrence of any Event
of Default, or of any Potential Default, or to any Corporate Guarantor’s knowledge, the failure of
any other Loan Party to observe any of its undertakings hereunder or under any of the other Loan
Documents, (iv) any event of default by a Borrower known to Administrator or ColorTyme, Inc. under
the terms of its franchise agreement with ColorTyme, Inc. and (v) any other event which has or
would reasonably be expected to have a Material Adverse Effect.
FRANCHISEE FINANCING AGREEMENT
Page 11
6.3 Taxes and Other Obligations. Pay all of Administrator’s taxes,
assessments and other obligations, including, but not limited to taxes and assessments and lawful
claims which, if unpaid, might by law become a lien against the assets of Administrator, as the
same become due and payable, except to the extent the same are being Contested in Good Faith or
except for taxes, the failure of which to pay, could not reasonably be expected to have a Material
Adverse Effect.
6.4 Insurance. Keep its properties of an insurable nature insured at all
times against such risks and to the extent that like properties are customarily insured by other
companies engaged in the same or similar businesses similarly situated and maintain insurance of
the types and in the coverage amounts and with reasonable deductibles as are usual and customary.
6.5 Compliance with Laws. Comply with all applicable laws (including
environmental laws), rules, regulations and orders of any Governmental Authority, a breach of which
(when considered alone or when aggregated with the effect of other breaches) would reasonably be
expected to have a Material Adverse Effect.
6.6 Compliance with Material Agreements. Comply in all respects with all
existing and future agreements, indentures, mortgages, or documents which are binding upon it or
affect any of its properties or business, a breach of which (when considered alone or when
aggregated with the effect of other breaches) would reasonably be expected to have a Material
Adverse Effect.
6.7 Maintenance of Records. Keep at all times books and records of account
in accordance with GAAP in which full, true and correct entries will be made of all dealings or
transactions in relation to the business and affairs of Administrator, and Administrator will
provide adequate protection against loss or damage to such books of record and account.
6.8 Inspection of Books and Records. Allow any representative of Lender to
visit and inspect its properties, to examine its books of record and account and to discuss its
affairs, finances and accounts with any of its officers, directors, employees and agents, all at
such reasonable times during normal business hours and upon at least three Business Days advance
notice and as often as Lender may request; provided, however, that so long as no Event of Default
or Potential Default has occurred and is continuing, (i) such inspections, examinations and
discussions shall be conducted no more than four times per calendar year and (ii) a Responsible
Officer of the Administrator shall have the option to be present at all such inspections,
examinations and discussions.
6.9 Existence and Qualification. Preserve and maintain its existence and
good standing in Texas and in each other jurisdiction in which qualification is required and where
failure so to qualify would be reasonably expected to have a Material Adverse Effect.
6.10 Collateral LCs. Cause Parent to deliver one or more Collateral LCs as
described in Section 3.4.
6.11 Borrower Operating Accounts. Cause each Borrower to maintain a
Borrower Operating Account at Lender, with an aggregate minimum average daily balance for such
accounts as follows: (i) for each Store of such Borrower that has been open for business less than
two years, the Borrower Operating Account for such Borrower at Lender shall have an aggregate
minimum average daily balance of at least $2,500; (ii) for each Store of such Borrower that has
been open for business between two and four years, the Borrower Operating Account for such Borrower
at Lender shall have an aggregate minimum average daily balance of at least $5,000; and (iii) for
each Store of such Borrower that has been open for business more than four years, the Borrower
Operating Account for such Borrower
FRANCHISEE FINANCING AGREEMENT
Page 12
at Lender shall have an aggregate minimum average daily balance of at least $7,500. If at any
time any Borrower does not comply with foregoing, then such Borrower shall pay to Lender a $100 fee
for each month Borrower is not in compliance with this Section 6.11. Such fee shall be assessed on
a yearly basis. No breach of the obligations of this Section 6.11 shall cause an Event of Default.
6.12 Further Assurances. Make, execute or endorse, acknowledge and deliver
or file or cause the same to be done, all such vouchers, invoices, notices, certifications and
additional agreements, undertakings, conveyances, deeds of trust, mortgages, assignments, financing
statements or other assurances, and take any and all such other action as Lender may from time to
time deem necessary or reasonably appropriate in connection with this Agreement or any of
the other Loan Documents (a) to cure any defects in the creation of the Loan Documents, or (b) to
evidence further or more fully describe, perfect or realize on the collateral intended as security,
or (c) to correct any omissions in the Loan Documents, or (d) to state more fully the security for
the Obligations, or (e) to perfect, protect or preserve any liens pursuant to any of the Loan
Documents, or (f) for better assuring and confirming unto Lender all or any part of the security
for any of the Obligations.
SECTION 7. NEGATIVE COVENANTS
Until full payment and performance of all Obligations under the Loan Documents, Administrator
shall not without the prior written consent of Lender (and without limiting any requirement of any
other Loan Documents):
7.1 Merger, Etc. Enter into any merger or consolidation.
7.2 Transfer of Assets. Convey, assign, transfer, sell, lease or otherwise
dispose of, in one transaction or a series of transactions (or agree to do any of the foregoing at
any future time), all or substantially all or a substantial part of its properties or assets
(whether now owned or hereafter acquired) or any part of such properties or assets which are
essential to the conduct of its business substantially as now conducted.
SECTION 8. REPRESENTATIONS AND WARRANTIES
Administrator hereby represents and warrants to Lender as follows:
8.1 Financial Statements. The financial statements and ratios of each
Corporate Guarantor heretofore delivered to Lender have been prepared in accordance with GAAP and
fairly present such Corporate Guarantor’s financial condition as of the date or dates thereof, and
there have been no material adverse changes in such Corporate Guarantor’s financial condition or
operation since the date or dates thereof.
8.2 Good Standing. Administrator is a corporation, duly organized, validly
existing and in good standing under the laws of Texas and has the power and authority to own its
property and to carry on its business in Texas and in each other jurisdiction in which
Administrator does business and in which the failure to be so qualified would (when considered
alone or when aggregated with the effect of failure to qualify in all other jurisdictions)
reasonably be expected to have a Material Adverse Effect.
8.3 Authority and Compliance. Administrator has full power and authority to
execute, deliver and perform the Loan Documents to which it is a party and to incur and perform the
obligations provided for therein. No consent or approval of any Governmental Authority or other
third party is required as a condition to the validity or performance of any Loan Document, and
Administrator is in
FRANCHISEE FINANCING AGREEMENT
Page 13
compliance with all material laws and regulatory requirements to which it is subject, except
to the extent that failure to do so could not reasonably be expected to have a Material Adverse
Effect.
8.4 Binding Agreements. This Agreement and the other Loan Documents executed
by Administrator constitute valid and legally binding obligations of Administrator, enforceable in
accordance with their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by general equitable principles (whether enforcement is sought by proceedings
in equity or at law.
8.5 Litigation. There is no proceeding involving Administrator pending or,
to the knowledge of Administrator, threatened before any court or Governmental Authority, agency or
arbitration authority, except (a) as disclosed to Lender in writing and acknowledged by Lender
prior to the date of this Agreement or (b) that either individually or in the aggregate could not
reasonably be expected to have Material Adverse Effect.
8.6 No Conflicting Agreements. There is no charter, bylaw, stock provision,
partnership agreement or other document pertaining to the power or authority of Administrator and
no provision of any existing material agreement, mortgage, indenture or contract binding on
Administrator or affecting any property of Administrator, which would conflict with or in any way
prevent the execution, delivery or carrying out of the terms of this Agreement and the other Loan
Documents.
8.7 Taxes. All taxes and assessments due and payable by Administrator have
been paid or are being Contested in Good Faith, except for taxes, the failure of which to pay,
could reasonably be expected not to have a Material Adverse Effect.
8.8 No Default. No Event of Default or Potential Default has occurred and is
continuing.
8.9 Accuracy of Information. To the best of Administrator’s knowledge, all
factual information furnished to Lender in connection with this Agreement and the other Loan
Documents is and will be accurate and complete on the date as of which such information is
delivered to Lender and is not and will not be incomplete by the omission of any material fact
necessary to make such information not misleading.
8.10 Borrowers. To the best of Administrator’s knowledge, each Borrower is
in compliance with the terms of its franchise agreement with ColorTyme, Inc., and each Borrower has
satisfied and continues to perform its obligations as a franchisee of ColorTyme, Inc., except to
the extent that failure of such Borrower to do so could not reasonably be expected to have a
Material Adverse Effect. No breach of this Section 8.10 shall cause an Event of Default.
SECTION 9. DEFAULT
Any of the following shall constitute events of default (each an “Event of Default”):
9.1 Representations and Warranties. Any representation, warranty or
statement made by either Corporate Guarantor herein or otherwise in writing in connection herewith
or in connection with any of the other Loan Documents and the agreements referred to herein or
therein or in any financial statement, certificate or statement signed by any Responsible Officer
of either Corporate Guarantor and furnished pursuant to any provision of the Loan Documents shall
be breached, or shall be materially false, incorrect or incomplete when made.
FRANCHISEE FINANCING AGREEMENT
Page 14
9.2 Default in Covenants Under Agreement. (a) A default shall occur in the
due performance or observance of any term, covenant or agreement set forth in Section 6.10 or in
Section 7 hereof; or, (b) Administrator shall default in the due performance or observance of any
term, covenant or agreement contained in this Agreement other than those specified in clause (a)
immediately preceding (and other than those described in Section 9.1 hereof or any default under
Section 6.11 or 8.10), and such default continues unremedied for a period of thirty (30) days after
notice thereof from Lender or Lender is notified of such default or should have been so notified
pursuant to the provisions of Section 6.2 hereof, whichever is earlier.
9.3 Default in Other Loan Documents. Either Corporate Guarantor shall
default in the due performance of or observance by it of any term, covenant or agreement on its
part to be performed pursuant to the terms of any of the other Loan Documents and the default shall
continue unremedied beyond any grace or cure period therein provided.
9.4 Default Under Senior Credit Agreement. An event of default shall have
occurred and be continuing under the provisions of the Senior Credit Agreement, the effect of which
is to permit the holder or holders of indebtedness thereunder to cause the indebtedness to become
due and payable prior to its stated maturity (whether or not the holder actually exercises such
option).
9.5 Bankruptcy. Either Corporate Guarantor shall suspend or discontinue its
business operations, or shall generally fail to pay its debts as they mature, or shall file a
petition commencing a voluntary case concerning such Corporate Guarantor under any chapter of the
United States Bankruptcy Code; or any involuntary case shall be commenced against either Corporate
Guarantor under the United States Bankruptcy Code that results in the entry of an order for relief
or any such adjudication or appointment or remains undismissed, undischarged or unbonded for a
period of 60 days; or either Corporate Guarantor shall become insolvent (howsoever such insolvency
may be evidenced).
SECTION 10. REMEDIES
Upon the occurrence of a Bankruptcy Default, the entire principal of and accrued interest on
the Notes shall forthwith be due and payable without demand, presentment for payment, notice of
nonpayment, protest, notice of protest, notice of intent to accelerate, notice of acceleration and
all other notices and further actions of any kind, all of which are hereby expressly waived by the
Loan Parties. In the event that any other Event of Default shall occur and be continuing, Lender
may, without demand or notice of its election, terminate its obligation to make further Loans
hereunder and/or declare the entire unpaid balance of the Notes and all other indebtedness of
Borrowers to Lender, or any part thereof, immediately due and payable, whereupon the principal of
and accrued interest on such Notes and other indebtedness shall be forthwith due and payable
without demand, presentment for payment, notice of nonpayment, protest, notice of protest, notice
of intent to accelerate, notice of acceleration and all other notices and further actions of any
kind, all of which are hereby expressly waived by the Loan Parties. Upon the occurrence and during
the continuance of any Event of Default, Lender may (a) exercise any and all rights under or
pursuant to any of the Loan Documents, and (b) exercise any and all rights afforded to Lender by
the laws of the State of Texas or any other applicable jurisdiction or in equity or otherwise, as
Lender may deem appropriate.
SECTION 11. EXPENSES AND INDEMNITY
11.1 Payment of Expenses. Administrator shall promptly (and in any event,
within 30 days after any invoice or other statement or notice) pay to Lender immediately upon
demand the full amount of all reasonable costs and expenses (including without limitation
reasonable attorneys’ fees, consultants’
FRANCHISEE FINANCING AGREEMENT
Page 15
fees, engineering fees, travel costs and miscellaneous expenses) incurred by Lender in
connection with (a) negotiation, preparation, execution and delivery of this Agreement and each of
the Loan Documents, and (b) any modifications of or consents or waivers under or amendments to or
interpretations of this Agreement, the Notes, or the other Loan Documents, and (c) all transfer,
stamp, mortgage, documentary or other similar taxes, assessments or other charges levied by any
Governmental Authority or revenue authority in respect of this Agreement or any of the other Loan
Documents, and (d) the filing, recording, refiling and rerecording of any Loan Documents and any
other documents or instruments or further assurances required to be filed or recorded or refiled or
rerecorded by the terms of any Loan Document. Administrator further agrees to pay on demand all
reasonable costs and expenses of Lender, if any (including without limitation reasonable attorneys’
fees and expenses and the cost of internal counsel), in connection with the enforcement (whether
through negotiations, arbitration proceedings, legal proceedings or otherwise) of the Loan
Documents; provided however, with respect to enforcement and collection of the Obligations of any
Borrower that is in default, such costs and expenses shall not exceed $1,500 per enforcement action
without first giving Administrator prior written notice of such enforcement action and the
opportunity to purchase the Note of such Borrower.
11.2 Indemnity. Administrator further agrees to indemnify Lender and its
employees and agents, from and hold them harmless against any and all losses, liabilities, claims,
damages or expenses which any of them suffers or incurs as a result of Lender’s entering into this
Agreement and the Loan Documents, or the consummation of the transactions contemplated by this
Agreement and the Loan Documents, or the use or contemplated use of the proceeds of the Loans,
including, without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any litigation, arbitration or other proceeding arising out of or by reason of any
of the aforesaid. IT IS THE INTENTION OF THE PARTIES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO
LOSSES, LIABILITIES, CLAIMS, DAMAGES OR EXPENSES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE
OUT OF THE NEGLIGENCE OF AN INDEMNIFIED PARTY. No such indemnified party, however, shall be
entitled to be indemnified for its or his own gross negligence or willful misconduct. In the case
of an investigation, litigation or other proceeding to which the indemnity in this Section applies,
such indemnities shall be effective whether or not such investigation, litigation or proceeding is
brought by Administrator, its directors, shareholders or creditors, or by an indemnified party and
whether or not the transactions hereby are consummated. Administrator shall defend any claim for
which an indemnified party is entitled to seek indemnity pursuant to the preceding sentence, and
the indemnified party shall cooperate with the defense. The indemnified party may have separate
counsel, and Administrator will pay the expenses and reasonable fees of such separate counsel if
either counsel for Administrator or counsel for the indemnified party shall advise the indemnified
party that the interests of both Administrator and the indemnified party with respect to such claim
are or with reasonable certainty will become adverse. The agreements and obligations of
Administrator contained in this Section shall survive payment in full of the Obligations.
SECTION 12. MISCELLANEOUS
Administrator and Lender further covenant and agree as follows, without limiting any
requirement of any other Loan Document:
12.1 Notices. All notices, requests or demands which any party is required
or may desire to give to any other party under any provision of this Agreement must be in writing
(including telegraphic, telex and facsimile transmission) delivered to the other party at the
addresses set forth on the first page of this Agreement or to such other address as any party may
designate by written notice to the other party. Each such notice, request and demand shall be
deemed given or made (whether actually received or not) (a) if sent by mail, upon the earlier of
the date of receipt or five (5) days after deposit in the U.S. Mail, first class postage prepaid,
and (b) if sent by any other means, upon delivery. Unless otherwise changed
FRANCHISEE FINANCING AGREEMENT
Page 16
by notice given pursuant to this Section, the facsimile transmission number for Administrator
shall be 000-000-0000, and the facsimile transmission number for Lender shall be 000-000-0000.
12.2 Cumulative Rights and No Waiver. Each and every right granted to Lender
under any Loan Document, or allowed it by law or equity shall be cumulative of each other and may
be exercised in addition to any and all other rights of Lender, and no delay in exercising any
right shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any
right preclude any other or future exercise thereof or the exercise of any other right.
Administrator expressly waives any presentment, demand, protest or other notice of any kind,
including but not limited to notice of intent to accelerate and notice of acceleration. No notice
to or demand on Administrator in any case shall, of itself, entitle Administrator to any other or
future notice or demand in similar or other circumstances.
12.3 Choice of Law and Venue. (a) THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF LAWS) OF THE
STATE OF TEXAS AND SHALL BE PERFORMABLE IN DALLAS COUNTY, TEXAS. The parties hereto irrevocably
submit themselves to the jurisdiction of any Texas state court or any United States court located
in the State of Texas (or any court having jurisdiction over appeals from any such court) in any
proceeding between or among them arising out of or in any way relating to this Agreement or the
Loan Documents whether arising in contract, tort or otherwise. Any suit, action or proceeding may
be brought in the courts of the State of Texas, County of Dallas, or in the United States District
Court for the Northern District of Texas, Dallas Division. All parties hereto irrevocably consent
to the service of process in any suit, action or proceeding in said court by the mailing thereof,
by registered or certified mail, postage prepaid, to its address for notices set forth in this
Agreement. Service shall be deemed effective five (5) days after such mailing. If requested to do
so by any party, each party hereto agrees to waive service of process and to execute any and all
documents necessary to implement such waiver in accordance with the Texas Rules of Civil Procedure.
All parties hereto irrevocably waive any objections which any may now or hereafter have (including
any based on the grounds of forum non conveniens) to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the Loan Documents brought in the courts
located in Dallas County, Texas. Nothing herein impairs the right to bring proceedings in the
courts of any other jurisdiction or to effect service of process in any other manner permitted.
(b) The parties recognize that courts outside of Dallas County, Texas, may also have
jurisdiction over suits, actions or proceedings arising out of this Agreement and the Loan
Documents. In the event any party shall institute a proceeding involving this Agreement or the Loan
Documents in a jurisdiction outside Dallas County, Texas, the party instituting such litigation
shall indemnify the other parties for any losses and expenses that may result from the breach of
the foregoing covenant to institute such proceeding only in a state or federal court in Dallas
County, Texas, including without limitation any additional expenses incurred as the result of
litigating in another jurisdiction, such as the expenses and reasonable fees of local counsel and
travel and lodging expenses of the indemnified parties, its witnesses, experts and support
personnel.
12.4 Amendment and Assignment. No modification, consent, amendment or waiver
of any provision of this Agreement, nor consent to any departure by Administrator therefrom, shall
be effective unless the same shall be in writing and signed by an officer of Lender, and then shall
be effective only in the specified instance and for the purpose for which given. This Agreement is
binding upon Administrator, its successors and assigns, and inures to the benefit of Lender, its
successors and assigns. However, no assignment or other transfer of Administrator’s rights or
obligations hereunder shall be made or be effective without Lender’s prior written consent, nor
shall it relieve Administrator of any obligations hereunder. There is no third party beneficiary of
this Agreement. Lender may assign this
FRANCHISEE FINANCING AGREEMENT
Page 17
Agreement and the other Loan Documents without consent of any Loan Party, and such assignment
shall not relieve any Loan Party from its obligations under the Loan Documents.
12.5 Authorization to File Financing Statements. Lender is authorized to
complete and file financing statements in any state to perfect the security interests granted by
any of the Loan Documents.
12.6 Partial Invalidity. The unenforceability or invalidity of any provision
of this Agreement shall not affect the enforceability or validity of any other provision herein and
the invalidity or unenforceability of any provision of any Loan Document to any Person or
circumstance shall not affect the enforceability or validity of such provision as it may apply to
other Persons or circumstances.
12.7 Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the making of the initial Loans
and shall continue in full force and effect so long as the Obligations are outstanding or the
outstanding Revolving Loan Commitments have not expired.
12.8 Communications via Internet. Administrator and each Loan Party by its
or his execution of the Loan Documents to which it or he is a party, hereby authorizes Lender and
its counsel to communicate and transfer documents and other information (including without
limitation, confidential information) concerning this transaction or Borrower or any other Loan
Party or the business affairs of Borrower and any other Loan Party by unencrypted e-mail sent over
the Internet without regard to the lack of security of such communications.
12.9 Agreement Controlling. In the event of a conflict between the terms and
provisions of this Agreement and the terms and provisions of any of the other Loan Documents, the
terms and provisions of this Agreement shall control. This Agreement replaces and supersedes in its
entirety that certain proposal letter between the parties dated as of June 2, 2010.
12.10 Setoff. In addition to, and without limitation of, any rights of
Lender under applicable law, if any Event of Default occurs and is continuing, then any and all
deposits (including all account balances, whether provisional or final and whether or not collected
or available but excluding any payroll accounts) and any other indebtedness at any time held or
owing by Lender or any affiliate of Lender to or for the credit or account of Administrator may be
offset and applied toward the payment of the Obligations, whether or not the Obligations, or any
part thereof, shall then be due.
12.11 Joint Preparation; Construction of Indemnities and Releases. This
Agreement and the other Loan Documents have been reviewed and negotiated by sophisticated parties
with access to legal counsel and no rule of construction shall apply hereto or thereto which would
require or allow any Loan Documents to be construed against any party because of its role in
drafting such Loan Document. All indemnification and release provisions of this Agreement shall be
construed broadly (and not narrowly) in favor of the Persons receiving indemnification or being
released.
12.12 Form and Number of Documents. Each agreement, document, instrument,
or other writing to be furnished to Lender under any provision of this Agreement must be in form
and substance and in such number of counterparts as may be reasonably satisfactory to Lender and
its counsel.
12.13 Multiple Counterparts. This Agreement has been executed in a number
of identical counterparts, each of which constitutes an original and all of which constitute,
collectively, one agreement; but in making proof of this Agreement, it shall not be necessary to
produce or account for more than one such counterpart. Delivery of an executed counterpart of a
signature page of this
FRANCHISEE FINANCING AGREEMENT
Page 18
Agreement by telecopy or electronic mail shall be effective as delivery of a manually executed
counterpart of this Agreement.
12.14 Lender’s Consent or Approval. Except where otherwise expressly
provided in the Loan Documents, in any instance where the approval, consent or the exercise of
judgment of Lender is required, the granting or denial of such approval or consent and the exercise
of such judgment shall be (a) within the reasonable discretion of Lender, and (b) deemed to have
been given only by a specific writing intended for the purpose and executed by Lender. Each
provision for consent, approval, inspection, review, or verification by Lender is for Lender’s own
purposes and benefit only.
12.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF
LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
SECTION 13. NOTICE OF FINAL AGREEMENT
THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of Page Intentionally Blank; Signatures Begin on Next Page]
FRANCHISEE FINANCING AGREEMENT
Page 19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first
above written.
| ADMINISTRATOR: COLORTYME FINANCE, INC. |
||||
| By: | /s/ Xxxxxx X. Xxxxx | |||
| Name: | Xxxxxx X. Xxxxx | |||
| Title: | President & CEO | |||
FRANCHISEE FINANCING AGREEMENT
Page 20
| LENDER: CITIBANK, N.A. |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Xxxxx X. Xxxxxxx | ||||
| Vice President | ||||
FRANCHISEE FINANCING AGREEMENT
Page 21
LIST OF EXHIBITS
A
|
Loan Notice | § 2.1 | |
B
|
Form of Revolving Note | § 2.1(c) |
FRANCHISEE FINANCING AGREEMENT
Page 22
EXHIBIT A
LOAN NOTICE
(from ColorTyme Finance, Inc. to Lender)
LOAN NOTICE
(from ColorTyme Finance, Inc. to Lender)
Reference is made to (i) that certain Franchisee Financing Agreement between ColorTyme
Finance, Inc. and Citibank, N.A. dated as of August 2, 2010 (together with all amendments and
modifications, if any, from time to time made thereto, the “Agreement”) and (ii) Section 2.4 of
each Note, pursuant to which Administrator is authorized, on behalf of the Borrowers, to request
Loans. The terms used herein shall have the same meanings as provided therefor in the Agreement
unless the context hereof otherwise requires or provides. This notice may only be delivered by
Administrator to Lender. Lender will not accept any loan notice from a Borrower.
| A. | GENERAL. |
| 1. | Date of proposed Loans | |||||||
| 2. | Aggregate amount of Loans requested. | |||||||
| 3. | Administrator hereby certifies that all conditions precedent specified by the Agreement for these Loans have been complied with in all respects. | |||||||
| 4. | Attached hereto is a schedule evidencing the Borrowers requesting Loans and the requested Loan amounts. | |||||||
| B. | AVAILABILITY. |
| 1. | Enter: Program Amount | $25,000,000 | ||||||||
| 2. | Enter: Aggregate Revolving Loan Principal Debt outstanding as of this date. | |||||||||
| 3. | Excess (deficit) available for Loans (subtract line B2 from line B1). | |||||||||
Administrator hereby certifies that on the date hereof the representations and warranties
contained the Agreement are true in all material respects as if made on the date hereof, except to
the extent such representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all material respects
on and as of such earlier date and no Event of Default or Potential Default exists and is
continuing.
Dated , 2010.
| COLORTYME FINANCE, INC. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
EXHIBIT A — Solo Page
EXHIBIT B
FORM OF REVOLVING NOTE
FORM OF REVOLVING NOTE
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