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EXHIBIT 10(a)
EXECUTION COUNTERPART
LOAN FACILITY AGREEMENT
AND GUARANTY
by and among
XXXXX RENTS, INC.,
SUNTRUST BANK, ATLANTA, as Servicer
and
EACH OF THE PARTICIPANTS PARTY HERETO
Dated as of January 20, 1998
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LOAN FACILITY AGREEMENT AND GUARANTY
Table of Contents
Page
I. DEFINITIONS.........................................................................................2
1.1 Definitions............................................................................2
Adjusted LIBO Rate.....................................................................2
Advance................................................................................2
Affiliate..............................................................................2
Agreement..............................................................................2
Assignment and Acceptance..............................................................2
Bankruptcy Code........................................................................3
Borrower...............................................................................3
Borrower Rate..........................................................................3
Borrower Status Report.................................................................3
Business Day...........................................................................3
Cash Collateral Account................................................................3
Change in Control......................................................................3
Change in Control Date.................................................................3
Closing Date...........................................................................3
Collateral.............................................................................3
Collateral Agreement...................................................................4
Commitments............................................................................4
Commitment Fee.........................................................................4
Consolidated Companies.................................................................4
Consolidated Net Worth.................................................................4
Credit Event...........................................................................4
Credit Parties.........................................................................4
Defaulted Borrower.....................................................................4
Defaulted Loan.........................................................................4
Dollar" and "U.S. Dollar" and the sign "$..............................................4
Effective Date.........................................................................4
Eligible Assignee......................................................................4
Environmental Laws.....................................................................4
ERISA..................................................................................5
ERISA Affiliate........................................................................5
Executive Officer......................................................................5
Existing Facility Agreement............................................................5
Existing Loan Agreement................................................................5
Facility...............................................................................5
Facility Fee...........................................................................5
Federal Funds Rate.....................................................................5
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Fee Letter.............................................................................6
Final Termination Date.................................................................6
Financing Statement....................................................................6
Franchise Agreement....................................................................6
Franchisee Borrower....................................................................6
Franchisee Commitment..................................................................6
Franchisee Loan........................................................................6
Franchisee Loan Agreement..............................................................6
Franchisee Loan Program................................................................6
Franchisee Master Note.................................................................6
Funded Debt............................................................................7
Funded Debt Ratio......................................................................7
Funded Franchisee Participant's Interest...............................................7
Funded Qualified Franchisee Participant's Interest.....................................7
Funded Participant's Interest..........................................................7
Funding Approval Notice................................................................7
GAAP...................................................................................7
Guaranteed Obligations.................................................................7
Guarantors.............................................................................8
Guaranty Agreement.....................................................................8
Hazardous Substances...................................................................8
LIBOR..................................................................................8
Lien...................................................................................8
Loan...................................................................................8
Loan Commitment........................................................................8
Loan Agreement.........................................................................9
Loan Default...........................................................................9
Loan Documents.........................................................................9
Loan Indebtedness......................................................................9
Loan Payment Default...................................................................9
Loan Term..............................................................................9
Xxxxxxxxxx Family......................................................................9
Margin Regulations.....................................................................9
Master Note............................................................................9
Materially Adverse Effect..............................................................9
Maturity Date.........................................................................10
Maximum Amount........................................................................10
Maximum Commitment Amount.............................................................10
Maximum Qualified Franchisee Recourse Amount..........................................10
Minimum Purchase Price................................................................10
Monthly Deposit Amount................................................................10
Multiemployer Plan....................................................................10
Operative Documents...................................................................10
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Participant...........................................................................10
Participating Commitment..............................................................10
Participant Funding...................................................................11
Participant's Interest................................................................11
Participant's Unused Commitment.......................................................11
Participation Certificate.............................................................11
Payment Date..........................................................................11
Payment Period........................................................................11
PBGC..................................................................................11
Person................................................................................11
Personal Guaranty.....................................................................11
Plan..................................................................................11
Pro Rata Share........................................................................12
Qualified Franchisee..................................................................12
Qualified Franchisee Borrower.........................................................12
Qualified Franchisee Borrowing Base...................................................12
Qualified Franchisee Commitment.......................................................12
Qualified Franchisee Loan.............................................................12
Qualified Franchisee Loan Agreement...................................................12
Qualified Franchisee Master Note......................................................12
Quarterly Date........................................................................12
Regulation D..........................................................................12
Release...............................................................................13
Remedial Action.......................................................................13
Rental Revenue........................................................................13
Rental/Purchase Contract..............................................................13
Reportable Event......................................................................13
Required Participants.................................................................13
Requirement of Law....................................................................13
Response Period.......................................................................13
Reuters Screen........................................................................14
Servicing Agreement...................................................................14
Servicing Fee.........................................................................14
Servicing Report......................................................................14
Servicer..............................................................................14
Sponsor's Fee.........................................................................14
Spousal Consent.......................................................................14
Subordinated Debt.....................................................................14
Subsidiary............................................................................14
Swing Line Advances...................................................................14
Synthetic Lease Documents.............................................................14
Tax Code..............................................................................15
Taxes.................................................................................15
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Telerate..............................................................................15
Unmatured Credit Event................................................................15
Voting Stock..........................................................................15
1.2 Accounting Terms and Determination....................................................15
1.3 Other Definitional Terms..............................................................15
1.4 Exhibits and Schedules................................................................15
II. LOAN FACILITY.....................................................................................16
2.1 Establishment of Commitments; Terms of Loans..........................................16
2.2 Conveyance of Participant's Interest..................................................18
2.3 Funding of Advances; Swing Line; Funding of Participant's
Interest in Loans.....................................................................19
2.4 Facility Fee..........................................................................21
2.5 Commitment Fees.......................................................................21
2.6 Interest on Funded Participant's Interest.............................................22
2.7 Default Interest......................................................................23
2.8 Voluntary Reduction of the Unutilized Commitment .....................................23
2.9 Extension of Commitments..............................................................23
2.10 Wind-Down Event.......................................................................25
2.11 Reserve Requirements; Change in Circumstances; Change in
Lending Offices.......................................................................25
2.12 Pro Rata Treatment....................................................................27
2.13 Payments..............................................................................27
2.14 Sharing of Setoffs....................................................................27
III. SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF
PAYMENTS................................................................................................28
3.1 Servicer's Obligations with Respect to Loans; Collateral; Non-
Recourse..............................................................................28
3.2 Application of Payments...............................................................29
3.3 Servicing Report and Borrower Status Report...........................................31
IV. LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND.......................................................32
4.1 Notice Of Loan Default................................................................32
4.2 Waiver or Cure By The Sponsor.........................................................32
4.3 Defaulted Loan Guaranty Demand........................................................33
4.4 No Waiver or Cure Available...........................................................33
V. REPRESENTATIONS AND WARRANTIES.....................................................................34
5.1 Organization and Qualification........................................................34
5.2 Sponsor's Powers......................................................................34
5.3 Enforceability of Agreement and Other Operative Documents.............................34
5.4 Consent...............................................................................34
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5.5 Statutes, Judgments...................................................................35
5.6 Financial Statements..................................................................35
5.7 Actions Pending.......................................................................35
5.8 Outstanding Debt......................................................................35
5.9 Title to Properties...................................................................36
5.10 Taxes.................................................................................36
5.11 Regulation U, Etc.....................................................................36
5.12 No Credit Event; Unmatured Credit Event or Change of Control..........................36
5.13 ERISA.................................................................................36
5.14 Pollution and Environmental Control...................................................37
5.15 Possession of Franchises, Licenses, Etc...............................................37
5.16 Contingent Liabilities................................................................37
5.17 Compliance with Laws..................................................................37
5.18 Representations and Warranties with Respect to Specific Loans.........................38
VI. AFFIRMATIVE COVENANTS.............................................................................39
6.1 Financial Statements, Reports and Other Financial Data................................39
6.2 Inspection of Property................................................................40
6.3 Maintenance of Insurance..............................................................40
6.4 Funded Debt Ratio.....................................................................40
6.5 Leverage Ratio........................................................................40
6.6 Fixed Charge Coverage.................................................................41
6.7 Account Verification..................................................................41
6.8 ERISA.................................................................................41
6.9 Payment...............................................................................42
6.10 Notice of Credit Event, Unmatured Credit Event or Change of
Control...............................................................................42
6.11 Corporate Existence...................................................................42
6.12 Compliance with Laws, Etc.............................................................42
6.13 Additional Guarantors.................................................................42
VII. NEGATIVE COVENANTS...............................................................................43
7.1 Liens.................................................................................43
7.2 Minimum Net Worth.....................................................................44
7.3 Loans, Advances, Investments and Contingent Liabilities...............................44
7.4 Sale of Stock and Debt of Subsidiaries................................................45
7.5 Merger and Sale of Assets.............................................................45
7.6 Additional Negative Pledges...........................................................46
VIII. CREDIT EVENTS AND REMEDIES......................................................................46
IX. CHANGE OF CONTROL; CASH COLLATERAL ACCOUNT........................................................49
9.1 Change of Control; Deposit In Cash Collateral Account.................................49
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9.2 Obligations with Respect to Defaulted Loans...........................................50
9.3 Effect of Credit Event Following Change of Control....................................50
9.4 Deposit of Maximum Qualified Franchisee Recourse Amount
Following Credit Event................................................................50
X. GUARANTY...........................................................................................51
10.1 Unconditional Guaranty................................................................51
10.2 Limitation on Guaranty of Franchisee Loans............................................51
10.3 Obligations of Sponsor With Respect to Qualified Franchisee
Loans.................................................................................52
10.4 Continuing Guaranty...................................................................53
10.5 Waivers...............................................................................53
10.6 Additional Actions....................................................................54
10.7 Additional Waivers....................................................................54
10.8 Postponement of Obligations...........................................................55
10.9 Effect on Additional Guaranties.......................................................55
10.10 Reliance on Guaranty and Purchase Obligation; Disclaimer of
Liability.............................................................................55
10.11 Reinstatement of Obligations..........................................................56
10.12 Right to Bring Separate Action........................................................56
10.13 Subordination of Liens................................................................57
10.14 Exercise of Remedies With Respect to Collateral.......................................57
10.15 Rights Of Sponsor Upon Payment; Cooperation By Servicer...............................59
XI. INDEMNIFICATION...................................................................................59
11.1 Indemnification.......................................................................59
11.2 Notice Of Proceedings; Right To Defend................................................60
11.3 Third Party Beneficiaries.............................................................62
XII. SURVIVAL OF LOAN FACILITY........................................................................62
XIII. CONDITIONS PRECEDENT............................................................................62
13.1 Receipt of Documents..................................................................62
XIV. THE SERVICER.....................................................................................63
14.1 Appointment of Servicer as Agent......................................................63
14.2 Nature of Duties of Servicer..........................................................63
14.3 Lack of Reliance on the Servicer......................................................64
14.4 Certain Rights of the Servicer........................................................64
14.5 Reliance by Servicer..................................................................64
14.6 Indemnification of Servicer...........................................................65
14.7 The Servicer in its Individual Capacity...............................................65
14.8 Holders of Participation Certificates.................................................65
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XV. MISCELLANEOUS.....................................................................................66
15.1 Notices...............................................................................66
15.2 Amendments, Etc.......................................................................66
15.3 No Waiver; Remedies Cumulative........................................................67
15.4 Payment of Expenses, Etc..............................................................67
15.5 Right of Setoff.......................................................................68
15.6 Benefit of Agreement; Assignments; Participations.....................................68
15.7 Governing Law; Submission to Jurisdiction.............................................70
15.8 Counterparts..........................................................................71
15.9 Severability..........................................................................71
15.10 Independence of Covenants.............................................................71
15.11 No Joint Venture......................................................................71
15.12 Repurchase Right.....................................................................72
15.13 Effect on Existing Facility Agreement; Execution of New Loan
Documents.............................................................................72
15.14 Confidentiality.......................................................................72
15.15 Headings Descriptive; Entire Agreement................................................73
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EXHIBITS
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Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Franchisee Loan Agreement
Exhibit C - Form of Franchisee Master Note
Exhibit D - Form of Guaranty Agreement
Exhibit E - Form of Participation Certificate
Exhibit F - Form of Qualified Franchisee Loan Agreement
Exhibit G - Form of Qualified Franchisee Master Note
Exhibit H - Form of Servicing Report
Exhibit I - Form of Borrower Status Report
SCHEDULES
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Schedule 5.16 - Existing Contingent Liabilities
Schedule 7.1 - Existing Liens
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LOAN FACILITY AGREEMENT AND GUARANTY
THIS LOAN FACILITY AGREEMENT AND GUARANTY (the "Agreement") made as of
this 20th day of January, 1998, 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, ATLANTA ("STBA") and each of the other lending
institutions listed on the signature pages hereto (STBA, such lenders, together
with any assignees thereof becoming "Participants" pursuant to the terms of this
Agreement, the "Participants") and SUNTRUST BANK, ATLANTA, a banking corporation
organized and existing under the laws of Georgia having its principal office in
Atlanta, Georgia, as Servicer and agent for the Participants (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 wishes to establish a loan
program with the Servicer 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 wishes to establish two separate tranches of such loan
program with one tranche dedicated to more experienced Franchisees and one
tranche available for any Franchisee approved by Sponsor, including Franchisees
participating as of the date of this agreement in that certain loan facility
established by Servicer on behalf of Sponsor pursuant to that certain Loan
Facility Agreement dated as of November 18, 1994 by and between Servicer and
Sponsor (as amended through the date hereof, the "Existing Facility Agreement");
WHEREAS, Servicer is willing to provide such a loan program upon the
terms and conditions set forth herein subject to the agreement of the
Participants to purchase an undivided interest therein;
WHEREAS, the Servicer and the Participants have agreed to make such
lines of credit available to the Franchisees upon the terms and conditions set
forth herein and in the Servicing Agreement, dated as of even date herewith by
and between the Servicer and the Sponsor (as hereafter amended, modified or
supplemented, the "Servicing Agreement"), including, without limitation, (x) the
obligation of the Sponsor to purchase all outstanding loans and loan commitments
upon the occurrence of certain credit events and (y) the limited guaranty
obligations of the Sponsor with respect to the loans, all as more particularly
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 as follows:
1. DEFINITIONS
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):
"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
------------------------------------
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).
"Advance" means a funding of an advance pursuant to the Loan Commitment
of any Borrower.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by, or under common control with, such Person, whether
through the ownership of voting securities, by contract or otherwise. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling", "controlled by", and "under common control with") as
applied to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of that
Person.
"Agreement" means this Loan Facility Agreement and Guaranty as it may
hereafter be amended or modified.
"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.
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"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" means either a Qualified Franchisee Borrower or a Franchisee
Borrower, as the case may be.
"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; provided that, at no time may there be more than two
different Borrower Rates applicable to the Franchisee Loans or more than two
different Borrower Rates applicable to the Qualified Franchisee Loans.
"Borrower Status Report" shall have the meaning set forth in Section
3.3(b) hereof.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in Atlanta, Georgia
or New York, New York and, if the applicable Business Day relates to Adjusted
LIBOR, on which trading is not carried on by and between banks in the London
interbank market.
"Cash Collateral Account" shall have the meaning set forth in Section
9.1.
"Change in Control" shall mean (i) any person or group of persons
(other than the Xxxxxxxxxx Family) (within the meaning of Section 13 or 14 of
the Securities Exchange Act of 1934, as amended) shall have acquired beneficial
ownership (within the meaning of Rule 13d-3 promulgated by the SEC under said
Act) of 50% or more in voting power of the outstanding Voting Stock of the
Sponsor or (ii) members of the Board of Directors of the Sponsor on the date
hereof, plus any additional members of such Board whose nomination for election
or election to such Board is recommended or approved by the then current members
of such Board or by Xxxxxx Xxxxxxx Xxxxxxxxxx, Xx., shall at any time fail to
constitute a majority of such Board.
"Change in Control Date" shall mean a date on which a Change in Control
occurs.
"Closing Date" means, 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.
"Collateral" means property of a Borrower subject to a security
interest or lien which secures Advances outstanding pursuant to a Loan
Commitment, which shall include all accounts receivable, inventory,
Rental/Purchase Contracts and other business assets of the Borrower and all
property and assets of any Personal Guarantor subject to such a security
interest or lien in favor of the Servicer as security for obligations pursuant
to a Personal Guaranty.
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"Collateral Agreement" means 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, the Loan and Security Agreement and
any Personal Guaranties.
"Commitments" means collectively, the Franchisee Commitment and the
Qualified Franchisee Commitment.
"Commitment Fee" shall have the meaning set forth in Section 2.5.
"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 Net Worth" shall mean, as of the date of determination,
the Sponsor's total shareholders' equity, determined on a consolidated basis in
accordance with GAAP.
"Credit Event" shall have the meaning set forth in Article VIII of this
Agreement.
"Credit Parties" shall mean, collectively, each of the Sponsor and the
Guarantors.
"Defaulted Borrower" means a Borrower under a Defaulted Loan.
"Defaulted Loan" means a Loan evidenced by Loan Documents under the
terms of which exist one or more Loan Defaults which 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.
"Effective Date" means the date upon which all conditions precedent to
the effectiveness of this Agreement have been satisfied.
"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 federal, state, local and
applicable foreign statutes and codes or regulations, rules or ordinances
issued, promulgated, or approved thereunder, now or hereafter in effect
(including, without limitation, those with respect to asbestos or asbestos
containing material or exposure to asbestos or asbestos containing material),
relating to pollution
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or protection of the environment and relating to public health and safety,
relating to (i) emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial toxic or hazardous
constituents, substances or wastes, including without limitation, any Hazardous
Substance, petroleum including crude oil or any fraction thereof, any petroleum
product or other waste, chemicals or substances regulated by any Environmental
Law into the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), or (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of any Hazardous Substance, petroleum including
crude oil or any fraction thereof, any petroleum product or other waste,
chemicals or substances regulated by any Environmental Law, and (iii)
underground storage tanks and related piping, and emissions, discharges and
releases or threatened releases therefrom, such Environmental Laws to include,
without limitation (a) the Clean Air Act (42 U.S.C. ss. 7401 et seq.), (b) the
Clean Water Act (33 U.S.C. ss. 1251 et seq.), (c) the Resource Conservation and
Recovery Act (42 U.S.C. ss. 6901 et seq.), (d) the Toxic Substances Control Act
(15 U.S.C. ss. 2601 et seq.), (e) the Comprehensive Environmental Response
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act (42 U.S.C. ss. 9601 et seq.), and (f) all applicable
national and local laws or regulations with respect to environmental control.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time, and any regulations promulgated
thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, each trade or
business (whether or not incorporated) which is a member of a group of which
that Person is a member and which is under common control within the meaning of
the regulations promulgated under Section 414 of the Tax Code.
"Executive Officer" shall mean, with respect to any Person, the
President, Vice Presidents, Chief Financial Officer, Treasurer, Secretary and
any Person holding comparable offices or duties.
"Existing Facility Agreement" shall have the meaning set forth in the
recitals hereof.
"Existing Loan Agreement" shall mean that certain Second Amended and
Restated Revolving Credit and Term Loan Agreement dated as of January 5, 1995,
by and among Sponsor, STBA, individually and as agent, and the other lenders
named therein, as amended, modified or supplemented from time to time.
"Facility" shall mean either the loan facility established pursuant to
the Franchisee Commitment or the loan facility established pursuant to the
Qualified Franchisee Commitment, as the case may be.
"Facility Fee" shall have the meaning set forth in Section 2.4.
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"Federal Funds Rate" shall mean, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of Atlanta, or, if such rate
is not so published for any day that is a Business Day, the average quotations
for the day of such transactions received by the Servicer from three federal
funds brokers of recognized standing selected by it.
"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.
"Final Termination Date" shall mean the date which is ninety (90) days
after the last Maturity Date of the Loans established hereunder.
"Financing Statement" means, with respect to a Loan, a document which
among other things, describes the Borrower 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.
"Franchise Agreement" means the written agreement between Sponsor and a
Franchisee whereby the Franchisee is authorized to establish an "Aaron's Rental
Purchase" franchise.
"Franchisee Borrower" shall mean a Franchisee who is primarily liable
for repayment of a Franchisee Loan as a result of having executed Loan Documents
as maker, or its permitted assignee.
"Franchisee Commitment" shall have the meaning set forth in Section
2.1(a).
"Franchisee Loan" shall mean a loan extended to a Franchisee Borrower
pursuant to the Franchisee Commitment.
"Franchisee Loan Agreement" shall mean a Line of Credit and Security
Agreement setting forth the terms and conditions, as between a Franchisee
Borrower and the Servicer, under which the Servicer has established a Loan
Commitment to make Advances to the Franchisee Borrower pursuant to the
Franchisee Commitment, substantially in the form of Exhibit B.
"Franchisee Loan Program" shall mean that 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" (as such term is defined herein) executed by the
Consolidated Companies in connection herewith and therewith.
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"Franchisee Master Note" shall mean that certain Master Note, executed
by a Franchisee Borrower in favor of the Servicer, evidencing such Franchisee
Borrower's obligation to repay all Advances made to it pursuant to a Franchisee
Loan Commitment, substantially in the form of Exhibit C.
"Funded Debt" shall mean all indebtedness for money borrowed, plus
purchase money mortgages, capitalized leases, conditional sales contracts and
similar title retention debt instruments (including any current maturities of
such debt) which by its terms matures more than one year from the date of the
calculation hereof and/or which is renewable or extendable for such a period.
"Funded Debt Ratio" shall mean, as to the Sponsor for any period, a
ratio of (i) its Funded Debt to (ii) the sum of its net income before income
taxes, plus interest expense for such period.
"Funded Franchisee Participant's Interest" means the aggregate
outstanding amount of Advances made by a Participant hereunder with respect to
the Franchisee Loans, and shall include, with respect to STBA, the aggregate
outstanding amount of Swing Line Advances made with respect to Franchisee Loans.
"Funded Qualified Franchisee Participant's Interest" means the
aggregate outstanding amount of Advances made by a Participant hereunder with
respect to the Qualified Franchisee Loans, and shall include, with respect to
STBA, the aggregate outstanding amount of Swing Line Advances made with respect
to Qualified Franchisee Loans.
"Funded Participant's Interest" means, with respect to any Participant,
the sum of such Participant's Funded Franchisee Participant's Interest plus such
Participant's Funded Qualified Franchisee's Participant's Interest.
"Funding Approval Notice" means 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 set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or, if no such
statements are promulgated, then such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Guaranteed Obligations" means the aggregate amount of the Loan
Indebtedness outstanding under the 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
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proceeding under federal bankruptcy laws, (ii) all fees, expenses, and amounts
payable by any Borrower for reimbursement or indemnification under the terms of
the Loan Agreement or any other Loan Document 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).
"Guarantors" shall mean collectively, Xxxxx Investment Company 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" means 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 D, as the same may be amended, restated or
supplemented from time to time
"Hazardous Substances" shall have the meaning assigned to that term in
the Comprehensive Environmental Response Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Acts of 1986.
"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 Telerate Page 3750 as of 11:00 A.M.
(Atlanta, Georgia time) on such date. If two or more of such rates appear on
Telerate Page 3750, the rate for that Payment Period shall be the arithmetic
mean of such rates. If the foregoing rate is unavailable from Telerate Page 3750
for any reason, then such rate shall be determined by the Servicer from the
Reuters Screen LIBO Page or, if such rate is also unavailable on such service,
then on any other interest rate reporting service of recognized standing
designated in writing by the Servicer to Sponsor; in any such case rounded, if
necessary, to the next higher 1/100 of 1.0%, if the rate is not such a multiple.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien, charge, hypothecation, assignment, deposit arrangement, title retention,
preferential property right, trust or other arrangement having the practical
effect of the foregoing (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
thereof, including any lease or similar arrangement with a public authority
executed in connection with the issuance of industrial revenue bonds or
pollution control revenue bonds, and the filing of or agreements to give any
financing statement under the Uniform Commercial Code of any jurisdiction).
"Loan" means either a Franchisee Loan or a Qualified Franchisee Loan,
as the case may be.
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"Loan Commitment" means the committed amount of the loan facility
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
Franchisee Loan Commitment or a Qualified Franchisee Loan Commitment.
"Loan Agreement" means either a Franchisee Loan Agreement or a
Qualified Franchisee Loan Agreement as the case may be.
"Loan Default" means an occurrence with respect to a Loan which is
defined by the applicable Loan Documents to be an event of default (including
but not limited to a Loan Payment Default).
"Loan Documents" means the Loan Agreement, the Master Note, any
Personal Guaranty, any Spousal Consent, the Collateral Agreements, any other
documents relating to the 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" means all amounts due and payable by a Borrower
under the terms of the Loan Documents for a given Loan, 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" means 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" means the prescribed term of the Loan Commitment to any
Borrower as documented in the applicable Loan Documents and any term out period
thereafter, such term not to exceed, (x) in the case of Franchisee Loan
Commitment, one (1) year subject to extension in accordance with the terms of
the applicable Franchisee Loan Agreement, plus an additional 18 months
thereafter and (y) in the case of a Qualified 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 G, 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.
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"Master Note" means either a Franchisee Master Note or a Qualified
Franchisee Master Note, as the case may be.
"Materially Adverse Effect" shall mean any materially adverse change in
(i) the business, results of operations, financial condition, assets or
prospects of the Sponsor and its Subsidiaries, taken as a whole, (ii) the
ability of the Sponsor 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 Agreement.
"Maturity Date" means, 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
hereof.
"Maximum Commitment Amount" shall mean, $40,000,000, as such amount may
be reduced pursuant to Section 2.8, Section 2.9 or Section 15.2 hereof.
"Maximum Qualified Franchisee Recourse Amount" shall mean $7,500,000,
as reduced by any amounts paid by Sponsor pursuant to Section 10.3(c) hereof.
"Merchandise" means goods distributed or sold to Franchisees through
Sponsor.
"Minimum Purchase Price" shall mean, with respect to any Qualified
Franchisee Loan, the lesser of (x) the outstanding Loan Indebtedness thereof and
(y) the sum of (i) Qualified Franchisee Borrowing Base in effect on the date of
the occurrence of the relevant Loan Default, or if greater, during the month
preceding the date of the occurrence of the relevant Loan Default, plus (ii) all
advances made between the date that such borrowing base is reported to the
Servicer by the Sponsor and the date which is two Business Days thereafter.
"Monthly Deposit Amount" shall have the meaning set forth in Section
9.1 hereof.
"Multiemployer Plan" shall have the meaning set forth in Section
4001(a)(3) of ERISA.
"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 Lender in accordance
with the terms hereof.
"Operative Documents" shall mean this Agreement, the Guaranty
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.
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"Participant" shall mean STBA, 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 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
shall be deemed to be its Pro Rata Share of the aggregate Loan Commitments.
"Participant Funding" shall mean a funding by the Participants of their
Pro Rata Share of 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
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 E attached
hereto, evidencing such Participant's ownership interest conveyed hereunder.
"Payment Date" means the 20th 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.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, trust or other entity, or any government or
political subdivision or agency, department or instrumentality thereof.
"Personal Guaranty" shall mean any guaranty from a principal of a
Borrower substantially in the form attached to the Servicing Agreement.
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"Plan" shall mean any "employee benefit plan" (as defined in Section
3(3) f ERISA), including, but not limited to, any defined benefit pension plan,
profit sharing plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or any plan,
fund, program, arrangement or practice providing for medical (including
post-retirement medical), hospitalization, accident, sickness, disability, or
life insurance benefits.
"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.
"Qualified Franchisee" shall mean a Franchisee which (x) has been a
Franchisee 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.
"Qualified Franchisee Borrower" shall mean a Qualified Franchisee who
is primarily liable for repayment of a Qualified Franchisee Loan as a result of
having executed Loan Documents as maker, or its permitted assignee.
"Qualified Franchisee Borrowing Base" shall mean, with respect to each
Qualified Franchisee Loan, on any date of determination, an amount equal to 5.5
multiplied by the sum of (x) the average monthly Rental Revenue for the three
most recently ended calendar months from any and all franchisee stores operated
by the relevant Borrower where at least 12 calendar months have elapsed since
the Opening Date of each such store, plus (y) with respect to all other
franchisee stores of such Borrower, the Rental Revenue from the most recently
ended calendar month, as reported to Servicer by Sponsor pursuant to Section
2.10 of the Servicing Agreement.
"Qualified Franchisee Commitment" shall have the meaning set forth in
Section 2.1(b).
"Qualified Franchisee Loan" shall mean a loan extended to a Qualified
Franchisee Borrower pursuant to the Qualified Franchisee Commitment.
"Qualified Franchisee Loan Agreement" shall mean a Line of Credit and
Security Agreement setting forth the terms and conditions, as between a
Qualified Franchisee Borrower and the Servicer, under which the Servicer has
established a Loan Commitment to make Advances to the Qualified Franchisee
Borrower pursuant to the Qualified Franchisee Commitment, substantially in the
form of Exhibit F.
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"Qualified Franchisee Master Note" shall mean that certain Master Note,
executed by a Qualified Franchisee Borrower in favor of the Servicer, evidencing
such Qualified Franchisee Borrower's obligation to repay all Advances made to it
pursuant to a Qualified Franchisee Loan Commitment, substantially in the form of
Exhibit G.
"Quarterly Date" shall have the meaning set forth in Section 2.5.
"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, pumping,
injection, deposit, disposal (including the abandonment or discarding of
barrels, containers, or other closed receptacles), discharge, dispersal,
leaching or migration into the indoor or outdoor Environment or into or out of
any property, including the movement of Hazardous Substances through or in the
air, soil, surface water, ground water or property.
"Remedial Action" means all actions reasonably necessary, whether
voluntary or involuntary, to (a) clean up, remove, treat or in any other way
adjust Hazardous Substances in the indoor or outdoor Environment; (b) prevent
the Release or further movement of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor Environment; or (c) perform remedial studies, investigations,
restoration and post-remedial studies, investigations and monitoring on, about
or in the Property, assets, equipment or facilities
"Rental Revenue" means, 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 retail sales proceeds and sales taxes.
"Rental/Purchase Contract" means a contract between a Franchisee and a
customer to rent Merchandise (and which may included purchase options).
"Reportable Event" shall have the meaning assigned to such term in
ERISA.
"Required Participants" shall mean at any time, the Participants
holding at least 66 2/3% of the sum of (x) aggregate Funded Participant's
Interests, plus (y) the Participant's Unused Commitments, or, following the
termination of the Commitments and the Loan Commitments, the Participants
holding at least 66 2/3% of the aggregate outstanding Funded Participant's
Interests at such time.
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"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" means, with respect to Franchisee Loans, a period of
seventy (70) days commencing on the day next succeeding the day on which the
Sponsor receives a notice from the Servicer of a Loan Default, and, with respect
to Qualified Franchisee Loans, 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 of a Loan Default; provided that, no Response Period shall extend
beyond the Final Termination Date.
"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).
"Servicing Agreement" shall have the meaning set forth in the recitals
hereof.
"Servicing Fee" shall mean the fee payable to the Servicer pursuant to
the terms of the Servicing Agreement.
"Servicing Report" shall have the meaning set forth in Section 3.3.
"Servicer" shall mean SunTrust Bank, Atlanta and its successors and
assigns.
"Sponsor's Fee" shall have the meaning set forth in the Servicing
Agreement.
"Spousal Consent" shall mean a consent of the spouse of a Person
executing a Personal Guaranty, substantially in the form attached to the
Servicing Agreement.
"Subordinated Debt" shall have the meaning set forth in Section 10.8.
"Subsidiary" shall mean, with respect to any Person, any corporation or
other entity (including, without limitation, partnerships, joint ventures, and
associations) regardless of its jurisdiction of organization or formation, at
least a majority of the total combined voting power of all classes of voting
stock or other ownership interests of which shall, at the time as of which any
determination is being made, be owned by such Person, either directly or
indirectly through one or more other Subsidiaries.
"Swing Line Advances" shall have the meaning set forth in Section 2.3
hereof.
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"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, Atlanta and SouthTrust Bank of
Georgia, N.A., as lenders, and SunTrust Bank, Atlanta, 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.
"Tax Code" shall mean the Internal Revenue Code of 1986, as amended and
in effect from time to time.
"Taxes" shall mean any present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise taxes now
or hereafter imposed or levied by the United States, or any state, local or
foreign government or by any department, agency or other political subdivision
or taxing authority thereof or therein and all interest, penalties, additions to
tax and similar liabilities with respect thereto.
"Telerate" shall mean, when used in connection with any designated page
and LIBOR, the display page so designated on the Dow Xxxxx Telerate Service (or
such other page as may replace that page on that service for the purpose of
displaying rates comparable to LIBOR).
"Unmatured Credit Event" shall mean any condition or event which, with
notice or the passage of time or both, would constitute a Credit Event.
"Voting Stock" shall mean securities of any class or classes, the
holders of which are entitled to elect all of the corporate directors (or
Persons performing similar functions).
1.2 Accounting Terms and Determination.
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein, all accounting determinations hereunder
shall be made, all financial statements required to be delivered
hereunder shall be prepared, and all financial records shall be
maintained in accordance with, GAAP.
1.3 Other Definitional Terms.
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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.
1.4 Exhibits and Schedules.
All Exhibits and Schedules attached hereto are by reference made a part
hereof.
2. LOAN FACILITY
2.1 Establishment of Commitments; Terms of Loans.
(1) 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 Franchisee Loan Commitments and
to make Advances thereunder to such Franchisees as may be designated by
the Sponsor in its Funding Approval Notices during a period commencing
on the date hereof and ending on January 19, 1999 (as such period may
be extended for one or more subsequent 364- day periods pursuant to
Section 2.9 hereof, the "Commitment Termination Date") in an aggregate
committed amount at any one time outstanding not to exceed FORTY
MILLION AND NO/100 DOLLARS ($40,000,000) (the "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.
(2) Qualified 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 Qualified
Franchisee Loan Commitments and to make Advances thereunder to such
Qualified 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 TWENTY-FIVE MILLION
AND NO/100 DOLLARS ($25,000,000) (the "Qualified 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
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pursuant to the Commitments, or, following the termination of any such
Loan Commitment, Advances outstanding thereunder, exceed the Maximum
Commitment Amount.
(3) Authorization of Loan Commitments Pursuant to Franchisee
Commitment; Loan Terms. Within the limits of the 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 a Loan Commitment pursuant to the Franchisee Commitment in
favor of a Franchisee who meets the credit criteria established by the
Sponsor. The amount of each Loan Commitment shall be determined by the
Sponsor but shall not be less than $100,000 for any Franchisee.
Pursuant to the Loan Commitment, the Servicer shall agree to make
Advances to each Borrower thereunder. Each 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 Loan when all principal and interest shall
be due and payable in full. Each Loan may be prepaid in full or in part
on any Business Day, without premium or penalty. Each Loan Commitment
shall be evidenced by a Franchisee Loan Agreement and Franchisee Note
substantially in the forms attached hereto. The Loan Term of each
Franchisee Loan Commitment shall be, initially, one year, but shall
automatically renew unless terminated by ninety (90) days prior written
notice by Servicer 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; provided that the amounts outstanding
thereunder shall be allowed to term out over an additional 18 month
period as provided below. The proceeds of each advance made pursuant to
the Franchisee Loan Commitment shall be used solely to purchase
inventory. At the end of each month, the aggregate advances made to
each Franchisee Borrower during such month (net of any prepayments)
shall be amortized (in accordance with a straight-line amortization
schedule) over an 18 month period. In the event that the Franchisee
Loan Commitment of such Franchisee Borrower is terminated by the
Servicer as provided above, the Franchisee Borrower shall continue to
amortize all outstanding advances over the 18 month amortization period
provided above (in accordance with a straight-line amortization
schedule). In the event that the Franchisee Borrower terminates the
Franchisee Loan Commitment upon ninety (90) days notice to the
Servicer, however, all amounts advanced to such Franchisee Borrower
shall be due and payable in full on the termination date, together with
all accrued and unpaid interest thereon. With respect to each
Franchisee Loan Agreement executed after the Effective Date (other than
a Franchisee Loan Agreement executed by a Borrower under the Existing
Facility Agreement), the Borrower shall agree to pay a commitment fee
on the unused Loan Commitment in an amount to be determined by the
Sponsor but in any event not to exceed 0.5% per annum, such commitment
fee to be paid quarterly, in arrears.
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(4) Authorization of Loan Commitments Pursuant to Qualified
Franchisee Commitment; Loan Terms. Within the limits of the Qualified
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 a Loan Commitment pursuant to the
Qualified Franchisee Commitment in favor of a Qualified Franchisee who
meets the credit criteria established by the Sponsor. The amount of
each Loan Commitment shall be determined by the Sponsor but shall not
be less than $100,000 for any Qualified Franchisee and shall not be
greater than $3,500,000. Pursuant to the Loan Commitment, the Servicer
shall agree to make Advances to the Borrower thereunder. Each 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 Loan when all
principal and interest shall be due and payable in full. Each Loan may
be prepaid in full or in part on any Business Day, without premium or
penalty. The Loan Term of each Qualified Franchisee Loan shall not
exceed four years. Each Qualified Franchisee Borrower shall agree to
pay a commitment fee on the unused Loan Commitment in an amount to be
determined by the Sponsor but in any event not to exceed 0.5% per
annum, such commitment fee to be paid quarterly, in arrears. At no
time, except as otherwise provided in the form of Qualified Franchisee
Loan Agreement attached hereto, shall the aggregate outstanding
principal amount of any and all Qualified Franchisee Loans made to any
Borrower exceed the Qualified Franchisee Borrowing Base of such
Borrower as in effect at such time.
(5) 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:
(2) this Agreement and each of the other Operative
Documents shall be in full force and effect;
(3) the representations and warranties of the
Sponsor contained in Article 5 hereof 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;
(4) the Servicer shall have received a Funding
Approval Notice from the Sponsor authorizing such Loan Commitment;
(5) all precedents and conditions to the Loan
Commitment specified in the Servicing Agreement, together with such
additional precedents and conditions 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
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(6) no Credit Event, Unmatured Credit Event, Change
of Control or Wind-Down Event shall have occurred and be continuing.
2.2 Conveyance of Participant's Interest.
(1) 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, (iii)
the 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.
(2) 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
the amount of the relevant Participant's Participating Commitment, and
the Funded Participant's Interest outstanding thereunder shall bear
interest as hereinafter set forth and shall be payable as hereinafter
set forth.
(3) 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 an aggregate amount at any one
outstanding not to exceed such Participant's Participating Commitment
(subject to each Participant's obligations pursuant to Section 2.3(d)
hereof).
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 pursuant to the terms of the Loan Documents
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 such Advance or 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
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of the Advances on such date, the Servicer shall make such Advance
(each, a "Swing Line Advance") to the Borrower for the account of the
Servicer; provided that, the aggregate amount of Swing Line Advances
outstanding on any date shall not exceed $5,000,000 and further
provided that 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 aggregate Swing Line Advances outstanding
hereunder would exceed $5,000,000, 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 Loans outstanding to be funded in
connection with such Participant Funding.
(c) Each Participant shall make its Participant Funding in the
amount of its Pro Rata Share 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 which the Participant has failed to pay to the Servicer. If
such Participant
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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, (iv) any adverse change in the condition (financial
or otherwise) of the Sponsor or 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 Commitment, Loan
Commitment 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 as long as the aggregate amount of such Swing Line Advances
does not exceed $2,000,000.
2.4 Facility Fee.
On the Effective Date, the Sponsor shall pay to the Servicer,
for the ratable benefit of the Participants (other than STBA), a
facility fee (the "Facility Fee") equal to one quarter of one percent
(0.25%) of the Participating Commitment of each such Participant and
the Servicer shall remit such amount to the Participants on such date
if received by 2:00 p.m. (Atlanta, Georgia time) and if received after
such time, on the next Business Day.
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2.5 Commitment Fees.
(1) 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") with respect to the
average daily amount of each 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, equal to 0.125% per annum, such Commitment
Fee to be payable in arrears on each third Payment Date (a "Quarterly
Date") commencing on April 20, 1998, for the preceding Payment Period,
calculated on the basis of a 360-day year and the actual number of days
elapsed.
(2) 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.
(3) 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 the 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 Loan Payment Default such amount shall be deemed
to have satisfied Sponsor's obligation to cure such Loan Payment
Default hereunder.
2.6 Interest on Funded Participant's Interest.
(a) Funded Franchisee Participant's Interest. Subject to the
provisions of Section 2.7, each Participant's Funded 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 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 an additional one and one quarter of one percent
(1.25%) per annum.
(b) Funded Qualified Franchisee Participant's Interest.
Subject to the provisions of Section 2.7, each Participant's Funded
Qualified Franchisee Participant's Interest shall bear interest
(computed on the basis of the actual number of days elapsed
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over a year of 360 days) at rate per annum equal to the Adjusted LIBO
Rate for the Payment Period in which such Funded Qualified 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 an additional
one and one half of one percent (1.50%) per annum.
(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 other amounts received by the Servicer hereunder.
(d) Sponsor's Obligation. In the event that the interest
received by the Servicer 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.
2.7 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 2.6 for each
Facility plus an additional one percent (1.0%) per annum.
2.8 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
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termination shall apply to proportionately and permanently reduce the
Participating Commitments of each of the Participants, (ii) any partial
termination pursuant to this Section 2.8 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.
2.9 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 amount
of the Participating Commitments of the non-extending Participants
("Non-Consenting Participants") and such 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
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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) 85% 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 shall become due and payable, together with all interest
accrued thereon and all other amounts owed to such Non-Consenting
Participant hereunder, on the Existing Date applicable to such
Participant without giving effect to any extension of the Commitment
Termination Date.
2.10 Wind-Down Event.
In the event that (i) the Commitments are not extended for any reason
and the Commitment Termination Date occurs or (ii) the Maximum
Qualified Franchisee Recourse Amount is, at any date of determination,
less than $6,500,000 (each, a "Wind Down Event"), 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 within thirty (30) days thereafter, give
notice to each of the Franchisee Borrowers terminating the Franchisee
Loan Commitments as of the date which is ninety (90) days after such
notice, subject, in each case, to the right of the Franchisee Borrower
to term out the amounts outstanding thereunder as set forth in Section
2.1(c); provided that, in the case of a Wind Down Event described in
clause (ii) above, the Sponsor may continue to establish new Loan
Commitments pursuant to the Franchisee Commitment and the Servicer
shall not terminate the Franchisee Loan Commitments as provided above.
The occurrence of a Wind Down Event shall not affect the obligation of
(x) the Servicer to make Advances pursuant to existing Loan
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Commitments, (y) the Participants to fund their Participant's Interest
as provided herein, or (z) the Credit Parties under the Operative
Documents.
2.11 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.
(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
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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 2.11(c) shall affect or postpone any of the obligations
of the Sponsor or any right of any Participant provided hereunder.
2.12 Pro Rata Treatment.
Subject to the application of payments pursuant to Article III 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.
2.13 Payments.
(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.
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(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.
2.14 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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3. SERVICER'S SERVICING OBLIGATIONS; DISTRIBUTION OF PAYMENTS
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 in which no participations are allocated and in accordance with
the terms of the Servicing Agreement and Section 10.14 hereto.
(b) The forms of Loan Agreement and Master Note used by the
Servicer as documentation for each Loan 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
hereof.
(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 III). The Participants acknowledge and agree that
the Sponsor has the right to release or modify the terms of, any
Personal Guaranty.
(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 10.14 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 with the Qualified Franchisee Borrowing Base for each
Qualified 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 ACTS 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.
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 2.5 hereof, 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 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 STBA'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 STBA's Funded
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Participant's Interest without a corresponding reduction of the other
Participant's Funded Participant's Interest, STBA 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.
3.3 Servicing Report and Borrower Status Report.
(a) On each Payment Date, the Servicer shall telecopy to the Sponsor
and each Participant a servicing report in the form of Exhibit H
attached hereto (the "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;
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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;
d. each Loan which is past due (including the past due amount
and the number of days past due) under each Facility;
e. if a Change of Control has occurred, the amount on deposit
in the Cash Collateral Account; and
f. the amount of the Maximum Qualified Franchisee Recourse
Amount as of such date.
(b) By no later than thirty (30) days after the end of each calendar
quarter, the Servicer shall provide to the Sponsor and each Participant
a borrower status report in the form of Exhibit I hereto (the "Borrower
Status Report") setting forth the information required thereby.
4. LOAN DEFAULT; RIGHT TO MAKE GUARANTY DEMAND
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 in accordance with the
terms of the Servicing Agreement.
4.2 Waiver or Cure By The Sponsor.
Unless a Credit Event, an Unmatured Credit Event or a Change of Control
has occurred and is continuing, within the Response Period, the Sponsor
shall be entitled (but not obligated) to, (a) in the case of a Loan
Default, waive such Loan Default by sending to the Servicer a Default
Waiver Request, except as set forth in Section 4.4; provided however,
that the Sponsor shall not request a waiver of (A) more than three (3)
Loan Defaults in any one year period with respect to any Loan, (B) a
Loan Default resulting from the failure of a Borrower to comply with
the financial covenants set forth in the applicable Loan Agreement if
the Sponsor has previously waived such compliance for the preceding
fiscal quarter of such Borrower, or (C) compliance by any Qualified
Franchisee Borrower with the applicable Qualified Franchisee Borrowing
Base (except to the extent that the Sponsor may cure a Loan Payment
Default caused by a failure to make any required prepayment as a result
of an overadvance to the extent permitted by subsection (b) of this
Section 4.2) or, (b) in the case of a Loan Payment Default, to waive
and cure
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such 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 Qualified Loan
Agreement); provided, however, that Sponsor shall not waive and cure
more than two (2) consecutive Loan Payment Defaults nor waive and cure
more than a total of four (4) Loan Payment Defaults in any four year
period, with respect to any Loan. During a Response Period, the
Servicer shall refrain 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. If the
Sponsor waives any Loan Default or waives and cures any Loan Payment
Default (subject to Section 4.4) prior to the expiration of a Response
Period, then as to each Loan Default so waived, the Defaulted
Borrower's and the Servicer's respective rights and obligations under
the Loan Documents shall be restored to the same status as if such
waived Loan Default never occurred. In addition, if the Sponsor takes
over the operation of the business of a Qualified Franchisee Borrower
as provided in Article X, the Servicer shall refrain from exercising
remedies against such Borrower for as long as the Sponsor is complying
with Section 10.3 hereof, unless a Credit Event has occurred and is
continuing or the Required Participants otherwise agree.
4.3 Defaulted Loan Guaranty Demand.
(1) In the event that following the end of a Response Period,
a Loan Payment Default is not cured or in the event that any other Loan
Default is not then waived, the Servicer shall have the right at any
time thereafter, to demand that Sponsor comply with its obligations
with respect to such Defaulted Loan set forth in Article X hereof.
(2) In the event that the Sponsor is not obligated to repay
the Loan Indebtedness with respect to a Defaulted Loan pursuant to the
Article X hereof or in the event that a Credit Event has occurred and
is continuing and Sponsor has not purchased all outstanding Franchisee
Loans hereunder and fully cash-collateralized the Maximum Qualified
Franchisee Recourse Amount, the Sponsor agrees that the Servicer shall
be released from its obligations to the Sponsor hereunder with respect
to administering and enforcing all Loans and may administer and enforce
such Loans as it deems appropriate, without regard to any limitations
or restrictions set forth herein (but subject to Article III hereof in
all events) or in any other Operative Document.
4.4 No Waiver or Cure Available.
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, purchase the
Loan Indebtedness of any Loan and assume the Loan Commitment with
respect to a Defaulted Borrower whose Loan Default either arises from
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the bankruptcy or insolvency of such Borrower or the termination of the
Sponsor's franchise agreement with such Borrower; provided that, with
respect to a Qualified Franchisee Loan, the Servicer, at its option,
with the approval of the Required Participants, may require that the
Sponsor exercise any or all of the remedies set forth in Section 10.3
with respect to such Defaulted Loan except to the extent prohibited by
applicable law in the case of the bankruptcy of the 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 X hereof and shall not reduce the Maximum Amount or
Maximum Qualified Franchisee Recourse Amount thereunder.
5. REPRESENTATIONS AND WARRANTIES
The Sponsor (as to itself and each of the Consolidated Companies)
hereby represents and warrants to the Servicer and each of the
Participants that:
5.1 Organization and Qualification.
The Sponsor and its Subsidiaries are corporations duly organized,
validly existing and in good standing under the laws of the State of
Georgia and the State of Delaware, as applicable; the Sponsor and its
Subsidiaries have the corporate power to own their property and to
carry on their business as now being conducted; and the Sponsor and its
Subsidiaries are duly qualified as foreign corporations to do business
and are in good standing in every jurisdiction in which the nature of
the business conducted by them makes such qualification necessary and
where failure to qualify would have a Materially Adverse Effect.
5.2 Sponsor's Powers.
The execution, delivery and performance of this Agreement, the Guaranty
Agreement and each other Operative Document required hereunder are
within the Sponsor's or the Guarantors' corporate powers, as the case
may be, have been duly authorized by all necessary shareholder or
corporate action, and do not and will not contravene or conflict with
the terms of any charter, by-law or other organizational papers of the
Sponsor or any of its Subsidiaries, or any indenture, agreement or
undertaking to which the Sponsor or any of its Subsidiaries is a party
or by which the Sponsor or any of its Subsidiaries is bound or
affected.
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5.3 Enforceability of Agreement and Other Operative Documents.
This Agreement is a legal, valid and binding agreement of the Sponsor,
enforceable against the Sponsor in accordance with its terms, and each
other Operative Document and any other instrument or agreement required
hereunder, when executed and delivered, will be similarly legal, valid,
binding and enforceable against the Sponsor and its Subsidiaries, as
applicable, in accordance with their respective terms.
5.4 Consent.
No consent, permission, authorization, order or license of any
governmental authority is necessary in connection with the execution,
delivery, performance or enforcement of this Agreement, the Guaranty
Agreement, any other Operative Document or any other instrument or
agreement required hereunder, except as may have been obtained and
certified copies of which have been delivered to each Participant.
5.5 Statutes, Judgments.
There is no law, statute, rule or regulation, nor is there any
judgment, decree or order of any court or agency binding on the Sponsor
or any of its Subsidiaries, which would be contravened by the
execution, delivery or performance of this Agreement, the Guaranty
Agreement, any other Operative Document or any other instrument or
agreement required hereunder.
5.6 Financial Statements.
The Sponsor has furnished each Participant with the following financial
statements, identified by a principal financial officer of the Sponsor:
Audited Consolidated Financial and Operating Statements for
the Consolidated Companies for the years ended December 31,
1996, December 31, 1995, March 31, 1994 and March 31, 1993,
and audit opinions with respect to such statements of Ernst &
Young LLP; and unaudited financial and operating statements
for the nine-month period ended September 30, 1997.
The above financial statements (including any related schedules and/or
notes) are true and correct in all material respects and have been
prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all
known liabilities, direct and contingent, of the entities covered
thereby required to be shown in accordance with such principles. The
balance sheets fairly present the condition of the entities covered
thereby as at the dates thereof, and the profit and loss and surplus
statements fairly present the results of the operations of the entities
covered
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thereby for the periods indicated. There has been no material
adverse change in the business, condition or operations (financial or
otherwise) of the Consolidated Companies since December 31, 1996.
5.7 Actions Pending.
There is no action, suit, investigation or proceeding pending or, to
the knowledge of the Sponsor, threatened against or affecting the
Sponsor or any of its Subsidiaries, or any properties or rights of the
Sponsor or any of its Subsidiaries, before any court, arbitrator or
administrative or governmental body which is reasonably likely to
result in any Materially Adverse Effect.
5.8 Outstanding Debt.
Neither the Sponsor nor any of its Subsidiaries has outstanding any
indebtedness except debt permitted hereunder. There exists no default
under the provisions of any instrument evidencing such indebtedness or
of any agreement relating thereto.
5.9 Title to Properties.
The Sponsor and each of its Subsidiaries have good and marketable title
to their respective real properties, subject only to Liens permitted
under Section 7.1, and good title to all of its other respective
properties and assets, including the properties and assets reflected in
the balance sheet as of December 31, 1996 hereinabove described (other
than properties and assets disposed of in the ordinary course of
business), subject to no Lien of any kind except Liens permitted under
Section 7.1. The Sponsor and its Subsidiaries enjoy full and
undisturbed possession of all leases necessary in any material respect
for the operation of their respective properties and assets, none of
which contains any unusual or burdensome provisions which might
materially affect or impair the operation of such properties and
assets. All such leases are valid and subsisting and are free from
defaults by the Sponsor or respective landlords and in full force and
effect.
5.10 Taxes.
The Sponsor has and each of its Subsidiaries has filed all federal and
state income tax returns which, to the best knowledge of the officers
of the Sponsor, are required to be filed, and each has paid all taxes
as shown on said returns and on all assessments received by it to the
extent such taxes have become due, except to the extent expressly
permitted by Section 7.1(a) hereof.
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5.11 Regulation U, Etc.
Neither the Sponsor nor any of its Subsidiaries own or have any present
intention of acquiring any "margin security" as defined in Regulation U
of the Board of Governors of the Federal Reserve System (herein called
a "margin security"). None of the proceeds of any Advance will be used,
directly or indirectly, for the purpose of purchasing or carrying any
margin security or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry a
margin security or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said Regulation U.
5.12 No Credit Event; Unmatured Credit Event or Change of Control.
No Credit Event, Unmatured Credit Event or Change of Control, has
occurred and is continuing or will occur as a result of the incurring
of any obligation under this Agreement.
5.13 ERISA.
No fact or circumstance, including but not limited to any Reportable
Event, exists in connection with any Plan of the Sponsor or its
Subsidiaries which might constitute grounds for the termination of any
such Plan by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer any such Plan. For
purposes of this representation and warranty, if the Sponsor is not the
Plan administrator, it shall nonetheless be deemed to have knowledge of
all facts attributable to the Plan administrator designated pursuant to
ERISA.
5.14 Pollution and Environmental Control.
Each of the Sponsor and its Subsidiaries has obtained all permits,
licenses and other authorizations which are required under, and is in
material compliance with, all federal, state, and local laws and
regulations relating to pollution, reclamation, or protection of the
environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or
toxic materials or wastes into air, water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants
or hazardous or toxic materials or wastes.
5.15 Possession of Franchises, Licenses, Etc.
The Sponsor and its Subsidiaries possess all franchises, certificates,
licenses, permits and other authorizations from governmental political
subdivisions or regulatory authorities, and all patents, trademarks,
service marks, trade names, copyrights, licenses and other rights, free
from burdensome restrictions, that are necessary for the ownership,
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maintenance and operation of any of their respective properties and
assets, and neither the Sponsor nor any of its Subsidiaries is in
violation in any material respect of any thereof.
5.16 Contingent Liabilities.
After due inquiry, there exists no material contingent liability or
obligation assertable against the Sponsor or its Subsidiaries that is
not identified and disclosed to the Participants in the consolidated
financial statements delivered pursuant to Sections 5.6 or 6.1 hereof
or in Schedule 5.16 attached hereto.
5.17 Compliance with Laws.
Each of the Sponsor and its Subsidiaries is in compliance in all
material respects with all applicable federal, state and local laws,
rules, regulations and orders, including, without limitation, all
federal, state and local laws, rules, regulations and orders relating
to pollution, reclamation or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, or hazardous or toxic materials or wastes
into air, water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport,
or handling of pollutants, contaminants or hazardous or toxic materials
or wastes, and all federal, state and local laws, rules, regulations
and orders relating to franchising activities.
5.18 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:
(1) The Franchise Agreement, the Master Note, 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.
(2) 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.
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(3) 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.
(4) 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.
(5) 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, and, in the case of Qualified Franchisee Borrowers,
for Sponsor approved working capital purposes, but not in any case, for
any non-business purposes.
6. 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 Documents and thereafter so long as any Loans remain outstanding under this
Agreement or Sponsor has any other unsatisfied obligations under the Operative
Documents:
6.1 Financial Statements, Reports and Other Financial Data.
The Sponsor will deliver to the Servicer (for further delivery to each
Participant):
(a) as soon as practicable and in any event within forty-five
(45) days after the end of each calendar quarter (other than the last
calendar quarter) in each fiscal year, consolidated statements of
income, cash flow and retained earnings of the Sponsor and its
Subsidiaries for the period from the beginning of the current fiscal
year to the end of such calendar quarter, and consolidated balance
sheets of the Sponsor and its Subsidiaries as at the end of such
calendar quarter, setting forth in each case in comparative form
figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and certified by the Chief Financial Officer of
the Sponsor, subject to changes resulting from year-end adjustments;
(b) as soon as practicable and in any event within 90 days
after the end of each fiscal year (or as soon as made available by the
Sponsor's independent public
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accountants if availability is delayed beyond such 90-day period for
reasons beyond the Sponsor's control) audited consolidated statements
of income, cash flow and retained earnings of the Sponsor and its
Subsidiaries for such year, and an audited consolidated balance sheet
of the Sponsor and its Subsidiaries as at the end of such year, setting
forth in each case in comparative form corresponding figures from the
preceding annual statements, all in reasonable detail and reasonably
satisfactory in scope to Participants, and the consolidated financial
statements shall be certified by independent public accountants of
recognized standing, selected by the Sponsor, whose report shall be in
scope and substance reasonably satisfactory to Participants, and shall
be certified by the Chief Financial Officer of the Sponsor;
(c) along with the quarterly and annual reports required by
clauses (a) and (b) above, a certificate of the Chief Financial Officer
of the Sponsor certifying that no Event of Default exists and that no
event exists which with notice or the lapse of time or both would
become such an Event of Default, which certificate shall also
demonstrate in reasonable detail, with respect to both quarterly
reports and annual reports, the Sponsor's compliance with the covenants
set out in Sections 6.4, 6.5, 6.6, 7.2 and 7.3;
(d) promptly upon receipt thereof, copies of any detailed
reports submitted to the Sponsor by its independent public accountants
in connection with each annual audit or interim review of the books of
the Sponsor or its Subsidiaries made by such accountants;
(e) promptly upon transmission thereof, copies of all
financial statements, proxy statements, notices and reports as the
Sponsor shall send to its shareholders and of all regular or periodic
reports which it is or may be required to file with the Securities and
Exchange Commission or any governmental department, bureau, commission
or agency succeeding to the functions of the Securities and Exchange
Commission; and
(f) with reasonable promptness, such other financial data as
any Participant, through the Servicer, may reasonably request.
6.2 Inspection of Property.
The Sponsor will permit any Person designated by a Participant in
writing, to visit and inspect any of the properties, corporate books
and financial records of the Sponsor and its Subsidiaries and to make
copies thereof and take extracts therefrom and to discuss the affairs,
finances and accounts of any such corporations with the principal
officers of the Sponsor or its Subsidiaries, all at such reasonable
times and as often as such Participant may reasonably request, subject
in all cases to the confidentiality requirements of Section 15.11.
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6.3 Maintenance of Insurance.
The Sponsor and each Subsidiary will maintain insurance in such amounts
and against such liabilities and hazards as customarily is maintained
by other companies operating similar businesses.
6.4 Funded Debt Ratio.
The Sponsor shall maintain and operate its business in a manner to
insure that its Funded Debt Ratio, measured as of the last day of each
fiscal quarter for the four immediately preceding quarters ending on
such date, is less than 4.00:1.00.
6.5 Leverage Ratio.
The Sponsor shall maintain and operate its business in such a manner to
insure that its ratio, measured as of the last day of each fiscal
quarter, of (i) Funded Debt to (ii) the sum of Funded Debt plus the
Consolidated Net Worth of the Sponsor and its Subsidiaries, is less
than 0.50:1.00.
6.6 Fixed Charge Coverage.
The Sponsor will operate its business in such a manner to insure that
the sum of its (i) consolidated net income before income taxes, plus
(ii) interest expense, plus (iii) rental and lease expense are greater
than 150% of the sum of (i) interest expense, plus (ii) rental and
lease expense, all determined on a consolidated basis for the Sponsor
and its Subsidiaries. Compliance with the aforementioned fixed charge
coverage ratio will be determined at the end of each fiscal quarter of
the Sponsor and taking into account operations during the four
consecutive fiscal quarters ending on such date. The following
mathematical formula illustrates the Sponsor's fixed charge coverage
obligation:
Pretax Net Interest Rental and Lease
Income + Expense + Expense > 1.50
------------------------------------------------------- -
Interest Expense + Rental and Lease
Expense
6.7 Account Verification.
Upon the request of any Participant, made at reasonable intervals and
on a reasonable basis, the Sponsor will mail letters to selected lease
customers or account debtors requesting them to verify the status of
their leases or accounts, with responses to be returned directly to the
Servicer.
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6.8 ERISA.
The Sponsor and each Subsidiary will:
(a) At all times, make prompt payment of contributions
required to meet the minimum funding standard set forth in ERISA with
respect to its Plans;
(b) Notify Participants and the Servicer immediately of any
fact, including, but not limited to, any Reportable Event arising in
connection with any of its Plans which might constitute grounds for
termination thereof by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan, together with a statement, if requested by Participants, as
to the reasons therefor and the action, if any, which the Sponsor or
any of its Subsidiaries proposes to take with respect thereto; and
(c) Furnish to Participants or the Servicer, upon request,
such additional information concerning any of its Plans as may be
reasonably requested.
6.9 Payment.
The Sponsor will pay all sums due under this Agreement and the other
Operative Documents according to the terms hereof.
6.10 Notice of Credit Event, Unmatured Credit Event or Change of Control.
The Sponsor will immediately give notice to the Servicer and each
Participant of any Credit Event, Unmatured Credit Event or Change of
Control.
6.11 Corporate Existence.
Except as expressly permitted by Section 7.5 hereof, the Sponsor will
maintain and will cause each Subsidiary to maintain its corporate
existence and good standing in the jurisdiction of its incorporation,
and the Sponsor will qualify and will cause each Subsidiary to qualify
and remain qualified to do business as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or its
ownership of property makes such qualification necessary and where
failure to qualify would have a Materially Adverse Effect.
6.12 Compliance with Laws, Etc.
The Sponsor will comply, and cause each of its Subsidiaries to comply,
in all material respects with all applicable federal, state, and local
laws, rules, regulations and orders,
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including, without limitation, all federal, state and local laws,
rules, regulations and orders relating to pollution, reclamation, or
protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or wastes into air,
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling
of pollutants, contaminants or hazardous or toxic materials or wastes,
and all federal, state and local law, rules, regulations and orders
relating to franchising activities.
6.13 Additional Guarantors.
Promptly after any Person which is not a Subsidiary as of the Effective
Date becomes a Subsidiary of the Sponsor, the Sponsor shall cause such
Person to execute and deliver to the Servicer a Supplement to the
Guaranty Agreement, in the form of Exhibit 1 to the Guaranty Agreement,
together with related corporate authorization documents, organizational
documents, secretary's certificates and opinions, all in form and
substance satisfactory to the Servicer and the Required Participants.
7. 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:
7.1 Liens.
The Sponsor will not and will not permit any of its Subsidiaries to
create, assume or suffer to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, except:
(a) Liens for taxes not yet due or which are being actively
contested in good faith by appropriate proceedings;
(b) 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;
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(c) Liens on property or assets of a Subsidiary to secure
obligations of such Subsidiary to the Sponsor or another Subsidiary;
(d) 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;
(e) Liens on real property or equipment acquired by the
Sponsor to secure (i) all or any portion of the purchase price thereof
or the financing of the purchase price thereof, provided that the
aggregate principal amount of equipment loans secured by such Liens
shall be limited to $200,000 in aggregate or (ii) the costs of
improvements being constructed thereon or on real property leased by
the Sponsor for use by the Sponsor as stores or warehouses or as a part
thereof or the financing of such costs;
(f) Liens existing on the date hereof as set forth on Schedule
7.1 attached hereto and incorporated herein;
(g) easements, rights of way, restrictive covenants and
similar encumbrances on or exceptions to title to real property which
do not materially and adversely affect the value or the utility of the
real property involved;
(h) 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 7.3(h) hereof; and
(i) Liens assigned and granted by the Sponsor to the Servicer
pursuant to the Operative Documents.
7.2 Minimum Net Worth.
The Sponsor will not permit its Consolidated Net Worth as of the last
day of any fiscal quarter, commencing with the fiscal quarter ending
September 30, 1997, to be less than the sum of (a) $105,000,000 plus
(b) 50% of the Sponsor's consolidated net income after taxes (but not
loss) (as determined in accordance with generally accepted accounting
principles) for the period beginning July 1, 1997 and ending on the
last day of such fiscal quarter.
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7.3 Loans, Advances, Investments and Contingent Liabilities.
The Sponsor will not and will not permit any of its Subsidiaries to
make or permit to remain outstanding any loan or advance to, or extend
credit to, or guarantee, endorse or otherwise be or become contingently
liable, directly or indirectly, in connection with the obligations,
stock or dividends of, or own, purchase or acquire any stock,
obligations or securities of, or any other interest in, or make any
capital contributions to, any Person, except that the Sponsor or any of
its Subsidiaries may:
(a) create, incur, assure or suffer to exist, debt evidenced
by the Operative Documents or the Existing Credit Agreement;
(b) suffer to exist unsecured current liabilities (not
resulting from borrowing) incurred in the ordinary cause of business
for current purposes and not represented by a promissory note or other
evidence of indebtedness;
(c) permit to remain outstanding loans or advances to or
investments in any of its Subsidiaries existing on the date of this
Agreement;
(d) own, purchase or acquire stock, obligations or securities
of a Subsidiary or of a corporation which immediately after such
purchase or acquisition will be a Subsidiary or will be merged with
Sponsor, provided, however, written consent of the Participants, which
any of them may withhold in their sole discretion, is required for
purchases and acquisitions with (A) a cash purchase price greater than
or equal to $10,000,000, or (B) a total purchase price (including cash,
stock of the Sponsor and any of its Subsidiaries and any other
consideration) greater than or equal to $15,000,000;
(e) acquire and own stock, obligations or securities received
in settlement of debts (created in the ordinary course of business)
owing to the Sponsor or any of its Subsidiaries;
(f) own, purchase or acquire (i) prime commercial paper and
certificates of deposit in United States commercial banks (whose
long-term debt is rated "A" or better by Xxxxx'x Investors Service or
Standard and Poor's Corporation) (issued by banks having capital
resources in excess of $50,000,000), in each case due within one year
from the date of purchase and payable in the United States in dollars,
direct obligations of the United States Government or any agency
thereof, or obligations fully guaranteed as to principal and interest
by the United States Government or any agency thereof, in each case
maturing within one year from the date of creation of such obligation
or (ii) up to an additional $500,000 of other securities or investments
at any one time;
(g) endorse negotiable instruments for collection in the
ordinary course of business;
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(h) incur or guaranty indebtedness or contingent liability
under the Synthetic Lease Documents provided that the aggregate
outstanding principal amount of all such indebtedness or liabilities
does not exceed $20,000,000 at any one time; and
(i) make or permit to remain outstanding loans or advances to
officers, stockholders, employees and directors of the Sponsor,
provided that the aggregate principal amount of such loans and advances
shall not exceed $350,000 at any time outstanding for the Sponsor and
all Subsidiaries, and further provided that no Subsidiary shall make
any loan or advance to, or acquire any stock, obligations or securities
of, the Sponsor.
7.4 Sale of Stock and Debt of Subsidiaries.
The Sponsor will not sell or otherwise dispose of, or part with control
of, any shares of stock or debt of any of its Subsidiaries of the
Sponsor without the prior written consent of the Required Participants.
7.5 Merger and Sale of Assets.
The Sponsor will not merge or consolidate with any other corporation or
sell, lease or transfer or otherwise dispose of all or a substantial
part of its assets or the assets of a Subsidiary, or assets which shall
have contributed a substantial part of consolidated net earnings for
any of the three fiscal years then most recently ended, to any Person,
except that any of its Subsidiaries may merge with or liquidate into
the Sponsor (provided that the Sponsor shall be the continuing or
surviving corporation) or merge with any one or more other
Subsidiaries, provided that immediately after giving effect to such
merger or liquidation no Credit Event or Unmatured Credit Event shall
exist.
7.6 Additional Negative Pledges.
The Sponsor shall not, and shall not permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective,
directly or indirectly, any prohibition or restriction on the creation
or existence of any Lien upon any assets of the Sponsor or any of its
Subsidiaries, other than pursuant to (a) Section 7.1, (b) the terms of
any agreement, instrument or other document pursuant to which any debt
permitted by Section 7.1(e) is incurred by the Sponsor or any of its
Subsidiaries, so long as such prohibition or restriction applies only
to the property or asset being financed by such debt, (c) the terms of
the Existing Loan Agreement and the terms of the Synthetic Lease
Documents, and (d) any requirement of applicable law or any regulatory
authority having jurisdiction over the Sponsor or any of its
Subsidiaries.
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8. CREDIT EVENTS AND REMEDIES
In the event that:
8.1 The Sponsor defaults in the payment of any amount due hereunder; or
8.2 The Sponsor or any of its Subsidiaries defaults in any payment of
principal of or interest on any other obligation for a material amount
of money borrowed (or any material obligation under conditional sale or
other title retention agreement or any material obligation secured by a
purchase money mortgage or any material obligation under notes payable
or drafts accepted representing extensions of credit) or defaults in
the performance of any other agreement, term or condition contained in
any agreement under which any such material obligation is created (or
if any other default under any such agreement shall occur and be
continuing) if the effect of such default is to cause, or to permit the
holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due prior to its
stated maturity (for purposes of this Section 8.2, an obligation shall
be material if the amount owed thereunder exceeds $50,000); or
8.3 Any representation or warranty made by the Sponsor or any of its
Subsidiaries herein or in any writing furnished in connection with or
pursuant to this Agreement or other Operative Document shall be false
or misleading in any material respect on the date as of which made; or
8.4 The Sponsor defaults in the performance or observance of any covenant
or agreement contained in Sections 6.4, 6.5, 6.6 or Article VII hereof;
or
8.5 The Sponsor defaults in the performance or observance of any other
agreement, term or condition contained herein and such default shall
continue for 30 days after the Sponsor knows or has reason to know of
any such default; or
8.6 The Sponsor or any of its Subsidiaries makes an assignment for the
benefit of creditors or fails to pay its debts generally as they become
due; or
8.7 Any order, judgment or decree is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law (herein called the
"Bankruptcy Law") of any jurisdiction adjudicating the Sponsor or any
of its Subsidiaries bankrupt or insolvent; or
8.8 The Sponsor or any of its Subsidiaries petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, receiver, custodian or liquidator or similar official of
the Sponsor or any of its Subsidiaries, or of any substantial part of
the assets of the Sponsor or any of its Subsidiaries, or commences any
proceedings (other
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than proceedings for the voluntary liquidation and dissolution of a
Subsidiary) relating to the Sponsor or any of its Subsidiaries under
the Bankruptcy Law of any jurisdiction, whether now or hereafter in
effect, or any such petition or application is filed, or any such
proceedings are commenced, against the Sponsor or any of its
Subsidiaries and the Sponsor or such Subsidiary by any act indicates
its approval thereof, consent thereto or acquiescence therein, or an
order for relief is entered in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order judgment, or decree remains unstayed and in
effect for more than 60 days; or
8.9 Any order, judgment or decree is entered in any proceedings against the
Sponsor decreeing the dissolution of the Sponsor and such order,
judgment or decree remains unstayed and in effect for more than 60
days; or
8.10 Any order, judgment or decree is entered in any proceedings against the
Sponsor or any of its Subsidiaries decreeing a split-up of the Sponsor
or such Subsidiary which requires the divestiture of a substantial
part, or the divestiture of assets, or stock of a Subsidiary, which
shall have contributed a substantial part of consolidated net earnings
for any of the three fiscal years most recently ended, and such order,
judgment or decree remains unstayed and in effect for more than 60
days; or
8.11 Any Reportable Event shall have occurred, or any finding or
determination shall be made with respect to a Plan under Section
4041(c) or (e) of ERISA, or any fact or circumstance shall occur with
respect to a Plan which, in the opinion of the Required Participants,
provides grounds for the commencement of any proceeding under Section
4042 of ERISA, or any proceeding shall be commenced with respect to a
Plan under Section 4042 of ERISA; or
8.12 There shall exist or occur any 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; or
8.13 The Sponsor or any of its Subsidiaries shall fail to make any payment
as and when such payment is due under the Synthetic Lease Documents, or
any other default, event or condition shall have occurred or exist
under the Synthetic Lease Documents, the effect of which is to cause,
or to permit the holder of the obligations of the Sponsor or any such
Subsidiary under the Synthetic Lease Documents to cause, the
obligations of the Sponsor
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or any of its Subsidiaries, or any portion thereof, to become due prior
to its stated maturity date or prior to its regularly scheduled date of
payment;
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 Franchisee Loans and Franchisee Loan
Commitments by paying to the Servicer the Loan Indebtedness of each
such Franchisee Loan and assuming the Servicer's obligations
thereunder, 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); (iii) demand that the Sponsor
immediately deposit into the Cash Collateral Account, in immediately
available funds, an amount equal to the Maximum Qualified Franchisee
Recourse Amount (without relieving Sponsor of its obligations pursuant
to Section 10.3(a) and (b)); and (iv) take any other action and
exercise any other remedy available by contract or at law; provided,
that, if a Credit Event specified in Sections 8.6, 8.7 or 8.8 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
Qualified Franchisee Loan Agreements (which authorization is limited to
certain specified Credit Events), (x) cease funding further Advances
pursuant to the Qualified Franchisee Loan Commitments and (y) declare
all Loan Indebtedness outstanding pursuant to the Qualified Franchisee
Loan Commitments to be immediately due and payable in accordance with
the terms of the applicable Loan Documents and exercise all rights and
remedies provided under the Loan Documents, and (B) give notice to the
Franchisee Borrowers that the Franchisee Loan Commitments shall be
terminated upon the date which is ninety (90) days after receipt by
such Franchisee Borrower of such notice of termination, subject to the
Franchisee Borrowers' right to term out advances for an additional 18
months.
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9. CHANGE OF CONTROL; CASH COLLATERAL ACCOUNT
9.1 Change of Control; Deposit In Cash Collateral Account.
In the event of the occurrence of a Change of Control, (x) the
Commitments shall automatically terminate on the Change of Control
Date (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) and (y) the Sponsor shall immediately
deposit with the Servicer, for the benefit of the Participants, a cash
amount, in immediately available funds, equal to 1/24th of the
aggregate outstanding amount of the Loan Commitments on such date (the
"Monthly Deposit Amount"). The Servicer shall deposit such amount into
an interest bearing account with the Servicer subject to the sole
dominion and control of the Servicer (the "Cash Collateral Account").
On each Payment Date thereafter, the Sponsor shall deposit with the
Servicer, for the benefit of the Participants, an amount equal to the
original Monthly Deposit Amount (regardless of any interim reduction
of the Loan Commitments). On the earliest of (x) the Payment Date on
which the aggregate amount on deposit in the Cash Collateral Account
equals or exceeds the aggregate outstanding Loan Indebtedness pursuant
to the Franchisee Loan Program and (y) the 23rd Payment Date, the
Servicer shall (i) assign all Loans and Loan Commitments to the
Sponsor, and the Sponsor shall assume the obligations of the Servicer
thereunder, and (ii) disburse all amounts held in the Cash Collateral
Account to repay the Funded Participant's Interest to each Participant
in full, together with all Commitment Fees, interest and other amounts
owing to the Participants hereunder and all Servicing Fees and other
amounts owing to the Servicer pursuant to the Operative Documents, and
shall return any excess amounts to the Sponsor.
9.2 Obligations with Respect to Defaulted Loans.
Notwithstanding the amount on deposit in the Cash Collateral Account,
following the occurrence of a Change of Control, the Sponsor shall
continue to honor its obligations pursuant to the Operative Documents
to repurchase Defaulted Loans and take the other actions required
hereunder with respect thereto, including without limitation, the
obligations of the Sponsor set forth in Section 10.3(a) and (b), with
the express understanding that the Sponsor shall be required to make
cash payments to the Servicer with respect to such obligations
regardless of the amount on deposit in the Cash Collateral Account.
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9.3 Effect of Credit Event Following Change of Control.
Nothing set forth in this Article IX shall be deemed to affect the
Sponsor's obligation upon the occurrence of a Credit Event to
immediately repurchase all Franchisee Loans and Loan Commitments and
to immediately deposit an amount equal to the Maximum Qualified
Franchisee Recourse Amount with the Servicer to be placed in the Cash
Collateral Account and to continue to comply with the provisions of
Section 10.3(a) and (b) with respect thereto. Following the occurrence
of a Credit Event, the Servicer shall continue to make the payments
required pursuant to Section 9.1 and upon such time as the total
amounts on deposit in the Cash Collateral Account (including the
Maximum Qualified Franchisee Recourse Amount) equals or exceeds the
aggregate Loan Indebtedness, the Servicer shall assign the Loans and
Loan Commitments to the Sponsor as provided in Section 9.1.
9.4 Deposit of Maximum Qualified Franchisee Recourse Amount Following
Credit Event.
In the event of the occurrence of a Credit Event where a Change of
Control has not occurred, the Sponsor shall deposit the Maximum
Qualified Franchisee Recourse Amount in the Cash Collateral Account as
required by Article VIII. Thereafter, the Servicer shall apply amounts
on deposit in the Cash Collateral Account to satisfy Sponsor's
obligations pursuant to Section 10.3(c) and Sponsor shall have no
further obligation with respect thereto but the Servicer shall
continue to have the option to require the Sponsor to satisfy its
obligations pursuant to Section 10.3(a) and (b).
10. 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:
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 Loan Documents,
subject, in the case of the Loans outstanding pursuant to the
Franchisee Commitment, to the limitations set forth in Section 10.2
below and subject, in the case of Loans outstanding pursuant to the
Qualified Franchisee Commitment, to the limitations set forth in
Section 10.3 below. If any portion of the Loan Indebtedness with
respect to any Defaulted Loan is not paid by
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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 X constitute a guarantee which 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 from the Servicer prior to the acceleration of the
Defaulted Loan pursuant to the terms of the applicable Loan Documents
for an amount equal to the Loan Indebtedness with respect to such
Defaulted Loan and such purchase by the Sponsor shall be deemed to be
a payment hereunder in such amount.
10.2 Limitation on Guaranty of Franchisee Loans.
The obligation of the Sponsor pursuant to this Article X with respect
to the Franchisee Loans 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 Franchisee 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 Franchisee Loans), (b) three (3) times the largest aggregate
outstanding Franchisee Loan, and (c) $7,000,000; provided that, the
Maximum Amount shall not on any date of determination exceed the
aggregate outstanding Loan Indebtedness of the Franchisee 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 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 Franchisee 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 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 or Section 4.4 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.
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The foregoing limitation shall not in any way limit the obligation of
the Sponsor with respect to the Qualified Franchisee Loans or the
obligation of the Sponsor to purchase the Franchisee 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 X.
10.3 Obligations of Sponsor With Respect to Qualified Franchisee Loans.
(a) With respect to any Defaulted Loan which is a Qualified Franchisee
Loan, within five (5) Business Days after receipt of notice
of such Loan Default, the Sponsor shall exercise its rights
pursuant to the applicable Franchise Agreement to assume the
operation of the stores of the Defaulted Borrower thereunder
and during any period that any Sponsor operates such stores,
Sponsor shall make all payments due and owing to the Servicer
pursuant to the applicable Loan Documents;
(b) In the event that the applicable Sponsor has not resold the
franchise and inventory of the Defaulted Borrower within
sixty (60) days thereafter in accordance with 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
transfer to Sponsor of the Loan and the Liens of the Servicer
thereon and applied by the Servicer to Sponsor's purchase of
the outstanding Loan Indebtedness of such Defaulted Loan,
with any deficiency recovered pursuant to the next
paragraph), the Sponsor shall purchase the outstanding Loan
Indebtedness of such Defaulted Loan 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; and
(c) In the event that any Loan Indebtedness remains outstanding
following the completion of the actions set forth above, the
Servicer shall demand that the Sponsor repay any remaining
amount of the Loan Indebtedness pursuant to its guaranty set
forth above; provided, however, that the aggregate amount
paid by the Sponsor pursuant to this Section 10.3(c) with
respect to all Defaulted Loans outstanding pursuant to the
Qualified Franchisee Commitment shall not exceed the Maximum
Qualified Franchisee Recourse Amount.
(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
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Required Participants, require that the Sponsor repurchase
the Loan pursuant to subsection (c) above.
10.4 Continuing Guaranty.
The obligations of the Sponsor pursuant to this Article X 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
Sections 10.2 and 10.3.
10.5 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
10.12.
10.6 Additional Actions.
Subject to Section 10.12, 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 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 10.12, Servicer shall have full authority to adjust,
compromise, and receive less than the amount due upon any
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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.
10.7 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 10.12.
10.8 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
Borrower or any other Guaranteed Obligations arising
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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 X or otherwise).
10.9 Effect on Additional Guaranties.
The obligations of the Sponsor pursuant to this Article X 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.
10.10 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 in Article X 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
BORROWER, 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
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IT MIGHT HAVE AGAINST THE SERVICER OR ANY PARTICIPANT, WHETHER ARISING
OUT OF THIS AGREEMENT OR OTHERWISE, BUT SUBJECT TO SECTION 10.12
BELOW.
10.11 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.
10.12 Right to Bring Separate Action.
Nothing contained in this Article X 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 X 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.
10.13 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
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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 Sponsors may take or fail to take in respect of the
Collateral, except as otherwise provided above in this subsection.
10.14 Exercise of Remedies With Respect to Collateral.
(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
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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 10.14, 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
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 10.14 shall
modify the rights of the Servicer set forth in Section 3.1.
10.15 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.
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;
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(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.
11. INDEMNIFICATION
11.1 Indemnification.
(1) 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's 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
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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
X hereof, 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
X 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 ACTS 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.
(c) This indemnity shall survive the termination of this
Agreement.
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 XI.
(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
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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 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.
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.
12. 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 XI hereof shall
survive the termination of this Agreement upon such repayment.
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13. CONDITIONS PRECEDENT
The obligation of the Servicer to establish the initial Loan
Commitment pursuant to this Agreement is subject to satisfaction of the
following conditions:
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:
(1) Duly executed counterparts of this Agreement.
(2) Duly executed counterparts of the Servicing Agreement
and the Fee Letter.
(3) Duly executed counterparts of the Guaranty Agreement.
(4) 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.
(5) 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.
(6) 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.
(7) All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby and all
documents incident hereto or delivered
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in connection therewith shall be satisfactory in form and substance to
the Servicer and the Participants.
(8) In addition, each of the Participants shall have
received a duly executed Participation Certificate from the Servicer
and each of the Participants (other than STBA) shall have received
payment of the Facililty Fee in accordance with Section 2.4 hereof.
14. THE SERVICER
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.
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.
14.3 Lack of Reliance on the Servicer.
(1) 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
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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.
(2) 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.
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.
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.
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
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Pro Rata Shares, in either case, for and against 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.
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.
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.
15. MISCELLANEOUS
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
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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 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.
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 Commitments 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 2.10, Article IV, Article IX, Article X 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.
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
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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.
15.4 Payment of Expenses, Etc. Sponsor shall:
(1) 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 an 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
(2) 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.
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
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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.
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 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 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 amount of the
Participating Commitment 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 its Original Participating
Commitment or (y) $5,000,000 and shall be divided pro rata amongst 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 $2,500. 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 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.
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(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, 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 II
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.
(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
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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 at least equal to 25% of the
aggregate outstanding Loan Commitments.
15.7 Governing Law; Submission to Jurisdiction.
(1) 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.
(2) 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 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.
(3) 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.
15.8 Counterparts.
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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.
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.
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.
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).
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 and the Collateral relating thereto for a
purchase price (payable in immediately available funds) equal to the
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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.
15.13 Effect on Existing Facility Agreement; Execution of New Loan Documents.
Upon the Effective Date, all loans and loan commitments outstanding
pursuant to the Existing Facility Agreement shall be deemed to be
Loans and Loan Commitments outstanding hereunder pursuant to the
Franchisee Commitment and the Existing Facility Agreement shall be of
no further force and effect, except to the extent that certain
indemnities set forth therein are deemed to expressly survive the
termination thereof. The Sponsor covenants and agrees with the
Servicer and the Participants that it shall, within forty-five (45)
days after the Effective Date, cause each borrower under the Existing
Facility to execute and deliver Loan Documents in the form attached to
the Operative Documents to the Servicer in replacement of the existing
loan documents of such Borrower. The Sponsor further acknowledges and
agrees that the failure to comply with this covenant shall constitute
a Credit Event hereunder.
15.14 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:
(1) such information is in the public domain at the
time of disclosure;
(2) such information is required to be disclosed by
subpoena or similar process of applicable law or regulations;
(3) 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;
(4) 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;
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(5) 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;
(6) 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;
(7) 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;
(8) 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
(9) 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.
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.
15.15 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 Xxxxxxx X. Xxxxxxxxx
Attn: Xxxxxxx X. Xxxxxxxxx Vice President, Finance;
Telecopy: 000-000-0000 Chief Financial Officer
Attest:___________________________
Xxxxx X. Xxxxx
Secretary
[Corporate Seal]
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Address for Notices: SUNTRUST BANK, ATLANTA, as
Servicer
00 Xxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Center No. 113 By:______________________________
Telecopy No. (000) 000-0000 Title:
with a copy to:
By:______________________________
R. Xxxxxxx Xxxxxx Title:
00 Xxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
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Address for Notices: SUNTRUST BANK, ATLANTA
00 Xxxx Xxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Center No. 113 By:______________________________
Telecopy No.: (000) 000-0000 Name:
Title:
with a copy to:
R. Xxxxxxx Xxxxxx By:______________________________
00 Xxxx Xxxxx Name:
23rd Floor Title:
Xxxxxxx, Xxxxxxx 00000
Participating Commitment: $19,000,000.00
Pro Rata Share: 47.50%
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Address for Notices: THE FIRST NATIONAL BANK OF CHICAGO
One First Xxxxxxxx Xxxxx
Xxxxx Xx. 0000
Xxxxxxx, Xxxxxxxx 00000 By:______________________________
Attn: Xx. Xxxxx Xxxxxxx Title:_______________________
Telecopy: (000) 000-0000
Participating Commitment: $7,000,000.00
Pro Rata Share: 17.50%
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Address for Notices: FIRST UNION NATIONAL BANK
000 Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxx By:_______________________________
Telecopy: (000) 000-0000 Title:________________________
Participating Commitment: $7,000,000.00
Pro Rata Share: 17.50%
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Address for Notices: SOUTHTRUST BANK, N.A.
000 Xxxx Xxxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000 By:_______________________________
Attention: Xxxx Xxxxxxxxx Title:________________________
Telecopy: (000) 000-0000
Participating Commitment: $7,000,000.00
Pro Rata Share: 17.50%
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EXHIBIT A
TO
THE LOAN FACILITY AND GUARANTY
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
ASSIGNMENT AND ACCEPTANCE AGREEMENT (the "Assignment Agreement") dated
as of _______________________, 19__ 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.
W I T N E S S E T H:
WHEREAS, Assignor is a party to that certain Loan Facility Agreement
and Guaranty, dated as of January 20, 1998 (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"), and SunTrust Bank,
Atlanta ("STBA") and each of the other lending institutions party thereto (STBA,
such lenders, together with any assignees thereof becoming "Participants") and
SunTrust Bank, Atlanta, 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 of $___________ under
the Loan Facility Agreement pursuant to which it has outstanding a Funded
Franchisee Participant's Interest of $______________, and a Funded Qualified
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:
1. Assignment. Assignor hereby assigns to Assignee, without recourse, or
representation or warranty (other than expressly provided herein) and subject to
Section 4(b) hereof,
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___% 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 $__________.
I. 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 of the 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.
2. 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.
3. Payment of Interest and Fees to Assignee.
a. As of the date hereof, interest is payable in respect of Assignee's
Share of the Funded Franchisee Participant's Interest (computed on the basis of
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to one and one quarter of one percent (1.25%) above the Adjusted LIBO Rate, and
in respect of Assignee's Funded Qualified Franchisee Participant's Interest,
interest is payable (computed on the basis of actual number of days elapsed over
a year of 360 days) at a rate per annum equal to one and one half percent
(1.50%) above the Adjusted LIBO Rate.
b. As of the date hereof, a Commitment Fee equal to 0.125% per annum is
payable on the Assignee's Share of the average daily unused portion of the
Participating Commitment.
c. 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 which, in any
such case, are required to be paid to Assignee pursuant to clause (a) and (b)
above, 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).
d. Notwithstanding anything to the contrary contained in this Assignment
Agreement, if and when Assignee receives or collects any payment of interest on
the Funded Participant's Interest or any payment of the Commitment Fee which, in
any such case, is required to be paid to Assignor pursuant to clause (a) or (b)
above, Assignee shall distribute to Assignor such payment.
4. 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
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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.
II. Effectiveness.
1. 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 $2,500 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.
2. 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.
5. 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.
6. Representations and Warranties. Each of the Assignor and the
Assignee represents and warrants to the other party as follows:
1. 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;
2. 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;
3. 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
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4. 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.
7. 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.
8. Miscellaneous.
1. 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.
2. 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.
3. 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.
4. 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.
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5. 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.
6. The Assignor may at any time or from time to time grant to others
assignments or 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.
7. 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.
8. 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.
9. All representations and warranties made herein and indemnities
provided for herein shall survive the consummation of the transaction
contemplated hereby.
10. 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.
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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 Franchisee
Participant's Interest:
$_______________________
Assignee's Share of Funded
Qualified Franchisee
Participant's Interest:
$_______________________
Address:
Tel. No:____________________
Fax No: ____________________
96
CONSENTED TO AS OF THE
DATE SET FORTH ABOVE:
XXXXX RENTS, INC.
By:____________________________
Title:__________________
SUNTRUST BANK, ATLANTA,
as Servicer
By:____________________________
Title:__________________
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EXHIBIT B
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
LINE OF CREDIT AND SECURITY AGREEMENT
(Franchisee Borrower)
THIS LINE OF CREDIT AND SECURITY AGREEMENT (this "Agreement") dated as
of ____________ ___, 199__, is made between _______________________, [a
__________ corporation] [a ____________ partnership] [a _________ limited
liability company] ("Borrower"), and SUNTRUST BANK, ATLANTA ("Bank"), a Georgia
banking corporation having its principal office in Atlanta, Georgia.
W I T N E S S E T H:
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 purchase inventory for use in
connection with its Aaron's Rental Purchase franchise; 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):
"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 perfor xxxxx.
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"Account Debtor" means any Person who is liable on an Account.
"ACTS System" shall mean Aaron's proprietary software system, as
modified from time to time, used by Xxxxx and its franchisees, such as Borrower.
"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.
"AOR Report" shall mean an "Agreements on Rent" report tracking the
number of units on rent, idle units, re-rents and new rents, scheduled and early
payouts, and charged off and skipped units, and including the net monthly rental
income and a weekly or monthly delinquency figure.
"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, Atlanta and its successors and
assigns.
"Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as may be
amended from time to time.
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"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.
"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 adopted in force 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 sole purpose of paying, by means of ACH
transfer, Approved Invoices arising from purchases of Merchandise from a
supplier.
"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, 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.
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"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.
"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.
"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.
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"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.
"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
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102
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
ACTS 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" means with respect to the Loan, the 20th 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.
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"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.
"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 termination, 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.
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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. In addition, at
the request of Borrower and subject to the compatibility of computer systems,
Bank will provide Borrower with computer access to the Bank's records with
respect to such DDA Account for the purposes of monitoring activity in the
account. Borrower hereby consents and acknowledges that Xxxxx shall be given
computer access to such DDA Account.
(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. (a) Upon Borrower's execution of this Agreement and
compliance with its terms and subject to Bank's confirmation that Bank has a
first priority security interest in the Col lateral, 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 ACTS System, for ACH transfers to
suppliers of Merchandise in payment of Approved Invoices. 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").
(b) On a daily basis, 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 availability of the
Loan Commitment, shall pay such invoice by directing the Bank, through the ACTS
System, to pay such invoice by means of an ACH transfer from its DDA Account.
Any directions for ACH transfers correctly inputted into the ACTS 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 last day of each calendar month, Bank shall
determine the aggregate amount of Advances made to Borrower during such month
and shall subtract therefrom payments received by Bank from Borrower with
respect to Asset Dispositions since the cut-off date of the last statement of
Borrower. The remaining principal amount of Advances made to Borrower during the
month shall be amortized into eighteen (18) equal payments of principal due and
payable on the next succeeding Payment Dates. On the 10th 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.
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, ATLANTA
STRATEGIC PARTNER PROGRAMS DEPARTMENT
XXXXXX 000
X. X. XXX 0000
XXXXXXX, XXXXXXX 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 other party at any time, either party 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 the eighteen (18) month amortization
schedule described in Section 2.2(d) above, which eighteen (18) month
amortization schedule shall remain in effect in the event Borrower's Line of
Credit is canceled.
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 unless reference to a 365
or a 366-day year is necessary in order not to exceed the highest rate
permissible under Applicable Law. 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 outstanding hereunder for such full period will not exceed the
maximum amount permitted by Applicable Law.
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2.6. Loan Prepayment. Borrower shall have the right to prepay the Loan
in whole or in part upon at least five (5) 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(d)) 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. Asset Dispositions. (a) All Merchandise financed by the Bank must
be serialized by means of the ACTS 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 directly to Xxxxx on a monthly basis (and, if available,
on a weekly basis) by transmittal of Borrower's receiving report (containing
ACTS numbers) directly to Xxxxx on the ACTS 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 ACTS System,
such information to include the ACTS 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. 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 Value of the Asset Dispositions during the preceding month. The
Borrower shall be notified by the Bank by the 10th 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
________________]
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(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 five percent (5%) of
the amount of the late payment or such lesser amount as may be agreed to by the
Bank.
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, 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."
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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, ATLANTA AND THERE ARE NO DEFENSES AGAINST THE AS-
SIGNEE."
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
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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 par ties. 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;
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(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;
(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, ATLANTA
X.X. XXX 0000
XXXXXXX, XXXXXXX 00000
CENTER CODE 113
ATTENTION: STRATEGIC PARTNER PROGRAMS]
(j) a validly executed authorization to make the ACH
transfers for payments of principal, interest and fees contemplated
hereunder, including without limitation, Asset Disposition Prepayments,
which authorization shall be in form and substance satisfactory to the
Bank.
In addition, Bank and Borrower shall have established a DDA Account and
a Loan Account for Borrower, the Bank shall have satisfied itself that
there are no Liens on any of the Col lateral, and the Bank shall be
satisfied that all corporate or partnership proceeding 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 re spective 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 dated
________, 19__, and previously delivered to Bank, 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
purpose of honoring requests for ACH transfers to suppliers of Merchandise in
payment of Approved Invoices which requests have been entered by the Borrower in
the ACTS System as provided above.
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:
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(i) Rental Revenue to Debt Service.
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 the Borrower's Rental Revenue to Debt Service for
such quarter shall not be less than 2.2:1.0;
(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 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
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 Bank or cause to be delivered
to Bank:
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(i) on or before the tenth day of each month, monthly detailed
Inventory reports in a form acceptable to Bank showing Accounts and
changes therein;
(ii) within 120 days after the end of each fiscal year, an
annual personal financial statement of each Guarantor;
(iii) within 20 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 year-to-date basis, prepared in
accordance with GAAP in the format recommended by Xxxxx, and (b) a
Compliance Certificate as described below in Section 7.2;
(iv) 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;
(v) on or before the tenth day of the following month, monthly
AOR Reports concerning the prior month; and
(vi) with reasonable promptness, all reports by Borrower to
its shareholders and such other information as Bank may reasonably
request from time to time.
7.2. Compliance Certificate. Prepare and deliver to Bank, 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 cov enants and explaining any such variances.
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
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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.
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 ACTS 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.
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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 is an S Corporation, it may pay dividends
not to exceed the amount of income taxes payable by its shareholders
attributable to Borrower's income.
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 covenants set forth
in Section 6 hereof, provided that Sponsor may 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 obli gation in accordance with
the terms of any agreement with Bank;
(e) Borrower, Sponsor or any Guarantor shall cease to be
Solvent, shall die or become incompetent, shall suffer the appointment
of a receiver, trustee, custodian or similar fidu ciary, 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;
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(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 as shown on Exhibit B;
(j) Borrower shall lose its franchise, license or right to
rent or to sell the Inventory;
(k) Borrower shall fail to enter properly any acquisition of
Inventory or Equipment or any Asset Disposition on the ACTS 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.
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):
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(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 10 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, 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
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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.
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 add 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, ATLANTA
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00 XXXX XXXXX
XXXXXXX, XXXXXXX 00000
ATTENTION: CENTER NO. 113
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 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
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122
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, 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.
26
123
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.
17. 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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124
WITNESS the hand and seal of the parties hereto on the date first above
written.
Accepted in Atlanta, Georgia:
BORROWER:
__________________________(Seal)
By:__________________________
Title:____________________
Attest:___________________
Secretary
[CORPORATE SEAL]
BANK:
SUNTRUST BANK, ATLANTA
By:__________________________
Title:____________________
By:__________________________
Title:____________________
28
125
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, ATLANTA, 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 "Line of Credit 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 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 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 and, when adjusted for a year of 365
days, an initial simple interest rate 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.
1
126
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 man ner 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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127
[if Borrower is [NAME OF BORROWER]
a corporation:]
By:
-------------------------
Name:
Title:
Attest:
---------------------
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: ]
3
128
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):
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129
D. BUSINESS LOCATIONS
The following are all of the locations where Borrower has an office or
other place of business or owns assets:
E. STOCKHOLDERS
The following are all of the stockholders of Borrower and the
percentage of shares of Borrower's capital stock owned by each:
Stockholder's Name Percentage of Shares Owned
------------------ --------------------------
5
130
EXHIBIT C
COMPLIANCE CERTIFICATE OF BORROWER
(Pursuant to Section 7.2 of Line of Credit and Security Agreement
dated ______________, 19___)
[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 ____________, 19___ by and
between the Borrower and SUNTRUST BANK, ATLANTA (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 super vision. 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.
6
131
WITNESS my hand this ____ day of __________, ____.
[NAME OF BORROWER]
By:
---------------------------------------
Title:
---------------------------------
7
132
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 12 months.
I. Rental Revenue to Debt Service
A. Enter amount of quarterly Rental Revenue. $__________________
B. Enter amount of quarterly Rental Revenue
attributable to store locations
open less than 13 months. ____________________
C. Subtract B from A. ____________________
D. Enter amount of quarter's Debt Service. ____________________
E. Enter amount of quarter's Debt Service
attributable to store locations open less
than 13 months. ____________________
F. Subtract E from D. ____________________
Ratio of C:F. ____________________
STANDARD --- Ratio not less than --- 2.2: 1.0
-----------
Compliance? Yes ____ No ____
1
133
II. Debt to Rental Revenue
A. Enter amount of Debt. _____________________
B. Enter amount of Debt attributable
to store locations open less
than 19 months. _____________________
C. Subtract B from A. _____________________
D. Enter Amount of last month's
Rental Revenue. _____________________
E. Enter amount of last month's Rental
Income attributable to store locations
open less than 19 months. _____________________
F. Subtract E from D. _____________________
Ratio of C : F. _____________________
STANDARD .............. 5.5 : 1.0
-----------
Compliance? Yes ____ No ____
III. Total Liabilities to Tangible Net Worth
A. Enter amount of Total Liabilities. _____________________
B. Enter amount of Tangible Net Worth. _____________________
C. Ratio of A:B.
STANDARD .............. 6.5 : 1.0
-----------
Compliance? Yes ____ No ____
Note: All terms are those used in generally accepted accounting practices unless
specifically defined in the Agreement.
2
134
EXHIBIT C
TO
THE LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
MASTER NOTE
(Franchisee Borrower)
[DATE] [$____________]
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, [____________, a ____________
_______________] (the "Borrower"), promises to pay to the order of SUNTRUST
BANK, ATLANTA, 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 and, when adjusted for a year of 365
days, an initial simple interest rate 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.
135
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.
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, irrespective of whether or not Bank has made any demand under the
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 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 AND THE RIGHTS AND OBLIGATIONS
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. TIME IS OF THE ESSENCE OF THIS NOTE.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE
HEREBY WAIVED.
136
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:
Attest:
-----------------------
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 a limited [NAME OF BORROWER
liability company:]
By:
---------------------------
Name:
Title:]
-3-
137
EXHIBIT D
TO
FORM OF LOAN FACILITY AGREEMENT AND GUARANTY
THIS GUARANTY AGREEMENT ("Guaranty Agreement") dated as of
January 20, 1998, made by XXXXX INVESTMENT COMPANY, a Delaware corporation (the
"Guarantor", together with all Additional Guarantors, as defined below, and all
assignees of any party hereto, collectively referred to as the "Guarantors"),
for the benefit of SUNTRUST BANK, ATLANTA, a Georgia banking corporation
("STBA"), and all other lending institutions party to that certain Loan Facility
Agreement and Guaranty, as defined below (STBA, such lenders, together with any
assignees thereof becoming "Participants"), and SUNTRUST BANK, ATLANTA, as
Servicer and agent for the Participants (in such capacity, the "Servicer");
W I T N E S S E T H:
WHEREAS, Xxxxx Rents, Inc., a Georgia corporation (the
"Sponsor"), the Servicer and the Participants have entered into that certain
Loan Facility Agreement and Guaranty dated as of the date hereof (the "Loan
Facility Agreement"); capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Loan Facility Agreement;
WHEREAS, pursuant to the Loan Facility Agreement, and the
other Operative Documents, the Servicer and Participants (the "Guaranteed
Parties") have established a loan program wherein the Servicer makes available
to certain Franchisees approved by Sponsor revolving lines of credit and the
Participants purchase a pro rata participating interest therein;
WHEREAS, the Guaranteed Parties have agreed to make such lines
of credit available to Franchisees upon the terms and conditions set forth in
the Loan Facility Agreement and in the Servicing Agreement, dated as of even
date herewith by and between the Servicer and the Sponsor (as amended, restated,
modified or supplemented from time to time, the "Servicing Agreement");
WHEREAS, the Sponsor owns one hundred percent (100%) of the
issued and outstanding capital stock of the Guarantors, and although the
Guarantors are separate legal entities, the making of the advances by the
Servicer to the Franchisees of the Sponsor and the other extensions of credit
under the Loan Facility Agreement provide a direct, beneficial, economic
advantage to the Guarantors as a result of their relationship to the Sponsor;
138
WHEREAS, consummation of the transactions pursuant to the Loan
Facility Agreement will facilitate expansion and enhance the overall financial
strength and stability of the Sponsor's entire corporate group, including the
Guarantors; and
WHEREAS, it is a condition precedent to the establishment of
the loan program under the Loan Facility Agreement that the Guarantors execute
this Guaranty Agreement, and the Guarantors wish to execute this Guaranty
Agreement in satisfaction of said condition precedent;
THEREFORE, in consideration of the premises and for other
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Guarantors hereby agree as follows:
ARTICLE I
Covenants and Agreements
Section 1.1. The Guarantors hereby, irrevocably and
unconditionally, guarantee the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all obligations owing by the Sponsor
to the Guaranteed Parties, under the Loan Facility Agreement and the other
Operative Documents, including all renewals, extensions, modifications and
refinancings thereof, now or hereafter owing, whether for principal, interest,
fees, expenses or otherwise, and any and all reasonable out-of-pocket expenses
(including reasonable attorneys' fees actually incurred and expenses) incurred
by the Guaranteed Parties in enforcing any rights under this Guaranty, including
without limitation, all interest which, but for the filing of a petition in
bankruptcy with respect to the Sponsor, would accrue on any principal portion of
such obligations (hereinafter collectively referred to as the "Guaranteed
Obligations"). Any and all payments by the Guarantors hereunder shall be made
free and clear of and without deduction for any set-off, counterclaim, or
withholding so that, in each case, each Guaranteed Party will receive, the full
amount that it would otherwise be entitled to receive with respect to the
Guaranteed Obligations. The Guarantors acknowledge and agree that this is a
guarantee of payment when due, and not of collection, and that this Guaranty may
be enforced up to the full amount of the Guaranteed Obligations and the
Servicer, in its sole discretion, shall have the right to proceed first and
directly against any Guarantor, its successors and assigns, under this Guaranty
Agreement without proceeding against the Sponsor or any other Guarantor, or
exhausting any other remedies which it may have and without resorting to any
other security held by the Servicer.
Section 1.2. The Guarantors additionally hereby jointly and
severally, unconditionally and irrevocably guarantee the full and prompt
performance by the Sponsor of all of the other covenants and obligations on the
part of the Sponsor under the Loan Facility Agreement and the other Operative
Documents. If the Sponsor shall at any time default in the performance of any
such other covenant or obligation contained in the Loan Facility Agreement, or
other Operative Document, such that a "Credit Event" under the Loan Facility
Agreement shall have occurred, the Guarantors will immediately perform the same
or cause the same to be performed.
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Section 1.3. The obligations of the Guarantors under this
Guaranty Agreement shall include the obligation to reimburse the Guaranteed
Parties for any preferential payments received from the Sponsor under or
pursuant to the Loan Facility Agreement or this Guaranty Agreement in the event
that the Sponsor becomes a debtor under the United States Bankruptcy Code and
such payment has been determined by the court having jurisdiction over the
matter to be a preferential payment. Notwithstanding anything in this Guaranty
Agreement to the contrary, if a bankruptcy petition has been filed by or against
the Sponsor during any preferential period (as established by the United States
Bankruptcy Court or other applicable law) and the Sponsor has made payments to
the Guaranteed Parties during said preferential period, this Guaranty Agreement
shall not be terminated unless and until a final, nonappealable decision by a
court of competent jurisdiction or other agreement has been entered or reached
pursuant to which the Guaranteed Parties shall be entitled to retain all such
moneys paid during such preferential period.
Section 1.4. The obligations of the Guarantors under this
Guaranty Agreement shall be primary, absolute and unconditional and shall remain
in full force and effect until the Guaranteed Obligations or any other liability
guaranteed hereby shall have been paid or provided for, irrespective of the
validity, regularity or enforceability of the Loan Facility Agreement or any
other Operative Document, and, until such payment, shall not be affected,
modified or impaired upon the happening from time to time of any event,
including, without limitation, any of the following, whether or not with notice
to or the consent of the Guarantors:
(a) the compromise, settlement, release or termination of any
or all of the obligations, covenants or agreements of the Sponsor or
any Borrower under the Loan Facility Agreement or any other Operative
Document;
(b) to the extent permitted by law, the failure to give notice
to the Guarantors of the occurrence of a Credit Event under the terms
and provisions of this Guaranty Agreement or the occurrence of a
"Credit Event" under the Loan Facility Agreement;
(c) the waiver of the payment, performance or observance by
the Guaranteed Parties, the Sponsor or any Guarantor of any of the
obligations, covenants or agreements of any of them contained in the
Loan Facility Agreement or any other Operative Document (except to the
extent waived);
(d) the extension of the time for payment of any obligations,
covenants or agreements arising out of the Loan Facility Agreement or
any other Operative Document or the extension or the renewal of any
thereof;
(e) the modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth in the
Loan Facility Agreement or any other Operative Document;
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(f) the taking or the omission of any of the actions referred
to in the Loan Facility Agreement or any other Operative Document;
(g) any failure, omission, delay or lack on the part of the
Guaranteed Parties to enforce, assert or exercise any right, power or
remedy conferred on the Guaranteed Parties in this Guaranty Agreement
or the Loan Facility Agreement or any other Operative Document;
(h) the voluntary or involuntary liquidation, dissolution,
marshalling of assets and liabilities, receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment of, or other
similar proceedings affecting the Guarantors or the Guaranteed Parties
or any of their assets, or any allegation or contest of the validity of
this Guaranty Agreement in any such proceeding or the sale or other
disposition of all or substantially all the assets of the Guaranteed
Parties or the Guarantors; provided, however, that this Guaranty
Agreement shall continue to be effective or be reinstated, as the case
may be, if, at any time, payment, or any part thereof, pursuant to
Section 1.1 hereof, is rescinded or must otherwise be restored or
returned by the Guaranteed Parties upon any of the events listed in
this Subsection (h) or otherwise, as though such payment has not been
made;
(i) to the extent permitted by applicable law, the release or
discharge of the Guarantors from the performance or observance of any
obligation, covenant or agreement contained in this Guaranty Agreement
by operation of law;
(j) the default or failure of the Guarantors to fully perform
any of the obligations thereof set forth in this Guaranty Agreement;
(k) the invalidity or unenforceability of the Loan Facility
Agreement or any other Operative Document or any Loan Document;
(l) the release, surrender or substitution, either with or
without consideration, of any property, collateral or other security of
any kind or nature whatsoever held by the Guaranteed Parties, or held
by any other Person on behalf of or for the account of the Guaranteed
Parties, securing any obligation covered by or under this Guaranty
Agreement;
(m) the lack of capacity or authority on the part of the
Guaranteed Parties, the Sponsor or the Guarantors to perform their
obligations under this Guaranty Agreement or the Loan Facility
Agreement or any other Operative Document;
(n) the creation or incurring of any new or additional
obligation of the Guaranteed Parties, the Sponsor or the Guarantors
under this Guaranty Agreement or the Loan Facility Agreement or any
other Operative Document;
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(o) the breach of any duty on the part of the Guaranteed
Parties, the Sponsor, or any other Person to disclose to the Guarantors
any facts which such Person may now or hereafter know regardless of
whether any such Person has reason to believe that any such facts
materially increase the risk beyond which the Guarantors intends to
assume, and regardless of whether any such Person has reason to believe
that such facts are unknown to the Guarantors; or
(p) the existence of any defense based upon an election of
remedies by the Guaranteed Parties.
Section 1.5. The Guarantors hereby expressly waive notice in
writing, or otherwise, from the Guaranteed Parties of their acceptance and
reliance on this Guaranty Agreement. The Guarantors agree to pay all reasonable
costs, expenses and fees, including all actual and reasonable attorneys' fees of
both in-house counsel and outside counsel, which may be incurred by the Servicer
in enforcing or attempting to enforce this Guaranty Agreement following any
default on the part of any Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.
Section 1.6. The Guarantors hereby acknowledge that there may
be future advances by the Guaranteed Parties to or for the benefit of the
Sponsor (although the Guaranteed Parties may be under no obligation to make such
advances) and that the number and amount of the liabilities guaranteed hereby
may fluctuate from time to time hereafter. Each Guarantor expressly agrees that
its obligations hereunder shall remain absolute, primary and unconditional
notwithstanding such future advances and fluctuations, if any, and agree that,
in any event, this agreement is a continuing guaranty and shall remain in force
at all times hereafter, whether there are any liabilities outstanding or not.
Section 1.7. (a) It is the intent of the Guarantors and the
Guaranteed Parties that each Guarantor's maximum obligations hereunder shall be,
but not in excess of:
(i) in a case or proceeding commenced by or against
such Guarantor under the Bankruptcy Code on or within one year from the
date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties) to be avoidable or unenforceable against such
Guarantor under (A) Section 548 of the Bankruptcy Code or (B) any state
fraudulent transfer or fraudulent conveyance act or statute applied in
such case or proceeding by virtue of Section 544 of the Bankruptcy
Code; or
(ii) in a case or proceeding commenced by or against
such Guarantor under the Bankruptcy Code subsequent to one year from
the date on which any of the Guaranteed Obligations are incurred, the
maximum amount which would not otherwise cause the Guaranteed
Obligations (or any other obligations of such Guarantor to the
Guaranteed
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Parties) to be avoidable or unenforceable against such Guarantor under
any state fraudulent transfer or fraudulent conveyance act or statute
applied in any such case or proceeding by virtue of Section 544 of the
Bankruptcy Code; or
(iii) in a case or proceeding commenced by or against
such Guarantor under any law, statute or regulation other than the
Bankruptcy Code (including, without limitation, any other bankruptcy,
reorganization, arrangement, moratorium, readjustment of debt,
dissolution, liquidation or similar debtor relief laws), the maximum
amount which would not otherwise cause the Guaranteed Obligations (or
any other obligations of such Guarantor to the Guaranteed Parties) to
be avoidable or unenforceable against the Guarantor under such law,
statute or regulation including, without limitation, any state
fraudulent transfer or fraudulent conveyance act or statute applied in
any such case or proceeding.
(The substantive laws under which the possible avoidance or unenforceability of
the Guaranteed Obligations (or any other obligations of such Guarantor to the
Guaranteed Parties) shall be determined in any such case or proceeding shall
hereinafter be referred to as the "Avoidance Provisions").
(b) To the end set forth in Section 1.7(a), but only to the
extent that the Guaranteed Obligations would otherwise be subject to
avoidance under the Avoidance Provisions if any Guarantor is not deemed
to have received valuable consideration, fair value or reasonably
equivalent value for the Guaranteed Obligations, or if the Guaranteed
Obligations would render such Guarantor insolvent, or leave such
Guarantor with an unreasonably small capital to conduct its business,
or cause such Guarantor to have incurred debts (or to have intended to
have incurred debts) beyond its ability to pay such debts as they
mature, in each case as of the time any of the Guaranteed Obligations
are deemed to have been incurred under the Avoidance Provisions and
after giving effect to the contribution by such Guarantor, the maximum
Guaranteed Obligations for which any Guarantor shall be liable
hereunder shall be reduced to that amount which, after giving effect
thereto, would not cause the Guaranteed Obligations (or any other
obligations of such Guarantor to the Guaranteed Parties), as so
reduced, to be subject to avoidance under the Avoidance Provisions.
This Section 1.7(b) is intended solely to preserve the rights of the
Guaranteed Parties hereunder to the maximum extent that would not cause
the Guaranteed Obligations of any Guarantor to be subject to avoidance
under the Avoidance Provisions, and neither the Guarantors nor any
other Person shall have any right or claim under this Section 1.7 as
against the Guaranteed Parties that would not otherwise be available to
such Person under the Avoidance Provisions.
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ARTICLE II
Special Covenants
Section 2.1. Any notices served upon any Guarantor shall be
sent by registered or certified mail to such Guarantor at the address set forth
below, or to such other address as may be furnished by such Guarantor to the
Servicer in writing.
Section 2.2. Any rights that any Guarantor may have against
the Sponsor arising out of the Guaranty Agreement, the Loan Facility Agreement
or out of any other Operative Document or otherwise shall be subordinate to the
rights of the Guaranteed Parties arising out of the Guaranty Agreement, the Loan
Facility Agreement or any other Operative Document, and no Guarantor shall
exercise or assert any subrogation rights against the Sponsor prior to payment
in full of the Guaranteed Obligations so long as a Credit Event hereunder shall
have occurred and is continuing.
ARTICLE III
Credit Events; Remedies
Section 3.1. The following shall be "Credit Events" under this
Guaranty Agreement:
(1) the failure in any material respect of any Guarantor to
abide by or perform its obligations under Section 4.7 hereof within any
applicable grace period given the Sponsor to perform a particular duty
or obligation under the Loan Facility Agreement or any other Operative
Document;
(2) the failure in any material respect of any Guarantor to
abide by or perform any of the other covenants on the part of such
Guarantor contained herein;
(3) the discovery by the Servicer that any statement,
representation or warranty of any Guarantor contained herein is false,
misleading or erroneous in any material respect; or
(4) the occurrence and continuance of a "Credit Event" under
the Loan Facility Agreement.
Section 3.2. If a Credit Event hereunder shall occur, the
Servicer, subject to the unanimous consent of the Guaranteed Parties, shall be
entitled to exercise all remedies available against any Guarantor at law or in
equity, including, but not limited to, the recovery of damages for the breach
hereof or specific enforcement of this Guaranty Agreement, or both, and to
recover from any Guarantor all costs and expenses of exercising such remedies
hereunder, including actual and
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reasonable attorneys' fees and actual costs, whether or not the exercise of such
remedies involved litigation. EACH GUARANTOR EXPRESSLY AGREES THAT THE PROPER
VENUE FOR ANY ACTION WHICH MAY BE BROUGHT UNDER THIS GUARANTY AGREEMENT, IN
ADDITION TO ANY OTHER VENUE PERMITTED BY LAW, SHALL BE IN THE STATE OF GEORGIA.
EACH GUARANTOR FURTHER AGREES THAT ANY SUIT HEREUNDER MAY BE BROUGHT IN EITHER
THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA OR THE
SUPERIOR COURT OF XXXXXX COUNTY, GEORGIA. SHOULD IT BECOME NECESSARY FOR THE
SERVICER TO INSTITUTE ANY ACTION UNDER THIS GUARANTY AGREEMENT, EACH GUARANTOR
(i) DOES HEREBY SUBMIT ITSELF TO THE JURISDICTION OF ANY COURT SITTING IN THE
STATE OF GEORGIA (AND ANY COURT OF APPEALS FROM ANY SUCH COURT) IN REGARD TO ANY
DISPUTE ARISING UNDER THIS GUARANTY AGREEMENT; AND (ii) AGREES THAT ENTRY OF ANY
FINAL AND NONAPPEALABLE JUDGMENT BY ANY SUCH COURT AND ARISING UNDER THIS
GUARANTY AGREEMENT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, SHALL BE BINDING
UPON AND SHALL BE ENTITLED TO THE FULL FAITH AND CREDIT OF THE COURT OF ANY
STATE, TERRITORY OR POSSESSION OF THE UNITED STATES SHOULD THE SERVICER FIND IT
NECESSARY TO ENFORCE SAID JUDGMENT IN ANY SUCH STATE, TERRITORY OR POSSESSION
AGAINST SUCH GUARANTOR.
ARTICLE IV
Miscellaneous
Section 4.1. The obligations of each Guarantor hereunder shall
arise absolutely and unconditionally when this Guaranty Agreement is executed
and delivered to the Guaranteed Parties.
Section 4.2. No remedy herein conferred upon or reserved to
the Servicer is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Guaranty Agreement, or now, or
hereafter, existing at law, or in equity, or by statute. THIS GUARANTY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
GEORGIA. No delay or omission to exercise any right or power accruing upon any
default, omission or failure or performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time as often as may be deemed
expedient. In order to entitle the Servicer to exercise any remedy reserved to
it in this Guaranty Agreement, it shall not be necessary to give any notice,
other than such notice as may be herein expressly required. In the event any
provision contained in this Guaranty Agreement should be breached by any party
and thereafter duly waived by the other party so empowered to act, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder. No waiver, amendment, release or modification
of this Guaranty Agreement shall be established by conduct, custom or course of
dealing, but solely
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by an instrument in writing duly executed by the parties hereto, duly authorized
by this Guaranty Agreement.
Section 4.3. This Guaranty Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof and may be
executed simultaneously in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
Section 4.4. The invalidity or unenforceability of any one or
more phrases, sentences, clauses or sections in this Guaranty Agreement
contained shall not affect the validity or enforceability of the remaining
portions of this Guaranty Agreement or any part thereof.
Section 4.5. Where this Guaranty Agreement provides for notice
in any manner, such notice may be waived in writing by the person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice shall be given in the manner
provided for in Section 2.1 hereof.
Section 4.6. Each Guarantor hereby agrees to indemnify and
defend the Guaranteed Parties and the Servicer and hold them harmless from and
against any and all claims, losses, liabilities or damages (other than such as
result from gross negligence or willful misconduct) in any way growing out of or
resulting from this Guaranty Agreement, including, without limitation, the
enforcement of this Guaranty Agreement.
Section 4.7. Each Guarantor accepts the terms and provisions
of the Loan Facility Agreement and all other Operative Documents and agrees to
perform all duties and obligations, express or implied, of the Sponsor
thereunder in the event the Sponsor shall fail to perform any thereof.
Section 4.8. Upon execution and delivery by any Subsidiary of
the Sponsor of an instrument in the form of Exhibit 1, such Subsidiary of the
Sponsor shall become a Guarantor hereunder with the same force and effect as if
originally named a Guarantor herein (each an "Additional Guarantor") and its
obligations hereunder shall be joint and several with the Guarantors that
originally executed this Guaranty. The execution and delivery of any such
instrument shall not require the consent of any other Guarantor hereunder. The
rights and obligations of the Guarantors hereunder shall remain in full force
and effect notwithstanding the addition of any Additional Guarantor as a party
to this Guaranty.
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IN WITNESS WHEREOF, the Guarantors and the Servicer have
caused this Guaranty to be duly executed and delivered by their respective duly
authorized officers as of the date first above written.
GUARANTORS:
Address for Notices: XXXXX INVESTMENT COMPANY
000 Xxxx Xxxxx Xxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000 By:
Attn: Xxxxxxx X. Xxxxxxxxx ----------------------------
Xxxxxxx X. Xxxxxxxxx
Vice President and Treasurer
Attest:
-------------------------
Xxxxx X. Xxxxx
Secretary
[CORPORATE SEAL]
[SIGNATURE PAGE TO THE GUARANTY AGREEMENT]
147
SERVICER:
SUNTRUST BANK, ATLANTA
By:
----------------------------------------
Title:
-----------------------------------
By:
----------------------------------------
Title:
-----------------------------------
148
ACKNOWLEDGED AND
AGREED TO:
XXXXX RENTS, INC.
By:
-----------------------------------
Xxxxxxx X. Xxxxxxxxx
Vice President, Finance;
Chief Financial Officer
149
EXHIBIT E
TO
LOAN FACILITY AGREEMENT AND GUARANTY
FORM OF PARTICIPATION CERTIFICATE
SERVICER: SunTrust Bank, Atlanta CERTIFICATE NO. _____
00 Xxxx Xxxxx
Xxxxxx Xxxx_000__
Xxxxxxx, Xxxxxxx 00000
DATE: January __, 1998
This is to certify that SunTrust Bank, Atlanta ("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 a Loan Facility Agreement and Guaranty dated as of January __,
1998 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, ATLANTA,
AS SERVICER
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
150
EXHIBIT F
TO
LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
LINE OF CREDIT AND SECURITY AGREEMENT
(Qualified Franchisee Borrower)
THIS LINE OF CREDIT AND SECURITY AGREEMENT (this "Agreement") dated as
of ____________ ___, 199__, is made between _______________________, [a
__________ corporation] [a ____________ partnership] [a __________ limited
liability company] ("Borrower"), and SUNTRUST BANK, ATLANTA ("Bank"), a Georgia
banking corporation having its principal office in Atlanta, Georgia.
W I T N E S S E T H:
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):
"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 perfor xxxxx.
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"Account Debtor" means any Person who is liable on an Account.
"ACTS System" shall mean Aaron's proprietary software system, as
modified from time to time, used by Xxxxx and its franchisees, such as Borrower.
"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.
"AOR Report" shall mean an "Agreements on Rent" report tracking the
number of units on rent, idle units, re-rents and new rents, scheduled and early
payouts, and charged off and skipped units, and including the net monthly rental
income and a weekly or monthly delinquency figure.
"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, Atlanta 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.
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152
"Borrowing Base" shall mean, on any date of determination, an amount
equal to 5.5 multiplied by the sum of (x) the average monthly Rental Revenue for
the three most recently ended calendar months from any and all franchisee stores
operated by Borrower where at least 12 calendar months have elapsed since the
Opening Date of each such store, plus (y) with respect to all other franchisee
stores of Borrower, the Rental Revenue from such stores for the most recently
ended calendar month, as reported to Bank by Xxxxx in accordance with the
procedures described in 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.
"Cash Flow" 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, taxes based on income and depreciation (as reported
through ACTS) and amortization for such period, minus (iii) the dollar amount of
inventory purchases made by Borrower during such period, each as determined in
accordance with GAAP consistently applied.
"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 adopted in force 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.
"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
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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, 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.
"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.
"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.
"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.
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"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, 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.
"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.
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"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
ACTS 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" means with respect to the Loan, the 20th 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
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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.
"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 termination, 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.
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"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. In addition, at
the request of Borrower and subject to the compatibility of computer systems,
Bank will provide Borrower with computer access to the Bank's records with
respect to such DDA Account for the purposes of monitoring activity in the
account. Borrower hereby consents and acknowledges that Xxxxx shall be given
computer access to such DDA Account.
(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. (a) Upon Borrower's execution of this Agreement and
compliance with its terms and subject to Bank's confirmation that Bank has a
first priority security interest in the Col lateral, 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 ACTS 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
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to use in requesting such working capital Advance through the ACTS 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").
(b) On a daily basis, 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
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 ACTS System, to pay such invoice by means of an ACH transfer
from its DDA Account. Any directions for ACH transfers correctly inputted into
the ACTS 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
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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 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, ATLANTA
STRATEGIC PARTNER PROGRAMS DEPARTMENT
XXXXXX 000
X. X. XXX 0000
XXXXXXX, XXXXXXX 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 unless reference to a 365
or a 366-day year is necessary in order not to exceed the highest rate
permissible under Applicable Law. 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
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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 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 five (5) 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 and in
integral multiples thereof.
(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. Asset Dispositions. (a) All Merchandise financed by the Bank must
be serialized by means of the ACTS 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 monthly
basis (and, if available, on a weekly basis) by transmittal of Borrower's
receiving report (containing ACTS numbers) directly to Xxxxx on the ACTS 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 ACTS System,
such information to include the ACTS
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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. Xxxxx, on a monthly (and if available, weekly)
basis, shall transmit all such information to the Bank in a summary form.
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 five percent (5%) of
the amount of the late payment or such lesser amount as may be agreed to by the
Bank.
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, 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
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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:
"FOR VALUE RECEIVED, THIS AGREEMENT HAS BEEN ASSIGNED TO
SUNTRUST BANK, ATLANTA AND THERE ARE NO DEFENSES AGAINST THE AS
SIGNEE."
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
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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 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 par ties. Bank may exercise its rights and
remedies with respect to the Collateral without first resorting
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(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;
(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, ATLANTA
X.X. XXX 0000
XXXXXXX, XXXXXXX 00000
CENTER CODE 113
ATTENTION: STRATEGIC PARTNER PROGRAMS DEPARTMENT]
(j) a validly executed authorization to make the ACH transfers
for payments of principal, interest and fees contemplated hereunder,
including without limitation, mandatory
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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 and Borrower shall have established a DDA Account and
a Loan Account for Borrower, the Bank shall have satisfied itself that
there are no Liens on any of the Col lateral, and the Bank shall be
satisfied that all corporate or partnership proceeding 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 re spective 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 dated
________, 19__, and previously delivered to Bank, 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 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
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respect to Advances made for working capital purposes, subject to the approval
of Xxxxx, which requests have been entered by the Borrower in the ACTS 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 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 Cash Flow. 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 of
Borrower occurs and measured on 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 Debt
to Cash Flow 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 4.5:1.0.
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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.
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 Bank or cause to be delivered to
Bank:
(i) on or before the tenth day of each month, monthly
detailed Inventory reports in a form acceptable to Bank showing
Accounts and changes therein;
(ii) within 120 days after the end of each fiscal year, an
annual personal financial statement of each Guarantor;
(iii) within 20 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 year-to-date basis, prepared in
accordance with GAAP in the format recommended by Xxxxx, and (b) a
Compliance Certificate as described below in Section 7.2;
(iv) 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;
(v) on or before the tenth day of the following month,
monthly AOR Reports concerning the prior month; and
(vi) with reasonable promptness, all reports by Borrower to
its shareholders and such other information as Bank may reasonably
request from time to time.
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7.2. Compliance Certificate. Prepare and deliver to Bank, 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 cov enants and explaining any such variances.
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
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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 ACTS 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 is an S Corporation, it may pay dividends
not to exceed the amount of income taxes payable by its shareholders
attributable to Borrower's income.
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 obli gation 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 fidu ciary, 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 as shown on Exhibit B;
(j) Borrower shall lose its franchise, license or right to
rent or to sell the Inventory;
(k) Borrower shall fail to enter properly any acquisition of
Inventory or Equipment or any Asset Disposition on the ACTS 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.
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.
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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 10 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, 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
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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.
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.
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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 add 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, ATLANTA
00 XXXX XXXXX
XXXXXXX, XXXXXXX 00000
ATTENTION: CENTER NO. 113
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 connection therewith. The indemnity obligations of Borrower under this
Section shall survive the payment in full of the Loan Indebtedness.
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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, 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
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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.
27
177
WITNESS the hand and seal of the parties hereto on the date first above
written.
Accepted in Atlanta, Georgia:
BORROWER:
(Seal)
--------------------------
By:
--------------------------
Title:
--------------------
Attest:
----------------------
Secretary
[CORPORATE SEAL]
BANK:
SUNTRUST BANK, ATLANTA
By:
--------------------------
Title:
-----------------------
By:
--------------------------
Title:
-----------------------
28
178
EXHIBIT A
FORM OF
MASTER NOTE
(Qualified Franchisee Borrower)
[DATE] [$____________]
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, [____________, a
____________ _______________] (the "Borrower"), promises to pay to the order of
SUNTRUST BANK, ATLANTA, 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 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 and, when adjusted for a year of 365 days, an initial
simple interest rate 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
1
179
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 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.
2
180
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:
Attest:
--------------------
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: ]
3
181
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):
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182
D. BUSINESS LOCATIONS
The following are all of the locations where Borrower has an office or
other place of business or owns assets:
E. STOCKHOLDERS
The following are all of the stockholders of Borrower and the
percentage of shares of Borrower's capital stock owned by each:
Stockholder's Name Percentage of Shares Owned
------------------ --------------------------
5
183
EXHIBIT C
COMPLIANCE CERTIFICATE OF BORROWER
(Pursuant to Section 7.2 of Line of Credit and Security Agreement
dated ______________, 19___)
[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 ____________, 19___ by and
between the Borrower and SUNTRUST BANK, ATLANTA (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 super vision. 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.
6
184
WITNESS my hand this ____ day of __________, 199_.
[NAME OF BORROWER]
By:
-------------------------
Title:
-------------------
7
000
XXXXXXXXX XXXXXXXX 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 Cash Flow
A. Enter amount of Debt ____________________
B. Enter amount of Debt
attributable to store locations open
less than 13 months ____________________
C. Subtract B from A ____________________
D. Enter amount of pretax net income for
last three months (backing out income
for stores less than 12 months old) ____________________
E. Enter amount of depreciation and
amortization expense for last
three months (backing out
depreciation and amortization for
stores less than 13 months old) ____________________
F. Add D plus E ____________________
G. Enter amount of inventory purchases
for last three months (backing out
purchases for stores less than 13 months
old) ____________________
1
186
H. Subtract G from F _____________________
Ratio of C:H _____________________
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
2
187
first day of the 13th month following
the Opening Date of the first store
location, ratio not great than......... 4.5 : 1.0
-------------
Compliance? Yes ____ No ____
Note: All terms are those used in generally accepted accounting practices unless
specifically defined in the Agreement.
3
188
EXHIBIT G
TO
THE LOAN FACILITY AGREEMENT
AND GUARANTY
FORM OF
MASTER NOTE
(Qualified Franchisee Borrower)
[DATE] [$____________]
Atlanta, Georgia
FOR VALUE RECEIVED, the undersigned, [____________, a ____________
_______________] (the "Borrower"), promises to pay to the order of SUNTRUST
BANK, ATLANTA, 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 (i) the
principal sum of ________________ ($_______________), or (ii) so much 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 and, when adjusted for a year of 365
days, an initial simple interest rate 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.
189
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.
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, irrespective of whether or not Bank has made any demand under the
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 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 AND THE RIGHTS AND OBLIGATIONS
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. TIME IS OF THE ESSENCE OF THIS NOTE.
PRESENTMENT FOR PAYMENT, NOTICE OF DISHONOR AND PROTEST ARE
HEREBY WAIVED.
190
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:
Attest:
-----------------------
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 a limited [NAME OF BORROWER
liability company:]
By:
---------------------------
Name:
Title:]
