MASTER DEVELOPMENT AND FRANCHISE AGREEMENT
THIS MASTER DEVELOPMENT AND FRANCHISE AGREEMENT (the "Agreement") is made
and entered into this 12TH day of August, 1996, by and between SUPERCUTS,
INC., a Delaware corporation, with its principal business address at 000
Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 (the "Company"), and
SUPERBROWARD, L.L.C., a Delaware limited liability company, whose principal
business address is X.X. XXX 0000 XXXXXXX, XX 00000 ("Franchisee").
RECITALS
Franchisee has expressed an interest in acquiring and developing additional
Supercuts Store franchises in the Broward County, Florida market (the "Market").
Company, through its wholly-owned subsidiary, Supercuts Corporate Shops,
Inc. (which is included in the references to "Company"), currently owns and
operates 26 Supercuts Stores in the Market and one Supercuts Store in Miami
Lakes, Dade County, Florida, the addresses of which are listed in Exhibit A to
this Agreement (the "Corporate Stores").
Franchisee desires to acquire franchises for the Corporate Stores and to
develop and open additional Supercuts Store franchises in the Market and is
willing to comply with this Agreement's terms and conditions in order to receive
these rights.
Company is willing to grant franchises to Franchisee for the Corporate
Stores and to grant Franchisee the right to develop and open additional
Supercuts Store franchises in the Market if Franchisee complies with this
Agreement's terms and conditions.
NOW, THEREFORE, in consideration of the mutual promises and obligations
contained in this Agreement and the other agreements and documents that this
Agreement references, Company and Franchisee agree as follows:
1. Subject to this Agreement's terms and conditions, Company hereby
grants Franchisee the right to operate the Corporate Stores as franchises. To
reflect these franchises, Company and Franchisee are, concurrently with the
signing of this Agreement, also signing 27 separate Franchise Agreements, one
for each Corporate Store, that will regulate Franchisee's operation of those
Stores according to Company's standards, specifications and operating
procedures. The form of Franchise Agreement that Company and Franchisee are
signing for each Corporate Store, which is Company's current standard form of
Franchise Agreement, is attached as Exhibit B. Each Franchise Agreement also
will include a Rider in the form attached as Exhibit C. Company retains title
to all fixed assets and leasehold improvements of the Corporate Stores unless
and until Franchisee exercises the buyout option described in Section 8.
However, Company is selling to Franchisee all of the retail supplies/inventory,
and transferring to Franchisee all of the xxxxx cash, now located at the
Corporate Stores. Company agrees to reduce the amounts owed by Franchisee for
these items by the value of any vacation time accrued by the employees of the
Corporate Stores. Company and Franchisee agree to determine the amounts due for
the retail supplies/inventory and xxxxx cash, and the value of all accrued
vacation time, within fifteen days after this Agreement's date. The remaining
amount due to Company or Franchisee, as applicable, must be paid within 15 days
after the parties determine that amount. Despite the foregoing, Franchisee need
not pay for the "backbar" supplies (I.E., the non-retail inventory) located at
the Corporate Stores.
2. Subject to this Agreement's terms and conditions, Company hereby
grants Franchisee the right to occupy the premises of each Corporate Store
during the term of the Franchise Agreement for that Store. To reflect these
occupancy rights, Company and Franchisee are, concurrently with the signing of
this Agreement, also signing 27 separate Subleases, one for each Corporate
Store, that will regulate Franchisee's occupancy of those Stores. Franchisee
will make all required Sublease payments directly to Company, which then will
pay the landlord of each Store. However, if Company fails to make any Sublease
payment and to cure that default within the time period specified in the lease
after notice from the Store's landlord, Franchisee may make such Sublease
payment and set off that amount against the payments Franchisee must make under
this Agreement. The form of Sublease that Company and Franchisee are signing
for each Corporate Store, which is Company's current standard form of Sublease,
is attached as Exhibit D. Each Sublease also will include a Rider in the form
attached as Exhibit E.
3. Subject to this Agreement's terms and conditions, Company hereby
grants Franchisee the right, and Franchisee hereby undertakes the obligation, to
develop and open 15 additional Supercuts Store franchises (the "Additional
Stores") within the Market on or before December 31, 1998. Franchisee further
agrees to develop and open at least five of these 15 Additional Stores before
the one year anniversary of this Agreement. To reflect these development
rights, Company and Franchisee are, concurrently with the signing of this
Agreement, also signing a separate Area Development Agreement that will
incorporate the terms of this Agreement and this development schedule and,
together with Company's existing "Supercuts Expansion Policy," regulate
Franchisee's development of these Additional Stores within the Market according
to Company's standards, specifications and operating procedures. The form of
Area Development Agreement that Company and Franchisee are signing, which is
Company's current standard form of Area Development Agreement, is attached as
Exhibit F. The Area Development Agreement also will include a Rider in the form
attached as Exhibit G. The forms of Franchise Agreement and Sublease that
Franchisee will sign for each Additional Store it develops under the Area
Development Agreement will be (at Company's option) either (a) the forms of
Franchise Agreement and Sublease attached as Exhibits B and D or (b) Company's
then current forms of Franchise Agreement and Sublease offered to all
prospective franchisees (if Company modifies those documents after the date of
this Agreement), although Franchisee will sign the same forms of Franchise
Agreement and Sublease for each Additional Store it develops under the Area
Development Agreement and sign Riders to those documents substantially in the
form attached as
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Exhibit H. Franchisee may apply to the Development Fees due
under the Area Development Agreement the $50,000 in development fees that it
already has credited but not applied under its existing area development
agreement for Dade County, Florida. If one of the Additional Stores that
Franchisee develops and opens under this Section 3 is destroyed or otherwise
rendered inoperable through no fault of Franchisee, Company will continue to
count that Additional Store as one of the 15 Additional Stores that Franchisee
must develop by December 31, 1998 if Franchisee replaces that Store within one
year after the Store is destroyed or rendered inoperable. If Franchisee fails
to do so, its failure will be a default of its development obligations under
this Section 3.
4.(a) Notwithstanding anything to the contrary contained in the forms
of Franchise Agreement and Sublease attached as Exhibits B and D, the
initial term of the franchise for each Corporate Store that Company is
granting under Section 1 above will be 10 years, except as provided in
subparagraph (b) and Section 8 below, and, when that initial term expires,
Franchisee will have the right to renew all franchises for an additional 10
year term on the same terms and conditions under which Franchisee then is
operating those Corporate Store franchises, provided Franchisee remodels
those Corporate Stores to conform to Company's then current standards for
Supercuts Stores. If Franchisee elects to renew these franchises, it must
renew all of the franchises. Franchisee may not elect to renew the
franchises for some, but not all, of the Corporate Stores. Despite the
foregoing provisions, Company and Franchisee acknowledge and agree that the
terms of the Subleases for the premises of the Corporate Stores, including
any renewal rights under those Subleases, might not exceed 10 years. If
Company cannot maintain legal possession of the premises of one or more
Corporate Stores for at least the 10 year term of this Agreement, Company
agrees to allow Franchisee to relocate those Corporate Stores to acceptable
substitute premises for which Company will sign leases and then sublease to
Franchisee. The initial and renewal terms of any Additional Store
franchises that Franchisee acquires under the Area Development Agreement
referenced in Section 3 will be as provided in the Franchise Agreements and
Subleases that Franchisee signs for those Stores, as modified by the forms
of Riders attached as Exhibit H.
(b) The initial term of the franchise for each Corporate Store will
be less than 10 years if Franchisee (i) exercises its buyout option under
Section 8 below or (ii) breaches any provision of this Agreement and
Company exercises its termination rights and/or buyout option under
Section 10 below.
5. After the date of this Agreement, Franchisee is responsible for all of
the costs and expenses of operating the Corporate Stores (even though Company
retains title to all fixed assets and leasehold improvements), including the
costs of insurance coverage of the type that Company customarily requires for
its own Supercuts Stores (with Company named as an additional insured
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and co-loss payee), and for all liabilities that arise during the operation of
the Corporate Stores. Concomitantly, Franchisee will have the right, except as
otherwise provided in Sections 6 and 7, to all revenue that the Corporate Stores
generate.
6. As partial consideration for Company's willingness to allow Franchisee
to operate the Corporate Stores as franchises, and notwithstanding anything to
the contrary contained in the Franchise Agreements for the Corporate Stores,
Franchisee agrees to pay Company during this Agreement's term the annual amount
of $1.54 million. Franchisee agrees to pay this amount in equal monthly
installments of $128,333.33. Each monthly installment is due on or before the
tenth day of each calendar month, with the first of such payments due September
10, 1996. The payment due for the month in which the parties sign this
Agreement will be prorated for the number of days during that month that
Franchisee actually operates the Corporate Stores. These lump sum payments are
in place of the royalty fees payable under the Franchise Agreements for the
Corporate Stores. However, if the Corporate Stores generate, in the aggregate,
more than $6.5 million in Gross Revenue (as defined below) during any calendar
year during this Agreement's term before the date on which Franchisee
effectively exercises its rights under Section 8 or Company exercises its rights
under Section 9, Franchisee also agrees to pay a royalty on the excess revenue
equal to 10% of the excess related to services provided and 4% of the excess
related to product sales. Franchisee will begin paying this royalty on the
service and product sales made during the month following the calendar month in
which Franchisee's aggregate Gross Revenue from all Corporate Stores first
exceeds $6.5 million. All amounts which Franchisee owes Company under this
Agreement will bear interest after their original due date at the highest
contract rate of interest that the law allows, not to exceed 18% per year.
"Gross Revenue" means the total gross revenue Franchisee derives in accordance
with such accounting practices and procedures as Company determines and requires
with respect to the operation of Supercuts Stores, whether from sales for cash
or credit, and without regard to the source of payment thereof or the collection
thereof, or the cost of collection, including the sales of all merchandise and
services but excluding all sales, use, gross receipt and other similar taxes
added to the sales price and collected from the customer and less any bona fide
refunds. The term "sales of all merchandise and services" shall be construed in
its most comprehensive sense.
7. As additional consideration for Company's willingness to allow
Franchisee to operate the Corporate Stores as franchises, Franchisee will assume
payments to Prime Leasing, Inc. in the amount of $8,040 per month through May
2000 ($96,481 per year), with a final lump sum payment to Prime Leasing, Inc. of
$45,712 due in June 2000. While Franchisee is primarily responsible for these
Prime Leasing, Inc. payments, Company agrees to advance funds, and make the
monthly Prime Leasing, Inc. payments, on Franchisee's behalf through December
1998. To reflect these payments, Company and Franchisee are, concurrently with
the signing of this Agreement, also signing a Promissory Note in which
Franchisee agrees to repay Company on January 1, 1999 the principal amount of
$233,160, which equals the amount that Company will pay
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Prime Leasing, Inc. on Franchisee's behalf from this Agreement's date through
December 1998. Franchisee agrees to pay Company on a monthly basis in cash
the interest that accrues on the amounts that Company advances on
Franchisee's behalf. Interest will accrue as noted in the Promissory Note.
The form of Promissory Note that Franchisee will sign is attached as Exhibit I.
Franchisee agrees that, beginning January 1, 1999, it will make the
monthly and lump sum payments noted above directly to Company, which then
will make the required payments to Prime Leasing, Inc.
8. If Franchisee fully complies with this Agreement, the Franchise
Agreements for the Corporate Stores, the Area Development Agreement and the
Franchise Agreements for the Additional Stores (or has fully cured any defaults
which it has the right to cure), Franchisee will have the right, at any time
after December 31, 1998 and before the tenth anniversary date of this Agreement
(but only as of the end of a calendar month), to purchase the assets of the
Corporate Stores, to terminate this Agreement, to terminate the Franchise
Agreements, Subleases and related documents for the Corporate Stores and to
replace them with new Franchise Agreements, Subleases and related documents (the
standard terms of which will govern the operation of those Stores) and to cease
paying the annual $1.54 million amount referenced in Section 6 by paying Company
the buyout price described below (the "Buyout Price"). If Franchisee exercises
this right, Franchisee must exercise the right with respect to all of the
Corporate Stores. Franchisee may not elect to exercise the right with respect
to only some, but not all, of the Corporate Stores. The Additional Stores are
not affected by Franchisee's exercise of this right.
The Buyout Price equals the sum of:
(a) three times the greater of:
(i) cash flow (as defined below); or
(ii) $1.54 million; plus
(b) the undepreciated buildout/net book value of the assets of the
Corporate Stores (the value of which Company periodically will
apprise Franchisee upon reasonable request); plus
(c) all remaining Prime Leasing, Inc. payments.
"Cash flow," for purposes of subparagraph (a)(i) above, means the cash that
Franchisee receives from operating all Corporate Stores during the full 12
calendar month period preceding the date on which Franchisee notifies
Company that it desires to exercise its rights under this Section, less
rent paid under the Subleases, less any Advertising Fund
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contributions paid under the Franchise Agreements for the Corporate Stores
and less other customary profit and loss statement expenses recognized by
generally accepted accounting principles (but not capitalizable balance
sheet items), provided, however, that Franchisee may not deduct from cash
receipts the amounts that it pays to its owners (whether classified as
salary or otherwise), the amounts it pays Company under this Agreement,
including the Prime Leasing, Inc. payments, and non-cash charges such as
depreciation and amortization of fixed or intangible assets. If Company
and Franchisee cannot agree on the calculation of cash flow for the
Corporate Stores, Company's independent certified public accountants will
determine the cash flow for these Stores, and their decision will bind the
parties. This determination will be made at Company's expense. If
Franchisee exercises its buyout right, Company will give Franchisee
customary bills of sale and similar transfer documents. All assets will be
sold on an "as is, where is" basis with no warranties of condition,
merchantability or the like.
9. If Franchisee does not (a) by the tenth anniversary date of this
Agreement, exercise the buyout option described in Section 8 or (b) renew the
Franchise Agreements, Subleases and related documents for the Corporate Stores
for an additional 10 year term after the initial term expires, then:
(i) Franchisee's right to operate the Corporate Stores as franchises
will cease immediately;
(ii) all rights to operate the Corporate Stores will revert
immediately to Company without any payment of any kind; and
(iii) Company will have the right to purchase all of Franchisee's
Additional Stores for an amount equal to the sum of three times
cash flow of the Additional Stores, determined as in Section 8
above, plus the undepreciated buildout/net book value of the
fixed assets of the Additional Stores (all fixed assets to be
depreciated over their estimated useful lives, but no longer than
10 years). Company has the right to receive the same transfer
documents referenced in Section 8.
10. Company also has the right to terminate this Agreement and exercise
immediately the rights described in Section 9 if Franchisee fails at any time to
perform any of its obligations under this Agreement, including, but not limited
to, (a) operating the Corporate Stores as required under this Agreement and the
Franchise Agreements, Subleases and related documents that Franchisee signs for
the Corporate Stores, (b) developing, opening and operating the Additional
Stores as required under this Agreement, the Area Development Agreement and the
Franchise Agreements, Subleases and related documents that Franchisee signs for
the Additional Stores and
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(c) making all payments required under this Agreement, and fails to cure any
of the defaults identified in subparagraphs (a) through (c) above within 10
days after receiving notice of that default from Company, provided, however,
that Company need not provide Franchisee with any notice of and opportunity
to cure a default, and may terminate this Agreement immediately and exercise
its rights under Section 9, if Franchisee commits its second default within
any 12 month period during this Agreement's term.
11. The term of this Agreement is 10 years, unless earlier terminated
under Sections 8 or 10.
12. Concurrently with the signing of this Agreement, each of Franchisee's
owners will sign the form of Guaranty attached as Exhibit J in which they will
guarantee Franchisee's obligations under this Agreement and all other agreements
that Franchisee signs for the Corporate Stores and Additional Stores. These
Guaranties will be secured by Pledge and Security Agreements in the form
attached as Exhibit K that each owner will sign concurrently with the execution
of his or her Guaranty. Franchisee also will sign a Security Agreement in the
form attached as Exhibit L covering all of its personal property.
13. EXCEPT TO THE EXTENT GOVERNED BY FEDERAL LAW, THIS AGREEMENT WILL BE
GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO ITS CONFLICT
OF LAWS PRINCIPLES. IF AND TO THE EXTENT THAT THE PARTIES AGREE NOT TO PROCEED
BY MEANS OF ARBITRATION OR ARE NOT REQUIRED TO PROCEED BY ARBITRATION,
FRANCHISEE WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY OTHER
DOCUMENT SIGNED CONCURRENTLY WITH OR PURSUANT TO THIS AGREEMENT. FRANCHISEE
HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
SAN FRANCISCO COUNTY, CALIFORNIA, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED
MAIL DIRECTED TO FRANCHISEE AT THE ADDRESSES PROVIDED IN SECTION 20 BELOW.
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE (3) BUSINESS DAYS AFTER
THE SAME SHALL HAVE BEEN DEPOSITED IN THE UNITED STATES MAILS, POSTAGE PREPAID.
FRANCHISEE WAIVES ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED UNDER THIS
SECTION AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT.
14. This Agreement is binding upon Company and Franchisee and their
respective assigns and successors in interest and may not be modified except by
a written agreement signed by
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both Company and Franchisee. Franchisee may not assign this Agreement or any
of its rights or obligations under this Agreement, and no owner of Franchisee
may assign an ownership interest in Franchisee, without Company's prior
written consent, which Company may withhold or grant for any or no reason
and, if it grants its consent, condition on Franchisee's sale or assignment
of all of its rights and responsibilities under all documents signed
concurrently with or pursuant to this Agreement. Company may assign this
Agreement without restriction.
15. Company and Franchisee may by written instrument unilaterally waive or
reduce any obligation of or restriction upon the other under this Agreement,
effective upon delivery of written notice to the other or any other effective
date stated in the notice of waiver. Any waiver Company grants will be without
prejudice to any other rights it may have, will be subject to its continuing
review and may be revoked, in its sole discretion, at any time and for any
reason, effective upon delivery to Franchisee of ten (10) days' prior written
notice.
Company and Franchisee will not be deemed to have waived or impaired any
right, power or option this Agreement reserves (including, without limitation,
Company's right to demand exact compliance with every term, condition and
covenant or to declare any breach to be a default and to terminate this
Agreement and all other documents that Company and Franchisee are signing
concurrently with or pursuant to this Agreement before their terms expire) by
virtue of any custom or practice at variance with this Agreement's terms;
Company's or Franchisee's failure, refusal or neglect to exercise any right
under this Agreement or to insist upon the other's exact compliance with its
obligations under this Agreement; Company's waiver, forbearance, delay, failure
or omission to exercise any right, power or option, whether of the same, similar
or different nature, with other Supercuts Store franchisees; the existence of
other agreements for Supercuts Stores which contain provisions different from
those this Agreement contains; or Company's acceptance of any payments due from
Franchisee after any breach of this Agreement. Company and Franchisee agree
that, if Franchisee commits a default under any Franchise Agreement, Rider,
Sublease or other document signed concurrently with or pursuant to this
Agreement, but that default is not so serious in Company's sole discretion as to
warrant Company's termination of this Agreement and exercise of the rights
described in Sections 9 and 10 above, Company may elect to pursue Franchisee for
that specific default and need not exercise all of its rights under this
Agreement. However, that decision will not preclude Company, in the event of
another default, from exercising any and all rights under this Agreement.
16. If any part of this Agreement is declared by a court or arbitrator to
be invalid, unenforceable or unlawful for any reason, that decision will not
affect the validity, enforceability or lawfulness of any other part or the rest
of this Agreement, which will continue in full force and effect and bind the
parties as though the invalid, unenforceable or unlawful part was not contained
in the Agreement.
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17. Except as provided below, all controversies, disputes or claims
between Company and Franchisee in connection with, arising from or with respect
to: (a) any provision of this Agreement or any other related agreement; (b) the
relationship of the parties; or (c) the validity of this Agreement or any other
related agreement, or any provision of such agreement, which is not resolved
within 15 days after either party notifies the other in writing of such
controversy, dispute or claim, shall be submitted for arbitration to the San
Francisco, California office of the American Arbitration Association on demand
of either party. The arbitration proceedings will be conducted in San
Francisco, California and heard by one arbitrator in accordance with the then
current Commercial Arbitration Rules of the American Arbitration Association.
The arbitrator has the right to award or include in his or her award any relief
which he or she deems proper in the circumstances, including, without
limitation, money damages (with interest on unpaid amounts from date due),
specific performance, injunctive relief and attorneys' fees. The award and
decision of the arbitrator will be conclusive and binding upon all parties, and
judgment upon the award may be entered in any court of competent jurisdiction.
The parties acknowledge and agree that any arbitration award may be enforced
against either or both of them in a court of competent jurisdiction, and each
waives any right to contest the validity or enforceability of the award. The
parties further agree to be bound by the provision of any statute of limitations
which otherwise would be applicable to the controversy, dispute or claim which
is the subject of the arbitration proceeding. Without limiting the foregoing,
the parties are entitled in any arbitration proceeding to the entry of an order
by a court of competent jurisdiction pursuant to an opinion of the arbitrator
for specific performance of any of the requirements of this Agreement. This
provision will continue in full force and effect subsequent to and
notwithstanding expiration or termination of this Agreement. All matters
relating to arbitration will be governed by the Federal Arbitration Act (9
U.S.C. Sections 1 ET SEQ.) and not by any state arbitration law.
Despite Company's and Franchisee's agreement to arbitrate, each has the
right in a proper case to seek temporary restraining orders and temporary or
preliminary injunctive relief from a court of competent jurisdiction; provided,
however, that Company and Franchisee must contemporaneously submit their dispute
for arbitration on the merits as provided in this Section.
18. Company's and Franchisee's rights under this Agreement are cumulative,
and either party's exercise or enforcement of any right or remedy under this
Agreement will not preclude its exercise or enforcement of any other right or
remedy under this Agreement which Company or Franchisee is entitled by law to
enforce.
19. The recitals and exhibits are a part of this Agreement which, together
with the documents that Company and Franchisee are signing concurrently with
this Agreement, constitutes Company's and Franchisee's entire agreement and
supersedes all prior negotiations, representations, inducements, promises or
agreements, oral or otherwise.
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20. All notices and reports to Company and Franchisee, if not personally
served, shall be deemed so delivered the same business day after sending by
telegraph, facsimile or comparable electronic system, one business day after
deposit with Federal Express or a comparable overnight courier company or three
days after being placed in the U.S. mail by registered or certified mail, return
receipt requested. All notices must be sent postage prepaid and addressed to
the respective party at the addresses noted on page 1 above or as either party
otherwise designates in writing from time to time.
21. COMPANY AND FRANCHISEE INTEND THIS AGREEMENT, ALL OTHER AGREEMENTS AND
DOCUMENTS SIGNED CONCURRENTLY WITH THIS AGREEMENT AND ALL OTHER AGREEMENTS AND
DOCUMENTS TO BE SIGNED PURSUANT TO THE RIGHTS GRANTED BY THIS AGREEMENT
(INCLUDING, BUT NOT LIMITED TO, FRANCHISE AGREEMENTS, RIDERS AND SUBLEASES FOR
CORPORATE STORES AND ADDITIONAL STORES) TO BE PART OF ONE INTEGRATED TRANSACTION
AND NOT SEPARATE TRANSACTIONS. IN THE EVENT OF A CONFLICT BETWEEN THIS
AGREEMENT AND ANY OTHER AGREEMENT, THIS AGREEMENT WILL PREVAIL.
SUPERCUTS, INC., a Delaware SUPERBROWARD, L.L.C., a Delaware
corporation limited liability company
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx Xxxxxxxxxx
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Its: Senior Vice President its:
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Dated: August 23, 1996 Dated: August 23, 1996
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PROMISSORY NOTE
$233,160 August 12, 1996
FOR VALUE RECEIVED, SUPERBROWARD, L.L.C., a Delaware limited liability
company (Superbroward, L.L.C., its successors and assigns are hereinafter
collectively referred to as "Maker") promises to pay to the order of SUPERCUTS,
INC. (Supercuts, Inc., its successors and assigns are hereinafter collectively
referred to as "Lender") at its office at 000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx, 00000, or such other place as the holder hereof may from time to
time appoint in writing, in lawful money of the United States of America, the
principal sum of TWO HUNDRED THIRTY-THREE THOUSAND, ONE HUNDRED SIXTY DOLLARS
($233,160), or, if less, the aggregate unpaid principal amount as may be
outstanding pursuant to the Master Agreement (as hereinafter defined) together
with interest on the principal balance from time to time unpaid at the rate of
the Prime Rate (as hereinafter defined). From and after the occurrence of an
Event of Default under the Master Agreement the outstanding principal amount
hereof shall bear interest at the rate of the Prime Rate plus four percent (4%).
Interest will be computed on the daily principal balance outstanding during the
period from the last payment date to the current payment date. Interest shall
be the product resulting when multiplying the rate of interest by the principal
balance outstanding, dividing by 360 and then multiplying by the actual number
of days interest has accrued. Advances of the principal evidenced by this Note
made by Lender to Maker and all payments made on account of the principal
thereof will be recorded by Lender in its records or, at its option, on the
attached schedule to this Note.
"Prime Rate" shall be the highest of the prime rates of interest as
reported in the Money Rate Section of the WALL STREET JOURNAL on the last
business day of the month for which an interest payment is to be made. If the
WALL STREET JOURNAL no longer publishes the Prime Rate as an index, Lender may
substitute a comparable index, including the prime rate or reference rate of a
financial institution selected by Lender.
Accrued interest on this Note shall be payable in arrears upon the receipt
by Maker of a statement from Lender, but in no event later than the fifth day of
each month for the immediately preceding month, with the first such payment due
no later than September 5, 1996. The principal indebtedness evidenced by this
Note shall be payable in a single installment on January 1, 1999, unless earlier
declared due and payable as provided in this Note.
This Note may be prepaid in whole or in part at any time without premium or
penalty.
This Note has been issued pursuant to the terms of that certain Master
Development and Franchise Agreement, dated August 12, 1996 (the "Master
Agreement"), between Lender and Maker. The terms, covenants, conditions,
provisions, stipulations and agreements of the Master Agreement are hereby made
a part of this Note, to the same extent and with the same effect as if
they were fully set forth herein. Maker does hereby covenant to abide by and
comply with each and every term, covenant, provision, stipulation, promise,
agreement and condition set forth in the Master Agreement.
Maker shall remain liable for the payment of this Note, including interest,
notwithstanding any extensions of time of payment or any indulgence of any kind
or nature that Lender may grant to Maker or any guarantor, whether with or
without notice to Maker, and Maker hereby expressly waives such notice. No
release of any or all of the security given for this obligation shall release
any other maker, co-maker, surety, guarantor, or other party hereto in any
capacity.
Each of the following shall constitute an "Event or Default" under this
Note: (i) the failure of Maker to make any payment of the principal of or
interest on this Note when due and payable, (ii) the failure of Maker to perform
any of its obligations under the Master Agreement in accordance with the terms
thereof, or (iii) the failure of Maker to perform any of its obligations under
the documents and agreements delivered pursuant to the Master Agreement (the
"Documents"). Upon the occurrence of an Event of Default, this Note shall
become immediately due and payable and Lender shall have all of the rights and
remedies provided in the Master Agreement, as well as those rights and remedies
provided by any other applicable law, rule or regulation.
In the event that Lender institutes legal proceedings to enforce the
provisions of this Note, Maker agrees to pay to Lender, in addition to any
indebtedness due and unpaid, all costs and expenses of such proceedings,
including reasonable attorneys' fees.
Lender shall not by any act of omission or commission be deemed to waive
any of its rights or remedies hereunder unless such waiver be in writing and
signed by an authorized officer of Lender and then only to the extent
specifically set forth therein. A waiver on one occasion shall not be construed
as continuing or as a bar to or waiver of such right or remedy on any other
occasion. All remedies conferred upon Lender by the Documents shall be
cumulative and none is exclusive, and such remedies may be exercised
concurrently or consecutively at Lender's option.
Except as expressly provided for in this Note, the Master Agreement or any
Document, every person at any time liable for the payment of the debt evidenced
hereby waives presentment for payment, demand, notice of nonpayment of this
Note, protest and notice of protest, trial by jury in any litigation arising out
of, relating to, or connected with this Note or any instrument given as security
herefor, all exemptions and homestead laws and all rights thereunder and
consents that Lender may extend the time of payment of any part or the whole of
the debt, or grant any other modifications or indulgence pertaining to payment
of this Note at any time, at the request of any other person liable for said
debt.
2
This Note is hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity of the indebtedness evidenced
hereby or otherwise, shall the amount paid or agreed to be paid to Lender for
the use, forebearance or detention of the money advanced or to be advanced
hereunder exceed the highest lawful rate permissible under the laws of the State
of California as applicable to Maker. If, from any circumstances whatsoever,
fulfillment of any provision of this Note or of any of the other Documents
shall, at the time performance of such provisions shall be due, involve the
payment of interest in excess of that authorized by law, the obligation to be
fulfilled shall be reduced to the limit so authorized by law, and if, from any
circumstances, Lender shall ever receive as interest an amount which would
exceed the highest lawful rate applicable to Maker, such amount which would be
excessive interest shall be applied to the reduction of the unpaid principal
balance of the indebtedness evidenced hereby and not to the payment of interest.
All covenants, agreements, representations and warranties made herein in
the Master Agreement and in the Documents are deemed to have been relied upon by
Lender, notwithstanding any investigation by Lender on its behalf. All
provisions contained in this Note which are contrary to, prohibited by or
invalid under applicable laws or regulations shall be deemed omitted from this
Note and shall not invalidate the remaining provisions hereof.
This Note is given and accepted as evidence of indebtedness only and not in
payment or satisfaction of any indebtedness or obligation.
The form and essential validity of this Note shall be governed by the laws
of the State of California. If any provision of this Note is prohibited by, or
is unlawful or unenforceable under, any applicable law of any jurisdiction, such
provision shall, as to such jurisdiction, be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof; provided that
where the provisions of any such applicable law may be waived, they hereby are
waived by Maker to the full extent permitted by law in order that this Note
shall be deemed to be a valid and binding Note in accordance with its terms.
Time is of the essence with respect to all Maker's obligations and
agreements under this Note.
This Note and all the provisions, conditions, promises and covenants hereof
shall inure to the benefit of Lender, its successors and assigns, and shall be
binding in accordance with the terms hereof upon Maker, its successors and
assigns, provided nothing herein shall be deemed consent to any assignment
restricted or prohibited by the terms of the Master Agreement or the Documents.
All notices required hereunder shall be given in accordance with the Master
Agreement.
3
IN WITNESS WHEREOF, the undersigned has caused its duly authorized officers
to execute this Note on its behalf as of the date and year first set forth
above.
SUPERBROWARD, L.L.C.,
a Delaware limited liability company
By: Ecendale Associates, Inc.
Its: Managing Member
By: /s/ Xxxxxxx Xxxxxxxxxx
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
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Schedule attached to Promissory Note, August 12, 1996
of SUPERBROWARD, L.L.C. payable to the order of SUPERCUTS, INC.
in the maximum principal amount of $233,160.
ADVANCES AND PRINCIPAL PAYMENTS
Amount of Unpaid
Amount of Principal Principal Notation
Date Advance Made Repaid Balance Made By
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The aggregate unpaid principal amount shown on this schedule shall be rebuttable
presumptive evidence of the principal amount owing and unpaid on this Note. The
failure to record the date and amount of any principal advance on this schedule
shall not, however, limit or otherwise affect the obligations of Borrower under
this Note to repay the principal amount of the such advances together with all
interest accruing thereon.
5
EXHIBIT J
GUARANTY
GUARANTY, dated as of August , 1996, of , an
individual ("Guarantor"), in favor of "SUPERCUTS, INC.," a Delaware corporation
("Supercuts").
W I T N E S S E T H:
WHEREAS, Superbroward, L.L.C., a Delaware limited liability company
("Superbroward"), has entered each of the documents and agreements set forth on
Exhibit A attached hereto with Supercuts (collectively, the "Documents").
WHEREAS, Guarantor is the owner of a membership interest in Superbroward
and Guarantor will derive direct and indirect economic benefits from the
transactions contemplated by the Documents; and
WHEREAS, as a condition precedent to Supercuts entering into the Documents
and the transactions contemplated thereby, Supercuts is requiring that Guarantor
shall have executed and delivered this Guaranty;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, and to induce Supercuts to enter into the Documents and
the transactions contemplated thereby, it is agreed as follows:
1. DEFINITIONS. Capitalized terms used herein shall have the meanings
assigned to them in the foregoing recitals and as set forth below:
"OBLIGATIONS" shall mean all debts, liabilities and obligations for
monetary amounts and all covenants and duties regarding such amounts of any kind
or nature, present or future, arising under the Documents.
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, entity or government
(whether Federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"PROMISSORY NOTE" shall mean the Promissory Note, dated August ___, 1996,
issued by Superbroward to Supercuts in the maximum principal amount of $233,160.
References to this "Guaranty" shall mean this Guaranty, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Guaranty as the same may be in effect
at the time such reference becomes operative.
2. THE GUARANTY. The guaranty of Guarantor hereunder is as follows:
2.1. GUARANTY OF OBLIGATIONS OF SUPERBROWARD. Guarantor hereby
unconditionally guarantees to Supercuts, and its successors, indorsees,
transferees and assigns, the prompt payment (whether at stated maturity, by
acceleration or otherwise) and performance of the Obligations. Guarantor
agrees that this Guaranty is a guaranty of payment and performance and not
of collection, and that her [his] obligations under this Guaranty shall be
primary, absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any
future amendment of, or change in, any Document or any other
agreement, document or instrument to which Superbroward and/or
Guarantor is or are or may become a party;
(b) the absence of any action to enforce this Guaranty or any
Document or the waiver or consent by Supercuts with respect to any of
the provisions thereof;
(c) the existence, value or condition of, or failure to perfect
Supercuts' lien against any security for the Obligations or any
action, or the absence of any action, by Supercuts in respect thereof
(including, without limitation, the release of any such security); or
(d) any other action or circumstances which might otherwise
constitute a legal or equitable discharge or defense of a surety or
guarantor,
it being agreed by Guarantor that her [his] obligations under this Guaranty
shall not be discharged until the payment and performance, in full, of the
Obligations. Guarantor shall be regarded, and shall be in the same
position, as principal debtor with respect to the Obligations. Guarantor
expressly waives all rights she [he] may have, now or in the future, under
any statute, or at common law, or at law or in equity, or otherwise, to
compel Supercuts to proceed in respect of the Obligations against
Superbroward or any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a condition
to proceeding against, Guarantor. Guarantor agrees that any notice or
directive given at any time to Supercuts which is inconsistent with the
waiver in the immediately preceding sentence shall be null and void and may
be ignored by Supercuts, and, in addition, may not be pleaded or introduced
as evidence in any litigation relating to this Guaranty for the reason that
such pleading or introduction would be at variance with the written terms
of this Guaranty, unless Supercuts has or have specifically agreed
otherwise in writing. It is agreed among Guarantor and Supercuts that the
foregoing
2
waivers are of the essence of the transaction contemplated by the
Documents and that, but for this Guaranty and such waivers, Supercuts would
decline to enter into the Documents.
2.2. DEMAND BY SUPERCUTS. In addition to the terms of this Guaranty
set forth in Section 2.1 hereof, and in no manner imposing any limitation
on such terms, it is expressly understood and agreed that, if the then
outstanding principal amount of the Obligations (together with all accrued
interest thereon) is declared to be immediately due and payable, then,
Guarantor shall, upon demand in writing therefor by Supercuts to Guarantor,
pay to Supercuts the entire outstanding Obligations due and owing to
Supercuts.
2.3 ENFORCEMENT OF GUARANTY. In no event shall Supercuts have any
obligation (although it is entitled, at its option) to proceed against
Superbroward or any other person or any real or personal property pledged
to secure the Obligations before seeking satisfaction from Guarantor, and
Supercuts may proceed, prior or subsequent to, or simultaneously with, the
enforcement of Supercuts' rights hereunder, to exercise any right or remedy
which it may have against any property, real or personal, as a result of
any lien it may have as security for all or any portion of the Obligations.
2.4 WAIVER. In addition to the waivers contained in Section 2.1
hereof, Guarantor waives, and agrees that she [he] shall not at any time
insist upon, plead or in any manner whatever claim or take the benefit or
advantage of, any appraisal, valuation, stay, extension, marshalling of
assets or redemption laws, or exemption, whether now or at any time
hereafter in force, which may delay, prevent or otherwise affect the
performance by Guarantor of her [his] obligations under, or the enforcement
by Supercuts of, this Guaranty. Guarantor hereby waives diligence (whether
for non-payment or protest or of acceptance, maturity, extension of time,
change in nature or form of the Obligations, acceptance of further
security, release of further security, composition or agreement arrived at
as to the amount of, or the terms of, the Obligations, notice of adverse
change in Superbroward's financial condition or any other fact which might
materially increase the risk to Guarantor), presentment and demand with
respect to any of the Obligations or all other demands whatsoever and
waives the benefit of all provisions of law which are or might be in
conflict with the terms of this Guaranty. Guarantor represents, warrants
and agrees that, as of the date of this Guaranty, her [his] obligations
under this Guaranty are not subject to any defense against Supercuts or
Superbroward of any kind. Guarantor further agrees that her [his]
obligations under this Guaranty shall not be subject to any counterclaims,
offsets or defenses against Supercuts or against Superbroward of any kind
which may arise in the future.
2.5. BENEFITS OF GUARANTY. The provisions of this Guaranty are for
the benefit of Supercuts and its successors, transferees, indorsees and
assigns, and nothing herein contained shall impair, as between Superbroward
and Supercuts, the obligations of Superbroward under the Documents. In the
event all or any part of the Obligations are transferred, indorsed or
assigned by Supercuts to any person or persons in accordance with
3
the provisions of the Documents, any reference to "Supercuts" herein shall
be deemed to refer equally to such Person or Persons.
2.6. MODIFICATION OF OBLIGATIONS, ETC. If Supercuts shall at any time
or from time to time, with or without the consent of, or notice to,
Guarantor:
(a) change or extend the manner, place or terms of payment of,
or renew or alter all or any portion of, the Obligations;
(b) take any action under or in respect of the Documents in the
exercise of any remedy, power or privilege contained therein or
available to it at law, equity or otherwise, or waive or refrain from
exercising any such remedies, powers or privileges;
(c) amend or modify, in any manner whatsoever, the Documents;
(d) extend or waive the time for any of Guarantor's,
Superbroward's or any other Person's performance of, or compliance
with, any term, covenant or agreement on its part to be performed or
observed under the Documents, or waive such performance or compliance
or consent to a failure of, or departure from, such performance or
compliance;
(e) take and hold security or collateral for the payment of the
Obligations guaranteed hereby or sell, exchange, release, dispose of,
or otherwise deal with, any property pledged, mortgaged or conveyed,
or in which Supercuts has been granted a lien, to secure any
indebtedness of Guarantor or Superbroward to Supercuts;
(f) release anyone who may be liable in any manner for the
payment of any amounts owed by Guarantor or Superbroward to Supercuts;
(g) modify or terminate the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors of
Guarantor or Superbroward are subordinated to the claims of Supercuts;
and/or
(h) apply any sums by whomever paid or however realized to any
amounts owing by Guarantor or Superbroward to Supercuts in such manner
as Supercuts shall determine in their discretion;
then Supercuts shall not incur any liability to Guarantor pursuant hereto
as a result thereof, and no such action shall impair or release the
obligations of Guarantor under this Guaranty.
4
2.7. REINSTATEMENT. This Guaranty shall remain in full force and
effect and continue to be effective in the event any petition be filed by
or against Superbroward or Guarantor for liquidation or reorganization, in
the event Superbroward or Guarantor becomes insolvent or makes an
assignment for the benefit of creditors or in the event a receiver or
trustee be appointed for all or any significant part of Superbroward's or
Guarantor's assets, and shall continue to be effective or be reinstated, as
the case may be, if at any time payment and performance of the Obligations,
or any part thereof, is, pursuant to applicable law, rescinded or reduced
in amount, or must otherwise be restored or returned by Supercuts, whether
as a "voidable preference", "fraudulent conveyance", or otherwise, all as
though such payment or performance had not been made. In the event that
any payment, or any part thereof, is rescinded, reduced, restored or
returned, the Obligations shall be reinstated and deemed reduced only by
such amount paid and not so rescinded, reduced, restored or returned.
2.8. ELECTION OF REMEDIES. If Supercuts may, under applicable law,
proceed to realize its benefits under any of the Documents giving Supercuts
a lien upon any collateral, whether owned by Superbroward or by any other
Person, either by judicial foreclosure or by non-judicial sale or
enforcement, Supercuts may, at its sole option, determine which of its
remedies or rights it may pursue without affecting any of its rights and
remedies under this Guaranty. If, in the exercise of any of its rights and
remedies, Supercuts shall forfeit any of its rights or remedies, including
its right to enter a deficiency judgment against Superbroward or any other
person, whether because of any applicable laws pertaining to "election of
remedies" or the like, Guarantor hereby consents to such action by
Supercuts and waives any claim based upon such action, even if such action
by Supercuts shall result in a full or partial loss of any rights of
subrogation which Guarantor might otherwise have had but for such action by
Supercuts. Any election of remedies which results in the denial or
impairment of the right of Supercuts to seek a deficiency judgment against
Superbroward shall not impair Guarantor's obligation to pay the full amount
of the Obligations. In the event Supercuts shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or the Documents,
Supercuts may bid all or less then the amount of the Obligations and the
amount of such bid need not be paid by Supercuts but shall be credited
against the Obligations. The amount of the successful bid at any such
sale, conducted in a commercially reasonable manner, whether Supercuts or
any other party is the successful bidder, shall be conclusively deemed to
be the fair market value of the collateral and the difference between such
bid amount and the remaining balance of the Obligations shall be
conclusively deemed to be the amount of the Obligations guaranteed under
this Guaranty, notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the amount of any
deficiency claim to which Supercuts might otherwise be entitled but for
such bidding at any such sale.
2.9. CONTINUING GUARANTY. Guarantor agrees that this Guaranty is a
continuing guaranty and shall remain in full force and effect until the
payment and performance in full of the Obligations.
5
2.10. WAIVER OF SUBROGATION. Guarantor hereby waives any right of
subrogation Guarantor has or may have against Superbroward with respect to
Guarantor's obligations hereunder. In addition, Guarantor hereby waives
any right to proceed against Superbroward, now or hereafter, for
contribution, indemnity, reimbursement, and any other suretyship rights and
claims, whether direct or indirect, liquidated or contingent, whether
arising under express or implied contract or by operation of law, which
Guarantor may now have or hereafter have against Superbroward with respect
to Guarantor's obligations hereunder. Guarantor also hereby waives any
rights to recourse to or with respect to any asset of Superbroward.
Guarantor agrees that in light of the immediately foregoing waivers, the
execution of this Guaranty shall not be deemed to make Guarantor a
"creditor" of Superbroward, and that for purposes of Sections 547 and 550
of the Bankruptcy Code, Guarantor shall not be deemed a "creditor" of
Superbroward. Guarantor acknowledges and agrees that this waiver is
intended to benefit Supercuts and shall not limit or otherwise affect
Guarantor's liability hereunder or the enforceability of this Guaranty, and
that Supercuts and its successors and assigns are intended third party
beneficiaries of the waivers and agreements set forth in this Section 2.10
and their rights under this Section 2.10 shall survive payment in full of
the Guaranteed Obligations.
3. DELIVERIES. Guarantor shall deliver to Supercuts, concurrently with
the execution of this Guaranty, each of the following documents duly executed by
Guarantor in form and content acceptable to Supercuts:
(a) Pledge and Security Agreement;
(b) Recognition Agreement; and
(c) UCC-1 Financing Statement.
2. REPRESENTATIONS AND WARRANTIES. To induce Supercuts to enter into the
Documents and the transactions contemplated thereby, Guarantor makes the
following representations and warranties to Supercuts, each and all of which
shall survive the execution and delivery of this Guaranty:
2.1. NO CONFLICT. The execution, delivery and performance of this
Guaranty and all instruments and documents to be delivered by Guarantor in
connection with this Guaranty, will not violate any law or regulation, or
any order or decree of any court or governmental instrumentality, will not
conflict with or result in the breach of, or constitute a default under any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which Guarantor is a party or by which Guarantor or any of her [his]
property is bound will not result in the creation or imposition of any lien
upon any of the property of Guarantor and the same do not require the
consent or approval of any governmental body, agency, authority or any
other Person except those already obtained.
6
2.2. ENFORCEABILITY. This Guaranty and each of the instruments and
documents delivered by Guarantor in connection with this Guaranty
constitute the legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms.
3. PERMITTED ASSIGNMENT BY SUPERCUTS. Supercuts may freely assign its
rights and delegate its duties under this Guaranty, but no such assignment or
delegation shall increase or diminish Guarantor's obligations hereunder.
Supercuts agrees to give Guarantor prompt notice of such assignment or
delegation and agrees to use its best efforts to give such notice at least three
(3) business days prior to such assignment or delegation, but the consent of
Guarantor shall not be required for any such assignment or delegation and
failure to give such notice shall not effect the validity or enforceability of
any such assignment or delegation or this Guaranty or subject Supercuts to any
liability.
4. FURTHER ASSURANCES. Guarantor agrees, upon the written request of
Supercuts, to execute and deliver to Supercuts, from time to time, any
additional instruments or documents reasonably considered necessary by Supercuts
to cause this Guaranty to be, become or remain valid and effective in accordance
with its terms.
5. PAYMENTS FREE AND CLEAR OF TAXES. All payments required to be made by
Guarantor hereunder shall be made to Supercuts free and clear of, and without
deduction for, any and all present and future taxes, withholdings, levies,
duties, and other governmental charges ("Taxes"), excluding such income and
franchise taxes of the United States and any political subdivision thereof which
would otherwise have been payable by Supercuts if Superbroward had paid the
Obligations to Supercuts in accordance with the terms of the Documents. Upon
request by Supercuts, Guarantor shall furnish to Supercuts a receipt for any
Taxes paid by Guarantor pursuant to this Section 7 or, if no Taxes are payable
with respect to any payments required to be made by Guarantor hereunder,
evidence reasonably acceptable to Supercuts that no such Taxes are payable. If
Taxes are paid by Supercuts, Guarantor will, upon demand of Supercuts, and
whether or not such Taxes shall be correctly or legally asserted, indemnify
Supercuts for such payments, together with any interest, penalties and expenses
in connection therewith plus interest thereon at the Prime Rate (as defined in
the Promissory Note) plus four percent (4%).
6. MISCELLANEOUS.
6.1. ENTIRE AGREEMENT; AMENDMENTS. This Guaranty, together with the
documents delivered in accordance with Section 3 and the other Documents,
constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior agreements relating to a
guaranty of the loans Obligations and may not be amended or supplemented
except by a writing signed by Guarantor and Supercuts.
6.2. HEADINGS. The headings in this Guaranty are for convenience of
reference only and are not part of the substance of this Guaranty.
7
6.3. SEVERABILITY. In the event that any one or more of the
provisions contained in this Guaranty shall be determined to be invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision or provisions in every
other respect and the remaining provisions of this Guaranty shall not be in
any way impaired.
6.4. NOTICES. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may
be given to or served upon any of the parties by another, or whenever any
of the parties desires to give or serve upon another any such communication
with respect to this Guaranty, each such notice, demand, request, consent,
approval, declaration or other communication shall be in writing and either
shall be delivered pursuant to the provisions of Section 20 of the Master
Development and Franchise Agreement, dated August ___, 1996, between
Superbroward and Supercuts, addressed as follows:
(a) If to Supercuts, at: Supercuts, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: --------------------
Telecopy No.: (000) 000-0000
(a) If to Guarantor, at: -------------------------------
-------------------------------
-------------------------------
Telecopier No: (___) ___-____
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication
hereunder shall be deemed to have been duly given or served on the date on
which personally delivered, in person, by delivery service or by overnight
courier service, with receipt acknowledged, the date of telecopy
transmission or three (3) business days after the same shall have been
deposited with the United States mail, postage prepaid.
3.2. BINDING EFFECT. This Guaranty shall bind Guarantor and shall
inure to the benefit of Supercuts and its successors and assigns.
Guarantor may not assign this Guaranty.
3.3 NON-WAIVER. The failure of Supercuts to enforce any right or
remedy hereunder, or promptly to enforce any such right or remedy, shall
not constitute a waiver thereof, nor give rise to any estoppel against
Supercuts, nor excuse Guarantor from its
8
obligations hereunder. Any waiver of any such right or remedy by Supercuts
must be in writing and signed by Supercuts.
3.4. TERMINATION. This Guaranty shall terminate and be of no further
force or effect at such time as the Obligations shall be paid and performed
in full and the Documents are terminated. Upon payment and performance in
full of the Obligations and termination of the Document, Supercuts shall
deliver to Guarantor such documents as Guarantor may reasonably request to
evidence such termination.
3.5. GOVERNING LAW; WAIVER OF JURY TRIAL; CONSENT TO JURISDICTION.
THE TERMS OF THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA (EXCLUSIVE
OF ANY RULES AS TO CONFLICT OF LAWS) AND THE LAWS OF THE UNITED STATES
APPLICABLE THEREIN. IF AND TO THE EXTENT THAT GUARANTOR AND SUPERCUTS
AGREE NOT TO PROCEED BY MEANS OF ARBITRATION OR ARE NOT REQUIRED TO PROCEED
BY ARBITRATION, GUARANTOR WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES HEREUNDER OR
UNDER THE OTHER DOCUMENTS DELIVERED IN CONNECTION WITH THIS GUARANTY OR
RELATING TO EACH OF THE FOREGOING. AS PART OF THE CONSIDERATION FOR NEW
VALUE THIS DAY RECEIVED, GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN SAN FRANCISCO COUNTY, CALIFORNIA
AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON GUARANTOR, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO GUARANTOR AT THE ADDRESSES PROVIDED IN SECTION 8.4 ABOVE AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED THREE (3) BUSINESS DAYS
AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE UNITED STATES MAILS,
POSTAGE PREPAID. GUARANTOR WAIVES ANY OBJECTION TO VENUE OF ANY ACTION
INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
3.6. ARBITRATION. Except as provided below, all controversies,
disputes or claims between Supercuts and Guarantor in connection with,
arising from or with respect to: any provision of this Guaranty or any
other related agreement; the relationship of the parties; or the validity
of this Guaranty or any other related agreement, or any provision of such
agreement, which is not resolved within 15 days after either party notifies
the other in writing of such controversy, dispute or claim, shall be
submitted for arbitration to the San Francisco, California office of the
American Arbitration Association on demand of either party. The
arbitration proceedings will be conducted in San Francisco, California and
heard by one arbitrator in accordance with the then current Commercial
Arbitration Rules
9
of the American Arbitration Association. The arbitrator
has the right to award or include in his or her award any relief which he
or she deems proper in the circumstances, including, without limitation,
money damages (with interest on unpaid amounts from date due), specific
performance, injunctive relief and attorneys' fees. The award and decision
of the arbitrator will be conclusive and binding upon all parties, and
judgment upon the award may be entered in any court of competent
jurisdiction. The parties acknowledge and agree that any arbitration award
may be enforced against either or both of them in a court of competent
jurisdiction, and each waives any right to contest the validity or
enforceability of the award. The parties further agree to be bound by the
provision of any statute of limitations which otherwise would be applicable
to the controversy, dispute or claim which is the subject of the
arbitration proceeding. Without limiting the foregoing, the parties are
entitled in any arbitration proceeding to the entry of an order by a court
of competent jurisdiction pursuant to an opinion of the arbitrator for
specific performance of any of the requirements of this Guaranty. This
provision will continue in full force and effect subsequent to and
notwithstanding expiration or termination of this Guaranty. All matters
relating to arbitration will be governed by the Federal Arbitration Act (9
U.S.C. Sections 1 ET SEQ.) and not by any state arbitration law.
Despite Supercuts' and Guarantor's agreement to arbitrate, each has
the right in a proper case to seek temporary restraining orders and
temporary or preliminary injunctive relief from a court of competent
jurisdiction; provided, however, that Supercuts and Guarantor must
contemporaneously submit their dispute for arbitration on the merits as
provided in this Section.
3.7. SECURITY. The obligations of Guarantor under this Guaranty are
secured in part pursuant to the terms of the Pledge and Security Agreement
referred to in Section 3.
3.8. COUNTERPARTS. This Guaranty may be executed in any number of
counterparts which shall individually and collectively constitute one
agreement.
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IN WITNESS WHEREOF, Guarantor has executed and delivered this Guaranty as
of the date first above written.
[GUARANTOR]
By: ----------------------------------
Name: -----------------------------
Title: ----------------------------
Accepted and acknowledged by
SUPERCUTS, INC.
By: ----------------------------------
Name: -----------------------------
Title: ----------------------------
11
