RENT-A-CENTER, INC.
EXECUTIVE TRANSITION AGREEMENT
This AGREEMENT is made as of __________________ by and between RENT-A-CENTER, INC. INC. (“Company”) and _____________ (“Executive”).
1.
Background
. This Agreement is intended to provide the Executive with certain payments and benefits upon an involuntary termination of Executive’s employment or the occurrence of certain other circumstances that may affect the Executive. The Company believes this Agreement will help ensure the Executive’s undivided focus on the business of the Company and thereby enhance shareholder value.
2.
Certain Defined Terms
. The following terms have the following meanings when used in this Agreement.
(a)
“Accrued Compensation” means, as of any date, (1) the unpaid amount, if any, of Executive’s previously earned base salary, (2) the unpaid amount, if any, of the bonus earned by the Executive for the preceding year, and (3) additional payments or benefits, if any, earned by the Executive under and in accordance with any employee plan, program or arrangement of or with the Company or an Affiliate (other than this Agreement).
(b)
“Affiliate” means an entity at least 50% of the voting, capital or profits interests of which are owned directly or indirectly by Company.
(c)
“Benefit Continuation Coverage” means continuing group health insurance coverage for Executive and, where applicable, Executive’s covered spouse and covered eligible dependents for a specified period following the termination of Executive’s Employment with Company and its Affiliates at the same benefit and contribution levels that would be in effect if the Executive’s employment had continued, if and to the extent such coverage would be permitted by the applicable plan and applicable law. Benefit Continuation Coverage, if any, shall be in addition to and not in lieu of COBRA coverage. Unless sooner terminated, Benefit Continuation Coverage will be subject to early termination if and when the Executive becomes entitled to comparable coverage from another employer.
(d)
“Board” means the Board of Directors of the Company.
(e)
“Cause” means (1) material act or acts of willful misconduct by Executive, whether in violation of the Company’s policies, including, without limitation, the Company’s Code of Business Conduct and Ethics, or otherwise; (2) Executive’s willful and repeated failure (except where due to physical or mental incapacity) or refusal to perform in any material respect the duties and responsibilities of Executive’s employment (3) embezzlement or fraud committed by Executive, at Executive’s direction, or with Executive’s prior personal knowledge; (4) Executive’s conviction of, or plea of guilty or
nolo
contendere
to, the commission of a felony; or (5) substance abuse or use of illegal drugs that, in the reasonable judgment of the Compensation Committee, (A) impairs the ability of the Executive to perform the duties of the Executive’s employment, or (B) causes or is likely to cause harm or embarrassment to the Company or any of its Affiliates. Except as specified, the Compensation Committee, acting in its own discretion, will be responsible for determining whether particular conduct constitutes “Cause” for the purposes of this Agreement.
(f)
“Change in Control” means the occurrence of any of the following after September 14, 2006:
(i)
any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) becomes the beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of the combined voting power of the then outstanding voting securities of Company;
(ii)
a consolidation, merger or reorganization of the Company, unless (1) the stockholders of Company immediately before such consolidation, merger or reorganization own, directly or indirectly, at least a majority of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such consolidation, merger or reorganization, (2) individuals who were members of the Board immediately prior to the execution of the agreement providing for such consolidation, merger or reorganization constitute a majority of the board of directors of the surviving corporation or of a corporation directly or indirectly beneficially owning a majority of the voting securities of the surviving corporation, and (3) no person beneficially owns more than 40% of the combined voting power of the then outstanding voting securities of the surviving corporation (other than a person who is (A) Company or a subsidiary of Company, (B) an employee benefit plan maintained by Company, the surviving corporation or any subsidiary, or (C) the beneficial owner of 40% or more of the combined voting power of the outstanding voting securities of Company immediately prior to such consolidation, merger or reorganization);
(iii)
individuals who, as of September 14, 2006, constitute the entire Board (the “Incumbent Board”) cease for any reason to constitute a majority of the Board, provided that any individual becoming a director subsequent to September 14, 2006 whose appointment or nomination for election by Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the incumbent Board shall be considered as though such individual were a member of the Incumbent Board; or
(iv)
a complete liquidation or dissolution of Company, or a sale or other disposition of all or substantially all of the assets of the Company (other than to an entity described in (f)(ii) above).
(g)
“Code” means the Internal Revenue Code of 1986, as amended.
(h)
“Company” means Rent-A-Center, Inc. and any successor thereto.
(i)
“Compensation Committee” means the Compensation Committee of the Board.
(j)
“Disability” means the inability of Executive to substantially perform the customary duties and responsibilities of Executive’s Employment with Company or an Affiliate for a period of at least 120 consecutive days or 120 days in any 12-month period by reason of a physical or mental incapacity which is expected to result in death or last indefinitely, as determined by a duly licensed physician appointed by the Company.
(k)
“Employment” means Executive’s employment with the Company and/or any of its Affiliates.
(l)
“Good Reason” means the occurrence of any of the following without the written consent of Executive: (1) a material diminution by Company or an Affiliate of Executive’s duties or responsibilities in a manner which is inconsistent with Executive's position or which has or is reasonably likely to have a material adverse effect on Executive’s status or authority; (2) a relocation by more than 50 miles of Executive’s principal place of business; or (3) a reduction by Company or an Affiliate of Executive’s rate of salary or annual incentive opportunity or a breach by Company or any of its Affiliates of a material provision of any written employment or other agreement with Executive which is not corrected within 15 business days following notice thereof by Executive to Company.
(m)
“Pro Rata Bonus” means the annual bonus, if any, which (if not for Executive’s termination of Employment), Executive would have earned, as determined in the Company’s sole discretion, for the calendar year in which the Executive’s Employment terminates, multiplied by a fraction, the numerator of which is the number of days elapsed from the beginning of the calendar year in which the Executive’s Employment terminates until the date the Executive’s Employment terminates, and the denominator of which is 365; provided that such payment shall be paid in a lump sum in cash in the normal course upon the Company’s completion of annual bonus calculations, but in no event later than March 15 of the year following the year in which Executive’s termination of Employment occurred. If the Executive’s Employment terminates before April 1 of a calendar year, the Pro Rata Bonus for such calendar year shall be deemed to be zero.
(n)
“Salary & Bonus” means, as of the effective date of the termination of Executive’s Employment with Company and its Affiliates, the sum of: (1) Executive’s highest annual rate of salary at any time during the preceding 24 months, and (2) Executive’s average annual bonus for the two preceding calendar years. If the number of preceding years of Executive’s Employment is less than two, then the bonus component of Executive’s Salary & Bonus will be equal to bonus earned during the calendar year preceding the date of Executive’s termination of Employment; and, if the Executive has not completed at least a full calendar year of Employment, the bonus component of Executive’s Salary & Bonus will be zero.
3.
General Severance Protection
. Subject to the provisions hereof, including, without limitation, Section 7 (relating to non-duplication of payments and benefits provided under other agreements and arrangements) and Section 8 (relating to the execution and delivery of a release as a condition of Executive’s (or a beneficiary’s) entitlement to payments and benefits hereunder), upon termination of Employment, other than a termination of Employment in conjunction with a Change in Control to which Section 4 applies, Executive (or Executive’s beneficiary, as the case may be) will be entitled to receive the applicable severance payments and benefits set forth in this Section.
(a)
Termination by Company or an Affiliate without Cause
. If Executive’s Employment is terminated by the Company or an Affiliate without Cause, then Executive shall be entitled to receive the following payments and benefits:
(i)
Accrued Compensation;
(ii)
Pro Rata Bonus;
(iii)
[EVP: 1.5] [DVP/SVP/VP: 1.0] times Salary & Bonus, payable to Executive in equal monthly (or, at the option of the Company, more frequent) installments; and
(iv)
Benefit Continuation Coverage for the period covered by Section 3(a)(iii).
(b)
Disability or Death
. If Executive’s Employment is terminated by the Company or an Affiliate due to Executive’s Disability or if Executive’s Employment terminates by reason of death, then Executive (or Executive’s beneficiary) shall be entitled to receive the following payments and benefits:
(i)
Accrued Compensation;
(ii)
Pro Rata Bonus; and
(iii)
Benefit Continuation Coverage for twelve months.
(c)
Termination by Company or an Affiliate for Cause or Termination by Executive
. If Company or an Affiliate terminates Executive’s Employment for Cause or if Executive terminates such Employment for any reason (other than death), then Executive shall be entitled to receive any Accrued Compensation, subject to set off for amounts owed by Executive to Company or an Affiliate, and nothing more.
(d)
Restoration
. Any severance payments and benefits paid under this Section 3 shall be subject to continuing compliance with the covenants described in and repayment pursuant to Section 9.
4.
Termination in Conjunction with a Change in Control
. Subject to the provisions hereof, including, without limitation, Section 6 (relating to a reduction of severance payments and benefits in order to avoid adverse tax consequences), Section 7 (relating to non-duplication of payments and benefits provided under other agreements and arrangements), and Section 8 (relating to execution and delivery of a general release as a condition of Executive’s entitlement to payments and benefits hereunder), upon the termination of Executive’s Employment with Company and its Affiliates in conjunction with a Change in Control, Executive (or Executive’s beneficiary, as the case may be) will be entitled to receive the applicable severance payments and benefits set forth in this Section. For the purposes hereof, a termination of Employment is in conjunction with a Change in Control if (and only it) it occurs during the period beginning six months prior to a Change in Control (or, in the case of a Change in Control described in Section 2(f)(i) or (ii), beginning on the date of the definitive agreement pursuant to which the Change in Control is consummated), and ending on the second anniversary of the date of the Change in Control. If Executive is entitled to receive payments and benefits under Section 3 (due to a termination of Employment not in conjunction with a Change in Control) and if, by reason of a subsequent Change in Control, Executive’s termination of Employment is deemed to be in conjunction with the Change in Control, then, in order to avoid duplication, the payments and benefits to which Executive is entitled under this Section upon and following the Change in Control will be reduced by the payments and benefits which Executive received under Section 3, and no further payments will be made under Section 3.
(a)
Termination by Company or an Affiliate without Cause or by Executive for Good Reason
. If Executive’s Employment is terminated by Company or an Affiliate without Cause or by Executive for Good Reason, then Executive shall be entitled to receive the following payments and benefits:
(i)
Accrued Compensation;
(ii)
Pro Rata Bonus;
(iii)
an amount equal to [EVP: 2] [DVP/SVP/VP: 1.5] times Salary & Bonus, which amount shall be payable in a lump sum in cash within 10 business days following the date of Executive's termination of Employment or, if later, the date of the Change in Control; and
(iv)
Benefit Continuation Coverage for [EVP: two years] [DVP/SVP/VP: twelve months] following termination.
(b)
Disability or Death
. If Executive’s Employment is terminated by Company or an Affiliate due to Executive’s Disability, or if Executive’s Employment terminates by reason of death, then Executive (or Executive’s beneficiary) shall be entitled to receive the following payments and benefits:
(i)
Accrued Compensation;
(ii)
Pro Rata Bonus; and
(iii)
Benefit Continuation Coverage for twelve months.
(c)
Termination by Company or an Affiliate or Cause or Termination by Executive without Good Reason
. If Executive’s Employment is terminated by Company or an Affiliate for Cause or is terminated by Executive without Good Reason, Executive shall be entitled to receive Accrued Compensation through the date of termination, subject to set off for amounts owed by Executive to Company or an Affiliate, and nothing more.
(d)
Restoration
. Any severance payments and benefits paid under this Section 4 shall be subject to continuing compliance with the covenants described in and repayment pursuant to Section 9.
5.
Effect of a Change in Control on Options and Other Equity-Based Awards
. All outstanding Company stock options and other Company equity-based awards held by Executive shall become fully vested immediately before the occurrence of a Change in Control if (a) Executive is then still employed by Company or an Affiliate; or (b) Executive is entitled to payments and benefits under Section 4(a) as a result of the termination of Employment during the pre-Change in Control severance protection period described in Section 4. If Executive becomes vested in a stock option or other equity-based award pursuant to part (b) of the preceding sentence, then, before the Change in Control, Company will either reinstate the option or other award to the extent it would otherwise not be vested, or make a cash payment to Executive equal to the intrinsic value of the non-vested portion of the option or other award based upon the then value per share of Company’s Common Stock. The vesting and other terms and conditions of Executive’s stock options and other equity-based awards will continue to govern except as otherwise specifically provided by this Section 5.
6.
Golden Parachute Tax Limitation
. If Executive is entitled to receive payments and benefits under this Agreement and if, when combined with the payments and benefits Executive is entitled to receive under any other plan, program or arrangement of Company or an Affiliate, Executive would be subject to excise tax under Section 4999 of the Code or Company would be denied a deduction under Section 2800 of the Code, then the severance amounts otherwise payable to Executive under this Agreement will be reduced by the minimum amount necessary to ensure that Executive will not be subject to such excise tax and Company will not be denied any such deduction.
7.
Effect of Other Agreements
. Notwithstanding the provisions hereof, the post-termination payment and benefit provisions of Executive’s written employment or other agreement with Company or an Affiliate in force at the termination of Executive’s Employment (if any) will apply in lieu of the provisions hereof if and to the extent that, with respect to Executive’s termination of Employment, the provisions of such employment or other agreement would provide greater payments or benefits to Executive (or to Executive’s covered dependents or beneficiaries). If any termination or severance payments or benefits are made or provided to Executive by Company or any of its Affiliates pursuant to a written employment or other agreement with Company or an Affiliate, such payments and benefits shall reduce the amount of the comparable payments and benefits payable hereunder. This Section is intended to provide Executive with the most favorable treatment and, at the same time, avoid duplication of payments or benefits, and it will be construed and interpreted accordingly.
8.
Release of Claims
. Notwithstanding anything herein to the contrary, the Compensation Committee or the Board may condition severance payments or benefits otherwise payable under this Agreement upon the execution and delivery by Executive (or Executive’s beneficiary) of a general release in favor of Company, its Affiliates and their officers, directors and employees, in such form as the Board or the Compensation Committee may specify; provided, however, that no such release will be required as a condition of Executive’s (or the beneficiary’s) entitlement to Accrued Compensation. Subject to Section 17 of this Agreement, any payment or benefit that is so conditioned shall commence or be paid during the period commencing on Executive’s termination of Employment and ending on a date not more than 30 days thereafter,
except that, in the event that such period could span two taxable years, payment must be made in the later year.
9.
Restoration
. The Executive has been provided and is privy to intellectual property, trade secrets and other confidential information of the Company and its Affiliates. For two years following the Executive’s termination of Employment, the Executive has agreed not to engage in any activity or provide any services which are similar to or competitive with the business of the Company and its Affiliates. For the same two- year period, the Executive also agreed not to solicit or induce, or cause or permit others to solicit or induce, any employee to terminate their employment with the Company and its Affiliates. These covenants are set forth and agreed to in the Loyalty and Confidentiality Agreement between the Executive and the Company (“Loyalty Agreement”). The parties hereto understand and acknowledge that the promises in this Agreement and those in the Loyalty Agreement, and not any employment of or services performed by the Executive in the course and scope of that employment, constitute the sole consideration for the severance payments and benefits provided by this Agreement. Further, it is agreed that should the Executive violate or be in breach of any restrictions set forth herein or in the Loyalty Agreement (which determination shall be made in the discretion of the Compensation Committee), (a) the Executive shall not be entitled to any further severance payments and benefits under this Agreement, (b) the Executive shall immediately return to the Company any severance payments and the value of any severance benefits which were received hereunder, and (c) the Executive will have no further rights or entitlements under this Agreement. This Section 9 shall not in any manner supersede or limit any other right the Company may have to enforce or seek legal or equitable relief based on this Agreement or the Loyalty Agreement.
10.
No Duty to Mitigate
. Except as otherwise specifically provided herein with respect to early termination of Benefit Continuation Coverage, Executive’s entitlement to payments or benefits hereunder is not subject to mitigation or a duty to mitigate by Executive.
11.
Amendment
. The Board may amend this Agreement, provided, however, that, no such action which would have the effect of reducing or diminishing Executive’s entitlements under this Agreement shall be effective without the express written consent of the Executive.
12.
Successors and Beneficiaries
.
(a)
Successors and Assigns of Company
. Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of Company and its subsidiaries taken as a whole, expressly and unconditionally to assume and agree to perform or cause to be performed Company’s obligations under this Agreement. In any such event, the term “Company,” as used herein shall mean Company, as defined in Section 2 hereof, and any such successor or assignee. Executive acknowledges and agrees that this Agreement and the Loyalty Agreement shall be fully enforceable by the Company’s successor or assignee.
(b)
Executive’s Beneficiary. For the purposes hereof, Executive’s beneficiary will be the person or persons designated as such in a written beneficiary designation filed with the Company, which may be revoked or revised in the same manner at any time prior to Executive’s death. In the absence of a properly filed written beneficiary designation or if no designated beneficiary survives Executive, Executive’s estate will be deemed to be the beneficiary hereunder.
13.
Nonassignability
. With the exception of Executive’s beneficiary designation, neither Executive nor Executive’s beneficiary may pledge, transfer or assign in any way the right to receive payments
or benefits hereunder, and any attempted pledge, transfer or assignment shall be void and of no force or effect.
14.
Legal Fees to Enforce Rights after a Change in Control
. If, following a Change in Control, Company fails to comply with any of its obligations under this Agreement or Company takes any action to declare this Agreement void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from Executive (or Executive’s beneficiary) the payments and benefits intended to be provided, then Executive (or Executive’s beneficiary, as the case may be) shall be entitled to select and retain counsel at the expense of Company to represent Executive (or Executive’s beneficiary) in connection with the good faith initiation or defense of any litigation or other legal action, whether by or against Company or any director, officer, stockholder or other person affiliated with Company or any successor thereto in any jurisdiction.
15.
Not a Contract of Employment
. This Agreement shall not be deemed to constitute a contract of employment between Executive and Company or any of its Affiliates. Nothing contained herein shall be deemed to give Executive a right to be retained in the employ or other service of Company or any of its Affiliates or to interfere with the right of Company or any of its Affiliates to terminate Executive’s employment at any time.
16.
Governing Law
. This Agreement shall be governed by the laws of the State of Texas, excluding its conflict of law rules. Any suit with respect to this Agreement will be brought in the federal or state courts in the districts, which include Dallas, Texas, and Executive hereby agrees to submit to the personal jurisdiction and venue thereof.
17.
Compliance with Section 409A of the Code
. This Agreement is intended to comply with Section 409A of the Code, if and to the extent applicable, and will be interpreted and applied in a manner consistent with that intention. Toward that end, unless permitted sooner by Section 409A of the Code, severance amounts otherwise payable within six-months after termination of employment will be deferred until and become payable on the first day of the seventh month following termination of employment. Further, to the extent Section 409A of the Code is applicable, the phrase “termination of Employment” shall have the same meaning as a “separation from service” as defined in Section 409A of the Code and its accompanying regulations.
18.
Withholding
. Company and its Affiliates may withhold from any and all amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to applicable law.
[SIGNATURE PAGE FOLLOWS.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
RENT-A-CENTER, INC.
By:
________________________________________
EXECUTIVE:
_______________________________________________
EMPLOYMENT AGREEMENT
AGREEMENT made on October 2, 2006, and amended and restated as of September 6, 2013, by and between RENT-A-CENTER, INC. (the “Company”) and MARK E. SPEESE (“Mr. Speese”).
1.
Employment
. The Company desires to enter into a written agreement to employ Mr. Speese upon and subject to the terms and conditions set forth herein, and Mr. Speese hereby agrees to be employed by the Company upon and subject to such terms and conditions.
2.
Certain Defined Terms
. The following terms have the following meanings when used in this Agreement.
(a)
“Accrued Compensation” means, as of any date, (1) the unpaid amount, if any, of Mr. Speese’s previously earned base salary, (2) the unpaid amount, if any, of the bonus earned by Mr. Speese for the preceding year, and (3) additional payments or benefits, if any, earned by Mr. Speese under and in accordance with any employee plan, program or arrangement of or with the Company or an Affiliate (other than this Agreement).
(b)
“Affiliate” means an entity at least 50%
of the voting, capital or profits interests of which are owned directly or indirectly by the Company.
(c)
“Benefit Continuation Coverage” means continuing group health insurance coverage for Executive and, where applicable, Executive’s covered spouse and covered eligible dependents for a specified period following the termination of Executive’s Employment with Company and its Affiliates at the same benefit and contribution levels that would be in effect if the Executive’s employment had continued, if and to the extent such coverage would be permitted by the applicable plan and applicable law. Benefit Continuation Coverage, if any, shall be in addition to and not in lieu of COBRA coverage. Unless sooner terminated, Benefit Continuation Coverage will be subject to early termination if and when the Executive becomes entitled to comparable coverage from another employer.
(d)
“Board” means the Board of Directors of the Company.
(e)
“Cause” means (1) material act or acts of willful misconduct by Mr. Speese, whether in violation of the Company’s policies, including, without limitation, the Company’s Code of Business Conduct and Ethics, or otherwise; (2) Mr. Speese’s willful and repeated failure (except where due to physical or mental incapacity) or refusal to perform in any material respect the duties and responsibilities of Mr. Speese’s employment; (3) embezzlement or fraud committed by Mr. Speese, at Mr. Speese’s direction, or with Mr. Speese’s prior personal knowledge; (4) Mr. Speese’s conviction of, or plea of guilty or
nolo contendere
to, the commission of a felony; or (5) substance abuse or use of illegal drugs that, in the reasonable judgment of the Compensation Committee, (A) impairs the ability of Mr. Speese to perform the duties of Mr. Speese’s employment, or (B) causes or is likely to cause harm or embarrassment to the Company or any of its Affiliates. Except as specified, the Compensation Committee, acting in its own discretion, will be responsible for determining whether particular conduct constitutes “Cause” for the purposes of this Agreement.
(f)
“Change in Control” means the occurrence of any of the following after the date of this Agreement:
(i)
any person (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) becomes the beneficial owner (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of the combined voting power of the then outstanding voting securities of the Company;
(ii)
a consolidation, merger or reorganization of the Company, unless (1) the stockholders of the Company immediately before such consolidation, merger or reorganization own, directly or indirectly, at least a majority of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such consolidation, merger or reorganization, (2) individuals who were members of the Board immediately prior to the execution of the agreement providing for such consolidation, merger or reorganization constitute a majority of the board of directors of the surviving corporation or of a corporation directly or indirectly beneficially owning a majority of the voting securities of the surviving corporation, and (3) no person beneficially owns more than 40% of the combined voting power of the then outstanding voting securities of the surviving corporation (other than a person who is (A) the Company or a subsidiary of the Company, (B) an employee benefit plan maintained by the Company, the surviving corporation or any subsidiary, or (C) the beneficial owner of 40% or more of the combined voting power of the outstanding voting securities of the Company immediately prior to such consolidation, merger or reorganization);
(iii)
individuals who, as of the date of this Agreement, constitute the entire Board (the “Incumbent Board”) cease for any reason to constitute a majority of the Board, provided that any individual becoming a director subsequent to the date of this Agreement whose appointment or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; or
(iv)
a complete liquidation or dissolution of the Company, or a sale or other disposition of all or substantially all of the assets of the Company (other than to an entity described in (f)(ii) above).
(g)
“Code” means the Internal Revenue Code of 1986, as amended.
(h)
“Company” means Rent-A-Center, Inc. and any successor thereto.
(i)
“Compensation Committee” means the Compensation Committee of the Board.
(j)
“Disability” means the inability of Mr. Speese to substantially perform the customary duties and responsibilities of Mr. Speese’s Employment with the Company or an Affiliate for a period of at least 120 consecutive days or 120 days in any 12-month period by reason of a physical or mental incapacity which is expected to result in death or last indefinitely, as determined by a duly licensed physician appointed by the Company.
(k)
“Employment” means Mr. Speese’s employment with the Company and/or any of its Affiliates.
(l)
“Good Reason” means the occurrence of any of the following without the written consent of Mr. Speese: (1) a material diminution by the Company or an Affiliate of Mr. Speese’s duties or responsibilities in a manner which is inconsistent with Mr. Speese’s position or which has or is reasonably likely to have a material adverse effect on Mr. Speese’s status or authority,
provided, however
, that a change in Mr. Speese's position as Chairman of the Board shall not be considered a material diminution in Mr.
Speese's duties or responsibilities or having or reasonably likely to have a material adverse effect on Mr. Speese's status or authority within the meaning of "Good Reason" if a majority of the independent directors of the Board (such independent directors being determined in accordance with securities listing standards then applicable to the Company's common stock), (a) upon the advice of counsel, determines such change in position is required to comply with such applicable securities listing standard or any law or regulation applicable to the Company, or (b) in their reasonable discretion, determines such a change in position to be in the best interest of the Company to comply with appropriate corporate governance practices or for similar reasons; (2) a relocation by more than 50 miles of Mr. Speese’s principal place of business; or (3) a reduction by the Company or an Affiliate of Mr. Speese’s rate of salary or annual incentive opportunity or a breach by the Company or any of its Affiliates of a material provision of this Agreement which is not corrected within 15 business days following notice thereof by Mr. Speese to the Company.
(m)
“Pro Rata Bonus” means the annual bonus, if any, earned by Mr. Speese for the calendar year preceding the year in which Mr. Speese’s Employment terminates multiplied by a fraction, the numerator of which is the number of days elapsed from the beginning of the calendar year in which Mr. Speese’s Employment terminates until the date Mr. Speese’s Employment terminates, and the denominator of which is 365. If Mr. Speese’s Employment terminates before April 1 of a calendar year, the Pro Rata Bonus for such calendar year shall be deemed to be zero.
(n)
“Salary & Bonus” means, as of the effective date of the termination of Mr. Speese’s Employment with the Company and its Affiliates, the sum of: (1) Mr. Speese’s highest annual rate of salary at any time during the preceding 24 months, and (2) Mr. Speese’s average annual bonus for the two preceding calendar years.
(o)
“Transfer Restrictions” means the contractual restrictions against the sale or transfer of Company stock acquired upon the exercise of the special option granted to Mr. Speese pursuant to Section 6 of this Agreement.
3.
Term
. The term of this Agreement will be begin on the date hereof and will end on December 31, 2009, unless sooner terminated in accordance with the provisions of Section 8 or Section 9 hereof. The term of this Agreement will be renewed for successive one year renewal periods unless (a) at least 90 days before the end of the initial term or a renewal term, either party gives written notice of non-renewal to the other, or (B) Mr. Speese’s employment is sooner terminated pursuant to Section 8 or Section 9 of this Agreement.
4.
Position and Duties
. During the term of this Agreement, Mr. Speese shall serve as the Chairman of the Board and the Chief Executive Officer of the Company. The Company agrees to use its reasonable best efforts to cause Mr. Speese to be a member of the Board. Mr. Speese shall report directly to the Board and will have such executive and managerial powers, duties and responsibilities as are assigned to him by the Board, consistent with his position as Chief Executive Officer. At the request of the Board, Mr. Speese shall serve as an officer and director of the Company’s subsidiaries and other affiliates without additional compensation. Mr. Speese shall devote all of his business time, attention, knowledge and skills faithfully and to the best of his ability to the performance of the obligations, duties and responsibilities of his position as Chairman of the Board and Chief Executive Officer of the Company and in furtherance of the business, affairs, policies, codes of conduct and activities of the Company in the interests of its shareholders. Subject to the Company’s policies applicable to senior executives generally, Mr. Speese may engage in personal, charitable, professional and investment activities to the extent such activities do not conflict or interfere with his obligations to, or his ability to perform the duties and responsibilities of his employment with the Company.
5.
Annual Compensation
.
(a)
Base Salary
. During the term of this Agreement, the Company will pay salary to Mr. Speese at an annual rate of $740,000, in accordance with its regular payroll practices. The Board and/or the Compensation Committee will review Mr. Speese’s salary at least annually. The Board, acting in its discretion, may increase (but may not decrease) the annual rate of Mr. Speese’s salary in effect at any time.
(b)
Bonus
. Mr. Speese will be eligible for an annual bonus determined at the sole discretion of the Compensation Committee. The amount of the annual bonus, if any, will be payable to Mr. Speese as soon as practicable after the end of the year, consistent with the payment of annual incentive compensation to senior executives generally.
6.
Additional Compensation
. Simultaneously with the execution of this Agreement, the Company will make a special option grant to Mr. Speese pursuant to the Company’s 2006 Long Term Incentive Plan. The special option will cover seventy thousand (70,000) shares of the Company’s common stock and will be fully vested on the date of grant,
provided, however,
that, except as otherwise specified in the option agreement, if Mr. Speese exercises the option before December 31, 2009, any shares of the Company stock acquired upon such exercise may not be sold or otherwise transferred until such date. The Compensation Committee, acting in its discretion, may reduce the transfer restriction period with respect to some or all of the shares covered by the option. The terms and conditions of the special option are set forth in a separate option agreement made of even date herewith between the Company and Mr. Speese.
7.
Employee Benefit Programs and Perquisites
.
(a)
General
. Subject to the provisions of this Agreement, Mr. Speese will be entitled to participate in such qualified and nonqualified employee pension plans, stock option or other equity or long term incentive compensation plans, group health, long term disability and group life insurance plans, and any other welfare and fringe benefit plans, arrangements, programs and perquisites sponsored or maintained by the Company from time to time for the benefit of its employees generally or its senior executives generally.
(b)
Reimbursement of Business Expenses
. Mr. Speese is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement, and the Company will promptly reimburse him for all expenses that are so incurred upon presentation of appropriate vouchers or receipts, subject to the Company’s expense reimbursement policies applicable to senior executive officers generally as in effect from time to time.
(c)
Conditions of Employment.
Mr. Speese’s place of employment during the term of his employment under this Agreement will be at the principal office of the Company in Plano, Texas, subject to the need for business travel. The conditions of Mr. Speese’s employment, including, without limitation, office space and accouterments, secretarial, administrative and other support, will be consistent with his status as the Chairman of the Board and the Chief Executive Officer of the Company.
8.
Termination of Employment
. Subject to the provisions hereof, including, without limitation, Section 12 (relating to the execution and delivery of a release as a condition of Mr. Speese’s (or a beneficiary’s) entitlement to certain payments and benefits hereunder), upon termination of Employment, other than a termination of Employment in conjunction with a Change in Control to which Section 9 applies, Mr. Speese (or Mr. Speese’s beneficiary, as the case may be) will be entitled to receive the applicable payments and benefits set forth in this Section. For the purposes hereof, termination of Employment at the expiration of the initial term or a renewal term due to the Company’s providing notice of non-renewal pursuant to Section
3 of this Agreement will be deemed to be a termination by the Company without Cause; and, if such a termination is due to notice of non-renewal by Mr. Speese, it shall be deemed to be a voluntary termination by Mr. Speese without Good Reason.
(a)
Termination of Employment by the Company without Cause or Mr. Speese for Good Reason
. If Mr. Speese’s Employment is terminated by the Company or an Affiliate without Cause or by Mr. Speese for Good Reason, then Mr. Speese shall be entitled to receive the following payments and benefits:
(i)
Accrued Compensation;
(ii)
Pro Rata Bonus;
(iii)
2.0 times Salary & Bonus, payable to Mr. Speese in equal monthly (or, at the option of the Company, more frequent) installments;
(iv)
Lapse of any Transfer Restrictions; and
(v)
Benefit Continuation Coverage for twenty-four months following termination of Employment.
(b)
Disability or Death
. If Mr. Speese’s Employment is terminated by the Company or an Affiliate due to Mr. Speese’s Disability or if Mr. Speese’s Employment terminates by reason of death, then Mr. Speese (or Mr. Speese’s beneficiary) shall be entitled to receive the following payments and benefits:
(i)
Accrued Compensation;
(ii)
Pro Rata Bonus;
(iii)
Lapse of any Transfer Restrictions; and
(iv)
Benefit Continuation Coverage for twelve months.
(c)
Termination by the Company or an Affiliate for Cause or Termination by Mr. Speese without Good Reason
. If the Company or an Affiliate terminates Mr. Speese’s Employment for Cause or if Mr. Speese terminates such Employment for any reason other than death or for Good Reason, then Mr. Speese shall be entitled to receive any Accrued Compensation, subject to set off for amounts owed by Mr. Speese to the Company or an Affiliate, and nothing more.
(d)
Restoration
. Any severance payments and benefits paid under this Section 8 shall be subject to continuing compliance with the covenants described in and repayment pursuant to Section 13.
9.
Termination in Conjunction with a Change in Control
. Subject to the provisions hereof, including, without limitation, Section 11 (relating to a reduction of severance payments and benefits in order to avoid adverse tax consequences) and Section 12 (relating to execution and delivery of a general release as a condition of Mr. Speese’s entitlement to certain payments and benefits hereunder), upon the termination of Mr. Speese’s Employment with the Company and its Affiliates in conjunction with a Change in Control, Mr. Speese (or Mr. Speese’s beneficiary, as the case may be) will be entitled to receive the applicable severance payments and benefits described in Section 8,
provided, however,
that, if Mr. Speese’s Employment is terminated by the Company without Cause or by Mr. Speese for Good Reason in conjunction with a Change
in Control, then (a) in lieu of the installment payout described in Section 8(a)(iii), Mr. Speese shall be entitled to receive a single sum payment equal to 2.0 times Salary & Bonus within 10 business days following the date of Mr. Speese’s termination of Employment or, if later, the date of the Change in Control, and (b) the period of Benefit Continuation Coverage will be thirty-six months (as opposed to twenty-four months). For the purposes hereof, a termination of Employment is in conjunction with a Change in Control if (and only if) it occurs during the period beginning six months prior to a Change in Control (or, in the case of a Change in Control described in Section 2(f)(i) or (ii), beginning on the date of the definitive agreement pursuant to which the Change in Control is consummated), and ending on the second anniversary of the date of the Change in Control. If Mr. Speese is entitled to receive payments and benefits under Section 8 (due to a termination of Employment not in conjunction with a Change in Control) and if, by reason of a subsequent Change in Control, Mr. Speese’s termination of Employment is deemed to be in conjunction with the Change in Control, then, in order to avoid duplication, the payments and benefits to which Mr. Speese is entitled under this Section upon and following the Change in Control will be reduced by the payments and benefits which Mr. Speese received under Section 8, and no further payments will be made under Section 8. Any severance payments and benefits paid under this Section 9 shall be subject to continuing compliance with the covenants described in and repayment pursuant to Section 13.
10.
Effect of a Change in Control on Options and Other Equity-Based Awards
. All Transfer Restrictions shall lapse immediately before a Change In Control. All outstanding Company stock options and other Company equity-based awards held by Mr. Speese shall become fully vested immediately before the occurrence of a Change in Control if (a) Mr. Speese is then still employed by the Company or an Affiliate; or (b) if Mr. Speese’s Employment is terminated by the Company or an Affiliate without Cause or by Mr. Speese for Good Reason during the pre-Change in Control severance protection period described in Section 9. If Mr. Speese becomes vested in a stock option or other equity-based award pursuant to part (b) of the preceding sentence, then, before the Change in Control, the Company will either reinstate the option or other award to the extent it would otherwise not be vested, or make a cash payment to Mr. Speese equal to the intrinsic value of the non-vested portion of the option or other award based upon the then value per share of the Company’s common stock. The vesting and other terms and conditions of Mr. Speese’s stock options and other equity-based awards will continue to govern except as otherwise specifically provided by this Section 10.
11.
Golden Parachute Tax Limitation
. If Mr. Speese is entitled to receive payments and benefits under this Agreement and if, when combined with the payments and benefits Mr. Speese is entitled to receive under any other plan, program or arrangement of the Company or an Affiliate, Mr. Speese would be subject to excise tax under Section 4999 of the Code or Company would be denied a deduction under Section 280G of the Code, then the severance amounts otherwise payable to Mr. Speese under this Agreement will be reduced by the minimum amount necessary to ensure that Mr. Speese will not be subject to such excise tax and the Company will not be denied any such deduction.
12.
Release of Claims
. Notwithstanding anything herein to the contrary, the Compensation Committee or the Board may condition severance payments or benefits otherwise payable under this Agreement upon the execution and delivery by Mr. Speese (or Mr. Speese’s beneficiary) of a general release in favor of the Company, its Affiliates and their officers, directors and employees, in such form as the Board or the Compensation Committee may specify; provided, however, that no such release will be required as a condition of Mr. Speese’s (or the beneficiary’s) entitlement to Accrued Compensation. Subject to Section 20 of this Agreement, any payment or benefit that is so conditioned shall commence or be paid during the period commencing on Executive’s termination of Employment and ending on a date not more than 30 days thereafter, except that, in the event that such period could span two taxable years, payment must be made in the later year.
13.
Restoration
. Mr. Speese has been provided and is privy to intellectual property, trade secrets and other confidential information of the Company and its Affiliates. For two years following Mr. Speese’s termination of Employment, Mr. Speese has agreed not to engage in any activity or provide any services which are similar to or competitive with the business of the Company and its Affiliates. For the same two year period, Mr. Speese also agreed not to solicit or induce, or cause or permit others to solicit or induce, any employee to terminate their employment with the Company and its Affiliates. These covenants are set forth and agreed to in the Loyalty and Confidentiality Agreement between Mr. Speese and the Company (“Loyalty Agreement”). The parties hereto understand and acknowledge that the promises in this Agreement and those in the Loyalty Agreement, and not any employment of or services performed by Mr. Speese in the course and scope of that employment, constitute the sole consideration for the severance payments and benefits provided by this Agreement. Further, it is agreed that should Mr. Speese violate or be in breach of any restrictions set forth herein or in the Loyalty Agreement (which determination shall be made in the discretion of the Compensation Committee), (a) Mr. Speese shall not be entitled to any further severance payments and benefits under this Agreement, (b) Mr. Speese shall immediately return to the Company any severance payments and the value of any severance benefits which were received hereunder, and (c) Mr. Speese will have no further rights or entitlements under this Agreement. This Section 13 shall not in any manner supersede or limit any other right the Company may have to enforce or seek legal or equitable relief based on this Agreement or the Loyalty Agreement.
14.
No Duty to Mitigate
. Except as otherwise specifically provided herein with respect to early termination of Benefit Continuation Coverage, Mr. Speese’s entitlement to payments or benefits hereunder is not subject to mitigation or a duty to mitigate by Mr. Speese.
15.
Amendment
. The Board may amend this Agreement, provided, however, that, no such action which would have the effect of reducing or diminishing Mr. Speese’s entitlements under this Agreement shall be effective without the express written consent of Mr. Speese.
16.
Successors and Beneficiaries
.
(a)
Successors and Assigns of the Company
. The Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Company and its subsidiaries taken as a whole, expressly and unconditionally to assume and agree to perform or cause to be performed the Company’s obligations under this Agreement. In any such event, the term “Company,” as used herein shall mean the Company, as defined in Section 2 hereof, and any such successor or assignee. Mr. Speese acknowledges and agrees that this Agreement and the Loyalty Agreement shall be fully enforceable by the Company's successor or assignee.
(b)
Mr. Speese’s Beneficiary
. For the purposes hereof, Mr. Speese’s beneficiary will be the person or persons designated as such in a written beneficiary designation filed with the Company, which may be revoked or revised in the same manner at any time prior to Mr. Speese’s death. In the absence of a properly filed written beneficiary designation or if no designated beneficiary survives Mr. Speese, Mr. Speese’s estate will be deemed to be the beneficiary hereunder.
17.
Nonassignability
. With the exception of Mr. Speese’s beneficiary designation, neither Mr. Speese nor Mr. Speese’s beneficiary may pledge, transfer or assign in any way the right to receive payments or benefits hereunder, and any attempted pledge, transfer or assignment shall be void and of no force or effect.
18.
Legal Fees to Enforce Rights after a Change in Control
. If, following a Change in Control, the Company fails to comply with any of its obligations under this Agreement or the Company takes any action to declare this Agreement void or unenforceable or institutes any litigation or other legal action designed to deny, diminish or to recover from Mr. Speese (or Mr. Speese’s beneficiary) the payments and benefits intended to be provided, then Mr. Speese (or Mr. Speese’s beneficiary, as the case may be) shall be entitled to select and retain counsel at the expense of the Company to represent Mr. Speese (or Mr. Speese’s beneficiary) in connection with the good faith initiation or defense of any litigation or other legal action, whether by or against the Company or any director, officer, stockholder or other person affiliated with the Company or any successor thereto in any jurisdiction.
19.
Governing Law
. This Agreement shall be governed by the laws of the State of Texas, excluding its conflict of law rules. Any suit with respect to this Agreement will be brought in the federal or state courts in the districts, which include Dallas, Texas, and Mr. Speese hereby agrees to submit to the personal jurisdiction and venue thereof.
20.
Compliance with Section 409A Deferral Requirements
. This Agreement is intended to comply with Section 409A of the Code, if and to the extent applicable, and will be interpreted and applied in a manner consistent with that intention. Toward that end, unless permitted sooner by Section 409A of the Code, severance amounts otherwise payable within six-months after termination of employment will be deferred until and become payable on the first day of the seventh month following termination of Employment. Further, to the extent Section 409A of the Code is applicable, the phrase “termination of Employment” shall have the same meaning as a “separation from service” as defined in Section 409A of the Code and its accompanying regulations.
21.
Withholding
. The Company and its Affiliates may withhold from any and all amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to applicable law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
RENT-A-CENTER, INC.
By:
/s/ Mitchell E. Fadel
Mitchell E. Fadel, President and COO
/s/ Mark E. Speese
Mark E. Speese
SECOND AMENDMENT TO FRANCHISEE FINANCING AGREEMENT
THIS SECOND AMENDMENT TO FRANCHISEE AGREEMENT is made as of August 30, 2013 (this
“Amendment”
), between COLORTYME FINANCE, INC., a Texas corporation (
“Administrator”
), and CITIBANK, N.A., a national banking association (
“Lender”
).
R
E
C
I
T
A
L
S
A.
Administrator and Lender are parties to a Franchisee Financing Agreement dated as of August 2, 2010 (the
“Original Financing Agreement”
), as amended by that certain First Amendment to Franchisee Financing Agreement dated as of July 25, 2012.
B.
The parties desire to amend the Original Financing Agreement to, among other things, increase the Program Amount as hereinafter provided.
NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Same Terms
. All terms used herein which are defined in the Original Financing Agreement shall have the same meanings when used herein, unless the context hereof otherwise requires or provides. In addition, all references in the Loan Documents to the “Agreement”
shall mean the Original Financing Agreement, as amended by this Amendment, as the same shall hereafter be amended from time to time. In addition, the following terms have the meanings set forth below:
“
Effective Date”
means August 30, 2013.
“Modification Papers”
means this Amendment, the Authorization Certificates, and all of the other documents and agreements executed in connection with the transactions contemplated by this Amendment.
2.
Conditions Precedent
. The transactions contemplated by this Amendment shall be deemed to be effective as of the Effective Date, when the following conditions have been complied with to the satisfaction of Lender, unless waived in writing by Lender:
A.
Second Amendment to Franchise Financing Agreement
. This Second Amendment to Franchisee Financing Agreement shall be fully executed by Administrator and Lender.
B.
Authorization Certificates
. Administrator shall have delivered certificates from all appropriate Loan Parties (each an
“Authorization Certificate”
) satisfactory in form and substance to Lender authorizing the execution, delivery and performance of the Modification Papers.
C.
Fees and Expenses
. Lender shall have received payment of all out-of-pocket fees and expenses (including reasonable attorneys' fees and expenses) incurred by Lender in connection with the preparation, negotiation and execution of the Modification Papers.
D.
Representations and Warranties
All representations and warranties contained herein or in the documents referred to herein or otherwise made in writing in connection herewith or
therewith shall be true and correct with the same force and effect as though such representations and warranties have been made on and as of this date.
3.
Amendments to Original Financing Agreement
. On the Effective Date, the Original Financing Agreement shall be amended as follows:
(a)
The following definitions in
Section 1.1
of the Original Financing Agreement shall be amended in their entirety to read as follows:
“Borrowers”
means collectively, each franchisee of Rent-A-Center Franchising International, Inc. who (a) is approved by Lender in its sole discretion, and (b) satisfies the conditions in
Section 5.6
Franchises may be added as Borrowers hereunder from time to time.
“Program Amount”
means the obligation of Lender, subject to the terms and conditions of this Agreement, to make Loans which shall not exceed at any one time outstanding $40,000,000.
“Store”
means, with respect to any Borrower, each store operated by such Borrower pursuant to a franchise or licensee agreement with Rent-A-Center Franchising International, Inc.
(b)
Section 2.3
of the Original Financing Agreement shall be amended in its entirety as follows:
“
2.3
Credit Approval
. Nothing herein shall obligate Lender to accept or approve any request for financing submitted by or on behalf of a franchisee of Rent-A-Center Franchising International, Inc. to become a new Borrower hereunder. Lender may in its sole discretion reject or otherwise decline to accept any franchisee of Rent-A-Center Franchising International, Inc. as a new Borrower hereunder.”
(c)
Section 2.5(a)
of the Original Financing Agreement shall be amended in its entirety as follows:
“(a)
In the event that any franchisee (whether existing or prospective) of Rent-A-Center Franchising International, Inc. shall indicate an interest in obtaining financing as a new Borrower hereunder, then Lender shall provide Administrator with Lender's new account applications for a Borrower Operating Account and with Lender's loan application. Administrator shall then provide such applications to such franchisee.”
(d)
Section 5.6(e)
of the Original Financing Agreement shall be amended in its entirety as follows:
“(e)
a signed copy of such Borrower's franchise agreement with Rent-A-Center Franchising International, Inc., as applicable”.
(e)
Section 6.2
of the Original Financing Agreement shall be amended in its entirety as follows:
“
6.2
Adverse Conditions or Events
. Promptly advise Lender in writing of (i) any condition, event or act which comes to its attention that would reasonably be expected to materially adversely affect either Corporate Guarantor's financial condition or operations or Lender's rights under the Loan Documents, (ii) any litigation filed by or against either Corporate Guarantor in which the amount in controversy exceeds $50,000,000, (iii) the occurrence of any Event of Default, or of any Potential Default, or to any Corporate Guarantor's knowledge, the failure of any other Loan Party to observe any of its undertakings hereunder or under any of the other Loan Documents, (iv) any event of default by a Borrower known to Administrator or Rent-A-Center Franchising International, Inc. under the terms of its franchise agreement with Rent-A-Center Franchising International, Inc. and (v) any other event which has or would reasonably be expected to have a Material Adverse Effect.”
(f)
Exhibit A to the Original Financing Agreement is hereby replaced with
Exhibit A
attached hereto.
(g)
Exhibit B to the Original Financing Agreement is hereby replaced with
Exhibit B
attached hereto.
4.
Certain Representations
. Administrator represents and warrants that, as of the Effective Date: (a) each Loan Party has full power and authority to execute the Modification Papers to which it is a party and the Modification Papers executed by each Loan Party constitute the legal, valid and binding obligation of such Loan Party enforceable in accordance with their terms, except as enforceability may be limited by general principles of equity and applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors' rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution, delivery and performance by each Loan Party thereof. In addition, Administrator represents that all representations and warranties contained in the Original Loan Agreement are true and correct in all material respects on and as of the Effective Date (except representations and warranties that relate to a specific prior date are based upon the state of facts as they exist as of such date).
5.
No Further Amendments
.
Except as previously amended in writing or as amended hereby, the Original Financing Agreement shall remain unchanged and all provisions shall remain fully effective between the parties.
6.
Limitation on Agreements
. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Financing Agreement or any of the Loan Documents, or (b) to prejudice any right or rights which Lender now has or may have in the future under or in connection with the Original Financing Agreement and the Loan Documents, each as amended hereby, or any of the other documents referred to herein or therein. The Modification Papers shall constitute Loan Documents for all purposes.
7.
Counterparts
. This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which constitute one instrument. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto.
8.
Incorporation of Certain Provisions by Reference
. The provisions of Section 12.3 of the Original Loan Agreement captioned “Choice of Law and Venue” and Section 12.15 of the Original Loan Agreement captioned “Waiver of Jury Trial” are incorporated herein by reference for all purposes.
9.
Entirety, Etc
. This instrument and all of the other Loan Documents embody the entire agreement between the parties. THIS AMENDMENT AND ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of Page Intentionally Left Blank; Signatures Begin on Next Page]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to be effective as of the date and year first above written.
ADMINISTRATOR
:
COLORTYME FINANCE, INC.
By:
/s/ Dawn M. Wolverton
Dawn M. Wolverton, Secretary
LENDER
CITIBANK, N.A.
By:
/s/ David C. Hauglid
David C. Hauglid
Senior Vice President
Each Corporate Guarantor hereby acknowledges and agrees that the Obligations, as amended and increased hereby, continue to be guaranteed pursuant to the terms of its Corporate Guaranty Agreement, which Corporate Guaranty Agreement is in full force and effect.
COLORTYME FINANCE, INC.
By:
/s/ Dawn M. Wolverton
Dawn M. Wolverton, Secretary
RENT-A-CENTER, INC.
By:
/s/ Dawn M. Wolverton
Dawn M. Wolverton, Secretary
EXHIBIT A
LOAN NOTICE
(from ColorTyme Finance, Inc. to Lender)
Reference is made to (i) that certain Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A. dated as of August 2, 2010 (together with all amendments and modifications, if any, from time to time made thereto, the
“Agreement”
) and (ii) Section 2.4 of each Note, pursuant to which Administrator is authorized, on behalf of the Borrowers, to request Loans. The terms used herein shall have the same meanings as provided therefor in the Agreement unless the context hereof otherwise requires or provides. This notice may only be delivered by Administrator to Lender. Lender will not accept any loan notice from a Borrower.
A.
GENERAL
.
|
|
|
|
1.
|
Date of proposed Loans
______________________________
|
|
|
|
|
2.
|
Aggregate amount of Loans requested. _________________________
|
|
|
|
|
3.
|
Administrator hereby certifies that all conditions precedent specified by the Agreement for these Loans have been complied with in all respects.
|
|
|
|
|
4.
|
Attached hereto is a schedule evidencing the Borrowers requesting Loans and the requested Loan amounts.
|
|
|
|
|
B.
|
AVAILABILITY UNDER PROGRAM
.
|
1.
Enter: Program Amount
$______________________________
2.
Enter: Outstanding Revolving Loan Commitments
of all Borrowers approved by Lender _________________________
3.
Excess availability for Loans
under the Program (subtract line B2 from line B1)
______________________________
C.
AVAILABILITY FOR APPLICABLE BORROWER(S)
.
1.
Enter: Outstanding Revolving Loan Commitments
of applicable Borrower(s) __________________________
|
|
|
|
2.
|
Enter: Aggregate Revolving Loan Principal Debt
|
of applicable Borrower(s) outstanding as of this date __________________________
3.
Excess (deficit) available for Loans
(subtract line C2 from line C1)
__________________________
Administrator hereby certifies that on the date hereof the representations and warranties contained the Agreement are true in all material respects as if made on the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date and no Event of Default or Potential Default exists and is continuing.
Dated _____________, 201_.
COLORTYME FINANCE, INC.
By:______________________________
Name:_________________________
Title:__________________________
EXHIBIT B
FORM OF REVOLVING NOTE
See attached.
REVOLVING PROMISSORY NOTE
$___________
_________, 2013
FOR VALUE RECEIVED, _____________________, a _________________ (“
Borrower
”), having an address at ________________________, hereby promises to pay to the order of CITIBANK, N.A., a national banking association (together with its successors and assigns and any subsequent holders of this Note, “
Lender
”), as hereinafter provided, the principal sum of _________________________ AND ___/100 DOLLARS ($________) or so much thereof as may be advanced by Lender from time to time hereunder to or for the benefit or account of Borrower, together with interest thereon at the Note Rate (as hereinafter defined), and otherwise in strict accordance with the terms and provisions hereof.
SECTION 1
DEFINITIONS
1.1 Definitions
. As used in this Note, the following terms shall have the following meanings:
“
Administrator
” means ColorTyme Finance, Inc.
“
Administrator Interest
”
means that portion of any interest payment that accrued at the Administrator Interest Rate.
“
Administrator Interest Rate
” means a rate of interest equal to two and three-quarters percent (2.75%) per annum.
“
Applicable Rate
”
means the Base Rate plus one and one-half percent (1.5%) per annum plus the Administrator Interest Rate.
“
Base Rate
”
means for any day, a rate of interest equal to the higher of (a) the Federal Funds Rate plus one half of one percent (0.5%); (b) the prime commercial lending rate as announced by Lender from time to time; provided, however, that if the prime commercial lending rate in this clause (b) is less than LIBOR plus two percent (2.0%) for more than two consecutive months, the rate equal to LIBOR plus two percent (2.0%).
“
Borrower
” has the meaning set forth in the introductory paragraph of this Note.
“
Business Day
” means a weekday, Monday through Friday, except a legal holiday or a day on which banking institutions in Dallas, Texas are authorized or required by law to be closed. Unless otherwise provided, the term “
days
” when used herein means calendar days.
“
Change
” means (a) any change after the date of this Note in the risk‑based capital guidelines applicable to Lender, or (b) any adoption of or change in any other law, governmental or quasi‑governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Note that affects capital adequacy or the amount of capital required or expected to be maintained by Lender or any entity controlling Lender.
“
Charges
” means all fees, charges and/or any other things of value, if any, contracted for, charged, taken, received or reserved by Lender in connection with the transactions relating to this Note and the other Loan Documents, which are treated as interest under applicable law.
“
Debtor Relief Laws
” means Title 11 of the United States Code, as now or hereafter in effect, or any other applicable law, domestic or foreign, as now or hereafter in effect, relating to bankruptcy, insolvency, liquidation, receivership, reorganization, arrangement or composition, extension or adjustment of debts, or similar laws affecting the rights of creditors.
“
Default Interest Rate
” means a rate per annum equal to the Note Rate plus two percent (2.0%), but in no
event in excess of the Maximum Rate.
“
Event of Default
” has the meaning set forth in
Section 3
herein.
“
Federal Funds Rate
” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or if such rate is not so published for any day that is a Business Day, the average of the quotations at approximately 10:00 a.m., (Dallas, Texas time) on such day on such transactions received by Lender from three (3) Federal funds brokers of recognized standing selected by Lender in its sole discretion.
“
LIBOR
” means, with respect to each LIBOR Interest Period, the rate (expressed as a percentage per annum and adjusted as described in the last sentence of this definition of LIBOR) for deposits in United States Dollars that appears on Thomson Reuters British Banker's Association LIBOR Rates Page (or the successor thereto) as of 11:00 a.m., London, England time, on the related LIBOR Determination Date. If such rate does not appear on such screen or service, or such screen or service shall cease to be available, LIBOR shall be determined by Lender to be the offered rate on such other screen or service that displays an average British Bankers Association Interest Settlement Rate for deposits in United States Dollars (for delivery on the first day of such LIBOR Interest Period) for a term equivalent to such LIBOR Interest Period as of 11:00 a.m. on the relevant LIBOR Determination Date. If the rates referenced in the two preceding sentences are not available, LIBOR for the relevant LIBOR Interest Period will be determined by such alternate method or reasonably selected by Lender. LIBOR shall be adjusted from time to time in Lender’s sole discretion for then‑applicable reserve requirements, deposit insurance assessment rates, marginal emergency, supplemental, special and other reserve percentages, and other regulatory costs.
“
LIBOR Determination Date
” means a day that is three (3) Business Days prior to the beginning of the relevant LIBOR Interest Period.
“
LIBOR Interest Period
” means a period of one (1) month. The first day of the interest period must be a Business Day. The last day of the interest period and the actual number of days during the interest period will be determined by Lender using the practices of the London inter‑bank market.
“
Lien
”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever.
“
Loan
”
means sums advanced to Borrower by Lender which may be repaid and reborrowed pursuant the Loan Documents.
“
Loan Documents
” means this Note, the Franchisee Financing Agreement, the Security Agreement, the Guaranty Agreements, any applicable UCC-1 financing statements, the Officer’s Certificate, and all other documents, instruments, guarantees, security agreements, deeds of trust, pledge agreements, certificates and agreements executed or delivered by any Loan Party in connection with the Note, together with all renewals, extensions, modifications and amendments from time to time made of any such documents.
“
Franchisee Financing Agreement
” means that certain Franchisee Financing Agreement dated as of August 2, 2010, executed by Lender and Administrator, as modified, amended, renewed, extended, and restated from time to time.
“
Maturity Date
” means __________, 201_.
“
Maximum Rate
” means, at all times, the maximum rate of interest which may be charged, contracted for, taken, received or reserved by Lender in accordance with applicable Texas law (or applicable United States federal law to the extent that such law permits Lender to charge, contract for, receive or reserve a greater amount of interest
than under Texas law). The Maximum Rate shall be calculated in a manner that takes into account any and all fees, payments, and other charges in respect of the Loan Documents that constitute interest under applicable law. Each change in any interest rate provided for herein based upon the Maximum Rate resulting from a change in the Maximum Rate shall take effect without notice to Borrower at the time of such change in the Maximum Rate.
“
Note
” means this Note.
“
Note Rate
” means the rate equal to the lesser of (a) the Maximum Rate or (b) the Applicable Rate.
“
Payment Date
” means the twenty-sixth (26
th
) day of each and every calendar month during the term of this Note.
“
Related Indebtedness
” means any and all indebtedness paid or payable by Borrower to Lender pursuant to the Loan Documents or any other communication or writing by or between Borrower and Lender related to the transaction or transactions that are the subject matter of the Loan Documents, except such indebtedness which has been paid or is payable by Borrower to Lender under this Note.
“Revolving Loan Commitment”
means the obligation of Lender, subject to the terms and conditions of the Franchisee Financing Agreement and the terms of this Note, to make Revolving Loans to Borrower which shall not exceed the face amount of this Note.
“Revolving Loan Principal Debt”
means, at any time, the aggregate outstanding principal balance of this Note.
“
Security Agreement
” means that certain Security Agreement dated as of even date herewith, executed by Borrower in favor of Lender, as modified, amended, renewed, extended and restated from time to time.
“
Store
” means each store operated by Borrower pursuant to a franchise or license agreement with Rent-A-Center Franchising International, Inc.
1.2 Rules of Construction
. Any capitalized term used in this Note and not otherwise defined herein shall have the meaning ascribed to such term in the Franchisee Financing Agreement. All terms used herein, whether or not defined in
Section 1.1
hereof, and whether used in singular or plural form, shall be deemed to refer to the object of such term whether such is singular or plural in nature, as the context may suggest or require. All personal pronouns used herein, whether used in the masculine, feminine or neutral gender, shall include all other genders; the singular shall include the plural and vice versa.
SECTION 2
PAYMENT TERMS
2.1 Payment of Principal and Interest; Revolving Nature
. The principal and interest on each advance (an “
Advance
”) made under this Note shall be due and payable in equal consecutive monthly installments in an amount based on a twenty-four (24) month amortization schedule provided by Administrator to Borrower and Lender. Additionally, monthly prepayments must be made for the remaining net book value of all disposed inventory.
The principal amortization may be modified by Administrator from time to time. Payments on each Advance shall be made monthly beginning on the twenty-sixth (26
th
) day of the month immediately following the month during which each such Advance is made, and continuing on each Payment Date thereafter through and including the earlier of (a) the date the principal balance and all accrued but unpaid interest on such Advance is paid, or (b) the Maturity Date. The required monthly payment amount under this Note shall be set forth in a statement delivered by Administrator to Borrower on the 10
th
day of each month immediately following the month during which any Advance is made. The outstanding principal
balance hereof and any and all accrued but unpaid interest hereon shall be finally due and payable in full on the Maturity Date or upon the earlier maturity hereof, whether by acceleration or otherwise. Borrower may from time to time during the term of this Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of the limitations, terms and conditions of the Note and other Loan Documents; provided, however, that the total outstanding borrowings under this Note shall not at any time exceed Borrower’s Revolving Loan Commitment. The unpaid principal balance of this Note at any time shall be the total amount advanced hereunder by Lender less the amount of principal payments made hereon by or for Borrower, which balance may be endorsed hereon from time to time by Lender or otherwise noted in Lender’s records, which notations shall be, absent manifest error, conclusive evidence of the amounts owing hereunder from time to time.
2.2 Application
. Except as expressly provided herein to the contrary, all payments on this Note shall be applied in the following order of priority: (a) the payment or reimbursement of any expenses, costs or obligations (other than the outstanding principal balance hereof and interest hereon) for which Borrower shall be obligated or Lender shall be entitled pursuant to the provisions of this Note or the other Loan Documents; (b) the payment to Lender of accrued but unpaid interest hereon, other than Administrator Interest; (c) the payment of accrued but unpaid Administrator Interest; and (d) the payment to Lender of all or any portion of the principal balance hereof then outstanding hereunder, in the direct order of maturity. If an Event of Default exists and is continuing under this Note or under any of the other Loan Documents, then Lender may, at the sole option of Lender, apply any such payments, at any time and from time to time, to any of the items specified in
clauses (a)
,
(b), (c)
or
(d)
above without regard to the order of priority otherwise specified in this
Section 2.2
and any application to the outstanding principal balance hereof may be made in either direct or inverse order of maturity. During the continuance of any Event of Default, Administrator shall not be entitled to receive any payments (whether for principal, interest or fees) until Lender has received full repayment of the Revolving Loan Principal Debt and all accrued and unpaid interest thereon other than any payments by Borrower to Administrator under Borrower’s franchise agreement.
2.3 Payments
.
(a) All payments under this Note made to Lender shall be made in immediately available funds at 8401 N. Central Expressway, Suite 500, LB 36, Dallas, Texas 75225 (or at such other place as Lender, in Lender’s sole discretion, may have established by delivery of written notice thereof to Borrower from time to time), without offset, in lawful money of the United States of America, which shall at the time of payment be legal tender in payment of all debts and dues, public and private. Payments by check or draft shall not constitute payment in immediately available funds until the required amount is actually received by Lender in full. Payments in immediately available funds received by Lender in the place designated for payment on a Business Day prior to 11:00 a.m. (Dallas, Texas time) at such place of payment shall be credited prior to the close of business on the Business Day received, while payments received by Lender on a day other than a Business Day or after 11:00 a.m. (Dallas, Texas time) on a Business Day shall not be credited until the next succeeding Business Day. If any payment of principal or interest on this Note shall become due and payable on a day other than a Business Day, then such payment shall be made on the next succeeding Business Day. Any such extension of time for payment shall be included in computing interest which has accrued and shall be payable in connection with such payment.
(b) Notwithstanding the foregoing, payments under this Note (including for principal, interest and fees) are to be direct debited from an operating account (the “
Borrower Operating Account
”) at Lender held in the name of Borrower on each Payment Date unless otherwise directed by Lender upon prior written notice. Such payments of accrued interest and unused charges due to Lender shall be direct debited from the Borrower Operating Account on a monthly basis. Principal payments owing to Administrator and Administrator Interest are to be made at the direction of Administrator on behalf of Borrower in the amounts provided to Lender by Administrator, and Lender shall be entitled to rely upon such information provided by Administrator as agent for Borrower and shall not incur any liability from relying thereon.
2.4 Borrowings
.
(a) Each Loan shall be made upon Administrator’s irrevocable notice to Lender on behalf of Borrower. Pursuant to Section 2.2 of the Franchisee Financing Agreement, Administrator shall deliver to Lender monthly a Loan Notice pursuant to which Administrator will request that Lender make Loans for the benefit of Borrower as specified in the Loan Notice.
(b) Subject to the terms and conditions of the Franchisee Financing Agreement, each Loan to Borrower will be advanced by Lender to Administrator, as determined by Administrator, on behalf of Borrower. On each Business Day after Loans are made, the proceeds of such Loans held in the Blocked Disbursement Account may be sent to Administrator for repayment of inventory purchases made by Borrower.
(c) Administrator shall at all times during the term hereof act as Borrower’s agent for the purpose of requesting Loans from Lender. Any requests for Loans by Borrower to Administrator may be made in any manner requested by Administrator including without limitation in the form of a loan notice in the form of
Exhibit A
attached hereto or in any other form acceptable to Administrator. All requests for Loans by Borrower shall be made through Administrator as its agent. Borrower may not request Loans directly from Lender.
2.5 Commitment Fee
. Borrower agrees to pay to Lender an unused commitment fee for the period commencing with the date of this Note to the Maturity Date, computed at the rate of one half of one percent (0.50%) per annum on the average daily unused portion of the Revolving Loan Commitment. The phrase “unused portion of the Revolving Loan Commitment” as used in the preceding sentence means the difference between (a) the Revolving Loan Commitment, and (b) the Revolving Loan Principal Debt. The commitment fee shall be payable quarterly in arrears upon receipt of billing from Lender.
2.6 Administration Fee
. Borrower shall pay to Lender an annual administration fee in an amount equal to $1,250. Such fee shall be payable on the initial Funding Date and each anniversary thereof during the term of this Note.
2.7 Upfront Fee
. On the initial Funding Date, Borrower shall pay to Lender an upfront fee in an amount equal to one percent (1.0%) of the original principal face amount of this Note, which upfront fee may, at the request of Borrower, be paid by an Advance hereunder. In addition, on the date of any increase to the principal face amount of this Note, Borrower shall pay to Lender an upfront fee in an amount equal to one percent (1.0%) of such increase. Such upfront fees are fully earned on the date paid.
2.8 Computation Period
. Interest on the indebtedness evidenced by this Note shall be computed on the basis of a three hundred sixty (360) day year and shall accrue on the actual number of days elapsed for any whole or partial month in which interest is being calculated. In computing the number of days during which interest accrues, the day on which funds are initially advanced shall be included regardless of the time of day such advance is made, and the day on which funds are repaid shall be included unless repayment is credited prior to the close of business on the Business Day received as provided in
Section 2.3
hereof. Each determination by Lender of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
2.9 Prepayment
. Borrower shall have the right to prepay, at any time and from time to time upon at least one (1) Business Day prior written notice to Lender, without fee, premium or penalty, all or any portion of the outstanding principal balance hereof; provided, however
,
that such prepayment shall also include any and all accrued but unpaid interest on the amount of principal being so prepaid through and including the date of prepayment, plus any other sums which have become due to Lender under the other Loan Documents on or before the date of prepayment, but which have not been fully paid.
2.10 Unconditional Payment
. Borrower is and shall be obligated to pay all principal, interest and any and all other amounts which become payable under this Note or under any of the other Loan Documents absolutely and unconditionally and without any abatement, postponement, diminution or deduction whatsoever and without any
reduction for counterclaim or setoff whatsoever. If at any time any payment received by Lender hereunder shall be deemed by a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under any Debtor Relief Law, then the obligation to make such payment shall survive any cancellation or satisfaction of this Note or return thereof to Borrower and shall not be discharged or satisfied with any prior payment thereof or cancellation of this Note, but shall remain a valid and binding obligation enforceable in accordance with the terms and provisions hereof, and such payment shall be immediately due and payable upon demand.
2.11 Partial or Incomplete Payments
. Remittances in payment of any part of this Note other than in the required amount in immediately available funds at the place where this Note is payable shall not, regardless of any receipt or credit issued therefor, constitute payment until the required amount is actually received by Lender in full in accordance herewith and shall be made and accepted subject to the condition that any check or draft may be handled for collection in accordance with the practice of the collecting bank or banks. Acceptance by Lender of any payment in an amount less than the full amount then due shall be deemed an acceptance on account only, and the failure to pay the entire amount then due shall be and continue to be an Event of Default in the payment of this Note.
2.12 Default Interest Rate
. For so long as any Event of Default exists and is continuing under this Note, regardless of whether or not there has been an acceleration of the indebtedness evidenced by this Note, and at all times after the maturity of the indebtedness evidenced by this Note (whether by acceleration or otherwise), and in addition to all other rights and remedies of Lender hereunder, interest shall accrue on the outstanding principal balance hereof at the Default Interest Rate, and such accrued interest shall be immediately due and payable. Borrower acknowledges that it would be extremely difficult or impracticable to determine Lender’s actual damages resulting from any late payment or Event of Default, and such late charges and accrued interest are reasonable estimates of those damages and do not constitute a penalty.
2.13 Late Fee
. To the extent permitted by law, Borrower agrees to pay to Administrator for its own benefit a daily delinquency charge of fifteen hundredths of one percent (0.15%) of any payment that is late.
SECTION 3
EVENT OF DEFAULT AND REMEDIES
3.1 Events of Default.
Any of the following shall constitute an event of default (each an
“Event of Default”
):
(a)
Nonpayment
. Borrower shall default in the due and punctual payment of any principal or interest of the Note when due and payable, whether at maturity or otherwise.
(b)
Representations and Warranties
. Any representation, warranty or statement made by Borrower herein or otherwise in writing in connection herewith or in connection with any of the other Loan Documents and the agreements referred to herein or therein or in any financial statement, certificate or statement signed by any officer or employee of Borrower and furnished pursuant to any provision of the Loan Documents shall be breached, or shall be materially false, incorrect or incomplete when made.
(c)
Default in Covenants Under Agreement
. Borrower shall default in the due performance or observance by Borrower of any term, covenant or agreement contained in this Note.
(d)
Default in Other Loan Documents
. Borrower shall default in the due performance of or observance by it of any term, covenant or agreement on its part to be performed pursuant to the terms of any of the other Loan Documents and the default shall continue unremedied beyond any grace or cure period therein provided.
(e)
Default in Other Debt
. An event of default shall have occurred and be continuing under the provisions of any instrument (other than the Loan Documents) evidencing indebtedness of Borrower for the payment of borrowed money or of any agreement relating thereto, the effect of which is to permit the holder
or holders of such instrument to cause the indebtedness evidenced by such instrument to become due and payable prior to its stated maturity (whether or not the holder actually exercises such option).
(f)
Bankruptcy
. Borrower shall suspend or discontinue its business operations, or shall generally fail to pay its debts as they mature, or shall file a petition commencing a voluntary case concerning Borrower under any chapter of the United States Bankruptcy Code that results in the entry of an order for relief or any such adjudication or appointment or remains undismissed, undischarged or unbonded for a period of 60 days; or any involuntary case shall be commenced against Borrower under the United States Bankruptcy Code; or Borrower shall become insolvent (howsoever such insolvency may be evidenced).
(g)
Judgments and Decrees
. Borrower shall suffer a final judgment for the payment of money and shall not discharge the same within a period of thirty (30) days unless, pending further proceedings, execution has not been commenced, or, if commenced, has been effectively stayed. Any order, judgment or decree shall be entered in any proceeding against Borrower decreeing the dissolution or split up of such entity and such order shall remain vacated, discharged, satisfied, stayed or bonded pending appeal for a period in excess of thirty (30) days.
(h)
Default in Covenants Under Franchise Agreement
. Borrower shall default in the due performance or observance by Borrower of any material term, covenant or agreement contained in the franchise agreement between Borrower and ColorTyme, Inc., and such default shall continue beyond the expiration of all applicable grace or cure periods, if any, provided therein.
(i)
Validity of Loan Documents
. Any of the Loan Documents shall cease to be a legal, valid and binding agreement enforceable against any party executing the same in accordance with the respective terms thereof, or shall in any way be terminated without the consent of Lender.
3.2 Remedies
. Upon the occurrence and continuance of an Event of Default, Lender shall have the immediate right, at the sole discretion of Lender and without notice, demand, presentment, notice of nonpayment or nonperformance, protest, notice of protest, notice of intent to accelerate, notice of acceleration, or any other notice or any other action (
ALL OF WHICH BORROWER HEREBY EXPRESSLY WAIVES AND RELINQUISHES
): (a) to declare the entire unpaid balance of the indebtedness evidenced by this Note (including, without limitation, the outstanding principal balance hereof, all sums advanced or accrued hereunder or under any other Loan Document, and all accrued but unpaid interest thereon) at once immediately due and payable (and upon such declaration, the same shall be at once immediately due and payable) and may be collected forthwith, whether or not there has been a prior demand for payment and regardless of the stipulated date of maturity; (b) to foreclose any Liens and security interests securing payment hereof or thereof (including, without limitation, any Liens and security interests); and (c) to exercise any of Lender’s other rights, powers, recourses and remedies under the Loan Documents or at law or in equity, and the same (i) shall be cumulative and concurrent, (ii) may be pursued separately, singly, successively, or concurrently against Borrower or others obligated for the repayment of this Note or any part hereof, at the sole discretion of Lender, (iii) may be exercised as often as occasion therefor shall arise, it being agreed by Borrower that the exercise, discontinuance of the exercise of or failure to exercise any of the same shall in no event be construed as a waiver or release thereof or of any other right, remedy, or recourse, and (iv) are intended to be, and shall be, nonexclusive. All rights and remedies of Lender hereunder and under the other Loan Documents shall extend to any period after the initiation of foreclosure proceedings, judicial or otherwise.
3.3 WAIVERS. EXCEPT AS SPECIFICALLY PROVIDED IN THE LOAN DOCUMENTS TO THE CONTRARY, BORROWER AND ANY ENDORSERS OR GUARANTORS HEREOF SEVERALLY WAIVE AND RELINQUISH PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF NONPAYMENT OR NONPERFORMANCE, PROTEST, NOTICE OF PROTEST, NOTICE OF INTENT TO ACCELERATE, NOTICE OF ACCELERATION OR ANY OTHER NOTICES OR ANY OTHER ACTION. BORROWER AND ANY ENDORSERS OR GUARANTORS HEREOF SEVERALLY WAIVE AND RELINQUISH, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO THE BENEFITS OF ANY MORATORIUM, REINSTATEMENT, MARSHALING, FORBEARANCE, VALUATION, STAY, EXTENSION,
REDEMPTION, APPRAISEMENT, EXEMPTION AND HOMESTEAD NOW OR HEREAFTER PROVIDED BY THE CONSTITUTION AND LAWS OF THE UNITED STATES OF AMERICA AND OF EACH STATE THEREOF, BOTH AS TO ITSELF AND IN AND TO ALL OF ITS PROPERTY, REAL AND PERSONAL, AGAINST THE ENFORCEMENT AND COLLECTION OF THE OBLIGATIONS EVIDENCED BY THIS NOTE OR BY THE OTHER LOAN DOCUMENTS.
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1
Borrower hereby represents and warrants to Lender as follows:
(a)
No Liens
. Borrower has good and defensible title to all of its assets, and none of such assets are subject to any security interest, mortgage, deed of trust, pledge, lien, title retention document or encumbrance of any character except those in favor or Lender and as otherwise disclosed to Lender in writing.
(b)
Good Standing
. Borrower is a corporation, duly organized, validly existing and in good standing under the laws of _______________ and has the power and authority to own its property and to carry on its business in _____________ and in each other jurisdiction in which Borrower does business and in which the failure to be so qualified would (when considered alone or when aggregated with the effect of failure to qualify in all other jurisdictions) have a Material Adverse Effect.
(c)
Authority and Compliance
. Borrower has full power and authority to execute, deliver and perform the Loan Documents to which it is a party and to incur and perform the obligations provided for therein. No consent or approval of any Governmental Authority or other third party is required as a condition to the validity or performance of any Loan Document, and Borrower is in compliance with all laws and regulatory requirements to which it is subject.
(d)
Litigation
. There is no proceeding involving Borrower pending or, to the knowledge of Borrower, threatened before any court or Governmental Authority, agency or arbitration authority, except as disclosed to Lender in writing prior to the date of this Note.
(e)
No Conflicting Agreements
. There is no charter, bylaw, stock provision, partnership agreement or other document pertaining to the power or authority of Borrower and no provision of any existing material agreement, mortgage, indenture or contract binding on Borrower or affecting any property of Borrower, which would conflict with or in any way prevent the execution, delivery or carrying out of the terms of this Note and the other Loan Documents.
(f)
Taxes
. All taxes and assessments due and payable by Borrower have been paid or are being Contested in Good Faith, except for taxes, the failure of which to pay, will not have a Material Adverse Effect. Borrower has filed all tax returns which it is required to file.
(g)
No Default
. No Event of Default has occurred and is continuing.
(h)
Adverse Circumstances
. Neither the business nor any property of Borrower is presently affected by any fire, explosion, accident, strike, lockout, or other dispute, embargo, act of God, act of public enemy, or similar event or circumstance nor has any other event or circumstance relating to its business or affairs occurred which has had or would reasonably be expected to have a Material Adverse Effect.
(i)
Accuracy of Information
. To the best of Borrower’s knowledge, all factual information furnished to Lender in connection with this Note and the other Loan Documents is and will be accurate and complete on the date as of which such information is delivered to Lender and is not and will not be incomplete by the omission of any material fact necessary to make such information not misleading.
(j)
ERISA
. Borrower is in compliance in all material respects with all applicable provisions of ERISA except where failure to so comply would not result in a Material Adverse Effect. Neither a Reportable Event nor a Prohibited Transaction has occurred and is continuing with respect to any Plan; no notice of intent to terminate a Plan has been filed, nor has any Plan been terminated; neither Borrower nor any Commonly Controlled Entity has completely or partially withdrawn from a Multiemployer Plan; and Borrower and each Commonly Controlled Entity have met their minimum funding requirements under ERISA with respect to all of their Plans.
(k)
Environmental
. The conduct of Borrower’s business operations and the condition of Borrower’s property does not and will not violate any federal laws, rules or ordinances for environmental protection, or regulations of the Environmental Protection Agency, or any applicable local or state law, rule, regulation or rule of common law, or any judicial interpretation thereof relating primarily to the environment or Hazardous Materials.
(l)
Franchisee Financing Agreement; Authority of Administrator
. Borrower acknowledges that Borrower has received or may request a copy of the Franchisee Financing Agreement.
(m)
Continuation of Representations and Warranties
. All representations and warranties made under this Agreement shall be deemed to be made at and as of the date hereof and at and as of the date of any future Loan and in all instances shall be true and correct in all material respects, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date.
SECTION 5
COVENANTS
5.1 Affirmative Covenants
. Until full payment and performance of all obligations of Borrower under the Note and Other Loan Documents and unless Lender consents otherwise in writing (and without limiting any requirement of any other Loan Document), Borrower shall:
(a)
Taxes and Other Obligations
. Pay all of Borrower’s taxes, assessments and other obligations, including, but not limited to taxes and assessments and lawful claims which, if unpaid, might by law become a lien against the assets of Borrower, as the same become due and payable, except to the extent the same are being Contested in Good Faith or except for taxes, the failure of which to pay, would not reasonably be expected to have a Material Adverse Effect.
(b)
Insurance
. Keep its properties of an insurable nature insured at all times against such risks and to the extent that like properties are customarily insured by other companies engaged in the same or similar businesses similarly situated and maintain insurance of the types and in the coverage amounts and with reasonable deductibles as are usual and customary.
(c)
Compliance with Laws
. Comply with all applicable laws (including environmental laws), rules, regulations and orders of any Governmental Authority, a breach of which (when considered alone or when aggregated with the effect of other breaches) would reasonably be expected to have a Material Adverse Effect.
(d)
Inspection of Books and Records
. Allow any representative of Lender to visit and inspect its properties, to examine its books of record and account and to discuss its affairs, finances and accounts with any of its officers, directors, employees and agents, all at such reasonable times and as often as Lender may request.
(e)
Existence and Qualification
. Preserve and maintain its existence and good standing in _________________ and in each other jurisdiction in which qualification is required and where failure so to qualify would reasonably be expected to have a Material Adverse Effect.
(f)
Good Standing
. Remain in good standing under Borrower’s franchise agreement with ColorTyme, Inc. and maintain the ability to purchase inventory from ColorTyme, Inc. pursuant to such franchise agreement.
(g)
Borrower Operating Account
. Maintain a Borrower Operating Account at Lender, with an aggregate minimum average daily balance for such account as follows: (i) for each Store of Borrower that has been open for business less than two years, the Borrower Operating Account at Lender shall have an aggregate minimum average daily balance of at least $2,500; (ii) for each Store of Borrower that has been open for business between two and four years, the Borrower Operating Account at Lender shall have an aggregate minimum average daily balance of at least $5,000; and (iii) for each Store of Borrower that has been open for business more than four years, the Borrower Operating Account at Lender shall have an aggregate minimum average daily balance of at least $7,500. If at any time Borrower does not comply with foregoing, then Borrower shall pay to Lender a $100 fee for each month Borrower is not in compliance with the requirements in this
Section 5.1(g)
. Such fee shall be assessed on a yearly basis.
(h)
Borrower Cash Receipts.
Within five (5) Business Days after request from Lender, a report of Borrower’s cash receipts for each Store, point of sale reports, bank statements and individual deposit slips on specific dates or for specific periods as may be requested by Lender.
(i)
Further Assurances
. Make, execute or endorse, acknowledge and deliver or file or cause the same to be done, all such vouchers, invoices, notices, certifications and additional agreements, undertakings, conveyances, deeds of trust, mortgages, assignments, financing statements or other assurances, and take any and all such other action as Lender may from time to time deem necessary or appropriate in connection with this Note or any of the other Loan Documents (i) to cure any defects in the creation of the Loan Documents, or (ii) to evidence further or more fully describe, perfect or realize on the collateral intended as security, or (iii) to correct any omissions in the Loan Documents, or (iv) to state more fully the security for the obligations, or (v) to perfect, protect or preserve any liens pursuant to any of the Loan Documents, or (vi) for better assuring and confirming unto Lender all or any part of the security for any of the obligations.
5.2 Negative Covenants
. Until full payment and performance of all obligations under note and Other Loan documents, Borrower shall not without the prior written consent of Lender (and without limiting any requirement of any other Loan Documents):
(a)
Negative Pledge
. Grant, suffer or permit any contractual or noncontractual lien on or security interest in its assets.
(b)
Merger
. Enter into any merger or consolidation.
(c)
Extensions of Credit
. Make any loan or advance to any individual, partnership, corporation or other entity without consent of Lender, except (a) loans and intercompany adjustments, between Borrower and its subsidiaries occurring in the ordinary course of business, and (b) advances made to employees of Borrower for the payment by them of items for which an expense report or voucher will be filed and which items will constitute ordinary and necessary business expenses of Borrower.
(d)
Borrowings
. Create, incur, assume or become liable in any manner for any indebtedness (for borrowed money, deferred payment for the purchase of assets, as surety or guarantor for the debt for another, or otherwise) other than to Lender, except for (a) normal trade debts incurred in the ordinary course of Borrower’s business; (b) existing indebtedness disclosed to Lender in writing and acknowledged by Lender prior to the date of this Note, and (c) leases of personal property which are not “capital leases” under generally
accepted accounting principles and for which the lessor’s remedy for a breach by the lessee thereunder is limited to recovery of the item leased.
(e)
Transfer of Assets
. Convey, assign, transfer, sell, lease or otherwise dispose of, in one transaction or a series of transactions (or agree to do any of the foregoing at any future time), all or substantially all or a substantial part of its properties or assets (whether now owned or hereafter acquired) or any part of such properties or assets which are essential to the conduct of its business substantially as now conducted.
(f)
Change of Control of Borrower
. Except pursuant to Lender’s prior consent, which consent shall not be unreasonably withheld, permit the change of control of Borrower. “Change of Control” as used in the preceding sentence means (a) the acquisition of more than fifty percent (50%) of the outstanding voting stock of Borrower by any Person or group of Persons acting in concert, or (b) the acquisition of more than ten percent (10%) of the outstanding voting stock of Borrower by any Person or group of Persons acting in concert if at any time following such acquisition of ten percent (10%) or more of Borrower’s outstanding voting stock more than fifty percent (50%) of the Persons serving on the board of directors of Borrower are Persons proposed directly or indirectly by the Persons or group of Persons acting in concert who have acquired such ten percent (10%) or more of Borrower’s outstanding voting stock.
(g)
Change in Nature of Business
. Conduct any business other than, or make any material change in the nature of, its business as carried on as of the date hereof.
(h)
Exceptions
. Take any action which is permitted by any covenant contained in this Agreement if such action is in breach of any other covenant contained in this Agreement.
SECTION 6
GENERAL PROVISIONS
6.1 Appointment and Authority of Administrator.
Borrower hereby irrevocably appoints Administrator to act on its behalf hereunder and under the other Loan Documents and authorizes Administrator to take such actions on its behalf and to exercise such powers as are delegated to Administrator by the terms of the Franchisee Financing Agreement, together with such actions and powers as are reasonably incidental thereto. Such powers include, without limitation, the power and authority to request Loans from Lender on behalf of Borrower, the authority to receive payment of Loans for the benefit of Borrower and the authority to provide Lender with financial and other business information concerning Borrower. Lender is entitled to rely upon any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message) from Administrator on behalf of Borrower.
6.2 No Waiver; Amendment
. No failure to accelerate the indebtedness evidenced by this Note by reason of an Event of Default hereunder, acceptance of a partial or past due payment, or indulgences granted from time to time shall be construed (a) as a novation of this Note or as a reinstatement of the indebtedness evidenced by this Note or as a waiver of such right of acceleration or of the right of Lender thereafter to insist upon strict compliance with the terms of this Note, or (b) to prevent the exercise of such right of acceleration or any other right granted under this Note, under any of the other Loan Documents or by any applicable laws. Borrower hereby expressly waives and relinquishes the benefit of any statute or rule of law or equity now provided, or which may hereafter be provided, which would produce a result contrary to or in conflict with the foregoing. The failure to exercise any remedy available to Lender shall not be deemed to be a waiver of any rights or remedies of Lender under this Note or under any of the other Loan Documents, or at law or in equity. No extension of the time for the payment of this Note or any installment due hereunder, made by agreement with any person now or hereafter liable for the payment of this Note, shall operate to release, discharge, modify, change or affect the original liability of Borrower under this Note, either in whole or in part, unless Lender specifically, unequivocally and expressly agrees otherwise in writing.
6.3 Interest Provisions.
(a)
Savings Clause
. It is expressly stipulated and agreed to be the intent of Borrower and Lender at all times to comply strictly with the applicable Texas law governing the Maximum Rate or amount of interest payable on the indebtedness evidenced by this Note and the Related Indebtedness (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any amount (i) contracted for, charged, taken, reserved or received pursuant to this Note, any of the other Loan Documents or any other communication or writing by or between Borrower and Lender related to the transaction or transactions that are the subject matter of the Loan Documents, (ii) contracted for, charged, taken, reserved or received by reason of Lender’s exercise of the option to accelerate the maturity of this Note and/or the Related Indebtedness, or (iii) Borrower will have paid or Lender will have received by reason of any voluntary prepayment by Borrower of this Note and/or the Related Indebtedness, then it is Borrower’s and Lender’s express intent that all amounts charged in excess of the Maximum Rate shall be automatically canceled, ab initio, and all amounts in excess of the Maximum Rate theretofore collected by Lender shall be credited on the principal balance of this Note and/or the Related Indebtedness (or, if this Note and all Related Indebtedness have been or would thereby be paid in full, refunded to Borrower), and the provisions of this Note and the other Loan Documents shall immediately be deemed reformed and the amounts thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder and thereunder; provided, however
,
that if this Note has been paid in full before the end of the stated term of this Note, then Borrower and Lender agree that Lender shall, with reasonable promptness after Lender discovers or is advised by Borrower that interest was received in an amount in excess of the Maximum Rate, either refund such excess interest to Borrower and/or credit such excess interest against this Note and/or any Related Indebtedness then owing by Borrower to Lender. Borrower hereby agrees that as a condition precedent to any claim seeking usury penalties against Lender, Borrower will provide written notice to Lender, advising Lender in reasonable detail of the nature and amount of the violation, and Lender shall have sixty (60) days after receipt of such notice in which to correct such usury violation, if any, by either refunding such excess interest to Borrower or crediting such excess interest against this Note and/or the Related Indebtedness then owing by Borrower to Lender. All sums contracted for, charged, taken, reserved or received by Lender for the use, forbearance or detention of any debt evidenced by this Note and/or the Related Indebtedness shall, to the extent permitted by applicable law, be amortized or spread, using the actuarial method, throughout the stated term of this Note and/or the Related Indebtedness (including any and all renewal and extension periods) until payment in full so that the rate or amount of interest on account of this Note and/or the Related Indebtedness does not exceed the Maximum Rate from time to time in effect and applicable to this Note and/or the Related Indebtedness for so long as debt is outstanding. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, it is not the intention of Lender to accelerate the maturity of any interest that has not accrued at the time of such acceleration or to collect unearned interest at the time of such acceleration.
(b)
Ceiling Election
. To the extent that Lender is relying on Chapter 303 of the Texas Finance Code to determine the Maximum Rate payable on the Note and/or any other portion of the Indebtedness, Lender will utilize the weekly ceiling from time to time in effect as provided in such Chapter 303, as amended. To the extent United States federal law permits Lender to contract for, charge, take, receive or reserve a greater amount of interest than under Texas law, Lender will rely on United States federal law instead of such Chapter 303 for the purpose of determining the Maximum Rate. Additionally, to the extent permitted by applicable law now or hereafter in effect, Lender may, at its option and from time to time, utilize any other method of establishing the Maximum Rate under such Chapter 303 or under other applicable law by giving notice, if required, to Borrower as provided by applicable law now or hereafter in effect.
6.4 WAIVER OF JURY TRIAL
. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER HEREBY IRREVOCABLY AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 6.4
.
6.5 GOVERNING LAW; VENUE; SERVICE OF PROCESS
. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS;
PROVIDED THAT
LENDER SHALL RETAIN ALL RIGHTS UNDER FEDERAL LAW. THIS AGREEMENT HAS BEEN ENTERED INTO IN DALLAS COUNTY, TEXAS, AND IS PERFORMABLE FOR ALL PURPOSES IN DALLAS COUNTY, TEXAS. THE PARTIES HEREBY AGREE THAT ANY LAWSUIT, ACTION, OR PROCEEDING THAT IS BROUGHT (WHETHER IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY, OR THE ACTIONS OF THE LENDER IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS SHALL BE BROUGHT IN A STATE OR FEDERAL COURT OF COMPETENT JURISDICTION LOCATED IN DALLAS COUNTY, TEXAS. BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS, (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH LAWSUIT, ACTION, OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND (C) FURTHER WAIVES ANY CLAIM THAT IT MAY NOW OR HEREAFTER HAVE THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREE THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED AT THE ADDRESS FOR NOTICES REFERENCED IN
SECTION 6.11
.
6.6 Relationship of the Parties
. Notwithstanding any prior business or personal relationship between Borrower and Lender, or any officer, director or employee of Lender, that may exist or have existed, the relationship between Borrower and Lender is solely that of debtor and creditor, Lender has no fiduciary or other special relationship with Borrower, Borrower and Lender are not partners or joint venturers, and no term or condition of any of the Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.
6.7 Successors and Assigns
. The terms and provisions hereof shall be binding upon and inure to the benefit of Borrower and Lender and their respective heirs, executors, legal representatives, successors, successors‑in‑title and assigns, whether by voluntary action of the parties, by operation of law or otherwise, and all other persons claiming by, through or under them. The terms “Borrower” and “Lender” as used hereunder shall be deemed to include their respective heirs, executors, legal representatives, successors, successors‑in‑title and assigns, whether by voluntary action of the parties, by operation of law or otherwise, and all other persons claiming by, through or under them. Lender may at any time assign the Loan Documents to Administrator without the consent of Borrower.
6.8 Time is of the Essence
. Time is of the essence with respect to all provisions of this Note and the other Loan Documents.
6.9 Headings
. The Section and Subsection titles hereof are inserted for convenience of reference only and shall in no way alter, modify, define, limit, amplify or be used in construing the text, scope or intent of such Sections or Subsections or any provisions hereof.
6.10 Controlling Agreement
. In the event of any conflict between the provisions of this Note and the Franchisee Financing Agreement, it is the intent of the parties hereto that the provisions of the Franchisee Financing Agreement shall control. In the event of any conflict between the provisions of this Note and any of the other Loan Documents other than the Franchisee Financing Agreement, it is the intent of the parties hereto that the provisions of this Note shall control. The parties hereto acknowledge that they were represented by competent counsel in connection with the negotiation, drafting and execution of this Note and the other Loan Documents and that this Note and the other Loan Documents shall not be subject to the principle of construing their meaning against the party which drafted same.
6.11 Notices
. All notices required or permitted to be given under the terms of this Note must be in writing (including telegraphic, telex and facsimile transmission) delivered to the other party at the addresses set forth below or to such other address as any party may designate by written notice to the other party. Each such notice, request and demand shall be deemed given or made (whether actually received or not) (a) if sent by mail, upon the earlier of the date of receipt or five (5) days after deposit in the U.S. Mail, first class postage prepaid, and (b) if sent by any other means, upon delivery.
Addresses for Notices:
If to Borrower:
____________________________________
____________________________________
____________________________________
Phone:
______________________________
Fax:
______________________________
Attn:
______________________________
If to Lender:
Citibank, N.A.
2001 Ross Avenue
Suite 4300
Dallas, TX 75225
Phone: (972) 419-3490
Fax: (972) 419-3589
Attn: David C. Hauglid
In either case, with a courtesy copy to Administrator:
ColorTyme Finance, Inc.
5000 Legacy Drive, Suite 210
Plano, TX 75024
Phone: (972) 403-4917
Fax: (972) 403-4923
Attn: Steve Ingham
Any notice delivered to Administrator pursuant to this
Section 6.11
shall not constitute formal notice hereunder nor shall the failure of Lender to give such notice to Administrator invalidate any notice given to Borrower hereunder.
6.12 Severability
. If any provision of this Note or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, then neither the remainder of this Note nor the application of such provision to other persons or circumstances nor the other instruments referred to herein shall be affected thereby, but rather shall be enforced to the greatest extent permitted by applicable law.
6.13 Right of Setoff
. In addition to all Liens upon and rights of setoff against the money, securities, or other property of Borrower given to Lender that may exist under applicable law, Lender shall have and Borrower hereby grants to Lender a Lien upon and a right of setoff against all money, securities, and other property of Borrower, now or hereafter in possession of or on deposit with Lender, whether held in a general or special account or deposit, for safe-keeping or otherwise but excluding payroll accounts, and every such Lien and right of setoff may be exercised without demand upon or notice to Borrower. No Lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Lender, or by any neglect to exercise such right of setoff or to enforce such Lien, or by
any delay in so doing, and every right of setoff and Lien shall continue in full force and effect until such right of setoff or Lien is specifically waived or released by an instrument in writing executed by Lender.
6.14 Costs of Collection
. If any holder of this Note retains an attorney‑at‑law in connection with any Event of Default or at maturity or to collect, enforce, or defend this Note or any part hereof, or any other Loan Document in any lawsuit or in any probate, reorganization, bankruptcy or other proceeding, or if Borrower sues any holder in connection with this Note or any other Loan Document and does not prevail, then Borrower agrees to pay to each such holder, in addition to the principal balance hereof and all interest hereon, all costs and expenses of collection or incurred by such holder or in any such suit or proceeding, including, but not limited to, reasonable attorneys’ fees.
6.15 Statement of Unpaid Balance
. At any time and from time to time, Borrower will furnish promptly, upon the request of Lender, a written statement or affidavit, in form satisfactory to Lender, stating the unpaid balance of the indebtedness evidenced by this Note and the Related Indebtedness and that there are no offsets or defenses against full payment of the indebtedness evidenced by this Note and the Related Indebtedness and the terms hereof, or if there are any such offsets or defenses, specifying them.
6.16 FINAL AGREEMENT
. THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[Remainder of Page Intentionally Left Blank; Signature Page Follows]
IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly executed this Note as of the day and year first written above.
BORROWER:
__________________________________________
By:_______________________________________
Name:______________________________
Title:_______________________________
PROMISSORY NOTE
EXHIBIT A
BORROWER LOAN NOTICE
Reference is made to (i) that certain Revolving Promissory Note executed by __________________ in favor of Citibank, N.A. dated as of _______, 2013 (together with all amendments and modifications, if any, from time to time made thereto, the
“Note”
) and (ii) that certain Franchisee Financing Agreement between ColorTyme Finance, Inc. and Citibank, N.A. dated as of August 2, 2010 (together with all amendments and modifications, if any, from time to time made thereto, the
“Agreement”
). The terms used herein shall have the same meanings as provided therefor in the Note unless the context hereof otherwise requires or provides.
A.
GENERAL
.
1.
Date of proposed Loans. __________________________________
2.
Aggregate Amount Requested. _____________________________
B.
AVAILABILITY
.
1.
Enter: Amount of Note.
_________________________________
2.
Enter: Outstanding principal balance of the Note as
of this date. ________________________________
3.
Excess (deficit) available for Loans
(subtract line B2 from line B1).
______________________________
Borrower hereby certifies that on the date hereof the representations and warranties contained in the Note are true in all material respects as if made on the date hereof, and no Event of Default exists. Further, Borrower certifies that Administrator is authorized to request, on behalf of Borrower, that Lender provide the Loans described herein in accordance with Section 2.4 of the Note.
Dated _____________, 201_.
_________________________________
By:______________________________
Name:_________________________
Title:__________________________
PROMISSORY NOTE