Common use of Franchisee Notes Clause in Contracts

Franchisee Notes. (a) The Company shall pledge or cause to be pledged Eligible Franchisee Notes in an outstanding unpaid principal amount equal to 1.25 multiplied by the then outstanding principal balance of the Loans (the "Minimum Secured Amount"). The Company shall first pledge Company Franchisee Notes which constitute Eligible Franchisee Notes. To the extent the aggregate unpaid principal balance of such Company Franchisee Notes is less then the Minimum Secured Amount, ▇▇▇▇▇▇▇▇ ▇▇▇, Sterling Vision California and/or Sterling DKM shall pledge BOS Franchisee Notes, California Franchisee Notes and DKM Franchisee Notes, respectively, to cover the shortfall. To the extent the Company, ▇▇▇▇▇▇▇▇ ▇▇▇, Sterling Vision California or Sterling DKM, collectively, do not have Eligible Franchisee Notes in an aggregate unpaid principal amount equal to the Minimum Secured Amount, the Company shall not be deemed to be in default under this Section 6.13, if the Company, Sterling DKM, Sterling Vision California and/or ▇▇▇▇▇▇▇▇ ▇▇▇, has pledged to the Bank Eligible Franchisee Notes in an amount not less than the outstanding principal amount of the Loans and the Company maintains Eligible Royalty Receivables and/or Eligible Rent Receivables in an aggregate amount equal to (x) the sum of the pledged Eligible Franchisee Notes less (y) the Minimum Secured Amount; provided, however, the aggregate amount of Eligible Rent Receivables pledged hereunder shall not exceed $250,000. Eligible Franchisee Notes pledged pursuant to this Section 6.13 shall be held by the Bank pursuant to the terms of the applicable Debt Pledge Agreement. The Bank shall be granted a security interest in all Royalty Receivables and Rent Receivables pursuant to the applicable Security Agreement. (b) Provided no Event of Default or event which upon lapse of time, notice or both would constitute an Event of Default shall have occurred and be continuing and further provided the Bank shall have received Eligible Franchisee Notes in an aggregate amount equal to the then Minimum Secured Amount, the Bank shall release from time to time, Company Franchisee Notes, DKM Franchisee Notes, California Franchisee Notes and/or BOS Franchisee Notes in an aggregate principal amount equal to the aggregate principal amount of all Eligible Franchisee Notes pledged to the Bank pursuant to the applicable Debt Pledge Agreements less the Minimum Secured Amount for the sole purpose of and in connection with the sale of such notes in accordance with Section 7.05 hereof; provided, however, no Company Franchisee Notes shall be released until all BOS Franchisee Notes, California Franchisee Notes and all DKM Franchisee Notes have been released. (c) In the event the Bank determines at any time that a Company Franchisee Note, DKM Franchisee Note, California Franchisee Note or BOS Franchisee Note is not an Eligible Franchisee Note or the aggregate principal amount of Eligible Franchisee Notes pledged to the Bank together with the aggregate principal amount of the Eligible Royalty Receivables and Eligible Rent Receivables is less than the Minimum Secured Amount, the Company shall promptly upon the Bank's request provide to the Bank (i) additional Eligible Franchisee Notes (ii) evidence of additional Eligible Royalty Receivables and/or Eligible Rent Receivables to the extent permitted by clause (a) above, and/or (iii) cash or Cash Equivalents properly margined and satisfactory to the Bank in its sole and absolute discretion in an aggregate amount which, when aggregated with all other Eligible Franchisee Notes, cash and Cash Equivalents pledged to the Bank and Eligible Rent Receivables and Eligible Royalty Receivables maintained by the Company to the extent permitted by clause (a) above, shall be equal to the Minimum Secured Amount. Payments received on the Eligible Franchisee Notes pledged pursuant to the Debt Pledge Agreements shall be subject to the terms of the Debt Pledge Agreement applicable thereto. (d) So long as the Obligations shall remain unpaid (i) the Company shall deliver to the Bank within ten (10) days after the close of each calendar month, an aging of the Franchisee Notes, Royalty Receivables, Rent Receivables and advertising receivables under the Franchise Agreements and (ii) the Company shall deliver to the Bank (x) within thirty (30) days after the end of each calendar quarter, a certificate executed by the Company's Chief Financial Officer and (y) within thirty (30) days after then end of each fiscal year of the Company a certificate executed by the Chief Financial Officer in each case, stating that each Franchisee Note then held by the Bank constitutes an Eligible Franchisee Note. (e) Upon the occurrence and continuance of an Event of Default, the Bank may, at its option, and at the Company's expense, conduct (or cause its designated representative to conduct) updated field audits of the Franchisee Notes, Rent Receivables and Royalty Receivables and the supporting books, records and documentation relating to each of the same for the purpose of determining whether the Franchisee Notes, Rent Receivables and Royalty Receivables constitute Eligible Franchisee Notes, Eligible Rent Receivables and Eligible Royalty Receivables, respectively. Section 7.01 is hereby amended to delete the text of clause (i) thereof and to insert in place thereof "[intentionally omitted]." 10. Article VII is hereby amended to add the text "(other than Insight LLC and Insight, Inc.)", after the text "(Subsidiary of the Company)" each time it appears in (I) clause (g) of Section 7.02, (II) clause (c) of Section 7.03, (III) Section 7.04 (other than the last line thereof), (IV) clause (iv) of Section 7.06, and (V) clause (iv) of Section 7.12.