Document:

Wdesk | 2013 Q3 EX-10.34

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 (26th) 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 (26th) 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 10th 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 NOTE2013.9.30 Ex 10.87

EXHIBIT 10-87

DTE ENERGY AFFILIATES
NONQUALIFIED PLANS MASTER TRUST

This Trust Agreement is made effective the 15th day of August, 2013 by and between DTE Energy Company, a corporation organized under the laws of the state of Michigan or any successor corporation (the "Company"), and State Street Bank and Trust Company, a trust company incorporated under the laws of the Commonwealth of Massachusetts (the “Trustee") .

RECITALS:

A.    The Company previously adopted the non-qualified deferred compensation plans listed in Appendix A (the "Plans").

B.    Appendix A may be revised by the Company from time to time prior to a Change in Control to add or delete Plans by delivering to the Trustee a new Appendix A without requiring an amendment of the Trust Agreement.

C.    The Company has incurred and expects to incur liability under the terms of the Plans with respect to the individuals participating in the Plans.

D.    The Company previously established an irrevocable grantor trust (the "Trust") and has contributed and expects to continue to contribute to the Trust assets to be held in the Trust subject to the claims of the creditors of the Company and, to the extent provided herein, the creditors of Participating Affiliated Companies in the event of Insolvency, as herein defined, until paid to Plan Participants and their Beneficiaries in such manner and at such times as specified in the Plan(s).

E.    It is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974.

F.    It is the intention of the Company to make contributions to the Trust to provide itself with a source of funds to assist it in the meeting of its liabilities under the Plans.

G.    The Company has appointed the Trustee as the successor to the Bank of New York Mellon as the trustee of the Trust, and the Trustee accepts this appointment, effective September 3, 2013.

The Company and the Trustee now amend and restate the Trust and agree that the Trust shall be comprised, held and disposed of as follows.

SECTION 1
DEFINITIONS

(a)    "AFFILIATED COMPANY" means any corporation while such corporation is a member of the same controlled group of corporations (within the meaning of Code section 414(b)) as the Company or any other employing entity while such entity is under common control (within the meaning of Code section 414(c)) with the Company.

(b)    "BENEFICIARY" means the person, persons or entity designated in writing by a Participant, on forms provided by the Company, to receive distribution of certain death benefits payable under a Plan in the event of the Participant's death.

(c)    “BOARD" or "BOARD OF DIRECTORS" means the Board of Directors of DTE Energy Company.

(d)    "CHANGE IN CONTROL" means the occurrence of anyone of the following events:

(1)    Individuals who, on January 1, 2002, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board, provided that:

(A)    Any person becoming a director subsequent to January 1, 2002, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; 

(B)    No individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) with respect to directors or as a result of any other actual or threatened solicitation of proxies (or consents) by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or

(2)    Any "person" (as such term is defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); provided, however, that the event described in this Paragraph 

1(d)(2) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions:

(A)    By the Company or any Subsidiary, 

(B)    By any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, 

(C)    By any underwriter temporarily holding securities pursuant to an offering of such securities, 

(D)    Pursuant to a Non-Qualifying Transaction (as defined in paragraph (3)), or 

(E)    A transaction (other than one described in (3) below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approve a resolution providing expressly that the acquisition pursuant to this clause (E) does not constitute a Change in Control under this Paragraph 1(d)(2); or

(3)    The consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries (a "Business Combination") or sale or other disposition of all or substantially all of the Company's assets to an entity that is not an affiliate of the Company (a "Sale"), unless immediately following such Business Combination or Sale:

(A)    More than 50% of the total voting power of:

(i)    The corporation resulting from such Business Combination (the "Surviving Corporation"), or 

(ii)    If applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation"), 

is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, 

(B)    No person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 20% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and 

(C)    At least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or

(4)    The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any person acquires beneficial ownership of more than 20% of Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.

The Company shall immediately notify the Trustee in writing of any Change in Control. The Trustee may conclusively rely upon such notice and shall have no duty to determine whether a Change in Control has occurred. 

(e)    "CODE" means the Internal Revenue Code of 1986, as amended, and any regulations issued thereunder. References to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection.

(f)    "COMPANY" means DTE Energy Company or its successors and assigns.

(g)    "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any regulations issued thereunder. References to any section or subsection of ERISA include references to any comparable or succeeding provisions of any legislation that amends, supplements or replaces such section or subsection.

(h)    "INSOLVENCY" OR "INSOLVENT" means for purposes of this Trust Agreement:

(1)    The Company or a Participating Affiliated Company is unable to pay its debts as they become due, or 

(2)    The Company or a Participating Affiliated Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.

(i)    "PARTICIPANT" means an employee who has made a written election on a properly executed form to participate in a Plan that requires such an election or has otherwise been properly designated to participate in a Plan.

(j)    "PARTICIPATING AFFILIATED COMPANY" means any Affiliated Company who has elected to participate in a Plan that requires such an election; otherwise it means any Affiliated Company.

(k)    "PLAN" OR "PLANS" means the plans described in Appendix A.

(l)    "SUBSIDIARY" means a corporation, partnership, joint venture, limited liability company, unincorporated association or other entity in which the Company has a direct or indirect ownership or other equity interest.

(m)    "TRUST" OR "TRUST AGREEMENT" means the DTE Energy Affiliates Nonqualified Plans Master Trust as described herein and as amended from time to time.

(n)    "TRUSTEE" means State Street Bank and Trust Company.

SECTION 2
ESTABLISHMENT AND FUNDING OF TRUST

(a)    The Company hereby deposits with the Trustee in trust the total assets of the Trust to be held, administered and disposed of by the Trustee as provided in this Trust Agreement.  The Trustee shall establish and maintain a subaccount within this Trust in the name of each Plan and each Participating Affiliated Company participating in such Plan (each a "Participating Affiliated Company Account"), as directed by the Company.  Contributions or transfers to this Trust shall be credited to the subaccount of one or more Plans and one or more Participating Affiliated Company Accounts, as directed by the Company.  The Company may cause the assets of the subaccounts allocable to the Plans to be commingled for investment purposes, provided that the Company shall be responsible for causing sufficient records to be maintained to insure that benefits and liabilities payable with respect to each Plan shall be paid from the assets allocable to each such Plan.

(b)    The Trust hereby established shall be irrevocable.

(c)    The Trust is intended to be a grantor trust, of which the Company is the grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of 

the Internal Revenue Code of 1986, as amended, and shall be construed accordingly. The Company represents and warrants to the Trustee:

(1)    No Plan for which benefits are or may become payable under this Trust is subject to Part 4 of Title I of ERISA; 

(2)    Each Plan covers, and will cover, only:

(A) A select group of management or highly compensated employees as contemplated by Section 401(a) of ERISA and interpretations, opinions, and rulings of the Department of Labor thereunder or 

(B)    Participants in an excess benefit plan as defined in Section 3(36) of ERISA; and

(3)    The Plans are not qualified under Section 401 of the Code and not subject to any of the Code requirements applicable to tax‐qualified plans.

(d)    The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the Company and Participating Affiliated Companies and shall be used exclusively for the purposes of paying Plan Participants and their Beneficiaries to the extent any Participant or Beneficiary acquires the right to receive a payment under a Plan and general creditors as herein set forth. Plan Participants and their Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under a Plan and this Trust Agreement shall be mere unsecured contractual rights of Plan Participants and their Beneficiaries against the Company. Any assets held by the Trustee in any subaccount will be subject to the claims of the Company's general creditors in the event of Insolvency of the Company. Any assets held by the Trustee in a Participating Affiliated Company Account will be subject to the claims of such Participating Affiliated Company's general creditors (but shall not be subject to the claims of any other Participating Affiliated Company's general creditors) under federal and state law in the event of Insolvency.

Upon a Change in Control, the Company shall, as soon as possible, but in no event longer than 7 days following the Change in Control, as defined herein, make an irrevocable contribution to the Trust. Such contribution shall be in an amount such that the resulting balance of the Trust and each Plan's subaccount are sufficient to pay each Plan Participant or Beneficiary the benefits to which Plan Participants or their Beneficiaries would be entitled pursuant to the terms of the Plan, as well as an amount deemed necessary to pay estimated Trust administrative expenses for the following 5 years as determined by the Company's accountants, as of the date on which the Change in Control occurred. The Trustee shall have no duty to enforce any funding obligations of the Company or to determine or collect contributions under the Plans and shall have no responsibility for any property until it is received and accepted by the 

Trustee. Notwithstanding the preceding, in no event shall the transfer the Company is required to make hereunder upon or following a Change in Control be less than the transfer the Company would have been required to make under the terms of the Plans as in effect immediately prior to the Change in Control. The Company shall have the sole duty and responsibility, both before and after a Change of Control, for the determination of the accuracy or sufficiency of the contributions to be made under the Plans. 

The duties of the Trustee shall be governed solely by the terms of this Trust Agreement without reference to the terms of the Plan, and the Trustee shall have no duties other than those specifically set forth in this Trust Agreement. 

SECTION 3
PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES

(a)    The Company shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates:

(1)    Either:

(A)    The amounts payable with respect to each Plan Participant (and his or her Beneficiaries); or

(B)    A formula or other instructions acceptable to the Trustee for determining the amounts so payable;

(2)    The form in which such amount is to be paid (as provided for or available under the applicable Plan), and

(3)    The time of commencement for payment of such amounts.  

Except as otherwise provided herein, the Trustee shall make payments to the Plan Participants and their Beneficiaries in accordance with the Payment Schedule. The Company shall be responsible for notifying the Trustee of any change in the information on the Payment Schedule.  Except as otherwise provided herein, the Trustee shall make payments to the Participants and their Beneficiaries in accordance with the Payment Schedule; provided, however, that, except as provided in Section 14 and with respect to the payment of the Trustee's expenses:

(1)    Amounts credited to a Plan's subaccount under this Trust may only be used to pay benefits to Participants and Beneficiaries of such Plan; and 

(2)    Amounts credited to a Participating Affiliated Company Account may only be used to pay benefits to Participants and Beneficiaries who are entitled to a benefit from such Participating Affiliated Company.

It is the intent of the Company and the Trustee that the Company shall be responsible for determining and effecting all federal, state and local tax aspects of the Plan and the Trust Fund, including without limitation income taxes payable on the Trust Fund's income, if any, and required withholding of income or other payroll taxes in connection with the payment of benefits from the Trust Fund pursuant to the Plan, and all reporting required in connection with any such taxes. To the extent that the Company is required by applicable law to pay or withhold such taxes or to file such reports, such obligations shall be a responsibility allocated to the Company hereunder. To the extent the Trustee is required by applicable law to pay or withhold such taxes or to file such reports, the Company shall inform the Trustee of such obligation, shall direct the Trustee with respect to the performance of such obligations, and shall provide the Trustee with all information required by the Trustee to meet such obligations. Notwithstanding the foregoing, the Company may elect to pay any applicable taxes directly. In the event the Company pays taxes directly, such amounts may be reimbursed from the Trust assets by the Trustee, provided that the Company certifies the amount of taxes paid directly and instructs the Trustee to remit a reimbursement of such taxes to the Company. In addition, the Trustee shall provide the Company with all information required to enable the Company to pay any taxes on the Trust's income on a timely basis.

(b)    The entitlement of a Plan Participant or his or her Beneficiaries to benefits under a Plan shall be determined by the Company or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. The Company shall notify the Trustee of such determination and shall direct commencement of payments of such benefits.

(c)    The Company or the applicable Participating Affiliated Company may make payment of benefits directly to Plan Participants or their Beneficiaries as they become due under the terms of a Plan. The Company shall notify the Trustee of any decision to make payment of benefits directly prior to the time amounts are payable to Participants or their Beneficiaries. In addition, if the principal of the Trust, and any earnings thereon, are not sufficient to make payments of benefits in accordance with the terms of the Plan, the Company or the applicable Participating Affiliated Company shall make the balance of each such payment to the Participant or Beneficiary as it falls due. The Trustee shall notify the Company where principal and earnings are not sufficient to make a payment then due under the Payment Schedule.

SECTION 4
TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN COMPANY IS INSOLVENT

(a)    The Trustee shall cease payment of benefits to Plan Participants and their Beneficiaries if the Company is Insolvent, subject to the provisions of Subsection 4(b) below. The Trustee shall cease payment of benefits to Plan Participants and their Beneficiaries on behalf of a Participating Affiliated Company if that Participating Affiliated Company is Insolvent, subject to the provisions of Subsection 4(b) below.

(b)    At all times during the continuance of this Trust, as provided in Subsection 2(d) hereof, the principal and income of the Trust shall be subject to claims of general creditors of the Company under federal and state law as set forth below, and the principal and income allocable to each Participating Affiliated Company's Subaccount shall be subject to claims of general creditors of that Participating Affiliated Company, under federal and state law as set forth below, for whose benefit such subaccount was established.

(1)    The Board of Directors and the Chief Executive Officer ("CEO") of the Company shall have the duty to inform the Trustee in writing of the Insolvency of the Company or a Participating Affiliated Company. If a person claiming to be a creditor of the Company or a Participating Affiliated Company alleges in writing to the Trustee that the Company or a Participating Affiliated Company has become Insolvent, the Trustee shall determine whether the Company or the Participating Affiliated Company is Insolvent and, pending such determination, the Trustee in the case of the insolvency of the Company, shall discontinue payment of benefits to Plan Participants or their Beneficiaries and; in the case of the Insolvency of a Participating Affiliated Company, shall discontinue payment of benefits to Plan participants who would otherwise be entitled to a benefit payable from the subaccount of such Participating Affiliate Company. In all cases, the Trustee shall be entitled to conclusively rely upon the written certification of the Board of Directors or the CEO of the Company when determining whether the Company or a Participating Affiliated Company is Insolvent.

(2)    Unless the Trustee has actual knowledge of the Insolvency of the Company or a Participating Affiliated Company, or has received notice from the Company or a person claiming to be a creditor alleging that the Company or a Participating Affiliated Company is Insolvent, the Trustee shall have no duty to inquire whether the Company or a Participating Affiliated Company is Insolvent. The Trustee may in all events rely on such evidence concerning the solvency of the Company or a Participating Affiliated Company, as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning the solvency of the Company or a Participating Affiliated Company. In no event shall "actual knowledge" be deemed to include knowledge of the credit status of the Company or a Participating Affiliated Company, held by banking officers or banking employees of State Street Bank and Trust Company which has not been communicated to the trust department of the Trustee. The Trustee may appoint an independent accounting, consulting or law firm to make any determination of solvency required by the Trustee under this Section 4 only in cases where:

(A)    The Trustee is required to make an inquiry as to the solvency of the Company or a Participating Affiliated Company, (because a creditor has alleged Insolvency) and 

(B)    The Company disputes that the Company or a Participating Affiliated Company is Insolvent. 

In such event, the Trustee may conclusively rely upon the determination by such firm and shall be responsible only for the prudent selection of such firm.

(3)    If at any time the Board of Directors or the CEO of the Company notifies the Trustee or the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Plan Participants or their Beneficiaries in accordance with Subsection 4(a) and shall hold the assets of the Trust for the benefit of the general creditors of the Company, except that, to the extent permitted by applicable law, the Trustee's fees and expenses may continue to be paid pursuant to Section 11 hereof. If at any time the Board of Directors or the CEO of the Company notifies the Trustee or the Trustee has determined that a Participating Affiliated Company is Insolvent, the Trustee shall discontinue payments to all Plan Participants and their Beneficiaries and the Trustee is hereby directed by the Company (without the need for further direction from the Company or any Participating Affiliated Company at the time of such Insolvency) to segregate into the applicable Participating Affiliated Company's subaccount such Participating Affiliated Company's pro rata portion of each type of asset held by the Trust (on a security by security basis). Upon such segregation, such assets in the Insolvent Participating Affiliated Company's subaccount shall no  longer be commingled with the remaining assets of the Trust for investment purposes, and the Trustee shall hold such segregated assets allocable to such Insolvent Participating Affiliated Company for the benefit of the general creditors of such Insolvent Participating Affiliated Company, except that, to the extent permitted by applicable law, the Trustee's fees and expenses may continue to be paid pursuant to Section 11 hereof. Upon such segregation, the Trustee shall resume payments to Plan Participants and Beneficiaries, in accordance with Section 3 of this Trust Agreement, who are entitled to benefits from other than the Insolvent Participating Affiliated Company's subaccount. Nothing in this Trust Agreement shall in any way diminish any rights of Plan Participants or their Beneficiaries to pursue their rights as general creditors of the Company or a Participating Affiliated Company with respect to benefits due under the Plan(s) or otherwise.

(4)    In the case of an Insolvency of the Company, the Trustee shall resume the payment of benefits to Plan Participants or their Beneficiaries in accordance with Section 3 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or is no longer Insolvent) or pursuant to an order from the U.S. Bankruptcy Court or other court of competent jurisdiction.  In the case of an Insolvency of a Participating Affiliated Company, the Trustee shall resume the payment of benefits to the Plan Participants and Beneficiaries from such subaccount of such Participating Affiliated Company in accordance with Section 3 of this Agreement, and such subaccount may be 

commingled with other such Trust Fund assets, only after the Trustee has determined that the Participating Affiliated Company is not Insolvent (or is no longer Insolvent) or pursuant to an order of the U.S. Bankruptcy Court or other Court of competent jurisdiction.

(c)    Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Subsection 4(b) hereof and subsequently resumes such payments, the first payment following such discontinuance, to the extent not inconsistent with an order from the U.S. Bankruptcy Court or other court of competent jurisdiction, shall include the aggregate amount of all payments due to Plan Participants or their Beneficiaries under the terms of the Plan(s) for the period of such discontinuance, less the aggregate amount of any payments made to Plan Participants or their Beneficiaries by the Company in lieu of the payments provided for here under during any such period of discontinuance, all in accordance with the Payment Schedule, which shall be modified by the Company as necessary to comply with the provisions of this Subsection 4(c).

SECTION 5
PAYMENTS TO COMPANY

The Company shall have no right or power to direct the Trustee to return to the Company (or any Participating Affiliated Company) or to divert to others any of the Trust assets before all payments of benefits have been made to Plan Participants and their Beneficiaries pursuant to the terms of the Plan(s).  The Trustee shall be entitled to rely conclusively upon the Company’s written certification that all such payments have been made.

SECTION 6
INVESTMENT AND ADMINISTRATIVE

(a)    Prior to a Change of Control, the Company shall establish and maintain written investment guidelines ("Investment Guidelines"), which may be used from time to time for the investment of the assets in the Trust. The Company may appoint and remove one or more investment managers from time to time to manage specified portions of the Trust; provided, however, that the Company may also manage all or a portion of the Trust.  To the extent that assets of the Trust are not so managed by an investment manager appointed by the Company, the Company shall manage all such assets.  The Company and each investment manager shall designate in writing the persons who are authorized to represent such party in dealing with the Trustee. The Trustee shall have no investment duties for the Trust. The Trustee shall have no duty to inquire whether investment directions received from the Company or an investment manager are in accordance with the Plans or the Investment Guidelines, or to review the assets purchased, retained or sold. The Trustee shall be fully indemnified by the Company for any action taken in accordance with, or any failure to act in the absence of, the Company's or an investment manager's directions.

(b)    The Company shall have the right, at anytime, and from time to time in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust; the Trustee shall have no responsibility for determining whether such right has been properly exercised or for any investment losses that may result from its exercise.

(c)    After a Change of Control, the Trustee shall have and exercise sole investment discretion with respect to the Trust in accordance with the Investment Guidelines in effect immediately prior to the Change of Control, a copy of which shall be provided to the Trustee by the Company. The Trustee's sole responsibility with respect to investment discretion shall be to exercise such discretion in accordance with the Investment Guidelines. The Investment Guidelines may be changed from time to time by mutual agreement of the Trustee and the Company. The Trustee may, in its sole discretion, appoint, retain or terminate an investment manager (including any affiliate of the Trustee) to manage all or a portion of the Trust in accordance with the current Investment Guidelines and shall pay their reasonable compensation from the Trust assets.

(d)    If directed by the Company or any investment manager before a Change of Control, or in the Trustee’s discretion after a Change of Control, the Trustee may collect and receive any and all money and other property due the Trust and give full discharge therefor. 

(e)    If directed by the Company or any investment manager before a Change of Control, or in the Trustee’s discretion after a Change of Control, the Trustee may settle, compromise or submit to arbitration any claims, debt or damages due or owing to or from the Trust; the Trustee may also commence or defend suits or legal proceedings to protect any interest of the Trust, and may represent the Trust in all suits or legal proceedings in any court or before any other body or tribunal.

(f)    If directed by the Company or any investment manager before a Change of Control, or in the Trustee’s discretion after a Change of Control, the Trustee may take all action necessary to pay for authorized transactions, including the borrowing or raising monies from any lender, including the Trustee, in its corporate capacity in conjunction with its duties under this Agreement and upon such terms and conditions as the Trustee may deem advisable to settle security purchases and/or foreign exchange or contracts for foreign exchange, and securing the repayments thereof by pledging all or any part of the Trust.

(g)    The Trustee may appoint custodians, subcustodians or subtrustees, domestic or foreign (including affiliates of the Trustee), as to part or all of the Trust. The Trustee shall not be responsible or liable for any losses or damages suffered by the Company arising as a result of the insolvency of any custodian, subcustodian or subtrustee, except to the extent the Trustee was negligent in its selection or continued retention of such custodian, subcustodian or subtrustee. In no event shall the Trustee be liable for the acts or omissions of any custodian, subcustodian or subtrustee appointed pursuant to the direction of the Company or an investment manager.

(h)    The Trustee may hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse corporation or in a depository (including an affiliate of the Trustee), so long as the Trustee's records clearly indicate that the assets held are a part of the Trust. The Trustee shall not be responsible for any losses resulting from the deposit or maintenance of securities or other property (in accordance with market practice, custom, or regulation) with any recognized foreign or domestic clearing facility, book entry system, centralized depository, or similar organization.

SECTION 7
CONTRACTUAL SETTLEMENT AND INCOME; MARKET PRACTICE SETTLEMENTS

(a)    In accordance with the Trustee's standard operating procedure, the Trustee shall credit the Trust with income and maturity proceeds on securities on contractual payment date net of any taxes or upon actual receipt. To the extent the Trustee credits income on contractual payment date, the Trustee may reverse such accounting entries to the contractual payment date if the Trustee reasonably believes that such amount will not be received. 

(b)    In accordance with the Trustee's standard operating procedure, the Trustee will attend to the settlement of securities transactions on the basis of either contractual settlement date accounting or actual settlement date accounting. To the extent the Trustee settles certain securities transactions on the basis of contractual settlement date accounting, the Trustee may reverse to the contractual settlement date any entry relating to such contractual settlement if the Trustee reasonably believes that such amount will not be received. To the extent the Trustee advances funds to the Trust for disbursements or to effect the settlement of purchase transaction, the Trustee shall be entitled to collect from the Trust an overdraft fee as set forth in the fee schedule agreed between the parties.

(c)    Settlements of transactions may be effected in trading and processing practices customary in the jurisdiction or market where the transaction occurs. The Company acknowledges that this may, in certain circumstances, require the delivery of cash or securities (or other property) without the concurrent receipt of securities (or other property) or cash. In such circumstances, the Trustee shall have no responsibility for nonreceipt of payment (or late payment) or nondelivery of securities or other property (or late delivery) by the counterparty unless the nonreceipt of payment (or late payment) or nondelivery of securities or other property (or late delivery) is due to the Trustee's negligence or willful misconduct.

SECTION 8
DISPOSITION OF INCOME

During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested.

SECTION 9
ACCOUNTING BY TRUSTEE

(a)    The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. The records shall include separate subaccounts established and maintained for each Plan and for each Participating Affiliated Company Account within each Plan. The assets of a subaccount allocable to a Plan shall not be used to satisfy the liabilities with respect to Plan Participants or Beneficiaries of another Plan.

(b)    The Company shall keep full, accurate and detailed records with respect to the Participants and benefits paid and payable under the Plan, which records shall be made available to the Trustee at its request. 

(c)    Within 60 days following the close of each calendar year and within 90 days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. In the absence of the filing in writing with the Trustee by the Company of exceptions or objections to any such account within 90 days, the Company shall be deemed to have approved such account; in such case, or upon the written approval by the Company of any such account, the Trustee shall be released, relieved and discharged with respect to all matters and things set forth in such account as though such account had been settled by the decree of a court of competent jurisdiction. The Trustee may conclusively rely on determinations of the Company of valuations for assets of the Trust for which the Trustee deems there to be no readily determinable fair market value and on determinations of the issuing insurance company of valuations for insurance contracts/policies.

SECTION 10
RESPONSIBILITY OF TRUSTEE

(a)    The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given in writing by the Company or any investment manager appointed by the Company. In the event of a dispute between the Company or any Participating Affiliated Company and a party, the 

Trustee may apply to a court of competent jurisdiction to resolve the dispute that is contemplated by and in conformity with the terms of the Plans or this Trust.

(b)    The Trustee is not a party to and has no duties or responsibilities under the Plans, and has not duties or responsibilities other than those that are expressly contained in this Trust Agreement.  Except as provided in Subsection 2(d) of this Trust Agreement relating to the Company’s contribution obligation on a Change in Control, in any case in which a provision of this Trust Agreement conflicts with any provision in any Plan, this Trust Agreement shall control.

(c)    The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title hereto received by it or delivered by it pursuant to this Trust Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or other instrument reasonably believed by it to be genuine and delivered by the proper party or parties.

(d)    The Company agrees to indemnify and hold harmless, to the extent not prohibited by law, the Trustee and its Nominee from and against all liability, loss and expense, including reasonable attorneys’ fees and expenses, incurred by the Trustee or any of the foregoing indemnitees arising out of or in connection with this Trust Agreement, except as a result of the Trustee’s own negligence, willful misconduct, or breach of the Trustee’s duties under this Trust Agreement.  The Trustee shall be fully indemnified by the Company for any action taken in accordance with or any failure to act in the absence of the Company’s or investment manager’s written direction.  

The Trustee agrees to use reasonable efforts to rectify any errors caused by its or any of the Trustee’s agents’ negligence, breach of fiduciary duty, or willful misconduct including, without limitation making financial contributions to the Trust.  Nothing in this Trust Agreement shall in any way constitute a waiver or limitation of any rights that the Company may have under applicable law, including, without limitation, Federal and State securities laws.

This Subsection 10(d) shall survive termination of this Agreement.

(e)    The Trustee may consult with legal counsel (who may be counsel for the Company generally) with respect to any of its duties or obligations hereunder and, as a part of its reimbursable expenses under this Agreement, pay counsel’s reasonable compensation and expenses.  The Trustee shall be entitled to rely on and may act upon advice of counsel on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. 

(f)    The Trustee may, in the Trustee’s reasonable judgment, hire agents, accountants, actuaries, investment advisors, financial consultants, or other professionals to assist it in performing any of its duties or obligations hereunder, and such professionals’ reasonable compensation shall be part of the Trustee’s reimbursable expenses under this Trust Agreement.

(g)    The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise in this Agreement.  However, if an insurance policy is held as an asset of the Trust, the Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor trustee, or to loan to any person the proceeds of any borrowing against such policy and shall act with respect to any such policy only as directed by the Company.

(h)    However, notwithstanding the provisions of Subsection 10(g) above, where directed by the Company, the Trustee may loan to the Company the proceeds of any borrowing against an insurance policy held as an asset of the Trust.

(i)    Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or to applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.

(j)    Notwithstanding anything in this Agreement to the contrary contained herein, if a Force Majeure Event occurs, the Trustee will be excused from performing any one or more obligations under this Trust Agreement but only if the Trustee complies with this Subsection 10(j).  For purposes of this Agreement, “Force Majeure Event” means any event or circumstance beyond the control of the Trustee, regardless of whether it was foreseeable, that could not be avoided by the Trustee’s exercise of due care and that prevents the Trustee from performing any of its obligations under this Agreement, except that a Force Majeure Event will not include the Trustee’s financial hardship or a change of law. The Trustee shall promptly notify the Company of the occurrence and nature of a Force Majeure Event, its effect on the Trustee’s performance, and how long the Trustee expects the Force Majeure Event to last and the Trustee’s resulting inability to perform its obligations under this Agreement. Thereafter the Trustee shall update that information as reasonably necessary. During a Force Majeure Event, the Trustee shall use reasonable efforts to limit damages to the Company, the Participating Affiliated Companies, Plan Participants and Plan Beneficiaries and to resume its performance under this Agreement as soon as possible.  This Section shall survive the termination of this Agreement.

(k)    The Trustee shall not be liable for any act of omission of any other person not selected or retained by the Trustee in the exercise of its sole discretion in carrying out any responsibility imposed upon such person. Under no circumstances shall the Trustee be liable for any indirect, consequential, or special damages with respect to its role as the Trustee.

(l)    If the Company either contributes or directs the Trustee to invest the Trust Fund in securities or other obligations of the Company, then the Trustee shall have no fiduciary or other liability for decisions to purchase or hold such investments. Also, the 

Company shall direct the Trustee as to the voting of any Company stock held in the Trust. The Company shall indemnify the Trustee for any liabilities that arise on account of such contributions or investments. This Section shall survive the termination of this Agreement.

SECTION 11
COMPENSATION AND EXPENSES OF TRUSTEE

The Company shall pay all reasonable administrative expenses and the Trustee's fees and reasonable expenses. If not so paid, the fees and expenses shall be paid from the Trust. The Trustee shall be entitled to fees for services as mutually agreed. The Company acknowledges that as part of the Trustee's compensation, the Trustee may earn interest on cash balances including disbursement balances and balances arising from purchase and sale transactions. If the Trustee advances cash or securities to the Trust for any purpose, or in the event that the Trustee shall incur or be assessed taxes, interest, charges, or assessments, in connection with the performance of this Agreement, except such as may arise from its own negligent failure to act or willful misconduct, any property at any time held in the Trust shall be security therefor and the Trustee shall be entitled to collect from the Trust sufficient cash for reimbursement, and if such cash is insufficient, dispose of the assets of the Trust to the extent necessary to obtain reimbursement. To the extent the Trustee advances funds to the Trust for disbursements or to effect the settlement of purchase transactions, the Trustee shall be entitled to collect from the Trust an overdraft fee as set forth in the fee schedule agreed between the parties. 
    
SECTION 12
RESIGNATION AND REMOVAL OF TRUSTEE

(a)    The Trustee may resign at any time by written notice to the Company, which shall be effective as of the later of:

(1)    30 days after receipt of such notice, or 

(2)    The date of the transfer of Trust assets to a successor Trustee, unless the Company and the Trustee agree otherwise. 

The Company may remove the Trustee on 30 days notice or such shorter notice accepted by the Trustee.

(b)    Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets shall subsequently be transferred to the successor Trustee. The resigning or removed Trustee is authorized, however, to reserve such amount as may be necessary for the payment of its fees and expenses incurred prior to resignation or removal. The transfer shall be completed within 30 days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. 

The Company's consent to extension of such time limit shall not be unreasonably withheld. 

(c)    If the Trustee resigns or is removed, a successor shall be appointed in accordance with Section 13 hereof, by the effective date of resignation or removal under paragraph (a) of this section. If no such appointment has been made within 60 days after the notice of such resignation or removal, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.

SECTION 13
APPOINTMENT OF SUCCESSOR

(a)    If the Trustee resigns (or is removed) in accordance with Subsection 12(a) hereof, the Company may appoint any third party, such as a bank trust department, that may validly exercise corporate trustee powers under state law, as a successor to replace the Trustee upon resignation or removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer.

(b)    The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust assets, subject to the terms hereof. The successor Trustee shall not be responsible for and the Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee.

SECTION 14
AMENDMENT OR TERMINATION

(a)    This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company. Notwithstanding the foregoing, no such amendment shall conflict with the terms of a Plan, as certified to in writing by the Company (upon which certification the Trustee may conclusively rely), or make the Trust revocable.

(b)    The Trust shall not terminate until the date on which the Plan Participants and their Beneficiaries are no longer entitled to benefits pursuant to the terms of the Plan, as certified to in writing by the Company (upon which certification the Trustee may conclusively rely). Upon termination of the Trust any assets remaining in the Trust shall be returned to the Company, Subsection 2(b) notwithstanding. The preceding sentences to the contrary notwithstanding, this Trust may terminate with respect to a Plan (and the subaccount maintained with respect to that Plan) if that Plan's Participants and Beneficiaries are no longer entitled to benefits pursuant to the terms of that Plan, as 

certified in writing by the Company (upon which certification the Trustee may conclusively rely), in which case any assets remaining in that Plan's subaccount shall be reallocated to the subaccount of one or more of the remaining Plans and the applicable Participating Affiliated Company Account as directed by the Company. 

(c)    Upon written approval of Participants or Beneficiaries entitled to payment of benefits pursuant to the terms of the Plan, the Company may terminate this Trust prior to the time all benefit payments under the Plan have been made. Such approval shall be obtained and certified to in writing by the Company (upon which certification the Trustee may conclusively rely), and the Trustee shall have no responsibility therefor. All assets in the Trust at termination shall be returned to the Company, Subsection 2(b) notwithstanding.

SECTION 15
MISCELLANEOUS

(a)    Neither the Company nor the Trustee may assign this Trust Agreement without the prior written consent of the other, except that the Trustee may assign its rights and delegate its duties hereunder to any corporation or entity which directly or indirectly is controlled by, or is under common control with, the Trustee. This Trust Agreement shall be binding upon, and inure to the benefit of, the Company and the Trustee and their respective successors and permitted assigns.  Any entity which shall by merger, consolidation, purchase, or otherwise, succeed to substantially the trust business of the Trustee shall, upon such succession and without any appointment or other action by the Company, be and become successor trustee hereunder, upon notification to the Company.

(b)    If any provision of this Trust Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, this Trust Agreement will continue as if the provision was modified, to the minimum extent necessary, to make the provision valid and enforceable and to accomplish the original reasonable objectives of the Company and the Trustee for entering into this Trust Agreement.

(c)    Benefits payable to Plan Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution, or other legal or equitable process.

(d)    Notwithstanding anything to the contrary contained elsewhere in this Trust Agreement, any reference to the Plans or to Plan provisions which require knowledge or interpretation of the Plans shall impose a duty upon the Company to communicate such knowledge or interpretation to the Trustee.  The Trustee shall have no obligation to know or interpret any portion of any Plan and shall in no way be liable for any proper action taken contrary to any Plan.

(e)    This Trust Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.  The parties hereby expressly waive, to the full extent permitted by applicable law, any right to trial by jury with respect to any judicial proceeding arising from or related to this Agreement.  

(f)    Any action required to be taken by the Company shall be by resolution of its Board of Directors or by written direction of one or more of its president, any vice president or treasurer or anyone designated by such person to act on behalf of the Company under this Trust Agreement.  The Trustee may rely upon a resolution or direction filed with the Trustee that is contemplated by and in conformity with the terms of the Plans or this Trust and shall have no responsibility for any action taken by the Trustee in accordance with any such resolution or direction.

(g)    In making payments to service providers pursuant to authorized directions, the Company acknowledges that the Trustee is acting as paying agent and not as the payor, for tax information reporting and withholding purposes.

(h)    Notices and other writings shall be delivered or mailed postage prepaid to:

To the Trustee:
            
State Street Bank and Trust Company
2 Avenue de Lafayette, LCC2
Boston, MA 02111
ATTN: DTE Relationship Manager

To the Company:

DTE Trust Investments
One Energy Plaza
Suite:  WCB 852
Detroit, MI  48226

or to such other address as the Trustee or the Administrator may hereafter specify in writing.

Facsimile notices shall be sufficient if communicated to the party entitled to receive such notice at the following numbers:

If to Trustee:
Facsimile: (617) 769-6902

If to Company:
Facsimile: (313) 235-0160

or to such other numbers as either party may furnish the other party by written notice under this Section.

Electronic notices shall also be sufficient if communicated to the party entitled to receive such notice at the following email address:

If to Trustee:
Email address: steven.lichty@statestreet.com

If to Company:
Email address: cavazosp@dteenergy.com

or to such other email addresses as either party may furnish the other party by written notice under this Section.  For purposes of the foregoing, electronic notices shall be deemed to include notice given via mystatestreet.com.

(i)    Each of the Company and the Trustee hereby represents and warrants to the other that it has full authority to enter into this Agreement upon the Agreement’s terms and conditions and that the individual executing this Agreement on its behalf has the requisite authority to bind it to this Agreement.

(j)    The Company and the Trustee agree that each shall treat confidentially all information provided by each party to the other party in connection with the services provided under this Agreement.  All confidential information provided by a party hereto shall be used by any other party hereto solely for the purpose of rendering or receiving services pursuant to this Agreement and, except as may be required in carrying out this Agreement, shall not be disclosed to any third party.  The foregoing shall not be applicable to any information:

(1)    That is publicly available when provided or thereafter becomes publicly available, other than through a breach of this Agreement, or that is independently derived by any party hereto without the use of any information provided by the other party hereto in connection with this Agreement, 

(2)    That is required in any legal or regulatory proceeding, investigation, audit, examination, subpoena, civil investigative demand or other similar process, or by operation of law or regulation, or 

(3)    Where the party seeking to disclose has received the prior written consent of the party providing the information, which consent shall not be unreasonably withheld.  

Notwithstanding anything herein to the contrary, the Trustee, its subsidiaries and affiliates may report and use nonpublic portfolio holdings information of its clients on an aggregated basis with all or substantially all other client information and without specific reference to the Company.

(k)    The Trustee will implement and maintain a written information security program that contains appropriate security measures to safeguard the personal information of the Company’s or the Trust’s beneficiaries, unit holders, shareholders, employees, directors and/or officers that it receives, stores, maintains, processes or otherwise accesses in connection with the provision of services hereunder.  For these purposes, “personal information” means:

 (1)    An individual’s name (first initial and last name or first name and last name), address or telephone number plus:

(A)    Social security number, 

(B)    Drivers license number, 

(C)    State identification card number, 

(D)    Debit or credit card number, 

(E)    Financial account number or 

(F)    Personal identification number or password that would permit access to a person’s account or 

(2)    Any combination of the foregoing that would allow a person to log onto or access an individual’s account.  

Notwithstanding the foregoing “personal information” shall not include information that is lawfully obtained from publicly available information, or from federal, state or local government records lawfully made available to the general public.

(l)    This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which shall together constitute only one Agreement.

(m)    The Company hereby represents and warrants that it does not engage in an “internet gambling business,” as such term is defined in Section 233.2(r) of Federal Reserve Regulation GG (12 CFR 233.1-233.7) (“Regulation GG”).  The Company hereby covenants and agrees that it shall not engage in an internet gambling business.  In accordance with Regulation GG, the Company is hereby notified that “restricted transactions,” as such term is defined in Section 233.2(y) of Regulation GG, are prohibited in any dealings with the Trustee pursuant to this Agreement or otherwise between or among any party hereto.

(Signatures Next Page)

DTE ENERGY COMPANY

By:  /s/Paul B. Cavazos                                                             

Name: Paul B. Cavazos                                                            

Title:  Solely in his capacity as Assistant Treasurer                  

Date:  8/15/13                                                                            

STATE STREET BANK AND TRUST COMPANY

By:  /s/Steven Lichty                                                                  

Name: Steven Lichty                                                                  

Title: Vice President                                                                   

Date: 8/15/13                                                                             

    
APPENDIX A
NON-QUALIFIED DEFERRED COMPENSATION PLANS

DTE Energy Company Executive Supplemental Retirement Plan, as amended and restated effective January 1, 2005

DTE Energy Company Supplemental Retirement Plan, as amended and restated effective January 1, 2005

DTE Energy Company Supplement Savings Plan, as amended and restated effective January 1, 2005

DTE Energy Company Executive Deferred Compensation Plan, as amended and restated effective January 1, 2005

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