1
Exhibit 10.1
LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 29, 1998
AMONG
SPINCYCLE, INC.,
AS BORROWER,
THE FINANCIAL INSTITUTIONS LISTED HEREIN,
AS LENDERS,
AND
XXXXXX FINANCIAL, INC.,
AS AGENT AND AS LENDER
2
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS.......................................................1
1.1 Certain Defined Terms........................................1
1.2 Accounting Terms............................................14
1.3 Other Definitional Provisions...............................14
SECTION 2. LOANS AND COLLATERAL.............................................15
2.1 Loans.......................................................15
(A) Revolving Loan.....................................15
(B) Eligible Laundry Equipment.........................16
(C) Borrowing Mechanics................................16
(D) Notes..............................................17
(E) Evidence of Revolving Loan Obligations.............17
(F) Letters of Credit..................................17
(G) Other Letter of Credit Provisions..................18
2.2 Interest....................................................20
(A) Rate of Interest...................................20
(B) Interest Periods...................................20
(C) Computation and Payment of Interest................21
(D) Interest Laws......................................21
(E) Conversion or Continuation.........................22
2.3 Fees........................................................22
(A) Unused Line Fee....................................22
(B) Letter of Credit Fees..............................23
(C) Field Examination Fees.............................23
(D) Other Fees and Expenses............................23
2.4 Payments and Prepayments....................................23
(A) Manner and Time of Payment.........................23
(B) Mandatory Prepayments..............................23
(C) Voluntary Prepayments and Repayments...............24
(D) Payments on Business Days..........................24
2.5 Term of this Agreement......................................24
2.6 Statements..................................................24
2.7 Grant of Security Interest..................................24
2.8 Capital Adequacy and Other Adjustments......................25
2.9 Taxes.......................................................25
(A) No Deductions......................................25
(B) Changes in Tax Laws................................26
(C) Foreign Lenders....................................26
i
3
2.10 Required Termination and Prepayment.........................27
2.11 Optional Prepayment/Replacement of Agent or Lenders in
Respect of Increased Costs..................................27
2.12 Compensation................................................28
2.13 Booking of LIBOR Loans......................................28
2.14 Assumptions Concerning Funding of LIBOR Loans...............28
SECTION 3. CONDITIONS TO LOANS..............................................28
3.1 Conditions to Loans.........................................28
(A) Closing Deliveries.................................29
(B) Security Interests.................................29
(C) Cash on Hand.......................................29
(D) Representations and Warranties.....................29
(E) Fees...............................................29
(F) No Default.........................................29
(G) Performance of Agreements..........................29
(H) No Prohibition.....................................29
(I) No Litigation......................................29
(J) Senior Unsecured Notes.............................30
(K) Senior Unsecured Notes Documents...................30
(L) Collateral Verification and Audit Procedure Report.30
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES.......................30
4.1 Organization, Powers, Capitalization........................30
(A) Organization and Powers............................30
(B) Capitalization.....................................31
4.2 Authorization of Borrowing, No Conflict.....................31
4.3 Financial Condition.........................................31
4.4 Indebtedness and Liabilities................................31
4.5 Laundry Equipment Warranties................................31
4.6 Names.......................................................32
4.7 Locations; FEIN.............................................32
4.8 Title to Properties; Liens..................................32
4.9 Litigation; Adverse Facts...................................32
4.10 Payment of Taxes............................................32
4.11 Performance of Agreements...................................33
4.12 Employee Benefit Plans......................................33
4.13 Intellectual Property.......................................33
4.14 Broker's Fees...............................................33
4.15 Environmental Compliance....................................33
4.16 Solvency....................................................33
4.17 Disclosure..................................................34
ii
4
4.18 Insurance...................................................34
4.19 Compliance with Laws; Licenses and Approvals................34
4.20 Bank Accounts...............................................34
4.21 Subsidiaries................................................34
4.22 Employee Matters............................................34
4.23 Governmental Regulation.....................................35
4.24 Material Adverse Effect.....................................35
4.25 Senior Unsecured Notes Documents............................35
SECTION 5. AFFIRMATIVE COVENANTS............................................35
5.1 Financial Statements and Other Reports......................35
(A) Period Financials..................................36
(B) Year-End Financials................................36
(C) Accountants' Certification and Reports.............36
(D) Compliance Certificate.............................36
(E) Borrowing Base Certificates, Laundry
Equipment Reports..................................37
(F) Leased Property Reports............................37
(G) Management Report..................................37
(H) Appraisals.........................................37
(I) Government Notices.................................38
(J) Events of Default, etc.............................38
(K) Trade Names........................................38
(L) Locations..........................................38
(M) Bank Accounts......................................38
(N) Litigation.........................................38
(O) Projections........................................39
(P) Indebtedness Notices...............................39
(Q) Other Information..................................39
5.2 Access to Accountants and Management........................39
5.3 Field Examination...........................................39
5.4 Collateral Records..........................................39
5.5 Condition of Laundry Equipment..............................39
5.6 Collection of Accounts and Payments.........................40
5.7 Endorsement.................................................40
5.8 Corporate Existence.........................................41
5.9 Payment of Taxes............................................41
5.10 Maintenance of Properties; Insurance........................41
5.11 Compliance with Laws........................................41
5.12 Further Assurances..........................................41
5.13 Collateral Locations........................................42
5.14 Bailees.....................................................42
5.15 Mortgages; Title Insurance; Surveys.........................42
(A) Additional Mortgaged Property......................42
iii
5
(B) Title Insurance....................................42
(C) Surveys............................................43
5.16 Use of Proceeds and Margin Security.........................43
5.17 Year 2000 Compatibility.....................................43
SECTION 6. FINANCIAL COVENANTS.............................................43
6.1 Fixed Charge Coverage.......................................43
6.2 Minimum Mature Store Average EBITDA.........................43
6.3 Minimum Unused Availability.................................44
SECTION 7. NEGATIVE COVENANTS...............................................44
7.1 Indebtedness and Liabilities................................44
7.2 Guaranties..................................................44
7.3 Transfers, Liens and Related Matters........................45
(A) Transfers..........................................45
(B) Liens..............................................45
(C) No Negative Pledges................................45
7.4 Investments and Loans.......................................45
7.5 Restricted Junior Payments..................................45
7.6 Restriction on Fundamental Changes..........................46
7.7 Changes Relating to Senior Unsecured Notes..................46
7.8 Transactions with Affiliates................................46
7.9 Environmental Liabilities...................................46
7.10 Conduct of Business.........................................47
7.11 Compliance with ERISA.......................................47
7.12 Tax Consolidations..........................................47
7.13 Subsidiaries................................................47
7.14 Fiscal Year.................................................47
7.15 Press Release; Public Offering Materials....................47
7.16 Bank Accounts...............................................47
SECTION 8. DEFAULT, RIGHTS AND REMEDIES....................................47
8.1 Event of Default............................................47
(A) Payment............................................47
(B) Default in Other Agreements........................47
(C) Breach of Certain Provisions.......................48
(D) Breach of Warranty.................................48
(E) Other Defaults Under Loan Documents................48
(F) Change of Control..................................48
(G) Involuntary Bankruptcy; Appointment of
Receiver, etc......................................48
iv
6
(H) Voluntary Bankruptcy; Appointment of Receiver, etc.48
(I) Liens..............................................49
(J) Judgment and Attachments...........................49
(K) Dissolution........................................49
(L) Solvency...........................................49
(M) Injunction.........................................49
(N) Invalidity of Loan Documents.......................49
(O) Failure of Security................................49
(P) Damage, Strike, Casualty...........................49
(Q) Licenses and Permits...............................50
(R) Forfeiture.........................................50
8.2 Suspension of Commitments...................................50
8.3 Acceleration................................................50
8.4 Remedies....................................................50
8.5 Appointment of Attorney-in-Fact.............................51
8.6 Limitation on Duty of Agent with Respect to Collateral......51
8.7 Application of Proceeds.....................................52
8.8 License of Intellectual Property............................52
8.9 Waivers, Non-Exclusive Remedies.............................52
SECTION 9. ASSIGNMENT AND PARTICIPATION.....................................52
9.1 Assignments and Participations in Loans.....................52
9.2 Agent.......................................................54
(A) Appointment........................................54
(B) Nature of Duties...................................54
(C) Rights, Exculpation, Etc...........................54
(D) Reliance...........................................55
(E) Indemnification....................................55
(F) Xxxxxx Individually................................55
(G) Successor Agent....................................56
(1) Resignation...............................56
(2) Appointment of Successor..................56
(3) Successor Agent...........................56
(H) Collateral Matters.................................56
(1) Release of Collateral.....................56
(2) Confirmation of Authority; Execution
of Releases...............................56
(3) Absence of Duty...........................56
(I) Agency for Perfection..............................57
(J) Exercise of Remedies...............................57
9.3 Consents....................................................58
9.4 Set Off and Sharing of Payments.............................58
9.5 Disbursement of Funds.......................................58
9.6 Settlements, Payments and Information.......................59
v
7
(A) Revolving Advances and Payments; Fee Payments......59
(B) Availability of Lender's Pro Rata Share............60
(C) Return of Payments.................................60
9.7 Dissemination of Information................................60
9.8 Discretionary Advances......................................60
SECTION 10. MISCELLANEOUS....................................................61
10.1 Expenses and Attorneys' Fees................................61
10.2 Indemnity...................................................61
10.3 Amendments and Waivers......................................62
10.4 Notices.....................................................63
10.5 Survival of Warranties and Certain Agreements...............64
10.6 Indulgence Not Waiver.......................................64
10.7 Marshaling; Payments Set Aside..............................64
10.8 Entire Agreement............................................64
10.9 Independence of Covenants...................................64
10.10 Severability................................................64
10.11 Lenders' Obligations Several; Independent Nature
of Lenders' Rights..........................................65
10.12 Headings....................................................65
10.13 Applicable Law..............................................65
10.14 Successors and Assigns......................................65
10.15 No Fiduciary Relationship; Limitation of Liabilities........65
10.16 Consent to Jurisdiction.....................................66
10.17 Waiver of Jury Trial........................................66
10.18 Construction................................................66
10.19 Counterparts; Effectiveness.................................67
10.20 No Duty.....................................................67
10.21 Confidentiality.............................................67
vi
8
EXHIBITS
A Borrowing Base Certificate
B Compliance Certificate
C Laundry Equipment Report
D Assignment and Assumption Agreement
E Leased Property Report
F Blocked Account Agreement
SCHEDULES
1.1(A) Leased Property
1.1(B) Other Liens
1.1(C) Pro Forma
1.1(D) Financial Statements
3.1(A) List of Closing Documents
4.1(B) Capitalization of Loan Parties
4.6 Trade Names (Present and Past Five Years)
4.7 Location of Principal Place of Business, Books and Records,
Facilities and Collateral
4.13 Intellectual Property
4.15 Environmental Compliance
4.20 Bank Accounts
4.22 Employee Matters
7.2 Guaranties
vii
9
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT is dated as of April 29, 1998 and
entered into among SPINCYCLE, INC., a Delaware corporation ("BORROWER"), with
its principal place of business at 00000 Xxxxx Xxxxxxxx/Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxx 00000, the financial institution(s) listed on the signature
pages hereof and their respective successors and assigns (each individually a
"LENDER" and collectively "LENDERS") and XXXXXX FINANCIAL, INC., a Delaware
corporation (in its individual capacity, "XXXXXX"), with offices at 000 Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, for itself as a Lender and as Agent. All
capitalized terms used herein are defined in Section 1 of this Agreement.
WHEREAS, Borrower desires that Lenders extend a credit facility to
provide working capital financing and to provide funds for capital expenditures
and other general corporate purposes; and
WHEREAS, Borrower desires to secure its obligations under the Loan
Documents by granting to Agent, for benefit of Lenders, a security interest in
and lien upon certain of Borrower's property; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Agent and Lenders agree as
follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS. The following terms used in this Agreement
shall have the following meanings:
"ACCOUNTS" means all "accounts" (as defined in the UCC), accounts
receivable, contract rights and general intangibles relating thereto, notes,
drafts and other forms of obligations owed to or owned by Borrower arising or
resulting from the sale of goods or the rendering of services.
"ACQUIRED STORE" means a Facility: (a) that, immediately prior to its
acquisition by Borrower, was operated as, or was substantially complete to be
operated as, a retail coin-operated laundromat by a Person which either owned or
leased the underlying real property; (b) that is leased to Borrower directly by
such Person or such Person's landlord or the lease for which is assigned by such
Person to Borrower (either with or without a concurrent amendment of such lease
being entered into by Borrower and the landlord); and (c) with respect to which
the equipment and other assets relating to the operation of such Facility are
concurrently acquired by Borrower from such Person.
"ADDITIONAL MORTGAGED PROPERTY" has the meaning assigned to that term
in subsection 5.15.
10
"AFFILIATE" means any Person (other than Agent or Lender): (a) directly
or indirectly controlling, controlled by, or under common control with, any Loan
Party; (b) directly or indirectly owning or holding ten percent (10%) or more of
any equity interest in Borrower; (c) five percent (5%) or more of whose stock or
other equity interest having ordinary voting power for the election of directors
or the power to direct or cause the direction of management, is directly or
indirectly owned or held by Borrower; or (d) which has a senior executive
officer who is also a senior executive officer of Borrower. For purposes of this
definition, "control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or other equity interest, or by contract or otherwise.
"AGENT" means Xxxxxx in its capacity as agent for Lenders under the
Loan Documents and any successor in such capacity appointed pursuant to
subsection 9.1.
"AGENT'S ACCOUNT" means Account No. 52-98695 at First National Bank of
Chicago, ABA No. 0000-0000-0, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, XX 00000,
Reference: Xxxxxx Business Credit for the benefit of SpinCycle, Inc.
"AGREEMENT" means this Loan and Security Agreement as it may be
amended, restated, supplemented or otherwise modified from time to time.
"ANNUALIZED STORE EBITDA" means, as of any date of determination, Store
EBITDA for the four consecutive Periods ending on or immediately preceding such
date, multiplied by 3.25.
"ASSET DISPOSITION" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, of any or all of
the assets of Borrower.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means an agreement among Agent, a
Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans, the Commitments and other
interests under this Agreement and the other Loan Documents substantially in the
form of Exhibit D.
"BANK LETTER OF CREDIT" means each letter of credit issued by a bank
acceptable to and approved by Agent for the account of Borrower and supported by
a Risk Participation Agreement.
"BASE RATE" means a variable rate of interest per annum equal to the
higher of (a) the rate of interest from time to time published by the Board of
Governors of the Federal Reserve System as the "Bank Prime Loan" rate in Federal
Reserve Statistical Release H.15(519) entitled "Selected Interest Rates" or any
successor publication of the Federal Reserve System reporting the Bank Prime
Loan rate or its equivalent, or (b) the Federal Funds Effective Rate plus
one-half of one percent (.50%). The statistical release generally sets forth a
Bank Prime Loan rate for each Business Day. In the event the Board of Governors
of the Federal Reserve System ceases to publish a Bank Prime Loan rate or its
equivalent, the term "Base Rate" shall mean a variable rate of interest per
annum
2
11
equal to the highest of the "prime rate", "reference rate", "base rate", or
other similar rate announced from time to time by any of Bankers Trust Company,
The Chase Manhattan Bank, N.A., or their successors (with the understanding that
any such rate may merely be a reference rate and may not necessarily represent
the lowest or best rate actually charged to any customer by any such bank).
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate.
"BLOCKED ACCOUNTS" has the meaning assigned to that term in subsection
5.6.
"BORROWER" has the meaning assigned to that term in the preamble to
this Agreement.
"BORROWING BASE" has the meaning assigned to that term in subsection
2.1(A)(2).
"BORROWING BASE CERTIFICATE" means a certificate and assignment
schedule duly executed by an officer of Borrower appropriately completed and in
substantially the form of Exhibit A.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of Illinois or
Pennsylvania, or is a day on which banking institutions located in any such
state are closed, or for the purposes of LIBOR Loans only, a day on which
commercial banks are open for dealings in Dollar deposits in the London, England
(U.K.) market.
"CAPITAL EXPENDITURES" means all expenditures (including deposits) for,
or contracts for expenditures (excluding contracts for expenditures under or
with respect to Capital Leases, but including cash down payments for assets
acquired under Capital Leases) with respect to any fixed assets or improvements,
or for replacements, substitutions or additions thereto, which have a useful
life of more than one year, including the direct or indirect acquisition of such
assets by way of increased product or service charges, offset items or
otherwise.
"CAPITAL LEASE" means any lease of any property (whether real, personal
or mixed) that, in conformity with GAAP, should be accounted for as a capital
lease.
"CASH EQUIVALENTS" means: (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within six (6) months from the date of acquisition thereof;
(b) commercial paper maturing no more than six (6) months from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Corporation or at least P-1 from Xxxxx'x Investors Service, Inc.; and (c)
certificates of deposit or bankers' acceptances maturing within six (6) months
from the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $250,000,000 and not subject to
setoff rights in favor of such bank.
3
12
"CLOSING DATE" means April 29, 1998.
"COLLATERAL" has the meaning assigned to that term in subsection 2.7.
"COLLATERAL ASSIGNMENT OF LEASES" means the collateral assignment of
leases delivered by Borrower to Agent, on behalf of Lenders, with respect to
Facilities, in form and substance reasonably satisfactory to Agent.
"COLLECTING BANKS" has the meaning assigned to that term in subsection
5.6.
"COMMITMENT" or "COMMITMENTS" means the commitment or commitments of
Lenders to make Loans as set forth in subsection 2.1(A) and to provide Lender
Letters of Credit as set forth in subsection 2.1(E).
"COMPLIANCE CERTIFICATE" means a certificate duly executed by the chief
executive officer or chief financial officer of Borrower appropriately completed
and in substantially the form of Exhibit B.
"DEFAULT" means a condition, act or event that, after notice or lapse
of time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"DEFAULT RATE" has the meaning assigned to that term in subsection 2.2.
"EBITDA" means, for any period, without duplication, the total of the
following for Borrower, each calculated for such period: (1) net income
determined in accordance with GAAP; plus, to the extent included in the
calculation of net income, (2) the sum of (a) income and franchise taxes paid or
accrued; (b) Interest Expenses, net of interest income, paid or accrued; (c)
interest paid in kind; (d) amortization and depreciation and (e) other non-cash
charges (excluding accruals for cash expenses made in the ordinary course of
business); less, to the extent included in the calculation of net income, (3)
the sum of (a) the income of any Person in which Borrower has an ownership
interest except to the extent such income is received by Borrower in a cash
distribution during such period; (b) gains or losses from sales or other
dispositions of assets (other than Inventory in the normal course of business);
and (c) extraordinary or non-recurring gains, but not net of extraordinary or
non-recurring "cash" losses.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $250,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $250,000,000,
provided that such bank is acting through a branch or agency located in the
country in which it is organized or another which is also a member of the OECD;
(c) any other entity which is an "accredited investor" (as defined in Regulation
D under the Securities Act) which extends credit or buys loans
4
13
as one of its businesses, including, but not limited to, insurance companies,
mutual funds and lease financing companies; and (d) a Person that is primarily
engaged in the business of lending that is (i) a Subsidiary of a Lender, (ii) a
Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of
which a Lender is a Subsidiary; provided that no Affiliate of Borrower shall be
an Eligible Assignee.
"ELIGIBLE LAUNDRY EQUIPMENT" has the meaning assigned to that term in
subsection 2.1(B).
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Loan Party or any ERISA Affiliate or (b) has at any time within the preceding
six (6) years been maintained for the employees of any Loan Party or any current
or former ERISA Affiliate.
"ENVIRONMENTAL CLAIMS" means claims, liabilities, investigations,
litigation, administrative proceedings, judgments or orders relating to
Hazardous Materials.
"ENVIRONMENTAL LAWS" means any present or future federal, state or
local law, rule, regulation or order relating to pollution, waste, disposal or
the protection of human health or safety, plant life or animal life, natural
resources or the environment.
"EQUIPMENT" means all "equipment" (as defined in the UCC), including,
without limitation, all washing machines, dryers, computer boards, furniture,
furnishings, fixtures, machinery, motor vehicles, trucks, trailers, vessels,
aircraft and rolling stock and all parts thereof and all additions and
accessions thereto and replacements therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA AFFILIATE", as applied to any Loan Party, means any Person who
is a member of a group which is under common control with any Loan Party, who
together with any Loan Party is treated as a single employer within the meaning
of Section 414(b) and (c) of the IRC.
"EVENT OF DEFAULT" means each of the events set forth in subsection
8.1.
"FACILITY" means a retail coin-operated laundromat facility operated by
Borrower.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the
immediately following Business Day by the Federal Reserve Bank of New York or,
if such rate is not published for any Business Day, the average of the
quotations for the day of the requested Loan received by Agent from three
Federal funds brokers of recognized standing selected by Agent.
5
14
"FEE LETTER" means that certain letter agreement between Borrower and
Agent, dated April 29, 1998 relating to certain fees.
"FISCAL YEAR" means the 13 Periods commencing on December 29, 1997 and
each 13 Periods thereafter.
"FIXED CHARGE COVERAGE" means, for any period, Operating Cash Flow plus
the net cash proceeds of any equity securities issued by Borrower and of the
issuance by Borrower of any Indebtedness for borrowed money that is unsecured
and is otherwise on terms substantially similar to the Senior Unsecured Notes,
divided by Fixed Charges.
"FIXED CHARGES" means, for any period, and each calculated for such
period (without duplication), (a) Interest Expenses paid or accrued by Borrower;
plus (b) scheduled payments of principal with respect to all Indebtedness of
Borrower; plus (c) any provision for (to the extent it is greater than zero)
income or franchise taxes included in the determination of net income, excluding
any provision for deferred taxes; plus (d) Restricted Junior Payments made in
cash to the extent permitted under subsection 7.5(b); plus (e) payment of
deferred taxes accrued in any prior period.
"FUNDING DATE" means the date of each funding of a Loan or issuance of
a Lender Letter of Credit.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination.
"HAZARDOUS MATERIAL" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
Environmental Laws or regulations as "HAZARDOUS SUBSTANCES" "hazardous
materials", "hazardous wastes", "toxic substances" or any other formulation
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity, or
toxicity; (b) oil, petroleum or petroleum derived substances, natural gas,
natural gas liquids or synthetic gas and drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
polychlorinated biphenyls.
"INDEBTEDNESS", as applied to any Person, means without duplication:
(a) all indebtedness for borrowed money; (b) obligations under leases which in
accordance with GAAP constitute Capital Leases; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six months from the date the obligation is incurred or is evidenced by
a note or similar written instrument; (e) all indebtedness secured by any Lien
on any property or asset owned or held by that Person
6
15
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non recourse to the credit of that Person and (f)
obligations in respect of letters of credit.
"INTANGIBLE ASSETS" means all intangible assets (determined in
conformity with GAAP) including, without limitation, goodwill, Intellectual
Property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income and restricted funds.
"INTELLECTUAL PROPERTY" means all present and future designs, patents,
patent rights and applications therefor, trademarks and registrations or
applications therefor, trade names, inventions, copyrights and all applications
and registrations therefor, software or computer programs, license rights, trade
secrets, methods, processes, know-how, drawings, specifications, descriptions,
and all memoranda, notes and records with respect to any research and
development, whether now owned or hereafter acquired, all goodwill associated
with any of the foregoing, and proceeds of all of the foregoing, including,
without limitation, proceeds of insurance policies thereon.
"INTEREST EXPENSES" means, without duplication, for any period, for
Borrower, the following, each calculated for such period: interest expenses
deducted in the determination of net income (excluding (i) the amortization of
fees and costs with respect to the transactions contemplated by this Agreement
which have been capitalized as transaction costs in accordance with the
provisions of subsection 1.2; and (ii) interest paid in kind).
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2(B).
"INTEREST RATE" has the meaning assigned to that term in subsection
2.2(A).
"INVENTORY" means all "inventory" (as defined in the UCC), including,
without limitation, finished goods, raw materials, work in process and other
materials and supplies used or consumed in a Person's business, and goods which
are returned or repossessed.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute and all rules and regulations promulgated
thereunder.
"LANDLORD WAIVER" means a waiver and consent delivered to Agent from
(a) the landlord of a Facility leased by Borrower at which any of the Collateral
is located and (b) a bailee of a warehouse at which any of the Collateral is
located, in each case waiving any lien or security interest held by such
landlord or bailee in favor of the lien on and security interest in such
Collateral held by Agent for the benefit of Lenders, and otherwise in form and
substance satisfactory to Agent.
"LAUNDRY EQUIPMENT" means machinery and equipment comprising commercial
laundry equipment including washing machines and dryers.
"LAUNDRY EQUIPMENT REPORT" means: (a) on the Closing Date, a report
substantially in the form of Exhibit C (the "INITIAL LAUNDRY EQUIPMENT REPORT");
and (b) thereafter, a report specifying, as at its date, all additions and
deletions to the Initial Laundry Equipment Report;
7
16
provided, however, that in the event that, as contemplated as at the date
hereof, Borrower modifies its computerized laundry equipment reporting system,
the format of the Laundry Equipment Report may change to a format consistent
with such modified reporting system so long as the type and scope of the
information contained in such new format is substantially the same as that
provided in the Initial Laundry Equipment Report.
"LEASED PROPERTY" means the real property leased by Borrower as
described on Schedule 1.1(A), as amended, modified and/or supplemented from time
to time pursuant to this Agreement.
"LEASED STORE" means a Facility that is not an Acquired Store or a
Self-Developed Leased Store and which is (i) leased directly to Borrower by the
landlord; or (ii) sublet to Borrower; or (iii) the lease for which is assigned
to Borrower, with or without a concurrent amendment entered into by Borrower
with the landlord.
"LENDER" or "LENDERS" has the meaning assigned to that term in the
preamble to this Agreement.
"LENDER LETTER OF CREDIT" has the meaning assigned to that term in
subsection 2.1(F).
"LETTER OF CREDIT LIABILITY" means, all reimbursement and other
liabilities of Borrower with respect to each Lender Letter of Credit, whether
contingent or otherwise, including: (a) the amount available to be drawn or
which may become available to be drawn; (b) all amounts which have been paid or
made available by any Lender issuing a Lender Letter of Credit or any bank
issuing a Bank Letter of Credit to the extent not reimbursed; and (c) all unpaid
interest, fees and expenses related thereto.
"LETTER OF CREDIT RESERVE" means, at any time, an amount equal to (a)
the aggregate amount of Letter of Credit Liability with respect to all Lender
Letters of Credit outstanding at such time plus, without duplication, (b) the
aggregate amount theretofore paid by Agent or any Lender under Lender Letters of
Credit and not debited to the Loan Account pursuant to subsection 2.1(E)(2) or
otherwise reimbursed by Borrower.
"LIABILITIES" shall have the meaning given that term in accordance with
GAAP and shall include Indebtedness.
"LIBOR" means, for each Interest Period, a rate of interest equal to:
(a) the rate of interest determined by Agent at which deposits in
Dollars for the relevant Interest Period are offered based on information
presented on the Reuters Screen LIBOR Page as of 11:00 A.M. (London time) on the
day which is two (2) Business Days prior to the first day of such Interest
Period; provided that if at least two such offered rates appear on the Reuters
Screen LIBOR Page in respect of such Interest Period, the arithmetic mean of all
such rates (as determined by Agent) will be the rate used; provided further that
if Reuters ceases to provide LIBOR quotations, such rate shall be the average
rate of interest determined by Agent at which deposits in Dollars are
8
17
offered for the relevant Interest Period by Bankers Trust Company, The Chase
Manhattan Bank, N.A., or its successors to prime banks in the London interbank
market as of 11:00 A.M. (London time) on the applicable interest rate
determination date, divided by
(b) a number equal to 1.0 minus the aggregate (but without duplication)
of the rates (expressed as a decimal fraction) of reserve requirements in effect
on the day which is two (2) Business Days prior to the beginning of such
Interest Period (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other governmental authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
such Board) which are required to be maintained by a member bank of the Federal
Reserve System;
(such rate to be adjusted to the nearest one sixteenth of one percent (1/16 of
1%) or, if there is not a nearest one sixteenth of one percent (1/16 of 1%), to
the next higher one sixteenth of one percent (1/16 of 1%).
"LIBOR LOANS" means at any time that portion of the Loans bearing
interest at rates determined by reference to LIBOR.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
"LOAN" or "LOANS" means an advance or advances under the Revolving Loan
Commitment.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Collateral
Assignment of Leases, and all other instruments, documents and agreements
executed by or on behalf of Borrower and delivered concurrently herewith or at
any time hereafter to or for Agent or any Lender in connection with the Loans,
any Lender Letter of Credit, and other transactions contemplated by this
Agreement, all as amended, restated, supplemented or modified from time to time.
"LOAN PARTY" means each of Borrower and any other Person (other than
Agent or any Lender) which is or becomes a party to any Loan Document.
"LOAN YEAR" means each period of twelve (12) consecutive months
commencing on the Closing Date and on each anniversary thereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (a) the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of any Loan Party on an individual basis or taken as a whole or (b)
the ability of any Loan Party to perform its obligations under any Loan Document
to which it is a party or of Agent or any Lender to enforce or collect any of
the Obligations.
9
18
"MATURE FACILITY" means, as at any date of determination thereof, a
Facility that has been continuously operating as a retail coin-operated
laundromat for at least 13 Periods prior to and through and including such date
(including, with respect to each Acquired Store, the period of operation prior
to Borrower's acquisition thereof).
"MATURE STORE AVERAGE EBITDA" means, as at any date of determination,
the sum of all Mature Facilities' Annualized Store EBITDA, as at such date,
divided by the number of Mature Facilities as at such date.
"MAXIMUM REVOLVING LOAN AMOUNT" has the meaning assigned to that term
in subsection 2.1(A)(1).
"MORTGAGE" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases (other
than the Collateral Assignment of Leases) or other real estate security
documents delivered by any Loan Party to Agent, on behalf of Lenders, with
respect to Mortgaged Property or Additional Mortgaged Property, all in form and
substance satisfactory to Agent.
"NET BOOK VALUE" means, as at any date of determination thereof:
(a) with respect to Laundry Equipment that is acquired other than as
part of the assets purchased in an Acquired Store acquisition (regardless of
whether such Laundry Equipment is utilized immediately after its acquisition or
subsequent to storing it), the purchase price of such Laundry Equipment; and
(b) with respect to Laundry Equipment that has been acquired as part of
the assets purchased in an Acquired Store acquisition, the purchase price
specified, either directly or pursuant to an allocation of a portion of the
aggregate purchase price, for such Laundry Equipment in the purchase agreement
between Borrower and the Person selling the same, provided that: (i) the manner
of specifying such purchase price, either directly or by allocation, is
consistent with Borrower's practices, in the ordinary course of its business at
the date of this Agreement, of specifying, directly or by allocation, the
purchase price of Laundry Equipment in Acquired Store acquisitions; (ii) such
purchase price does not exceed the fair market value of such Laundry Equipment
as at such date in Borrower's good faith judgment; and (iii) in the event no
such specification, directly or by allocation, of the purchase price is made as
at the date of acquisition thereof, then the fair market value thereof
determined by Borrower in its good faith judgment shall be deemed to be the
amount specified by this subparagraph (b), provided that, notwithstanding the
foregoing, the amounts used in determination of values of the Laundry Equipment
covered by this subparagraph (b) shall be such that for each type of Laundry
Equipment covered by this subparagraph (b), the sum of all book values initially
ascribed by Borrower to all such Laundry Equipment in each such type shall not,
in the aggregate, exceed the replacement cost, as new, of such Laundry
Equipment,
10
19
in each case with respect to clauses (a) and (b) above, minus all depreciation
on such Laundry Equipment through such date of determination, calculated as if
depreciated over a ten year period (which period shall commence on the date such
Laundry Equipment is first utilized by Borrower) on a straight-line basis.
"NOTE" means each promissory note of Borrower in a form reasonably
acceptable to Agent, issued pursuant to subsection 2.1(D).
"NOTICE OF BORROWING" has the meaning assigned to that term in
subsection 2.1(C).
"OBLIGATIONS" means all obligations, liabilities and indebtedness of
every nature of each Loan Party from time to time owed to Agent or to any Lender
under the Loan Documents including the principal amount of all debts, claims and
indebtedness (whether incurred before or after the Termination Date), accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable including, without limitation, all
interest, fees, cost and expenses accrued or incurred after the filing of any
petition under any bankruptcy or insolvency law.
"OPERATING CASH FLOW" means, for any period, (a) EBITDA; less (b)
Capital Expenditures.
"PERIOD" means each four week period comprised of four Monday through
Sunday weeks of which there are 13 in any year, constituting an accounting
period of Borrower.
"PERMITTED ENCUMBRANCES" means the following types of Liens: (a) Liens
(other than Liens relating to Environmental Claims or ERISA) for taxes,
assessments or other governmental charges not yet due and payable; (b) statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen and other
similar liens imposed by law, which are incurred in the ordinary course of
business for sums not more than thirty (30) days delinquent; (c) Liens (other
than any Lien imposed by ERISA) incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security, statutory obligations, surety and appeal bonds,
bids, leases, government contracts, trade contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money); (d) easements, rights-of-way, restrictions,
and other similar charges or encumbrances not interfering in any material
respect with the ordinary conduct of the business of any Loan Party or any of
its Subsidiaries; (e) Liens for purchase money obligations, provided that (i)
the Indebtedness secured by any such Lien is permitted under subsection 7.1, and
(ii) such Lien encumbers only the asset so purchased; (f) Liens in favor of
Agent, on behalf of Lenders, and (g) Liens set forth on Schedule 1.1(B).
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.
11
20
"PRO FORMA" means the unaudited balance sheet of Borrower as of March
22, 1998 after giving effect to the transactions contemplated by this Agreement.
The Pro Forma is annexed hereto as Schedule 1.1(C).
"PRO RATA SHARE" means (a) with respect to matters relating to a
particular Commitment of a Lender, the percentage obtained by dividing (i) such
Commitment of that Lender by (ii) all such Commitments of all Lenders and (b)
with respect to all other matters, the percentage obtained by dividing (i) the
Total Loan Commitment of a Lender by (ii) the Total Loan Commitments of all
Lenders, in either case as such percentage may be adjusted by assignments
permitted pursuant to subsection 9.1; provided, however, if any Commitment is
terminated pursuant to the terms hereof, then "Pro Rata Share" means the
percentage obtained by dividing (x) the aggregate amount of such Lender's
outstanding Loans related to such Commitment by (y) the aggregate amount of all
outstanding Loans related to such Commitment.
"PROJECTIONS" means Borrower's forecasted: (a) balance sheets; (b)
profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, all prepared on a basis consistent with Borrower's historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.
"REPLACEMENT LENDER" has the meaning assigned to that term in
subsection 2.11(A).
"REQUISITE LENDERS" means Lenders holding or being responsible for
fifty-one percent (51%) or more of the sum of (a) outstanding Loans (b)
outstanding Letter of Credit Liability and (c) unutilized Commitments; provided,
that at any time during which there are only two (2) Lenders, "Requisite
Lenders" shall mean both Lenders.
"RESTRICTED JUNIOR PAYMENT" means: (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Borrower now or hereafter outstanding, except a dividend payable solely with
shares of the class of stock on which such dividend is declared; (b) any payment
or prepayment of principal of, premium, if any, or interest on, or any
redemption, conversion, exchange, retirement, defeasance, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any Indebtedness subordinated in right of payment to the Obligations or any
shares of any class of stock of Borrower now or hereafter outstanding, or the
issuance of a notice of an intention to do any of the foregoing; (c) any payment
made to retire, or to obtain the surrender of, any outstanding warrants, options
or other rights to acquire shares of any class of stock of Borrower now or
hereafter outstanding; and (d) any payment by Borrower of any management,
consulting or similar fees to any Affiliate, whether pursuant to a management
agreement or otherwise.
"REVOLVING ADVANCE" means each advance made by Lender(s) pursuant to
subsection 2.1(A).
"REVOLVING LOAN" means the outstanding balance of all Revolving
Advances and any amounts added to the principal balance of the Revolving Loan
pursuant to this Agreement.
12
21
"REVOLVING LOAN COMMITMENT" means (a) as to any Lender, the commitment
of such Lender to make Revolving Advances pursuant to subsection 2.1(A), and to
purchase participations in Lender Letters of Credit pursuant to subsection
2.1(F) in the aggregate amount set forth on the signature page of this Agreement
opposite such Lender's signature or in the most recent Assignment and Assumption
Agreement, if any, executed by such Lender and (b) as to all Lenders, the
aggregate commitment of all Lenders to make Revolving Advances and to purchase
participations in Lender Letters of Credit.
"RISK PARTICIPATION AGREEMENT" has the meaning assigned to that term in
subsection 2.1(F).
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, as in effect from time to time.
"SELF-DEVELOPED LEASED STORE" means a Facility that was constructed by
Borrower or to its specifications on a parcel of unimproved real property, or on
a parcel of real property where any prior existing improvements were removed
prior to the construction of the Facility.
"SENIOR UNSECURED NOTES" has the meaning assigned to that term in
subsection 3.1(J).
"SENIOR UNSECURED NOTES DOCUMENTS" means, collectively, the Senior
Unsecured Notes Indenture and all documents, instruments and agreements
delivered in connection therewith.
"SENIOR UNSECURED NOTES INDENTURE" has the meaning assigned to that
term in subsection 3.1(J).
"SETTLEMENT DATE" has the meanings assigned to that term in subsection
9.6(A)(2).
"SPINDEVCO" has the meaning assigned to that term in subsection 7.4.
"STORE EBITDA" means, for any period, with respect to any Facility,
EBITDA resulting solely from the operations of such Facility during such period;
provided that Store EBITDA will be calculated in a manner consistent with that
used by Borrower to determine "Income From Store Operations" as such term is
used in the financial statements annexed hereto as Schedule 1.1(D).
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other business entity of which more than fifty percent (50%) of
the total voting power of shares of stock (or equivalent ownership or
controlling interest) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof.
"TAX LIABILITIES" has the meaning assigned to that term in subsection
2.9(A).
13
22
"TERMINATION DATE" has the meaning assigned to that term in subsection
2.5.
"TRIGGER PERIOD" means the period commencing on the first date after
the Closing Date, or the first date after the expiration of a previous Trigger
Period, on which (a) one or more Revolving Advances is outstanding; provided,
however, that for purposes of this definition only, advances to Borrower solely
for funding fees and interest on fees that remain outstanding for no more than
30 days shall not be deemed outstanding Revolving Advances, and (b) the sum of
(i) Borrower's cash on hand in immediately available funds, (ii) Borrower's Cash
Equivalents, and (iii) Unused Availability, is less than $15,000,000, and ending
on the date on which such sum was equal to or greater than $15,000,000 for a
period of sixty (60) consecutive days.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of Illinois, as amended from time to time, and any successor
statute.
"UNUSED AVAILABILITY" means, as of any date, the amount (if any) by
which the Maximum Revolving Loan Amount exceeds the Revolving Loan less the
Letter of Credit Reserve.
1.2 ACCOUNTING TERMS. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Financial statements and other information
furnished to Agent or any Lender pursuant to subsection 5.1 shall be prepared in
accordance with GAAP (as in effect at the time of such preparation) on a
consistent basis. In the event any "Accounting Changes" (as defined below) shall
occur and such changes affect financial covenants, standards or terms in this
Agreement, then Borrower and Lenders agree to enter into negotiations in order
to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
financial condition of Borrower shall be the same after such Accounting Changes
as if such Accounting Changes had not been made, and until such time as such an
amendment shall have been executed and delivered by Borrower and Requisite
Lenders, (A) all financial covenants, standards and terms in this Agreement
shall be calculated and/or construed as if such Accounting Changes had not been
made, and (B) Borrower shall prepare footnotes to each Compliance Certificate
and the financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "ACCOUNTING CHANGES" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Borrower's certified public
accountants; and (c) changes in carrying value of Borrower's assets, liabilities
or equity accounts resulting from any adjustments that, in each case, were
applicable to, but not included in, the Pro Forma. All such adjustments
resulting from expenditures made subsequent to the Closing Date (including, but
not limited to, capitalization of costs and expenses or payment of pre-Closing
Date liabilities) shall be treated as expenses in the period the expenditures
are made and deducted as part of the calculation of EBITDA in such period.
1.3 OTHER DEFINITIONAL PROVISIONS. References to "Sections",
"subsections", "Exhibits" and "Schedules" shall be to Sections, subsections,
Exhibits and Schedules, respectively, of this
14
23
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. In this Agreement, words
importing any gender include the other genders; the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual instruments shall be
deemed to include subsequent amendments, assignments, and other modifications
thereto, but only to the extent such amendments, assignments and other
modifications are not prohibited by the terms of this Agreement or any other
Loan Document; references to Persons include their respective permitted
successors and assigns or, in the case of governmental Persons, Persons
succeeding to the relevant functions of such Persons; and all references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations.
SECTION 2. LOANS AND COLLATERAL
2.1 LOANS.
(A) REVOLVING LOAN. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Borrower and the other Loan Parties set forth herein and in the other Loan
Documents, each Lender, severally, agrees to lend to Borrower from time to time
its Pro Rata Share of each Revolving Advance. The aggregate amount of all
Revolving Loan Commitments shall not exceed at any time $40,000,000. Amounts
borrowed under this subsection 2.1(A) may be repaid and reborrowed at any time
prior to the earlier of (i) the termination of the Revolving Loan Commitment
pursuant to subsection 8.3 or (ii) the Termination Date. Except as otherwise
provided herein, no Lender shall have any obligation to make an advance under
this subsection 2.1(A) to the extent such advance would cause the Revolving Loan
(after giving effect to any immediate application of the proceeds thereof) to
exceed the Maximum Revolving Loan Amount.
(1) "MAXIMUM REVOLVING LOAN AMOUNT" means, as of any
date of determination, the lesser of (a) the Revolving Loan Commitment(s) of all
Lenders minus the Letter of Credit Reserve and (b) the Borrowing Base minus the
Letter of Credit Reserve.
(2) "BORROWING BASE" means, as of any date of
determination, an amount equal to:
(a) with respect to Facilities where the
Annualized Store EBITDA is equal to or less than $60,000, forty percent (40%) of
Eligible Laundry Equipment located at such Facilities;
(b) with respect to Facilities where the
Annualized Store EBITDA is greater than $60,000 and less than or equal to
$100,000, the lesser of (i) sixty-five percent (65%) of Eligible Laundry
Equipment located at such Facilities, or (ii) such Facility's Annualized Store
EBITDA multiplied by three (3);
15
24
(c) with respect to Facilities where the
Annualized Store EBITDA is greater than $100,000, the lesser of (i) eighty-five
percent (85%) percent of Eligible Laundry Equipment located at such Facilities,
or (ii) such Facility's Annualized Store EBITDA multiplied by three (3); and
(d) forty (40%) percent of Eligible Laundry
Equipment that (i) is stored at a warehouse, (ii) was new when purchased by
Borrower, and (iii) has never been utilized;
less, in each case, such reserves as Agent in its reasonable discretion may
elect to establish for Facilities in respect of which a Landlord Waiver in form
and substance satisfactory to Agent has not been obtained and delivered to
Agent.
(B) ELIGIBLE LAUNDRY EQUIPMENT.
"ELIGIBLE LAUNDRY EQUIPMENT" means, as at any date of
determination, the Net Book Value of all Laundry Equipment owned by Borrower and
located in the United States of America that Agent, in its reasonable credit
judgment, deems to be eligible for borrowing purposes. Without limiting the
generality of the foregoing, unless otherwise agreed by Agent, the following is
not Eligible Laundry Equipment: (a) Laundry Equipment with respect to which
Agent, on behalf of Lenders, does not have a valid, first priority and fully
perfected security interest; and (b) Laundry Equipment with respect to which
there exists any Lien in favor of any Person other than Agent, on behalf of
Lenders other than Liens with respect to which Agent has received a Landlord
Waiver.
(C) BORROWING MECHANICS. (1) LIBOR Loans made on any Funding
Date shall be in an aggregate minimum amount of $500,000 and integral multiples
of $100,000 in excess of such amount. (2) On any day when Borrower desires an
advance under this subsection 2.1, Borrower shall give Agent telephonic notice
of the proposed borrowing by 11:00 a.m. Central time on the Funding Date of a
Base Rate Loan and three (3) Business Days in advance of the Funding Date of a
LIBOR Loan, which notice (a "NOTICE OF BORROWING") shall also specify the
proposed Funding Date (which shall be a Business Day), whether such Loans shall
consist of Base Rate Loans or LIBOR Loans, and for LIBOR Loans the Interest
Period applicable thereto. Any such telephonic notice shall be confirmed in
writing on the same day. Neither Agent nor Lender shall incur any liability to
Borrower for acting upon any telephonic notice Agent believes in good faith to
have been given by a duly authorized officer or other person authorized to
borrow on behalf of Borrower or for otherwise acting in good faith under this
subsection 2.1(C). Neither Agent nor Lender will make any advance pursuant to
any telephonic notice unless Agent has also received the most recent Borrowing
Base Certificate and all other documents required under subsection 5.1 by 11:00
a.m. Central time. Each Revolving Advance shall be deposited by wire transfer in
immediately available funds in such account as Borrower may from time to time
designate to Agent in writing. The becoming due of any amount required to be
paid under this Agreement or any of the other Loan Documents as principal,
accrued interest and fees shall be deemed irrevocably to be a request by
Borrower for a Base Rate Revolving Loan on the due date of, and in the amount
required to pay, such principal, accrued interest and fees, and the proceeds of
each such Revolving Advance if made by Agent or any
16
25
Lender shall be disbursed by Agent or such Lender by way of direct payment of
the relevant obligation.
(D) NOTES. Borrower shall execute and deliver to each Lender
with appropriate insertions a Note to evidence such Lender's Revolving Loan
Commitment. In the event of an assignment under subsection 9.1, Borrower shall,
upon surrender of the assigning Lender's Note, issue new Note(s) to reflect the
interest held by the assigning Lender and its assignee.
(E) EVIDENCE OF REVOLVING LOAN OBLIGATIONS. Each Revolving
Advance shall be evidenced by this Agreement, the Notes, and notations made from
time to time by Agent in its books and records, including computer records.
Agent shall record in its books and records, including computer records, the
principal amount of the Revolving Loan owing to each Lender from time to time.
Agent's books and records shall constitute presumptive evidence, absent manifest
error, of the accuracy of the information contained therein. Failure by Agent to
make any such notation or record shall not affect the obligations of Borrower to
Lenders with respect to the Revolving Loans.
(F) LETTERS OF CREDIT. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Borrower herein set forth, the Revolving Loan Commitments may, in addition to
Revolving Advances, be utilized, upon the request of Borrower, for (i) the
issuance of letters of credit by Agent (or, with Agent's consent, any Lender),
or (ii) the issuance by Agent of risk participations (a "RISK PARTICIPATION
AGREEMENT") to banks to induce such banks to issue letters of credit for the
account of Borrower (each of (i) and (ii) above a "LENDER LETTER OF CREDIT").
Each Lender shall be deemed to have purchased a participation in each Lender
Letter of Credit issued on behalf of Borrower in an amount equal to its Pro Rata
Share thereof. In no event shall any Lender Letter of Credit be issued to the
extent that the issuance of such Lender Letter of Credit would cause the sum of
the Letter of Credit Reserve (after giving effect to such issuance) plus the
Revolving Loan to exceed the lesser of (x) the Borrowing Base and (y) the
Revolving Loan Commitment.
(1) MAXIMUM AMOUNT. The aggregate amount of Letter of
Credit Liability with respect to all Lender Letters of Credit outstanding at any
time shall not exceed $1,000,000.
(2) REIMBURSEMENT. Borrower shall be irrevocably and
unconditionally obligated forthwith without presentment, demand, protest or
other formalities of any kind, to reimburse Agent or the issuer for any amounts
paid with respect to a Lender Letter of Credit including all fees, costs and
expenses paid to any bank that issues a Bank Letter of Credit. Borrower hereby
authorizes and directs Agent, at Agent's option, to debit Borrower's account (by
increasing the Revolving Loan) in the amount of any payment made with respect to
any Lender Letter of Credit. All amounts paid with respect to any Lender Letter
of Credit that are not immediately repaid by Borrower with the proceeds of a
Revolving Advance or otherwise shall bear interest at the Default Rate
applicable to Base Rate Revolving Loans. In the event that Borrower shall fail
to reimburse Agent on the date of any payment under a Lender Letter of Credit in
an amount equal to the amount
17
26
of such payment, Agent shall promptly notify each Lender of the unreimbursed
amount of such payment together with accrued interest thereon and each Lender,
on the next Business Day, shall deliver to Agent an amount equal to its
respective participation in same day funds. The obligation of each Lender to
deliver to Agent an amount equal to its respective participation pursuant to the
foregoing sentence shall be absolute and unconditional and such remittance shall
be made notwithstanding the occurrence or continuation of an Event of Default or
Default or the failure to satisfy any condition set forth in Section 3. In the
event any Lender fails to make available to Agent the amount of such Lender's
participation in such Lender Letter of Credit, Agent shall be entitled to
recover such amount on demand from such Lender together with interest at the
Base Rate.
(3) CONDITIONS OF ISSUANCE. In addition to all other
terms and conditions set forth in this Agreement, the issuance of any Lender
Letter of Credit shall be subject to the satisfaction of all conditions
applicable to Revolving Advances, and the conditions that the letter of credit
which Borrower requests be in such form, be for such amount, contain such terms
and support such transactions as are reasonably satisfactory to Agent. The
expiration date of each Lender Letter of Credit shall be on a date which is at
least thirty (30) days prior to the Termination Date.
(4) REQUEST FOR LETTERS OF CREDIT. Borrower shall
give Agent at least three (3) Business Days prior notice specifying the date a
Lender Letter of Credit is to be issued, identifying the beneficiary and
describing the nature of the transactions proposed to be supported thereby. The
notice shall be accompanied by the form of the letter of credit being requested.
(G) OTHER LETTER OF CREDIT PROVISIONS.
(1) OBLIGATIONS ABSOLUTE. The obligation of Borrower
to reimburse Agent or any Lender for payments made under, and other amounts
payable in connection with, any Lender Letter of Credit shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including the following circumstances:
(a) any lack of validity or enforceability
of any Lender Letter of Credit, Bank Letter of Credit or any other agreement;
(b) the existence of any claim, set-off,
defense or other right which Borrower, any of its Affiliates, Agent or any
Lender, on the one hand, may at any time have against any beneficiary or
transferee of any Lender Letter of Credit or Bank Letter of Credit (or any
Persons for whom any such transferee may be acting), Agent, any Lender or any
other Person, on the other hand, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including any
underlying transaction between Borrower or any of its Affiliates and the
beneficiary of the letter of credit);
(c) any draft, demand, certificate or any
other document presented under any Lender Letter of Credit or Bank Letter of
Credit is alleged to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
18
27
(d) payment under any Lender Letter of
Credit or Bank Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
letter of credit; provided that, in the case of any payment by Agent or a Lender
under any Lender Letter of Credit, Agent or such Lender has not acted with gross
negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment under such Lender Letter of Credit;
(e) any other circumstance or happening
whatsoever, which is similar to any of the foregoing; or
(f) the fact that a Default or an Event of
Default shall have occurred and be continuing.
(2) NATURE OF LENDER'S DUTIES. As between Agent and Lenders,
on the one hand, and Borrower, on the other hand, Borrower assumes all risks of
the acts and omissions of, or misuse of any Lender Letter of Credit by the
beneficiary thereof. In furtherance and not in limitation of the foregoing,
neither Agent nor any Lender shall be responsible for the following, other than
as a result of such Lender's or Agent's willful misconduct or gross negligence:
(a) for the form, validity, sufficiency, accuracy, genuineness or legal effect
of any document by any party in connection with the application for and issuance
of any Lender Letter of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (b) for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Lender Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (c) for failure of the beneficiary of
any Lender Letter of Credit to comply fully with conditions required in order to
demand payment thereunder; provided that, in the case of any payment by Agent or
any Lender under any Lender Letter of Credit, Agent or Lender has not acted with
gross negligence or willful misconduct (as determined by a court of competent
jurisdiction) in determining that the demand for payment under such Lender
Letter of Credit complies on its face with any applicable requirements for a
demand for payment thereunder; (d) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (e) for errors in
interpretation of technical terms; (f) for any loss or delay in the transmission
or otherwise of any document required in order to make a payment under any
Lender Letter of Credit; (g) for the credit of the proceeds of any drawing under
any Lender Letter of Credit; and (h) for any consequences arising from causes
beyond the control of Agent or any Lender as the case may be. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or any Lender's
rights or powers hereunder.
(3) LIABILITY. In furtherance and extension of and not in
limitation of, the specific provisions herein above set forth, any action taken
or omitted by Agent or any Lender under or in connection with any Lender Letter
of Credit, if taken or omitted in good faith, shall not put Agent or any Lender
under any resulting liability to Borrower.
19
28
2.2 INTEREST.
(A) RATE OF INTEREST. The Loans and all other Obligations
shall bear interest from the date such Loans are made or such other Obligations
become due to the date paid at a rate per annum equal to (i) in the case of Base
Rate Loans and other Obligations for which no other interest rate is specified,
the Base Rate plus one-half of one percent (.50%) and (ii) in the case of LIBOR
Loans, LIBOR plus two and three quarters percent (2.75%) (the "INTEREST RATE").
The applicable basis for determining the rate of interest shall be selected by
Borrower initially at the time a Notice of Borrowing is given pursuant to
subsection 2.1(C). The basis for determining the interest rate with respect to
any Loan or a portion of any Loan may be changed from time to time pursuant to
subsection 2.2(E). If on any day a Loan or a portion of any Loan is outstanding
with respect to which notice has not been delivered to Agent in accordance with
the terms of this Agreement specifying the basis for determining the rate of
interest, then for that day that Loan or portion thereof shall bear interest
determined by reference to the Base Rate.
After the occurrence and during the continuance of an Event of Default
(i) the Loans and all other Obligations shall, at the option of Requisite
Lenders, bear interest at a rate per annum equal to two percent (2%) plus the
applicable Interest Rate (the "DEFAULT RATE"), (ii) each LIBOR Loan shall
automatically convert to a Base Rate Loan at the end of any applicable Interest
Period and (iii) no Loans may be converted to LIBOR Loans.
(B) INTEREST PERIODS. In connection with each LIBOR Loan,
Borrower shall elect an interest period (each an "INTEREST PERIOD") to be
applicable to such Loan, which Interest Period shall be either a one, two, three
or six month period; provided that:
(1) the initial Interest Period for any LIBOR Loan
shall commence on the Funding Date of such Loan;
(2) in the case of successive Interest Periods, each
successive Interest Period shall commence on the day on which the immediately
preceding Interest Period expires;
(3) if an Interest Period expiration date is not a
Business Day, such Interest Period shall expire on the next succeeding Business
Day; provided that if any Interest Period expiration date is not a Business Day
but is a day of the month after which no further Business Day occurs in such
month, such Interest Period shall expire on the immediately preceding Business
Day;
(4) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to part (5), below, end on the last Business Day of a calendar
month;
(5) no Interest Period shall extend beyond the
Termination Date; and
20
29
(6) there shall be no more than five (5) Interest
Periods relating to LIBOR Loans outstanding at any time.
(C) COMPUTATION AND PAYMENT OF INTEREST. Interest on the Loans
and all other Obligations shall be computed on the daily principal balance on
the basis of a 360 day year for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of funding
of the Loan or the first day of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted from a LIBOR Loan, the date of
conversion of such LIBOR Loan to such Base Rate Loan, shall be included; and the
date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan, or with respect to a Base Rate Loan being converted to
a LIBOR Loan, the date of conversion of such Base Rate Loan to such LIBOR Loan,
shall be excluded; provided that if a Loan is repaid on the same day on which it
is made, one day's interest shall be paid on that Loan. Interest on Base Rate
Loans and all other Obligations (other than LIBOR Loans) shall be payable to
Agent for benefit of Lenders monthly in arrears on the first day of each month,
on the date of any prepayment of Loans, and at maturity, whether by acceleration
or otherwise. Interest on LIBOR Loans shall be payable to Agent for benefit of
Lenders on the last day of the applicable Interest Period for such Loan, on the
date of any prepayment of the Loans, and at maturity, whether by acceleration or
otherwise. In addition, for each LIBOR Loan having an Interest Period longer
than three (3) months, interest accrued on such Loan shall also be payable on
the last day of each three (3) month interval during such Interest Period.
(D) INTEREST LAWS. Notwithstanding any provision to the
contrary contained in this Agreement or any other Loan Document, Borrower shall
not be required to pay, and neither Agent nor any Lender shall be permitted to
collect, any amount of interest in excess of the maximum amount of interest
permitted by applicable law ("EXCESS INTEREST"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to have been
provided for in this Agreement or in any other Loan Document, then in such
event: (1) the provisions of this subsection shall govern and control; (2)
neither Borrower nor any other Loan Party shall be obligated to pay any Excess
Interest; (3) any Excess Interest that Agent or any Lender may have received
hereunder shall be, at such Lender's option, (a) applied as a credit against the
outstanding principal balance of the Obligations or accrued and unpaid interest
(not to exceed the maximum amount permitted by law), (b) refunded to the payor
thereof, or (c) any combination of the foregoing; (4) the interest rate(s)
provided for herein shall be automatically reduced to the maximum lawful rate
allowed from time to time under applicable law (the "MAXIMUM RATE"), and this
Agreement and the other Loan Documents shall be deemed to have been and shall
be, reformed and modified to reflect such reduction; and (5) neither Borrower
nor any Loan Party shall have any action against Agent or any Lender for any
damages arising out of the payment or collection of any Excess Interest.
Notwithstanding the foregoing, if for any period of time interest on any
Obligations is calculated at the Maximum Rate rather than the applicable rate
under this Agreement, and thereafter such applicable rate becomes less than the
Maximum Rate, the rate of interest payable on such Obligations shall remain at
the Maximum Rate until each Lender shall have received the amount of interest
which such Lender would have received during such period on such Obligations had
the rate of interest not been limited to the Maximum Rate during such period.
21
30
(E) CONVERSION OR CONTINUATION. Subject to the provisions of
subsection 2.2(A) Borrower shall have the option to (1) convert at any time all
or any part of outstanding Loans equal to $500,000 and integral multiples of
$100,000 in excess of that amount from Base Rate Loans to LIBOR Loans or (2)
upon the expiration of any Interest Period applicable to a LIBOR Loan, to (a)
continue all or any portion of such LIBOR Loan equal to $500,000 and integral
multiplies of $100,000 in excess of that amount as a LIBOR Loan or (b) convert
all or any portion of such LIBOR Loan to a Base Rate Loan. The succeeding
Interest Period(s) of such continued or converted Loan shall commence on the
last day of the Interest Period of the Loan to be continued or converted;
provided that no outstanding Loan may be continued as, or be converted into, a
LIBOR Loan, when any Event of Default or Default has occurred and is continuing.
Borrower shall deliver a notice of conversion/continuation to
Agent no later than noon (Central time) at least three (3) Business Days in
advance of the proposed conversion/ continuation date ("NOTICE OF
CONVERSION/CONTINUATION"). A Notice of Conversion/Continuation shall certify:
(1) the proposed conversion/continuation date (which shall be a Business Day);
(2) the amount of the Loan to be converted/continued; (3) the nature of the
proposed conversion/continuation; (4) in the case of conversion to, or a
continuation of, a LIBOR Loan, the requested Interest Period; and (5) that no
Default or Event of Default has occurred and is continuing or would result from
the proposed conversion/continuation.
In lieu of delivering the Notice of Conversion/Continuation,
Borrower may give Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2(E); provided that such notice
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Agent on or before the proposed
conversion/continuation date.
Neither Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above that Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Borrower or for otherwise acting in good
faith under this subsection 2.2(E) and upon conversion/continuation by Lenders
in accordance with this Agreement pursuant to any telephonic notice, Borrower
shall have effected such conversion or continuation, as the case may be,
hereunder.
2.3 FEES.
(A) UNUSED LINE FEE. Borrower shall pay to Agent, for the
benefit of Lenders, a fee in an amount equal to the Revolving Loan Commitment
less the sum of the average daily balance of the Revolving Loan plus the average
daily face amount of the Lender Letter of Credit Reserve during the preceding
month multiplied by one-half of one percent (.50%) per annum, such fee to be
calculated on the basis of a 360 day year for the actual number of days elapsed
and to be payable monthly in arrears on the first day of the first month
following the Closing Date and the first day of each month thereafter.
22
31
(B) LETTER OF CREDIT FEES. Borrower shall pay to Agent for the
account of Lenders, a fee with respect to the Lender Letters of Credit in the
amount of the average daily amount of Letter of Credit Liability outstanding
during such month multiplied by two percent (2%) per annum. Such fees will be
calculated on the basis of a 360 day year for the actual number of days elapsed
and will be payable monthly in arrears on the first day of each month. Borrower
shall also reimburse Agent for any and all fees and expenses, if any, paid by
Agent or any Lender to the issuer of any Bank Letter of Credit.
(C) FIELD EXAMINATION FEES. Borrower agrees to pay to Agent
for its own account a field examination fee for each inspection equal to $750
per examiner per day or any portion thereof, excluding all full days spent by
Agent traveling to or from Borrower's locations, together with out of pocket
expenses. So long as no Event of Default is continuing, Borrower shall not be
liable for more than $5,000 in the aggregate for each field examination.
(D) OTHER FEES AND EXPENSES. Borrower shall pay to Agent, for
its own account, all (1) payments due under and pursuant to the Fee Letter, and
(2) charges for returned items and all other bank charges incurred by Agent, as
well as Agent's standard wire transfer charges for each wire transfer made under
this Agreement.
2.4 PAYMENTS AND PREPAYMENTS.
(A) MANNER AND TIME OF PAYMENT. In its sole discretion, Agent
may charge interest and other amounts payable hereunder to the Revolving Loan,
all as set forth on Agent's books and records. If Agent elects to xxxx Borrower
for any amount due hereunder, such amount shall be immediately due and payable
with interest thereon as provided herein. All payments made by Borrower with
respect to the Obligations shall be made without deduction, defense, setoff or
counterclaim. All payments to Agent hereunder shall, unless otherwise directed
by Agent, be made to Agent's Account or in accordance with subsection 5.6.
Proceeds remitted to Agent's Account shall be credited to the Obligations on the
Business Day such proceeds were received; provided, however, for the purpose of
calculating interest on the Obligations, such funds shall be deemed received on
the first Business Day thereafter, unless such proceeds were remitted to Agent's
Account by wire transfer of immediately available funds, in which case, for
purposes of calculating interest on the Obligations, such funds shall be deemed
received on the Business Day received.
(B) MANDATORY PREPAYMENTS.
(1) OVERADVANCE. At any time that the Revolving Loan
exceeds the Maximum Revolving Loan Amount, Borrower shall, immediately repay the
Revolving Loan to the extent necessary to reduce the principal balance to an
amount equal to or less than the Maximum Revolving Loan Amount.
(2) PROCEEDS OF ASSET DISPOSITIONS. At such time that
the sum of all proceeds of all Asset Dispositions (net of reasonable expenses
incurred in such transactions) received by Borrower in any Fiscal Year exceeds
$100,000, and such proceeds have not been immediately
23
32
reinvested in like assets in which Agent has been granted a first priority
perfected security interest, then any such net proceeds received in excess of
such amount shall, immediately upon receipt thereof, be used to repay the
Obligations, to the extent any Obligations are then outstanding, in an amount
equal to the lesser of such excess net proceeds or the outstanding Obligations.
(C) VOLUNTARY PREPAYMENTS AND REPAYMENTS. Borrower may, at any
time upon not less than three (3) Business Days' prior notice to Agent,
terminate the Revolving Loan Commitment and thereupon shall pay in full all of
the Obligations and shall cause Agent and each Lender to be released from all
liability under any Lender Letters of Credit or, at Agent's option, Borrower
will deposit cash collateral with Agent in an amount equal to 105% of the Letter
of Credit Liability that will remain outstanding after prepayment or repayment,
all under and pursuant to such instruments and documents in form and substance
satisfactory to Agent.
(D) PAYMENTS ON BUSINESS DAYS. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, the
payment may be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the amount of interest or fees due
hereunder.
2.5 TERM OF THIS AGREEMENT. This Agreement shall be effective until
April 28, 2002 (the "TERMINATION DATE"). The Commitments shall (unless earlier
terminated pursuant to this Agreement) terminate upon the earlier of (i) the
occurrence of an event specified in subsection 8.3 or (ii) the Termination Date.
Upon termination in accordance with subsection 8.3 or on the Termination Date,
all Obligations shall become immediately due and payable without notice or
demand. Notwithstanding any termination, until all Obligations have been fully
paid and satisfied, Agent, on behalf of Lenders, shall be entitled to retain
security interests in and liens upon all Collateral, and even after payment of
all Obligations hereunder, Borrower's obligation to indemnify Agent and each
Lender in accordance with the terms hereof shall continue.
2.6 STATEMENTS. Agent shall render a monthly statement of account to
Borrower within twenty (20) days after the end of each month. Such statement of
account shall constitute an account stated unless Borrower makes written
objection thereto within thirty (30) days from the date such statement is mailed
to Borrower. Borrower promises to pay all of its Obligations as such amounts
become due or are declared due pursuant to the terms of this Agreement.
2.7 GRANT OF SECURITY INTEREST. To secure the payment and performance
of the Obligations, including all renewals, extensions, restructurings and
refinancings of any or all of the Obligations, Borrower hereby grants to Agent,
on behalf of Lenders, a continuing security interest, lien and mortgage in and
to all right, title and interest of Borrower in the following property of
Borrower, whether now owned or existing or hereafter acquired or arising and
regardless of where located (all being collectively referred to as the
"COLLATERAL"): (A) Accounts, and all guaranties and security therefor, and all
goods and rights represented thereby or arising therefrom including the rights
of stoppage in transit, replevin and reclamation; (B) Inventory; (C) general
intangibles (as defined in the UCC); (D) documents (as defined in the UCC) or
other receipts covering, evidencing or representing goods; (E) instruments (as
defined in the UCC); (F) chattel paper (as defined in the
24
33
UCC); (G) Equipment, including Laundry Equipment; (H) Additional Mortgaged
Property; (I) Leased Property; (J) Intellectual Property; (K) all deposit
accounts of Borrower maintained with any bank or financial institution; (L) all
cash and other monies and property of Borrower in the possession or under the
control of Agent, any Lender or any participant; (M) all books, records, ledger
cards, files, correspondence, computer programs, tapes, disks and related data
processing software that at any time evidence or contain information relating to
any of the property described above or are otherwise necessary or helpful in the
collection thereof or realization thereon; and (N) all products and proceeds of
all or any of the property described above, including, without limitation, the
proceeds of any insurance policies covering any of the above described property.
2.8 CAPITAL ADEQUACY AND OTHER ADJUSTMENTS. In the event Agent or any
Lender shall have determined that the adoption after the date hereof of any law,
treaty, governmental (or quasi-governmental) rule, regulation, guideline or
order regarding capital adequacy, reserve requirements or similar requirements
or compliance by Agent or such Lender or any corporation controlling Agent or
such Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law and
whether or not failure to comply therewith would be unlawful) from any central
bank or governmental agency or body having jurisdiction does or shall have the
effect of increasing the amount of capital, reserves or other funds required to
be maintained by Agent or such Lender or any corporation controlling Agent or
such Lender and thereby reducing the rate of return on Agent's or such Lender's
or such corporation's capital as a consequence of its obligations hereunder,
then Borrower shall from time to time within fifteen (15) days after notice and
demand (which demand shall be accompanied by a statement setting forth in
reasonable detail the basis of such demand) from such Lender (with a copy to
Agent) or Agent (together with the certificate referred to in the next sentence)
pay to Agent or such Lender additional amounts sufficient to compensate Agent or
such Lender for such reduction to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's Commitment. A certificate as to the amount of such cost and showing the
basis of the computation of such cost submitted by Agent or any Lender to
Borrower shall, absent manifest error, be final, conclusive and binding for all
purposes.
2.9 TAXES.
(A) NO DEDUCTIONS. Any and all payments or reimbursements made
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto; excluding, however, the
following: taxes imposed on the net income of any Lender or Agent by the
jurisdiction under the laws of which Agent or such Lender is organized or doing
business or any political subdivision thereof and taxes imposed on its net
income by the jurisdiction of Agent's or such Lender's applicable lending office
or any political subdivision thereof (all such taxes, levies, imposts,
deductions, charges or withholdings and all liabilities with respect thereto
excluding such taxes imposed on net income, herein "TAX LIABILITIES"). If
Borrower shall be required by law to deduct any such Tax Liabilities from or in
respect of any sum payable hereunder to Agent or any Lender, then the sum
payable hereunder shall be increased as may be necessary so that, after making
all
25
34
required deductions, Agent or such Lender receives an amount equal to the sum it
would have received had no such deductions been made.
(B) CHANGES IN TAX LAWS. In the event that, subsequent to the
Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by Lender with any request or directive (whether or
not having the force of law) from any governmental authority, agency or
instrumentality:
(1) does or shall subject Agent or any Lender to any
tax of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or Lender Letters of Credit issued hereunder, or
change the basis of taxation of payments to Agent or such Lender of principal,
fees, interest or any other amount payable hereunder (except for net income
taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally
by federal, state or local taxing authorities with respect to interest or
commitment or other fees payable hereunder or changes in the rate of tax on the
overall net income of Agent or such Lender); or
(2) does or shall impose on Agent or any Lender any
other condition or increased cost in connection with the transactions
contemplated hereby or participations herein; and the result of any of the
foregoing is to increase the cost to Agent or such Lender of issuing any Lender
Letter of Credit or making or continuing any Loan hereunder, as the case may be,
or to reduce any amount receivable hereunder,
then, in any such case, Borrower shall promptly pay to Agent or such Lender,
within ten (10) days after its demand therefor (which demand shall be
accompanied by a statement setting forth in reasonable detail the basis of such
demand), any additional amounts necessary to compensate Agent or such Lender, on
an after-tax basis, for such additional cost or reduced amount receivable, to
the extent reasonably determined by Agent or such Lender to be attributable to
this Agreement or the other Loan Documents. If Agent or any Lender becomes
entitled to claim any additional amounts pursuant to this subsection, it shall
promptly notify Borrower of the event by reason of which Agent or such Lender
has become so entitled. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower
shall, absent manifest error, be final, conclusive and binding for all purposes.
(C) FOREIGN LENDERS. Each Lender organized under the laws of a
jurisdiction outside the United States (a "FOREIGN LENDER") as to which payments
to be made under this Agreement or under the Notes) is exempt from United States
withholding tax or is subject to United States withholding tax at a reduced rate
under an applicable statute or tax treaty shall provide to Borrower and Agent
(i) a properly completed and executed Internal Revenue Service Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the
Internal Revenue Service of the United States certifying as to such Foreign
Lender's entitlement to such exemption or reduced rate of withholding with
respect to payments to be made to such Foreign Lender under this Agreement, or
under the Notes (a "CERTIFICATE OF EXEMPTION"), or (ii) a letter from any such
Foreign Lender stating that it is not entitled to any such exemption or reduced
rate of withholding
26
35
(a "LETTER OF NON-EXEMPTION"). Prior to becoming a Lender under this Agreement
and within fifteen (15) days after a reasonable written request of Borrower or
Agent from time to time thereafter, each Foreign Lender that becomes a Lender
under this Agreement shall provide a Certificate of Exemption or a Letter of
Non-Exemption to Borrower and Agent.
If a Foreign Lender is entitled to an exemption with respect
to payments to be made to such Foreign Lender under this Agreement (or to a
reduced rate of withholding) and does not provide a Certificate of Exemption to
Borrower and Agent within the time periods set forth in the preceding paragraph,
Borrower shall withhold taxes from payments to such Foreign Lender at the
applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding; provided, however, that all
such withholding shall cease upon delivery by such Foreign Lender of a
Certificate of Exemption to Borrower and Agent.
2.10 REQUIRED TERMINATION AND PREPAYMENT. If on any date any Lender
shall have reasonably determined (which determination shall be final and
conclusive and binding upon all parties) that the making or continuation of its
LIBOR Loans has become unlawful or impossible due to compliance by Lender in
good faith with any law, governmental rule, regulation or order (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful), then, and in any such event, that Lender shall promptly give notice
(by telephone confirmed in writing) to Borrower and Agent of that determination
(which notice shall be accompanied by a statement setting forth in reasonable
detail the basis of such determination). Subject to prior withdrawal of a Notice
of Borrowing or a Notice of Conversion/Continuation or prepayment of LIBOR Loans
as contemplated by subsection 2.11, the obligation of Lender to make or maintain
its LIBOR Loans during any such period shall be terminated at the earlier of the
termination of the Interest Period then in effect or when required by law and
Borrower shall no later than the termination of the Interest Period in effect at
the time any such determination pursuant to this subsection 2.10 is made or,
earlier when required by law, repay or prepay LIBOR Loans together with all
interest accrued thereon or convert LIBOR Loans to Base Rate Loans.
2.11 OPTIONAL PREPAYMENT/REPLACEMENT OF AGENT OR LENDERS IN RESPECT OF
INCREASED COSTS. Within fifteen (15) days after receipt by Borrower of written
notice and demand from Agent or any Lender (an "AFFECTED LENDER") for payment of
additional costs as provided in subsection 2.8, Borrower may, at its option,
notify Agent and such Affected Lender of its intention to do one of the
following:
(A) Borrower may obtain, at Borrower's expense, a replacement
Lender ("REPLACEMENT LENDER") for such Affected Lender, which Replacement Lender
shall be reasonably satisfactory to Agent. In the event Borrower obtains a
Replacement Lender within ninety (90) days following notice of its intention to
do so, the Affected Lender shall sell and assign its Loans and Commitments to
such Replacement Lender provided that Borrower has reimbursed such Affected
Lender for its increased costs for which it is entitled to reimbursement under
this Agreement through the date of such sale and assignment.
27
36
(B) Borrower may prepay in full all outstanding Obligations
owed to such Affected Lender and terminate such Affected Lender's Commitments.
Borrower shall, within ninety (90) days following notice of its intention to do
so, prepay in full all outstanding Obligations owed to such Affected Lender
(including such Affected Lender's increased costs for which it is entitled to
reimbursement under this Agreement through the date of such prepayment) and
terminate such Affected Lender's Commitments.
2.12 COMPENSATION. Borrower shall compensate each Lender, upon written
request by such Lender (which request shall set forth in reasonable detail the
basis for requesting such amounts and which shall, absent manifest error, be
conclusive and binding upon all parties hereto), for all reasonable losses,
expenses and liabilities including, without limitation, any loss sustained by
such Lender in connection with the re-employment of such funds: (i) if for any
reason (other than a default by such Lender) a borrowing of any LIBOR Loan does
not occur on a date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or
Conversion/Continuation; (ii) if any prepayment of any of its LIBOR Loans occurs
on a date that is not the last day of an Interest Period applicable to that Loan
(other than a prepayment made pursuant to subsection 2.10); (iii) if any
prepayment of any of its LIBOR Loans is not made on any date specified in a
notice of prepayment given by Borrower; or (iv) as a consequence of any other
default by Borrower to repay its LIBOR Loans when required by the terms of this
Agreement; provided that during the period while any such amounts have not been
paid, such Lender shall reserve an equal amount from amounts otherwise available
to be borrowed under the Revolving Loan.
2.13 BOOKING OF LIBOR LOANS. Each Lender may make, carry or transfer
LIBOR Loans at, to, or for the account of, any of its branch offices or the
office of an affiliate of Lender.
2.14 ASSUMPTIONS CONCERNING FUNDING OF LIBOR LOANS. Calculation of all
amounts payable to any Lender under subsection 2.12 shall be made as though such
Lender had actually funded its relevant LIBOR Loan through the purchase of a
LIBOR deposit bearing interest at LIBOR in an amount equal to the amount of that
LIBOR Loan and having maturity comparable to the relevant Interest Period and
through the transfer of such LIBOR deposit from an offshore office to a domestic
office in the United States of America; provided, however, that each Lender may
fund each of its LIBOR Loans in any manner it sees fit and the foregoing
assumption shall be utilized only for the calculation of amounts payable under
subsection 2.12.
SECTION 3. CONDITIONS TO LOANS
3.1 CONDITIONS TO LOANS. The obligations of Agent and each Lender to
make Loans and the obligation of Agent or any Lender to issue Lender Letters of
Credit on the Closing Date and on each Funding Date are subject to satisfaction
of all of the conditions set forth below.
(A) CLOSING DELIVERIES. Agent shall have received, in form and
substance satisfactory to Agent, all documents, instruments and information
identified on Schedule 3.1(A) and
28
37
all other agreements, notes, certificates, orders, authorizations, financing
statements, mortgages and other documents which Agent may at any time reasonably
request.
(B) SECURITY INTERESTS. Agent shall have received satisfactory
evidence that all security interests and liens granted to Agent for the benefit
of Lenders pursuant to this Agreement or the other Loan Documents have been duly
perfected and constitute first priority liens on the Collateral, subject only to
Permitted Encumbrances.
(C) CASH ON HAND. Agent shall have received evidence
satisfactory to it that after giving effect to the consummation of the
transactions contemplated hereunder on the Closing Date (including, without
limitation, the repayment of all Indebtedness of Borrower outstanding
immediately prior to the issuance of the Senior Unsecured Notes) and the payment
by Borrower of all costs, fees and expenses relating thereto, Borrower has not
less than $40,000,000 in unrestricted cash on hand (exclusive of any Revolving
Advances made under this Agreement).
(D) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein and in the other Loan Documents shall be true,
correct and complete in all material respects on and as of that Funding Date to
the same extent as though made on and as of that date, except for any
representation or warranty limited by its terms to a specific date and taking
into account any amendments to the Schedules or Exhibits as a result of any
disclosures made by Borrower to Agent after the Closing Date and approved by
Agent.
(E) FEES. With respect to Loans or Lender Letters of Credit to
be made or issued on the Closing Date, Borrower shall have paid the fees payable
on the Closing Date referred to in Section 2.3.
(F) NO DEFAULT. No event shall have occurred and be continuing
or would result from the consummation of the requested borrowing or notice
requesting issuance of a Lender Letter of Credit that would constitute an Event
of Default or a Default.
(G) PERFORMANCE OF AGREEMENTS. Each Loan Party shall have
performed in all material respects all agreements and satisfied all conditions
which any Loan Document provides shall be performed by it on or before that
Funding Date.
(H) NO PROHIBITION. No order, judgment or decree of any court,
arbitrator or governmental authority shall purport to enjoin or restrain Agent
or any Lender from making any Loans or issuing any Lender Letters of Credit.
(I) NO LITIGATION. There shall not be pending or, to the
knowledge of Borrower, threatened, any action, charge, claim, demand, suit,
proceeding, petition, governmental investigation or arbitration by, against or
affecting any Loan Party or any of its Subsidiaries or any property of any Loan
Party or any of its Subsidiaries, involving an amount (1) in excess of $250,000
with respect to any individual action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration or (2) in excess of $500,000
in the aggregate with respect to any action,
29
38
charge, claim, demand, suit, proceeding, petition, governmental investigation or
arbitration taken together with all other actions, charges, claims, demands,
suits, proceedings, petitions, governmental investigations and arbitrations (in
either case not adequately covered by insurance as to which the insurance
company has acknowledged coverage) that has not been disclosed to Agent by
Borrower in writing, and there shall have occurred no development in any such
action, charge, claim, demand, suit, proceeding, petition, governmental
investigation or arbitration that, in the opinion of Agent, would reasonably be
expected to have a Material Adverse Effect.
(J) SENIOR UNSECURED NOTES. Agent shall be satisfied that
Borrower shall have received a sum in cash in the aggregate amount of not less
than $100,000,000 (prior to the payment by Borrower of all costs, fees and
expenses relating thereto) in consideration of its issuance of Units consisting
in the aggregate of $144,990,000 principal amount at maturity, 12 3/4% Senior
Discount Notes of Borrower due 2005, Series A, and warrants to purchase 26,661
Shares of common stock, $0.01 par value, at $.01 per share, of Borrower
(collectively, the "SENIOR UNSECURED NOTES") issued under an Indenture dated as
of April 29, 1998 (as amended, supplemented or otherwise modified from time to
time to the extent, but only to the extent, permitted under subsection 7.7, the
"SENIOR UNSECURED NOTES INDENTURE") between Borrower and Norwest Bank Minnesota,
N.A., as Trustee.
(K) SENIOR UNSECURED NOTES DOCUMENTS. Agent shall have
received copies of the Senior Unsecured Note Documents, certified as true and
complete and in full force and effect by an officer of Borrower, and such
documents shall be reasonably satisfactory to Agent.
(L) COLLATERAL VERIFICATION AND AUDIT PROCEDURE REPORT. Agent
shall have received from Price Waterhouse LLP a Collateral Verification and
Audit Procedure Report prepared by Price Waterhouse LLP, at Borrower's expense,
and otherwise satisfactory in form and substance to Agent.
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce Agent and each Lender to enter into this Agreement, to make
Loans and to issue Lender Letters of Credit, Borrower represents and warrants to
Agent and each Lender that the following statements are and will be true,
correct and complete:
4.1 ORGANIZATION, POWERS, CAPITALIZATION.
(A) ORGANIZATION AND POWERS. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and qualified to do business in all states
where such qualification is required except where failure to be so qualified
could not be reasonably expected to have a Material Adverse Effect. Each of the
Loan Parties has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and proposed to be
conducted and to enter into each Loan Document.
30
39
(B) CAPITALIZATION. The authorized capital stock of each of
the Loan Parties is as set forth on Schedule 4.1(B). All issued and outstanding
shares of capital stock of each of the Loan Parties are duly authorized and
validly issued, fully paid, nonassessable, free and clear of all Liens and such
shares were issued in all material respects in compliance with all applicable
state and federal laws concerning the issuance of securities. Schedule 4.1(B)
sets forth the largest registered owners of the common stock of Borrower (on a
fully diluted basis) aggregating no less than fifty-one percent (51%) of such
capital stock (on a fully diluted basis). No shares of the capital stock of any
Loan Party, other than those described above, are issued and outstanding. There
are no preemptive or other outstanding rights, options, warrants, conversion
rights or similar agreements or understandings for the purchase or acquisition
from any Loan Party, of any shares of capital stock or other securities of any
such entity.
4.2 AUTHORIZATION OF BORROWING, NO CONFLICT. Borrower has the corporate
power and authority to incur the Obligations and to grant security interests in
the Collateral. On the Closing Date, the execution, delivery and performance of
the Loan Documents by each Loan Party signatory thereto will have been duly
authorized by all necessary corporate and stockholder action. The execution,
delivery and performance by each Loan Party of each Loan Document to which it is
a party and the consummation of the transactions contemplated by this Agreement
and the other Loan Documents by each Loan Party do not contravene and will not
be in contravention of any applicable law, the corporate charter or bylaws of
any Loan Party or any agreement or order by which any Loan Party or any Loan
Party's property is bound. This Agreement is, and the other Loan Documents,
including the Notes when executed and delivered will be, the legally valid and
binding obligations of the applicable Loan Parties respectively, each
enforceable against the Loan Parties, as applicable, in accordance with their
respective terms.
4.3 FINANCIAL CONDITION. All financial statements concerning Borrower
which have been or will hereafter be furnished by Borrower to Agent or any
Lender pursuant to this Agreement have been or will be prepared in accordance
with GAAP consistently applied throughout the periods involved (except as
disclosed therein) and do or will present fairly the financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended. The Pro Forma was prepared by Borrower
based on the unaudited balance sheet of Borrower dated March 22, 1998. The
Projections delivered and to be delivered have been and will be prepared by
Borrower in light of the past operations of the business of Borrower, and such
Projections represent and will represent the good faith estimate of Borrower and
its senior management concerning the most probable course of its business as of
the date such Projections are prepared and delivered.
4.4 INDEBTEDNESS AND LIABILITIES. As of the Closing Date, Borrower does
not have (a) any Indebtedness except as reflected on the Pro Forma; or (b) any
Liabilities other than as reflected on the Pro Forma or as incurred in the
ordinary course of business following the date of the Pro Forma.
4.5 LAUNDRY EQUIPMENT WARRANTIES. Schedule 4.7 sets forth a list of the
locations where all Borrower's present Laundry Equipment is kept. All Laundry
Equipment is, and will be,
31
40
owned by Borrower free and clear of all liens and security interests in favor of
any Person other than Agent, except as expressly permitted hereunder. All
Laundry Equipment hereafter acquired will be kept at the location or locations
shown on Schedule 4.7 except as permitted by this Agreement. Borrower shall at
all times hereafter keep correct and accurate records itemizing and describing
the location, kind and type of Laundry Equipment, the cost therefor and
accumulated depreciation thereof and retirements, sales, or other dispositions
thereof, all of which records shall be available for examination on demand to
any of the officers, employees or agents of Agent. To the best of Borrower's
knowledge, no Person owning or operating any Laundry Equipment necessary for the
operation of Borrower's business has used, operated or maintained the same in a
manner which, whether now or hereafter, could result in the cancellation or
termination of the right of Borrower to use the same or which could result in
any material liability of Borrower for damages in connection therewith.
4.6 NAMES. Schedule 4.6 sets forth all names, trade names, fictitious
names and business names under which Borrower currently conducts business or has
at any time during the past five years conducted business.
4.7 LOCATIONS; FEIN. Schedule 4.7 sets forth the location of Borrower's
principal place of business, the location of Borrower's books and records, the
location of all other offices of Borrower, the location of all Facilities, and
all Collateral locations, and such locations are Borrower's sole locations for
its business and the Collateral. Borrower's federal employer identification
number is set forth on the signature page hereof.
4.8 TITLE TO PROPERTIES; LIENS. Borrower has good, sufficient and legal
title, subject to Permitted Encumbrances, to all its respective material
properties and assets. Except for Permitted Encumbrances, all such properties
and assets are free and clear of Liens. To the best knowledge of Borrower after
due inquiry, there are no actual, threatened or alleged defaults with respect to
any leases of real property under which Borrower is lessee or lessor which would
have a Material Adverse Effect.
4.9 LITIGATION; ADVERSE FACTS. There are no judgments outstanding
against Borrower or affecting any property of Borrower nor is there any action,
charge, claim, demand, suit, proceeding, petition, governmental investigation or
arbitration now pending or, to the best knowledge of Borrower after due inquiry,
threatened against or affecting Borrower or any property of Borrower which could
reasonably be expected to result in any Material Adverse Effect. Borrower has
not received any opinion or memorandum or legal advice from legal counsel to the
effect that it is exposed to any liability which could reasonably be expected to
result in any Material Adverse Effect.
4.10 PAYMENT OF TAXES. All material tax returns and reports of Borrower
required to be filed by it have been timely filed, and all taxes, assessments,
fees and other governmental charges upon Borrower and upon its properties,
assets, income and franchises which are shown on such returns as due and payable
have been paid when due and payable. As of the Closing Date, Borrower has
received no notice that any of its United States income tax returns are under
audit. No tax liens
32
41
have been filed and no claims (except as otherwise permitted by Section 5.9) are
being asserted with respect to any such taxes. The charges, accruals and
reserves on the books of Borrower in respect of any taxes or other governmental
charges are in accordance with GAAP.
4.11 PERFORMANCE OF AGREEMENTS. None of the Loan Parties is in default
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any contractual obligation of any such
Person, and no condition exists that, with the giving of notice or the lapse of
time or both, would constitute such a default which could reasonably be expected
to have a Material Adverse Effect.
4.12 EMPLOYEE BENEFIT PLANS. Borrower and each ERISA Affiliate is in
compliance in all material respects with all applicable provisions of ERISA, the
IRC and all other applicable laws and the regulations and interpretations
thereof with respect to all Employee Benefit Plans. No material liability has
been incurred by Borrower, or any ERISA Affiliate which remains unsatisfied for
any funding obligation, taxes or penalties with respect to any Employee Benefit
Plan.
4.13 INTELLECTUAL PROPERTY. Borrower owns, is licensed to use or
otherwise has the right to use, all Intellectual Property used in or necessary
for the conduct of its business as currently conducted, and all such
Intellectual Property is identified on Schedule 4.13.
4.14 BROKER'S FEES. No broker's or finder's fee or commission will be
payable by or on behalf of Borrower with respect to any of the transactions
contemplated hereby.
4.15 ENVIRONMENTAL COMPLIANCE. Each Loan Party has been and is
currently in compliance with all applicable Environmental Laws, including
obtaining and maintaining in effect all permits, licenses or other
authorizations required by applicable Environmental Laws as such Laws relate to
the Facilities operated by any Loan Party as of the date hereof. To each Loan
Party's knowledge, there are no claims, liabilities, investigations, litigation,
administrative proceedings, whether pending or threatened against Borrower, or
judgments or orders relating to any Hazardous Materials asserted or threatened
against any Loan Party or relating to any real property currently or formerly
owned, leased or operated by any Loan Party, except as identified on Schedule
4.15.
4.16 SOLVENCY. After giving effect to the transactions contemplated by
the Loan Documents, and as of, and from and after, the date of this Agreement,
Borrower: (a) owns and will own assets the fair salable value of which are (i)
greater than the total amount of its liabilities (including contingent
liabilities) and (ii) greater than the amount that will be required to pay the
probable liabilities of Borrower as they mature; (b) has capital that is not
unreasonably small in relation to its business as presently conducted or any
contemplated or undertaken transaction; and (c) does not intend to incur and
does not believe that it will incur debts beyond its ability to pay such debts
as they become due. There is no material fact known to Borrower that has or
could have a Material Adverse Effect and that has not been fully disclosed
herein or in such other documents, certificates and statements furnished to
Agent or Lenders for use in connection with the transactions contemplated
hereby.
33
42
4.17 DISCLOSURE. No representation or warranty of Borrower or any other
Loan Party contained in this Agreement, the financial statements, the other Loan
Documents, or any other document, certificate or written statement furnished to
Agent or any Lender by or on behalf of any such Person for use in connection
with the Loan Documents contains any untrue statement of a material fact or
omitted, omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading in light of the
circumstances in which the same were made. The Projections and pro forma
financial information contained in such materials are based upon good faith
estimates and assumptions believed by such Persons to be reasonable at the time
made, it being recognized by Agent and Lenders that such projections as to
future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected
results. There is no material fact known to Borrower that has had or will have a
Material Adverse Effect and that has not been disclosed herein or in such other
documents, certificates and statements furnished to Agent or any Lender for use
in connection with the transactions contemplated hereby.
4.18 INSURANCE. Borrower maintains adequate insurance policies for
public liability, property damage for its business and properties, product
liability, and business interruption, no notice of cancellation has been
received with respect to such policies and Borrower is in compliance with all
conditions contained in such policies.
4.19 COMPLIANCE WITH LAWS; LICENSES AND APPROVALS. Borrower is not in
violation of any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any domestic or foreign government or any instrumentality
or agency thereof, having jurisdiction over the conduct of its business or the
ownership of its properties, including, without limitation, any violation
relating to any use, release, storage, transport or disposal of any Hazardous
Material, which violation would subject Borrower or any of its officers to
criminal liability or have a Material Adverse Effect and no such violation has
been alleged. Borrower has all necessary licenses, permits and governmental
authorizations, to lease and operate its properties and to carry on its business
as now conducted.
4.20 BANK ACCOUNTS. Schedule 4.20 sets forth the account numbers and
locations of all bank accounts of Borrower.
4.21 SUBSIDIARIES. Borrower has no Subsidiaries.
4.22 EMPLOYEE MATTERS. Except as set forth on Schedule 4.22, (a) no
Loan Party nor any of such Loan Party's employees is subject to any collective
bargaining agreement, (b) no petition for certification or union election is
pending with respect to the employees of any Loan Party and no union or
collective bargaining unit has sought such certification or recognition with
respect to the employees of any Loan Party, and (c) there are no strikes,
slowdowns, work stoppages or controversies pending or, to the best knowledge of
Borrower after due inquiry, threatened between any Loan Party and its respective
employees, other than employee grievances arising in the ordinary course of
business which could reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect. Except as set forth on Schedule 4.22,
Borrower is not subject to an employment contract.
34
43
4.23 GOVERNMENTAL REGULATION. None of the Loan Parties is, or after
giving effect to any Loan will be, subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the Investment
Company Act of 1940 or to any federal or state statute or regulation limiting
its ability to incur indebtedness for borrowed money which statute or regulation
would prohibit Borrower from borrowing or limit or restrict its right to borrow
under this Agreement.
4.24 MATERIAL ADVERSE EFFECT. Since March 22, 1998, no event or change
has occurred that has caused or evidences, and Borrower is not aware of any
incipient change that is reasonably likely to cause or evidence, either
individually or together with all such other events or changes, a Material
Adverse Effect with respect to Borrower.
4.25 SENIOR UNSECURED NOTES DOCUMENTS. The Senior Unsecured Notes
Documents have been duly executed and delivered and are in full force and
effect. The representations and warranties contained in the Senior Unsecured
Notes Documents are true and correct in all respects on the date hereof and will
be true and correct in all respects on the Closing Date, as if made on such
date, and Agent and Lenders shall be entitled to rely upon such representations
and warranties with the same force and effect as if they were incorporated in
this Agreement and made to Agent and each Lender directly as of the date hereof
and the Closing Date. The transactions contemplated by the Senior Unsecured
Notes Documents have been consummated in accordance with and pursuant to the
terms and conditions of the Senior Unsecured Notes Documents (without any waiver
or amendment of any term or condition therein not consented to by Agent and
Lenders) and in compliance with all applicable laws and pursuant to all
necessary approvals.
Borrower may, at any time and from time to time and subject to
subsection 5.13, amend any one or more of the Schedules referred in this Section
4 and any representation or warranty contained herein which refers to any such
Schedule shall from and after the date of any such amendment refer to such
Schedule as so amended, provided, however, that in no event may Borrower amend
any such Schedule if such amendment would reflect or evidence a Default or Event
of Default.
SECTION 5. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any of the Commitments
hereunder shall be in effect and until payment in full of all Obligations and
termination of all Lender Letters of Credit, unless Requisite Lenders shall
otherwise give their prior written consent, Borrower shall perform all covenants
in this Section 5.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. Borrower will maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Borrower will deliver to Agent and each Lender (unless specified to
be delivered solely to Agent) the financial statements and other reports
described below.
35
44
(A) PERIOD FINANCIALS. As soon as available and in any event
within twenty (20) days after the end of each Period, Borrower will deliver (1)
the balance sheet of Borrower as at the end of such Period and the related
statements of income, stockholders' equity and cash flow for such Period and for
the period from the beginning of the then current Fiscal Year to the end of such
Period, and (2) a schedule of the outstanding Indebtedness for borrowed money of
Borrower describing in reasonable detail each such debt issue or loan
outstanding and the principal amount and amount of accrued and unpaid interest
with respect to each such debt issue or loan.
(B) YEAR-END FINANCIALS. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, Borrower will
deliver: (1) the balance sheet of Borrower as at the end of such year and the
related statements of income, stockholders' equity and cash flow for such Fiscal
Year; (2) a schedule of the outstanding Indebtedness of Borrower describing in
reasonable detail each such debt issue or loan outstanding and the principal
amount and amount of accrued and unpaid interest with respect to each such debt
issue or loan; and (3) a report with respect to the financial statements from
Price Waterhouse LLP or another firm of independent certified public accountants
selected by Borrower and reasonably acceptable to Agent, which report shall be
unqualified as to going concern and scope of audit of Borrower and shall state
that (a) such financial statements present fairly the financial position of
Borrower as at the dates indicated and the results of its operations and cash
flow for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years and (b) that the examination by such accountants in
connection with such financial statements has been made in accordance with
generally accepted auditing standards.
(C) ACCOUNTANTS' CERTIFICATION AND REPORTS. Together with each
delivery of financial statements of Borrower pursuant to subsection 5.1(B),
Borrower will deliver (1) a written statement by its independent certified
public accountants (a) stating that the examination has included a review of the
terms of this Agreement as the same relate to accounting matters and (b) stating
whether, in connection with the examination, any condition or event that
constitutes a Default or an Event of Default has come to their attention and, if
such a condition or event has come to their attention, specifying the nature and
period of existence thereof and (2) a letter addressed to Agent and Lenders from
such accountants stating that such accountants have been informed that a primary
intent of Borrower was to have the professional services such accountants
provided to Borrower in preparing their audit report and the letter referred to
in this subsection 5.1(C) benefit or influence Agent and Lenders, and
identifying Agent and Lenders as parties that Borrower has indicated intend to
rely on such professional services provided to Borrower by such accountants.
Promptly upon receipt thereof, Borrower will deliver copies of all significant
reports submitted to Borrower by independent public accountants in connection
with each annual, interim or special audit of the financial statements of
Borrower made by such accountants, including the comment letter submitted by
such accountants to management in connection with their annual audit.
(D) COMPLIANCE CERTIFICATE. Together with the delivery of each
set of financial statements referenced in subparts (A), (B) and (C) of this
subsection 5.1, Borrower will deliver a Compliance Certificate, together with
copies of the calculations and work-up employed to determine Borrower's
compliance or noncompliance with the financial covenants set forth in Section 6.
36
45
(E) BORROWING BASE CERTIFICATES, LAUNDRY EQUIPMENT REPORTS. On
the Closing Date, as at April 19, 1998, and within ten (10) Business Days after,
and as at, the last day of each Period, Borrower shall deliver to Agent: (1) a
Borrowing Base Certificate; (2) a Laundry Equipment Report; and (3) an aged
trial balance of all then existing accounts payable. All such reports shall be
in form and substance satisfactory to Agent.
(F) LEASED PROPERTY REPORTS. Borrower shall, not less than
thirty (30) days prior to (or, with respect to the acquisition of an Acquired
Store, not less than thirty (30) days prior to such acquisition or, if later,
not later than the date on which substantive negotiations with respect to such
acquisition commenced) opening, reopening, or closing a Facility or selling any
Laundry Equipment or moving any Laundry Equipment to a location other than a
Facility (including a location not owned or leased by Borrower), notify Agent
thereof by delivery to Agent of a Leased Property Report in the form of Exhibit
E, which Leased Property Report shall include, as applicable, a description of
the Laundry Equipment to be maintained at such Facility or other location or, if
such Facility is closing, the location to where the Laundry Equipment from such
Facility is being moved or, if Laundry Equipment is being sold, the Net Book
Value of the Laundry Equipment being sold and the location from which it is
being sold. In the event of the opening of a Facility at a location previously
not occupied by Borrower, Borrower shall, at the same time it delivers such
Leased Property Report, deliver to Agent a copy of the Lease covering such
facility, a copy of the Landlord Waiver relating to such lease, executed UCC
financing statements covering the Collateral at such location, in proper form
for recording in the jurisdiction of such location to the extent necessary to
perfect Agent's security interest therein, and an amendment or supplement to
Schedule 1.1(a) to this Agreement as well as to Exhibit A to the Collateral
Assignment of Leases, to add such lease to the description of Leased Property
set forth on such schedules.
(G) MANAGEMENT REPORT. Together with each delivery of
financial statements of Borrower pursuant to subdivisions (A) (on a quarterly
basis only), and (B) of this subsection 5.1, Borrower will deliver a copy of its
Form 10-K or Form 10-Q, as applicable, filed with the Securities and Exchange
Commission for the period covered by such financial statements, each of which
shall include a complete management's discussion and analysis of financial
condition and results of operations. The information above shall be certified by
the chief financial officer of Borrower to the effect that such information
fairly presents the results of operations and financial condition of Borrower as
at the dates and for the periods indicated.
(H) APPRAISALS. From time to time, upon the request of Agent,
Borrower will obtain and deliver to Agent appraisal reports in form and
substance and from appraisers satisfactory to Agent, stating the then current
fair market and orderly liquidation values of all or any portion of the
Collateral specified by Agent. The costs of such appraisal reports shall be
allocated as follows: (a) so long as no Event of Default is continuing, the cost
of one such appraisal report per Loan Year shall be borne by Borrower (which
cost to Borrower shall not exceed $10,000 in any Loan Year) and the cost of all
other appraisal reports which are made during such Loan Year shall be borne by
Lenders, and (b) whenever an Event of Default exists hereunder, the costs of all
appraisal reports shall be borne by Borrower.
37
46
(I) GOVERNMENT NOTICES. Borrower will deliver to Agent
promptly after receipt copies of all notices, requests, subpoenas, inquiries or
other writings received from any governmental agency concerning any Employee
Benefit Plan, the violation or alleged violation of any Environmental Laws, the
storage, use or disposal of any Hazardous Material, the violation or alleged
violation of the Fair Labor Standards Act or Borrower's payment or non-payment
of any taxes including any tax audit.
(J) EVENTS OF DEFAULT, ETC. Promptly upon (but in any event
within five (5) Business Days after) any officer of Borrower obtaining knowledge
of any of the following events or conditions, Borrower shall deliver a
certificate of Borrower's chief executive officer specifying the nature and
period of existence of such condition or event and what action Borrower has
taken, is taking and proposes to take with respect thereto: (1) any condition or
event that constitutes an Event of Default or Default (including, without
limitation, in each case, arising under subdivision (B) of subsection 8.1); (2)
any notice of default that any Person has given to Borrower or any other action
taken with respect to a claimed default which could reasonably be expected to
have a Material Adverse Effect; or (3) any Material Adverse Effect.
(K) TRADE NAMES. Borrower will give Agent at least thirty (30)
days' advance written notice of any change of name or of any new trade name or
fictitious business name. Borrower's use of any trade name or fictitious
business name will be in compliance with all laws regarding the use of such
names.
(L) LOCATIONS. Borrower will give Agent at least thirty (30)
days' advance written notice of any change in Borrower's principal place of
business or any change in the location of its books and records or of any new
location for its books and records. Borrower will give Agent at least thirty
(30) days advance written notice (or, in the case of the acquisition of an
Acquired Store, such shorter period as is provided in subdivision (F) of this
subsection 5.1) of any change in the location of, or new location for, the
Collateral.
(M) BANK ACCOUNTS. Borrower will give Agent prompt notice of
any new bank accounts Borrower intends to establish prior to its opening same.
(N) LITIGATION. Promptly upon any officer of Borrower
obtaining knowledge of (1) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting any Loan Party or
any property of any Loan Party not previously disclosed by Borrower to Agent
involving an amount (i) in excess of $250,000 with respect to any individual
action, suit, proceeding, governmental investigation or arbitration or (ii) in
excess of $500,000 in the aggregate with respect to any action, suit,
proceeding, governmental investigation or arbitration taken together with all
other actions, suits, proceedings, governmental investigations or arbitrations
(in either case not adequately covered by insurance as to which the insurance
company has acknowledged coverage), or (2) any material development in any
action, suit, proceeding, governmental investigation or arbitration at any time
pending against or affecting any Loan Party or any property of any Loan Party
which could reasonably be expected to have a Material Adverse Effect, Borrower
38
47
will promptly give notice thereof to Agent and provide such other information as
may be reasonably available to them to enable Agent and its counsel to evaluate
such matter.
(O) PROJECTIONS. As soon as available and in any event no
later than fifteen (15) days prior to the end of each Fiscal Year of Borrower,
Borrower will deliver Projections of Borrower for the forthcoming three Fiscal
Years, year by year, and for the forthcoming Fiscal Year, Period by Period.
(P) INDEBTEDNESS NOTICES. Borrower shall promptly deliver
copies of all notices given or received by Borrower with respect to actual or
alleged noncompliance with any term or condition related to any Indebtedness
including, without limitation, Indebtedness under the Senior Unsecured Notes.
(Q) OTHER INFORMATION. With reasonable promptness, Borrower
will deliver such other information and data with respect to any Loan Party, or
the Collateral as Agent or any Lender may reasonably request from time to time.
5.2 ACCESS TO ACCOUNTANTS AND MANAGEMENT. Borrower authorizes Agent and
Lenders to discuss the financial condition and financial statements of Borrower
with Borrower's independent public accountants upon reasonable notice to
Borrower of its intention to do so, and authorizes such accountants to respond
to all of Agent's and Lenders' reasonable inquiries. Each Lender may, with the
consent of Agent (which will not be unreasonably denied) confer with Borrower's
management directly regarding Borrower's business, operations and financial
condition.
5.3 FIELD EXAMINATION. Borrower shall permit Agent and any authorized
representatives designated by Agent to visit and examine any of the properties
of Borrower, including its financial and accounting records, and in conjunction
with such examination, to make copies and take extracts therefrom, and to
discuss its affairs, finances and business with its officers and independent
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably requested. Borrower acknowledges that Agent intends
to make such examinations: (a) prior to the initial Revolving Advance hereunder,
on a semi-annual basis, and (b) subsequent to the initial Revolving Advance
hereunder up to four (4) times in any period of 12 consecutive months. Each
Lender may, with the consent of Agent (which will not be unreasonably denied)
accompany Agent on any such visit or examination.
5.4 COLLATERAL RECORDS. Borrower shall keep full and accurate books and
records relating to the Collateral and shall xxxx such books and records to
indicate Agent's security interests in the Collateral, for the benefit of
Lenders.
5.5 CONDITION OF LAUNDRY EQUIPMENT. Borrower shall keep all Laundry
Equipment in a good state of repair and good operating condition (except to the
extent of Laundry Equipment taken out of service, consistent with the final
clause of this sentence), and will make all repairs and replacements when and
where necessary, will not waste or destroy it or any part thereof, and will not
be negligent in the care or use thereof, all in the ordinary course of the
operation of Borrower's
39
48
business, and in a manner consistent with that maintained by prudent business
people in similar circumstances. Borrower shall repair and maintain all Laundry
Equipment in a manner sufficient to continue the operation of its business as
presently being conducted. All Laundry Equipment shall be used in all material
respects in accordance with applicable law and the manufacturer's instructions
and shall be kept separate from and shall not be permanently annexed or affixed
to or become part of any premises to the extent that under applicable law such
Laundry Equipment would be deemed fixtures and/or otherwise part of the real
property at which it is located except where Agent first receives a Landlord
Waiver satisfactory to it. Laundry Equipment shall not be removed from the
premises shown on Schedule 4.7 except with Agent's prior written consent or in
the ordinary course of Borrower's business.
5.6 COLLECTION OF ACCOUNTS AND PAYMENTS. Within ninety (90) days after
the Closing Date (and from time to time thereafter concurrently with the
Borrower's establishment of any new bank accounts), Borrower shall establish
blocked accounts (collectively, "BLOCKED ACCOUNTS") in Borrower's name with all
banks at which it maintains deposit accounts ("COLLECTING BANKS") (subject to
irrevocable instructions acceptable to Agent as hereinafter set forth) in which
Borrower will immediately deposit all cash. The Collecting Banks shall
acknowledge and agree, in a manner satisfactory to Agent, that all payments made
to the Blocked Accounts are the sole and exclusive property of Agent, for the
benefit of Lenders, and that the Collecting Banks have no right of setoff
against the Blocked Accounts and that all such payments received will be
promptly transferred to Agent's Account. Borrower hereby agrees that all
payments received by Agent, whether by cash, check, wire transfer or any other
instrument, made to such Blocked Accounts or otherwise received by Agent will be
the sole and exclusive property of Agent, for the benefit of Lenders, to be
applied in accordance with the provisions of this Agreement. Borrower shall,
pursuant to a blocked account agreement substantially in the form of Exhibit F
attached hereto, irrevocably instruct each Collecting Bank to promptly transfer
all payments or deposits, at the request of Agent, to the Blocked Accounts into
Agent's Account; provided, however, that Agent shall not direct the Collecting
Banks to transfer payments from the Blocked Accounts to the Agent's Account
unless and until: (a) one or more Revolving Advances is outstanding hereunder,
and (b) the sum of (i) Borrower's cash on hand in immediately available funds,
(ii) Borrower's Cash Equivalents, and (iii) Unused Availability is, at the time
such direction is given, less than $15,000,000. Borrower, and any of its
Affiliates, employees, agents or other Persons acting for or in concert with
Borrower, shall, acting as trustee for Agent, receive, as the sole and exclusive
property of Agent, any monies, checks, notes, drafts or any other payments which
come into the possession or under the control of Borrower or any of Borrower's
Affiliates, employees, agents or other Persons acting for or in concert with
Borrower, and immediately upon receipt thereof, Borrower or such Persons shall
remit the same or cause the same to be remitted, in kind, to the Blocked
Accounts or to Agent at its address set forth in subsection 10.4 below.
5.7 ENDORSEMENT. Borrower hereby constitutes and appoints Agent and all
Persons designated by Agent for that purpose as Borrower's true and lawful
attorney-in-fact, with power to endorse Borrower's name to any of the items of
payment or proceeds described in subsection 5.6 above and all proceeds of
Collateral that come into Agent's possession or under Agent's control. Both the
appointment of Agent as Borrower's attorney and Agent's rights and powers are
coupled
40
49
with an interest and are irrevocable until payment in full and complete
performance of all of the Obligations.
5.8 CORPORATE EXISTENCE. Borrower will at all times preserve and keep
in full force and effect its corporate existence and all rights and franchises
material to its business.
5.9 PAYMENT OF TAXES. Borrower will pay all taxes, assessments and
other governmental charges imposed upon it or any of its properties or assets or
with respect to any of its franchises, business, income or property before any
penalty accrues thereon provided that no such tax need be paid if Borrower is
contesting same in good faith by appropriate proceedings promptly instituted and
diligently conducted and if Borrower has established appropriate reserves as
shall be required in conformity with GAAP.
5.10 MAINTENANCE OF PROPERTIES; INSURANCE. Borrower will maintain or
cause to be maintained in good repair, working order and condition all material
properties used in the business of Borrower and will make or cause to be made
all appropriate repairs, renewals and replacements thereof. Borrower will
maintain or cause to be maintained, with financially sound and reputable
insurers, public liability and property damage insurance with respect to its
business and properties and the business and properties against loss or damage
of the kinds customarily carried or maintained by corporations of established
reputation engaged in similar businesses and in amounts acceptable to Agent.
Borrower shall cause Agent, for the benefit of Lenders, to be named as loss
payee on all insurance policies covering any of the Collateral and as additional
insured under all liability policies, in each case pursuant to appropriate
endorsements in form and substance satisfactory to Agent and shall collaterally
assign to Agent, for the benefit of Lenders, as security for the payment of the
Obligations all business interruption insurance of Borrower. Borrower shall
apply any proceeds received from any such policies of insurance to the
Obligations as set forth in subsection 2.4(B); provided, however that nothing
set forth in this Section 5.10 shall prohibit Borrower, if it is otherwise then
entitled to do so under the terms of this Agreement, from obtaining and applying
the proceeds of one or more Revolving Advances to rebuild its tenant
improvements damaged as a result of any casualty as may be required under any
lease of a Facility.
5.11 COMPLIANCE WITH LAWS. Borrower will comply with the requirements
of all applicable laws, rules, regulations and orders of any governmental
authority as now in effect and which may be imposed in the future in all
jurisdictions in which Borrower is now doing business or may hereafter be doing
business, other than those laws the noncompliance with which would not have a
Material Adverse Effect.
5.12 FURTHER ASSURANCES. Borrower shall, from time to time, execute
such guaranties, financing or continuation statements, documents, security
agreements, reports and other documents or deliver to Agent such instruments,
certificates of title or other documents as Agent at any time may reasonably
request to evidence, perfect or otherwise implement the security for repayment
of the Obligations provided for in the Loan Documents. At Agent's request,
Borrower shall cause any Subsidiaries of Borrower promptly to guaranty the
Obligations and to grant to Agent, on behalf of
41
50
Lenders, security interests in the real, personal and mixed property of such
Subsidiary to secure the Obligations.
5.13 COLLATERAL LOCATIONS. Borrower will keep the Collateral at the
locations specified on Schedule 4.7. With respect to any new location (which in
any event shall be within the continental United States), Borrower will execute
such documents and take such actions as Agent deems necessary to perfect and
protect the security interests of Agent, on behalf of Lenders, in the Collateral
prior to the transfer or removal of any Collateral to such new location.
5.14 BAILEES. If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of Borrower's agents or processors,
Borrower shall, upon the request of Lenders, notify such warehouseman, bailee,
agent or processor of the security interests in favor of Agent, for the benefit
of Lenders, created hereby and shall instruct such Person to hold all such
Collateral for Agent's account subject to Agent's instructions.
5.15 MORTGAGES; TITLE INSURANCE; SURVEYS.
(A) ADDITIONAL MORTGAGED PROPERTY. In the event that Borrower,
after the date hereof, acquires any fee simple interest in real property,
Borrower shall, not less than thirty (30) days prior to such acquisition, notify
Agent in writing thereof, which notification shall contain a description of such
real property including the location and the fair market value thereof and
Borrower's good faith estimation of whether and for how long it intends to own
such real property. Agent may designate such real property as "ADDITIONAL
MORTGAGED PROPERTY", in which case Borrower shall as promptly as possible (and
in any event within sixty (60) days after such designation) deliver to Agent a
fully executed Mortgage, in form and substance reasonably satisfactory to Agent,
together with title insurance policies and surveys as required by this
subsection 5.15. Borrower agrees that, following the taking of the actions with
respect to any Additional Mortgaged Property required by the immediately
preceding sentence, Agent, on behalf of Lenders, shall have a valid and
enforceable first priority mortgage on the respective Additional Mortgaged
Property, free and clear of all defects and encumbrances except for Permitted
Encumbrances. Notwithstanding the foregoing provisions of this subdivision (A),
neither "Store #133" located at 0000-0000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, nor
"Store #317" located at 0000 Xxxxx Xxxx Xxxxx, Xx Xxxx, Xxxxx, shall be deemed
to be Additional Mortgaged Property if, but only if (i) each such store is
purchased by SpinDevCo or one or more of its Affiliates as part of a
sale/leaseback transaction with Borrower (as contemplated on the date hereof)
not later than October 31, 1998; and (ii) no Event of Default exists prior to
such purchase.
(B) TITLE INSURANCE. Within thirty (30) days following
delivery of any Mortgage with respect to Additional Mortgaged Property, Borrower
shall, upon the request of Agent, deliver or cause to be delivered to Agent,
ALTA lender's title insurance policies issued by title insurers reasonably
satisfactory to Agent (the "MORTGAGE POLICIES") in form and substance and in
amounts reasonably satisfactory to Agent assuring Agent that the Mortgages are
valid and enforceable first priority mortgage liens on the respective Additional
Mortgaged Property, free and clear of all defects and encumbrances except
Permitted Encumbrances. The Mortgage Policies shall be in form and
42
51
substance reasonably satisfactory to Agent and shall include an endorsement
insuring against the effect of future advances under this Agreement, for
mechanics' liens and for any other matter that Agent may reasonably request, and
shall provide for affirmative insurance and such reinsurance as Agent may
reasonably request.
(C) SURVEYS. All such surveys shall be sufficient to allow the
issuer of the mortgage policy to issue an ALTA lender's policy.
5.16 USE OF PROCEEDS AND MARGIN SECURITY. Borrower shall use the
proceeds of all Loans for proper business purposes (as described in the recitals
to this Agreement) consistent with all applicable laws, statutes, rules and
regulations. No portion of the proceeds of any Loan shall be used by Borrower
for the purpose of purchasing or carrying margin stock within the meaning of
Regulation G or Regulation U, or in any manner that might cause the borrowing or
the application of such proceeds to violate Regulation T or Regulation X or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Exchange Act.
5.17 YEAR 2000 COMPATIBILITY. Borrower shall take all actions
reasonably necessary to assure that its computer based systems are able to
operate and effectively process data which includes dates on and after January
1, 2000. At the request of Agent, Borrower shall provided reasonable assurances
satisfactory to Agent of Borrower's Year 2000 compatibility.
SECTION 6. FINANCIAL COVENANTS
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender Letters of Credit, unless Borrower has received the prior written
consent of Requisite Lenders, Borrower shall comply with all covenants in this
Section 6.
6.1 FIXED CHARGE COVERAGE. During each Trigger Period, Borrower shall
not permit its Fixed Charge Coverage for the first period of four consecutive
Periods commencing immediately after the first day of such Trigger Period, and
for each fiscal quarter ending after such period of four consecutive Periods
during such Trigger Period, to be less than 1:1.
6.2 MINIMUM MATURE STORE AVERAGE EBITDA. Borrower shall maintain Mature
Store Average EBITDA with respect to each of the categories of Facilities set
forth below as at the last day of each fiscal quarter during:
(a) the first period of four consecutive fiscal quarters
commencing on or immediately after the Closing Date, in at least the amounts set
forth below opposite such categories:
CATEGORY MINIMUM MATURE STORE AVERAGE EBITDA
-------- -----------------------------------
Leased Stores $ 81,000
Acquired Stores $ 59,000
43
52
Self-Developed Leased Stores $ 53,000; and
(b) each subsequent period of four consecutive fiscal
quarters, in amounts of at least 105% of the amounts required to be maintained
during the immediately preceding period of four consecutive fiscal quarters.
6.3 MINIMUM UNUSED AVAILABILITY. Borrower shall maintain at all times
Unused Availability greater than or equal to $7,500,000; provided, however, that
after March 22, 1999, such requirement shall be suspended if, and so long as,
the number of all Mature Facilities constitutes more than 55% of all Facilities.
SECTION 7. NEGATIVE COVENANTS
Borrower covenants and agrees that so long as any of the Commitments
remain in effect and until payment in full of all Obligations and termination of
all Lender Letters of Credit, unless Borrower has received the prior written
consent of Requisite Lenders, Borrower shall not:
7.1 INDEBTEDNESS AND LIABILITIES. Directly or indirectly create, incur,
assume, guaranty, or otherwise become or remain directly or indirectly liable,
on a fixed or contingent basis, with respect to any Indebtedness except: (a) the
Obligations; (b) Indebtedness (excluding under Capital Leases) secured by
purchase money Liens not to exceed $500,000 in the aggregate at any time
outstanding; (c) Indebtedness under Capital Leases not to exceed $1,000,000 in
the aggregate at any time outstanding; (d) Indebtedness owing to one or more
sellers of Acquired Stores not to exceed $5,000,000 in the aggregate at any time
outstanding; (e) Indebtedness outstanding under the Senior Unsecured Notes in an
aggregate principal amount at maturity not to exceed $144,990,000 plus interest,
issued pursuant and subject to the terms and conditions of the Unsecured Notes
Documents; and (f) without duplication, other Indebtedness permitted under the
Senior Unsecured Notes Indenture provided such Indebtedness is and remains
unsecured. Except for Indebtedness described permitted in the preceding
sentence, Borrower will not incur any Liabilities except for trade payables and
normal accruals in the ordinary course of business not yet due and payable or
with respect to which Borrower is contesting in good faith the amount or
validity thereof by appropriate proceedings and then only to the extent that
Borrower has established adequate reserves therefor, if appropriate under GAAP.
7.2 GUARANTIES. Except for endorsements of instruments or items of
payment for collection in the ordinary course of business and except as set
forth on Schedule 7.2, guaranty, endorse, or otherwise in any way become or be
responsible for any obligations of any other Person, whether directly or
indirectly by agreement to purchase the indebtedness of any other Person or
through the purchase of goods, supplies or services, or maintenance of working
capital or other balance sheet covenants or conditions, or by way of stock
purchase, capital contribution, advance or loan for the purpose of paying or
discharging any indebtedness or obligation of such other Person or otherwise.
44
53
7.3 TRANSFERS, LIENS AND RELATED MATTERS.
(A) TRANSFERS. Sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to any of the
Collateral, except: (1) Laundry Equipment which in the ordinary course of
Borrower's business is replaced with new items of Equipment of like function and
comparable value to the replaced items of Equipment when the same were new;
provided, however, that such replacement items of Equipment shall become subject
to the liens and security interests in favor of Agent, for the benefit of
Lenders; and (2) Borrower may make Asset Dispositions if all of the following
conditions are met: (a) the fair market value of the assets sold or otherwise
disposed of in any single transaction or series of related transactions does not
exceed $2,500,000 and the aggregate fair market value of the assets sold or
otherwise disposed of in any Fiscal Year does not exceed $5,000,000; (b) the
consideration received is at least equal to the fair market value of such
assets; (c) the sole consideration received is cash; (d) the net proceeds of
such Asset Disposition are applied as required by subsection 2.4(B); (e) after
giving effect to the sale or other disposition of the assets included within the
Asset Disposition and the repayment of the Obligations with the proceeds
thereof, Borrower is in compliance on a pro forma basis with the covenants set
forth in Section 6 recomputed for the most recently ended Period for which
information is available and is in compliance with all other terms and
conditions contained in this Agreement; and (f) no Default or Event of Default
shall then exist or result from such sale or other disposition.
(B) LIENS. Except for Permitted Encumbrances, directly or
indirectly create, incur, assume or permit to exist any Lien on or with respect
to any of the Collateral or any proceeds, income or profits therefrom.
(C) NO NEGATIVE PLEDGES. Enter into or assume any agreement
(other than the Loan Documents) prohibiting the creation or assumption of any
Lien upon its properties or assets, whether now owned or hereafter acquired.
7.4 INVESTMENTS AND LOANS. Make or permit to exist investments in or
loans to any other Person, except: (a) Cash Equivalents; (b) loans and advances
to employees: (i) for moving, entertainment, travel and other similar expenses
in the ordinary course of business in an aggregate outstanding amount not in
excess of $250,000 at any time; and (ii) to finance the purchase by such
employees of capital stock in Borrower, provided that such purchase is
substantially concurrent with the making of any such loan, in an aggregate
outstanding amount not in excess of $1,000,000 at any time; and (c) a Secured
Promissory Note dated December 31, 1997 made by SpinDevCo, L.L.C., a Delaware
limited liability company ("SPINDEVCO") and payable to Borrower in the principal
sum of $4,852.002.75 (and any amendments thereto and/or extensions thereof),
which note must be payable not later than October 31, 1998.
7.5 RESTRICTED JUNIOR PAYMENTS. Directly or indirectly declare, order,
pay, make or set apart any sum for any Restricted Junior Payment.
45
54
7.6 RESTRICTION ON FUNDAMENTAL CHANGES. (a) Enter into any transaction
of merger or consolidation; (b) liquidate, wind-up or dissolve itself (or suffer
any liquidation or dissolution); (c) convey, sell, lease, sublease, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its business or assets, or the capital stock of any of its
Subsidiaries, whether now owned or hereafter acquired; or (d) acquire by
purchase or otherwise all or any substantial part of the business or assets of,
or stock or other evidence of beneficial ownership of, any Person except in
connection with the acquisition of Acquired Stores.
7.7 CHANGES RELATING TO SENIOR UNSECURED NOTES.
(A) Amend, modify, waive or otherwise change any of the terms
of the Senior Unsecured Notes or the Senior Unsecured Notes Indenture,
including, without limitation, any of the financial covenants, without the prior
written consent of Agent and Requisite Lenders if the effect of such amendment,
modification or waiver is to: (a) increase the interest rate on such
Indebtedness; (b) change the dates upon which payments of principal or interest
are due on such Indebtedness; (c) change any event of default or add any
covenant with respect to such Indebtedness; (d) change the payment provisions of
such Indebtedness; (e) change or amend any other term if such change or
amendment would materially increase the obligations of the obligor or confer
additional material rights on the holder of such Indebtedness in a manner
adverse to Borrower, Agent or any Lender, or xxxxx x xxxx on, or security
interest in, any of its assets or properties to secure the Indebtedness
evidenced thereby.
(B) Except for a permitted prepayment of up to thirty five
percent (35%) of the principal, interest and fees on the Senior Unsecured Notes
from the proceeds of one or more underwritten primary public offerings of common
stock of Borrower pursuant to an effective registration statement under the
Securities Act, all in accordance with the terms of the Senior Unsecured Notes
Indenture as in effect on the date hereof, make any payment of principal,
interest, fees or any other amounts on the Senior Unsecured Notes or otherwise
in connection with the Senior Unsecured Notes Indenture other than regularly
scheduled payments of principal, interest and fees on the Senior Unsecured Notes
in accordance with the terms of the Senior Unsecured Notes Indenture. Without
limiting the generality of the foregoing, Borrower shall not prepay, redeem,
offer to purchase, retire, fund any sinking fund, purchase or otherwise acquire
any of the Senior Unsecured Notes at any time other than at their regularly
scheduled maturity as set forth in the Senior Unsecured Notes Indenture.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter into or
permit to exist any transaction (including the purchase, sale or exchange of
property or the rendering of any service) with any Affiliate or with any
officer, director or employee of any Loan Party, except for transactions in the
ordinary course of and pursuant to the reasonable requirements of Borrower's
business and upon fair and reasonable terms which are fully disclosed to Agent
and Lenders and which are no less favorable to Borrower than it would obtain in
a comparable arm's length transaction with an unaffiliated Person.
46
55
7.9 ENVIRONMENTAL LIABILITIES. (a) Violate any applicable Environmental
Law which could reasonably be expected to have a Material Adverse Effect; (b)
dispose of any Hazardous Materials (except in accordance with applicable law)
into or onto or from, any real property owned, leased or operated by any Loan
Party; or (c) except as indicated on Schedule 4.15, permit any Lien imposed
pursuant to any Environmental Law to be imposed or to remain on any real
property owned, leased or operated by any Loan Party.
7.10 CONDUCT OF BUSINESS. From and after the Closing Date, engage in
any business other than businesses of the type engaged in by Borrower on the
Closing Date.
7.11 COMPLIANCE WITH ERISA. Establish any new Employee Benefit Plan or
amend any existing Employee Benefit Plan (except such amendments as may be
required to enable any Employee Benefit Plan to continue to comply with the
requirements of the IRC and ERISA and the rules and regulations promulgated
thereunder) if the liability or increased liability resulting from such
establishment or amendment is material. Borrower shall not fail to establish,
maintain and operate each Employee Benefit Plan in compliance in all material
respects with the provisions of ERISA, the IRC and all other applicable laws and
the regulations and interpretations thereof.
7.12 TAX CONSOLIDATIONS. File or consent to the filing of any
consolidated income tax return with any Person.
7.13 SUBSIDIARIES. Establish, create or acquire any Subsidiaries.
7.14 FISCAL YEAR. Change its Fiscal Year.
7.15 PRESS RELEASE; PUBLIC OFFERING MATERIALS. Disclose the name of
Agent or any Lender in any press release or in any prospectus, proxy statement
or other materials filed with any governmental entity relating to a public
offering of the capital stock of any Loan Party except as may be required by
law.
7.16 BANK ACCOUNTS. Amend or terminate any Blocked Account without
Agent's prior written consent.
SECTION 8. DEFAULT, RIGHTS AND REMEDIES
8.1 EVENT OF DEFAULT. "EVENT OF DEFAULT" shall mean the occurrence or
existence of any one or more of the following:
(A) PAYMENT. Failure to make payment of any of the Obligations
when due and in the case of interest, such failure shall not be cured within
five (5) Business Days of the applicable due date; or
47
56
(B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of Borrower to
pay when due any principal or interest on any Indebtedness (other than the
Obligations) or breach or default of Borrower with respect to any Indebtedness
(other than the Obligations), if such failure to pay, breach or default entitles
the holder to cause such Indebtedness having an individual principal amount in
excess of $500,000 or having an aggregate principal amount in excess of
$1,000,000 to become or be declared due prior to its stated maturity; or (2)
default under the Senior Unsecured Notes Indenture, including any breach of any
covenant thereunder regardless of whether such covenant is more restrictive
than, or conflicts with, or covers the same or similar matters as the covenants
set forth in this Agreement or any other Loan Documents; or
(C) BREACH OF CERTAIN PROVISIONS. Failure of Borrower to
perform or comply with any term or condition contained in subsections 5.1 (A)
and (B), 5.3, 5.5 or 5.6 or contained in Section 6 or Section 7; or
(D) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement made by any Loan Party in any Loan Document or
in any statement or certificate at any time given by such Person in writing
pursuant or in connection with any Loan Document is false in any material
respect on the date made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Borrower or any other
Loan Party defaults in the performance of or compliance with any term contained
in this Agreement or the other Loan Documents and such default is not remedied
or waived within fifteen (15) days after receipt by Borrower of notice from
Agent, or Requisite Lenders of such default (other than occurrences described in
other provisions of this subsection 8.1 for which a different grace or cure
period is specified or which constitute immediate Events of Default); or
(F) CHANGE OF CONTROL. Any Change of Control (as defined in
the Senior Unsecured Notes Indenture as in effect on the date hereof) shall
occur; or
(G) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1)
A court enters a decree or order for relief with respect to Borrower in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, which decree or order is not stayed or other
similar relief is not granted under any applicable federal or state law; or (2)
the continuance of any of the following events for sixty (60) days unless
dismissed, bonded or discharged: (a) an involuntary case is commenced against
Borrower, under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect; or (b) a decree or order of a court for the appointment
of a receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over Borrower, or over all or a substantial part of its
property, is entered; or (c) an interim receiver, trustee or other custodian is
appointed without the consent of Borrower for all or a substantial part of the
property of Borrower.
(H) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (1) An
order for relief is entered with respect to Borrower or Borrower commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the
48
57
entry of an order for relief in an involuntary case or to the conversion of an
involuntary case to a voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or (2) Borrower makes any
assignment for the benefit of creditors; or (3) the board of directors of
Borrower adopts any resolution or otherwise authorizes action to approve any of
the actions referred to in this subsection 8.1(H); or
(I) LIENS. Any lien, levy or assessment is filed or recorded
with respect to or otherwise imposed upon all or any part of the Collateral or
the assets of Borrower by the United States or any department or instrumentality
thereof or by any state, county, municipality or other governmental agency
(other than Permitted Encumbrances) and such lien, levy or assessment is not
stayed, vacated, paid or discharged within ten (10) days; or
(J) JUDGMENT AND ATTACHMENTS. Any money judgment, writ or
warrant of attachment, or similar process involving (1) an amount in any
individual case in excess of $100,000 or (2) an amount in the aggregate at any
time in excess of $250,000 (in either case not adequately covered by insurance
as to which the insurance company has acknowledged coverage) is entered or filed
against Borrower or any of its assets and remains undischarged, unvacated,
unbonded or unstayed for a period of forty-five (45) days or in any event later
than five (5) days prior to the date of any proposed sale thereunder; or
(K) DISSOLUTION. Any order, judgment or decree is entered
against Borrower decreeing the dissolution or split up of Borrower and such
order remains undischarged or unstayed for a period in excess of twenty (20)
days; or
(L) SOLVENCY. Borrower ceases to be solvent (as represented by
Borrower in subsection 4.17) or admits in writing its present or prospective
inability to pay its debts as they become due; or
(M) INJUNCTION. Borrower is enjoined, restrained or in any way
prevented by the order of any court or any administrative or regulatory agency
from conducting all or any material part of its business and such order
continues for more than thirty (30) days; or
(N) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan Documents
for any reason, other than a partial or full release in accordance with the
terms thereof, ceases to be in full force and effect or is declared to be null
and void, or any Loan Party denies that it has any further liability under any
Loan Documents to which it is party, or gives notice to such effect; or
(O) FAILURE OF SECURITY. Agent, on behalf of Lenders, does not
have or ceases to have a valid and perfected first priority security interest in
the Collateral (subject to Permitted Encumbrances), in each case, for any reason
other than the failure of Agent or any Lender to take any action within its
control; or
49
58
(P) DAMAGE, STRIKE, CASUALTY. Any material damage to, or loss,
theft or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days beyond
the coverage period of any applicable business interruption insurance, the
cessation or substantial curtailment of revenue producing activities at any
Facility if any such event or circumstance could reasonably be expected to have
a Material Adverse Effect.
(Q) LICENSES AND PERMITS. The loss, suspension or revocation
of, or failure to renew, any license or permit now held or hereafter acquired by
Borrower, if such loss, suspension, revocation or failure to renew could
reasonably be expected to have a Material Adverse Effect.
(R) FORFEITURE. There is filed against Borrower any civil or
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not dismissed
within one hundred twenty (120) days; and (2) could result in the confiscation
or forfeiture of any material portion of the Collateral.
8.2 SUSPENSION OF COMMITMENTS. Upon the occurrence of any Default or
Event of Default, notwithstanding any grace period or right to cure, Agent may
or upon demand by Requisite Lenders shall, without notice or demand, immediately
cease making additional Loans and the Commitments shall be suspended; provided
that, in the case of a Default, if the subject condition or event is waived or
cured within any applicable grace or cure period, the Commitments shall be
reinstated.
8.3 ACCELERATION. Upon the occurrence of any Event of Default described
in the foregoing subsections 8.1(G) or 8.1(H), all Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower, and the Commitments shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default, Agent may,
and upon demand by Requisite Lenders shall, by written notice to Borrower, (a)
declare all or any portion of the Obligations to be, and the same shall
forthwith become, immediately due and payable and the Commitments shall
thereupon terminate and (b) demand that Borrower immediately deposit with Agent
an amount equal to one hundred five percent (105%) of the Letter of Credit
Reserve to enable Lender to make payments under the Lender Letters of Credit
when required and such amount shall become immediately due and payable.
8.4 REMEDIES. If any Event of Default shall have occurred and be
continuing, in addition to and not in limitation of any other rights or remedies
available to Agent and Lenders at law or in equity, Agent may and shall upon the
request of Requisite Lenders exercise in respect of the Collateral, in addition
to all other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) and may also (a)
notify any or all obligors on the Accounts to make all payments directly to
Agent; (b) require Borrower to, and Borrower hereby agrees that it will, at its
expense and upon request of Agent forthwith, assemble all or part of the
Collateral as
50
59
directed by Agent and make it available to Agent at a place to be designated by
Agent which is reasonably convenient to both parties; (c) withdraw all cash in
the Blocked Accounts and apply such monies in payment of the Obligations in the
manner provided in subsection 8.7; (d) without notice or demand or legal
process, enter upon any premises of Borrower and take possession of the
Collateral; and (e) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of Agent's offices or elsewhere, at such time or times, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as Agent may deem commercially reasonable. Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days notice to
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. At any sale
of the Collateral, if permitted by law, Agent or any Lender may bid (which bid
may be, in whole or in part, in the form of cancellation of indebtedness) for
the purchase of the Collateral or any portion thereof for the account of Agent
or such Lender. Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. Borrower shall remain liable for
any deficiency. Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. To
the extent permitted by law, Borrower hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter enacted. Agent shall not be required to proceed against
any Collateral but may proceed against Borrower directly.
8.5 APPOINTMENT OF ATTORNEY-IN-FACT. Borrower hereby constitutes and
appoints Agent as Borrower's attorney-in-fact with full authority in the place
and stead of Borrower and in the name of Borrower, Agent or otherwise, from time
to time in Agent's discretion while an Event of Default is continuing to take
any action and to execute any instrument that Agent may deem reasonably
necessary or advisable to accomplish the purposes of this Agreement, including:
(a) to ask, demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral; (b) to adjust, settle or compromise the amount or payment
of any Account, or release wholly or partly any customer or obligor thereunder
or allow any credit or discount thereon; (c) to receive, endorse, and collect
any drafts or other instruments, documents and chattel paper, in connection with
clause (a) above; (d) to file any claims or take any action or institute any
proceedings that Agent may deem reasonably necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of Agent
and Lenders with respect to any of the Collateral; and (e) to sign and endorse
any invoices, freight or express bills, bills of lading, storage or warehouse
receipts, assignments, verifications and notices in connection with Accounts and
other documents relating to the Collateral. The appointment of Agent as
Borrower's attorney and Agent's rights and powers are coupled with an interest
and are irrevocable until payment in full and complete performance of all of the
Obligations.
8.6 LIMITATION ON DUTY OF AGENT WITH RESPECT TO COLLATERAL. Beyond the
safe custody thereof, Agent and each Lender shall have no duty with respect to
any Collateral in its possession or control (or in the possession or control of
any agent or bailee) or with respect to any income thereon or the preservation
of rights against prior parties or any other rights pertaining thereto. Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the
51
60
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Agent accords its own property. Neither Agent
nor any Lender shall be liable or responsible for any loss or damage to any of
the Collateral, or for any diminution in the value thereof, by reason of the act
or omission of any warehouseman, carrier, forwarding agency, consignee or other
agent or bailee selected by Agent in good faith.
8.7 APPLICATION OF PROCEEDS. Upon the occurrence and during the
continuance of an Event of Default, (a) Borrower irrevocably waives the right to
direct the application of any and all payments at any time or times thereafter
received by Agent from or on behalf of Borrower, and Borrower hereby irrevocably
agrees that Agent shall have the continuing exclusive right to apply and to
reapply any and all payments received at any time or times after the occurrence
and during the continuance of an Event of Default against the Obligations in
such manner as Agent may deem advisable notwithstanding any previous entry by
Agent upon any books and records and (b) the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied: first, to
all reasonable fees, costs and expenses incurred by Agent or any Lender with
respect to this Agreement, the other Loan Documents or the Collateral; second,
to all fees due and owing to Agent and Lenders; third, to accrued and unpaid
interest on the Obligations; fourth, to the principal amounts of the Obligations
outstanding; and fifth, to any other indebtedness or obligations of Borrower
owing to Agent or any Lender.
8.8 LICENSE OF INTELLECTUAL PROPERTY. Borrower hereby assigns,
transfers and conveys to Agent, for the benefit of Lenders, effective upon the
occurrence of any Event of Default hereunder, the non-exclusive right and
license to use all Intellectual Property owned by Borrower together with any
goodwill associated therewith, all to the extent necessary to enable Agent to
realize on the Collateral and any successor or assign to enjoy the benefits of
the Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Agent and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and
license is granted free of charge, without requirement that any monetary payment
whatsoever be made to Borrower by Agent.
8.9 WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the part of Agent or
any Lender to exercise, and no delay in exercising and no course of dealing with
respect to, any right under this Agreement or the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise by Agent
or any Lender of any right under this Agreement or any other Loan Document
preclude any other or further exercise thereof or the exercise of any other
right. The rights in this Agreement and the other Loan Documents are cumulative
and are not exclusive of any other remedies provided by law.
SECTION 9. ASSIGNMENT AND PARTICIPATION
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.
52
61
(A) Each Lender may assign its rights and delegate its
obligations under this Agreement to an Eligible Assignee; provided, that (a)
such Lender shall first obtain the written consent of Agent, which shall not be
unreasonably withheld, (b) the amount of Commitments and Loans of the assigning
Lender being assigned shall in no event be less than the lesser of (i)
$5,000,000 or (ii) the entire amount of the Commitments and Loans of such
assigning Lender and (c)(i) each such assignment shall be of a pro rata portion
of all such assigning Lender's Loans and Commitments hereunder, and (ii) the
parties to such assignment shall execute and deliver to Agent for acceptance and
recording an Assignment and Assumption Agreement together with (x) a processing
and recording fee of $2,500 payable to Agent (which in no event shall be at
Borrower's expense or responsibility) and (y) the Note originally delivered to
the assigning Lender. Upon receipt of all of the foregoing, Agent shall notify
Borrower of such assignment and Borrower shall comply with its obligations under
the last sentence of subsection 2.1(D). In the case of an assignment authorized
under this subsection 9.1, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as it would if it were a
Lender hereunder. The assigning Lender shall be relieved of its obligations
hereunder with respect to its Commitment or assigned portion thereof arising
after the date such assignment is effective. Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of Borrower to
the assignee and that the assignee shall be considered to be a "Lender".
(B) Each Lender may sell participations in all or any part of
any Loans made by it to another Person; provided, that any such participation
shall be in a minimum amount of $5,000,000, and provided, further, that all
amounts payable by Borrower hereunder shall be determined as if that Lender had
not sold such participation and the holder of any such participation shall not
be entitled to require such Lender to take or omit to take any action hereunder
except action directly effecting (a) any reduction in the principal amount,
interest rate or fees payable with respect to any Loan in which such holder
participates; (b) any extension of the Termination Date or the date fixed for
any payment of interest or fees payable with respect to any Loan in which such
holder participates; and (c) any release of substantially all of the Collateral
(other than in accordance with the terms of this Agreement or the Loan
Documents). Borrower hereby acknowledges and agrees that the participant under
each participation shall for purposes of subsection 2.8, 2.9, 2.10, 9.4 and 10.2
be considered to be a "Lender".
(C) Except as otherwise provided in this subsection 9.1 no
Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower in the possession of that Lender from time to time to
assignees and participants (including prospective assignees and participants)
provided that the Persons obtaining such information agrees to maintain the
confidentiality of such information to the extent required by subsection 10.21.
(D) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Loans owing to it and the Note(s) held by it in favor of any
53
62
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System).
9.2 AGENT.
(A) APPOINTMENT. Each Lender hereby designates and appoints
Xxxxxx as its agent under this Agreement and the Loan Documents, and each Lender
hereby irrevocably authorizes Agent to take such action or to refrain from
taking such action on its behalf under the provisions of this Agreement and the
Loan Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably incidental thereto. Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that certain of Lenders' consent be obtained in certain instances as
provided in subsection 9.3. Agent agrees to act as such on the express
conditions contained in this subsection 9.2. The provisions of this subsection
9.2 are solely for the benefit of Agent and Lenders and neither Borrower nor any
Loan Party shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement,
Agent shall act solely as an administrative representative of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Lenders, Borrower or any Loan Party.
Agent may perform any of its duties hereunder, or under the Loan Documents, by
or through its agents or employees.
(B) NATURE OF DUTIES. Agent shall have no duties, obligations
or responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of Agent shall be mechanical and administrative in
nature. Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender. Each Lender shall make its own
independent investigation of the financial condition and affairs of Borrower in
connection with the extension of credit hereunder and shall make its own
appraisal of the credit worthiness of Borrower, and Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any Lender
with any credit or other information with respect thereto, whether coming into
its possession before the Closing Date or at any time or times thereafter. If
Agent seeks the consent or approval of any Lenders to the taking or refraining
from taking any action hereunder, then Agent shall send notice thereof to each
Lender. Agent shall promptly notify each Lender any time that the applicable
percentage of Lenders have instructed Agent to act or refrain from acting
pursuant hereto.
(C) RIGHTS, EXCULPATION, ETC. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to any Lender for any
action taken or omitted by them hereunder or under any of the Loan Documents, or
in connection herewith or therewith, except that Agent shall be obligated on the
terms set forth herein for performance of its express obligations hereunder, and
except that Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by
54
63
them). In performing its functions and duties hereunder, Agent shall exercise
the same care which it would in dealing with loans for its own account, but
Agent shall not be responsible to any Lender for any recitals, statements,
representations or warranties herein or for the execution, effectiveness,
genuineness, validity, enforceability, collectability, or sufficiency of this
Agreement or any of the Loan Documents or the transactions contemplated thereby,
or for the financial condition of any Loan Party. Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement or any of the Loan Documents
or the financial condition of any Loan Party, or the existence or possible
existence of any Default or Event of Default. Agent may at any time request
instructions from Lenders with respect to any actions or approvals which by the
terms of this Agreement or of any of the Loan Documents Agent is permitted or
required to take or to grant, and Agent shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or withholding
any approval under any of the Loan Documents until it shall have received such
instructions from the applicable percentage of Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement or any
of the other Loan Documents in accordance with the instructions of the
applicable percentage of Lenders and notwithstanding the instructions of
Lenders, Agent shall have no obligation to take any action if it, in good faith
believes that such action exposes Agent to any liability.
(D) RELIANCE. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of counsel selected by it. Agent shall be
entitled to rely upon the advice of legal counsel, independent accountants, and
other experts selected by Agent in its sole discretion.
(E) INDEMNIFICATION. Each Lender, severally, agrees to
reimburse and indemnify Agent for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by, or asserted against Agent in any way relating to or
arising out of this Agreement or any of the Loan Documents or any action taken
or omitted by Agent under this Agreement for any of the Loan Documents, in
proportion to each Lender's Pro Rata Share; provided, however, that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements resulting from Agent's gross negligence or willful misconduct. The
obligations of Lenders under this subsection 9.2(E) shall survive the payment in
full of the Obligations and the termination of this Agreement.
(F) XXXXXX INDIVIDUALLY. With respect to its Commitments and
the Loans made by it, and the Note(s) issued to it, Xxxxxx shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless
55
64
the context clearly otherwise indicates, include Xxxxxx in its individual
capacity as a Lender or one of the Requisite Lenders. Xxxxxx may lend money to,
and generally engage in any kind of banking, trust or other business with any
Loan Party as if it were not acting as Agent pursuant hereto.
(G) SUCCESSOR AGENT.
(1) RESIGNATION. Agent may resign from the
performance of all its functions and duties hereunder at any time by giving at
least thirty (30) Business Days' prior written notice to Borrower and Lenders.
Such resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (2) below or as otherwise provided below.
(2) APPOINTMENT OF SUCCESSOR. Upon any such notice
of resignation pursuant to clause (G)(1) above, Requisite Lenders shall, upon
receipt of Borrower's prior consent, which shall not unreasonably be withheld,
appoint a successor Agent. If a successor Agent shall not have been so appointed
within said thirty (30) Business Day period, the retiring Agent, upon notice to
Borrower, shall then appoint a successor Agent who shall serve as Agent until
such time, as Requisite Lenders, upon receipt of Borrower's prior written
consent which shall not be unreasonably withheld, appoint a successor Agent as
provided above.
(3) SUCCESSOR AGENT. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under the Loan
Documents arising after the effective date of such appointment. After any
retiring Agent's resignation as Agent under the Loan Documents, the provisions
of this subsection 9.2 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under the Loan Documents.
(H) COLLATERAL MATTERS.
(1) RELEASE OF COLLATERAL. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent upon any property covered by this Agreement or the
Loan Documents (i) upon termination of the Commitments and payment and
satisfaction of all Obligations; (ii) constituting property being sold or
disposed of if Borrower certifies to Agent that the sale or disposition is made
in compliance with the provisions of this Agreement (and Agent may rely in good
faith conclusively on any such certificate, without further inquiry); or (iii)
constituting property leased to Borrower under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by Borrower to be, renewed or
extended. In addition during any Fiscal Year (x) Agent may release Collateral
having a Net Book Value of not more than $1,000,000, and (y) Agent, with the
consent of Requisite Lenders, may release Collateral having a Net Book Value of
not more than 25% of the Net Book Value of all Collateral.
(2) CONFIRMATION OF AUTHORITY; EXECUTION OF RELEASES.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by
56
65
Lenders (as set forth in subsection 9.2(H)(1)), each Lender agrees to confirm in
writing, upon request by Borrower, the authority to release any property covered
by this Agreement or the Loan Documents conferred upon Agent under subsection
9.2(H)(1). So long as no Event of Default is then continuing, upon receipt by
Agent of confirmation from the requisite percentage of Lenders, of its authority
to release any particular item or types of property covered by this Agreement or
the Loan Documents, and upon at least five (5) Business Days prior written
request by Borrower, Agent shall (and is hereby irrevocably authorized by
Lenders to) execute such documents as may be necessary to evidence the release
of the Liens granted to Agent for the benefit of Lenders herein or pursuant
hereto upon such Collateral; provided, however, that (i) Agent shall not be
required to execute any such document on terms which, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of any Loan Party, in respect of), all interests
retained by any Loan Party, including, without limitation, the proceeds of any
sale, all of which shall continue to constitute part of the property covered by
this Agreement or the Loan Documents.
(3) ABSENCE OF DUTY. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by this Agreement or the Loan Documents exists or is owned by Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent on behalf of Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this subsection 9.2(H) or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by this Agreement
or the Loan Documents or any act, omission or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by this Agreement or the Loan Documents as one of
the Lenders and that Agent shall have no duty or liability whatsoever to any of
the other Lenders; provided, that Agent shall exercise the same care which it
would in dealing with loans for its own account.
(I) AGENCY FOR PERFECTION. Each Lender hereby appoints each
other Lender as agent for the purpose of perfecting Lenders' security interest
in Collateral which, in accordance with Article 9 of the Uniform Commercial Code
in any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Agent) obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent's request therefor, shall
deliver such Collateral to Agent or in accordance with Agent's instructions.
(J) EXERCISE OF REMEDIES. Each Lender agrees that it will not
have any right individually to enforce or seek to enforce this Agreement or any
Loan Document or to realize upon any collateral security for the Loans, it being
understood and agreed that such rights and remedies may be exercised only by
Agent.
57
66
9.3 CONSENTS.
(A) In the event Agent requests the consent of a Lender and
does not receive a written denial thereof within ten (10) Business Days after
such Lender's receipt of such request, then such Lender will be deemed to have
given such consent.
(B) In the event Agent requests the consent of a Lender and
such consent is denied, then Xxxxxx may, at its option, require such Lender to
assign its interest in the Loans to Xxxxxx for a price equal to the then
outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Lender, which interest and fees will be paid when collected from
Borrower. In the event that Xxxxxx elects to require any Lender to assign its
interest to Xxxxxx, Xxxxxx will so notify such Lender in writing within
forty-five (45) days following such Lender's denial, and such Lender will assign
its interest to Xxxxxx no later than five (5) days following receipt of such
notice.
9.4 SET OFF AND SHARING OF PAYMENTS. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender is hereby authorized by Borrower at any time or from time to time,
with reasonably prompt subsequent notice to Borrower or to any other Person (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (A) balances held by such Lender or such
holder at any of its offices for the account of Borrower (regardless of whether
such balances are then due to Borrower) and (B) other property at any time held
or owing by such Lender or such holder to or for the credit or for the account
of Borrower, against and on account of any of the Obligations which are not paid
when due; except that no Lender or any such holder shall exercise any such right
without the prior written consent of Agent. Any Lender which has exercised its
right to set off shall, to the extent the amount of any such set off exceeds its
Pro Rata Share of the Obligations, purchase for cash (and the other Lenders or
holders shall sell) participations in each such other Lender's or holder's Pro
Rata Share of the Obligations as would be necessary to cause such Lender to
share such excess with each other Lender or holder in accordance with their
respective Pro Rata Shares. Borrower agrees, to the fullest extent permitted by
law, that after an Event of Default (a) any Lender or holder may exercise its
right to set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such excess to other Lenders and
holders, and (b) any Lender or holder so purchasing a participation in the Loans
made or other Obligations held by other Lenders or holders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect to
such participation as fully as if such Lender or holder were a direct holder of
Loans and other Obligations in the amount of such participation.
9.5 DISBURSEMENT OF FUNDS. Agent may, on behalf of Lenders, disburse
funds to Borrower for Loans requested. Each Lender shall reimburse Agent on
demand for all funds disbursed on its behalf by Agent, or if Agent so requests,
each Lender will remit to Agent its Pro Rata Share of any Loan before Agent
disburses same to Borrower. If Agent elects to require that funds be made
available prior to disbursement to Borrower, Agent shall advise each Lender by
telephone, telex or telecopy of the amount of such Lender's Pro Rata Share of
such requested Loan no later than (a) two (2) Business Day prior to the Funding
Date applicable thereto for LIBOR Loans
58
67
and (b) by 12:00 noon. Central time on the Funding Date for Base Rate Loans, and
each such Lender shall pay Agent such Lender's Pro Rata Share of such requested
Loan, in same day funds, by wire transfer to Agent's account not later than
10:00 a.m. Central time on such Funding Date for LIBOR Loans and 3:00 p.m.
Central time for Base Rate Loans. If any Lender fails to pay the amount of its
Pro Rata Share forthwith upon Agent's demand, Agent shall promptly notify
Borrower, and Borrower shall immediately repay such amount to Agent. Any
repayment required pursuant to this subsection 9.5 shall be without premium or
penalty, which repayment shall not be deemed a waiver of any claim Borrower may
have against such Lender for its failure to comply with its obligations to make
Loans hereunder. Nothing in this subsection 9.5 or elsewhere in this Agreement
or the other Loan Documents, including without limitation the provisions of
subsection 9.6, shall be deemed to require Agent to advance funds on behalf of
any Lender or to relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Agent or Borrower may have
against any Lender as a result of any default by such Lender hereunder.
9.6 SETTLEMENTS, PAYMENTS AND INFORMATION.
(A) REVOLVING ADVANCES AND PAYMENTS; FEE PAYMENTS.
(1) The Revolving Loan may fluctuate from day to day
through Agent's disbursement of funds to, and receipt of funds from, Borrower.
In order to minimize the frequency of transfers of funds between Agent and each
Lender notwithstanding terms to the contrary set forth in Section 2 and
subsection 9.5, Revolving Advances and repayments may be settled according to
the procedures described in subsection 9.6(A)(2) and 9.6(A)(3) of this
Agreement. Notwithstanding these procedures, each Lender's obligation to fund
its Pro Rata Share of any advances made by Agent to Borrower will commence on
the date such advances are made by Agent. Such payments will be made by such
Lender without set-off, counterclaim or reduction of any kind.
(2) Once each week, or more frequently (including
daily), if Agent so elects (each such day being a "SETTLEMENT DATE"), Agent will
advise each Lender by 1 p.m. Central time by telephone, telex, or telecopy of
the amount of each such Lender's Pro Rata Share of the Revolving Loan. In the
event payments are necessary to adjust the amount of such Lender's share of the
Revolving Loan to such Lender's Pro Rata Share of the Revolving Loan, the party
from which such payment is due will pay the other, in same day funds, by wire
transfer to the other's account not later than 3:00 p.m. Central time on the
Business Day following the Settlement Date.
(3) On the first Business Day of each month
("INTEREST SETTLEMENT DATE"), Agent will advise each Lender by telephone,
telefax or telecopy of the amount of interest and fees charged to and collected
from Borrower for the preceding month. Provided that such Lender has made all
payments required to be made by it under this Agreement, Agent will pay to such
Lender, by wire transfer to such Lender's account (as specified by such Lender
on the signature page of this Agreement as amended by such Lender from time to
time after the date hereof pursuant to the notice provisions contained herein or
in the applicable Assignment and Assumption Agreement) not later than 3 p.m.
Central time on the next Business Day following the Interest Settlement Date
such Lender's share of such interest and fees.
59
68
(B) AVAILABILITY OF LENDER'S PRO RATA SHARE.
(1) Unless Agent has been notified by a Lender prior
to a Funding Date of such Lender's intention not to fund its Pro Rata Share of
the Loan amount requested by Borrower, Agent may assume that such Lender will
make such amount available to Agent on the Funding Date or the Business Day
following the next Settlement Date, as applicable. If such amount is not, in
fact, made available to Agent by such Lender when due, Agent will be entitled to
recover such amount on demand from such Lender without set-off, counterclaim or
deduction of any kind.
(2) Nothing contained in this subsection 9.6(B) will
be deemed to relieve a Lender of its obligation to fulfill its Commitments or to
prejudice any rights Agent or Borrower may have against such Lender as a result
of any default by such Lender under this Agreement.
(3) Without limiting the generality of the foregoing,
each Lender shall be obligated to fund its Pro Rata Share of any Revolving
Advance made with respect to any draw on a Lender Letter of Credit.
(C) RETURN OF PAYMENTS
(1) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(2) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
9.7 DISSEMINATION OF INFORMATION. Agent will provide Lenders with any
information received by Agent from Borrower which is required to be provided to
a Lender hereunder; provided, however, that Agent shall not be liable to Lenders
for any failure to do so, except to the extent that such failure is attributable
to Agent's gross negligence or willful misconduct.
9.8 DISCRETIONARY ADVANCES. Agent may, in its sole discretion, (i)
provided that no Event of Default exists, make Revolving Advances of up to
$1,000,000 in excess of the limitations set forth in subsection 2.1(A)(1)(b) but
not in excess of the limitation set forth in subsection 2.1(A)(1)(a) for a
period of not more than 30 consecutive days and (ii) during the continuance of
an Event of Default, make Revolving Advances in an aggregate amount of not more
than $750,000 in excess of the limitations set forth in subsection 2.1(A)(1) for
the purpose of preserving or protecting the Collateral.
60
69
SECTION 10. MISCELLANEOUS
10.1 EXPENSES AND ATTORNEYS' FEES. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees to promptly pay all
reasonable fees, costs and expenses incurred by Agent in connection with any
matters contemplated by or arising out of this Agreement or the other Loan
Documents including the following, and all such reasonable fees, costs and
expenses shall be part of the Obligations, payable on demand and secured by the
Collateral: (a) reasonable fees, costs and expenses (including reasonable
attorneys' fees, allocated costs of internal counsel and fees of environmental
consultants, accountants and other professionals retained by Agent) incurred in
connection with the examination, review, due diligence investigation,
documentation and closing of the financing arrangements evidenced by the Loan
Documents; (b) reasonable fees, costs and expenses (including reasonable
attorneys' fees, allocated costs of internal counsel and reasonable fees of
environmental consultants, accountants and other professionals retained by
Agent) incurred in connection with the review, negotiation, preparation,
documentation, execution, syndication, and administration of the Loan Documents,
the Loans, and any amendments, waivers, consents, forbearances and other
modifications relating thereto or any subordination or intercreditor agreements;
(c) reasonable fees, costs and expenses incurred by Agent in creating,
perfecting and maintaining perfection of Liens in favor of Agent, on behalf of
Lenders; (d) reasonable fees, costs and expenses incurred by Agent in connection
with forwarding to Borrower the proceeds of Loans including Agent's or any
Lenders' standard wire transfer fee; (e) reasonable fees, costs, expenses and
bank charges, including bank charges for returned checks, incurred by Agent or
any Lender in establishing, maintaining and handling lock box accounts, blocked
accounts or other accounts for collection of the Collateral; (f) reasonable
fees, costs, expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) of Agent or any Lender and reasonable costs of settlement
incurred in collecting upon or enforcing rights against the Collateral or
incurred in any action to enforce this Agreement or the other Loan Documents or
to collect any payments due from Borrower or any other Loan Party under this
Agreement or any other Loan Document or incurred in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement, whether in the nature of a "workout" or in connection with any
insolvency or bankruptcy proceedings or otherwise.
10.2 INDEMNITY. In addition to the payment of expenses pursuant to
subsection 10.1, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to indemnify, pay and hold Agent and each Lender
and any holder of the Note(s) and the officers, directors, employees, agents,
consultants, auditors, persons engaged by Agent or any Lender and any holder of
the Note(s) to evaluate or monitor the Collateral, affiliates and attorneys of
Agent, Lender and such holders (collectively called the "INDEMNITEES") harmless
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, reasonable costs, expenses and
disbursements (including the fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitee shall be
designated a party thereto) that may be imposed on, incurred by, or asserted
against that Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents, the consummation of the transactions
contemplated by this
61
70
Agreement, the statements contained in the commitment letters, if any, delivered
by Agent or any Lender, Agent's and each Lender's agreement to make the Loans
hereunder, the use or intended use of the proceeds of any of the Loans or the
exercise of any right or remedy hereunder or under the other Loan Documents (the
"INDEMNIFIED LIABILITIES"); provided that Borrower shall have no obligation to
an Indemnitee hereunder with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction.
10.3 AMENDMENTS AND WAIVERS.
(A) Except as otherwise provided herein, no amendment,
modification, termination or waiver of any provision of this Agreement or any
Loan Document, or consent to any departure by any Loan Party therefrom, shall in
any event be effective unless the same shall be in writing and signed by
Requisite Lenders or Agent, as applicable; provided, that no amendment,
modification, termination or waiver shall, unless in writing and signed by all
Lenders, do any of the following: (i) increase the Commitment of any Lender;
(ii) reduce the principal of, rate of interest on or fees payable with respect
to any Loan; (iii) extend the scheduled due date of any installment of principal
of the Loans; (iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans, or the percentage of Lenders which shall
be required for Lenders or any of them to take any action hereunder; (v) amend
or waive this subsection 10.3 or the definitions of the terms used in this
subsection 10.3 insofar as the definitions affect the substance of this
subsection 10.3; (vi) consent to the assignment or other transfer by any Loan
Party of any of its rights and obligations under any Loan Document; (vii)
increase the percentages contained in the definition of Borrowing Base; and
(viii) release all or substantially all of the Collateral and provided, further,
that no amendment, modification, termination or waiver affecting the rights or
duties of Agent under any Loan Document shall in any event be effective, unless
in writing and signed by Agent, in addition to the Lenders required herein above
to take such action.
(B) Each amendment, modification, termination or waiver shall
be effective only in the specific instance and for the specific purpose for
which it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(C) No amendment, modification or waiver of any provision of
any Lender Letter of Credit shall be applicable without the written concurrence
of the issuer of such Lender Letter of Credit. No notice to or demand on
Borrower or any other Loan Party in any case shall entitle Borrower or any other
Loan Party to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.3 shall be binding upon each
Lender, and, if signed by a Loan Party, on such Loan Party.
(D) In the event Agent waives (1) any Default arising under
subsection 8.1(E) as a result of the breach of any of the provisions of Section
5 of this Agreement (other than any such breach which constitutes an Event of
Default) or (2) any Default constituting a condition to the
62
71
funding of any Revolving Advance or issuance of any Lender Letter of Credit,
such waiver shall expire on the date upon which the Default which was the
subject of such waiver matures into an Event of Default pursuant to the terms of
this Agreement.
10.4 NOTICES. Unless otherwise specifically provided herein, all
notices shall be in writing addressed to the respective party as set forth below
and may be personally served, telecopied or sent by overnight courier service or
United States mail and shall be deemed to have been given: (a) if delivered in
person, when delivered; (b) if delivered by telecopy, on the date of
transmission if transmitted on a Business Day before 4:00 p.m. Central time or,
if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two (2) days after delivery to such courier properly addressed; or (d)
if by U.S. Mail, four (4) Business Days after depositing in the United States
mail, with postage prepaid and properly addressed.
If to Borrower: SpinCycle, Inc.
00000 Xxxxx Xxxxxxxx/Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxxx, Esq.
Telecopier: 000-000-0000
If to Agent or to Xxxxxx: Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx, 00000
Attn: HBC Portfolio Manager
Telecopy No.: (000) 000-0000
With a copy to: Xxxxxx Financial, Inc.
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department/HBC
Telecopy No.: (000) 000-0000
If to any Lender: Its address indicated on the signature page hereto,
in an Assignment and Assumption Agreement or in a notice to Agent and Borrower
or to such other address as the party addressed shall have previously designated
by written notice to the serving party, given in accordance with this subsection
10.4.
63
72
10.5 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
Notwithstanding anything in this Agreement or implied by law to the contrary,
the agreements of Borrower set forth in subsections 10.1 and 10.2 shall survive
the payment of the Loans and the termination of this Agreement.
10.6 INDULGENCE NOT WAIVER. No failure or delay on the part of Agent,
any Lender or any holder of the Note(s) in the exercise of any power, right or
privilege hereunder or under the Note(s) shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
10.7 MARSHALING; PAYMENTS SET ASIDE. Neither Agent nor any Lender shall
be under any obligation to marshal any assets in favor of any Loan Party or any
other party or against or in payment of any or all of the Obligations. To the
extent that any Loan Party makes a payment or payments to Agent and/or any
Lender or Agent and/or any Lender enforces its security interests or exercise
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
Obligations or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and continued in full force and
effect as if such payment had not been made or such enforcement or setoff had
not occurred.
10.8 ENTIRE AGREEMENT. This Agreement, the Note(s) and the other Loan
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties hereto.
10.9 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
condition exists.
10.10 SEVERABILITY. The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Agreement or the
other Loan Documents shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement,
or the other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11 LENDERS' OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS'
RIGHTS. The obligation of each Lender hereunder is several and not joint and
neither Agent nor any Lender shall
64
73
be responsible for the obligation or commitment of any other Lender hereunder.
In the event that any Lender at any time should fail to make a Loan as herein
provided, Lenders, or any of them, at their sole option, may make the Loan that
was to have been made by the Lender so failing to make such Loan. Nothing
contained in any Loan Document and no action taken by Agent or any Lender
pursuant hereto or thereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and, provided Agent fails or refuses to exercise any remedies
against Borrower after receiving the direction of the Requisite Lenders, each
Lender shall be entitled to protect and enforce its rights arising out of this
Agreement and it shall not be necessary for any other Lender to be joined as an
additional party in any proceeding for such purpose.
10.12 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
10.13 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
10.14 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns except that Borrower may not assign its rights or obligations hereunder
without the written consent of Lenders.
10.15 NO FIDUCIARY RELATIONSHIP; LIMITATION OF LIABILITIES.
(A) No provision in this Agreement or in any of the other Loan
Documents and no course of dealing between the parties shall be deemed to create
any fiduciary duty by Agent or any Lender to Borrower.
(B) (i) Neither Agent nor any Lender, nor any affiliate,
officer, director, shareholder, employee, attorney, or agent of Agent or any
Lender shall have any liability with respect to, and Borrower hereby waives,
releases, and agrees not to xxx any of them upon, any claim for any special,
indirect, incidental, or consequential damages suffered or incurred by Borrower
in connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents. Borrower hereby waives, releases,
and agrees not to xxx Agent or any Lender or any of Agent's or any Lender's
affiliates, officers, directors, employees, attorneys, or agents for punitive
damages in respect of any claim in connection with, arising out of, or in any
way related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
(ii) Neither Borrower nor any affiliate, officer,
director, shareholder, employee, attorney, or agent of Borrower shall have any
liability with respect to, and Agent and
65
74
Lenders hereby waive, release, and agree not to xxx any of them upon, any claim
for any special, indirect, incidental, or consequential damages suffered or
incurred by Agent or Lenders in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Agent and Lenders hereby waive, release, and agree not to xxx Borrower or any of
its affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the transactions
contemplated hereby.
10.16 CONSENT TO JURISDICTION. BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF XXXX
STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES
OR THE OTHER LOAN DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH LOAN PARTY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTES,
THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.
10.17 WAIVER OF JURY TRIAL. EACH LOAN PARTY, AGENT AND EACH LENDER
HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS.
EACH LOAN PARTY, AGENT AND EACH LENDER ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR
RELATED FUTURE DEALINGS. EACH LOAN PARTY, AGENT AND EACH LENDER FURTHER WARRANTS
AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.
10.18 CONSTRUCTION. Borrower, Agent and each Lender each acknowledge
that it has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by Borrower, Agent and each Lender.
10.19 COUNTERPARTS; EFFECTIVENESS. This Agreement and any amendments,
waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
66
75
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto. Delivery of an executed counterpart of a signature
page to this Agreement, any amendments, waivers, consents or supplements, or to
any other Loan Document by telecopier shall be as effective as delivery of a
manually executed counterpart thereof.
10.20 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Agent or any Lender shall have
the right to act exclusively in the interest of Agent or such Lender and shall
have no duty of disclosure, duty of loyalty, duty of care, or other duty or
obligation of any type or nature whatsoever to Borrower or any of Borrower's
shareholders or any other Person.
10.21 CONFIDENTIALITY. Agent and Lenders shall hold all nonpublic
information obtained pursuant to the requirements hereof and identified as such
by Borrower in accordance with such Person's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
business practices and in any event may make disclosure to such of its
respective Affiliates, officers, directors, employees, agents and
representatives as need to know such information in connection with the Loans.
If any Lender is otherwise a creditor of a Borrower, such Lender may use the
information in connection with its other credits. Agent and Lenders may also
make disclosure reasonably required by a bona fide offeree or assignee (or
participation), or as required or requested by any Governmental Authority or
representative thereof, or pursuant to legal process, or to its accountants,
lawyers and other advisors, and shall require any such offeree or assignee (or
participant) to agree (and require any of its offerees, assignees or
participants to agree) to comply with this Section 10.21. In no event shall
Agent or any Lender be obligated or required to return any materials furnished
by Borrower; provided, however, each Offeree shall be required to agree that if
it does not become a assignee (or participant) it shall return all materials
furnished to it by Borrower in connection herewith.
[Signature Page to Follow]
67
76
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
SPINCYCLE, INC.
By: /s/ Xxxxxxx Xxxxx
-----------------------------
Title: Chief Financial Officer
--------------------------
FEIN: 00-0000000
---------------------------
XXXXXX FINANCIAL, INC.,
as a Lender and as Agent
By: /s/
-----------------------------
Title: Senior Vice President
--------------------------
Revolving Loan Commitment:
$40,000,000
68
77
EXHIBITS
A Borrowing Base Certificate
B Compliance Certificate
C Laundry Equipment Report
D Assignment and Assumption Agreement
E Leased Property Report
F Blocked Account Agreement
SCHEDULES
1.1(A) Leased Property
1.1(B) Other Liens
1.1(C) Pro Forma
1.1 (D) Financial Statements
3.1(A) List of Closing Documents
4.1(B) Capitalization of Loan Parties
4.6 Trade Names (Present and Past Five Years)
4.7 Location of Principal Place of Business, Books and Records,
Facilities and Collateral
4.13 Intellectual Property
4.15 Environmental Compliance
4.20 Bank Accounts
4.22 Employee Matters
7.2 Guaranties
69
78
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
I, Xxxxxxx Xxxxxx, a Notary Public in and for said County, in
the State aforesaid, DO HEREBY CERTIFY that X.X. Xxxx, Xx., personally known to
me to be the Senior Vice President of Xxxxxx Financial, Inc., the person who
executed the foregoing instrument, who being by me duly sworn, did depose and
say he is the Senior Vice President of such corporation described in and which
executed the foregoing instrument; that said instrument is signed on behalf of
such corporation by order of its Board of Directors; and that he acknowledged
said instrument to be the free act and deed of such corporation.
GIVEN under my hand and notarial seal this 29th day of April,
1998.
/s/
--------------------------------------------
Notary Public
My commission expires:
-------------------------------------------
70
79
STATE OF NEW YORK )
SS
COUNTY OF NEW YORK )
I, Xxxxxxx Xxxxxx, a Notary Public in and for said County, in the State
aforesaid, DO HEREBY CERTIFY that Xxxxxxx Xxxxx, personally known to me to be a
Chief Financial Officer of SpinCycle, Inc., the person who executed the
foregoing instrument, who being by me duly sworn, did depose and say he is a
Chief Financial Officer of such corporation described in and which executed the
foregoing instrument; that said instrument is signed on behalf of such
corporation by order of its Board of Directors; and that he acknowledged said
instrument to be the free act and deed of such corporation.
GIVEN under my hand and notarial seal this 29th day of April, 1998
/s/
-------------------------------------------
Notary Public
My commission expires:
------------------------------------------
71
