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Exhibit 10.14
LOAN AND SECURITY AGREEMENT
Dated as of November 17, 1999
between
SPINCYCLE, INC.,
as Borrower
and
ALLIANCE LAUNDRY SYSTEMS LLC,
as Lender
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement"), dated as of November
17, 1999, is entered into between "Lender" and "Borrower" (hereinafter
defined).
R E C I T A L S
A. Borrower desires to borrow from Lender the sum of Three Million Dollars
($3,000,000) to refinance existing debt and pay closing costs.
B. Lender desires, upon the terms and conditions set forth in this
Agreement, to make the loan requested by Borrower.
NOW, THEREFORE, in consideration of the parties' mutual agreements
contained herein, the parties hereto agree as follows:
1. DEFINITIONS
1.1 General Terms. As used in this Agreement, the following
terms shall have the following definitions:
"Accounts" shall mean all of Borrower's presently existing and
hereafter arising accounts, accounts receivable, contract rights,
instruments, documents, chattel paper, and all other forms of
obligations owing to Borrower arising out of the sale or lease of
goods or the rendition of services by Borrower, whether or not
earned by performance, and any and all credit insurance, guarantees,
letters of credit and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower, and all products
and proceeds of the foregoing.
"Affiliate" shall mean any Person that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or
is under common control with, Borrower.
"Agreement" shall mean this Loan and Security Agreement, any and all
exhibits or schedules hereto, any and all concurrent or subsequent
riders to this Loan and Security Agreement and any extensions,
supplements, amendments, modifications or restatements to or of this
Loan and Security Agreement and/or to or of any such rider.
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"Bank" shall mean LaSalle Bank National Association, a national
banking association.
"Bank Financing" shall mean the term loan by Bank to Borrower in the
maximum principal amount of $12,000,000, to be evidenced by the Bank
Loan Documents.
"Bank Loan Documents" shall mean the Loan and Security Agreement
between Bank and Borrower of even date herewith and all other
documents which are defined therein as "Loan Documents."
"Bank Senior Collateral" shall have the meaning provided therefor in
the Intercreditor Agreement.
"Borrower" shall mean SpinCycle, Inc.
"Borrower's Books" shall mean all of Borrower's books and records
including, but not limited to: minute books; ledgers; records
indicating, summarizing, or evidencing Borrower's assets,
liabilities, the Accounts and all information relating thereto;
records indicating, summarizing, or evidencing Borrower's business
operations or financial condition; records indicating, summarizing,
or evidencing Borrower's compliance with or problems or activities
concerning Environmental Laws; and all computer programs, disc or
tape files, printouts, runs, and other computer prepared information
and the equipment containing such information and any software
necessary to operate the same.
"Business Day(s)" shall mean any day other than a Saturday, Sunday
or other day on which banks in Illinois are closed.
"Capital Expenditures" shall mean, with respect to any period, the
aggregate of all expenditures (whether paid in cash or accrued as
liabilities and including expenditures for the portion of
capitalized lease obligations amortizable in the fiscal period of
measurement) by Borrower during such period that are required by
Generally Accepted Accounting Principles to be included in or
reflected by the property, plant, or equipment or similar fixed
asset accounts in the balance sheet of Borrower.
"Closing" shall have the meaning set forth in Section 5.1 hereof.
"Closing Date" shall mean the date of the Closing.
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"Code" shall mean the Uniform Commercial Code of the State of
Illinois as in effect from time to time during the Initial Term and
any renewal term hereof, and any and all terms used in this
Agreement which are not otherwise defined herein but are defined in
the Code shall be construed and defined in accordance with the
meaning and definition ascribed to such terms under the Code.
"Collateral" shall mean each and all of the following wherever
located and whether now existing or owned or hereafter created or
acquired by Borrower: the Accounts; the General Intangibles; the
Negotiable Collateral; the Inventory; Borrower's Books; the
Equipment; any money, deposit accounts or other assets of Borrower
in which Lender receives a Lien or which hereafter comes into the
possession, custody or control of Lender or any bailee of Lender;
and all products and proceeds of every nature of any of the
foregoing, including, but not limited to, proceeds of insurance
covering the Collateral and any and all Accounts, General
Intangibles, Negotiable Collateral, Inventory, contract rights,
instruments, documents and chattel paper, Equipment, money, deposit
accounts or other tangible and intangible property of Borrower
resulting from the sale or other disposition of the Collateral, and
the proceeds and products thereof.
"Default Rate" shall have the meaning set forth in Section 2.2(b)
hereof.
"EBITDA" shall have the meaning provided therefor in the definition
of Senior Interest Coverage Ratio set forth in this Section.
"Environmental Laws" shall mean any applicable laws, statutes,
rules, regulations, orders, consent decrees, permits or licenses of
any governmental authority, relating to prevention, remediation,
reduction or control of pollution, or protection of the environment,
natural resources and/or human health and safety, including, without
limitation, such applicable laws, statutes, rules, regulations,
orders, consent decrees, permits or licenses relating to (a) solid
waste and/or Hazardous Materials treatment, storage, disposal,
generation and transactions, (b) air, water, and noise pollution,
(c) soil, ground, water or groundwater contamination, (d) the
generation, handling, storage, transportation or Release into the
environment of Hazardous Materials, and (e) regulation of
underground and above ground storage tanks.
"Equipment" shall mean the machinery and equipment of Borrower,
including, without limitation, laundry equipment, processing
equipment, data processing and computer equipment with software and
peripheral equipment, and all engineering, processing and
manufacturing equipment,
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office machinery, furniture, materials handling equipment, tools,
molds, dies, attachments, accessories, automotive equipment,
trailers, trucks, motor vehicles, leasehold improvements and cranes,
and other equipment of every kind and nature, and fixtures, all
whether now owned or hereafter acquired, and wheresoever situated,
together with all additions and accessions thereto, replacements
therefor, all parts therefor, and all manuals, drawings,
instructions, warranties, and rights with respect thereto, and all
products and proceeds of the foregoing, and condemnation awards and
insurance proceeds with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and all references to sections thereof shall
include such sections and any predecessor and successor provisions
thereto.
"Event of Default" shall mean the occurrence of any one or more of
the events set forth in Section 12 of this Agreement.
"Extended Maturity Date" shall mean September 30, 2006.
"Fiscal Quarter" shall mean the four (4) fiscal quarterly periods of
Borrower during each Fiscal Year consisting of three (3), three (3),
four (4), and three (3) Reporting Periods, respectively.
"Fiscal Year" shall mean with respect to Borrower, the fiscal
accounting period of Borrower each year consisting of thirteen (13)
four calendar week accounting periods ending on the last Sunday of
December of each calendar year.
"Free Cash Flow" shall mean with respect to Borrower for any period
of measurement, the sum of EBITDA for such period, less Maintenance
Capital Expenditures during such period, less income taxes paid
during such period, less interest expense paid during such period.
"Funded Debt" shall mean Indebtedness of Borrower incurred under
this Agreement, the other Loan Documents, and the Bank Loan
Documents.
"Funded Debt Interest Expense" shall have the meaning provided
therefor in the definition of Senior Interest Coverage Ratio set
forth in this Section.
"General Intangibles" shall mean all of the Borrower's present and
future general intangibles, contract rights and other personal
property rights of Borrower to all choses or things in action, tax
refund claims, credits, claims, demands, goodwill, licenses,
franchise agreements, subscription costs,
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patents, trade names, trademarks, copyrights, rights to royalties,
blueprints, drawings, customer lists, purchase orders, computer
programs, computer discs, computer tapes, literature, reports,
catalogs, methods, sales literature, video tapes, confidential
information and trade secrets, consulting agreements, employment
agreements, leasehold interests in real and personal property,
insurance policies, deposits with insurers relating to workmen's
compensation liabilities, deposit accounts, tax refunds and
proprietary rights in any Equipment, other than Equipment, Inventory
and Accounts, as well as Borrower's Books relating to any of the
foregoing, and all products and proceeds of the foregoing.
"Generally Accepted Accounting Principles" shall mean, with respect
to any date of determination, generally accepted accounting
principles as used by the Financial Accounting Standards Board
and/or the American Institute of Certified Public Accountants
consistently applied and maintained throughout the periods
indicated.
"Hazardous Materials" shall mean any flammable or explosive
materials, petroleum (including crude oil and its fractions),
radioactive materials, hazardous wastes, toxic substances or related
hazardous materials, including without limitation polychlorinated
biphenyls, friable asbestos, and any substances defined as, or
included in the definition of toxic or hazardous substances, wastes,
or materials under any federal or applicable state or local laws,
ordinances, rules or regulations including Environmental Laws.
"Indebtedness" shall mean, with respect to any Person, (a)
indebtedness for borrowed money or for the deferred purchase price
of property or services in respect of which such Person is liable,
contingently or otherwise, as obligor or otherwise, including
without limitation accounts payable and accrued indebtedness owed by
such Person or any commitment by which such Person assures a
creditor against loss, including contingent reimbursement
obligations with respect to letters of credit, (b) indebtedness
guaranteed in any manner by such Person, including guarantees in the
form of an agreement to repurchase or reimburse, (c) obligations
under leases which shall have been or should be, in accordance with
Generally Accepted Accounting Principles, recorded as capital
leases, in respect of which obligations such Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person assures a creditor against
loss, and (d) any unfunded obligation of such Person to any Benefit
Plan or Multiemployer Plan.
"Indemnified Persons" shall have the meaning set forth in Section 18
hereof.
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"Insolvency Proceeding" shall mean, with respect to any Person, any
proceeding commenced by or against such Person, under any provision
of the United States Bankruptcy Code, as amended, or under any other
bankruptcy, reorganization or insolvency law, or any assignment for
the benefit of creditors, formal or informal moratorium, or
compositions or extensions with some or all creditors of such
Person.
"Intercreditor Agreement" shall mean the Intercreditor Agreement of
even date herewith between Bank and Lender.
"Inventory" shall mean all present and future inventory in which
Borrower has any interest, including, but not limited to, goods held
by Borrower for sale or lease or to be finished under a contract of
service and all of Borrower's present and future raw materials, work
in process, finished goods, supplies and packing and shipping
materials, wherever located, and any documents of title representing
any of the above.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
all references to sections thereof shall include such sections and
any predecessor and successor provisions thereto.
"Lender" shall mean Alliance Laundry Systems LLC, a Delaware limited
liability company.
"Lien" shall mean any mortgage, deed of trust, pledge, fixed or
floating charge, lien, security interest, or encumbrance or security
arrangement of any nature whatsoever, whether arising by written or
oral agreement or by operation of law, including without limitation
any conditional sale or title retention arrangement and any
assignment, deposit arrangement or lease intended as or having the
effect of, security.
"Loan" shall have the meaning set forth in Section 2.1 hereof.
"Loan Documents" shall mean all agreements, instruments and
documents, including without limitation security agreements, loan
agreements (including without limitation this Agreement), notes,
guarantees, mortgages, deeds of trust, subordination agreements,
intercreditor agreements, pledges, affidavits, certificates, powers
of attorney, consents, assignments, landlord and mortgagee waivers,
opinions, collateral assignments, reimbursement agreements,
contracts, notices, leases, financing statements, and all
amendments, supplements, restatements and renewals thereof, and all
other written matter, whether heretofore, now or hereafter executed
by or on
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behalf of Borrower, or any other Person in connection with the
Obligations or the transactions contemplated hereby (including
without limitation any guaranty of the Obligations), and delivered
to Lender, together with all agreements, instruments and documents
referred to therein or contemplated thereby, whether heretofore, now
or hereafter executed by or on behalf of Borrower or any such other
Persons and delivered to Lender, and all amendments, supplements,
restatements and renewals thereof, but not including any proposal
letter, commitment letter or other comparable documents delivered by
Lender prior to the date hereof and not expressly incorporated
herein and made a part hereof.
"Losses" shall have the meaning set forth in Section 18.1 hereof.
"Maintenance Capital Expenditures" shall have the meaning set forth
in Section 8.20 hereof.
"Maturity Date" shall mean September 30, 2001.
"Negotiable Collateral" shall mean a letter of credit, advice of
credit, instrument, money, negotiable document, warehouse receipt,
xxxx of lading, certificated security, certificate of title,
certificate of deposit, chattel paper, or similar property, and the
proceeds thereof.
"Net Worth" means the total of Borrower's stated capital, paid in
surplus and retained earnings, less treasury stock, all as
determined in accordance with Generally Accepted Accounting
Principles.
"Note" shall have the meaning set forth in Section 2.1 hereof.
"Obligations" shall mean all loans, advances, overdrafts, debts,
liabilities, obligations, covenants, lease payments, guarantees and
duties owing by Borrower to Lender of any kind or description
(whether advanced pursuant to or evidenced by this Agreement, by the
Note, by any other Loan Document or other agreement, instrument or
document or otherwise), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising,
and including without limitation any debt, liability or obligation
owing from Borrower to another Person which Lender may have obtained
by assignment of which notice is provided to Borrower (or otherwise
as a result of a payment made by Lender on behalf of Borrower as
permitted under this Agreement or any other Loan Documents) and
further including without limitation all interest, all Out-of-Pocket
Fees and Costs which Borrower is required to pay or reimburse by
this Agreement or any other Loan Document, by law or otherwise.
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"Out-of-Pocket Fees and Costs" shall have the meaning set forth in
Section 2.3(b) hereof.
"Permanent Term" shall have the meaning set forth in Section 3.1
hereof.
"Permitted Liens" shall have the meaning set forth in Section 8.1
hereof.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability corporation,
institution, entity or governmental entity.
"Potential Default" shall mean any event which through the passage
of time, service of notice or both, would mature into an Event of
Default.
"Pro Formas" shall have the meaning set forth in Section 7.11
hereof.
"Rate" shall have the meaning set forth in Section 2.14(a) hereof.
"Reference Rate" shall mean the variable per annum rate of interest
announced from time to time by Bank at its corporate headquarters in
Chicago, Illinois, as its prime or equivalent rate. The "Reference
Rate" is one of Bank's index rates and merely serves as a basis
under which effective rates of interest are calculated for loans
making reference thereto and may not be the lowest or best rate at
which Bank calculates interest or extends credit.
"Release" shall mean any actual or threatened past, present or
future releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, seeping, injecting, escaping, leaching,
dumping or disposing, whether intentional or not.
"Reporting Period" shall mean each of Borrower's thirteen (13)
annual four week fiscal reporting periods.
"Restriction Agreement" shall have the meaning set forth in Section
8.8 hereof.
"Senior Discount Notes" shall mean Borrower's $144,990,000 principal
amount of 12-3/4% Series B Senior Discount Notes due 2005, issued
pursuant to an Indenture dated as of April 29, 1998 between Borrower
and Norwest Bank Minnesota, N.A., as Trustee (the "Note Indenture").
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"Senior Interest Coverage Ratio" shall mean with respect to Borrower
for any period of measurement (a) the total of (i) Borrower's net
income after income taxes (exclusive of any gain or loss in such
period from an asset disposition other than Inventory in the
ordinary course of business and excluding other extraordinary gains
and losses) for such period, plus (ii) Borrower's amortization,
depreciation and other non-cash charges (excluding Accounts
reserves, Inventory reserves and other reserves incurred in the
ordinary course of business) for such period ("EBITDA"), divided by
(b) interest expense paid or accrued on Funded Debt for such period
("Funded Debt Interest Expense").
"Subordinated Indebtedness" shall mean Borrower's Indebtedness, if
any, to any Person, the repayment of which has been subordinated to
the repayment of the Obligations on terms and by written agreement
in form and substance acceptable to Lender.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors of such
corporation (irrespective of whether at the time stock of any other
class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned by Borrower, or any partnership,
limited liability company or joint venture of which more than fifty
percent (50%) of the outstanding equity interests are at the time,
directly or indirectly, owned by Borrower.
"Tangible Net Worth" means the sum of the Net Worth of Borrower,
plus the outstanding principal balance of the Senior Discount Notes,
less all of the following: (i) all prepaid expenses and deposits,
(ii) the book value of all such assets which would be treated as an
intangible under Generally Accepted Accounting Principles, including
without limitation, goodwill, trademarks, tradenames, copyrights,
patents, licenses, deferred charges, unamortized debt discount and
expenses and covenants not to compete, and (iii) accounts, notes and
other receivables due from Affiliates and/or employees of Borrower.
"Term" shall mean the term of this Agreement, commencing on the
Closing Date and ending on the Maturity Date, unless extended.
"Uncured Default" shall mean an Event of Default which shall be
continuing.
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1.2 Accounting Terms. Any accounting terms used in this
Agreement which are not specifically defined herein shall have the
meanings customarily given them in accordance with Generally Accepted
Accounting Principles. In the event that changes in Generally Accepted
Accounting Principles shall be mandated by the Financial Accounting
Standards Board and/or the American Institute of Certified Public
Accountants or any similar accounting body of comparable standing, or
shall be recommended by Borrower's certified public accountants, to the
extent that such changes would modify such accounting terms or the
interpretation or computation thereof as contemplated by this Agreement at
the time of execution hereof, then in such event such changes shall be
followed in defining such accounting terms only after the Borrower and
Lender shall have agreed to amend this Agreement to reflect the original
intent of such terms in light of such changes, and such terms shall
continue to be applied and interpreted without such change until such
agreement.
1.3 Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The
section titles, table of contents and list of exhibits appear as a matter
of convenience only and shall not affect the interpretation of this
Agreement. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
All references to any instruments or agreements, including, without
limitation, references to any of the Loan Documents shall include any and
all modifications or amendments thereto and any and all extensions or
renewals thereof. The Recitals to this Agreement are incorporated into
this Agreement in their entirety and deemed to be a part hereof.
2. LOAN; FEES; TERMS OF PAYMENT
2.1 Term Loan. Subject to the terms and provisions of this
Agreement including without limitation, that no Event of Default or
Potential Default has occurred and all other conditions precedent to
lending under Section 5 hereof have been satisfied, Lender agrees to make
a term loan (the "Loan") to Borrower on the Closing Date in the amount of
Three Million Dollars ($3,000,000).
The Loan shall be evidenced by, and repayable in accordance
with, the Note, which shall be substantially in the form of Exhibit A to
this Agreement ("Note").
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2.2 Interest.
(a) Rate. All Obligations owed by Borrower to Lender
shall bear interest on the unpaid principal balance thereof, at a
rate per annum (computed on the basis of the actual number of days
elapsed over a 360 day year) equal to the Reference Rate, plus one
percent (1.00%) (the "Rate"). Interest owed on the Obligations shall
be payable monthly in arrears on the first Business Day of each
month.
In addition to calculations of the Rate as provided
above, in the event that the Reference Rate announced is, from time
to time hereafter, changed, adjustment in the Rate shall be made on
the effective date of such change in the Reference Rate. Lender
shall use reasonable efforts to notify Borrower of each change in
the Reference Rate as soon as practicable, but Borrower's obligation
to pay all interest at the Rate and Default Rate as provided in this
Agreement shall not be affected by, nor shall Lender have any
liability for, any failure to so notify Borrower.
(b) Default Rate. Notwithstanding the foregoing, the
Obligations shall bear interest, from and after written notice by
Lender to Borrower of the occurrence of an Event of Default and for
so long as such Event of Default has not been cured or waived as set
forth in this Agreement, and without constituting a waiver of any
such Event of Default, on the balances owing from time to time, at a
rate per annum equal to two percentage (2.00%) points above the Rate
(the "Default Rate"), payable on demand.
(c) Maximum Interest. It is the intention of Lender and
Borrower to comply with the laws of the State of Illinois, and
notwithstanding any provision to the contrary contained herein or in
the other Loan Documents, Borrower shall not be required to pay, and
Lender shall not be permitted to collect, any amount in excess of
the maximum amount of interest permitted by applicable law ("Excess
Interest"). If any Excess Interest is provided for or determined to
have been provided for by a court of competent jurisdiction in this
Agreement or in any of the other Loan Documents, then in such event
(i) the provisions of this Section 2.14(d) shall govern and control;
(ii) Borrower shall not be obligated to pay any Excess Interest;
(iii) any Excess Interest that Lender may have received hereunder
shall be, at Lender's option, (A) applied as a credit against either
the outstanding principal balance of the Loan or accrued and unpaid
interest hereon, (B) refunded to the payor thereof, or (C) any
combination of the foregoing; (iv) the interest rate provided for
herein shall be automatically reduced to the maximum rate allowed
under
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applicable law, 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 (v) Borrower shall not have any action
against Lender for any damages arising out of the payment or
collection of any Excess Interest. Notwithstanding the foregoing, if
any interest payment or other charge or fee payable hereunder or
under any of the other Loan Documents exceeds the maximum amount
then permitted by applicable law, then to the extent permitted by
law, Borrower shall be obligated to pay the maximum amount then
permitted by applicable law and Borrower shall continue to pay the
maximum amount from time to time permitted by applicable law until
all such interest payments and other charges and fees otherwise due
hereunder or under any of the other Loan Documents (in the absence
of such restraint imposed by applicable law) have been paid in full.
2.3 Fees. In consideration of Lender's making of the Loan
hereunder, Borrower shall pay to Lender the following fees and charges:
(a) Closing Fee. A one-time closing fee equal to
$30,000.00, payable at the Closing.
(b) Out-of-Pocket Fees, Costs and Expenses. All
reasonable out-of-pocket fees, costs and expenses ("Out-of-Pocket
Fees and Costs"), incurred by Lender in connection with the
documentation, negotiation and closing of this Agreement and the
other Loan Documents and the ongoing administration of the Loan and
any and all reasonable costs of enforcement of this Agreement or the
other Loan Documents or collection of the Obligations, including,
without limitation, the reasonable fees, costs and expenses of
attorneys and paralegals in connection with all of the foregoing,
all of which shall be part of the Obligations, payable on demand.
Prior to an Event of Default, Lender shall provide Borrower with
copies of invoices of charges and expenses setting forth all
Out-of-Pocket Fees and Costs. There shall be included as
Out-of-Pocket Fees and Costs, but without limitation of the
foregoing sentence, certain specific categories of Out-of-Pocket
Fees and Costs related to Collateral as follows: (i) any reasonable
costs or expenses incurred by Lender concerning any property of
Borrower relating to Environmental Laws, including without
limitation, for consultants or engineers; (ii) any out-of-pocket
fees, costs and expenses for audits or examinations by Lender or its
agents or representatives, of Borrower or the Collateral; and (iii)
any reasonable appraisal and evaluation fees and expenses, including
for appraisers retained by Lender in Lender's discretion to appraise
Equipment, Inventory or any other Collateral or property of Borrower
which are undertaken pursuant to and as limited by Section 6.2(c).
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2.4 Lender Rights to Collect Directly. Lender or Lender's
designee may, after the occurrence of an Event of Default which has been
declared by Lender by notice to Borrower, (i) notify customers or account
debtors of Borrower that the Accounts have been assigned to Lender and
that Lender has a Lien thereon, and (ii) collect the Accounts directly,
and charge the reasonable collection costs and expenses to Borrower's
account.
2.5 Disputes, Returns and Allowances. Returns and allowances,
if any, as between Borrower and its customers, will be on the same basis
and in accordance with the usual customary practices of Borrower, as they
exist at this time. After the occurrence of an Event of Default which has
not been cured or waived as set forth in this Agreement, no discount,
credit or allowance shall be granted by Borrower to any account debtor
without Lender's consent, and no return of merchandise shall be accepted
by Borrower outside the ordinary course of its business without Lender's
consent. Lender may, in its discretion, after the occurrence of an Event
of Default which has not been cured or waived as set forth in this
Agreement, settle or adjust disputes and claims directly with account
debtors for amounts and upon terms which Lender considers advisable, and
in such cases, Lender will credit Borrower's account with only the net
amounts received by Lender in payment of such disputed Accounts, after
deducting all Out-of-Pocket Fees and Costs incurred or expended in
connection therewith.
2.6 Lender Statements. Lender may render from time to time,
statements of the Obligations owing by Borrower to Lender, including
statements of all principal, interest, and Out-of-Pocket Fees and Costs
owing, and such statements shall be presumed to be correct and accurate
and constitute an account stated between Borrower and Lender unless,
within sixty (60) days after receipt thereof by Borrower, Borrower shall
deliver to Lender, in accordance with Section 16 of this Agreement, at
Lender's place of business indicated in Section 16 hereof, written
objection thereto specifying the error or errors, if any, contained in any
such statement.
2.7 Payments.
(a) Borrower shall make each payment in respect of the
Loan and any other payments due under this Agreement not later than
12:00 p.m. Chicago time on the day when due, in United States
dollars, to Lender at its office in Ripon, Wisconsin in immediately
available funds.
(b) Borrower shall, at the time of making such payment
under this Agreement or the Note, specify to Lender the amounts
payable by Borrower hereunder to which such payment is to be applied
(and in the
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event that it fails to so specify, or if an Event of Default has
occurred and has not been cured or waived as set forth in this
Agreement, Lender shall distribute such payment in such manner as
Lender may determine to be appropriate).
2.8 All Collateral Secures Borrower's Obligations. The Loan
made by Lender to Borrower under this Agreement shall be secured not only
by Lender's Lien on the Collateral, but also by any Lien heretofore, now
or at any time or times hereafter granted by Borrower to Lender under any
of the Loan Documents.
3. TERM OF THIS AGREEMENT; PREPAYMENTS
3.1 Term. This Agreement shall have a term (the "Initial
Term") commencing on the Closing Date and maturing on the Maturity Date.
Provided that no Event of Default exists at the expiration of the Initial
Term, an additional term (the "Permanent Term") shall commence on that
date and expire on the Extended Maturity Date.
3.2 Prepayment. Borrower may voluntarily prepay the
Obligations in whole or in part, at any time, without premium or penalty
of any kind.
3.3 Effect of Termination. The indemnifications set forth in
Section 18 and elsewhere in this Agreement shall survive the termination
of this Agreement.
4. CREATION OF LIEN AND COLLATERAL
4.1 Security Interest. Borrower hereby grants to Lender, a
continuing Lien and security interest in all presently existing and
hereafter arising Collateral which Borrower now or hereafter owns or has
an interest in, wherever located, to secure prompt repayment of any and
all Obligations owed and to be owed by Borrower to Lender and to secure
prompt performance by Borrower of each and all of its covenants and
obligations under this Agreement and the other Loan Documents. Lender's
Lien and security interest in the Collateral shall attach to all
Collateral without further act on the part of Lender or Borrower. In the
event that any Collateral, including proceeds, is evidenced by or consists
of Negotiable Collateral, Borrower shall, immediately upon receipt
thereof, endorse and assign such Negotiable Collateral over to Lender (or
in blank if requested by Lender) and deliver actual physical possession of
the Negotiable Collateral to Lender.
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4.2 Preservation of Collateral and Perfection of Security
Interests. Borrower shall execute and deliver to Lender, concurrently with
Borrower's execution of this Agreement, and at any time or times hereafter
immediately at the request of Lender, all financing statements, amendments
or continuations of financing statements, fixture filings, security
agreements, chattel mortgages, assignments, endorsements of certificates
of title, affidavits, reports, notices, schedules of accounts, letters of
authority and all other documents that Lender may reasonably request, in
form satisfactory to Lender, that are required to perfect and maintain
perfected Lender's Liens in the Collateral and to fully consummate all of
the transactions contemplated under this Agreement. Borrower hereby
irrevocably makes, constitutes and appoints Lender (and any of Lender's
officers, employees or agents designated by Lender), with full power of
substitution by Lender, as Borrower's true and lawful attorney with power
to sign the name of Borrower on any of the above-described documents or on
any other similar documents which need to be executed, recorded and/or
filed to perfect or continue perfected Lender's Lien in the Collateral
upon the failure of Borrower to do so after a request by Lender. For
purposes hereof, photocopies of this Agreement or any other Loan Document
constituting a security agreement may be filed by Lender as a financing
statement.
4.3 Inspection, Appointment as Attorney-in-Fact. Lender
(through any of its officers, employees or agents) shall have the right,
at any time or times during Borrower's usual business hours, or during the
usual business hours of any third party having control over the records of
Borrower, to inspect and verify Borrower's Books and the Collateral in
order to verify the amount or condition of, or any other matter relating
to, the Collateral and Borrower's financial condition; provided that,
unless an Event of Default has occurred or Lender in good faith believes
that Borrower has breached a representation, warranty or covenant
hereunder, Lender shall give Borrower two (2) Business Days' notice of
Lender's inspections. In addition, Borrower hereby appoints Lender (and
any of Lender's officers, employees or agents designated by Lender), with
full power of substitution by Lender, as Borrower's attorney-in-fact, with
power: to endorse Borrower's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into
Lender's possession; to sign Borrower's name on any invoice or xxxx of
lading relating to any Accounts, on drafts against account debtors, on
schedules and assignments of Accounts, on verifications of Accounts and on
notices to account debtors; after an occurrence of an Event of Default, to
notify the post office authorities to change the address for delivery of
Borrower's mail to an address designated by Lender, to receive and open
all mail addressed to Borrower, and to retain all mail relating to the
Collateral and forward all other mail to Borrower; to send, whether in
writing or by telephone, request for verifications of Accounts and request
for verifications of trade and other Indebtedness of Borrower; and after
the occurrence of an Event of Default, to do
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all things necessary to carry out this Agreement. Borrower ratifies and
approves all acts of the attorney acting in accordance with this Section
4.3 (other than those acts which constitute gross negligence or willful
misconduct) and neither Lender nor any other Person acting as Borrower's
attorney hereunder will be liable for any acts or omissions or for any
error of judgment or mistake of fact or law made in good faith except as
result of gross negligence or willful misconduct. The appointment of
Lender as Borrower's attorney, and each and every one of Lender's rights
and powers as set forth in this Section 4.3, being coupled with an
interest, are irrevocable so long as any Accounts in which Lender has a
Lien remain unpaid and until all of the Obligations have been fully repaid
and this Agreement shall have expired or been terminated.
5. CONDITIONS PRECEDENT
5.1 Closing: Conditions to Closing. The Loan shall be made on
the Closing Date hereunder at the offices of Bank's counsel, or at such
other place as may be designated by Lender ("Closing"). In addition to
those conditions set forth in Section 2 of this Agreement, prior to or
contemporaneously with the making of the Loan hereunder at Closing, Lender
shall be satisfied that all of the following conditions precedent shall
have been satisfied in a manner satisfactory to Lender:
(a) Satisfactory Due Diligence. Lender shall have
completed and shall be satisfied with the results of (i) due
diligence by Lender and its counsel with respect to Borrower; (ii)
Lender's examination of Borrower, including a review of prior years'
"management letters" by Borrower's independent certified public
accountants, to the extent such management letters exist; (iii) the
results of investigations, including any consultants' reports,
concerning Environmental Laws; (iv) all appraisals reasonably
required by Lender; and (v) any governmental approvals, waivers or
consents.
(b) No Adverse Change. There shall have been, as
determined by Lender in its reasonable discretion (i) no material
adverse change since August 8, 1999 in the operations (financial or
otherwise) of Borrower, and (ii) no material litigation or claims
with respect to this Agreement or otherwise which could have a
material adverse effect on the condition, financial or otherwise,
business, property or assets of Borrower or the results of the
operation of Borrower, the Collateral, Lender's Liens or ability to
enforce its rights and remedies hereunder or the ability of Borrower
to pay or perform the Obligations.
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(c) Senior Loan. Lender shall have received evidence
reasonably satisfactory to it that Lender has a first priority
perfected Lien on the Collateral (other than the Bank Senior
Collateral) and a second priority perfected Lien on the Bank Senior
Collateral, and all financing statements and other documents Lender
deems reasonably necessary to perfect such Lien shall have been
filed and recorded.
(d) Required Documents. Lender shall have received all
of the following documents, each in form and substance reasonably
satisfactory to Lender and its counsel, duly executed and dated the
Closing Date (or such other date prior thereto as shall be
reasonably satisfactory to Lender), where required:
(i) Agreement. Multiple copies of this Agreement
as requested by Lender.
(ii) Note. The Note.
(iii) Intercreditor Agreement. The Intercreditor
Agreement.
(iv) Assignments of Leases. Assignments to Lender,
for collateral purposes, of all leases of Borrower for any of
Borrower's places of business or leased locations where
Collateral is located, other than locations where the Bank
Senior Collateral is located.
(v) Landlord and Mortgagee Waivers. Landlord,
mortgagee and bailee waivers for any of Borrower's places of
business, equipment locations or Inventory storage or
processing locations, including without limitation, all leased
locations or where any Collateral is located or where payroll
and Accounts are processed, except for such premises which are
owned by Borrower and subject only to the Lien of Lender,
together with any necessary landlord consents to any subleases
or lease assignments to Borrower.
(vi) Certificate for Certified Resolutions,
Incumbency By-Laws. A secretary's certificate for the Borrower
with respect to resolutions of the directors of Borrower
authorizing this Agreement and all related transactions and
the incumbency of Borrower's officers.
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(vii) Legal Opinion. A legal opinion of Xxxxxxxx &
Xxxxx, counsel for Borrower, in form and substance reasonably
acceptable to Lender.
(viii) Organizational Documents. A copy of the
by-laws and the Certificate of Incorporation of the Borrower,
as amended to and including the Closing Date, certified by the
Secretary of State of the State of incorporation of Borrower.
(ix) Insurance. A certified list with copies of
insurance policies of Borrower; certificates of liability and
other third party insurance of Borrower, each showing Lender
as certificate holder and additional insured; certificates of
property and boiler and machinery insurance, each showing
Lender as certificate holder and lender loss payee, with a
form of lender's loss payable clause in form and in accordance
with the requirements of Section 9.2 of this Agreement to
Lender attached to each such certificate; a certificate of
business interruption insurance of Borrower, showing Lender as
certificate holder, lender's loss payee, and assignee of such
policy, with lender's loss payable clause and the collateral
assignment of such insurance policy, in form and substance
satisfactory to Lender.
(x) Good Standing Certificates. Good standing
certificates and qualifications to do business for Borrower in
the State of its incorporation and in each other State in
which the failure of Borrower to be qualified to transact
business as a corporation would have a material adverse impact
on Borrower.
(xi) Officer's Certificate. A certificate executed
by the President of Borrower in his capacity as such officer,
stating that (a) no Event of Default or Potential Default has
occurred and is continuing, (b) no material adverse change in
the condition or operations, financial or otherwise, or in the
business prospects of such Borrower's business, has occurred
since August 8, 1999, and (c) no litigation, investigation or
proceeding, or injunction, writ or restraining order of the
type described in Section 7.8 or Section 9.3 hereof is pending
or threatened.
(xii) Releases. Evidence of releases of any other
Liens on the Collateral other than Permitted Liens.
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(xiii) Completion of Transactions. Satisfactory
evidence of completion of the Bank Financing.
(xiv) [Intentionally not used.]
(xv) Payoff Letters and Releases. Payoff letters,
releases and UCC-3 termination statements, executed by any
secured party designated by Lender, in a form appropriate for
recording and filing, as to any Lien recorded against the
Collateral and which is not permitted hereunder.
(xvi) Pro Formas. The Pro Formas.
(xvii) Other. Such other documents as Lender shall
reasonably request.
(e) Out-of-Pocket Fees and Costs. Lender shall have
received reimbursement for all Out-of-Pocket Fees and Costs which
then have been paid or incurred by Lender.
(f) Warranties and Representations. All of the
warranties and representations contained in this Agreement or any
other Loan Document shall be true and correct in all material
respects on and as of the Closing Date of the Loan as if made on
such date.
(g) No Default. As determined by Lender in its
reasonable discretion, no Potential Default shall have occurred and
be continuing or will result from the funding of the Loan, and no
Event of Default shall have occurred which has not been cured or
waived as set forth in this Agreement or will result from the
funding of the Loan.
(h) Other Requirements and Other Documents. Lender shall
have received, in form and substance reasonably satisfactory to
Lender, all certificates, orders, authorizations, consents,
affidavits, schedules, instruments, security agreements, financing
statements, and other documents which are provided for hereunder, or
which Lender may at any time reasonably request.
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6. WARRANTIES, REPRESENTATIONS, AND COVENANTS -- COLLATERAL
Borrower warrants, represents, covenants and agrees that:
6.1 Collateral Warranties Generally. Borrower has and will
continue to have good and marketable title to the portion of the
Collateral owned by it; the Collateral is free and clear of all Liens,
except (i) as may be consented to in writing by Lender, (ii) as held by
Lender, or (iii) Permitted Liens.
6.2 Account Warranties and Covenants. The Accounts are and
will, at all times pertinent hereto, be bona fide existing obligations
created by the sale and delivery of merchandise or the rendition of
services to account debtors in the ordinary course of business, free of
Liens (except those described in Section 6.1), and are unconditionally
owed to Borrower without defenses, disputes, offsets or counterclaims
which have been asserted, rights of return or cancellation, except for any
such defenses, offsets or counterclaims which may arise in the ordinary
course of Borrower's business.
6.3 Inventory and Equipment Warranties and Covenants.
(a) Borrower shall keep the Inventory and Equipment only
at the locations specified in Schedule 6.3 hereto or at (i)
locations consented to by Lender upon 30 days' prior written notice
to Lender, or (ii) new store locations permitted by Section 8.20 of
this Agreement, and in the case of (i) and (ii) above, execution by
Borrower or any other Persons of such financing statements,
landlord, mortgagee, bailee, warehouseman or other agreements
requested by Lender in its reasonable discretion.
(b) All Inventory is now and at all times hereafter
shall be of good and merchantable quality, free from defects that
make the Inventory unsalable in the ordinary course of Borrower's
business (as determined by Lender in its reasonable discretion).
(c) Borrower shall keep and maintain the Equipment in
good operating condition and repair (normal wear and tear excepted)
in a manner consistent with that maintained by prudent business
people in similar circumstances and, subject to the terms of this
Agreement, make necessary or appropriate replacements thereto.
Borrower shall not permit any items of Equipment to become a fixture
to real estate or an accession to other property and the Equipment
is now and shall at all times remain and be personal property to the
extent that under applicable law, such Equipment would be deemed to
be fixtures and/or otherwise part of the real
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property, except where Lender first receives a landlord's waiver
satisfactory to it, establishing the priority of Lender's Lien in
such Equipment. Borrower shall promptly deliver to Lender any and
all evidence of ownership, if any, of any of the Equipment
including, without limitation, certificates of title and
applications for title. Borrower shall maintain accurate, itemized
records describing the kind, type, quality, quantity and value of
the Equipment and shall furnish Lender with a current schedule
containing the foregoing information when requested, and Borrower
shall not sell, lease, or otherwise dispose of or transfer any of
the Equipment or any part thereof, except as otherwise permitted
under the terms of this Agreement. Borrower shall, as and when
requested by Lender, procure and supply to Lender, at Borrower's
expense, annual appraisals of the Equipment Collateral by appraisers
and in form reasonably satisfactory to Lender; provided, however,
that upon or after the occurrence of an Event of Default, Borrower's
obligations for such appraisals shall not be limited to annual
appraisals and Lender may request or procure additional appraisals
at Borrower's expense.
(d) The Inventory and Equipment is not now and shall not
at any time or times hereafter be stored with a bailee, warehouseman
or similar party without Lender's prior written consent, and, in
such event, Borrower will upon Lender's request, concurrent
therewith, cause any such bailee, warehouseman or similar party to
issue and deliver to Lender, in a form acceptable to Lender,
warehouse receipts in Lender's name evidencing the storage of the
Inventory or Equipment.
(e) Borrower shall keep correct and accurate records
itemizing and describing the kind, type, quality and quantity of the
Inventory, and its costs therefor, all of which records shall be
available at all times after demand to any of Lender's officers,
agents, and employees for inspection and copying.
(f) Lender shall have the right at all times during
Borrower's usual business hours, to inspect and examine the
Inventory and Equipment and to check and test the same as to
quality, quantity, value, and condition; provided that prior to an
Event of Default, Lender shall provide Borrower two (2) Business
Days' prior notice of any such inspection, and Lender shall use its
good faith efforts to minimize interference with Borrower's business
in conducting such inspections.
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7. GENERAL CONTINUING WARRANTIES AND REPRESENTATIONS
Borrower warrants, represents, covenants and agrees that:
7.1 Office. The chief executive office or principal place of
business of Borrower is at the address indicated in Section 16 hereof, and
Borrower covenants and agrees that it will not, during the term of this
Agreement, without at least thirty (30) days prior written notification to
Lender and the delivery to Lender, if requested, of an executed landlord's
or mortgagee's waiver and Code financing statements in form acceptable to
Lender, relocate either such chief executive office or principal place of
business.
7.2 Existence. Borrower is and shall at all times hereafter be
a corporation, duly organized and existing under the laws of the state of
its organization and qualified and licensed to do business, and is good
standing, in any state in which it conducts its business or in which the
failure to qualify would have a material adverse effect on the condition,
financial or otherwise, business, property or results of operations of
Borrower, which states include, as of the date hereof and as of the
Closing Date, the states listed on Schedule 7.2.
7.3 Authority. Borrower has the right and power and is duly
authorized to enter into this Agreement and the other Loan Documents.
7.4 Validity. This Agreement and all of the other Loan
Documents are the legal, valid and binding obligations of Borrower,
enforceable in accordance with their respective terms, except as limited
by applicable bankruptcy, reorganization, insolvency or similar laws
affecting the enforcement of creditor's rights generally.
7.5 No Breach. The execution by Borrower of this Agreement and
the other Loan Documents shall not constitute a breach of any provision
contained in Borrower's Certificate of Incorporation or by-laws, nor does
it constitute an event of default under any material agreement to which
Borrower is now or hereafter becomes a party, nor does it violate any
order, decree or judgment of any court or governmental commission or
agency.
7.6 Solvency. On the Closing Date both prior to and after the
transactions contemplated in connection with the Closing and the Bank
Financing, and at all times thereafter, Borrower's assets (determined at
present fair saleable value) are and shall be greater than Borrower's
liabilities (taking into account all liabilities of Borrower, whether
fixed or contingent, direct or indirect, disputed or undisputed and
whether or not required to be reflected on a balance sheet prepared in
accordance with Generally Accepted Accounting Principles other than
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Borrower's liabilities under the Senior Discount Notes); Borrower is and
shall at all times hereafter be able to pay its debts as they mature, and
Borrower does not and will not have an unreasonably small amount of
capital. Borrower has and at all times hereafter will have sufficient
capital to carry on its business and transactions as now conducted and as
planned to be conducted in the future.
7.7 Compliance With Laws. Borrower is in compliance in all
material respects with all applicable laws, rules and regulations of any
governmental authority, including but not limited to the Securities Act of
1933, the Securities Exchange Act of 1934, the Fair Labor Standards Act,
Environmental Laws, laws relating to income, unemployment, payroll or
social security taxes and Benefit Plans (as defined in Section 7.15
hereof) as required by ERISA, except for those laws, rules and regulations
the violation of which would not have a material adverse effect on the
condition, financial or otherwise, business, property or results of
operations of Borrower.
7.8 Actions or Proceedings. Except as disclosed on Schedule
7.8, there are no actions or proceedings pending by or against Borrower
before any court, administrative agency or other governmental entity and
Borrower has no knowledge of any pending, threatened or imminent
litigation, governmental investigations or claims, complaints, actions or
prosecutions involving Borrower, or any breaches by Borrower or any other
Person of any agreement to which Borrower is a party, except for actions,
proceedings, litigation, investigations, claims, complaints, actions,
prosecutions and breaches that involve claims that do not exceed $100,000
individually or $200,000 in the aggregate.
7.9 Trademarks, Licenses, etc. Borrower owns or possesses
rights to use all licenses, patents, patent applications, copyrights,
service marks, trademarks and trade names required to continue to conduct
its business as heretofore or presently conducted. All such licenses,
patents, patent applications, copyright registrations, service marks,
trademarks and trade names are listed on Schedule 7.9. No such license or
trademark has been declared invalid, been limited by order of any
governmental authority or by agreement, or is the subject of any
infringement, interference or similar proceeding or challenge, except for
those licenses or trademarks which if challenged, limited or rendered
invalid, would not have a material adverse effect on the condition,
financial or otherwise, business, property or results of operations of
Borrower, the Collateral, Lender's Liens or Lender's ability to enforce
its rights and remedies hereunder.
7.10 Financial Statements. All financial statements relating
to Borrower which have been or may hereafter be delivered by Borrower to
Lender fairly present the financial condition of Borrower for the periods
related thereto and have been prepared in accordance with Generally
Accepted Accounting Principles,
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subject to year-end adjustments and the absence of footnotes with respect
to interim financial statements, and there has been no material adverse
change in the financial condition of Borrower since the submission of such
financial information to Lender.
7.11 Pro Formas. Borrower has furnished to Lender, (i) profit
and loss statements and cash flow projections for each Reporting Period
after the Closing through December 21, 2003, and (ii) balance sheets,
profit and loss statements and cash flow projections reflected annually
for the next five (5) Fiscal Years, including the Fiscal Year 1999, all
certified by the Chief Executive Officer or a Vice President of Borrower
and (except as stated above), based on Generally Accepted Accounting
Principles, and on financial data as of the Closing Date, and which are
attached hereto as Schedule 7.11 (the "Pro Formas"). The Pro Formas are
complete and accurate, and fairly present Borrower's assets, liabilities
and financial condition, on the bases described above, as of the Closing
Date, but taking into account the transactions contemplated by this
Agreement and those contemplated as of the Closing Date under the other
Loan Documents. There are no omissions from the Pro Formas or other facts
and circumstances not reflected in the Pro Formas which are or may be
material.
7.12 Conduct of Business. Except as contemplated hereby, since
August 8, 1999, Borrower has not (i) incurred any debts, obligations, or
liabilities (absolute, accrued, or contingent and whether due or to become
due) except current liabilities incurred in the ordinary course of
business, none of which (individually or in the aggregate) materially and
adversely affects the business or properties of Borrower, except as set
forth in Schedule 7.12; (ii) paid any obligation or liability other than
current liabilities in the ordinary course of business, or discharged or
satisfied any Liens or encumbrances other than those securing current
liabilities, in each case in the ordinary course of business or as
required by the terms of this Agreement; (iii) declared or made any
payment to or distribution to its stockholders as such, or purchased or
redeemed any of its shares of capital stock, or obligated itself to do so;
(iv) mortgaged, pledged, or subjected to any Lien any of its assets,
tangible or intangible (other than Permitted Liens); (v) sold, transferred
or leased any of its assets except in the usual and ordinary course of
business; (vi) suffered any physical damage, destruction or loss (whether
or not covered by insurance) materially and adversely affecting its
properties or business; (vii) except as set forth in Schedule 7.12,
entered into any transaction other than in the usual and ordinary course
of business and other than as contemplated hereby; (viii) encountered any
strikes or work stoppages or labor union organizing activities; (ix)
issued or sold any shares of capital stock or other securities or granted
any options or similar rights with respect thereto other than pursuant to
Borrower's existing stock option plans, as such plans may be amended with
the approval of Borrower's stockholders; or (x) agreed to do any of the
foregoing other than pursuant hereto.
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To Borrower's knowledge after due inquiry, there has been no material
adverse change in the business, financial condition, operations or results
of operations of Borrower since August 8, 1999.
7.13 Environmental Laws. Except as disclosed on Schedule 7.13:
(i) Borrower and all properties owned or operated by Borrower comply with
all Environmental Laws; (ii) Borrower is not subject to any actual or
threatened judicial or administrative proceeding, investigation or inquiry
into the possibility of violation of any Environmental Laws; (iii) neither
the Borrower nor its properties is the subject of actual or, to the best
of Borrower's knowledge after due inquiry, threatened governmental
authority investigation or inquiry evaluating whether any remedial action
is needed to respond to a Release of any Hazardous Material or other
substance into the environment, and Borrower does not have knowledge or
notice of the presence on or under any property owned or operated by it,
or of the Release of, any Hazardous Material; (iv) there is no claim
pending or, to the best of Borrower's knowledge after due inquiry,
threatened against Borrower relating to damage, contribution, cost
recovery compensation, loss, or injury resulting from the Release of, or
exposure to, any Hazardous Material other than as listed on Schedule 7.13,
which Hazardous Material is stored in or under Borrower's properties in
the ordinary course of business in accordance with Environmental Laws; and
(v) Borrower has not filed, nor was required to file, any notice under any
law, regulation or rule indicating past or present generation,
transportation, treatment, storage or disposal of a Hazardous Material or
reporting a Release of a Hazardous Material into the environment and has
not engaged in such activity other than in accordance with Environmental
Laws where failure to file such notice or report will not have a material
adverse effect on Borrower. Borrower does not have any known contingent
liability in connection with any Release of any Hazardous Material into
the environment; and Borrower has not received notice, nor has reason to
expect notice, of any potential liability under any Environmental Law.
7.14 Permits and Licenses. Borrower has not been in breach or
default under, and is current and in good standing with respect to, all
governmental approvals, permits, certificates, licenses, inspections,
consents and franchises necessary to continue to conduct its business and
to own or lease and operate its respective properties as heretofore
conducted, owned, leased or operated, including, without limitation, any
and all governmental approvals, permits, certificates, licenses,
inspections, consents and franchises related to Environmental Laws.
7.15 ERISA. Neither Borrower nor any ERISA Affiliate (defined
below) of Borrower, nor any Benefit Plan (defined below) is in violation
in any material respect of any of the provisions of ERISA or any of the
qualification requirements of Section 401(a) of the IRC; no Prohibited
Transaction (defined
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below) or Reportable Event (defined below) has occurred with respect to
any Benefit Plan, nor has any Benefit Plan been the subject of a waiver of
the minimum funding standard under Section 412 of the IRC; nor has any
Benefit Plan experienced an accumulated funding deficiency under Section
412 of the IRC; nor has any Lien been imposed upon Borrower or any ERISA
Affiliate of Borrower under Section 412(n) of the IRC; nor has any Benefit
Plan been amended in such a way that the security requirements of Section
401(a)(29) of the IRC apply; no notice of intent to terminate a Benefit
Plan has been distributed to affected parties or filed with the Pension
Benefit Guaranty Corporation, or any successor agency (the "PBGC"), under
Section 4041 of ERISA, nor has any Benefit Plan been terminated under
Section 4041(e) of ERISA; the PBGC has not instituted proceedings to
terminate, or appoint a trustee to administer, a Benefit Plan and no event
has occurred or condition exists which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan; neither Borrower nor any ERISA
Affiliate of Borrower would be liable for any amount pursuant to Sections
4062, 4063 or 4064 of ERISA if all Benefit Plans terminated as of the most
recent valuation dates of such Benefit Plans; neither Borrower nor any
ERISA Affiliate of Borrower maintains any employee welfare benefit plan,
as defined in Section 3(l) of ERISA, which provides any benefits to an
employee or the employee's dependents with respect to claims incurred
after the employee separates from service other than is required by
applicable law; and neither Borrower nor any ERISA Affiliate of Borrower
has incurred or expects to incur any withdrawal liability to any
Multiemployer Plan (defined below), or contributes to a Multiemployer
Plan. As used herein, (a) "Benefit Plan" shall mean an employee benefit
plan of Borrower or an ERISA Affiliate, as defined in Section 3(3) of
ERISA; (b) "ERISA Affiliate" shall mean any Person which, together with
Borrower, would be treated as a single employer under Section 4001(a)(14)
of ERISA or IRC Section 414(b), (c), (m), (n) or (o), as applicable; (c)
"Multiemployer Plan" shall mean a plan described in Section 4001(a)(3) of
ERISA which covers employees of Borrower or any ERISA Affiliate; (d)
"Prohibited Transaction" shall mean any transaction described in Section
406 of ERISA which is not exempt by reason of Section 408 of ERISA, and
any transaction described in Section 4975(c) of the IRC which is not
exempt by reason of Sections 4975(c)(2) or (d) of the IRC, and which could
result in any excise tax, fine, penalty or other liability being imposed
on Borrower; and (e) "Reportable Event" shall mean a reportable event
described in Section 4043 of ERISA or the regulations thereunder, for
which the thirty (30) day notice requirement has not been waived.
7.16 Customer and Trade Relations. There exists no actual or
to the best of Borrower's knowledge after diligent inquiry, threatened
termination, cancellation or limitation of, or any modification or change
in, the business relationship between Borrower and any customer or any
group of customers whose
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purchases individually or in the aggregate are material to the business of
Borrower, or with any material supplier, and there exists no present
condition or state of facts or circumstances which would materially
adversely affect Borrower or prevent Borrower from conducting such
business after the consummation of the transactions contemplated by this
Agreement in substantially the same manner in which it has heretofore been
conducted by Borrower.
7.17 Other Names. The businesses conducted by Borrower have
not been conducted under any corporate, trade or fictitious name other
than those names listed on Schedule 7.17 hereto.
7.18 Tax Obligations. Borrower has filed complete and correct
federal, state and local tax reports and returns required to be filed by
them, prepared in accordance with any applicable laws or regulations, and
except for extensions duly obtained, have either duly paid all taxes,
duties and charges owed by it, or made adequate provision for the payment
thereof. There are no material unresolved questions or claims concerning
any tax liability of Borrower. None of the transactions contemplated
hereby or under any agreements referred to hereunder will result in any
material tax liability for Borrower or result in any other material
adverse tax consequence for Borrower.
7.19 Employee Controversies. There are no strikes, work
stoppages or controversies pending or, to the best of Borrower's knowledge
after diligent inquiry and investigation, threatened, between Borrower and
any of its employees, other than employee grievances arising in the
ordinary course of business which are not, in the aggregate, material to
the financial condition, results of operations or business of Borrower.
7.20 Investment Company Act. Borrower is not an "investment
company" nor a company "controlled" by an investment company within the
meaning of the Investment Company Act of 1940, as amended.
7.21 Full Disclosure. This Agreement, the financial statements
delivered in connection herewith, and the representations and warranties
of Borrower herein and in any other document delivered or to be delivered
by or on behalf of Borrower in connection therewith, do not and will not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein, in light of
the circumstances under which they were made, not misleading. There is no
material fact which Borrower has not disclosed to Lender in writing which
materially and adversely affects or, so far as Borrower can foresee, would
materially and adversely affect the assets, business, prospects, profits,
or condition (financial or otherwise) of Borrower, the rights of Lender or
the ability of Borrower to perform this Agreement.
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7.22 Year 2000 Compliance. The Borrower and its Affiliates
have reviewed the areas within their business and operations which could
be adversely affected by, and have developed or are developing a program
to address on a timely basis, the "Year 2000 Problem" (that is, the risk
that computer applications used by the Borrower and its Affiliates may be
unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999),
and have made related appropriate inquiry of material suppliers and
vendors. Based on such review and program, the Borrower believes that the
"Year 2000 Problem" will not have a material adverse effect on the
Borrower, its financial condition, business and operations, and its
ability to pay and perform the Obligations. From time to time, at the
request of Lender, the Borrower and its Affiliates shall provide to Lender
such updated information or documentation as is reasonably requested
regarding the status of its efforts to address the "Year 2000 Problem".
8. NEGATIVE COVENANTS
The Borrower will not, without Lender's prior written consent:
8.1 Sale, Transfer or Encumbrance of Assets. Sell, lease,
pledge, encumber, grant or permit a Lien on (other than Permitted Liens),
or otherwise dispose of or transfer, whether by sale or otherwise, any of
its assets, except for (a) sales of Inventory in the ordinary course of
business, (b) sales of items of Equipment which are obsolete, worn-out or
otherwise not useable in Borrower's businesses up to an aggregate of
$100,000 in sales proceeds in any Fiscal Year so long as (i) no Event of
Default has occurred and which has not been cured or waived as set forth
in this Agreement, or Potential Default exists, (ii) the proceeds thereof
are applied to the principal balance of the Obligations, (iii) Lender has
prior written notice thereof, (iv) such sales are on price and other
terms, and Borrower proposes to apply the proceeds of each such sale to
the Obligations in a manner, reasonably acceptable to Lender, and (v) the
transfer of assets in each such sale will not result in any impairment in
use or value of the Collateral remaining after each such sale, or (c) the
closure of Borrower's locations listed on Schedule 8.1 hereto or such
other locations consented to by Lender in writing, which consent shall not
be unreasonably withheld, provided that the Equipment located at any
closed facility is transferred to locations of Borrower listed on Schedule
6.3 hereto or locations permitted by Section 6.3(a) of this Agreement. The
parties agree that, with respect to those locations which constitute the
Alliance Senior Collateral, as defined in the Intercreditor Agreement, it
shall be reasonable for Lender to condition its consent to the closure of
any location pursuant to the preceding clause (c) upon either (A) a
proportional reduction (based upon the percentage which the closed
location constituted of the total number of locations comprising Alliance
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Senior Collateral, as defined in the Intercreditor Agreement) of the then
outstanding principal balance of the Loan or (B) the grant of a senior
security interest in the Collateral located at a substitute location
acceptable to Lender, with the effect that such substitute location
becomes Alliance Senior Collateral, within the meaning of the
Intercreditor Agreement. For purposes of this Agreement, "Permitted Liens"
shall mean any or all of the following: (i) Liens to Lender, (ii) Liens
securing the payment of taxes or other governmental charges not yet due
and payable, (iii) Liens securing claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons
imposed without action of such parties, provided that the payment thereof
is not yet required; (iv) Liens incurred or deposits made in the ordinary
course of Borrower's business in connection with worker's compensation,
unemployment insurance, social security and other like laws, (v)
easements, rights of way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are
not substantial in amount and that do not in any case materially detract
from the value of the property subject thereto or materially interfere
with the ordinary conduct of Borrower's business, (vi) Liens in connection
with purchase money security interests for the purchase of Equipment up to
an aggregate sum not to exceed One Hundred Thousand Dollars ($100,000) for
any purchase and One Hundred Thousand Dollars ($100,000) in the aggregate
for purchases during any Fiscal Year, provided the documents relating to
any such purchases must be in form and substance reasonably satisfactory
to Lender, (vii) Liens listed on Schedule 8.1, and (viii) Liens in favor
of Bank.
8.2 Name or Identity Change. Change Borrower's name, business
structure, or identity, or add any new fictitious name.
8.3 Guaranties. Guarantee or otherwise become in any way
liable with respect to the obligations of any third party except by
endorsement of instruments or items of payments for deposit to the general
account of Borrower or which are transmitted or turned over to Lender.
8.4 Change in Business. Enter into any business not related to
Borrower's present business or make any change in Borrower's financial
structure or in any of its business objectives, purposes, or operations
which would adversely affect the ability of Borrower to repay the
Obligations, the value of the Collateral or Lender's rights and remedies
hereunder, or create any Subsidiary or change the form of Borrower's
business entity from a corporation.
8.5 Loans and Investments. Except as set forth on Schedule
8.5, make any advance, loan, investment or material acquisition of assets
other than (i) advances made to employees in the ordinary course of
business for travel and business related expenses so long as the amount of
such advances do not exceed
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Fifty Thousand Dollars ($50,000) in the aggregate outstanding at any time;
(ii) investments in short-term direct obligations of the United States
government; (iii) investments in negotiable certificates of deposit issued
by a bank having capital and surplus of not less than $100,000,000,
payable to the order of Borrower or to bearer, and (iv) investments in
commercial paper rated A-1 or P-1; provided, that with respect to clauses
(ii), (iii) and (iv), Borrower shall assign all such investments to Lender
in form acceptable to Lender.
8.6 Indebtedness. Incur or make any commitments or agreements
to incur or suffer to exist any Indebtedness, other than (i) unsecured
trade debt and accrued expenses arising in the ordinary course of
Borrower's business, (ii) Indebtedness incurred with respect to
Maintenance Capital Expenditures in accordance with Section 8.20 hereof up
to the aggregate sum of $500,000 in any Fiscal Year, (iii) Indebtedness
incurred in connection with Liens arising under Section 8.1(v) of this
Agreement, (iv) Indebtedness incurred in connection with the Bank
Financing, or (v) obligations under the Note Indenture.
8.7 Prepayments. Prepay any existing Indebtedness owing to any
Person, except that (i) Borrower may prepay trade creditors in the
ordinary course of business, and (ii) Borrower may prepay Lender as
provided in this Agreement.
8.8 Affiliate Transactions. Transfer any cash or property to
any direct or indirect owner of or beneficial owner of any interest in
Borrower or other Affiliate or enter into any transaction, including
without limitation the purchase, lease, sale or exchange of property or
the rendering of any service to or by any direct or indirect owner of or
beneficial owner of any interest in Borrower or other Affiliate; provided
that Borrower may (i) sell Inventory to Affiliates, for cash for fair
value in the ordinary course of business pursuant to terms that are no
less favorable to Borrower than the terms upon which such transactions
would have been made had such transfers or transactions been made at arm's
length to or with a Person that is not an Affiliate, and notice thereof
has been given to Lender, (ii) pay compensation for services to employees
who are direct or indirect owners of or beneficial owners of any interest
in Borrower in the ordinary course of Borrower's business, (iii) pay
Xxxxxxxx & Xxxxx for legal services performed for Borrower, and (iv)
repurchase common stock of Borrower pursuant to that certain Stock
Transfer Restriction Agreement between Borrower and certain of its
shareholders ("Restriction Agreement") as permitted by Section 8.12
hereof.
8.9 Consolidations, Mergers. Merge or consolidate with any
other Person, or enter into any joint venture or become a partner in any
partnership.
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8.10 Liquidations. Adopt or undertake a plan of liquidation or
dissolution.
8.11 Suspension of Business. Suspend or terminate the
transaction of its business or abandon the Collateral.
8.12 Redemptions and Distributions. Except for the purchase or
redemption of capital stock of officers of Borrower who terminate their
employment with Borrower or whose employment is terminated by Borrower and
repurchases by Borrower of capital stock of Borrower pursuant to the
Restriction Agreement, up to the aggregate sum of $50,000 in any Fiscal
Year, purchase, redeem, retire or otherwise acquire any shares of its
capital stock or declare or pay, directly or indirectly, any cash or other
property, dividends or distributions to its shareholders.
8.13 Unpermitted Uses of Loans. Use any part of the proceeds
of the Loan for any purpose which constitutes a violation of, or is
inconsistent with, any applicable regulations of the Board of Governors of
the Federal Reserve System, including without limitation, the purchase or
carrying of (or refinancing of indebtedness originally incurred to
purchase or carry) margin securities.
8.14 ERISA. Adopt or agree to contribute to any tax qualified
Benefit Plan, except for a 401(k) Plan or as previously approved by Lender
in writing.
8.15 Consignment. Sell any goods on consignment, xxxx and
hold, or similar terms, except as permitted in writing by Lender.
8.16 Bank Accounts. Unless Borrower first notifies Lender and
obtains any necessary blocked account agreements from such financial
institution, establish any depository, operating or other account at any
financial institution other than those accounts listed on Schedule 8.16
hereof.
8.17 Compensation. Unless approved by Borrower's board of
directors, pay total compensation, including salaries, withdrawals, fees,
bonuses, commissions, drawing accounts, and other payments, whether
directly or indirectly, in money or otherwise, to the officers of Borrower
in any fiscal year, in amounts in excess of one hundred twenty percent
(120%) of the total compensation for the immediately preceding fiscal
year, paid or accrued by Borrower or its Affiliates to or for the benefit
of such Persons (individually).
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8.18 Lease Modifications. Modify or amend the material terms
of or terminate any lease of real property, except for the termination of
the leases for the stores listed on Schedule 8.1 hereto.
8.19 New Leases. Enter into any lease of real property without
obtaining an executed landlord's waiver and such lease contains a consent
to assignment thereof to Lender, both in form attached hereto as Exhibit
C.
8.20 Capital Expenditures. Make any Capital Expenditures
except for (i) Capital Expenditures to maintain or upgrade existing
business locations of Borrower, up to the aggregate sum of $1,000,000 in
any Fiscal Year ("Maintenance Capital Expenditures"), (ii) Capital
Expenditures either to maintain or upgrade existing business locations or
for the construction and equipping of new business locations, up to the
aggregate sum of seventy-five percent (75%) of Free Cash Flow in any
Fiscal Year, and (iii) Capital Expenditures either to maintain or upgrade
existing business locations or for the construction of new business
locations, up to the aggregate sum of ninety percent (90%) of any Excess
Issuance Proceeds, provided such sums are actually spent on Capital
Expenditures within twelve (12) months of their receipt by Borrower.
9. AFFIRMATIVE COVENANTS - GENERAL
So long as any Obligations are outstanding, Borrower covenants and agrees that:
9.1 Taxes. All assessments and taxes, whether real, personal
or otherwise, due or payable by, or imposed, levied or assessed against,
Borrower or any of its property have been paid, and shall hereafter be
paid in full, before delinquency, except those assessments and taxes the
validity of which is being contested in good faith by appropriate
proceedings, do not impair the priority of Lender's Liens on the
Collateral and as to which Borrower shall have set aside adequate reserves
(as determined by Lender in its reasonable discretion). Borrower will make
timely payment or deposit of all FICA payments and withholding taxes
required of it by applicable laws, and will, upon request, furnish Lender
with proof reasonably satisfactory to it that Borrower has made such
payments or deposits.
9.2 Insurance. Borrower, at its expense, shall keep and
maintain the Collateral insured under "all risk" or equivalent types of
policies against loss or damage by fire, theft, explosion, sprinklers and
all other hazards and risks ordinarily insured against by other owners who
use such properties in similar business for the full insurable value
thereof as necessary to prevent application of any co-insurance
provisions. Borrower shall also keep and maintain business interruption
insurance and public liability and property damage insurance relating to
Borrower's ownership and use of the Inventory, Equipment and its other
assets.
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All such policies of insurance shall be in such form, with such companies,
and in such amounts as may be reasonably satisfactory to Lender. Borrower
shall deliver to Lender certified copies of such policies of insurance and
evidence of the payments of all premiums therefor. All such policies of
insurance (except those of public liability and those insuring
improvements to real estate leased by Borrower (the "Real Property
Improvement Insurance") shall contain an endorsement in a form reasonably
satisfactory to Lender showing Lender as the lender loss payee on all
Collateral with a waiver of warranties, and absent the occurrence of a
Potential Default or an Event of Default, all proceeds payable thereunder
in excess of the aggregate sum of One Hundred Thousand Dollars ($100,000)
shall be payable to Lender and, upon receipt by Lender, shall be applied
on account of the Obligations owing to Lender. Absent the occurrence of a
Potential Default or Event of Default, Borrower may retain proceeds up to
the aggregate sum of One Hundred Thousand Dollars ($100,000) to be used by
Borrower for the repair or replacement of any damaged or destroyed
Collateral. Upon the occurrence of a Potential Default or Event of
Default, all insurance proceeds (other than the Real Property Improvement
Insurance proceeds) shall be paid to Lender. To secure the payment of the
Obligations, Borrower grants Lender a Lien in and to all such policies of
insurance (except those of public liability and the Real Property
Improvement Insurance) and the proceeds thereof, and except as provided
above, Borrower shall direct all insurers under such policies of insurance
to pay all proceeds thereof directly to Lender as its interest may appear.
After the occurrence of a Potential Default or Event of Default, Borrower
hereby irrevocably appoints Lender (and any of Lender's officers,
employees or agents designated by Lender) as Borrower's attorney-in-fact
for the purpose of making, settling and adjusting claims under such
policies of insurance, endorsing the name of Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect to
such policies of insurance. Prior to an Event of Default or Potential
Default, Borrower shall not make, settle or adjust claims in excess of One
Hundred Thousand Dollars ($100,000) under such policies of insurance
without prior consultation with and written consent of Lender. Borrower
will not cancel any of such policies without Lender's prior written
consent. Borrower shall obtain by endorsement upon the policy or policies
of insurance issued to Borrower as required above, or by independent
instruments furnished to Lender, an agreement from each insurer that it
will give Lender at least thirty (30) days' written notice before any such
policy or policies of insurance shall be materially altered or canceled,
and that no act or default of Borrower, or any other Person, shall affect
the right of Lender to recover under such policy or policies of insurance
required above or to pay any premium in whole or in part relating thereto.
Lender, without waiving or releasing any Obligations or any Event of
Default may, but shall have no obligation to, obtain and maintain such
policies of insurance that Borrower is required to carry hereunder and pay
such premiums and take any other action with respect to such
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policies which Lender deems advisable. All sums disbursed by Lender in
accordance with this Section 9.2, as well as reasonable attorneys' fees,
court costs, expenses and other charges relating thereof, shall constitute
Out-of-Pocket Fees and Costs and shall be payable on demand.
9.3 Litigation. Borrower shall immediately notify Lender in
writing of any suit in law or equity or administrative proceeding
involving money or property, and seeking damages in excess of $100,000
individually or $200,000 in the aggregate.
9.4 Books and Records. Borrower at all times hereafter shall
keep proper books of record and account in which full and true entries
will be made of all dealings or transactions with respect to or in
relation to the business and affairs of Borrower, and shall maintain a
standard and modern system of accounting, in accordance with Generally
Accepted Accounting Practices with ledger and account cards and/or
computer tapes, discs, printouts, and records pertaining to the Collateral
which contain information as may from time to time be reasonably requested
by Lender. Borrower agrees to permit Lender and any of its employees,
officers or agents, at all times during Borrower's usual business hours,
or the usual business hours of third Persons having control thereof, to
have access to and examine all of Borrower's Books relating to the
Collateral, the Obligations, Borrower's financial condition and the
results of Borrower's operations, and, in connection therewith, permit
Lender or any of its agents, employees or officers to copy and make
extracts therefrom; provided that prior to an Event of Default, Lender
shall provide Borrower two (2) Business Days' prior notice of such
examinations and Lender shall use its good faith efforts to minimize
interference with Borrower's business.
9.5 Compliance with Laws. Borrower shall comply in all
material respects with all Federal, State, local and foreign laws, rules
and regulations, including, but not limited to the Securities Act of 1933,
the Securities Exchange Act of 1934, the Fair Labor Standards Act,
Environmental Laws, laws relating to income, unemployment, payroll or
social security taxes and pension funds and retirement benefit programs as
required by ERISA.
9.6 Expense Reimbursements. Borrower shall within five (5)
Business Days of demand by Lender, reimburse Lender for all sums expended
by Lender which constitute Out-of-Pocket Fees and Costs if Borrower fails
to pay same. Absent the occurrence of an Event of Default, Lender shall
provide Borrower with copies of invoices for such Out-of-Pocket Fees and
Costs. All of such amounts expended for Out-of-Pocket Fees and Costs shall
be part of the Obligations subject to interest at the Rate or Default
Rate, as applicable.
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9.7 ERISA Reportable Events. Borrower shall furnish to Lender:
(a) as soon as possible, but in no event later than thirty (30) days after
it knows or has reason to know that any Reportable Event with respect to
any Benefit Plan has occurred, a statement of the Chief Executive Officer
of Borrower setting forth the details concerning such Reportable Event and
the action which it proposes to take with respect thereto, together with a
copy of the notice of such Reportable Event given to the PBGC, if a copy
of such notice is available to Borrower; (b) upon request by Lender,
promptly after the filing thereof with the United States Internal Revenue
Service or the PBGC, copies of each annual report with respect to each
Benefit Plan; (c) promptly after receipt thereof, a copy of any notice of
any potential material liability, adverse determination letter, ruling or
opinion it may receive from the PBGC or the Internal Revenue Service with
respect to any Benefit Plan; (d) when the same is made available to
participants in a Benefit Plan, all notices of a significant reduction in
the rate of benefit accrual or plan termination to the participants by the
administrator of such Benefit Plan; and (e) promptly after receipt
thereof, any notice from any Multiemployer Plan to which it or any of its
ERISA Affiliates contributes which quantifies any actual or potential
withdrawal liability which will or may be imposed upon the withdrawal of
Borrower or any ERISA Affiliate of Borrower from such Multiemployer Plan.
9.8 Intellectual Property. Upon Borrower's acquisition of any
patents, trademarks, licenses or other intellectual property rights,
Borrower shall notify Lender of same in writing and take all steps that
Lender reasonably deems necessary to create a first priority lien and
security interest in such assets in favor of Lender.
10. AFFIRMATIVE COVENANTS - REPORTING
Borrower shall furnish or cause to be furnished to Lender the following:
10.1 (a) Periodic Financial Statements. As soon as
practicable and in any event within thirty (30) days following the
end of each Reporting Period (i) a statement of income and a
statement of cash flow of Borrower for each such Reporting Period
and for the period from the beginning of the then current fiscal
year of Borrower to the end of such Reporting Period, (ii) a balance
sheet of Borrower as of the end of such Reporting Period, and (iii)
with respect to such statement of income and balance sheet, in
comparative form, figures for the corresponding Reporting Periods in
the preceding Fiscal Year of Borrower, all in reasonable detail and
certified by the Chief Executive Officer of Borrower as fairly
presenting the financial condition of Borrower in accordance with
Generally Accepted Accounting Principles, subject to changes
resulting from normal year-end adjustments and the absence of
footnotes.
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(b) Yearly Financial Statements. As soon as practicable
and in any event within ninety (90) days after the end of each
Fiscal Year of Borrower, a statement of income of Borrower for such
Fiscal Year, and a balance sheet of Borrower as of the end of such
Fiscal Year, and a statement of cash flow of Borrower for such
Fiscal Year, all setting forth in comparative form, corresponding
figures for the period covered by the preceding annual audit and as
of the end of the preceding Fiscal Year of Borrower, all in
reasonable detail and in scope in accordance with audits performed
for Borrower in prior years and examined and certified by
independent certified public accountants of recognized national
standing selected by Borrower and reasonably satisfactory to Lender,
whose opinion shall be unqualified and shall be in scope in
accordance with audits performed for Borrower in prior years, in
form and substance satisfactory to Lender.
(c) Projections. As soon as practicable and in any event
not later than thirty (30) days prior to the beginning of each
Fiscal Year of Borrower hereafter, preliminary drafts of projected
balance sheets, statements of income and cash flow for Borrower, for
each month during such Fiscal Year, which shall include the
assumptions used therein, together with final versions of same
within sixty (60) days after the beginning of each Fiscal Year
containing appropriate supporting details as requested by Lender,
along with consolidated calculations with respect to compliance with
covenants in the same manner as required in connection with the
delivery of financial statements under (a) and (b) above.
(d) Management Letters, Tax Distributions. As soon as
practicable and in any event within ten (10) days of delivery to
Borrower a copy of any letter issued by Borrower's independent
public accountants or other management consultants, if any are
issued, with respect to Borrower's financial or accounting systems
or controls, including all so-called "management letters".
(e) Yearly Reports. In conjunction with the delivery of
the annual presentation of projections or budgets referred to in
subsection (c) above, a letter signed by the Chief Executive Officer
of Borrower, describing, comparing and analyzing, in reasonable
detail, all changes and developments between the anticipated
financial results included in such projections or budgets for the
prior Fiscal Year and the historical financial statements of
Borrower for such prior Fiscal Year.
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(f) SEC Reports. Within five (5) days after the same are
sent, copies of all financial statements and reports that Borrower
sends to the Securities and Exchange Commission or any holders of
other Indebtedness.
(g) Other Information. With reasonable promptness, such
other business or financial data, reports, appraisals and
projections as Lender may reasonably request.
All financial statements delivered to Lender pursuant to the
requirements of this subsection (except where otherwise expressly
indicated) shall be prepared in accordance with Generally Accepted
Accounting Principles as provided in this Agreement. Together with each
delivery of financial statements required by subsections (a) and (b)
above, Borrower shall deliver to Lender an officer's certificate in the
form of Exhibit B hereto stating that (i) there exists no Event of Default
or Potential Default, or if an Event of Default or Potential Default
exists, specifying the nature thereof, the period of existence thereof and
what action Borrower proposes to take with respect thereto, (ii) no
material adverse change in the condition, financial or otherwise,
business, property, including without limitation, with respect to
Environmental Laws, or results of operations of Borrower has occurred
since the previous certificate was sent to Lender by Borrower or, if any
such change has occurred, specifying the nature thereof and what action
Borrower has taken or proposes to take with respect thereto, (iii) all
insurance premiums then due have been paid before delinquent, (iv) all
taxes then due have been paid or, for those taxes which have not been paid
before delinquent, a statement of the taxes not paid and a description of
Borrower's rationale therefor, (v) except as previously reported to
Lender, no litigation, investigation or proceeding, or injunction, writ or
restraining order involving claims in excess of $100,000 individually or
$200,000 in the aggregate is pending or to the best of Borrower's
knowledge after diligent inquiry, threatened, and (vi) stating whether or
not Borrower is in compliance with the representations, warranties and
covenants in this Agreement, including a calculation of financial
covenants in the schedule attached to such officer's certificate in form
satisfactory to Lender. Lender shall exercise reasonable efforts to keep
such information, and all information acquired as a result of any
inspection conducted in accordance with this Agreement, confidential,
provided that Lender may communicate such information (A) to any other
Person in accordance with the customary practices of commercial lenders
relating to routine trade inquiries, (B) to any regulatory authority, or
pursuant to any order, judgement or decree of any court having
jurisdiction over Lender, or (C) to any other Person in connection with
the exercise of Lender's rights hereunder.
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10.2 Accounting Information. Borrower authorizes Lender to
discuss the financial condition of Borrower with Borrower's independent
public accountants and agrees that such discussion or communication shall
be without liability to either Lender or Borrower's independent public
accountants. Prior to the occurrence of a Potential Default or Event of
Default, Lender shall use its best efforts to notify Borrower of Lender's
discussions with Borrower's accountants. Borrower shall deliver a letter
addressed to such accountants authorizing them to comply with the
provisions of this subsection, and authorizing Lender to rely on financial
statements of Borrower issued by such accountants, which letter shall be
acknowledged and consented to in writing by such accountants, and be in
form and substance satisfactory to Lender.
10.3 Other Information and Changes. Borrower shall promptly
supply Lender with such other information concerning its affairs as Lender
may request from time to time hereafter, and shall promptly notify Lender
of any material adverse change in Borrower's financial condition and of
any condition or event which constitutes a breach of or an Event of
Default under this Agreement.
11. AFFIRMATIVE COVENANTS - FINANCIAL
11.1 Tangible Net Worth. Borrower shall maintain its Tangible
Net Worth in an amount of not less than the amount set forth opposite each
period set forth below, measured quarterly, as of the last day of each
Fiscal Quarter.
MINIMUM TANGIBLE NET WORTH
----------------------------------------------------------------
Period Minimum Level
----------------------------------------------------------------
Closing Date to and including $90,000,000
December 26, 1999
----------------------------------------------------------------
December 27, 1999 to and $85,000,000
including June 11, 2000
----------------------------------------------------------------
June 12, 2000 and thereafter $80,000,000
----------------------------------------------------------------
11.2 Senior Interest Coverage Ratio. Borrower shall maintain a
Senior Interest Coverage Ratio, calculated and tested as of the last day
of each respective Fiscal Quarter, cumulatively for the rolling thirteen
(13) Reporting Periods ending on the last day of each such Fiscal Quarter
of not less 3.00 : 1.00; provided that for purposes of determining the
ratio described above for the Fiscal Quarters ending December 26, 1999,
March 19, 2000, and June 11, 2000, EBITDA and Funded Debt Interest Expense
shall be deemed to equal EBITDA and Funded Debt Interest Expense for such
Fiscal Quarter (and, in the case of the later two such
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determinations, each previous Fiscal Quarter commencing with the Closing),
multiplied by 13/3rds, 13/3rds, and 13/3rds respectively.
11.3 Minimum Net Book Value of Laundry Equipment. Borrower
shall own at all times, laundry Equipment having a net book value of not
less than $30,000,000.
12. EVENTS OF DEFAULT
Any one or more of the following shall constitute an Event of Default by
Borrower under this Agreement:
12.1 Payment. If Borrower fails to pay, when due and payable
or when declared due and payable, all or any portion of the Obligations
representing principal or interest owing to Lender, or Borrower fails to
pay, when due and payable or when declared due and payable, any other
Obligations and such failure is not cured within five (5) days of such
breach.
12.2 Breach of Covenants. If Borrower fails or neglects to
perform, keep or observe any term, provision, condition, covenant, or
agreement contained in this Agreement, any other Loan Document, or any
other present or future agreement between Borrower and Lender and/or
evidencing and/or securing the Obligations, except the failure to comply
with Sections 8.2, 8.18, 9.1, 9.3, 9.4, 9.5, 9.7 and 9.8 of this Agreement
shall not be an Event of Default unless such failure continues for a
period of thirty (30) days following notice by Lender to Borrower.
12.3 Breach of Representation. If any representation,
warranty, statement, report, or certificate made or delivered by Borrower,
or any of its officers, employees or agents on behalf of Borrower, to
Lender is false in any material respect when made or deemed to be made.
12.4 Material Adverse Change. If in Lender's reasonable
discretion (i) there is a material impairment of the prospect of repayment
of all or any portion of the Obligations, (ii) there is any impairment of
the priority of Lender's Liens on all or a portion of the Collateral
(including without limitation a Lien, levy or assessment in any amount of
the type referred to in Section 12.9 hereof), or (iii) a material adverse
change has occurred in the condition (financial or otherwise), business,
property or results of operations of Borrower.
12.5 Attachment or Levy. If all or any of Borrower's assets in
excess of Fifty Thousand Dollars ($50,000) in the aggregate are attached,
seized, subjected to a writ or distress warrant, or are levied upon, or
come into the
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possession of any trustee, receiver, controller, custodian or assignee for
the benefit of creditors (or any other Person with similar powers or
duties) unless, with respect to any such assets, such attachment, seizure,
writ, warrant or levy shall be dismissed, released or stayed within thirty
(30) days of issuance thereof.
12.6 Voluntary Insolvency. If an Insolvency Proceeding is
commenced by Borrower.
12.7 Involuntary Insolvency. If an Insolvency Proceeding is
commenced against Borrower except that if Borrower is contesting such
Insolvency Proceeding in good faith, such Insolvency Proceeding shall not
constitute an Event of Default unless such Insolvency Proceeding is not
dismissed within sixty (60) days of the commencement of such Insolvency
Proceedings.
12.8 Injunction. If Borrower is enjoined, restrained or in any
way prevented by court order from continuing to conduct all or any
material part of its business affairs and such order continues for more
than thirty (30) days.
12.9 Governmental Lien. Except as permitted by Section 9.1, if
a notice of Lien, levy or assessment in excess of Ten Thousand Dollars
($10,000) in the aggregate, is filed of record with respect to any or all
of Borrower's assets by the United States Government, or any department,
agency or instrumentality thereof, or by any state, county, municipal or
other governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities in excess of Ten Thousand
Dollars ($10,000) in the aggregate, becomes a Lien, whether xxxxxx or
otherwise, upon any or all of Borrower's assets and the same is not paid
on or before the due date thereof.
12.10 Judgment. If a judgment or other claim in excess of
Fifty Thousand Dollars ($50,000) individually, or One Hundred Thousand
Dollars ($100,000) in the aggregate, becomes a Lien upon any or all of
Borrower's assets, or any individual judgment or other claim in excess of
One Hundred Thousand Dollars ($100,000) is entered against Borrower and is
not stayed, vacated or discharged within thirty (30) days of the entry
thereof.
12.11 Other Indebtedness. If there is a default in any
agreement with respect to Indebtedness in excess of One Hundred Thousand
Dollars ($100,000) to which Borrower is a party with another Person
resulting in a right by such Person to accelerate the maturity of
Borrower's Indebtedness or to exercise any other right or remedy.
12.12 Prepayment. If Borrower makes any prepayment on account
of Indebtedness for borrowed money, except for prepayments to Lender.
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12.13 ERISA Reportable Event. If (a) any Reportable Event
which Lender determines constitutes grounds for the termination of any
Benefit Plan by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer any such Plan, shall have
occurred and be continuing thirty (30) days after written notice of such
determination shall have been given to Borrower by Lender, or any such
Benefit Plan shall be terminated within the meaning of Title IV of ERISA,
or a trustee shall be appointed by the appropriate United States District
Court to administer any such Plan, or the PBGC shall institute proceedings
to terminate any Benefit Plan; and (b) in case of any event described
above in this Section 12.13, the aggregate amount of Borrower's liability
under Sections 4062, 4063 or 4064 of ERISA shall exceed one percent
(1.00%) of its Net Worth, or (c) there shall be a withdrawal from any
Multiemployer Plan as a result of which the aggregate amount of Borrower's
liability in relation thereto shall exceed one percent (1%) of its Net
Worth.
12.14 Change of Control. If any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), shall become, or obtain rights
(whether by means of warrants, options or otherwise) to become the
"beneficial owner" (as defined in Rules 13(d)-3 and 13(d)-5 under the
Exchange Act, directly or indirectly, of more than 30% of the outstanding
common stock of Borrower or the occurrence of a Change of Control (as
defined in the Note Indenture).
12.15 Default Under the Bank Financing. If an Event of Default
or (as defined therein) occurs under the Bank Loan Agreement.
Notwithstanding anything contained in this Section 12 or
contained in any other provision of this Agreement or the other Loan
Documents to the contrary, in the event of the institution of Insolvency
Proceedings against Borrower, Lender shall not be obligated to make
advances to Borrower during the sixty (60) day grace period under Section
12.7
13. RIGHTS AND REMEDIES
13.1 Rights and Remedies Generally. Upon the occurrence of an
Event of Default by Borrower under this Agreement and notice thereof by
Lender to Borrower, except as hereinafter provided, Lender may, at its
sole election, without notice of its election and without demand, do any
one or more of the following, all of which are authorized by Borrower:
(a) Declare all Obligations, whether evidenced by this
Agreement, by the Note, or otherwise, immediately due and payable;
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provided, that all Obligations shall be immediately due and payable
without notice or demand upon an Event of Default under Section 12.6
or 12.7;
(b) Without notice to or demand upon Borrower, make such
payments and do such acts as Lender considers necessary or
reasonable to protect its Lien in the Collateral. Borrower agrees to
assemble the Collateral if Lender so requires, and to make the
Collateral available to Lender at such location as Lender may
designate. Borrower authorizes Lender to enter the premises where
the Collateral is located subject to the terms of the related real
estate leases, take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest or compromise any Lien
which in the opinion of Lender appears to be prior or superior to
its Lien (exclusive of the Lien of Bank on the Bank Senior
Collateral) and to pay all expenses incurred in connection
therewith;
(c) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale and sell (in the manner
provided for herein) the Collateral;
(d) Sell some or all of the Collateral at either public
or private sales, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such
places (including Borrower's premises subject to the terms of the
related real estate leases) as is commercially reasonable in the
opinion of Lender. It is not necessary that the Collateral be
present at any such sale.
Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of
any name, logo, trade secrets, trade names, trademarks, customer lists and
advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and
selling any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
13.2 Notice of Disposition. Lender shall give notice of the
disposition of the Collateral as follows:
(a) Lender shall give Borrower and each holder of a Lien
in the Collateral who has filed with Lender a written request for
notice, a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other
than a public sale is to be made of the Collateral, the time on or
after which the private sale or other disposition is to be made;
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(b) The notice to Borrower shall be personally delivered
or mailed, postage prepaid, as provided in Section 16, at least ten
(10) calendar days before the date fixed for the sale, or at least
ten (10) calendar days before the date on or after which the private
sale or other disposition is to be made, unless the Collateral is
perishable or threatens to decline speedily in value. Notice to
Persons other than Borrower claiming an interest in the Collateral
shall be sent to such addresses as they have furnished to Lender;
and
(c) If the sale is to be a public sale, Lender shall
also give notice of the time and place by publishing a notice one
time at least ten (10) calendar days before the date of the sale in
a newspaper of general circulation in the county in which the sale
is to be held. Lender may bid in any way permitted by applicable law
and purchase at any public sale.
13.3 Expenses of Enforcement. Borrower shall pay all
Out-of-Pocket Fees and Costs incurred in connection with Lender's
enforcement and exercise of any of its rights and remedies as herein
provided, whether or not suit is commenced by Lender. Any deficiency which
exists after disposition of the Collateral as provided above will be paid
immediately by Borrower. Any excess will be returned, without interest to
Borrower or such other Person as may be entitled thereto by Lender.
13.4 Rights Cumulative. Lender's rights and remedies under
this Agreement, all other Loan Documents and all other agreements with
Borrower shall be cumulative. Lender shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or
in equity. No exercise by Lender of one right or remedy shall be deemed an
election, and no waiver by Lender of any default on Borrower's part shall
be deemed a continuing waiver. No delay by Lender shall constitute a
waiver, election or acquiescence by it.
14. TAXES AND EXPENSES REGARDING THE COLLATERAL
14.1 If Borrower fails to pay promptly when due to any other
Person, monies which Borrower is required to pay by reason of any
provision in this Agreement in accordance with the provisions of this
Agreement (including without limitation for any tax, expense or with
respect to any Lien), or to promptly contest same by proper proceedings
diligently pursued and establish adequate reserves therefor as required by
the terms of this Agreement, Lender may, but need not, pay the same after
any notice required hereunder and charge Borrower's account therefor, and
Borrower shall promptly reimburse Lender. All such sums shall become
additional Obligations owing to Lender, shall bear interest at the
applicable interest rate hereunder and shall be secured by the Collateral.
Any
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payments made by Lender shall not constitute: (i) an agreement by Lender
to make similar payments in the future, or (ii) a waiver by Lender of any
Event of Default under this Agreement. In connection with any payment made
by Lender pursuant to this Section 14.1, Lender need not inquire as to, or
contest the validity of, any such expense, tax or Lien and the receipt of
the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing, and the receipt of any
other notice with respect to all other such monies due hereunder shall be
prima facia evidence that the same was validly due and owing.
15. CERTAIN WAIVERS
15.1 Application of Payments. Except as expressly provided in
this Agreement, Borrower waives the right to direct the application of any
and all payments at any time or times hereafter received by Lender on
account of any Obligations owed by Borrower, including without limitation
amounts received which are the proceeds of any insurance policy, and
Borrower agrees that Lender shall have the continuing exclusive right to
apply and reapply such payments in any manner as Lender may deem
advisable, notwithstanding any entry by Lender upon its books.
15.2 Demand, etc. Except as specifically provided herein,
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, notice
of nonpayment at maturity, notice of intent to accelerate, and notice of
acceleration, notice prior to Lender's taking possession or control of any
of the Collateral, or any bond or security which might be required by any
court prior to allowing Lender to exercise any of Lender's remedies,
including the issuance of an immediate writ of possession, the release,
compromise, settlement, extension or renewal of any or all commercial
paper, accounts, documents, instruments, chattel paper, and guarantees at
any time held by Lender on which Borrower may in any way be liable, the
benefit of all valuation, appraisement and exemption laws, and any right
to require a marshalling of assets by Lender or to require that Lender
first resort to some or any portion of any Collateral before sale,
foreclosure or realization on any other portion thereof.
15.3 Risk of Loss Regarding Collateral. Beyond the safe
custody of the Collateral in its possession, Lender shall not in any way
or manner be liable or responsible for: (a) the Collateral in its
possession (or in the possession or control of any agent or bailee); (b)
any loss or damage thereto occurring or arising in any manner or fashion
from any cause, including without limitation, lost profits, incidental or
consequential damages; or (c) any diminution in the value thereof. Except
where occasioned by gross negligence or willful misconduct of Lender, all
risk of loss, damage or destruction of the Collateral shall be borne by
Borrower.
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15.4 Confidentiality. Borrower authorizes its accounting firm
and/or service bureau to provide Lender with such information requested by
Lender pursuant to or in accordance with Section 10.2 of this Agreement,
and authorizes Lender to contact directly any such accounting firm and/or
service bureau in order to obtain such information. Prior to the
occurrence of a Potential Default or Event of Default, Lender shall notify
Borrower prior to contacting such accounting firm or service bureau, but
in no event shall Lender be liable to Borrower for failure to provide such
notice.
16. NOTICES
Except as otherwise expressly provided herein, any notice required or desired to
be served, given or delivered hereunder shall be in the form and manner
specified below, and shall be addressed to the party to be notified as follows:
If to Lender at: Alliance Laundry Systems LLC
Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxxx
Facsimile No. 920/748-1629
With a copy to: Xxxxxxx & Burnham, PLC
Xxx Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Facsimile No. 602/256-4475
If to Borrower at: SpinCycle, Inc.
00000 X. Xxxxxxxx/Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Ax
Facsimile No. 602/707-9967
With copies to: Xxxxxxxx & Xxxxx
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxx, Esq.
Facsimile No. 312/641-6895
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or to such other address as each party designates to the other by notice
in the manner herein prescribed. Notice shall be deemed given hereunder if
(i) delivered personally or otherwise actually received, (ii) sent by
overnight delivery service, (iii) mailed by first-class United States
mail, postage prepaid, registered or certified, with return receipt
requested, or (iv) sent via telecopy machine with a duplicate signed copy
sent on the same day as provided in clause (ii) above. Notice mailed as
provided in clause (iii) above shall be effective upon the expiration of
three (3) Business Days after its deposit in the United States mail, and
notice telecopied as provided in clause (iv) above shall be effective upon
receipt of such telecopy if the duplicate signed copy is sent under clause
(ii) above. Notice given in any other manner described in this section
shall be effective upon receipt by the addressee thereof; provided,
however, that if any notice is tendered to an addressee and delivery
thereof is refused by such addressee, such notice shall be effective upon
such tender unless expressly set forth in such notice.
17. CHOICE OF LAW AND VENUE
This Agreement shall be deemed to have been made in the State of Illinois and
the validity of this Agreement, its construction, interpretation and
enforcement, and the rights of parties hereunder and concerning the Collateral,
shall be determined under, governed by and construed in accordance with the laws
of the State of Illinois. The parties agree that at Lender's election, all
actions or proceedings arising in connection with this Agreement shall be tried
and litigated only in the state and federal courts located in the County of
Xxxx, State of Illinois. Borrower waives any right it may have to assert the
doctrine of forum non conveniens or to object to such venue and hereby consents
to any court ordered relief. Borrower consents that all service of process upon
it be made by registered mail or messenger directed to it at the address set
forth in Section 16 above and that service so made shall be deemed to be
completed upon the earlier of actual receipt or three (3) Business Days after
the same shall have been posted to Borrower's address. Nothing contained in this
Section 17 shall affect the right of Lender to serve legal process in any other
manner permitted by law or affect the right of Lender to bring any action or
proceeding against Borrower or its property in the courts of any other
jurisdiction.
18. INDEMNITY
Borrower hereby shall indemnify, hold harmless and defend Lender and its
directors, officers, agents, counsel and employees ("Indemnified Persons") from
and against all losses, claims, damages, costs, expenses and liabilities
("Losses"), whether such Losses arise or notice thereof is received by Lender
during the Initial Term or any renewal term or after termination of this
Agreement, incurred by any of them arising principally out of or relating to
this Agreement or under any other transaction contemplated hereby except for any
such Losses caused by the gross negligence or willful misconduct of such
Indemnified Persons, and shall reimburse Lender and each other Indemnified
Person for
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any reasonable expenses including in connection with the investigation of,
preparation for or defense of any actual or threatened claim, action or
proceeding arising therefrom (including any such costs of responding to
discovery requests or subpoenas), regardless of whether any Indemnified Person
is a party thereto. Each Indemnified Person may select its own counsel with
respect to any Losses, in addition to Borrower's counsel, and shall be
indemnified therefor hereunder.
19. GENERAL PROVISIONS
19.1 Acceptance. This Agreement shall be binding and deemed
effective when executed by Borrower and accepted and executed by Lender.
19.2 Binding Agreement. This Agreement shall bind and inure to
the benefit of the respective successors and assigns of each of the
parties, provided, however, that Borrower may not assign this Agreement or
any rights hereunder without Lender's prior written consent and any
prohibited assignment shall be absolutely void. No consent to an
assignment by Lender shall release Borrower from its Obligations to
Lender. Lender may not assign this Agreement and its rights and duties
hereunder, without Borrower's written consent, such consent not to be
unreasonably withheld, conditioned or delayed, and Borrower shall execute
and deliver such documents in connection with such assignment as Lender or
such assignee may reasonably request. Lender may not transfer, negotiate
or grant participations in all or any part of, or any interest in its
rights and benefits hereunder without Borrower's written consent, such
consent not to be unreasonably withheld, conditioned or delayed. In
connection therewith, Lender may disclose all documents and information
which Lender now or hereafter may have relating to Borrower or Borrower's
business, but shall use all reasonable efforts to ensure that the
recipient of such information maintains the confidentiality of such
information as required by the terms of this Agreement.
19.3 Section Headings. Section headings and section numbers
have been set forth herein for convenience only. Unless the contrary is
compelled by the context, everything contained in each paragraph applies
equally to this entire Agreement.
19.4 Construction. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against Lender or
Borrower, whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by all parties and shall be
construed and interpreted according to the ordinary meaning of the words
used so as to fairly accomplish the purposes and intentions of the parties
hereto.
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19.5 Severability. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
19.6 Entire Agreement. This Agreement cannot be changed or
terminated orally. All prior agreements, understandings, representations,
warranties, and negotiations, if any, are merged into this Agreement. This
Agreement may be amended only by a written agreement signed by duly
authorized officers of Borrower and Lender.
19.7 No Fiduciary Relationship or Joint Venture. No provision
herein or in any of the other Loan Documents and no course of dealing
between the parties hereto shall be deemed to create any fiduciary
relationship between Lender and Borrower nor to create any partnership or
joint venture between Lender and Borrower.
19.8 Publicity. Subject to the other confidentiality
provisions of this Agreement, Borrower hereby consents to the issuance or
dissemination by Lender to the public of information describing the credit
accommodations entered into pursuant to this Agreement (as it may be
amended, modified and supplemented from time to time) including without
limitation the name and address of Borrower, a general description of
Borrower's business and the use of Borrower's name and logo in connection
therewith.
19.9 Counterparts. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original but all of
which shall together constitute one and the same instrument.
19.10 Conflict. In the event of a conflict between the terms
of this Agreement and the terms of any other Loan Documents, the terms of
this Agreement shall be controlling.
19.11 WAIVER OF JURY TRIAL
LENDER AND BORROWER ACKNOWLEDGE THAT THE RIGHT TO A TRIAL BY
JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY BE WAIVED. BORROWER
AND LENDER EACH KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND WITHOUT COERCION,
WAIVE ALL RIGHTS TO TRIAL BY JURY OF ALL DISPUTES BETWEEN THEM. NEITHER
LENDER NOR BORROWER SHALL BE DEEMED TO HAVE GIVEN UP THIS WAIVER OF JURY
TRIAL UNLESS THE PARTY CLAIMING THAT THIS WAIVER HAS BEEN RELINQUISHED
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HAS A WRITTEN INSTRUMENT SIGNED BY THE OTHER PARTY STATING THAT THIS
WAIVER HAS BEEN GIVEN UP.
IN WITNESS WHEREOF, Borrower has executed and delivered this
Agreement.
SPINCYCLE, INC.
/s/ Xxx Xxxx
By: ______________________________________
Xxx Xxxx
Vice President
Address: 00000 X. Xxxxxxxx/Xxxxxx
Xxxx, Xxxxx 000
Attn: Xxxxx Ax
Facsimile: 602/707-9967
17th
ACCEPTED this ____ day of November, 1999 at Lender's place of
business in the City of Ripon, State of Wisconsin.
ALLIANCE LAUNDRY SYSTEMS LLC
/s/ Xxxxx X. Xxxxxx
_________________________________________
By: Xxxxx X. Xxxxxx
Title: Vice President Chief Financial
Officer
Address: Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxx, Xxxxxxxxx 00000-0000
Attn: Xxxxx Xxxxxx
Facsimile: 920/748-1629
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SCHEDULES AND EXHIBITS
EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Compliance Certificate
Exhibit C Form of Landlord's Waiver and Lease Assignment Provision
SCHEDULES
Schedule 6.3 - Location of Inventory
Schedule 7.2 - States Where Borrower is Qualified
Schedule 7.8 - Litigation
Schedule 7.9 - Intellectual Property
Schedule 7.11 - Pro Formas
Schedule 7.12 - Conduct of Business
Schedule 7.13 - Environmental Compliance
Schedule 7.17 - Fictitious Names
Schedule 8.1 - Permitted Liens, Facilities to be Closed
Schedule 8.16 - Bank Accounts
