<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1998
REGISTRATION NO. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
ALLIANCE LAUNDRY SYSTEMS LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 35820 39-1927923
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR P.O. BOX 990
ORGANIZATION) RIPON, WISCONSIN 54971-0990
TELEPHONE: (920) 748-3121
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
THOMAS F. L'ESPERANCE
P.O. BOX 990
RIPON, WISCONSIN 54971-0990
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
LANCE C. BALK
KIRKLAND & ELLIS
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022-4675
TELEPHONE: (212) 446-4800
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE(2)
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<S> <C> <C> <C> <C>
9 5/8% Senior
Subordinated Notes due
2008................... $110,000,000 $1,000 $110,000,000 $32,450
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Guarantee(2)............ N/A N/A N/A N/A
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f)(2) based upon the book value of the securities
as of June 9, 1998.
(2) Previously paid.
(3) The Guarantee by Alliance Laundry Holdings LLC of the payment of principal
and interest on the Notes is being registered hereby. Pursuant to Rule
457(g), no registration fee is required with respect to the Guarantee.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
(continued from previous page)
ALLIANCE LAUNDRY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 35820 39-1928505
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION
ORGANIZATION) NUMBER)
ALLIANCE LAUNDRY HOLDINGS LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 35820 52-2055893
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION
ORGANIZATION) NUMBER)
<PAGE>
EXPLANATORY NOTE:
This Amendment No. 1 to the Form S-4 Registration Statement for Alliance
Laundry Systems LLC, Alliance Laundry Corporation and Alliance Laundry
Holdings LLC is being filed solely to file Part II to the Registration
Statement, including certain Exhibits thereto. Part I of the Registration
Statement is not included herewith and remains unchanged from the previous
filing dated June 15, 1998.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Each of Alliance Laundry Systems LLC (the "Company") and Alliance Laundry
Holdings LLC (the "Parent") is a limited liability company organized under the
laws of the State of Delaware. Section 18-108 of the Delaware Limited
Liability Company Act (the "DLLCA") provides that, subject to such standards
and restrictions, if any, as are set forth in its limited liability company
agreement, a limited liability company may, and shall have the power to,
indemnify and hold harmless any member or manager or other persons from and
against any and all claims and demands whatsoever.
Section 6.4 of the Parent's Limited Liability Company Agreement (the "Parent
LLC Agreement") provides, among other things, that the Company shall indemnify
and hold harmless any Person (each an "Indemnified Person") to the fullest
extent permitted under the DLLCA, as the same exists or as thereafter amended,
substituted or replaced (but, in the case of any such amendment, substitution
or replacement only to the extent that such amendment, substitution or
replacement permits the Parent to provide broader indemnification rights than
the Parent is providing immediately prior to such amendment), against all
expenses, liabilities and losses (including attorneys' fees, judgments, fines,
excise taxes or penalties) reasonably incurred or suffered by such Person (or
one or more of such Person's Affiliates) by reason of the fact that such
Person is or was a Unitholder or is or was serving as a Representative,
officer, director, principal, member, employee or agent of the Parent or is or
was serving at the request of the Parent as a Representative, officer,
director, principal, member, employee or agent of another corporation,
partnership, joint venture, limited liability company, trust or other
enterprise; provided that (unless the Board otherwise consents) no Indemnified
Person shall be indemnified for any expenses, liabilities and losses suffered
that are attributable to such Indemnified Person's or its Affiliates' gross
negligence, willful misconduct or knowing violation of law or for any present
or future breaches of any representations, warranties or covenants by such
Indemnified Person or its Affiliates contained herein or in the other
agreements with the Parent. The Parent LLC Agreement further provides that
expenses, including attorneys' fees, incurred by any such Indemnified Person
in defending a proceeding shall be paid by the Parent in advance of the final
disposition of such proceeding, including any appeal therefrom, upon receipt
of an undertaking by or on behalf of such Indemnified Person to repay such
amount if it shall ultimately be determined that such Indemnified Person is
not entitled to be indemnified by the Parent.
The Parent LLC Agreement defines "Person" as an individual or a corporation,
partnership, limited liability company, trust, unincorporated organization,
association or other entity. The Parent LLC Agreement defines "Affiliate" of
any Person as any Person that directly or indirectly controls, is controlled
by, or is under common control with the Person in question. The Parent LLC
Agreement defines "Unitholder" as any owner of one or more Units as reflected
on the Parent's books and records. In addition, as used in the Parent LLC
Agreement, each member of the Parent's Board is referred to as a
"Representative". According to the LLC Agreement, the Parent shall have power
to purchase and maintain insurance on behalf of any Indemnified Party against
any expense, liability or loss incurred by such Person in any capacity or
arising out of its status as such, whether or not the Parent would have power
to indemnify against such liability or cost.
Section 4.3 of the Company's Limited Liability Company Agreement (the
"Company LLC Agreement") provides, among other things, that, except as limited
by law and subject to the provisions of Section 4.3, each person and entity
shall be entitled to be indemnified and held harmless on an as incurred basis
by the Company (but only after first making a claim for indemnification
available from any other source and only to the extent indemnification is not
provided by that source) to the fullest extent permitted under the DLLCA
(including indemnification for negligence, gross negligence and breach of
fiduciary duty to the extent so authorized) as amended from time to time (but,
in the case of any such amendment, only to the extent that such amendment
permits the Company to provide broader indemnification rights than such law
permitted the Company to provide
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<PAGE>
prior to such amendment) against all losses, liabilities and expenses,
including attorneys' fees and expenses, arising from claims, actions and
proceedings in which such person or entity may be involved, as a party or
otherwise, by reason of his being or having been on the Board, a Participant
or officer of the Company, or by reason of his serving at the request of the
Company as a director, officer, manager, member, partner, employee or agent of
another limited liability company or of a corporation, partnership, joint
venture, trust or other enterprise, including a service with respect to an
employee benefit plan whether or not such person or entity continues to be
such at the time any such loss, liability or expense is paid or incurred. The
Company LLC Agreement further provides that the rights of indemnification
provided in Section 4.3 are in addition to any rights to which such person may
otherwise be entitled by contract or as a matter of law and shall extend to
his successors and assigns. In particular, and without limitation of the
foregoing, such person or entity shall be entitled to indemnification by the
Company against expenses (as incurred), including attorneys' fees and
expenses, incurred by such person or entity upon the delivery by such person
or entity to the Company of a written undertaking (reasonably acceptable to
the Board). The Company may, to the extent authorized from time to time by the
Board, grant rights to indemnification and to advancement of expenses to any
employee or agent of the Company to the fullest extent of the provisions of
Section 4.3 with respect to the indemnification and advancement of expenses of
the Board, Participants and officers of the Company.
The Company LLC Agreement defines "Participant" as a Member, a Terminated
Member or an Assignee. The Company LLC Agreement defines "Member" as the
Parent and any Person admitted to the Company as a Substituted Member or
Additional Member, but only so long as such Person is shown on the Company's
books and records as the owner of one or more Units. The Company LLC Agreement
defines "Terminated Member" as a Person who has ceased to be a Member pursuant
to Section 4.7 of the Company LLC Agreement. In addition, the Company LLC
Agreement defines "Assignee" as a Person or entity to whom a LLC interest has
been transferred in a Transfer described in Section 4.4, unless and until such
person or entity becomes a Member with respect to such LLC interest.
Alliance Laundry Corporation (the "Corporation") is a Delaware corporation.
Section 145 of the General Corporation Law of the State of Delaware provides
that a Delaware corporation may indemnify any person who were, are or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative of investigative
(other than an action by or in the right of such corporation), by reason of
the fact that such person is or was an officer, director, employee or agent of
such corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding, provided such person acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the corporation's best interests and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his conduct was
illegal. A Delaware corporation may indemnify any persons who are, were or are
threatened to be made, a party to any threatened, pending or completed action
or suit by or in the right of the corporation by reasons of the fact that such
person was a director, officer, employee or agent of such corporation, or is
or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit, provided
such person acted in good faith and in a manner he reasonably believed to be
in or not opposed to the corporation's best interests, provided that no
indemnification is permitted without judicial approval if the officer,
director, employee or agent is adjudged to be liable to the corporation. Where
an officer, director, employee or agent is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which such officer or director has actually
and reasonably incurred.
The Certificate of Incorporation of the Corporation provides that to the
fullest extent permitted by the General Corporation Law of the State of
Delaware as the same exists or may thereafter be amended, a director of the
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for a breach
II-2
<PAGE>
of fiduciary duty as a director. The Certificate of Incorporation of the
Corporation further provides that any repeal or modification of this provision
of the Certificate of Incorporation of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing at
the time of such repeal or modification.
Article V of the Bylaws of the Corporation provides that each person who was
or is made a party or is threatened to be made a party to or is involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he, or
a person of whom he is the legal representative, is or was a director or
officer, of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary, or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
shall be indemnified and held harmless by the Corporation to the fullest
extent which it is empowered to do so unless prohibited from doing so by the
General Corporation Law of the State of Delaware, as the same exists or may
thereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment) against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of
his heirs, executors and administrators; provided, however, that, except as
provided in Section 2 of the Bylaws of the Corporation, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the board of directors of the Corporation. Article V of the Bylaws of the
Corporation further provides that the right to indemnification conferred in
Article V of the Bylaws of the Corporation shall be a contract right and,
subject to Sections 2 and 5 of the Bylaws of the Corporation, shall include
the right to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition. The Corporation may, by
action of its board of directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation
or enterprise, against any liability asserted against him and incurred by him
in any such capacity, arising out of his status as such, whether or not the
corporation would otherwise have the power to indemnify him under Section 145.
The Corporation's Bylaws provide for the maintenance of insurance under the
circumstances described in Section 145.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrants pursuant to the foregoing provisions, the registrants have been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
II-3
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<C> <S>
2.1 Agreement and Plan of Merger, dated as of February 21, 1998, by and
among Bain/RCL, L.L.C., RCL Acquisitions, L.L.C., Raytheon Commercial
Laundry LLC and Raytheon Company.*
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated as of May 2,
1998, by and among Bain/RCL, L.L.C., RCL Acquisitions, L.L.C., Raytheon
Commercial Laundry LLC and Raytheon Company.*
3.1 Certificate of Formation of Alliance Laundry Systems LLC*
3.2 Amended and Restated Limited Liability Company Agreement of Alliance
Laundry Systems LLC.*
3.3 Certificate of Incorporation of Alliance Laundry Corporation.*
3.4 Bylaws of Alliance Laundry Corporation.*
4.1 Indenture, dated as of May 5, 1998, among Alliance Laundry Systems LLC,
Alliance Laundry Corporation, the Guarantors and United States Trust
Company of New York.*
5.1 Opinion and Consent of Kirkland & Ellis.**
8.1 Opinion of Kirkland & Ellis as to federal income tax consequences.**
10.1 Purchase Agreement, dated as of April 29,1998, by and among Alliance
Laundry Systems LLC, Alliance Laundry Corporation and the Initial
Purchasers.*
10.2 Registration Rights Agreement, dated as of May 5, 1998, by and among
Alliance Laundry Systems LLC, Alliance Laundry Corporation, Alliance
Laundry Holdings LLC, and Lehman Brothers Inc. and Credit Suisse First
Boston Corporation.*
10.3 Credit Agreement, dated as of May 5, 1998, among Alliance Laundry
Holdings LLC, Alliance Laundry Systems LLC, the several banks or other
financial institutions or entities from time to time parties to this
Agreement, Lehman Brothers Inc., Lehman Commercial Paper Inc., and
General Electric Capital Corporation.*
10.4 Loan and Security Agreement dated May 5, 1998, between Alliance Laundry
Receivables Warehouse LLC, the Lenders and Lehman Commercial Paper
Inc.*
10.5 Amended and Restated Limited Liability Agreement of Alliance Laundry
Holdings LLC, dated as of May 5, 1998.*
10.6 Alliance Laundry Holdings LLC, Securityholders Agreement, dated as of
May 5, 1998, between Alliance Laundry Holdings LLC and the
Securityholders.*
10.7 Alliance Laundry Holdings LLC, Registration Rights Agreement, made as if
May 5, 1998, by and among Alliance Laundry Holdings LLC, Raytheon
Company, Bain/RCL and the Securityholders.*
10.8 Employment Agreement, made as of May 5, 1998, by and between Alliance
Laundry Systems LLC and Thomas F. L'Esperance.*
10.9 IRA and Executive Unit Purchase Agreement, made as of May 5, 1998, by
and between RCL Acquisitions, LLC, Thomas F. L'Esperance and Stifel,
Nicolaus Custodian for Thomas F. L'Esperance IRA and Stifel, Nicolaus
Custodian for Paula K. L'Esperance IRA.*
10.10 IRA and Executive Unit Purchase Agreement, made as of May 5, 1998, by
and between RCL Acquisitions, LLC, R. Scott Gaster and Robert W. Baird
& Co. Inc. TTEE for R. Scott Gaster IRA.*
10.11 IRA and Executive Unit Purchase Agreement, made as of May 5, 1998, by
and between RCL Acquisitions, L.L.C., Jeffrey J. Brothers and Delaware
Charter Guarantee and Trust Company, TTEE for Jeffrey J. Brothers,
IRA.*
10.12 Executive Unit Purchase Agreement, made as of May 5, 1998, by and
between RCL Acquisitions, L.L.C., and Herman Beach.*
10.13 IRA and Executive Unit Purchase Agreement, made as of May 5, 1998, by
and between RCL Acquisitions, L.L.C., Bruce P. Rounds and Stifel,
Nicolaus Custodian for Bruce P. Rounds IRA.*
10.14 IRA and Executive Unit Purchase Agreement, made as of May 5, 1998, by
and between RCL Acquisitions, L.L.C., Scott L. Spiller and Stifel,
Nicolaus Custodian for Scott Spiller IRA.*
10.15 IRA and Executive Unit Purchase Agreement, made as of May 5, 1998, by
and between RCL Acquisitions, L.L.C., Robert T. Wallace and Edward
Jones, Cust FBO Robert T. Wallace, IRA.*
10.16 Deferred Compensation Agreement, made and entered into as of May 5,
1998, by and among Thomas F. L'Esperance, Raytheon Company, Alliance
Laundry Holdings LLC, and Alliance Laundry Systems LLC.*
</TABLE>
II-4
<PAGE>
<TABLE>
<C> <S>
10.17 Deferred Compensation Agreement, made and entered into as of May 5,
1998, by and among R. Scott Gaster, Alliance Laundry Holdings LLC, and
Alliance Laundry Systems LLC.*
10.18 Deferred Compensation Agreement, made and entered into as of May 5,
1998, by and among Jeffrey J. Brothers, Alliance Laundry Holdings LLC
and Alliance Laundry Systems LLC.*
10.19 Deferred Compensation Agreement, made and entered into as of May 5,
1998, by and among Herman W. Beach, Alliance Laundry Holdings LLC and
Alliance Laundry Systems LLC.*
10.20 Deferred Compensation Agreement, made and entered into as of May 5,
1998, by and among Bruce P. Rounds, Alliance Laundry Holdings LLC and
Alliance Laundry Systems LLC.*
10.21 Deferred Compensation Agreement, made and entered into as of May 5,
1998, by and among Robert T. Wallace, Alliance Laundry Holdings LLC and
Alliance Laundry Systems LLC.*
10.22 Retention Agreement, dated as of September 30, 1997, by and between
Thomas F. L'Esperance and Raytheon Commercial Laundry LLC.*
10.23 Amendment No. 1 to Retention Agreement, dated as of April , 1998, be
and between Thomas F. L'Esperance and Raytheon Commercial Laundry LLC.*
10.24 Retention Agreement, dated as of September 30, 1997, by and between R.
Scott Gaster and Raytheon Commercial Laundry LLC.*
10.25 Amendment No. 1 to Retention Agreement, dated as of April , 1998, by
and between R. Scott Gaster and Raytheon Commercial Laundry LLC.*
10.26 Retention Agreement, dated as of September 30, 1997, by and between
Jeffrey J. Brothers and Raytheon Commercial Laundry LLC.*
10.27 Amendment No. 1 to Retention Agreement, dated as of April , 1998, by
and between Jeffrey J. Brothers and Raytheon Commercial Laundry LLC.*
10.28 Retention Agreement, dated as of September 30, 1997, by and between
Herman W. Beach and Raytheon Commercial Laundry LLC.*
10.29 Amendment No. 1 to Retention Agreement, dated as of April , 1998, by
and between Herman W. Beach and Raytheon Commercial Laundry LLC.*
10.30 Retention Agreement, dated as of September 30, 1997, by and between
Bruce P. Rounds and Raytheon Commercial Laundry LLC.*
10.31 Amendment No. 1 to Retention Agreement, dated as of April , 1998, by
and between Bruce P. Rounds and Raytheon Commercial Laundry LLC.*
10.32 Retention Agreement, dated as of September 30, 1997, by and between
Robert T. Wallace and Raytheon Commercial Laundry LLC.*
10.33 Amendment No. 1 to Retention Agreement, dated as of April , 1998, by
and between Robert T. Wallace and Raytheon Commercial Laundry LLC.*
10.34 Promissory Note, dated as of May 5, 1998, from Thomas F. L'Esperance to
RCL Acquisitions, L.L.C.*
10.35 Promissory Note, dated as of May 5, 1998, from R. Scott Gaster to RCL
Acquisitions, L.L.C.*
10.36 Promissory Note, dated as of May 5, 1998, from Jeffrey J. Brothers to
RCL Acquisitions, L.L.C.*
10.37 Promissory Note, dated as of May 5, 1998, from Herman W. Beach to RCL
Acquisitions, L.L.C.*
10.38 Promissory Note, dated as of May 5, 1998, from Bruce P. Rounds to RCL
Acquisitions, L.L.C.*
10.39 Promissory Note, dated as of May 5, 1998, from Robert T. Wallace to RCL
Acquisitions, L.L.C.*
10.40 Advisory Agreement, dated as of , 1998, by and between Alliance
Laundry Systems LLC, and Bain Capital, Inc.*
10.41 Transition Services Agreement, dated as of May , 1998, by and among
Bain/RCL, L.L.C., RCL Acquisitions, L.L.C., Raytheon Company, and
Raytheon Commercial Laundry LLC.*
10.42 Junior Subordinated Promissory Note, dated as of , 1998, from
Alliance Laundry Holdings LLC to Raytheon Company.*
10.43 Supply Agreement, dated as of September 10, 1997, between Amana Company,
L.P. and Raytheon Commercial Laundry LLC.**
10.44 Supply Agreement II, dated as of September 10, 1997, between Amana
Company, L.P. and Raytheon Commercial Laundry LLC.**
12.1 Statement of Computation of Ratios.*
21.1 Subsidiaries of Alliance Laundry Systems LLC.**
23.1 Consent of Coopers & Lybrand L.L.P.***
23.2 Consent of Kirkland & Ellis (included in exhibits 5.1 and 8.1).*
24.1 Powers of Attorney (included in signature page).***
25.1 Statement of Eligibility of Trustee on Form T-1.*
</TABLE>
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<PAGE>
<TABLE>
<C> <S>
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.**
</TABLE>
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* Filed herewith
** To be filed by amendment.
*** Previously filed
(B) FINANCIAL STATEMENT SCHEDULES
Combined Schedule of Valuation Accounts
(C) REPORT OF INDEPENDENT ACCOUNTANTS
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering; and
(4) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of the chapter at the start of any delayed offering or
throughout a continuous offering. Financial statements and information
otherwise required by Section 10(a) (3) of the Act need not be furnished,
provided, that the registrant includes in the prospectus, by means of a post-
effective amendment, financial statements required pursuant to this paragraph
(a)(4) and other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those financial
statements. Notwithstanding the foregoing, with respect to registration
statements on Form F-3, a post-effective amendment need not be filed to
include financial statements and information required by Section 10(a)(3) of
the Act or Rule 3-19 of this chapter is such financial statements and
information are contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the Form
F-3.
(1) The undersigned registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use
of a prospectus which is part of this registration statement, by any person
or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain
the information called for by the applicable registration form with respect
to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of Section 10(a)(3) of the Act and is
II-6
<PAGE>
used in connection with an offering of securities subject to Rule 415, will
be filed as a part of an amendment to the registration statement and will
not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such post-
effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 20 or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
RIPON, STATE OF WISCONSIN, ON JULY 2, 1998.
Alliance Laundry Systems LLC
/s/ Thomas F. L'Esperance
By: _________________________________
Name: Thomas F. L'Esperance
Title: President, Chief Executive
Officer and Manager
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATION ON JULY 2,
1998:
SIGNATURE CAPACITY
/s/ Thomas F. L'Esperance President, Chief Executive Officer
- ------------------------------------- and Manager (principal executive
THOMAS F. L'ESPERANCE officer)
/s/ Bruce P. Rounds Vice President/Chief Financial
- ------------------------------------- Officer (principal financial and
BRUCE P. ROUNDS accounting officer)
Manager
*
- -------------------------------------
EDWARD W. CONARD
Manager
*
- -------------------------------------
ROBERT C. GAY
Manager
*
- -------------------------------------
STEPHEN C. SHERRILL
Vice President and
* Manager
- -------------------------------------
- -------- STEPHEN M. ZIDE
* means signed by attorney-in-fact
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
RIPON, STATE OF WISCONSIN, ON JULY 2, 1998.
Alliance Laundry Holdings LLC
/s/ Thomas F. L'Esperance
By: _________________________________
Name: Thomas F. L'Esperance
Title: President, Chief Executive
Officer and Manager
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATION ON JULY 2,
1998:
SIGNATURE CAPACITY
/s/ Thomas F. L'Esperance President, Chief Executive Officer
- ------------------------------------- and Manager (principal executive
THOMAS F. L'ESPERANCE officer)
/s/ Bruce P. Rounds Vice President/Chief Financial
- ------------------------------------- Officer (principal financial
BRUCE P. ROUNDS and accounting officer)
Manager
*
- -------------------------------------
EDWARD W. CONARD
Manager
*
- -------------------------------------
ROBERT C. GAY
Manager
*
- -------------------------------------
STEPHEN C. SHERRILL
Vice President and
* Manager
- -------------------------------------
STEPHEN M. ZIDE
- --------
* means signed by attorney-in-fact
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
RIPON, STATE OF WISCONSIN, ON JULY 2, 1998.
Alliance Laundry Corporation
/s/ Thomas F. L'Esperance
By: _________________________________
Name: Thomas F. L'Esperance
Title: President, Chief Executive
Officer and Director
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO REGISTRATION STATEMENT AND POWER OF ATTORNEY HAVE BEEN SIGNED BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATION ON JULY 2,
1998:
SIGNATURE CAPACITY
/s/ Thomas F. L'Esperance President, Chief Executive Officer
- ------------------------------------- and Director (principal executive
THOMAS F. L'ESPERANCE officer)
/s/ Bruce P. Rounds Vice President/Chief Financial
- ------------------------------------- Officer (principal financial and
BRUCE P. ROUNDS accounting officer)
Director
*
- -------------------------------------
EDWARD W. CONARD
Director
*
- -------------------------------------
ROBERT C. GAY
Director
*
- -------------------------------------
STEPHEN C. SHERRILL
Vice President and
* Director
- -------------------------------------
STEPHEN M. ZIDE
- --------
* means signed by attorney-in-fact
II-10
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
2.1 Agreement and Plan of Merger, dated as of February 21,
1998, by and among Bain/RCL, L.L.C., RCL Acquisitions,
L.L.C., Raytheon Commercial Laundry LLC and Raytheon
Company.*
2.2 Amendment No. 1 to Agreement and Plan of Merger, dated
as of May 2, 1998, by and among Bain/RCL, L.L.C., RCL
Acquisitions, L.L.C., Raytheon Commercial Laundry LLC
and Raytheon Company.*
3.1 Certificate of Formation of Alliance Laundry Systems
LLC*
3.2 Amended and Restated Limited Liability Company
Agreement of Alliance Laundry Systems LLC.*
3.3 Certificate of Incorporation of Alliance Laundry
Corporation.*
3.4 Bylaws of Alliance Laundry Corporation.*
4.1 Indenture, dated as of May 5, 1998, among Alliance
Laundry Systems LLC, Alliance Laundry Corporation, the
Guarantors and United States Trust Company of New
York.*
5.1 Opinion and Consent of Kirkland & Ellis.**
8.1 Opinion of Kirkland & Ellis as to federal income tax
consequences.**
10.1 Purchase Agreement, dated as of April 29,1998, by and
among Alliance Laundry Systems LLC, Alliance Laundry
Corporation and the Initial Purchasers.*
10.2 Registration Rights Agreement, dated as of May 5, 1998,
by and among Alliance Laundry Systems LLC, Alliance
Laundry Corporation, Alliance Laundry Holdings LLC,
and Lehman Brothers Inc. and Credit Suisse First
Boston Corporation.*
10.3 Credit Agreement, dated as of May 5, 1998, among
Alliance Laundry Holdings LLC, Alliance Laundry
Systems LLC, the several banks or other financial
institutions or entities from time to time parties to
this Agreement, Lehman Brothers Inc., Lehman
Commercial Paper Inc., and General Electric Capital
Corporation.*
10.4 Loan and Security Agreement dated May 5, 1998, between
Alliance Laundry Receivables Warehouse LLC, the
Lenders and Lehman Commercial Paper Inc.*
10.5 Amended and Restated Limited Liability Agreement of
Alliance Laundry Holdings LLC, dated as of May 5,
1998.*
10.6 Alliance Laundry Holdings LLC, Securityholders
Agreement, dated as of May 5, 1998, between Alliance
Laundry Holdings LLC and the Securityholders.*
10.7 Alliance Laundry Holdings LLC, Registration Rights
Agreement, made as if May 5, 1998, by and among
Alliance Laundry Holdings LLC, Raytheon Company,
Bain/RCL and the Securityholders.*
10.8 Employment Agreement, made as of May 5, 1998, by and
between Alliance Laundry Systems LLC and Thomas F.
L'Esperance.*
10.9 IRA and Executive Unit Purchase Agreement, made as of
May 5, 1998, by and between RCL Acquisitions, LLC,
Thomas F. L'Esperance and Stifel, Nicolaus Custodian
for Thomas F. L'Esperance IRA and Stifel, Nicolaus
Custodian for Paula K. L'Esperance IRA.*
10.10 IRA and Executive Unit Purchase Agreement, made as of
May 5, 1998, by and between RCL Acquisitions, LLC, R.
Scott Gaster and Robert W. Baird & Co. Inc. TTEE for
R. Scott Gaster IRA.*
10.11 IRA and Executive Unit Purchase Agreement, made as of
May 5, 1998, by and between RCL Acquisitions, L.L.C.,
Jeffrey J. Brothers and Delaware Charter Guarantee and
Trust Company, TTEE for Jeffrey J. Brothers, IRA.*
10.12 Executive Unit Purchase Agreement, made as of May 5,
1998, by and between RCL Acquisitions, L.L.C., and
Herman Beach.*
10.13 IRA and Executive Unit Purchase Agreement, made as of
May 5, 1998, by and between RCL Acquisitions, L.L.C.,
Bruce P. Rounds and Stifel, Nicolaus Custodian for
Bruce P. Rounds IRA.*
10.14 IRA and Executive Unit Purchase Agreement, made as of
May 5, 1998, by and between RCL Acquisitions, L.L.C.,
Scott L. Spiller and Stifel, Nicolaus Custodian for
Scott Spiller IRA.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.15 IRA and Executive Unit Purchase Agreement, made as of
May 5, 1998, by and between RCL Acquisitions, L.L.C.,
Robert T. Wallace and Edward Jones, Cust FBO Robert T.
Wallace, IRA.*
10.16 Deferred Compensation Agreement, made and entered into
as of May 5, 1998, by and among Thomas F. L'Esperance,
Raytheon Company, Alliance Laundry Holdings LLC, and
Alliance Laundry Systems LLC.*
10.17 Deferred Compensation Agreement, made and entered into
as of May 5, 1998, by and among R. Scott Gaster,
Alliance Laundry Holdings LLC, and Alliance Laundry
Systems LLC.*
10.18 Deferred Compensation Agreement, made and entered into
as of May 5, 1998, by and among Jeffrey J. Brothers,
Alliance Laundry Holdings LLC and Alliance Laundry
Systems LLC.*
10.19 Deferred Compensation Agreement, made and entered into
as of May 5, 1998, by and among Herman W. Beach,
Alliance Laundry Holdings LLC and Alliance Laundry
Systems LLC.*
10.20 Deferred Compensation Agreement, made and entered into
as of May 5, 1998, by and among Bruce P. Rounds,
Alliance Laundry Holdings LLC and Alliance Laundry
Systems LLC.*
10.21 Deferred Compensation Agreement, made and entered into
as of May 5, 1998, by and among Robert T. Wallace,
Alliance Laundry Holdings LLC and Alliance Laundry
Systems LLC.*
10.22 Retention Agreement, dated as of September 30, 1997, by
and between Thomas F. L'Esperance and Raytheon
Commercial Laundry LLC.*
10.23 Amendment No. 1 to Retention Agreement, dated as of
April , 1998, be and between Thomas F. L'Esperance
and Raytheon Commercial Laundry LLC.*
10.24 Retention Agreement, dated as of September 30, 1997, by
and between R. Scott Gaster and Raytheon Commercial
Laundry LLC.*
10.25 Amendment No. 1 to Retention Agreement, dated as of
April , 1998, by and between R. Scott Gaster and
Raytheon Commercial Laundry LLC.*
10.26 Retention Agreement, dated as of September 30, 1997, by
and between Jeffrey J. Brothers and Raytheon
Commercial Laundry LLC.*
10.27 Amendment No. 1 to Retention Agreement, dated as of
April , 1998, by and between Jeffrey J. Brothers and
Raytheon Commercial Laundry LLC.*
10.28 Retention Agreement, dated as of September 30, 1997, by
and between Herman W. Beach and Raytheon Commercial
Laundry LLC.*
10.29 Amendment No. 1 to Retention Agreement, dated as of
April , 1998, by and between Herman W. Beach and
Raytheon Commercial Laundry LLC.*
10.30 Retention Agreement, dated as of September 30, 1997, by
and between Bruce P. Rounds and Raytheon Commercial
Laundry LLC.*
10.31 Amendment No. 1 to Retention Agreement, dated as of
April , 1998, by and between Bruce P. Rounds and
Raytheon Commercial Laundry LLC.*
10.32 Retention Agreement, dated as of September 30, 1997, by
and between Robert T. Wallace and Raytheon Commercial
Laundry LLC.*
10.33 Amendment No. 1 to Retention Agreement, dated as of
April , 1998, by and between Robert T. Wallace and
Raytheon Commercial Laundry LLC.*
10.34 Promissory Note, dated as of May 5, 1998, from Thomas
F. L'Esperance to RCL Acquisitions, L.L.C.*
10.35 Promissory Note, dated as of May 5, 1998, from R. Scott
Gaster to RCL Acquisitions, L.L.C.*
10.36 Promissory Note, dated as of May 5, 1998, from Jeffrey
J. Brothers to RCL Acquisitions, L.L.C.*
10.37 Promissory Note, dated as of May 5, 1998, from Herman
W. Beach to RCL Acquisitions, L.L.C.*
10.38 Promissory Note, dated as of May 5, 1998, from Bruce P.
Rounds to RCL Acquisitions, L.L.C.*
10.39 Promissory Note, dated as of May 5, 1998, from Robert
T. Wallace to RCL Acquisitions, L.L.C.*
10.40 Advisory Agreement, dated as of , 1998, by and
between Alliance Laundry Systems LLC, and Bain
Capital, Inc.*
10.41 Transition Services Agreement, dated as of May ,
1998, by and among Bain/RCL, L.L.C., RCL Acquisitions,
L.L.C., Raytheon Company, and Raytheon Commercial
Laundry LLC.*
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------- ----------- ------------
<C> <S> <C>
10.42 Junior Subordinated Promissory Note, dated as of ,
1998, from Alliance Laundry Holdings LLC to Raytheon
Company.*
10.43 Supply Agreement, dated as of September 10, 1997,
between Amana Company, L.P. and Raytheon Commercial
Laundry LLC.**
10.44 Supply Agreement II, dated as of September 10, 1997,
between Amana Company, L.P. and Raytheon Commercial
Laundry LLC.**
12.1 Statement of Computation of Ratios.*
21.1 Subsidiaries of Alliance Laundry Systems LLC.**
23.1 Consent of Coopers & Lybrand L.L.P.***
23.2 Consent of Kirkland & Ellis (included in exhibits 5.1
and 8.1).*
24.1 Powers of Attorney (included in signature page).***
25.1 Statement of Eligibility of Trustee on Form T-1.*
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal.**
99.2 Form of Notice of Guaranteed Delivery.**
99.3 Form of Tender Instructions.**
</TABLE>
- -------
* Filed herewith
** To be filed by amendment.
*** Previously filed
3
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of February 21, 1998 (the
"Agreement"), by and among Bain/RCL, L.L.C., a Delaware limited liability
---------
company ("Bain"), RCL Acquisitions, L.L.C., a Delaware limited liability company
----
("MergeCo"), RAYTHEON COMMERCIAL LAUNDRY LLC, a Delaware limited liability
-------
company (the "Company"), and RAYTHEON COMPANY, a Delaware corporation
-------
("Raytheon").
--------
RECITALS
WHEREAS, the Board of Managers of MergeCo and the Company; Raytheon, as the
sole Member of the Company; and Bain, as the sole Member of MergeCo, have each
approved this Agreement, including without limitation, the merger of MergeCo
with and into the Company in accordance with the terms of this Agreement and the
Limited Liability Company Act of the State of Delaware (the "Act") and with any
---
other applicable law.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
Article 1
Certain Definitions
-------------------
Section 1.1 Definitions. As used herein, unless the context otherwise
-----------
requires, the following terms (or any variant in the form thereof) have the
following respective meanings. Terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa, and the reference to
any gender shall be deemed to include all genders. Unless otherwise defined or
the context otherwise clearly requires, terms for which meanings are provided
herein shall have such meanings when used in the Disclosure Schedule and each
collateral document and certificate executed or required to be executed pursuant
hereto or thereto or otherwise delivered, from time to time, pursuant hereto or
thereto.
"Action" means any litigation or legal or other actions, arbitrations,
------
counterclaims, investigations, proceedings, requests for material information by
or pursuant to the order of any Governmental Authority, or suits, at law or in
arbitration, equity or admiralty commenced by any Person.
<PAGE>
"Adverse", "Adversely" when used in conjunction with "Affect," "Change" and
------- ---------
"Effect" shall mean, with respect to the Company or Bain, whichever is the
obligor in the context to which such term applies, any event which could
reasonably be expected, in a material respect or manner or to a material degree,
to (a) adversely affect the enforceability of this Agreement by the obligee, (b)
adversely affect the business, assets, liabilities, properties, financial
condition or results of operation of the Company and its subsidiaries (taken as
a whole) or Bain, whichever is the obligor in the context to which such term
applies, (c) impair the obligor's ability to fulfill its obligations under the
terms of this Agreement or (d) adversely affect the aggregate rights and
remedies of the obligee under this Agreement.
"Affiliate" means, with respect to any Person, any other Person
---------
controlling, controlled by or under common control with, such Person, with
"control" for such purpose meaning the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or voting interests,
by contract or otherwise.
"Balance Sheet" means the audited balance sheet of the Company as of
-------------
December 31, 1997, including the notes thereto.
"Balance Sheet Date" means the date of the Balance Sheet.
------------------
"Cash" means cash, time deposits, certificates of deposit and other cash
----
equivalents.
"Cash Merger Consideration" means $339,500,000, representing the aggregate
-------------------------
cash consideration to be paid to Raytheon pursuant to Section 2.6, before giving
effect to any adjustments pursuant to Section 2.8.
"Closing" means the consummation of the Merger and the other transactions
-------
contemplated hereby.
"Closing Date" means the date on which the conditions set forth in Articles
------------
8 and 9 shall be satisfied or duly waived, or if Raytheon and Bain mutually
agree on a different date, the date upon which they have mutually agreed.
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
successor thereto.
"Company Intellectual Property" means any Intellectual Property which is
-----------------------------
used in the operation of the business of the Company as it is operated as of the
date hereof or as it is operated as of the Closing Date, including, but not
limited to, the Intellectual Property identified in Schedule 3.5(i), but
excluding the trademark "Raytheon."
2
<PAGE>
"Company's knowledge" (including the term "to the knowledge of the
-------------------
Company") means the actual knowledge of the President, the Vice President of
Business Development, the Vice President of Washer and Dryer Operations, the
Vice President of Washer-Extractor/Tumbler Operations, the Vice President -
Controller of the Company, with respect to Section 3.17 and Article VII hereof,
Stephen M. Loewenberg - Director of Taxes, Raytheon Company, with respect to
Section 3.16 hereof, Robert Luhrs of Raytheon Company and with respect to
Section 3.5 hereof, the Associate General Counsel - Intellectual Property and
the Associate General Counsel - Litigation of Raytheon Company.
"Contract" means any written note, bond, mortgage, indenture, lease
--------
(including, without limitation the Marianna Lease and the Omro Lease), contract,
instrument, license, agreement, sales order, purchase order, open bid or other
obligation or commitment and all rights therein.
"Eligible Notes Receivable" means the notes receivable of the Company that
-------------------------
would be eligible for sale under the RAYCAF Facility were it not for the
limitation on availability set forth in Section 4.2(b)(iii) of such agreement.
"Entity" means any Person other than a natural Person.
------
"Environmental Laws" means all Federal, state, local and foreign Laws,
------------------
including for this purpose all judicial and administrative orders and
determinations and all common law, relating to public health or safety,
pollution or protection of the environment, including but not limited to the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
------
42 U.S.C. 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
6901 et seq., the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.,
the Clean Air Act, 42 U.S.C. 7401 et seq., and the Toxic Substances Control Act,
15 U.S.C. 2601 et seq., and all analogous state Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Excluded Liabilities" means any and all liabilities associated with or
--------------------
arising out of Environmental Law with respect to the Company's formerly owned
facilities in Omro, Wisconsin, Searcy, Arkansas and Wautoma, Wisconsin.
"Final Determination" means (a) with respect to federal Income Taxes, a
-------------------
"determination" as defined in Section 1313(a) of the Code, execution of an
Internal Revenue Service Form 870AD or any agreement, compromise or other
similar arrangement entered into (whether written or unwritten) with a
representative of the Internal Revenue Service and, with respect to Taxes other
than federal Income Taxes, any final determination of liability in respect of a
Tax that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of a
statute of limitations or a period for the filing of claims for refunds, amended
returns or appeals from adverse determinations) or the Party whose interests are
adverse to the
3
<PAGE>
finding of the Final Determination determines in its reasonable
judgment that further appeal, review or modification through proceedings or
otherwise would not reduce such party's ultimate liability for Taxes, or (b) the
payment of Tax by Raytheon, Bain or any of their Affiliates, whichever is
responsible for payment of such Tax liability under applicable law, with respect
to any item disallowed or adjusted by a Taxing Authority, provided that such
--------
responsible party determines that no action should be taken to recoup such
payment and the indemnifying party, if any, agrees.
"Governmental Authorization" mean any approval, concession, consent,
--------------------------
franchise, license, permit, plan, registration or other authorization of any
Governmental Authority.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof, any federal, state, local or foreign Entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission, or instrumentality of the United States,
any State of the United States or political subdivision thereof, and any
tribunal or arbitral authority of competent jurisdiction, and any self-
regulatory organization.
"Hazardous Substance" means (a) any substance that is defined as a
-------------------
"hazardous waste," "hazardous material," "hazardous substance" or term of
similar meaning and regulatory effect under any Environmental Law or (b)
petroleum or its derivatives.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
"Income Tax" means any federal, state, local, or foreign tax based upon or
----------
measured by income, including any interest, penalty, or addition thereto,
whether disputed or not.
"Indebtedness" means, as of any date of determination, without duplication,
------------
(i) any indebtedness for borrowed money or issued in substitution for or
exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced by
any note, bond, debenture or other debt security, (iii) any indebtedness for the
deferred purchase price of property or services with respect to which a Person
is liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business which are not more than six months past due), (iv) any commitment by
which a Person assures a creditor against loss (including, without limitation,
contingent reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or reimburse),
(vi) any obligations under capitalized leases with respect to which a Person is
liable, contingently or otherwise, as obligor, guarantor or otherwise, or with
respect to which obligations a Person assures a creditor against loss, (vii)
cash or book overdrafts, including without limitation, any held or outstanding
checks as of the Closing Date (except to the extent reflected in Net Working
Capital), (viii) any amounts owed under
4
<PAGE>
any litigation settlements (except to the extent reflected in Net Working
Capital), (ix) any dividends or distributions to shareholders payable as of the
Closing Date, (x) any indebtedness secured by a Lien on a Person's assets and
(xi) any unsatisfied obligation for "withdrawal liability" to a "multiemployer
plan" as such terms are defined under ERISA; provided, however, in no event will
-------- -------
Indebtedness include indebtedness, commitments and other obligations in respect
of the Receivables Financing Facilities or Other Receivables Obligations.
"Income Tax Return" means any return, declaration, report, claim for
-----------------
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Intellectual Property" means all of the following (in any jurisdiction
---------------------
throughout the world) (i) inventions, patents, patent applications and unfiled
invention disclosures; (ii) trademarks, trademark applications, service marks,
trade dress, trade names, logos, Internet domain names, corporate names and all
registrations of or applications to register the foregoing; (iii) mask works and
mask work applications; (iv) copyrights and copyrightable works and all
registrations of or applications to register the foregoing; (v) trade secrets,
confidential information and proprietary know-how (including, without
limitation, ideas, formulas, compositions, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, financial and
marketing plans, and customer and supplier lists and information); (vi) computer
software (including, without limitation, data, databases and related
documentation); and (vii) all other intellectual property rights.
"Known Environmental Liabilities" shall mean those items designated as
-------------------------------
"Known Environmental Liabilities" on Schedule 3.16.
"Laws" means statutes, regulations, ordinances, rules and other laws
----
promulgated by a Governmental Authority.
"Leased Real Property" means all real property used or occupied by the
--------------------
Company or any of its subsidiaries pursuant to any leasehold, subleasehold,
license, concession or other similar real property interest held by the Company
or such subsidiaries.
"LIBOR Rate" means a per annum rate equal to the sum of (i) the three-month
----------
LIBOR rate as published in the Wall Street Journal on the Closing Date plus (ii)
2.375%.
"Licenses" means use rights granted in connection with Intellectual
--------
Property and/or Company Intellectual Property and permits, franchises, licenses,
certificates, approvals or other authorizations of federal, foreign, state and
local governments.
5
<PAGE>
"Lien" means an adverse claim, restriction on voting or transfer or pledge,
----
lien (including Tax liens), mortgage, hypothecation, collateral assignment,
charge, encumbrance, easement, covenant, restriction, title defect,
encroachment, security interest of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof), any sale of receivables with recourse against the Company or any of
its subsidiaries or any filing or agreement to file a financing statement as
debtor under the Uniform Commercial Code or any similar statute other than to
reflect ownership by a third party of property leased to the Company or any of
its subsidiaries under a lease which is not in the nature of a conditional sale
or title retention agreement.
"Marianna Lease" means the Lease Agreement, dated November 3, 1994 and
--------------
recorded in Official Records in Jackson County, Florida, in Volume 563, page
160, for certain Leased Real Property located in Marianna, Florida.
"Member" means a member (as defined in Section 18-101(11) of the Act) of
------
the Company.
"Net Working Capital" means, as of any date of determination, (x) the sum
-------------------
of Cash, accounts receivable, Eligible Notes Receivable, inventory and prepaid
expenses as of such date (except deferred taxes and Income Tax refunds relating
to operation of the Company through the Closing Date, interdivision receivables
and prepaid pension assets) minus (y) the sum of accounts payable, short-term
debt and accrued expenses (except for (a) Taxes relating to operation of the
Company through the Closing Date and interdivision payables, (b) reserves
relating to (i) post-retirement medical benefits, (ii) restructuring and (iii)
receivables sold under the RAYCAF Facility (in an amount equal to approximately
$3,530,000 as of December 31, 1997) and (c) accrued pension liability and
liabilities under the Retention Plans), as of such date.
"Non-Laundry Affiliate" means any Affiliate of Raytheon other than the
---------------------
Company and the subsidiaries of the Company.
"Omro Lease" means the lease agreement, dated as of February 20, 1998,
----------
between Raytheon Holding LLC, as landlord, and the Company, as tenant, for
certain Leased Real Property located in Omro, Wisconsin, as described therein.
"Orders" means judgments, orders, injunctions, decrees, stipulations or
------
awards (whether rendered by a court, administrative agency, arbitrator or other
tribunal) and whether imposed or entered by consent.
"Other Receivables Obligations" means the Company's or its subsidiary's
-----------------------------
obligation to repurchase or otherwise guaranty or provide credit support for any
loan or other financing relationship (the aggregate principal amount of which
was approximately $102,400,000 as of December 31, 1997), including, without
limitation, those obligations of the Company in respect of or arising under (i)
that certain Master Agreement, dated on or about February 27, 1992, by and
between Speed Queen Company and Bell Atlantic Tricon Leasing Corporation, as
amended and if
6
<PAGE>
effect on the date hereof, (ii) that certain loan, dated as of December 5, 1994,
in an original principal amount of $50,000,000 from Greyhound Financial
Corporation and American National Bank and Trust Company of Chicago to Macke
Laundry Service Limited Partnership, and (iii) that certain Loan Assignment and
Assumption, dated as of April 26, 1996, by and between Finova Capital
Corporation and Raytheon Appliances Inc. - Commercial Laundry relating to the
loan to Coin Controlled Washers, Inc.
"Other Taxes" means all Taxes which are not Income Taxes.
-----------
"Party" means Raytheon or Bain.
-----
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Performance Guarantees" means Raytheon's Performance Guarantees executed
----------------------
and delivered pursuant to the RAYCAR Facility and the RAYCAF Facility.
"Permitted Liens" means any Liens (i) for Taxes attributable to any taxable
---------------
period beginning on or prior to the Closing Date and not yet due or payable or
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established in accordance with GAAP and reflected
in the financial statements, (ii) that are not material and constitute
mechanics', carriers', workers' or like liens incurred in the ordinary course of
business, or (iii) that are zoning restrictions, easements, rights of way and
other restrictions and similar charges or encumbrances relating to real property
and would not interfere in a material way with the ordinary conduct of the
Company's business as it is presently conducted.
"Person" means an individual, a corporation, a limited liability company, a
------
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof and, for purposes of this Agreement, the Company.
"RAI" means Raytheon Appliances, Inc.
---
"RASA" means Raytheon Appliances, S.A., an Argentine corporation.
----
"RAYCAF" means Raytheon Commercial Appliances Financing Corporation, a
------
Delaware corporation.
"RAYCAF Facility" means that certain Receivables Purchase Agreement dated
---------------
as of March 26, 1997 among RAYCAF, Falcon Asset Securitization Corporation
("Falcon"), The First National Bank of Chicago and the other parties signatory
- --------
thereto, as amended by that certain Omnibus Amendment, Consent, Assignment and
Assumption Agreement, dated September 9, 1997, by and among RAI, RAYCAF, the
Company, Falcon, The First National Bank of Chicago and Raytheon.
7
<PAGE>
"RAYCAR" means Raytheon Commercial Appliances Receivables Corporation, a
------
Delaware corporation.
"RAYCAR Facility" means that certain Receivables Purchase Agreement dated
---------------
as of December 27, 1996 among RAYCAR, Preferred Receivables Funding Corporation
("PREFCO") and The First National Bank of Chicago, as amended by that certain
------
Omnibus Amendment, Consent, Assignment and Assumption Agreement, dated September
9, 1997, by and among RAI, RAYCAR, the Company, PREFCO, The First National Bank
of Chicago and Raytheon, as further amended by that certain Amendment, dated
December 29, 1997, by and among RAYCAR, PREFCO and The First National Bank of
Chicago.
"Receivables Financing Facilities" means the RAYCAF Facility and the RAYCAR
--------------------------------
Facility.
"Release" means any spilling, leaking, pumping, pouring, emitting,
-------
emptying, discharging, injecting, escaping, leaching, dumping or disposing into
the environment.
"Returns" means returns, reports and forms required to be filed with any
-------
U.S. or foreign taxing authority.
"Schedule" means any Schedule hereto.
--------
"Subordinated Note" means the Junior Subordinated Promissory Note of the
-----------------
Surviving Entity in the original principal amount of $9,000,000 in the form
attached hereto as Exhibit 2.6.
"Target Net Working Capital" means Net Working Capital of $27,953,000, less
--------------------------
the amount, if any, paid under the Retention Plans by the Company as of the
close of business on the day immediately preceding the Closing Date.
"Taxes" means all taxes (whether federal, state, local or foreign) based
-----
upon or measured by income and any other tax whatsoever, including gross
receipts, profits, sales, use, occupation, value added, ad valorem, transfer,
franchise, withholding, payroll, employment, excise or property taxes, together
with any interest or penalties, or addition thereto, imposed with respect
thereto, whether disputed or not.
"Tax Laws" means the Code, federal, state, county, local or foreign laws
--------
relating to Taxes and any regulations or official administrative pronouncements
released thereunder.
"Third-Party Claim" means any Action by or before any Governmental
-----------------
Authority asserted by a Person other than any party hereto or their respective
Affiliates which gives rise to a right of indemnification hereunder.
"Units" means the units of limited liability company interest in the
-----
Surviving Entity issued pursuant to Section 2.6.
Sec Other Definitions. The following terms are defined in the Sections
-----------------
indicated:
8
<PAGE>
TERM SECTION
- ---- -------
Act Recitals
Adjusted Closing Balance Sheet 2.8(e)
Advances 5.9(a)
Agreement Recitals
Allocation Agreement 2.9(a)
Apportioned Obligations 7.2(b)
Asset Transfer 2.11
Bain Recitals
Benefit Plans 3.11(a)
Benefits Maintenance Period 6.1(b)
CFSB 3.14
C&L 2.8(c)
Certificate of Merger 2.3
CHI 10.2
Closing Balance Sheet 2.8(c)
Company Recitals
Company Assets 7.1
Company Payment 5.9(a)
Company Transaction 5.8
Commercial Laundry Employees 3.9
Commercial Laundry Retirement 3.11(b)
Plans
Competitive Business 5.11
Consideration 2.9(a)
Continuing Employees 6.1(a)
Covered Breach or Event 10.2
Covered Liabilities 10.2
Cowen Escrow 10.2
Deficit 5.9(f)
Delaware Secretary of State 2.3
Disputes 10.8(a)
Dispute Notice 2.8(d)
Disputing Party 10.8(b)
Disputing Party's Arbitrator 10.8(c)
Effective Time 2.3
Environmental Permits 3.16(b)
Estimated Indebtedness 2.8(a)
Estimated Net Working Capital 2.8(a)
Existing Operating Agreement 3.1(b)
Final Award 10.8(e)
Financial Statements 3.2
Financing Commitments 4.5
GAAP 2.8(c)
Goodwill 7.1
Initial Allocation 6.5(b)
Interest 2.6(a)
Investment Plans 6.2
Material Consents 8.2
MergeCo. Recitals
MergeCo. Interest 2.6(b)
9
<PAGE>
TERM SECTION
- ---- -------
Merger 2.1(a)
Neutral Auditor 2.8(e)
NewCo 2.11
1997 Customers 3.20
1997 Suppliers 3.20
Non-Disputing Party's Arbitrator 10.8(c)
Nonsolicitation Period 5.12
Notice of Arbitration 10.8(b)
Operating Agreement 2.4(b)
Owned Real Property 3.4(c)
Post-Closing Tax Period 7.2(b)
Pre-Closing Tax Period 7.2(b)
Quarterly Report 5.9(f)
RAI Plan 6.5(a)
RAYSIP Plan 6.2(a)
RAYSOP Plan 6.2(a)
Raytheon Recitals
Raytheon Group 5.11
Raytheon Indemnified Parties 10.3
Raytheon Payments 5.9(f)
Raytheon Reimbursements 5.9(f)
RCL Hourly Plan 3.11(b)
RCL Salaried Plan 3.11(b)
Recovery 5.9(f)
Registration Rights Agreement 8.4(b)
Reimbursable Payment 5.9(f)
Resolution Period 2.8(d)
Restricted Business 5.11
Restricted Period 5.11
Retention Bonuses 6.3
Retention Plans 6.3
Securities Act 3.23
Securityholders Agreement 8.4(a)
Separate Counsel 10.4
Spin-Off Date 6.5(a)
Subsequent Loss 7.7(d)
Surplus 5.9(f)
Surviving Entity 2.1(a)
Surviving Entity Indemnified 10.2
Parties
Target Plan 6.2(b)
Third Party Tax Claim 7.9(d)
Tranche 5.9(f)
Transfer Taxes 7.2(a)
WARN Act 6.1(c)
10
<PAGE>
Article 2
The Merger; Conversion of Interests
-----------------------------------
Section 2.1 The Merger; Effect of Merger.
----------------------------
(a) In accordance with the provisions of this Agreement and the Act, at the
Effective Time, MergeCo shall be merged with and into the Company (the
"Merger"), and the Company shall be the surviving limited liability company
------
(hereinafter sometimes called the "Surviving Entity") and shall continue its
----------------
existence under the laws of the Act. At the Effective Time, the separate
existence of MergeCo shall cease.
(b) From and after the Effective Time, all the rights, privileges and
powers and all property, real, personal and mixed of, and all debts due to, the
Company and MergeCo shall be vested in the Surviving Entity, and the Merger
shall otherwise have the effects, all as provided under the Act.
Section 2.2 Time and Place of Closing. The Closing shall take place on the
-------------------------
Closing Date at 10:00 A.M., New York time, in New York, New York at a location
to be determined by Bain. Bain covenants and agrees to give written notice of
this location to Raytheon no later than ten (10) days prior to the Closing Date.
Section 2.3 Effective Time. The Merger shall become effective at the time
--------------
of filing of, or at such later time on the Closing Date specified in, a
certificate of merger (the "Certificate of Merger"), in the form required by and
---------------------
executed in accordance with the Act, filed with the Secretary of State of the
State of Delaware (the "Delaware Secretary of State") in accordance with the
---------------------------
provisions of Section 18-209 of the Act. The date and time when the Merger shall
become effective is herein referred to as the "Effective Time."
--------------
Section 2.4 Certificate of Formation and Operating Agreement of Surviving
-------------------------------------------------------------
Entity.
- ------
(a) From and after the Effective Time, the Certificate of Formation of the
Surviving Entity shall be substantially in the form attached hereto as Exhibit
2.4(a) until thereafter amended as provided by law, and the name of the
Surviving Entity shall be such name as may be selected by Bain prior to the
Closing Date.
(b) From and after the Effective Time, the Operating Agreement of the
Surviving Entity shall be substantially in the form of the Amended and Restated
Limited Liability Company Agreement (the "Operating Agreement") attached hereto
-------------------
as Exhibit 2.4(b) until thereafter amended as provided by law and the terms of
such Operating Agreement.
Section 2.5 Managers and Officers of Surviving Entity.
-----------------------------------------
11
<PAGE>
(a) Subject to applicable law, the managers of MergeCo immediately prior to
the Effective Time shall be the managers of the Surviving Entity.
(b) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Entity and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
Section 2.6 Effect on the Interests of the Company and MergeCo.
--------------------------------------------------
(a) As of the Effective Time, by virtue of the Merger and without any
action on the part of the Company or MergeCo, the entire limited liability
company interest (as defined in Section 18-101(8) of the Act) in the Company
(the "Interest") shall be converted into the right to receive (a) the Cash
--------
Merger Consideration, and any adjustments thereto pursuant to Section 2.8
hereof, in immediately available funds by wire transfer to the account specified
by Raytheon, (b) the Subordinated Note, (c) Units of Preferred Membership
Interest in the Surviving Entity with an Unreturned Capital (as defined in the
Operating Agreement) of $6,000,000, (c) Units of the Class A Common Membership
Interest in the Surviving Entity representing 7% of the Class A Common
Membership Interest and (d) Units of the Class L Common Membership Interest in
the Surviving Entity with an Unreturned Capital of $3,150,000 (representing 7%
of the Class L Common Membership Interest). At the Effective Time, the Interest
shall be no longer be outstanding and shall automatically be canceled and
retired and cease to exist.
(b) As of the Effective Time, by virtue of the Merger and without any
action on the part of the Company or MergeCo, the entire limited liability
company interest (as defined in Section 18-101(8) of the Act) in MergeCo (the
"MergeCo Interest") shall be converted into the right to receive the remaining
- -----------------
Units of the Class A Common Membership Interest and Class L Common Membership
Interest in the Surviving Entity. At the Effective Time, the MergeCo Interest
shall be no longer be outstanding and shall automatically be canceled and
retired and cease to exist.
Section 2.7 Consummation of the Merger. As soon as practicable after the
--------------------------
satisfaction or waiver of the conditions set forth in Article 8 and Article 9
hereof, the Surviving Entity shall execute in the manner required by the Act and
file with the Delaware Secretary of State the Certificate of Merger, and the
Parties shall take such other and further actions as may be required by law to
make the Merger effective as promptly as is practicable.
Section 2.8 Cash Merger Consideration Adjustment.
------------------------------------
(a) At least three (3) days prior to the Closing, Raytheon shall deliver to
Bain its good faith estimate of Net Working Capital as of the close of business
on the day immediately preceding the Closing Date (such estimate, the "Estimated
---------
Net Working Capital") and its good faith estimate of Indebtedness of the Company
- -------------------
as of the close of business on the day immediately preceding the Closing Date
(such estimate, the "Estimated Indebtedness"). In preparing the Estimated Net
----------------------
Working Capital and Estimated Indebtedness, Raytheon shall, to the extent
practicable, use substantially the same accounting methods, policies, practices
and procedures with consistent
12
<PAGE>
classifications, judgments, and valuation and estimation methodologies as used
in the calculation of such items on the Balance Sheet.
(b) The Cash Merger Consideration shall be (i)(a) increased dollar for
dollar to the extent Estimated Net Working Capital exceeds Target Net Working
Capital, or (b) decreased dollar for dollar to the extent Estimated Net Working
Capital is less than Target Net Working Capital and (ii) decreased dollar for
dollar in an amount equal to Estimated Indebtedness.
(c) Within 90 days following the Closing, Raytheon shall deliver to Bain a
combined balance sheet of the Company and its subsidiaries as of the close of
business on the day immediately preceding the Closing Date, which balance sheet
shall be audited by Coopers & Lybrand LLP ("C&L"), auditors for Raytheon and the
---
Company and will reflect the Net Working Capital and Indebtedness of the Company
as of such date (such balance sheet, including the notes thereto, the "Closing
-------
Balance Sheet"). The Closing Balance Sheet shall fairly present the financial
- -------------
position of the Company and shall be prepared in accordance with generally
accepted accounting principles ("GAAP") using substantially the same accounting
----
methods, policies, practices and procedures with consistent classifications,
judgments, and valuation and estimation methodologies as used in the calculation
of such items on the Balance Sheet. During the preparation of the Closing
Balance Sheet and the period of any dispute within the contemplation of this
Section 2.8, the Company shall (i) provide Raytheon and Raytheon's authorized
representatives with full access to the books, records, facilities and employees
of the Company, (ii) provide Raytheon within ten (10) business days after the
Closing Date with normal month-end closing financial information for the period
ending on the Closing Date, and (iii) cooperate fully with Raytheon and
Raytheon's authorized representatives (including, without limitation, C&L),
including the provision on a timely basis of all information necessary or useful
in preparing the Closing Balance Sheet.
(d) Raytheon shall deliver a copy of the Closing Balance Sheet to Bain
promptly after it has been prepared. After receipt of the Closing Balance Sheet,
Bain shall have thirty (30) days to review the Closing Balance Sheet, together
with the work papers used in the preparation thereof. Bain and its authorized
representatives shall have full access to all relevant books and records and
employees of Raytheon to the extent required to complete their review of the
Closing Balance Sheet. Bain may dispute only those items reflected on the
Closing Balance Sheet which relate to Net Working Capital and the calculation of
Indebtedness and only on the basis that such amounts were not arrived at in
accordance with GAAP and the application of the Company's policies on financial
reporting consistent with those applied to the Balance Sheet, and using
substantially the same accounting methods, policies, practices and procedures
with consistent classifications, judgments, and valuation and estimation
methodologies as used in the calculation of such items on the Balance Sheet.
Bain shall only be entitled to dispute the Closing Balance Sheet if Bain's good
faith estimate of Indebtedness and the Net Working Capital of the Company as of
the close of business on the day immediately preceding the Closing Date differs
from the Indebtedness and Net Working Capital as shown on the Closing Balance
Sheet by an amount exceeding Five Hundred Thousand Dollars ($500,000). Unless
Bain delivers written notice to Raytheon on or prior to the 30th day after
Bain's receipt of the Closing Balance Sheet specifying in reasonable detail all
disputed items and the basis therefor (a "Dispute Notice") and the amount in
--------------
dispute exceeds Five Hundred Thousand ($500,000), Bain shall be deemed to have
accepted and agreed to the Closing Balance Sheet. If Bain
13
<PAGE>
so notifies Raytheon of its objection to the Closing Balance Sheet, Bain and
Raytheon shall, within thirty (30) days following such Dispute Notice (the
"Resolution Period"), attempt in good faith to resolve their differences and any
-----------------
resolution by them as to any disputed amounts shall be final, binding and
conclusive.
(e) If at the conclusion of the Resolution Period any amounts remain in
dispute, Bain and Raytheon shall submit the dispute to Arthur Andersen LLP (the
"Neutral Auditor"). Each party agrees to execute, if requested by the Neutral
---------------
Auditor, a reasonable engagement letter. All fees and expenses relating to the
work, if any, to be performed by the Neutral Auditor shall be borne equally by
Raytheon and Bain. Using the same accounting policies and procedures used in
the preparation of the Balance Sheet, the Neutral Auditor shall act as an
arbitrator to determine, based solely on presentations by Raytheon and Bain, and
not by independent review, only those issues still in dispute. In no event may
the Neutral Auditor consider any issues, amounts or matters not disputed within
the thirty-day period provided in Section 2.8(d) hereof. The Neutral Auditor's
determination shall be made within sixty (60) days of its selection, shall be
set forth in a written statement delivered to Raytheon and Bain and shall be
final, binding, conclusive and non-appealable by the Parties. The term "Adjusted
--------
Closing Balance Sheet", as hereinafter used, shall mean the definitive Closing
- ---------------------
Balance Sheet agreed to by Bain and Raytheon in accordance with Section 2.8(d)
(including a deemed acceptance resulting from Bain's failure to provide Raytheon
a Dispute Notice within the thirty-day period) or the definitive Closing Balance
Sheet resulting from the determinations made by the Neutral Auditor in
accordance with this Section 2.8(e) (in addition to those items theretofore
agreed to by Raytheon and Bain).
(f) The Cash Merger Consideration shall be (i) (a) increased dollar for
dollar to the extent Net Working Capital reflected in the Adjusted Closing
Balance Sheet exceeds Estimated Net Working Capital, or (b) decreased dollar for
dollar to the extent Net Working Capital reflected in the Adjusted Closing
Balance Sheet is less than Estimated Net Working Capital and (ii) (a) increased
dollar for dollar to the extent Indebtedness calculated based upon the Adjusted
Closing Balance Sheet is less than Estimated Indebtedness and (b) decreased
dollar for dollar to the extent Indebtedness calculated based upon the Adjusted
Closing Balance Sheet exceeds Estimated Indebtedness. Any adjustments to the
Cash Merger Consideration made pursuant to this Section 2.8(f) shall bear
interest from the Closing Date through the date of payment at the LIBOR Rate.
Any adjustments to the Cash Merger Consideration made pursuant to this Section
2.8(f) shall be paid by wire transfer in immediately available funds to the
account specified by the party to whom such payment is owed within five business
days after the Adjusted Closing Balance Sheet is agreed to by Bain and Raytheon
or any remaining disputed items are ultimately determined by the Neutral
Auditor. If Bain is entitled to such payment, it shall be made by Raytheon and
if Raytheon is entitled to such payment, it shall be made by the Company.
Section 2.9. Allocation of Merger Consideration.
----------------------------------
(a) The merger consideration (including the liabilities of the Company) and
all other capitalizable costs (hereinafter, the "Consideration"), to the extent
-------------
properly taken into account under Section 1060 of the Code, shall be allocated
among each of the assets of the Company in the manner set forth in an Agreement
(the "Allocation Agreement") between Raytheon and Bain. Bain and
--------------------
14
<PAGE>
Raytheon agree that they shall use their best efforts to enter into the
Allocation Agreement prior to the Closing Date (provided that entering into such
Allocation Agreement shall not be a condition to Closing).
(b) Except as required by a Final Determination, Raytheon and Bain agree to
(i) be bound by the Allocation, (ii) act in accordance with the Allocation in
the preparation of financial statements and filing of all Returns (including
filing Form 8594 with its Income Tax Return for the taxable year that includes
the Closing Date) and in the course of any Tax audit, Tax review or Tax
litigation relating thereto, and (iii) take no position and cause their
affiliates to take no position inconsistent with the Allocation for federal and
state Income Tax purposes.
(c) If an adjustment is made with respect to the Cash Merger Consideration
pursuant to this Agreement, the Allocation shall be adjusted in accordance with
Code Section 1060 and the regulations promulgated thereunder, and in accordance
with the Allocation Agreement or as otherwise mutually agreed by Raytheon and
Bain. In the event that an agreement as to the appropriate adjustment is not
reached within thirty (30) days after the delivery of the Adjusted Closing
Balance Sheet hereto, any disputed items shall be resolved pursuant to Section
2.8(e) hereof. Raytheon and Bain agree to file any additional information return
required pursuant to the regulations under Code Section 1060 and to treat the
Allocation as adjusted in the manner described in Section 2.5(b).
(d) Not later than thirty (30) days prior to the filing of their respective
Forms 8594 relating to this transaction, Bain and Raytheon shall deliver each to
the other a copy of its Form 8594.
Section 2.10. Intercompany Account; Distributions. As of the close of
-----------------------------------
business on the day immediately preceding the Effective Time, all intercompany
receivables or payables and loans then existing between Raytheon or any Non-
Laundry Affiliate, on the one hand, and the Company and its subsidiaries, on the
other hand, shall be settled by way of capital contribution (with respect to
intercompany payables or loans due to Raytheon or any Non-Laundry Affiliate) or
by way of dividend in kind (with respect to receivables of the Company and its
subsidiaries owed by Raytheon or any Non-Laundry Affiliate). In addition, if
necessary, the Company will dividend to Raytheon sufficient Eligible Notes
Receivables such that the aggregate amount reflected in the Estimated Net
Working Capital does not exceed $12,500,000. No cash shall be distributed to
Raytheon by the Company and its subsidiaries after the close of business on the
day immediately preceding the Closing Date.
Section 2.11. Transfer of Assets. At the request of Bain, immediately
------------------
prior to the Effective Time, the Company shall transfer by way of a capital
contribution (the "Asset Transfer") all of its assets and liabilities to a newly
--------------
formed subsidiary Delaware limited liability company ("NewCo"). In such event,
-----
NewCo and the Surviving Entity shall be jointly and severally responsible for
all obligations of the Surviving Entity under this Agreement, and as a condition
to such transfer, NewCo shall enter into an agreement pursuant to which it
agrees to be jointly and severally liable with the Surviving Entity and to be
bound by the terms of this Agreement as if it were a party hereto. The Surviving
Entity shall bear all costs and expenses associated with such transfer.
15
<PAGE>
Article 3
Representations and Warranties of Raytheon
------------------------------------------
As a material inducement to Bain and MergeCo to enter into this Agreement
and consummate the transactions contemplated hereby, Raytheon hereby represents
and warrants to Bain and MergeCo as follows:
Section 3.1. Incorporation; Authorization; Capitalization; Etc.
--------------------------------------------------
(a) Raytheon is a Delaware corporation in good standing under the laws of
the State of Delaware. The Company is a duly organized and validly existing
limited liability company in good standing under the laws of the State of
Delaware and is in good standing and qualified to transact business in each
jurisdiction in which the nature of property owned or leased by the Company or
the conduct of the Company's business requires it to be so qualified, except
where the failure to be in good standing or to be duly qualified to transact
business, would not, individually or in the aggregate, reasonably be expected to
have an Adverse Affect on the Company.
(b) Raytheon has all requisite power and authority (corporate and other) to
own the Interest and both Raytheon and the Company possess all requisite power
and authority (corporate and other) to execute and deliver this Agreement, all
other agreements contemplated hereby to which Raytheon and/or the Company is a
party and to consummate the transactions contemplated hereby and thereby. The
Company has all requisite power to own its properties and assets and to carry on
its business as it is now being conducted. The execution and delivery of this
Agreement, all other agreements contemplated hereby to which Raytheon and/or the
Company is a party and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
proceedings on the part of Raytheon and/or the Company, as the case may be, and
no proceedings on the part of Raytheon's stockholders are required. The
execution, delivery and performance of this Agreement by Raytheon and the
Company, all other agreements contemplated hereby to which Raytheon and/or the
Company is a party and the consummation of the transactions contemplated hereby
and thereby (other than the Asset Transfer) will not (i) violate any provision
of Raytheon's certificate of incorporation or bylaws or the Limited Liability
Company Agreement of the Company dated as of August 21, 1997 (the "Existing
--------
Operating Agreement"), in each case as in effect on the date hereof, (ii) except
- -------------------
as disclosed in Schedule 3.1(b), violate, conflict with, result in a breach of
or default under any provision of, or be an event that is (or with the giving of
notice or the passage of time will result in) a violation of, a conflict with,
or a breach of or default under, or result in the acceleration of or entitle any
Person to accelerate (whether after the giving of notice or lapse of time or
both) any obligation under, or result in the imposition of any Lien upon any of
the assets or properties of the Company and its subsidiaries, pursuant to any
Contract or Order to which Raytheon, the Company or any of the Company's
subsidiaries is a party or by which it is bound, or (iii) except as listed on
Schedule 3.1(b), violate or conflict with any other material restriction of any
kind or character or any License to which Raytheon, the Company or any of the
Company's subsidiaries is subject, that, in the case of any of clauses (ii) and
(iii), would, individually or in the aggregate, reasonably be expected to
Adversely Affect Raytheon or the Company. This Agreement has been duly executed
and delivered
16
<PAGE>
by Raytheon and the Company, and, assuming the due execution hereof by Bain and
MergeCo, this Agreement constitutes the legal, valid and binding obligation of
Raytheon and the Company, enforceable against Raytheon and the Company in
accordance with its terms.
(c) The Interest constitutes the entire authorized equity interest in the
Company and is owned free and clear of any Lien by Raytheon. There are no
outstanding options, warrants or other rights of any kind relating to the sale,
issuance or voting of any other equity interests or profit participation in the
Company which have been issued, granted, or entered into by Raytheon or the
Company. The Company did not violate any applicable federal or state securities
laws in connection with the offer, sale or issuance of the Interest to Raytheon.
(d) Except as set forth of Schedule 3.1(d), the Company is not the owner of
the capital stock or other equity interests in any Entity. The capital stock
and other equity interests set forth on Schedule 3.1(d) constitute the entire
authorized equity interests in the subsidiaries (except for the director's
qualifying share as required under the laws of the Republic of Argentina with
respect to Raytheon Appliances S.A.), are validly issued, fully paid and
nonassessable and are owned free and clear of any Lien by the Company. There
are no outstanding options, warrants or other rights of any kind relating to the
sale, issuance or voting of any other equity interests or profit participation
in the subsidiaries of the Company which have been issued, granted, or entered
into by the Company or the subsidiaries of the Company. Each of the
subsidiaries of the Company (i) is duly organized, validly existing and in good
standing, (ii) possesses all requisite power and authority (corporate and other)
necessary to own its properties and to carry on its business as now being
conducted and (iii) is qualified to transact business in each jurisdiction in
which the nature of property owned or leased by the such subsidiary or the
conduct of its business requires it to be so qualified, except where the failure
to be in good standing or to be duly qualified to transact business, would not,
individually or in the aggregate, reasonably be expected to have an Adverse
Affect on said subsidiary.
Section 3.2. Financial Statements. Attached hereto as Schedule 3.2 are
--------------------
true and complete copies of the audited combined balance sheet of the Commercial
Laundry Business of Raytheon, as of December 31, 1996 and 1997 and the audited
combined statements of income and cash flows for each of the three years in the
period ending on December 31, 1997, including the notes thereto (collectively,
the "Financial Statements"). The Financial Statements fairly present in all
---------------------
material respects the combined historical results and financial position of the
Commercial Laundry Business of Raytheon in each case in accordance with GAAP
except as set forth on Schedule 3.2.
Section 3.3. Undisclosed Liabilities. Except as disclosed herein, in
-----------------------
Schedule 3.3 or in the Schedules hereto, to the Company's knowledge, (i) at the
Balance Sheet Date, the Company and its subsidiaries had no obligations or
liabilities, past, present or deferred, accrued or unaccrued, fixed, absolute,
contingent or other, except as disclosed in the Balance Sheet and (ii) since the
Balance Sheet Date, neither the Company nor any subsidiary has incurred any such
obligations or liabilities, other than obligations and liabilities incurred in
the ordinary course of business consistent with past practice of the Company,
which in the case of clause (i) and (ii) above do not and, to the Company's
knowledge, could not reasonably be expected to, in the aggregate, have an
Adverse Effect on the Company.
17
<PAGE>
Section 3.4. Properties; Sufficiency of Assets.
---------------------------------
(a) With the exception of properties disposed of since the date of the
Balance Sheet, the Company and its subsidiaries have (or will have prior to the
Closing Date) good title to, or hold by valid and existing lease or License,
free and clear of all Liens, all real and personal property and assets, tangible
or intangible (other than Intellectual Property), used by them, located on their
premises, capitalized on or included in the Balance Sheet and to all real and
personal property and assets, tangible or intangible (other than Intellectual
Property), used by them, located on their premises acquired by the Company or
its subsidiaries since the Balance Sheet Date that would, had it been acquired
prior to such date, be capitalized on or included in the Balance Sheet, except
in any of the foregoing cases for Permitted Liens and such other Liens as are
reflected or reserved against in the Balance Sheet.
(b) The assets of the Company and its subsidiaries will, at the Closing
Date, include all right, title and interest in and to all real and personal
property and assets, tangible or intangible (other than Intellectual Property
and good will attributable to Raytheon and the Non-Laundry Affiliates) used or
held by the Company and its subsidiaries in the operation of the Company and its
subsidiaries as conducted on the date hereof, are in a condition sufficient for
the conduct and business of the Company as conducted on the date hereof and,
with respect to tangible assets, the Company has no knowledge of any latent
defects with respect thereto.
(c) Schedule 3.4 attached hereto contains a complete list of all real
property owned by the Company or any of its subsidiaries (collectively, the
"Owned Real Property"). The Owned Real Property constitutes all of the fee
- --------------------
simple interests in real property owned by the Company or any of its
subsidiaries. With respect to each parcel of Owned Real Property: (i) such
parcel is free and clear of all Liens (other than Permitted Liens), and the
Company, or its respective subsidiary, owns good and marketable fee simple title
thereto; (ii) there are no leases, subleases, licenses, concessions, or other
agreements, written or oral, granting to any Person the right of use or
occupancy of any portion of such parcel; and (iii) there are no outstanding
options or rights of first refusal to purchase such parcel or any portion
thereof or interest therein.
(d) Except for the Leased Real Property held pursuant to the Marianna Lease
and the Omro Lease and an undocumented arrangement with respect to storage
facilities in Madisonville, Kentucky, neither the Company nor any of its
subsidiaries hold any Leased Real Property.
(e) There is no pending proceeding in eminent domain or any similar
proceeding affecting the Company's or any of its subsidiaries' interest in any
Owned Real Property or Leased Real Property which, individually or in the
aggregate, could reasonably be expected to have an Adverse Affect on the
Company. There exists no writ, injunction, decree, order or judgment
outstanding, nor any pending litigation, relating to the ownership, lease, use,
occupancy or operation by the Company or any of its subsidiaries of any Owned
Real Property or Leased Real Property except for such matters that would not,
individually or in the aggregate, reasonably be expected to have an Adverse
Affect on the Company.
18
<PAGE>
(f) Except as would not, individually or in the aggregate, reasonably be
expected to have an Adverse Affect on the Company, (i) the current use of the
Owned Real Property does not violate in any material respect any instrument of
record or agreement affecting such Owned Real Property; (ii) there is no
violation of any covenant, condition, restriction, easement, agreement or order
of any governmental authority having jurisdiction over any of the Owned Real
Property that affects such real property or the use or occupancy thereof; and
(iii) no damage or destruction has occurred with respect to any of the Owned
Real Property.
Section 3.5. Intellectual Property.
---------------------
(a) Schedule 3.5(i) sets forth a complete and accurate list of all the
following owned by the Company: patents, patent applications, unfiled invention
disclosures, registered and unregistered trademarks, trademark applications,
registered trade names, corporate names, Internet domain names and service
marks. Except for rights under the Company Intellectual Property that the
Company has granted distributors pursuant to a distributorship agreement between
the Company and the distributor, Schedule 3.5(i) also contains a complete and
accurate list of all Licenses and other rights granted by the Company to any
third party with respect to the Company Intellectual Property.
(b) The Company owns or has the right to use all the Company Intellectual
Property which is material to the operation of the Company and its subsidiaries
as of both the date hereof and as of the Closing Date. The Company has used
commercially reasonable efforts to maintain and prosecute the patents, patent
applications, trademarks, trademark applications, service marks, service mark
applications and Internet domain names set forth on Schedule 3.5(i) and has
taken all steps necessary to prevent the same from lapsing or otherwise becoming
abandoned (including, without limitation, paying all required maintenance fees).
The Company has taken all commercially reasonable steps to maintain the secrecy
and confidentiality of those trade secrets which are part of the Company
Intellectual Property.
(c) Schedule 3.5(ii) sets forth a complete and accurate list of all of the
Licenses of third party Intellectual Property to which the Company is a party,
with the exception of Licenses for computer software. All of the Licenses set
forth on Schedule 3.5(ii) are valid and enforceable. To the Company's
knowledge, the owners of any Intellectual Property licensed to the Company or
any of its subsidiaries have maintained and protected the Intellectual Property
that is subject to the Licenses identified in Schedule 3.5(ii) in accordance
with the terms and conditions of the applicable License agreement.
(d) Except as set forth on Schedule 3.5(iii), as of the date hereof, and as
of the Closing Date, (i) there exist no actual or threatened claims of
invalidity, misuse or unenforceability of the Company Intellectual Property or
infringement or misappropriation by the Company or its subsidiaries of any other
Person's Intellectual Property; (ii) to the Company's knowledge the Company
Intellectual Property has not been infringed or misappropriated by any other
Persons; and (iii) the conduct of the business of the Company after the Closing
Date in the manner the business of the Company is currently conducted will not
result in the infringement of any other Person's Intellectual Property. The
transactions contemplated by this Agreement shall have no Adverse
19
<PAGE>
Effect on the Company's or any of its subsidiaries' right, title or interest in
and to the Company Intellectual Property listed on the Schedule 3.5(i).
(e) The Company represents and warrants that it has adopted and implemented
a commercially reasonable plan to investigate and correct any "year 2000
problems" associated with (i) the operation of the Company's business; and (ii)
the products manufactured and distributed by the Company. The Company, however,
does not represent and warrant that this plan will find and correct all "year
2000 problems" which may arise in connection with the operation of the Company's
business or the products manufactured by the Company.
(f) With respect to the Licenses identified in Schedules 3.5(i) and
3.5(ii), none of Raytheon, the Company or any of the Company's subsidiaries, and
to the Company's knowledge, no other party to any such License is in material
breach of the License or material default thereunder, and there does not exist
under any provision thereof, as of the date hereof, any event that, with the
giving of notice or lapse of time or both, would constitute such a breach or
default, except for such breaches, defaults and events as to which requisite
waivers or consents have been obtained or which would not, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the Company.
(g) The representations, warranties, and covenants set forth in this
Agreement shall not apply with respect to any patents which issue after the
Closing Date.
(h) To the extent that there is any Intellectual Property or License
omitted from Schedule 3.5(i) or Schedule 3.5(ii) and Raytheon becomes aware of
that omission within two years of the Closing Date, or Bain or the Surviving
Entity brings such omission to the attention of Raytheon within two years from
the Closing Date, Raytheon shall, subject to obtaining any necessary consents
(which consents Raytheon will use reasonable effort to obtain), transfer its
rights in and to such Intellectual Property or License to the Company, at
Raytheon's expense.
Section 3.6. Absence of Certain Changes. Except as disclosed on Schedule
--------------------------
3.6, in the other Schedules hereto or as otherwise contemplated by this
Agreement, since the Balance Sheet Date, (a) there has been no Adverse Change in
the financial condition of the Company except for any change resulting from
general economic, financial or market conditions and for any change resulting
from conditions or circumstances generally affecting the businesses in which the
Company operates; (b) there has been no physical damage, destruction or loss
that would reasonably be expected to have an Adverse Effect on the Company; and
(c) neither the Company nor any of its subsidiaries have (i) amended its charter
or bylaws or other organizational documents, (ii) issued (or agreed to issue)
any notes, bonds or other debt securities or any capital stock or other equity
securities or any securities convertible, exchangeable or exercisable into any
capital stock or other equity securities, (iii) discharged or satisfied any
material Lien or paid any obligation or liability, other than any such
obligations or liabilities paid in the ordinary course of business, (iv)
declared or made any payment or distribution any property (other than cash) to
its stockholders or other equity holders with respect to its capital stock or
other equity securities or purchased or redeemed any shares or any of its
limited liability company interests, (v) mortgaged or pledged any of its
properties or assets or subjected them to any material Lien (other than
Permitted Liens), (vi) sold, leased or transferred any
20
<PAGE>
of its assets, except in the ordinary course of business and in accordance with
past practice, (vii) entered into, amended or terminated any Contract other than
in the ordinary course of business in accordance with past practice, (viii)
entered into any transaction with any Affiliate, (ix) suffered any extraordinary
losses, (x) made any guarantees for the benefit of, or any investments in, any
Person (other than the Company or a subsidiary) in excess of $500,000 in the
aggregate, or (xi) made any charitable contributions or pledges in excess of
$100,000 in the aggregate.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule 3.7,
-------------------
there are no Actions pending, or to the Company's knowledge, threatened against
or affecting Raytheon, the Company or any of the Company's subsidiaries (or
pending, or to the Company's knowledge, threatened against or affecting any of
the officers of the Company or any of its subsidiaries with respect to their
businesses) that would, individually or in the aggregate, reasonably be expected
to have an Adverse Effect on the Company. Except as disclosed in Schedule 3.7,
as of the date hereof, there are no Orders against the Company or any of its
subsidiaries or their respective properties or business that would, individually
or in the aggregate, reasonably be expected to have an Adverse Effect on the
Company. Except as disclosed in Schedule 3.7, to the Company's knowledge, there
are no events or conditions which would reasonably be expected to result in an
Action against it that would, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Company.
Section 3.8. Licenses, Approvals, Other Authorizations, Consents, Reports,
-------------------------------------------------------------
Etc. Except as disclosed on Schedule 3.8, the Company and its subsidiaries own
- ---
or possess all right, title and interest to all Licenses (except as relates to
Licenses under Environmental Laws) that are required in order to permit the
Company to carry on its business as it is presently conducted, except where the
failure to have such Licenses would not, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on the Company. All such
Licenses are in full force and effect, and the Company is in compliance with the
terms of such Licenses, and no loss or expiration of any such License is
pending, other than the expiration in accordance with the terms thereto, except
where the failure of such Licenses to be in full force and effect, or of the
Company to be in compliance with such Licenses, or the loss or expiration of
such Licenses, would not, individually or in the aggregate, reasonably be
expected to have an Adverse Effect on the Company.
Section 3.9. Labor Matters. Schedule 3.9 sets forth, as of the date
-------------
hereof, a list of all agreements with labor unions or associations representing
employees of the Company ("Commercial Laundry Employees"). No material work
----------------------------
stoppage against the Company is pending or, to the Company's knowledge,
threatened. The Company is not involved in or, to the Company's knowledge,
threatened with, any labor dispute, arbitration, lawsuit or administrative
proceeding relating to labor matters involving the Commercial Laundry Employees
(excluding routine workers' compensation claims) that would, individually or in
the aggregate, reasonably be expected to have an Adverse Effect on the Company.
Section 3.10. Compliance with Laws. Except as may be indicated in the
--------------------
Schedules hereto, the conduct of business by the Company and its subsidiaries
has complied and is in compliance with and has not violated and is not in
violation of any and all Laws and Orders applicable thereto, except for
violations or failures so to comply, if any, that would not reasonably be
expected to have an
21
<PAGE>
Adverse Effect on the Company. This Section 3.10 does not relate to Employee
Benefits matters (for which Section 3.11 is applicable), Tax matters (for which
Section 3.17 is applicable) or Environmental matters (for which Section 3.16 is
applicable).
Section 3.11. Employee Benefits.
-----------------
(a) Schedule 3.11(a) lists all employee benefit plans, as defined in
Section 3(3) of ERISA, and all other deferred compensation, bonus or other
incentive compensation, stock purchase, severance pay, salary continuation for
disability or other leave of absence, supplemental unemployment benefits, layoff
or reduction in force, retention, change in control or educational assistance
plans, arrangements or policies including, but not limited to, any individual
benefit arrangement, policy or practice, in which any current or former
Commercial Laundry Employee (other than the President of the Company)
participates on the date hereof (collectively, the "Benefit Plans").
-------------
(b) The Raytheon Commercial Laundry Retirement Income Plan (the "RCL
---
Salaried Plan") and the Raytheon Commercial Laundry Pension Plan for Hourly
- -------------
Employees (the "RCL Hourly Plan" and, together with the RCL Salaried Plan, the
---------------
"Commercial Laundry Retirement Plans") and each other Benefit Plan, to the
-----------------------------------
extent applicable to Commercial Laundry Employees, has been maintained and
operated in all material respects in accordance with all federal, state and
local laws applicable to such plans, and the terms and conditions of the
respective plan documents, if any, except where the failure of the Company to be
in compliance would not, individually or in the aggregate, reasonably be
expected to have an Adverse Effect of the Company.
(c) With respect to any Benefit Plan, there has been no (nor will there be
any as a result of the transactions contemplated by this Agreement) event or
condition which presents a material risk of plan termination or any other event
that may cause the Company or Bain to incur liability or have a Lien imposed on
its assets under the Code, ERISA or any other applicable statute.
(d) In connection with the current and former Commercial Laundry Employees
(other than the President of the Company), no party has failed to comply with
the continuation health care coverage requirements of Section 4980B of the Code
and Sections 601 through 607 of ERISA in respect of the Benefit Plans , except
where any such failure would not, individually or in the aggregate, reasonably
be expected to have an Adverse Effect on the Company.
(e) Each Benefit Plan (or its predecessor) that is intended to be qualified
within the meaning of Section 401(a) of the Code and each trust which forms a
part of any such Benefit Plan (i) has received a determination from the Internal
Revenue Service that such Benefit Plan is qualified under Section 401(a) of the
Code and that such related trust is exempt from taxation under Section 501(a) of
the Code, and nothing has occurred since the date of such determination that
could adversely affect the qualification of such Benefit Plan or the exemption
from taxation of such related trust and (ii) is in compliance with the
requirements of Sections 401(a)(4) and 410(b) of the Code for each plan year of
such Benefit Plan commencing on or before the Closing Date. On or before the
Closing Date, Raytheon will cause the Company to file an application for
determination with the
22
<PAGE>
Internal Revenue Service with respect to the past 1995 amendment and restatement
of such Benefit Plan.
(f) Except as set forth on Schedule 3.11(a), none of the Benefit Plans
obligates the Company to pay any separation, severance, termination or similar
benefit solely as a result of any transaction contemplated by this Agreement.
(g) Except as set forth on Schedule 3.11(a) hereto, there are no pending or
threatened actions, suits, investigations or claims with respect to any Benefit
Plan (other than routine claims for benefits) which could result in liability to
the Company (whether direct or indirect), and the Company does not have any
knowledge of any facts which could give rise to (or be expected to give rise to)
any such actions, suits, investigations or claims.
(h) As of the Closing Date, the Company will have no liability or
obligation with respect to any "employee benefit plan" (as defined in Section
3(3) of ERISA) solely by reason of being treated as a single employer under
Section 414 of the Code with any trade, business or entity other than the
employee benefit plans that are maintained by the Company. Except as set forth
on Schedule 3.11(a), the Company does not contribute to, maintain or sponsor or
have any liability with respect to any employee benefit plan, agreement or
arrangement applicable to employees located outside the United States.
(i) With respect to each Benefit Plan, Raytheon has provided or will
provide upon request Bain with true, complete and correct copies of (to the
extent applicable) (i) all documents pursuant to which the Benefit Plan is
maintained, funded and administered, (ii) the most recent annual report (Form
5500 series) filed with the Internal Revenue Service (with applicable
attachments), (iii) the most recent financial statement, (iv) the most recent
actuarial valuation of benefit obligations, and (v) the most recent
determination letter received from the Internal Revenue Service and the most
recent application to the Internal Revenue Service for such determination
letter.
Section 3.12 Material Contracts.
-------------------
(a) Except as set forth on Schedule 3.12, none of the Company or its
subsidiaries is a party to any (i) management, employment or consulting
agreement requiring payments of base compensation in excess of $100,000 per
year; (ii) distributor or manufacturer's representative contract which is not
terminable on six months' (or less) notice; (iii) joint venture or similar
contract or agreement; (iv) contract that is material to its business which is
terminable by the other party thereto upon a sale of the Company; (v) note,
mortgage, indenture, guaranty, other obligation, agreement or other instrument
for or relating to any lending or borrowing (including assumed debt) of $500,000
or more relating to any properties or assets employed by the Company and its
subsidiaries; (vi) contracts for the purchase by the Company and its
subsidiaries of goods and/or services involving an estimated total future
payment or payments in excess of $1,000,000; (vii) contracts for the sale by the
Company and its subsidiaries of goods and/or services involving an estimated
total future payment or payments in excess of $1,000,000; (viii) Contract under
which the Company or any of its subsidiaries is lessee of or holds or operates
any property, real or personal,
23
<PAGE>
owned by any other Person, except for any such Contract under which the annual
rental payments do not exceed $500,000; (ix) Contract under which the Company or
any of its subsidiaries is lessor of or permits any third party to hold or
operate any property, real or personal, owned or controlled by the Company or
any of its subsidiaries, except for any such Contract under which the annual
rental payments do not exceed $50,000; (x) any nondisclosure or confidentiality
agreements (other than those entered into in the ordinary course of business
with customers, suppliers and employees or in connection with Raytheon's sale of
the Company); (xi) power of attorney; (xii) contract or agreement prohibiting it
from freely engaging in any business or competing anywhere in the world; (xiii)
Contract with United States or state thereof Governmental Authority; or (xiv)
other Contracts entered into other than in the ordinary course of business,
involving an estimated total future payment or payments in excess of $500,000.
(b) With respect to all such Contracts, none of Raytheon, the Company or
any of the Company's subsidiaries, and to the Company's knowledge, no other
party to any such contract is in material breach thereof or material default
thereunder, and there does not exist under any provision thereof, as of the date
hereof, any event that, with the giving of notice or the lapse of time or both,
would constitute such a breach or default, except for such breaches, defaults
and events as to which requisite waivers or consents have been or are obtained
or which would not, individually or in the aggregate, reasonably be expected to
have an Adverse Effect on the Company.
(c) A true and correct copy of each of the Contracts which are referred to
on Schedule 3.12, together with all amendments, waivers or other changes thereto
or guarantees thereto has been made available to Bain's special counsel.
Section 3.13. Guaranty of Obligations of the Company. Set forth on
---------------------------------------
Schedule 3.13 are all Guarantees for the benefit of the Company and its
subsidiaries under which Raytheon or any Non-Laundry Affiliate has any
obligations.
Section 3.14. Brokers, Finders, Etc. Except for the services of Credit
----------------------
Suisse First Boston Corporation ("CSFB"), neither Raytheon nor any of its
----
Affiliates has employed, nor is any of them subject to any valid claim of, any
broker, finder, consultant or other intermediary in connection with the Merger
who might be entitled to a fee or commission in connection therewith. Raytheon
is solely responsible for any fees, commissions or other payments that may be
due to CSFB by Raytheon, the Company or any subsidiary in connection with the
Merger.
Section 3.15. No Implied Representation. Notwithstanding anything
--------------------------
contained in this Article III or any other provision of this Agreement, it is
the explicit intent of each party hereto that Raytheon is not making any
representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, including any implied warranty or
representation as to condition, merchantability, or suitability as to any of the
properties or assets employed by the Company and its subsidiaries and it is
understood that Bain takes the Company and its business as is and where is. It
is understood that any cost estimates, projections or other predictions
contained or referred to in the Schedules or in the offering materials that have
been provided to Bain are not and shall not be deemed to be representations or
warranties of Raytheon.
24
<PAGE>
Section 3.16. Environmental Matters. Except as set forth on Schedule
---------------------
3.16:
(a) The Company and its subsidiaries are and have been in compliance with
all applicable Environmental Laws except where the failure to be in compliance
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on the Company.
(b) The Company and its subsidiaries have obtained all Licenses required
under Environmental Laws for the operation of their respective businesses as
presently conducted (the "Environmental Permits") and, since January 1, 1992,
---------------------
there are and have been no violations, and no pending, or, to the knowledge of
the Company, threatened, investigations or proceedings with respect to such
Environmental Permits except where the failure to have such Environmental
Permits or where the violation, investigation or proceeding relating thereto
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on the Company.
(c) Since January 1, 1992, no written notice, notification, demand, request
for information, citation, summons, complaint or Order has been received by, is
pending, or, to the knowledge of the Company, is threatened by any Person
against, the Company or any of its subsidiaries in connection with the past or
current business or facilities of the Company and its subsidiaries nor has any
penalty been assessed against the Company or any of its subsidiaries in either
case for any alleged violation of any Environmental Law or liability thereunder,
other than where such notice, notification, demand, request for information,
citation, summons, complaint or Order has been fully resolved, or where
resolution would not, individually or in the aggregate, reasonably be expected
to have an Adverse Effect on the Company.
(d) To the Company's knowledge, none of the following exists at any
property or facility currently owned or operated by the Company or its
subsidiaries: (i) underground storage tanks; (ii) friable asbestos-containing
material; (iii) materials or equipment containing polychlorinated biphenyls; or
(iv) landfills, surface impoundments, or disposal areas.
(e) None of the Company or any of its subsidiaries has treated, disposed
of, arranged for or permitted the disposal of, transported or released any
Hazardous Substance, or owned or operated any property or facility (and no such
property or facility is contaminated by any such Hazardous Substance) in a
manner that has given or gives rise to liabilities, including any liability for
response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, or any investigative, corrective or
remedial obligations, pursuant to any Environmental Laws, except for such
liabilities which would not reasonably be expected to have an Adverse Effect on
the Company.
Section 3.17. Tax Matters.
------------
(a) Each of the Company and its subsidiaries has filed all Returns that it
was required to file. All such Returns were correct and complete in all
material respects. All Taxes owed by any of the Company and its subsidiaries
(whether or not shown on any Return) have been paid. Except as provided on
Schedule 3.17(a), none of the Company and its subsidiaries currently is the
beneficiary of any extension of time within which to file any Return. All Taxes
accrued but not yet
25
<PAGE>
due are accrued on the Closing Balance Sheet. The charges, accruals and reserves
for Taxes with respect to the Company for any Tax period (or portion thereof)
beginning on or prior to the Closing Date (excluding any provision for deferred
income taxes) reflected on the Closing Balance Sheet of the Company are adequate
to cover such Taxes.
(b) Except as provided on Schedule 3.17(b), there is no material dispute or
claim concerning any Tax liability of any of the Company and its subsidiaries
either (A) claimed or raised by any authority in writing or (B) as to which
Raytheon or the Company or its subsidiaries has knowledge based upon personal
contact with any agent of such authority.
(c) Schedule 3.17(c) (i) lists all federal, state, local, and foreign
Returns filed with respect to any of the Company and its subsidiaries for
taxable periods ended on or after December 31, 1993, (ii) indicates those
Returns that have been audited, and (iii) indicates those Returns that currently
are the subject of audit. Raytheon has delivered to Bain correct and complete
copies of all federal Returns, examination reports, and statements of
deficiencies assessed against, or agreed to by any of the Company and its
subsidiaries since December 31, 1993. No claim has been made by a taxing
authority in a jurisdiction where the Company or any of its subsidiaries does
not file returns that the Company or any of its subsidiaries may be subject to
taxes assessed by such jurisdiction. None of the Company and its subsidiaries
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(d) None of the Company and its subsidiaries has filed a consent under Code
(S)341(f) concerning collapsible corporations.
(e) None of the Company and its subsidiaries has made any material
payments, is obligated to make any material payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
material payments that will not be deductible under Code (S)280G.
(f) None of the Company and its subsidiaries has been a United States real
property holding corporation within the meaning of Code (S)897(c)(2) during the
applicable period specified in Code (S)897(c)(1)(A)(ii).
(g) None of the Company and its subsidiaries is a party to any tax
allocation or sharing agreement which will remain in effect after the Closing
Date.
(h) None of the Company and its subsidiaries (i) has been a member of an
Affiliated Group filing a consolidated Income Tax Return (other than a group the
common parent of which was Raytheon) or (ii) has any liability for the taxes of
any Person (other than any of the Company and its subsidiaries) under Reg.
(S)1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
Section 3.18. Insurance. Except as set forth on Schedule 3.18, none of
---------
the Company or any of its subsidiaries have any self-insurance or co-insurance
programs.
26
<PAGE>
Section 3.19. Locations. All of the tangible assets and properties (other
---------
than tooling located at suppliers in accordance with ordinary business practice)
of the Company and its subsidiaries are located at the locations set forth on
the attached Schedule 3.19.
Section 3.20. Suppliers and Customers. Schedule 3.20 attached hereto
-----------------------
accurately sets forth a list of the top ten customers and suppliers of the
Company and its subsidiaries by dollar volume of sales and purchases,
respectively, for each of the fiscal years ended December 31, 1997 and December
31, 1996 (the customers and suppliers identified with respect to 1997 are
hereinafter referred to as the "1997 Customers" or "1997 Suppliers," as the case
-------------- --------------
may be). To the Company's knowledge, except as set forth on Schedule 3.20, the
Company has not received any written notice from any 1997 Customer to the effect
that such customer will stop, or materially decrease the rate of, buying
products of the Company or any of its subsidiaries (whether as a result of the
consummation of the transactions contemplated hereby or otherwise). To the
Company's knowledge, except as set forth on Schedule 3.20, the Company has not
received any written notice from any 1997 Supplier to the effect that such
supplier will stop, materially decrease the rate of, or materially change the
terms (whether related to payment, price or otherwise) with respect to,
supplying materials, products or services to the Company or any of its
subsidiaries (whether as a result of the consummation of the transactions
contemplated hereby or otherwise).
Section 3.21. Closing Date. The representations and warranties of Raytheon
------------
contained in this Article 3 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any certificate
delivered by, or on behalf of, Raytheon and the Company to Bain pursuant to this
Agreement shall be true and correct in all respects on the Closing Date as
though then made (except those which speak as of a certain date which shall
continue to be true and correct as of such date on the Closing Date), except as
affected by the transactions expressly contemplated by this Agreement and except
as expressly disclosed in writing to Bain by the Company prior to the Closing.
Section 3.22. Schedules. The inclusion of any item on any Schedule to this
---------
Agreement shall not be construed as an indication that such item is material in
any respect.
Section 3.23. Investment Representation. Raytheon is an "accredited
-------------------------
investor," as such term is defined in Rule 501 of Regulation D promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and has such
--------------
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the Merger.
Article 4
Representations and Warranties of Bain and MergeCo
--------------------------------------------------
As a material inducement to Raytheon and the Company to enter into this
Agreement, Bain and MergeCo hereby jointly and severally represent and warrant
to Raytheon and the Company as follows:
27
<PAGE>
Section 4.1. Incorporation; Authorization; Etc. Each of Bain and MergeCo
----------------------------------
is a duly organized and validly existing limited liability company in good
standing under the laws of the State of Delaware. Each of Bain and MergeCo has
all requisite power (corporate and other) to execute and deliver this Agreement
and all other agreements contemplated hereby to which Bain and/or MergeCo is a
party, to perform Bain's and/or MergeCo's obligations hereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement, all other agreements contemplated hereby to which
Bain and/or MergeCo is a party, the performance of Bain's and/or MergeCo's
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Managers of Bain and/or MergeCo and by the sole Member of MergeCo and no other
corporate proceedings or actions on the part of Bain and/or MergeCo, their
respective Managers or Members are necessary therefor. The execution, delivery
and performance of this Agreement, all other agreements contemplated hereby to
which Bain and/or MergeCo is a party and the consummation of the transactions
contemplated hereby and thereby will not (i) violate any provision of the
Certificate of Formation or Operating Agreement or similar organizational
documents of Bain and/or MergeCo or any of their respective Affiliates, (ii)
violate, conflict with, result in a breach of or default under any provision of,
or be an event that is (or with the passage of time will result in) a violation
of, a conflict with, or a breach of or default under, or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the
imposition of any Lien upon or the creation of a security interest in any of
Bain's and/or MergeCo's or any of their respective Affiliates' assets or
properties pursuant to, any Contract or Order to which Bain and/or MergeCo or
any of their respective Affiliates is a party or by which Bain and/or MergeCo or
any of their respective Affiliates is bound, or (iii) violate or conflict with
any other material restriction or License of any kind or character to which Bain
and/or MergeCo or any of their respective Affiliates is subject, that, in the
case of clauses (ii) and (iii), would, individually or in the aggregate,
reasonably be expected to have an Adverse Effect on Bain and/or MergeCo or Bain
and/or MergeCo and their subsidiaries, taken as a whole, or, after giving effect
to the Merger, the Company. This Agreement has been duly executed and delivered
by Bain and MergeCo, and, assuming the due execution hereof by Raytheon and the
Company, this Agreement constitutes the legal, valid and binding obligation of
Bain and of MergeCo, enforceable against each of Bain and MergeCo in accordance
with its terms.
Section 4.2. Brokers, Finders, Etc. Neither Bain nor any of its
----------------------
Affiliates has employed, nor is any of them subject to the valid claim of, any
broker, finder, consultant or other intermediary in connection with the
transactions contemplated by this Agreement who might be entitled to a fee or
commission from Raytheon or the Company in connection with such transactions.
Section 4.3. Licenses, Approvals, Other Authorizations, Consents, Reports,
-------------------------------------------------------------
Etc. Other than the filing of the Certificate of Merger, no filing with, notice
- ---
to or authorization, consent or approval of, any Governmental Authority is
required to be made, filed, given or obtained by Bain or any of its Affiliates,
in connection with the consummation of the Merger except for (i) those that
become applicable solely as a result of the specific regulatory status of
Raytheon or the Company, or (ii) the failure to make, file, give or obtain which
would not, individually or in the aggregate, reasonably be expected to have an
Adverse Effect on Bain or Bain and its subsidiaries, taken as a whole, or, after
giving effect to the Merger, the Company. Due to the ownership structure of Bain
28
<PAGE>
and MergeCo, no filings under the HSR Act are required in connection with the
Merger and the transactions contemplated hereby.
Section 4.4. Investment Representation. Bain is an "accredited investor,"
-------------------------
as such term is defined in Rule 501 of Regulation D promulgated under the
Securities Act, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the Merger and
operation of the Company's business. Bain confirms that Raytheon has made
available to Bain and MergeCo the opportunity to ask questions of the officers
of Raytheon and the Company and to acquire additional information about the
Company Business and the financial condition of the Company.
Section 4.5. Financing. Bain has delivered to Raytheon a true and
---------
complete copy of (i) a commitment letter obtained by Bain Capital, Inc. from
Lehman Commercial Paper Inc. and Lehman Brothers Inc. relating to debt financing
for the transactions contemplated hereby pursuant to a senior secured credit
facility; and (ii) a commitment and engagement letter obtained by Bain Capital,
Inc. from Lehman Brothers Inc. with respect to senior subordinated debt
financing for the transactions contemplated hereby pursuant to the sale of
senior subordinated notes (collectively, the "Financing Commitments"). Executed
---------------------
copies of the Financing Commitments are attached hereto as Exhibit 4.5. Assuming
that the financing contemplated by the Financing Commitments is consummated in
accordance with the terms thereof, the funds to be borrowed and/or provided
thereunder by Bain, together with additional equity available to Bain, will
provide sufficient funds to pay the Cash Merger Consideration, plus any
adjustments to the Cash Merger Consideration and all related fees and expenses,
as well as a revolving credit facility for working capital and other general
corporate purposes. Bain is not aware of any facts or circumstances that create
a reasonable basis for Bain to believe that Bain will not be able to obtain
financing in accordance with the terms of the Financing Commitments. Bain agrees
with Raytheon that it will not waive, release, modify, rescind, terminate or
otherwise amend any of the material terms or conditions in the Financing
Commitments in a manner which could reasonably be expected to adversely affect
the ability of Bain to obtain the financing and consummate the Merger and the
transactions contemplated hereby, without the prior written consent of Raytheon.
Section 4.6. Solvency. Based in part of the representations and
--------
warranties of Raytheon contained in Article III hereof, after giving effect to
the Merger and the consummation of the other transactions contemplated by this
Agreement, the Surviving Entity: (a) will own assets the fair saleable value of
which are (i) greater than the total amount of liabilities (including contingent
liabilities) of the Surviving Entity as of the Effective Time and (ii) greater
than the amount that will be required to pay the probable liabilities of the
Surviving Entity's then existing debts as they become absolute and matured
considering all financing alternatives and potential asset sales reasonably
available to the Surviving Entity; (b) will not have capital that will be
unreasonably small in relation to its business as presently conducted or any
contemplated; and (c) Bain does not intend to cause the Surviving Entity to
incur and does not believe that it will incur debts beyond its ability to pay
such debts as they become due.
Section 4.7. Capitalization; Subordinated Note; Prior Activities of Bain.
-----------------------------------------------------------
29
<PAGE>
(a) At the Effective Time, Bain and its Affiliates will hold no Units other
than the Units to be issued pursuant to Section 2.6. As of the Effective Time,
all of such Units will have been duly authorized and validly issued, and will be
fully paid and nonassessable.
(b) As of the Effective Time, the Subordinated Note will have been duly
executed and delivered by the Surviving Entity and will constitute the legal,
valid and binding obligation of the Surviving Entity, enforceable against it in
accordance with its terms. The execution, delivery and performance of the
Subordinated Note will not (i) violate any provision of the Certificate of
Formation or Operating Agreement or similar organizational documents of the
Surviving Entity, or (ii) violate, conflict with, result in a breach of or
default under the terms of any financing contemplated by the Financing
Commitments.
(c) Bain has not incurred any liabilities or obligations, except those
incurred in connection with its formation or with the negotiation of this
Agreement or the performance hereof, and the financing of the Merger and the
transactions contemplated hereby. Except as contemplated by the foregoing, Bain
has not engaged in any business activities of any type or kind whatsoever.
Article 5
Covenants of Raytheon, the Company, Bain and MergeCo
----------------------------------------------------
Section 5.1. Investigation of Business; Access to Properties, Records and
------------------------------------------------------------
Employees.
- ----------
(a) Raytheon shall afford to representatives of Bain full access to the
offices, plants, properties, personnel, contracts, books and records (including
tax records) and other documents of or pertaining to the Company and its
subsidiaries of the Company and its subsidiaries during normal business hours,
in order that Bain may have full opportunity to make such investigations as it
desires of the affairs of the Company and its subsidiaries; provided, however,
--------- --------
that such investigation shall not (i) unreasonably disrupt the personnel and
operations of the Company and its subsidiaries or (ii) include the right to
undertake any investigations (including, without limitation, any so-called Phase
I or Phase II site assessments) into the environmental condition or
environmental compliance of the properties or business of the Company and its
subsidiaries. If, in the course of any investigation pursuant to this Section
5.1, Bain discovers any breach of any representation or warranty contained in
this Agreement or any circumstance or condition that upon Closing would
constitute such a breach, Bain covenants that it will promptly so inform
Raytheon.
(b) Any information provided to Bain or its representatives pursuant to
this Agreement shall be held by Bain and its representatives in accordance with,
and shall be subject to the terms of, the Confidentiality Agreement dated
November 7, 1997 by and between Raytheon and Bain Capital, Inc., which is hereby
incorporated in this Agreement as though fully set forth herein.
(c) The Surviving Entity agrees to (i) hold all of the books and records of
the Company and its subsidiaries which are customarily maintained for tax,
accounting and regulatory purposes existing on the Closing Date and not to
destroy or dispose of any thereof for a period of seven (7) years from the
Closing Date or such longer time as may be required by law, and thereafter, if
it
30
<PAGE>
desires to destroy or dispose of such books and records, to offer first in
writing at least sixty (60) days prior to such destruction or disposition to
surrender them to Raytheon and (ii) following the Closing Date to afford
Raytheon, its accountants and counsel, during normal business hours, upon
reasonable request, full access to such books, records and other data and to the
employees of the Surviving Entity and its subsidiaries to the extent that such
access may be requested for any legitimate purpose, including without limitation
responding to Governmental Authorities, defending or prosecuting litigation,
preparation of Income Tax Returns and other tax filings, at no cost to Raytheon
(other than for reasonable out-of-pocket expenses); provided, however, that
--------- --------
nothing herein shall limit any of Raytheon's rights of discovery. Bain shall
have the same rights, and Raytheon the same obligations, as are set forth above
in this Section 5.1(c), with respect to any material non-privileged records of
the Surviving Entity and its subsidiaries that are retained by Raytheon, with
the exception of Returns relating to Taxes that are not the responsibility of
Bain.
Section 5.2. Best Efforts; Obtaining Consents.
---------------------------------
(a) Subject to the terms and conditions herein provided, each of Raytheon
and Bain agrees to use its best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable, the
transactions contemplated by this Agreement and to cooperate with the other in
connection with the foregoing, including using its best efforts (i) to obtain
all necessary waivers, consents and approvals from other parties to material
Contracts, (ii) to obtain all consents, approvals and authorizations that are
required to be obtained under any Law, (iii) to lift or rescind any Order
adversely affecting the ability of the parties hereto to consummate the Merger
and the other transactions contemplated hereby, (iv) to effect all necessary
registrations and filings including filings under the HSR Act and submissions of
information requested by Governmental Authorities, and (v) to fulfill all
conditions to this Agreement (it being understood that such best efforts shall
not include any requirement of Raytheon or Bain to expend material sums of money
or grant any material financial or other accommodation (other than as
contemplated hereby)). Raytheon and Bain further covenant and agree, with
respect to a threatened or pending Order or Law that would adversely affect the
ability of the Parties hereto to consummate the Merger and the other
transactions contemplated hereby, to use their respective best efforts to
prevent the entry, enactment or promulgation thereof, as the case may be (it
being understood that such best efforts shall not include any requirement of
Raytheon or Bain to expend material sums of money or grant any material
financial or other accommodation (other than as contemplated hereby)).
(b) In case at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Section 5.2, the proper officers
and/or directors of the Surviving Entity or any of its Affiliates shall take all
such reasonably necessary action.
(c) Each Party hereto shall promptly inform the other of any material
communication from any Governmental Authority regarding any of the transactions
contemplated hereby. If any Party or any Affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Authority with respect to the transactions contemplated hereby, then such Party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other Party, an appropriate response
in compliance with
31
<PAGE>
such request. Bain and MergeCo will advise Raytheon promptly in respect of any
understandings, undertakings or agreements (oral or written) which Bain or
MergeCo proposes to make or enter into with any Governmental Authority in
connection with the transactions contemplated hereby.
Section 5.3. Further Assurances. Raytheon, Bain and the Surviving Entity
------------------
agree that, from time to time, whether before, at or after the Closing Date,
each of them will execute and deliver such further instruments and take such
other action as may be reasonably required or desirable to carry out the
purposes and intent of this Agreement, including, without limitation: (i)
allocating rights and obligations under Contracts and other arrangements, if
any, relating to business of Raytheon and the Non-Laundry Affiliates, on the one
hand, and relating to the Company and its subsidiaries on the other, (ii)
ensuring that all of the Company Intellectual Property is or has been properly
assigned to the Company and that all Licenses of Company Intellectual Property
are or have been properly assigned to the Company and (iii) entering into a
transitional services agreement reasonably satisfactory to Raytheon and Bain for
a period not to exceed three months for no consideration (other than
reimbursement of Raytheon's costs and expenses) providing for the provision of
certain services to be reasonably agreed to by the Parties. In case at any time
after the Closing Date, any further action is reasonably necessary or desirable
to carry out the purposes of this Agreement, the proper officers and directors
of each Party to this Agreement shall take all such reasonably necessary or
desirable action. Without limiting the generality of the foregoing, when
requested by Raytheon or its Affiliates, Bain shall use its reasonable efforts
to cause the Company or one its Affiliates to be substituted in all respects for
Raytheon or any Non-Laundry Affiliate, effective as of the Closing Date, in
respect of all obligations of Raytheon or any Non-Laundry Affiliate under any
Guaranty such that, from and after the Closing Date, Raytheon and the Non-
Laundry Affiliate shall cease to have any obligation whatsoever arising from or
in connection with any such Guaranty (other than in connection with the RAYCAR
Facility and the RAYCAF Facility).
Section 5.4. Conduct of Business. From the date hereof through the
--------------------
Closing, except as disclosed on Schedule 5.4 otherwise provided for in, or
contemplated by, this Agreement, and, except as consented to or approved by Bain
in writing (which consent shall not be unreasonably withheld or delayed),
Raytheon covenants and agrees that:
(a) Raytheon shall cause the Company to (i) operate its business in
the ordinary and usual course in all material respects in accordance with past
practices; (ii) carry on its business in the same manner as presently conducted
and use its reasonable efforts to keep its organization and properties intact,
including its present business operations, physical facilities, working
conditions and employees and its present relationships with lessors, licensors,
suppliers and customers and others having business relations with it; (iii) take
all necessary steps to maintain and prosecute the patents, patent
applications,trademarks, trademark applications, service marks, service mark
applications and Internet domain names identified on Schedule 3.5(i) and take
all steps necessary to prevent the same from lapsing or otherwise becoming
abandoned; (iv) maintain the prosecution or defense (as applicable) of claims or
lawsuits identified on Schedule 3.5(iii); and (v) as requested by Bain confer on
a regular and reasonable basis with Bain to report on operational matters and
the general status of ongoing operations.
32
<PAGE>
(b) except as required by Law, Contract or the terms of a Benefit Plan
existing on the date hereof, Raytheon shall not permit the Company or any of its
subsidiaries hereafter to (i) increase the base compensation of, or enter into
any new bonus or incentive agreement or arrangement not consistent with the
Company's policies respecting such agreements with, any of the senior management
employees employed by the Company; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit to any such employee, whether
past or present not otherwise required by Contract or under any employee benefit
plan in effect on the date hereof; (iii) enter into any express new employment,
severance, consulting or other compensation agreement with any such employee; or
(iv) commit itself to any pension, profit sharing, deferred compensation, group
insurance, severance pay, retirement or other employee benefit plan, fund or
similar arrangement in addition to those in effect on the date hereof and
intended exclusively for employees of the Company and its subsidiaries, or amend
or commit itself to amend any of such plans, funds or similar arrangements in
existence on the date hereof intended for the benefit of the Company's employees
generally if the effect thereof would exclusively benefit employees of the
Company; provided, however, that bonuses, severance payments or other incentives
--------- --------
committed to in connection with or in contemplation of the Merger or a similar
transaction as set forth on Schedule 5.4(b) may be paid by Raytheon or the
Company at or prior to Closing;
(c) Raytheon shall not permit the Company or any of its subsidiaries
hereafter to (i) assume, incur or guarantee, except in the ordinary course of
business consistent with past practice, any obligation for borrowed money, (ii)
cancel or compromise, except in the ordinary course of business consistent with
past practice, any debts owed to it, (iii) waive or release any rights of
material value (except in the ordinary course of business consistent with past
practice), (iv) close any plants or any other material facilities or (v) except
for purposes of transferring cash and liquidating intercompany accounts, declare
any dividend or make any distribution with respect to its equity interests;
(d) Raytheon shall not permit the Company hereafter to (i) sell,
transfer, distribute as a dividend in kind or otherwise dispose of any material
asset (other than inventory or the sales of receivables, in each case in the
ordinary course of business consistent with past practice), (ii) create or
permit to exist any new material Lien on its assets (other than a Permitted
Lien), (iii) enter into any joint venture, partnership or other similar
arrangement or form any other new material arrangement for the conduct of its
business, (iv) except in the ordinary course of business, purchase any asset,
(v) take any action that would require disclosure under Section 3.6, (vi) except
in the ordinary course of business consistent with past practices, terminate or
modify any Contract required to be disclosed on Schedule 3.12 or any License,
(vii) except in the ordinary course of business consistent with past practices,
enter into any new or amend any existing, material Contracts, or (ix) institute
any material change in the conduct of its business or in its method of purchase,
sale, lease, management, marketing, operation or accounting; and
(e) On or as soon as reasonably practicable after the Closing, the
Surviving Entity shall obtain and utilize with respect to its operation of the
Surviving Entity a new EPA identification number (and to the extent required,
new State and local identification numbers) for the generation of Hazardous
Substances disposed of on or after the Closing Date.
33
<PAGE>
Section 5.5. Public Announcements. Raytheon and Bain will consult with
--------------------
each other before issuing, or permitting any agent or Affiliate to issue, any
press releases or otherwise making or permitting any agent or Affiliate to make,
any public statements with respect to this Agreement and the transactions
contemplated hereby, and, except as may be required by applicable law or any
listing agreement with any securities exchange, will not issue any such press
release or make any such public statement, unless the text of such statement
shall have been agreed upon by the parties.
Section 5.6. Use of Raytheon Name. From and after the Closing, except for
--------------------
purposes of announcing the Merger or responding reasonably to inquiries with
respect thereto, the Surviving Entity shall not and shall not permit its
subsidiaries to use or permit the use of the names or marks "Raytheon", "RTN",
any trademark or trade name owned or controlled by Raytheon or an Affiliate of
Raytheon (except for trademarks or trade names owned or controlled by the
Company and its subsidiaries), or any trademarks or trade names confusingly
similar thereto, nor shall the Surviving Entity use or permit the use of such
names and marks in connection with the operation or disposition of the Surviving
Entity and its subsidiaries or the proceeds thereof; provided, however, that (i)
for a period of sixty (60) days, the Surviving Entity may make use of
promotional and sales literature possessed by the Company and its subsidiaries
at Closing, provided that such literature is stickered or otherwise marked to
indicate the change of ownership, and (ii) nothing in this Section 5.6 shall
require the amendment of any Contracts nor limit, where relevant, any accurate
and complete statement of facts concerning ownership of the Company prior to the
Closing in any Action or in any filing with a Government Authority.
Section 5.7. Notice of Material Developments: Each Party will give prompt
-------------------------------
written notice to the other Parties when such Party becomes aware of any (i)
representation or warranty of such Party contained in this agreement which was
true as of the date hereof but which has subsequently become untrue in any
material respect, (ii) breach of any covenant hereunder by any such Party and
(iii) any other material development affecting the ability of any such Party to
consummate the transactions contemplated by this Agreement.
Section 5.8. Exclusivity. Until consummation of the transaction
-----------
contemplated hereby or termination of this Agreement pursuant to Article XI,
none of the Company, Raytheon or any of their respective subsidiaries,
Affiliates, representatives, officers, employees, directors, or agents will,
directly or indirectly, (i) submit, solicit, initiate, encourage or discuss any
proposal or offer from any Person or enter into any agreement or accept any
offer relating to any (a) reorganization, liquidation, dissolution or
refinancing of the Company or any of its subsidiaries, (b) merger or
consolidation involving the Company or any of its subsidiaries, (c) purchase of
sale of any assets or capital stock of the Company or any of its subsidiaries
(other than a purchase or sale of assets in the ordinary course of business
consistent with past practice) or (d) similar transaction or business
combination involving the Company or any of its subsidiaries or the assets of
any of them (each of the foregoing actions described in clauses (a) through (d),
a "Company Transaction") or (ii) furnish any information with respect to, assist
-------------------
or participate in or facilitate in any other manner any effort or attempt by any
Person to do or seek to do any of the foregoing. The Company and Raytheon agree
to notify Bain promptly if any Person makes any proposal, offer, inquiry or
contact with respect to a Company Transaction.
34
<PAGE>
Section 5.9. Receivable Financing Facilities and Other Receivables
-----------------------------------------------------
Obligations.
- -----------
(a) From and after the Closing Date until such time as a Change of Control
(as defined in the Subordinated Note), Raytheon shall indemnify and hold
harmless the Surviving Entity from and against any amounts paid by the Surviving
Entity in respect of the purchase of loans that are outstanding on the date
hereof relating to Other Receivables Obligations; provided, however, that until
-------- -------
such time as the Surviving Entity has made cash payments after the Closing Date
(a "Company Payment") in excess of $2,000,000 in respect of such Other
---------------
Receivables Obligations (after giving effect to all related Recoveries (as
defined below)), Raytheon shall only be required to indemnify and hold harmless
the Surviving Entity from and against fifty percent (50%) of a Company Payment;
provided, further, however, that to the extent the aggregate Company Payments
- -------- ------- -------
(after Recoveries) exceed $500,000 (but are less than $2,000,000), Raytheon
shall transfer to the Surviving Entity the entire Company Payment in cash and
fifty percent (50%) of such payment by Raytheon shall be deemed to be an advance
by Raytheon to the Surviving Entity, which advance shall bear interest at 13%
per annum (which interest shall be payable in kind), compounded annually
(collectively, the "Advances"). The Advances, together with all interest
--------
thereon, shall be paid in full on the earliest to occur of (i) the seventh
anniversary of the Closing Date, or (ii) when the Subordinate Note is paid in
full.
After a Change of Control, Raytheon shall indemnify and hold harmless the
Surviving Entity (if it shall survive such Change of Control) or the Person
formed by or surviving any consolidation or merger, or to which a sale of assets
have been made, from and against any amounts paid by the Surviving Entity in
respect of the purchase of loans that are outstanding on the date hereof
relating to Other Receivables Obligations; provided, however, that until such
-------- -------
time as the Surviving Entity or such Person has made cash payments after the
date of the Change of Control (a "Company Payment") in excess of $2,000,000 in
---------------
respect of such Other Receivables Obligations (after giving effect to all
related Recoveries), Raytheon shall only be required to indemnify and hold
harmless the Surviving Entity or such Person from and against fifty percent
(50%) of a Company Payment. In addition, the references to the Surviving Entity
in the rest of this Section shall be deemed to refer to the Person formed by or
surviving any consolidation or merger, or to which a sale of assets have been
made.
(b) From and after the Closing Date, Raytheon shall indemnify and hold
harmless the Surviving Entity and its subsidiaries from and against any and all
obligations and liabilities under Sections 1.8 and 8.1 of the RAYCAR Facility
(other than any such obligation or liability resulting from RAYCAR's or the
Company's breach after the Closing Date of its representations, warranties,
covenants and agreements under the RAYCAR Facility and the Sale Agreement (as
defined in the RAYCAR Agreement)) in respect of Receivables (as defined in the
RAYCAR Facility) which have been sold to the purchasers under the RAYCAR
Facility on or prior to the Closing Date. The Parties hereto agree that the
Closing Date shall constitute a Termination Date under the RAYCAR Facility and
that the Surviving Entity shall not and shall not permit RAYCAR to sell any
additional Receivables under the RAYCAR Facility or the related Receivable Sales
Agreement. Any Recoveries with respect to any such Receivable transferred as
part of the RAYCAR Facility for which the Surviving Entity has received an
indemnification payment shall be applied in accordance with paragraph (f) below.
35
<PAGE>
(c) From and after the Closing Date, Raytheon shall indemnify and hold
harmless the Surviving Entity and its subsidiaries from and against any and all
obligations and liabilities under Sections 1.5 and 8.1 of the RAYCAF Facility
(other than any such obligation or liability resulting from RAYCAF's or the
Company's breach after the Closing Date of its representations, warranties,
covenants and agreements under the RAYCAF Facility or the Sale Agreement (as
defined in the RAYCAF Agreement)) in respect of Receivables (as defined in the
RAYCAF Facility) which have been sold to the purchasers under the RAYCAF
Facility on or prior to the Closing Date. The Parties hereto agree that the
Closing Date shall constitute a Facility Termination Date under the RAYCAF
Facility and that the Surviving Entity shall not, and shall not permit RAYCAF
to, sell any additional receivables under such facility. Any Recoveries with
respect to any such Receivable transferred as part of the RAYCAR Facility for
which the Surviving Entity has received an indemnification payment shall be
applied in accordance with paragraph (f) below.
(d) From and after the Closing Date, the Surviving Entity shall indemnify
and hold harmless Raytheon from and against any and all payments made by
Raytheon under the Performance Guarantees to the extent such payment results
from RAYCAF's or RAYCAR's, as the case may be, or the Company's breach after the
Closing Date of its representations, warranties, covenants and agreements under
the Receivables Financing Facilities or the related Receivable Sales Agreements.
(e) The Surviving Entity shall, and shall cause each of RAYCAR and RAYCAF
to, use its reasonable best efforts to service the loans and receivables in
accordance with past custom and practice (including, without limitation,
foreclosure, repossession and remarketing). In addition, and without intending
to limit the generality of the foregoing, (i) the Surviving Entity agrees that
is shall not, and it shall not permit any subsidiary to, waive, release, modify,
rescind, terminate or otherwise amend any of the terms of the RAYCAR Facility or
the RAYCAF Facility or any Contract entered into in connection with any Other
Receivables Financing or otherwise increase its recourse with respect thereto
without obtaining the prior written consent of Raytheon; and (ii) the Surviving
Entity shall, and shall cause each of RAYCAR and RAYCAF to, comply in all
material respects with its covenants and agreements under, and shall, and shall
cause each of RAYCAR and RAYCAF to, use its reasonable best efforts to maintain
the accuracy of the representations and warranties included in, the Receivables
Financing Facilities and the related Receivables Sales Agreements.
(f) The Parties intend that Raytheon and the Surviving Entity will settle
any amounts owed to each other on a quarterly basis and to calculate amounts
owing under each Receivables Financing Facility and the Other Receivables
Obligations as separate obligations (each a "Tranche"). In this regard, if in
-------
any quarter there is a Surplus (as defined below) under a Tranche and Raytheon
has made payments under this Section 5.9 or a Performance Guarantee in respect
of such Tranche for which it has not been reimbursed, the Surviving Entity shall
pay over to Raytheon such Surplus (provided that such payment shall not exceed
Raytheon's unrecovered payments in respect of such Tranche). If after giving
effect to such payment there continues to be a Surplus, the Surplus shall be
carried forward to future quarters and applied against any payments for which
the Surviving Entity is entitled to indemnification under this Section 5.9 in
respect of such Tranche. If there is a
36
<PAGE>
Deficit in any quarter (after giving effect to any Surplus in effect at the
beginning of such quarter), Raytheon shall pay an amount equal to such Deficit
to the Surviving Entity.
In order to implement the indemnification provisions set forth above, for
so long as the Surviving Entity or any of its subsidiaries has obligations and
liabilities outstanding with respect to the Receivables Financing Facilities or
Other Receivables Obligations, the Surviving Entity shall supply to Raytheon on
or before the fifteenth of January, April, July and October (or the next
business day if the fifteenth is not a business day), a report for each Tranche
(the "Quarterly Report") that sets forth in reasonable detail, (i) the payments,
----------------
if any, made by the Company, RAYCAR or RAYCAF during the immediately preceding
quarter for which the Surviving Entity is entitled to indemnification under this
Section 5.9 and, if the Surviving Entity is not entitled to full indemnification
in respect of such payment as a result of the proviso in paragraph (a) above,
the amount Raytheon is required to indemnify the Surviving Entity (after such
adjustment, if any, the "Reimbursable Payments"); (ii) the amount, if any,
---------------------
received by the Surviving Entity or one of its subsidiaries during such quarter
as a result of any recovery (a "Recovery") in respect of any defaulted loan or
--------
receivable or any collateral with respect to such loan or receivable (including,
without limitation, as a result of (1) collecting on any guaranty or other
credit assurance with respect to such loan, (2) a sale or refinancing of such
loan or receivable, (3) a sale of equipment and other property that was secured
by, or was purchased with the proceeds of, a previously defaulted loan or (4) a
remarketing of such equipment or the store at which the equipment and other
property is located); (iii) if during such quarter the aggregate Reimbursable
Payments made during such quarter exceed the sum of (1) the aggregate Recoveries
received during such quarter plus (2) the amount of the Surplus, if any, in
effect at the beginning of such quarter, the net amount payable by Raytheon (the
"Deficit"); (iv) if during such quarter, the aggregate Recoveries exceed the
-------
aggregate Reimbursable Payments (a "Surplus"), and if the aggregate payments
-------
made by Raytheon pursuant to this Section 5.9 or pursuant to the Performance
Guarantees ("Raytheon Payments") exceed the aggregate amounts paid to Raytheon
-----------------
by the Surviving Entity under this Section 5.9 ("Raytheon Reimbursements"), the
-----------------------
net amount payable to Raytheon; (v) the amount of the aggregate Surplus at the
end of such quarter (if any); (vi) the aggregate amount of Raytheon Payments
made with respect to such Tranche and, with respect to the Other Receivables
Obligations, the aggregate outstanding Advances (plus interest accrued through
the end of the quarter); and (vi) such other information as Raytheon may
reasonably request. If Raytheon has made a payment on a Performance Guarantee
it will, on or before the fifth day of January, April, July and October, provide
written notice to the Surviving Entity setting forth the amount of any such
payment and the Receivables Finance Facility to which it relates.
Not later than the last business day of January, April, July and October,
with respect to each Tranche, (i) if there is a Deficit, Raytheon shall make a
cash payment to the Surviving Entity in an amount equal to the Deficit; and (ii)
if (1) there is a Surplus and (2) the Raytheon Payments exceed the Raytheon
Reimbursements, the Surviving Entity shall make a cash payment to Raytheon in an
amount equal to the Surplus (provided that in no event shall such payment be
greater than the unrecovered Raytheon Payments). Notwithstanding the foregoing,
any Surplus with respect to the Other Receivables Financing shall be paid in the
following order of priority: (i) first, to Raytheon until such time as the
-----
Raytheon Payments for which Raytheon has not been repaid is equal to $250,000;
(ii) second, as repayment of principal and interest under the Advances until
------
such time as
37
<PAGE>
no amounts remain outstanding in respect of the Advances; (iii) third,
-----
one-half to Raytheon and one-half to the Surviving Entity until Raytheon
has been reimbursed for all Raytheon Payments with respect to Other Receivables
Obligations; and (iv) fourth, to be retained by the Surviving Entity to be
------
applied against any future losses. If on any payment date, Raytheon is
obligated to pay the Surviving Entity in respect of one Tranche and the
Surviving Entity is obligated to pay Raytheon in respect of another Tranche,
then, on such date, the obligations to remit payments shall be automatically
satisfied by the party by whom the larger aggregate amount would have been
payable paying the other party an amount equal to the excess of the larger
aggregate payment over the smaller aggregate payment.
(g) Raytheon and the Surviving Entity shall attempt in good faith to
resolve any differences relating to the calculation of the amounts set forth in
Raytheon's notice or in a Quarterly Report. In order to assist in such process,
the Surviving Entity shall provide Raytheon and Raytheon's authorized
representatives with reasonable access to the books, records and employees of
the Surviving Entity and its subsidiaries to the extent reasonably required to
enable Raytheon to determine the accuracy of a Quarterly Report.
(h) If, as a result of the foregoing provisions, Raytheon has indemnified
the Surviving Entity in respect of a defaulted loan or receivable, and the
Surviving Entity or one of its subsidiaries has not made a Recovery in respect
of such loan or receivable within 270 days of its default, the Surviving Entity
or such subsidiary shall, at Raytheon's option and for no additional
consideration, assign all of its rights and interest in and to such loan to
Raytheon or its designee.
(i) Satisfaction of Raytheon's or the Surviving Entity's obligations set
forth in this Section 5.9 shall be a condition precedent to the other party's
indemnification obligations under this Section 5.9.
(j) The Surviving Entity shall be entitled to assign its rights under this
Section 5.9 to any assignee of all or substantially all of its assets or to
another entity resulting from a merger or consolidation, provided that the
Person formed by or surviving any such consolidation or merger, or to which such
sale shall have been made shall, as a condition to the assignment of this
Section 5.9 shall assume all the obligations of the Surviving Entity under this
Section 5.9 pursuant to an instrument in a form reasonably satisfactory to the
Raytheon.
(k) Raytheon shall use its reasonable best efforts to increase the RAYCAF
Facility prior to the Closing Date.
Section 5.10. Warranty Obligation. The Company covenants and agrees that
-------------------
it will honor fully and perform diligently all of its product warranty, guaranty
and product return obligations express or implied which arise from or are
related to products manufactured or services provided by the Company or any of
its subsidiaries prior to the Closing, including, with respect to products
manufactured for or services provided to any Non-Laundry Affiliate or any
division of Raytheon.
Section 5.11 Noncompetition. As a condition precedent to Bain to enter
into and perform its obligations under this Agreement, Raytheon agrees that for
a period of five (5) years after date
38
<PAGE>
hereof (the "Restricted Period"), none of Raytheon or any subsidiary of Raytheon
-----------------
(the "Raytheon Group"), will engage directly or indirectly in competition with
--------------
the Surviving Entity, whether individually or as a consultant, partner, owner or
stockholder owning more than five percent (5%) of an Entity, in the business of
manufacturing and selling commercial laundry and dry cleaning equipment and the
operation of commercial laundromats and dry cleaners anywhere in the world (the
"Restricted Business"). Notwithstanding the foregoing, nothing herein shall
-------------------
prohibit any member of the Raytheon Group from (a) owning, directly or
indirectly, less than five percent 5% of any class of securities listed on a
national securities exchange or traded publicly in the over-the-counter market,
(b) directly or indirectly acquiring a business which engages in the Restricted
Business (a "Competitive Business") if such Competitive Business is 10% or less
--------------------
(measured by net revenues) of a larger business so acquired by such member of
the Raytheon Group (so long as such Competitive Business has $30 million or less
in net revenues), or (c) acquiring a Competitive Business if such business is
more than 10% (measured by net revenues) of a larger business so acquired by
such member of the Raytheon Group (or if such Competitive Business has more than
$30 million in net revenues), provided that such member of the Raytheon Group
places such Competitive Business for sale promptly after its acquisition and
uses reasonable commercial efforts to complete such sale within the Restricted
Period. Notwithstanding the foregoing, it is understood that the Raytheon Group
shall be permitted to manufacture and sell to the US Government products
associated with dry cleaning of natural and manmade fabrics, textiles, furs and
leathers. Moreover, nothing in this section is intended to nor shall it preclude
the Raytheon Group from engaging in the business of operating and/or selling
equipment which uses CO\\2\\ dry cleaning technology to clean products other
than natural and manmade fabrics, textiles, furs and leathers, e.g.,
semiconductor devices and machine parts.
Section 5.12. Nonsolicitation. Raytheon agrees that for a period of two
---------------
(2) years after the date hereof (the "Nonsolicitation Period"), Raytheon shall
----------------------
not (i) induce or attempt to induce any employee of the Surviving Entity to
leave the employ of the Surviving Entity, or in any way interfere with the
relationship between the Surviving Entity and any employee thereof, (ii) hire at
any time during the Nonsolicitation Period, directly or through another Entity,
any of the persons listed on Schedule 5.12; provided, however, that the
-------- -------
restrictions on the hiring of these persons shall not apply to those persons
whose employment at the Surviving Entity has been terminated by the Surviving
Entity during the Nonsolicitation Period, or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Surviving
Entity to cease doing business with the Surviving Entity.
Section 5.13. Regulation S-X. Raytheon shall furnish or shall cause C&L
--------------
to furnish to Bain, (i) the Financial Statements (provided that for purposes of
this Section 5.13, such Financial Statements shall be in a form meeting the
requirements of Regulation S-X under the Securities Act), and (ii) reviewed
combined financial statements for the Commercial Laundry Business of Raytheon
for the three-month periods ending March 31, 1998 and 1997 prepared in
accordance with GAAP and in a form meeting the requirements of Item 301 of
Regulation S-K of the Securities Act (and, in each case, use reasonable best
efforts to obtain the consent of C&L to the use of their reports thereon, if
any); provided, however, that, prior to the Closing Date, Bain shall reimburse,
-------- -------
and after the Closing Date the Surviving Entity shall reimburse, Raytheon for
its reasonable out-of-pocket expenses incurred in connection with its compliance
with this Section 5.13 (which reimbursement
39
<PAGE>
obligation will survive termination of this Agreement pursuant to Section 11.1);
provided further that such reimbursement obligation shall not extend to any
- -------- -------
services that would ordinarily be provided by C&L to Raytheon and its
subsidiaries. Raytheon shall provide (or cause C&L to provide) the Financial
Statements referred to in clause (i) above no later than 30 days after the
execution of this Agreement and the financial statements referred to in clause
(ii) above on or prior to the later of (i) May 15, 1998 or (ii) 45 days after
Closing. Bain and Raytheon acknowledge and agree that time is of the essence in
the performance of the provisions of this Section 5.13.
Section 5.14. Lines of Business. For so long as Raytheon or any of its
------------------
Affiliates continues to hold an equity interest in the Surviving Entity, the
Surviving Entity shall give Raytheon at least sixty days notice prior to
selling, marketing, advertising, distributing or servicing home laundry products
and related service parts in the home retail distribution market, anywhere in
the United States of America.
Article 6
Employees, Employee Benefits and Other Transitional Matters
-----------------------------------------------------------
Section 6.1 Retention of Employees.
----------------------
(a) The Surviving Entity shall continue in employment as of the Closing
Date (or, in the case of employees within clauses (ii) and (iii), as of the date
of their commencement of or return to active employment) (i) all employees on
the Company's active payroll on the Closing Date, (ii) all persons who are
subject to outstanding employment offers from the Company at the Closing Date
and (iii) any employee not on the Company's active payroll on the Closing Date
on account of an approved leave of absence or short-term disability leave (but
excluding those on long-term disability leave) if such employee returns to
active employment with the Surviving Entity immediately upon the conclusion of
any such leave of absence or within the period required by Law (all employees
continuing such employment being "Continuing Employees"). Such continued
--------------------
employment and the benefits to be provided to the Continuing Employees shall
recognize the date of hire and time of service with the Company and its
Affiliates and predecessors for all purposes unless inconsistent with another
provision of this Article. Nothing contained herein shall confer upon any
Continuing Employee the right to continued employment by the Surviving Entity
for any period of time.
(b) The Surviving Entity agrees that, from the Closing Date until December
31, 1998 (the "Benefits Maintenance Period"), with respect to Continuing
---------------------------
Employees, the Surviving Entity shall (i) maintain the Commercial Laundry
Retirement Plans in effect without any material reduction in the aggregate
benefits thereunder and (ii) provide at least the same pay and comparable
benefits as those in effect on the Closing Date, in the aggregate, to the
compensation paid by the Company and to the benefits provided to such employees
under the Benefit Plans; provided, however, that with respect to any Benefit
-------- -------
Plan that is a severance plan or arrangement, there shall be no change adverse
to any Commercial Laundry Employee during the Benefits Maintenance Period.
40
<PAGE>
(c) The Surviving Entity agrees that, for a period of 60 days after the
Closing Date, it will not cause any of the Continuing Employees to suffer
"employment loss" for purposes of the Worker Adjustment and Retraining
Notification Act, 29 U.S.C. (S)(S)2101-2109, and related regulations (the "WARN
----
Act") if such employment loss could create any liability for Raytheon or any
- ---
Non-Laundry Affiliate, unless the Surviving Entity delivers notices under the
WARN Act in such a manner and at such a time that Raytheon bears no liability
with respect thereto.
Section 6.2. Investment Plans.
----------------
(a) Raytheon will not be obligated to make any contribution with respect to
a participant in the Raytheon Savings and Investment Plan (the "RAYSIP Plan") or
-----------
the Raytheon Stock Ownership Plan (the "RAYSOP Plan" and, together with the
-----------
RAYSIP Plan, the "Investment Plans") with respect to compensation earned by
----------------
Commercial Laundry Employees on or after the Closing Date and no participant
shall be eligible to make any contributions to the RAYSIP Plan on or after the
Closing Date. The Continuing Employees shall be fully vested as of the Closing
Date in their respective account balances under the Investment Plans. Raytheon
shall cause the account balances held under the RAYSOP Plan to be distributed to
the Continuing Employees after the Closing Date in accordance with the terms of
such Plan on the basis that the employment of each such person with Raytheon
terminated as of the Closing Date.
(b) The Surviving Entity agrees to establish a defined contribution plan
that is qualified under Section 401(a) of the Code (the "Target Plan"),
-----------
effective within 90 days after the Closing Date. As soon as practicable after
the establishment of the Target Plan, Raytheon agrees to cause the trustee of
the RAYSIP Plan to transfer to the trustee of the Target Plan an amount equal to
the account balances, including without limitation, outstanding participant
loans, in the RAYSIP Plan attributable to the Continuing Employees, whether or
not such employees remain in employment with the Surviving Entity as of the date
of transfer, valued as of the date of the transfer. Before the expiration of
the remedial amendment period that applies under Section 401(b) of the Code to
the Target Plan for determination of its initial qualification under Section
401(a) of the Code, the Surviving Entity shall apply for a determination by the
Internal Revenue Service to the effect that the Target Plan satisfied the
requirements for qualification under Section 401(a) of the Code, and the
Surviving Entity shall take all reasonable actions to ensure continued
qualification of the Target Plan under Section 401(a) of the Code.
Section 6.3. Retention Plans. Attached as Schedule 6.3 is a description
---------------
of the Company's employee retention plans (the "Retention Plans"). The Surviving
---------------
Entity agrees continue to maintain the Retention Plans for those Commercial
Laundry Employees (and former Commercial Laundry Employees) covered thereby at
the Closing Date and to cause the Surviving Entity to pay all amounts to which
any such individuals may become entitled thereunder after the Closing Date. The
Cash Merger Consideration is intended to reflect an equal division of the
payments due after the date hereof under the Retention Bonus component of the
Retention Plans (the "Retention Bonuses"). If, at such time as the Surviving
-----------------
Entity has no further obligations to pay Retention Bonuses, the aggregate
Retention Bonuses paid by the Surviving Entity (including the amounts, if any,
paid by the Company on or prior to the Effective Time) is less than $3,600,000,
the Surviving Entity shall
41
<PAGE>
promptly pay to Raytheon an amount equal to 50% of the difference between
$3,600,000 and the Retention Bonuses paid by the Surviving Entity.
Section 6.4. Access to Books and Records. As soon as practicable after
---------------------------
the Closing Date, Bain shall receive from Raytheon (i) such pertinent data or
information as Bain may reasonably require to determine the Continuing
Employees' accrued benefits under the Commercial Laundry Retirement Plans, (ii)
such information concerning each Continuing Employee's period of employment with
Raytheon as Bain may reasonably require to determine service for eligibility and
benefit accrual purposes, and (iii) such information concerning the terms of the
Benefit Plans and concerning each Continuing Employee's benefit utilization
under welfare benefit plans as Bain may reasonably require to comply with
Section 6.1(c) of this Agreement.
Section 6.5. Pension Plans.
-------------
(a) The Company maintains the Commercial Laundry Retirement Plans.
Effective January 1, 1997, the RCL Salaried Plan was merged with and into the
Raytheon Appliances Retirement Income Plan (the "RAI Plan"). Effective as of
--------
September 10, 1997, the Raytheon Appliance business was divested. Effective
September 11, 1997 (the "Spin-Off Date"), the RAI Plan was divided into two
-------------
plans, one covering the former employees of the divested business and the RCL
Salaried Plan which covers the employees and former employees of the Commercial
Laundry business. As part of the divestiture, certain participants in the RCL
Hourly Plan located at the Searcy, Arkansas plant ceased active participation in
the RCL Hourly Plan and Raytheon authorized the transfer of the portion of the
RCL Hourly Plan attributable to the Searcy participants into a separate plan to
be maintained by Raytheon. Notwithstanding the above authorized actions, assets
have not yet been transferred from the RAI Plan or the RCL Hourly Plan.
(b) Raytheon and Buyer agree that the transfer of assets from the RAI Plan
and the RCL Hourly Plan will be done in accordance with the requirements of
Section 414(l) of the Code. In that regard, the assets allocated between each
plan shall be no less than the obligations determined thereunder as of the Spin-
off Date using the safe harbor mortality and interest rate assumptions
prescribed by the PBGC and other assumptions consistent with the actuarial
valuation of the Commercial Laundry Retirement Plans (the "Initial Allocation").
------------------
In the event the assets held in the plans as of the Spin-off Date exceed the
Initial Allocation, such excess shall be allocated among the plans in proportion
to the Initial Allocation for each such plan. In the event the assets held in
the plans as of the Spin-off Date are less than the aggregate sum of the Initial
Allocations, the assets will be allocated among the plans in accordance with the
requirements of Section 4044 of ERISA. The assets allocated to each plan shall
be increased or decreased to reflect the actual earnings of, and the respective
benefit payments made from, the trust with respect to the period commencing on
the Spin-off Date to the date the assets are actually transferred. Prior to the
transfer of assets, Raytheon shall provide information to Bain with respect to
the allocation of assets between the plans which is sufficient for Bain to
confirm that the allocation has been made in accordance with this Agreement.
Notwithstanding the above allocation, in the event the Commercial Laundry
Retirement Plans are overfunded on a projected benefit obligation basis in
accordance with FAS 87, including assumptions selected by Raytheon thereunder
for December 31, 1997 financial statement purposes, by less than $7,000,000 as
of December 31, 1997, Raytheon shall either transfer additional funds
42
<PAGE>
to the Commercial Laundry Retirement Plans or pay cash to the Bain in an amount
equal to the difference between $7,000,000 and the amount by which the plans are
overfunded.
Article 7
Tax Matters
-----------
Raytheon covenants for the benefit of Bain and the Company, and Bain and
the Company covenant for the benefit of Raytheon, as follows:
Section 7.1. Tax Treatment of Purchase and Sale of Interest; Cooperation.
-----------------------------------------------------------
Bain, the Company and Raytheon agree that for all federal, state and local
Income Tax purposes, to the maximum extent permitted by applicable law, the
Merger shall be treated as (a) a purchase by the Company from Raytheon of all of
the assets of the Company (including the stock of its subsidiaries) other than
(i) all created goodwill of the Company (the "Goodwill") to the extent that the
----------
total value of the Goodwill does not exceed $18,500,000 and (ii) in the event
that the value of the Goodwill is less than $18,500,000, an undivided interest
in those assets of the Company having the greatest proportionate excess of value
over tax basis which assets have a value equal to the excess of $18,500,000 over
the value of the Goodwill in exchange for the cash portion of the Merger
Consideration, and (b) a contribution of the remaining assets of the Company to
the Surviving Entity in exchange for the Subordinated Note and the Units
received pursuant to Section 2.6. Raytheon, at the option of Bain or the
Company, shall cooperate in the preparation and filing of an election under
Section 754 of the Code, and under any other similar state or local Tax Law,
with respect to the Merger. Bain, the Company and Raytheon agree to furnish or
cause to be furnished to each other, upon request, as promptly as practicable,
such information and assistance relating to the assets of the Company (the
"Company Assets ") (including, without limitation, access to books and records)
- -----------------
as is reasonably necessary for the filing of all Tax Returns, the making of any
election relating to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax.
Section 7.2. Allocation of Transfer and Property Taxes.
-----------------------------------------
(a) All excise, sales, use, value added, registration stamp, recording,
documentary, conveyancing, franchise, property, transfer, gains and similar
Taxes, levies, charges and fees including any deficiencies, interest, penalties,
additions to tax or additional amounts excluding any Income Taxes (collectively,
"Transfer Taxes") incurred in connection with the transactions contemplated by
--------------
this Agreement shall be borne equally by the Company and Raytheon. Bain, the
Company and Raytheon shall use reasonable efforts to minimize the amount of all
Transfer Taxes and shall cooperate in providing each other with any appropriate
resale exemption certifications and other similar documentation. The party that
is required by applicable law to make the filings, reports, or returns and to
handle any audits or controversies with respect to any applicable Transfer Taxes
shall do so, and the other party shall cooperate with respect thereto as
necessary.
(b) All real property taxes, personal property taxes and similar ad valorem
-- -------
obligations levied with respect to the Company Assets for a taxable period which
includes (but does not end on)
43
<PAGE>
the Closing Date (collectively, the "Apportioned Obligations") shall be
-----------------------
apportioned between Raytheon and the Company based on the number of days of such
taxable period which fall on or before the Closing Date (this and any other tax
period which includes one or more days falling on or before the Closing Date, a
"Pre-Closing Tax Period") and the number of days of such taxable period after
----------------------
the Closing Date (a "Post-Closing Tax Period"). Raytheon shall be liable for the
-----------------------
proportionate amount of such taxes that is attributable to the Pre-Closing Tax
Period, and the Company shall be liable for the proportionate amount of such
taxes that is attributable to the Post-Closing Tax Period. Upon receipt of any
bill for real or personal property taxes relating to the Company Assets, each of
Raytheon and the Company shall present a statement to the other setting forth
the amount of reimbursement to which each is entitled under this Section
together with such supporting evidence as is reasonably necessary to calculate
the proration amount. The proration amount shall be paid by the party owing it
to the other within 30 days after delivery of such statement. In the event that
either Raytheon or the Company shall make any payment for which it is entitled
to reimbursement under this Section, the other party shall make such
reimbursement promptly but in no event later than ten (10) days after the
presentation of a statement setting forth the amount or reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement.
Section 7.3. Refunds. Any refunds or credits of Taxes shall be for the
-------
account of the party responsible for the payment of such Taxes under this
Agreement. If either party becomes aware of any pending or threatened
assessment, official inquiry, examination or proceeding that could result in an
official determination with respect to Taxes due or payable the responsibility
for which rests with the other party hereto, such party shall promptly so notify
the other party in writing.
Section 7.4. [Intentionally Omitted]
-----------------------
Section 7.5. Tax Indemnity by Bain and Raytheon.
----------------------------------
(a) The Company shall be liable for, and shall hold Raytheon harmless from
and against, the following Taxes with respect to the Company and its
subsidiaries or affiliates, (i) any and all Income Taxes or Other Taxes for any
taxable period (or portion thereof) beginning on or after the Closing Date, due
or payable by the Company or its subsidiaries or by Raytheon; (ii) all Other
Taxes not incurred in the ordinary course of business attributable to the acts
or omissions of Bain, Bain's affiliates, the Company, its subsidiaries or
affiliates after the Closing on the Closing Date; and (iii) any Income or Other
Taxes due and payable by the Company, its subsidiaries or affiliates or Bain
resulting from any election made by Bain or the Company or imposed on Bain or
the Company by the Internal Revenue Service under Section 338 of the Code or by
any other taxing authority under said Section 338 or the state or local
equivalent thereof (provided that for the purposes of this clause (iii) an
additional tax payable by Raytheon solely as a result of the effect on RASA's
earnings and profits of any such election under Section 338 of the Code shall
not be deemed a tax imposed on Raytheon under Section 338 of the Code.)
(b) Raytheon shall be liable for, and shall hold Bain and the Company
harmless from and against (i) any and all Taxes for any taxable period (or
portion thereof) ending on or before the Closing Date due and payable by the
Company or its subsidiaries; (ii) any and all liability of the
44
<PAGE>
Company or its subsidiaries for Taxes of any Person (other than the Company and
its subsidiaries) under Reg. Section 1.1502-6 (or any similar provision of
state, local or foreign law); and (iii) any Tax reportable in any taxable period
(or portion thereof) beginning on or after the Closing Date under Subpart F of
the Code which is attributable to earnings for any taxable period (or portion
thereof) ending on or before the Closing Date.
Section 7.6. Allocation of Certain Taxes.
---------------------------
(a) Bain, the Company and Raytheon agree that if the Company or any of its
subsidiaries is permitted but not required under applicable state or local
Income Tax laws to treat the day before the Closing Date or the Closing Date as
the last day of a taxable period, the Company and Raytheon shall treat such day
as the last day of a taxable period.
(b) Any Taxes for a taxable period beginning before the Closing Date and
ending after the Closing Date with respect to the Company, the subsidiaries or
the Affiliates, the allocation of which is not governed by Section 7.2(b),
shall be apportioned for purposes of Section 7.5 between Raytheon and the
Company based on the actual operations of the Company, its subsidiaries and/or
Affiliates, as the case may be, during the portion of such period ending on the
Closing Date and the portion of such period beginning on the date following the
Closing Date, and for purposes of the provisions of Section 7.5, 7.6 and 7.8,
each portion of such period shall be deemed to be a taxable period (whether or
not it is in fact a taxable period); provided, however, that to the extent
-------- -------
estimated Income Taxes have been paid prior to the Closing Date with respect to
a taxable period beginning before the Closing Date and ending after the Closing
Date, Raytheon's liability with respect thereto shall be reduced by that amount;
provided further, that if such payment of estimated Income Taxes exceeds
- -------- -------
Raytheon's liability as calculated pursuant to this Section 7.6, Bain shall
promptly pay Raytheon the amount of such excess. Upon timely notice from Bain,
Raytheon shall pay to Bain at least ten (10) days prior to the date any payment
for Income Taxes as described in this Section 7.6 is due, Raytheon's share of
such Income Taxes as described in this Section 7.6.
Section 7.7. Filing Responsibility.
---------------------
(a) Raytheon shall prepare and file or shall cause the Company and its
subsidiaries to prepare and file all Returns with respect to Taxes for periods
ending on or before the Closing Date.
(b) The Company shall prepare and file, and/or shall cause its
subsidiaries and Affiliates to prepare and file, subject to Raytheon's review
and approval, all Returns for taxable periods beginning before the Closing Date
and ending after the Closing Date, and all other Returns for which Raytheon does
not have filing responsibility pursuant to Section 7.7(a).
(c) Raytheon, Bain, the Company and their respective subsidiaries and
Affiliates agree that all Returns to be filed by any party hereto with respect
to the operations of the Company or its subsidiaries shall be prepared in a
manner consistent with the past practice of the Company and its subsidiaries.
45
<PAGE>
(d) Bain, the Company and their respective subsidiaries and affiliates
agree that, except to the extent contrary to law or applicable regulation, they
will take no position in the Returns referred to in clause (b) above
inconsistent with that taken in a Return for which Raytheon has filing
responsibility pursuant to this Article VII.
(e) Raytheon, Bain, the Company and their respective subsidiaries and
Affiliates agree not to make any election or change in accounting method with
respect to the Company or its subsidiaries which would have the effect of
deferring a Tax otherwise payable with respect to a period prior to the Closing
Date into a period after the Closing Date or accelerating a Tax otherwise
payable with respect to a period after the Closing Date into a period prior to
the Closing Date.
Section 7.8. Refunds and Carrybacks.
----------------------
(a) Raytheon shall be entitled to any refunds or credits of Income Taxes or
Other Taxes attributable to or arising in taxable periods ending on or before
the Closing Date.
(b) The Company and its subsidiaries and Affiliates, as the case may be,
shall be entitled to any refunds or credits of Income Taxes attributable to or
arising in taxable periods beginning on or after the Closing Date.
(c) Bain agrees that if as the result of any audit adjustment made by any
taxing authority with respect to a taxable period ending on or prior to the
Closing Date for which Raytheon has indemnified Bain pursuant to Section 7.5,
Bain, the Company or any of its subsidiaries or affiliates receives a Tax
benefit, then Bain shall pay to Raytheon the amount of such Tax benefit (on an
after-tax basis) within 15 days of filing the Return in which such Tax benefit
is realized or utilized; provided, however, that if Raytheon owes Bain an
-------- -------
indemnity obligation with respect to the adjustment which results in such Tax
benefit, Bain shall have no liability under this Section 7.8(c) unless and until
such indemnity obligation shall have been satisfied.
(d) Bain, the Company and their respective subsidiaries and affiliates
agree that, with respect to any Income Tax, none of the Company's subsidiaries
shall carry back any item of loss, deduction or credit which arises in any
taxable period ending after the Closing Date ("Subsequent Loss") into any
---------------
taxable period ending on or before the Closing Date. If a Subsequent Loss with
respect to any Income Tax is carried back into any taxable period ending on or
before the Closing Date, Raytheon shall be entitled to any refund or credit of
Taxes realized as a result thereof.
Section 7.9. Cooperation and Exchange of Information.
---------------------------------------
(a) As soon as practicable, but in any event within thirty (30) days after
a party's request, from and after the Closing Date, the requested party shall
provide the requesting party with such cooperation and shall deliver to the
requesting party such information and data concerning the pre-Closing operations
of the Company and its subsidiaries and Affiliates and make available such
knowledgeable employees of the Company and its subsidiaries and Affiliates as
the requesting party may request, including providing the information and data
required by the Company's customary tax and accounting questionnaires, in order
to enable each party to complete and file all Returns
46
<PAGE>
which it may be required to file with respect to the operations and business of
the Company and its subsidiaries and Affiliates through the Closing Date or to
respond to audits by any taxing authorities with respect to such operations and
to otherwise enable each party to satisfy its internal accounting, tax and other
legitimate requirements. Such cooperation and information shall include
provision of powers of attorney for the purpose of signing Returns and defending
audits and promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any taxing authority which relate to the
Company and its subsidiaries and affiliates, and providing copies of all
relevant Returns, together with accompanying schedules and related workpapers,
documents relating to rulings or other determinations by any taxing authority
and records concerning the ownership and tax basis of property, which each
respective party may possess. Each of Raytheon, Bain and the Company and its
subsidiaries and affiliates shall make its respective employees and facilities
available on a mutually convenient basis to provide explanation of any documents
or information provided hereunder.
(b) For a period of ten (10) years after the Closing Date, Bain shall, and
shall cause the Company and its subsidiaries and affiliates to, retain all
Returns, books and records (including computer files) of, or with respect to the
activities of, the Company and its subsidiaries and affiliates for all taxable
periods ending on or prior to the Closing Date. Thereafter, Bain shall not
dispose of any such Returns, books or records unless it first offers such
Returns, books and records to Raytheon and Raytheon fails to accept such offer
within sixty (60) days of its being made.
(c) Bain and the Company shall cooperate in the preparation of all Returns
relating in whole or in part to taxable periods ending on or before the Closing
Date that are required to be filed after such date; provided, however, that
-------- --------
Raytheon shall have the sole authority to determine the manner in which such
Returns are prepared to the extent such determination affects the amount of
Taxes for which Raytheon is liable.
(d) If any third party notifies Raytheon, Bain, the Company or their
respective subsidiaries and Affiliates of any audit, litigation or other
proceeding relating to Taxes of the Company or its subsidiaries for a taxable
period for which the other party may seek indemnification pursuant to this
Agreement (a "Third Party Tax Claim"), the party so notified shall give notice
---------------------
thereof to the other parties hereto within fifteen (15) days of receiving such
notice. The party ultimately responsible for payment of any Third Party Tax
Claim shall have the option to control, at its own expense, any proceeding
relating to such Third Party Tax Claim (or, if any such proceeding involves Tax
liabilities for which both parties are responsible, the option to control shall
rest with the party with the greatest amount at risk).
(e) If Raytheon, Bain, the Company or any of its subsidiaries or
Affiliates, as the case may be, fails to provide any information requested by
Raytheon in the time specified herein, or if no time is specified pursuant to
this Section 7.9, within a reasonable period, or otherwise fails to do any act
required of it under this Section 7.9, then such failing party shall be
obligated, notwithstanding any other provision of this Agreement, to indemnify
the harmed party and shall so indemnify the harmed party and hold such party
harmless from and against any and all costs, claims or damages, including all
Taxes or deficiencies thereof, payable as a result of such failure.
47
<PAGE>
Section 7.10. Tax Sharing Agreements. Any Tax Sharing Agreement between
----------------------
Raytheon and any of the Company or its subsidiaries is terminated as of the
Closing Date and shall have no further effect for any taxable year (whether a
current year, a future year or a past year).
Article 8
Conditions of Bain's and MergeCo's Obligation to Close
------------------------------------------------------
Bain's and MergeCo's obligation to consummate the Merger shall be subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 8.1. Representations, Warranties and Covenants of Raytheon.
------------------------------------------------------
(a) The representations and warranties of Raytheon and the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except for
representations and warranties that speak as of a specific date or time, which
need only be true and correct as of such date or time and except for
representations or warranties that contain a qualification as to "Adverse
Effect," which shall be true and correct in all respects) and without taking
into account any disclosure made by Raytheon pursuant to Section 3.21.
(b) Raytheon shall have performed in all material respects each obligation
and agreement and shall have complied in all material respects with each
covenant to be performed and complied with by them hereunder at or prior to the
Closing .
(c) Bain shall receive at or prior to the Closing a certificate as to the
matters set forth in paragraphs (a) and (b), dated the Closing Date, and validly
executed by an authorized officer of Raytheon.
Section 8.2. Filings; Consents; Waiting Periods. All waiting periods, if
-----------------
any, applicable under the HSR Act shall have expired or been terminated and
other than the filing of the Certificate of Merger with the Delaware Secretary
of State, all registrations, filings, applications, notices, consents,
approvals, orders, qualifications and waivers listed in Schedule 8.2 shall have
been made or obtained (the "Material Consents").
-----------------
Section 8.3. No Injunction. At the Closing Date, (i) there shall be no
--------------
Order of any nature of any Governmental Authority, or any pending Action before
any Governmental Authority, that restrains, prohibits or enjoins or seeks to
restrain, prohibit or enjoin, the consummation of the Merger, and (ii) no Law
shall have been enacted by any Governmental Authority which prevents
consummation of the Merger.
Section 8.4. Securityholders Agreement and Other Agreements.
----------------------------------------------
48
<PAGE>
(a) The Company, Bain and Raytheon shall have entered into a
securityholders agreement (the "Securityholders Agreement") in the form attached
-------------------------
hereto as Exhibit 8.4(a) and the Securityholders Agreement shall be in full
force and effect as of the Closing.
(b) The Company, Bain and Raytheon shall have entered into a registration
rights agreement (the "Registration Rights Agreement") in the form attached
-----------------------------
hereto as Exhibit 8.4(b) and the Registration Rights Agreement shall be in full
force and effect as of the Closing.
(c) The Company, Bain and Raytheon shall have entered into the Operating
Agreement and the Operating Agreement shall be in full force and effect as of
the Closing.
Section 8.5. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by Raytheon and the Company in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Bain.
Section 8.6. Financing. The financing of the transactions contemplated in
---------
the Commitment Letters attached hereto as Exhibit 4.5 shall have been funded by
such lenders; provided, however, that the funding of the Financing Commitments
by the lenders shall only be a condition to the Closing to the extent the
Financing Commitments have not been waived, released, modified, rescinded,
terminated or otherwise amended in a manner which could reasonably be expected
to adversely affect the ability of Bain to obtain the financing and consummate
the Merger and the transactions contemplated hereby.
Section 8.7. Closing Documents. At the Closing, the Company shall have
-----------------
delivered to Bain all of the foregoing documents:
(a) certified copies of the resolutions duly adopted by the Company's
Manager and Sole Manager authorizing the execution, delivery and performance of
this Agreement and each of the other agreements contemplated hereby;
(b) certified copies of the Certificate of Formation of the Company as
in effect on the Closing Date and the Existing Operating Agreement;
(c) copies of all Material Consents; and
(d) such other documents relating to the transactions contemplated by
this Agreement as Bain or its special counsel may reasonably request.
Section 8.8. Waiver. Any condition specified in this Article 8 may be
------
waived if consented to by Bain and MergeCo; provided that, no such waiver shall
--------
be effective against Bain unless it is set forth in a writing executed by Bain
and MergeCo.
49
<PAGE>
Article 9
Conditions to Raytheon's and the Company's Obligation to Close
--------------------------------------------------------------
Raytheon's and the Company's obligation to consummate the Merger is subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 9.1. Representations, Warranties and Covenants of Bain.
--------------------------------------------------
(a) The representations and warranties of Bain and MergeCo contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except for representations and
warranties that speak as of a specific date or time, which need only be true and
correct as of such date or time).
(b) Bain and MergeCo shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects with
each covenant to be performed and complied with by it hereunder at or prior to
the Closing.
(c) Raytheon shall receive at or prior to the Closing certificates as to
the matters set forth in paragraphs (a) and (b), dated the Closing Date, and
validly executed by executive officers of Bain and MergeCo on behalf of Bain and
MergeCo.
Section 9.2. Filings: Consents: Waiting Periods. All waiting periods, if
-----------------------------------
any, applicable under the HSR Act shall have expired or been terminated and,
other than the filing of the Certificate of Merger with the Delaware Secretary
of State, all Material Consents shall have been made or obtained.
Section 9.3. No Injunction. At the Closing Date, (i) there shall be no
--------------
Order of any nature of any Governmental Authority, nor any pending Action, that
restrains, prohibits or enjoins or seeks to restrain, prohibit or enjoin, the
consummation of the Merger, and (ii) no Law shall have been enacted by any
Governmental Authority which prevents consummation of the Merger.
Section 9.4. Securityholders Agreement and Other Agreements.
----------------------------------------------
(a) The Company, Bain, Raytheon and other securityholders of the Company
shall have entered into the Securityholders Agreement and the Securityholders
Agreement shall be in full force and effect as of the Closing;
(b) The Company, Bain and Raytheon shall have entered into the Registration
Rights Agreement and the Registration Rights Agreement shall be in full force
and effect as of the Closing;
(c) The Company, Bain, Raytheon and other securityholders of the Company
shall have entered into the Operating Agreement and the Operating Agreement
shall be in full force and effect as of the Closing; and
50
<PAGE>
(d) The Company shall have executed and delivered to Raytheon the
Subordinated Note, which shall be in full force and effect as of the Closing.
Section 9.5. Proceedings. All corporate and other proceedings taken or
-----------
required to be taken by Bain and MergeCo in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Raytheon.
Section 9.6. Closing Documents. At the Closing, Bain and MergeCo shall
-----------------
have delivered to Raytheon all of the foregoing documents:
(a) certified copies of the resolutions duly adopted by the Board of
Managers of Bain and MergeCo authorizing the execution, delivery and performance
of this Agreement and each of the other agreements contemplated hereby;
(b) certified copies of the Certificate of Formation of Bain and
MergeCo, and the Limited Liability Company Operating Agreements of Bain and
MergeCo, each as in effect at the Closing; and
(c) such other documents relating to the transactions contemplated by
this Agreement as Raytheon or its special counsel may reasonably request.
Section 9.7. Waiver. Any condition specified in this Article 9 may be
------
waived if consented to by Raytheon and the Company; provided that, no such
--------
waiver shall be effective against Raytheon unless it is set forth in a writing
executed by Raytheon and the Company.
Article 10
Survival: Indemnification
-------------------------
Section 10.1 Survival Periods. All representations, warranties, covenants
----------------
and agreements (other than any such covenant or agreement which by its terms is
to be performed after the Closing Date) contained or made in, or in connection
with, this Agreement or in any Schedule, or any certificate, document or other
instrument delivered in connection herewith shall survive the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, regardless of any investigation made by any Party or on its behalf, the
knowledge of any such Party's officers, directors, stockholders, employees or
agents, or the acceptance of any certificate or opinion, for a period of twelve
months following the Closing; provided, however, that (a) Raytheon's
-----------------
representations and warranties contained in (i) Section 3.17 shall survive for
the applicable statute of limitations, (ii) Sections 3.11 and 3.16 shall survive
for a period of three years following the Closing, and (iii) Sections 3.1(c) and
3.14 shall survive indefinitely, (b) Raytheon's agreement to indemnify the
Surviving Entity for Known Environmental Liabilities shall survive for a period
of three years and (c) Bain's representations and warranties contained in
Section 4.2 shall survive indefinitely.
51
<PAGE>
Section 10.2. Indemnification by Raytheon. From and after the Closing
---------------------------
Date, Raytheon shall indemnify and hold harmless the Surviving Entity, its
Affiliates, each of their respective directors, officers, employees and agents,
and each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Surviving Entity Indemnified Parties") from and against any
------------------------------------
and all damages, claims, losses, expenses, costs, obligations and liabilities,
including without limitation liabilities for all reasonable attorneys',
accountants', and experts' fees and expenses (collectively, "Covered
-------
Liabilities") including, but not limited to, those incurred to enforce the terms
- -----------
of this Agreement, suffered, directly or indirectly, by Bain by reason of, or
arising out of (i) any breach of any representation or warranty (after giving
effect to any disclosure delivered in accordance with Section 3.21 that relate
to events or circumstance that occurred between the date hereof and the Closing
Date), covenant or agreement of Raytheon contained herein, (ii) any claims of
any brokers or finders claiming by, through or under Raytheon or (iii) any Known
Environmental Liabilities; provided, however, that Raytheon shall not be
-------- -------
required to indemnify the Surviving Entity Indemnified Parties with respect to
any claim for indemnification for breaches of representation and warranties
pursuant to this Section 10.2, other than claims made under Sections 3.1(c) and
3.14 or with respect to Known Environmental Liabilities, unless (i) the amount
of the Covered Liabilities incurred by the Surviving Entity Indemnified Parties
as a result of the breach or event giving rise to such claim or series of
related claims arising from the same set of facts or circumstances is in excess
of $10,000 (any breach or event exceeding such $10,000 threshold being herein
referred to as a "Covered Breach or Event") and (ii) the aggregate amount of all
-----------------------
Covered Liabilities incurred by the Surviving Entity Indemnified Parties as a
result of Covered Breaches or Events is in excess of Four Million Dollars
($4,000,000) and then only to the extent such aggregate amount exceeds such
amount, and provided, further, that in no event shall Raytheon be required to
-------- -------
pay or otherwise be liable for an amount in excess of ten percent (10%) of the
Cash Merger Consideration with respect to claims made under this Section 10.2.
Notwithstanding the fact that the $4,000,000 threshold in first proviso above
has not been satisfied, Raytheon agrees to indemnify the Surviving Entity
Indemnified Parties in respect of Covered Liabilities incurred by the Surviving
Entity Indemnified Parties as a result of Known Environmental Liabilities or
breaches of the representations set forth in Section 3.16 (other than Section
3.16(e)) that constitute Covered Breaches or Events at such time as the
aggregate amount of all such Covered Liabilities exceeds $1,500,000; provided
that amounts paid by Raytheon to the Surviving Entity Indemnified Parties in
respect of such Covered Liabilities shall not be counted in determining whether
the $4,000,000 threshold has been satisfied. (By way of illustration, if the
Surviving Entity Indemnified Parties' have Covered Liabilities of $3,000,000
resulting from Known Environmental Liabilities or Covered Breaches of Sections
3.16(a), 3.16(b), 3.16(c) and 3.16(d) and no other Covered Breaches or Events,
they would be entitled to collect $1,500,000 from Raytheon, but before they
would be entitled to recover in respect of any other Covered Liabilities (other
than in respect of Known Environmental Liabilities or breaches of Sections
3.1(c), 3.14, 3.16(a), 3.16(b), 3.16(c) or 3.16(d)), the aggregate of the other
Covered Liabilities incurred by the Surviving Entity Indemnified Parties as a
result of Covered Breaches or Events would have to exceed $2,500,000.) With
respect to any Covered Liabilities arising out of environmental conditions at
the Company's facility in Marianna, Florida, the Surviving Entity shall use its
reasonable best efforts (including, but not limited to, pursuing all legal
remedies) to recover any Covered Liabilities from Cowen Holdings Inc. ("CHI")
---
pursuant to the environmental escrow in the Asset Purchase Agreement by which
Raytheon Appliances, Inc. acquired UniMac Company, Inc. (the "Cowen Escrow").
------------
Under no condition shall the Surviving
52
<PAGE>
Entity release CHI from any of CHI's obligations under the Cowen Escrow or
otherwise modify the terms of the Cowen Escrow without the prior written consent
of Raytheon. Any amounts recovered by the Surviving Entity from CHI under the
Cowen Escrow for Covered Liabilities arising out of environmental conditions at
the Company's facility in Marianna, Florida shall not be counted in determining
whether the $1,500,000 threshold for environmental matters or the $4,000,000
threshold for all matters have been satisfied. For purposes of calculating any
liability arising under this Section 10.2, any and all "materiality" and/or
"Adverse Affect, Change or Effect" qualifiers included in any representation,
warranty, covenant or agreement herein shall be ignored for purposes of
determining whether any breach of such representation, warranty, covenant or
agreement has occurred.
Section 10.3. Indemnification by the Surviving Entity. From and after the
----------------------------
Closing Date, the Surviving Entity shall indemnify and hold harmless Raytheon,
its Affiliates, each of their respective directors, officers, employees and
agents, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "Raytheon Indemnified Parties") from and against
----------------------------
any and all Covered Liabilities incurred by or asserted against any of Raytheon
Indemnified Parties in connection with or arising (i) from any liability of the
Company or any of its subsidiaries or arising out of or in connection with any
of the businesses, assets, operations or activities of the Company (including
any predecessor of the Company, and any former business, asset, operation,
activity or subsidiary of any of the foregoing) owned or conducted, as the case
may be, on or prior to the Closing Date including any liability based on
negligence, gross negligence, strict liability or any other theory of liability,
whether in law (whether common or statutory) or equity (but only to the extent
the Surviving Entity or NewCo has or would have had liability with respect to
any such Covered Liability) or (ii) out of (x) any breach of any representation
or warranty, covenant or agreement of Bain contained herein, (y) any claims of
any brokers or finders claiming by, through or under Bain or (z) any breach of
any post-Closing covenants or agreements of the Company or the Surviving Entity
contained herein.
Section 10.4. Indemnification Procedures.
---------------------------
(a) If any indemnified party receives notice of the assertion of any Third-
Party Claim with respect to which an indemnifying party is obligated under this
Agreement to provide indemnification, such indemnified party shall give such
indemnifying party written notice thereof (together with a copy of such Third-
Party Claim, process or other legal pleading) promptly after becoming aware of
such Third-Party Claim; provided, however, that the failure of any indemnified
--------- -------
party to give notice as provided in this Section 10.4 shall not relieve any
indemnifying party of its obligations under this Section 10.4, except to the
extent that such indemnifying party is actually prejudiced by such failure to
give notice. Such notice shall describe such Third-Party Claim in reasonable
detail.
(b) An indemnifying party, at such indemnifying party's own expense and
through counsel chosen by such indemnifying party (which counsel shall be
reasonably acceptable to the indemnified party), may elect to defend any Third-
Party Claim. If an indemnifying party elects to defend a Third-Party Claim,
then, within ten (10) business days after receiving notice of such Third-Party
Claim (or sooner, if the nature of such Third-Party claim so requires), such
53
<PAGE>
indemnifying party shall notify the indemnified party of its intent to do so,
and such indemnified party shall cooperate in the defense of such Third-Party
Claim (and pending such notice and assumption of defense, an indemnified party
may take such steps to defend against such Third-Party Claim as, in such
indemnified party's good-faith judgment, are appropriate to protect its
interests). Such indemnifying party shall pay such indemnified party's
reasonable out-of-pocket expenses incurred in connection with such cooperation.
Such indemnifying party shall keep the indemnified party reasonably informed as
to the status of the defense of such Third-Party Claim. After notice from an
indemnifying party to an indemnified party of its election to assume the defense
of a Third-Party Claim, such indemnifying party shall not be liable to such
indemnified party under this Section 10.4 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than those expenses referred to in the preceding sentence;
provided, however, that such indemnified party shall have the right to employ
- --------- --------
one law firm as counsel, together with a separate local law firm in each
applicable jurisdiction ("Separate Counsel"), to represent such indemnified
----------------
party in any action or group of related actions (which firm or firms shall be
reasonably acceptable to the indemnifying party) if the indemnified party has
been advised by counsel that either there is a reasonable likelihood of a
conflict of interest between such indemnified party and such indemnifying party
in respect of such claim, or there may be defenses available to such indemnified
party which are different from or in addition to those available to such
indemnifying party and the representation of both parties by the same counsel
would be inappropriate, and in that event (i) the reasonable fees and expenses
of such Separate Counsel shall be paid by such indemnifying party (it being
understood, however, that the indemnifying party shall not be liable for the
expenses of more than one Separate Counsel (excluding local counsel) with
respect to any Third-Party Claim (even if against multiple indemnified
parties)), and (ii) each of such indemnifying party and such indemnified party
shall have the right to conduct its own defense in respect of such claim. If an
indemnifying party elects not to defend against a Third-Party Claim, or fails to
notify an indemnified party of its election as provided in this Section 10.4
within the period of ten (10) business days described above, the indemnified
party may defend, compromise, and settle such Third-Party Claim and shall be
entitled to indemnification hereunder (to the extent permitted hereunder);
provided, however, that no such indemnified party may compromise or settle any
- --------- --------
such Third-Party claim without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the indemnifying party shall not, without the
prior written consent of the indemnified party, which consent shall not be
unreasonably withheld or delayed, (i) settle or compromise any Third-Party Claim
or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to the
indemnified party of a written release from all liability in respect of such
Third-Party Claim or (ii) settle or compromise any Third-Party Claim in any
manner that would reasonably be expected to have a material adverse effect on
the indemnified party or result in an injunction or other equitable relief will
be imposed against the indemnified party.
(c) Any payment pursuant to a claim for indemnification shall be made
promptly after the amount of the claim is finally determined.
Section 10.5. Certain Limitations.
-------------------
54
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(a) The amount of any Covered Liabilities for which indemnification is
provided under this Agreement shall be net of any amounts actually recovered by
the indemnified party from third parties (including amounts actually recovered
under insurance policies less the amount by which the premiums of such policy
have increased due to the claims being made) with respect to such Covered
Liabilities (it being understood that any indemnified party shall be under no
obligation to pursue any such third party). Except for claims involving
material customers and suppliers of the Company, any indemnifying party
hereunder shall be subrogated to the rights of the indemnified party upon
payment in full of the amount of the relevant indemnifiable loss. An insurer
who would otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto or, solely by virtue of the indemnification
provision hereof, have any subrogation rights with respect thereto. If any
indemnified party recovers an amount from a third party in respect of an
indemnifiable loss for which indemnification is provided in this Agreement after
the full amount of such indemnifiable loss has been paid by an indemnifying
party or after an indemnifying party has made a partial payment of such
indemnifiable loss and the amount received from the third party exceeds the
remaining unpaid balance of such indemnifiable loss, then the indemnified party
shall promptly remit to the indemnifying party the excess of (A) the sum of the
amount theretofore paid by such indemnifying party in respect of such
indemnifiable loss plus the amount received from the third party in respect
thereof, less (B) the full amount of such Covered Liabilities.
(b) The amount of any Covered Liabilities for which indemnification is
provided under this Agreement shall be (i) increased to take account of any net
Tax cost actually incurred by the indemnified party arising from the receipt or
accrual of an indemnification payment hereunder (grossed up for such increase),
and (ii) reduced to take account of any net Tax benefit actually realized by the
indemnified party arising from incurring or paying such loss or other liability.
In computing the amount of any such Tax cost or Tax benefit, the indemnified
party shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any indemnification payment hereunder or incurring or paying any
indemnified loss. Any indemnification payment hereunder shall initially be made
without regard to this Section 10.5(b) and shall be increased or reduced to
reflect any such net Tax cost (including gross-up) or net Tax benefit only after
the indemnified party has actually realized such cost or benefit. For purposes
of this Agreement, an indemnified party shall be deemed to have "actually
realized" a net Tax cost or a net Tax benefit to the extent that, and at such
time as, the amount of Taxes payable by such indemnified party is increased
above or reduced below, as the case may be, the amount of Taxes that such
indemnified party would be required to pay but for the receipt or accrual of the
indemnification payment or the incurrence or payment of such Loss, as the case
may be. The amount of any increase or reduction hereunder shall be adjusted to
reflect any Final Determination with respect to the indemnified party's
liability for Taxes, and payments between such indemnified parties to reflect
such adjustment shall be made if necessary.
(c) The amount of any other liability for which indemnification is provided
under this Agreement shall be treated by Bain and Raytheon as an adjustment to
the total Cash Merger Consideration, and Raytheon and Bain agree not to take any
position inconsistent therewith for any purpose.
55
<PAGE>
Section 10.6 Indemnification by Raytheon for Excluded Liabilities.
----------------------------------------------------
Notwithstanding anything to the contrary in Section 10.2, from and after the
Closing Date, Raytheon shall indemnify and hold harmless the Surviving Entity
Indemnified Parties from and against any and all Covered Liabilities relating to
any Excluded Liabilities. Raytheon will have sole control over all matters
relating to the Excluded Liabilities.
Section 10.7 Other Indemnification Provisions. In no event shall Raytheon
--------------------------------
seek contribution from the Company or any of its subsidiaries for any breaches
of Raytheon hereunder or in respect of any other payments required to be made by
Raytheon pursuant to this Agreement.
Section 10.8. Arbitration Procedure.
---------------------
(a) Each Party agrees that the arbitration procedure set forth below shall
be the sole and exclusive method for resolving and remedying claims for money
damages arising out of the provisions of this Section 10.8 (the "Disputes");
--------
provided that, nothing in this Section 10.8 shall prohibit a Party from
- -------- ----
instituting litigation to enforce any Final Award (as defined below). The
Parties hereby acknowledge and agree that, except as otherwise provided in
subparagraph (f) below, the arbitration procedures and any Final Award hereunder
shall be governed by, and shall be enforced pursuant to the Commercial
Arbitration Rules of the American Arbitration Association as in effect from time
to time.
(b) In the event that any Party asserts that there exists a Dispute, such
Party shall deliver a written notice to each other Party involved therein
specifying the nature of the asserted Dispute and requesting a meeting to
attempt to resolve the same. If no such resolution is reached within ten (10)
business days after such delivery of such notice, the Party delivering such
notice of Dispute (the "Disputing Party") may, within 45 business days after
---------------
delivery of such notice, commence arbitration hereunder by delivering to each
other Party involved therein a notice of arbitration (a "Notice of
---------
Arbitration"). Such Notice of Arbitration shall specify the matters as to which
arbitration is sought, the nature of any Dispute, the claims of each Party to
the arbitration and shall specify the amount and nature of any damages, if any,
sought to be recovered as a result of any alleged claim, and any other matters
required by the Commercial Arbitration Rules of the American Arbitration
Association as in effect from time to time to be included therein, if any.
(c) The Disputing Party, on the one hand, and the other Parties involved
therein, on the other hand, each shall select one non-neutral arbitrator expert
in the subject matter of the Dispute (the arbitrators so selected shall be
referred to herein as the "Disputing Party's Arbitrator" and the "Non-Disputing
---------------------------- -------------
Party's Arbitrator", respectively). In the event that either Party fails to
- ------------------
select an arbitrator as set forth herein within 20 days from the delivery of a
Notice of Arbitration, then the matter shall be resolved by the arbitrator
selected by the other party. The Disputing Party's Arbitrator and the Non-
Disputing Party's Arbitrator shall select a third independent, neutral
arbitrator expert in the subject matter of the dispute, and the three
arbitrators so selected shall resolve the matter according to the procedures set
forth in this Section 10.8. If the Disputing Party's Arbitrator and the Non-
Disputing Party's Arbitrator are unable to agree on a third arbitrator within 20
days after their selection, the Disputing Party's Arbitrator and the Non-
Disputing Party's Arbitrator shall each prepare a list of three independent
arbitrators. The Disputing Party's Arbitrator
56
<PAGE>
and the Non-Disputing Party's Arbitrator shall each have the opportunity to
designate as objectionable and eliminate one arbitrator from the other
arbitrator's list within seven (7) days after submission thereof, and the third
arbitrator shall then be selected by lot from the arbitrators remaining on the
lists submitted by the Disputing Party's Arbitrator and the Non-Disputing
Party's Arbitrator.
(d) The arbitrator(s) selected pursuant to subparagraph (c) above will
determine the allocation of the costs and expenses of arbitration based upon the
percentage which the portion of the contested amount not awarded to each party
bears to the amount actually contested by such party. For example, if the
Disputing Party submits a claim for $1,000 and if the other Parties involved in
the Dispute contest only $500 of the amount claimed by the Disputing Party, and
if the arbitrator(s) ultimately resolves the dispute by awarding the Disputing
Party $300 of the $500 contested, then the costs and expenses of arbitration
will be allocated 40% (i.e., 200 / 500) to the Disputing Party and 60% (i.e.,
300 / 500) to the other Parties involved in the Dispute.
(e) The arbitration shall be conducted in Boston, Massachusetts under the
Commercial Arbitration Rules of the American Arbitration Association as in
effect from time to time, except as modified by the agreement of the Parties.
The arbitrator(s) shall conduct the arbitration so that a final result,
determination, finding, judgment and/or aware (the "Final Award") is made or
-----------
rendered as soon as practicable, but in no event later than the earlier to occur
of (a) the date which is 90 business days after the delivery of the Notice of
Arbitration and (b) the date which is ten (10) days after the completion of the
arbitration. The Final Award must be agreed upon and signed by the sole
arbitrator or by at least two of the three arbitrators (as the case may be).
The Final Award shall be final and binding on all Parties and there shall be no
appeal from or reexamination of the Final Award, except for fraud, perjury,
evident partiality or misconduct by an arbitrator prejudicing the rights of any
Party and to correct manifest clerical errors.
(f) A Party may enforce any Final Award in any state or federal court
located in Boston, Massachusetts. For the purpose of any action or proceeding
instituted with respect to any Final Award, each Party hereby irrevocably
submits to the jurisdiction of such courts, irrevocably consents to the service
of process by registered mail or personal service and hereby irrevocably waives,
to the fullest extent permitted by law, any objection which it may have or
hereafter have as to personal jurisdiction, the laying of the venue of any such
action or proceeding brought in any such court and any claim that any such
action or proceeding brought in any court has been brought in an inconvenient
forum.
(g) Any party required to make a payment pursuant to this Section 10.8
shall pay the party entitled to receive such payment within three (3) days of
the delivery of the Final Award to such responsible party. If any party shall
fail to pay the amount of damages, if any, assessed against it within ten (10)
days of the delivery to such party of such award, the unpaid amount shall bear
interest from the date of such delivery at the maximum rate permitted by and on
the basis provided for under the laws of the Commonwealth of Massachusetts with
respect to unpaid judgments for breach of contract in civil cases. In addition,
such party shall reimburse the other party for any and all costs or expenses of
any nature or kind whatsoever (including but not limited to all attorneys'
57
<PAGE>
fees) incurred in seeking to collect such damages or to enforce any such award,
but only to the extent approved and ordered by a court exercising jurisdiction
to enforce a Final Award.
Section 10.9. Exclusive Remedy. Except as otherwise provided in this
----------------
Article, the indemnification provided in this Article shall be the sole and
exclusive post-Closing remedy available to the Parties hereto for any claim
under this Agreement (other than equitable relief if available).
Article 11
Termination
-----------
Section 11.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Closing by:
(a) The mutual written consent of Raytheon and Bain; or
(b) Either Raytheon or Bain if the Closing has not occurred by the
close of business on May 15, 1998, and if the failure to consummate the Merger
on or before such date did not result from the failure by the party seeking
termination of this Agreement to fulfill any undertaking or commitment provided
for herein that is required to be fulfilled prior to Closing.
(c) Raytheon, provided it is not then in breach of any of its
obligations hereunder, if Bain fails to perform in any material respect any
covenant in this Agreement when performance thereof is due or Bain shall have
breached in any material respect any of the representations or warranties
contained in this Agreement and does not cure the failure or breach within
thirty (30) business days after Raytheon delivers written notice thereof; or
(d) Bain, provided it is not then in breach of any of its obligations
hereunder, if Raytheon fails to perform in any material respect any covenant in
this Agreement when performance thereof is due or Raytheon shall have breached
in any material respect any of the representations and warranties contained in
this Agreement and does not cure the failure or breach within thirty (30)
business days after Bain delivers written notice thereof.
Section 11.2 Procedure and Effect of Termination. In the event of
-----------------------------------
termination of this Agreement by either or both of Raytheon and Bain pursuant to
Section 11.1, written notice thereof shall forthwith be given by the terminating
party to the other party hereto, and this Agreement shall thereupon terminate
and become void and have no effect, and the transactions contemplated hereby
shall be abandoned without further action by the parties hereto, except that the
provisions of Sections 5.1(b), 5.13 (as they relate to reimbursement of
Raytheon's expenses) and 12.4 shall survive the termination of this Agreement;
provided, however, that such termination shall not relieve any party hereto of
- -------- --------
any liability for any breach of this Agreement. If this Agreement is terminated
as provided herein, all filings, applications and other submissions made
pursuant to Sections 3.8 and 4.3, if any, shall, to the extent practicable, be
withdrawn from the agency or other persons to which they were made.
58
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Article 12
Miscellaneous
-------------
Section 12.1 Counterparts. This Agreement may be executed in one or more
-------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
Section 12.2 Governing Law; Consent to Jurisdiction. This Agreement shall
---------------------------------------
be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts without reference to the choice of law principles thereof. Bain
and Raytheon consent to and hereby submit to the exclusive jurisdiction of any
state or federal court located in the Commonwealth of Massachusetts in
connection with any action, suit or proceeding arising out of or relating to
this Agreement, and each of the parties hereto irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
Section 12.3 Entire Agreement. This Agreement (including agreements
-----------------
incorporated herein) and the Schedules hereto contain the entire agreement
between the parties with respect to the subject matter hereof and there are no
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to herein.
Section 12.4 Expenses. Except as set forth in this Agreement, whether the
---------
Merger is or is not consummated, all legal and other costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
Section 12.5 Notices. All notices hereunder shall be sufficiently given
--------
for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Raytheon shall be addressed to:
Raytheon Company
141 Spring Street
Lexington, Massachusetts 02173
Attention: General Counsel
Telecopy No: (781) 860-2924
59
<PAGE>
with a copy to:
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Attention: William J. Curry, Esq.
Telecopy No: (617) 338-2880
or at such other address and to the attention of such other Person as Raytheon
may designate by written notice to Bain. Notices to Bain shall be addressed to:
Bain/RCL, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attention: Mr. Robert Gay
Telecopy No.: (617) 572-3274
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60001
Attention: James L. Learner, Esq.
Telecopy No.: (312) 861-2200
or at such other address and to the attention of such other Person as Bain may
designate by written notice to Raytheon.
Section 12.6. Successors and Assigns. This Agreement shall be binding upon
-----------------------
and inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that no party hereto will assign its rights or
--------- --------
delegate its obligations under this Agreement without the express prior written
consent of each other party hereto, except that Raytheon may assign this
Agreement to any Entity that succeeds to substantially all of Raytheon's assets
and liabilities and Bain may assign this Agreement to (i) a subsidiary of Bain
or MergeCo and/or (ii) any of its financing sources as collateral security,
provided that any such assignment shall not relieve Bain or MergeCo of its
obligations under the Agreement.
Section 12.7. Headings: Definitions. The section and article headings
---------------------
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
60
<PAGE>
Section 12.8 Amendment. This Agreement may not be amended, modified,
----------
superseded, canceled, renewed or extended except by a written instrument signed
by the party to be charged therewith.
Section 12.9 Waiver; Effect of Waiver. No provision of this Agreement may
-------------------------
be waived except by a written instrument signed by the party waiving compliance.
No waiver by any party hereto of any of the requirements hereof or of any of
such party's rights hereunder shall release the other parties from full
performance of their remaining obligations stated herein. No failure to exercise
or delay in exercising on the part of any party hereto any right, power or
privilege of such party shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
by such party.
Section 12.10 Interpretation; Absence of Presumption.
--------------------------------------
(a) For the purposes hereof, (i) the terms "hereof" "herein," and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
hereto) and not to any particular provision of this Agreement, and Article,
Section, paragraph and Schedule references are to the Articles, Sections,
paragraphs and Schedules to this Agreement unless otherwise specified, (ii) the
word "including" and words of similar import when used in this Agreement means
"including, without limitation," unless the context otherwise requires or unless
otherwise specified, (iii) the word "or" shall not be exclusive, (iv) provisions
shall apply, when appropriate, to successive events and transactions, and (v)
all references to any period of days shall be deemed to be to the relevant
number of calendar days.
(b) This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
(c) For the purposes of this Agreement, a "subsidiary" of a Person means
any corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains and losses or shall otherwise control such limited liability company,
partnership, association or other business entity.
61
<PAGE>
Section 12.11 Specific Performance. The parties hereto each acknowledge
--------------------
that, in view of the uniqueness of the subject matter hereof, the parties hereto
would not have an adequate remedy at law for money damages in the event that
this Agreement were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled at law or in equity.
Section 12.12 Remedies Cumulative. Except as otherwise provided in Article
--------------------
11, all rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party. Notwithstanding the foregoing, however, no
remedy under this Agreement or at law or in equity shall include, provide for or
permit the payment of multiple, exemplary, punitive or consequential damages or
any equitable equivalent thereof or substitute therefor, and the burden shall be
on the party claiming loss to show actual loss in the amount claimed.
[The remainder of this page has been intentionally left blank.]
62
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered, as an instrument under seal, in their names and on their
behalf by their respective officers, thereunto duly authorized, on and as of the
date first set forth above.
MERGECO:
-------
RCL ACQUISITIONS, L.L.C.
By:______________________________
Name:
Title:
BAIN:
----
BAIN/RCL, L.L.C.
By:______________________________
Name:
Title:
RAYTHEON:
--------
RAYTHEON COMPANY
By:______________________________
Name:
Title:
THE COMPANY
-----------
RAYTHEON COMMERCIAL
LAUNDRY LLC
By:______________________________
Name:
Title:
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Article 1..................................................................... 1
Section 1.1. Definitions............................................ 1
Section 1.2. Other Definitions...................................... 8
Article 2..................................................................... 11
Section 2.1. The Merger; Effect of Merger........................... 11
Section 2.2. Time and Place of Closing.............................. 11
Section 2.3. Effective Time......................................... 11
Section 2.4. Certificate of Formation and Operating Agreement
of Surviving Entity.................................... 11
Section 2.5. Managers and Officers of Surviving Entity.............. 11
Section 2.6. Effect on the Interests of the Company and MergeCo..... 12
Section 2.7. Consummation of the Merger............................. 12
Section 2.8. Cash Merger Consideration Adjustment................... 12
Section 2.9. Allocation of Merger Consideration..................... 14
Section 2.10. Intercompany Account; Distributions.................... 15
Section 2.11. Transfer of Assets..................................... 15
Article 3..................................................................... 16
Section 3.1. Incorporation; Authorization; Capitalization; Etc...... 16
Section 3.2. Financial Statements................................... 17
Section 3.3. Undisclosed Liabilities................................ 17
Section 3.4. Properties; Sufficiency of Assets...................... 18
Section 3.5. Intellectual Property.................................. 19
Section 3.6. Absence of Certain Changes............................. 20
Section 3.7. Litigation; Orders..................................... 21
Section 3.8. Licenses, Approvals, Other Authorizations, Consents,
Reports, Etc........................................... 21
Section 3.9. Labor Matters.......................................... 21
Section 3.10. Compliance with Laws................................... 21
Section 3.11. Employee Benefits...................................... 22
Section 3.12. Material Contracts..................................... 23
Section 3.13. Guaranty of Obligations of the Company................. 24
Section 3.14. Brokers, Finders, Etc.................................. 24
Section 3.15. No Implied Representation.............................. 24
Section 3.16. Environmental Matters.................................. 25
Section 3.17. Tax Matters............................................ 25
Section 3.18. Insurance.............................................. 26
Section 3.19. Locations.............................................. 27
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 3.20. Suppliers and Customers................................ 27
Section 3.21. Closing Date........................................... 27
Section 3.22. Schedules.............................................. 27
Article 4..................................................................... 27
Section 4.1. Incorporation; Authorization; Etc...................... 28
Section 4.2. Brokers, Finders, Etc.................................. 28
Section 4.3. Licenses, Approvals, Other Authorizations,
Consents, Reports, Etc................................. 28
Section 4.4. Investment Representation.............................. 29
Section 4.5. Financing.............................................. 29
Section 4.6. Solvency............................................... 29
Article 5..................................................................... 30
Section 5.1. Investigation of Business; Access to Properties,
Records and Employees.................................. 30
Section 5.2. Best Efforts; Obtaining Consents....................... 31
Section 5.3. Further Assurances..................................... 32
Section 5.4. Conduct of Business.................................... 32
Section 5.5. Public Announcements................................... 34
Section 5.6. Use of Raytheon Name................................... 34
Section 5.7. Notice of Material Developments:....................... 34
Section 5.8. Exclusivity............................................ 34
Section 5.9. Receivable Financing Facilities and Other Receivables
Obligations............................................ 35
Section 5.10. Warranty Obligation.................................... 38
Section 5.11. Noncompetition......................................... 38
Section 5.12. Nonsolicitation........................................ 39
Section 5.13. Regulation S-X......................................... 39
Section 5.14. Lines of Business...................................... 40
Article 6..................................................................... 40
Section 6.1. Retention of Employees................................. 40
Section 6.2. Investment Plans....................................... 41
Section 6.3. Retention Plans........................................ 41
Section 6.4. Access to Books and Records............................ 42
Article 7..................................................................... 43
Section 7.1. Tax Treatment of Purchase and Sale of Interest;
Cooperation............................................ 43
Section 7.2. Allocation of Transfer and Property Taxes.............. 43
Section 7.3. Refunds................................................ 44
Section 7.4. [Intentionally Omitted]................................ 44
Section 7.5. Tax Indemnity by Bain and Raytheon..................... 44
Section 7.6. Allocation of Certain Taxes............................ 45
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.7. Filing Responsibility.................................. 45
Section 7.8. Refunds and Carrybacks................................. 46
Section 7.9. Cooperation and Exchange of Information................ 46
Section 7.10. Tax Sharing Agreements................................. 48
Article 8..................................................................... 48
Section 8.1. Representations, Warranties and Covenants of Raytheon.. 48
Section 8.2. Filings; Consents; Waiting Periods..................... 48
Section 8.3. No Injunction.......................................... 48
Section 8.4. Securityholders Agreement and Other Agreements......... 48
Section 8.5. Proceedings............................................ 49
Section 8.6. Financing.............................................. 49
Section 8.7. Closing Documents...................................... 49
Section 8.8. Waiver................................................. 49
Article 9..................................................................... 50
Section 9.1. Representations, Warranties and Covenants of Bain...... 50
Section 9.2. Filings: Consents: Waiting Periods..................... 50
Section 9.3. No Injunction.......................................... 50
Section 9.4. Securityholders Agreement and Other Agreements......... 50
Section 9.5. Proceedings............................................ 51
Section 9.6. Closing Documents...................................... 51
Section 9.7. Waiver................................................. 51
Article 10.................................................................... 51
Section 10.1. Survival Periods....................................... 51
Section 10.2. Indemnification by Raytheon............................ 52
Section 10.3. Indemnification by the Surviving Entity................ 53
Section 10.4. Indemnification Procedures............................. 53
Section 10.5. Certain Limitations.................................... 54
Section 10.6. Indemnification by Raytheon for Excluded Liabilities... 56
Section 10.7. Other Indemnification Provisions....................... 56
Section 10.8. Arbitration Procedure.................................. 56
Section 10.9. Exclusive Remedy....................................... 58
Article 11.................................................................... 58
Section 11.1. Termination............................................ 58
Section 11.2. Procedure and Effect of Termination.................... 58
Article 12.................................................................... 59
Section 12.1. Counterparts........................................... 59
Section 12.2. Governing Law; Consent to Jurisdiction................. 59
Section 12.3. Entire Agreement....................................... 59
Section 12.4. Expenses............................................... 59
Section 12.5. Notices................................................ 59
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C> <C>
Section 12.6. Successors and Assigns................................. 60
Section 12.7. Headings: Definitions.................................. 60
Section 12.8. Amendment.............................................. 61
Section 12.9. Waiver; Effect of Waiver............................... 61
Section 12.10. Interpretation; Absence of Presumption................. 61
Section 12.11. Specific Performance................................... 62
Section 12.12. Remedies Cumulative.................................... 62
</TABLE>
iv
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EXHIBIT 2.2
AMENDMENT NO. 1
TO THE
AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT NO. 1 TO THE AGREEMENT AND PLAN OF MERGER (this
"Amendment"), dated as of May 2, 1998, amends that certain Agreement and Plan of
- ----------
Merger (the "Merger Agreement"), dated as of February 21, 1998, by and among
----------------
Bain/RCL, L.L.C., a Delaware limited liability company ("Bain"), RCL
----
Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"), Raytheon
-------
Commercial Laundry LLC, a Delaware limited liability company ("RCL"), and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which MergeCo
--------
will merge with and into RCL with RCL being the surviving entity (as such, the
"Surviving Entity"). Capitalized terms used herein but not defined herein shall
- -----------------
have the meanings assigned to such term in the Merger Agreement.
WHEREAS, the parties hereto wish to amend the Merger Agreement to (i)
reflect the assumption by the Surviving Entity of deferred compensation
obligations owed by Raytheon to Thomas F. L'Esperance pursuant to a certain
Voluntary-Deferment Bonus Plan, dated November 21, 1988, and the corresponding
Cash Merger Consideration adjustments related thereto, (ii) reflect the
assumption by Raytheon of incentive bonus obligations owed by RCL to various
employees pursuant to the "1998 Management Performance Incentive Plan", (iii)
provide for the merger of Raytheon Commercial Appliances Receivables Corporation
("RAYCAR") and Raytheon Commercial Appliances Finance Corporation ("RAYCAF"),
------ ------
respectively, with and into new limited liability companies, (iv) update the
exhibits and schedules to be attached to the Merger Agreement and (v) resolve
certain ambiguities in the language of the Merger Agreement
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the receipt and sufficiency of which are
hereby acknowledged, the parties do hereby agree as follows:
1. ASSUMPTION OF DEFERRED COMPENSATION AND INCENTIVE BONUS
-------------------------------------------------------
OBLIGATIONS.
- ------------
(a) The following paragraph in its entirety will be inserted as a new
Section 2.1(c):
"In addition, (i) prior to the Effective Time, Raytheon shall assume
all the obligations owed by the Company to various employees of the Company
pursuant to the "1998 Management Performance Incentive Plan", including but
not limited to the obligations owed by the Company pursuant to any and all
Letter Agreements (the "Letter Agreements"), dated as of September 30,
-----------------
1997, by and between the Company and any employees of the Company, in
connection with the "1998 Management Performance Incentive Plan" described
in paragraph 4 of such Letter Agreements, and (ii) from and after the
Effective Time, the Surviving Entity will assume the obligation of Raytheon
owed to Thomas F. L'Esperance, pursuant to that certain
<PAGE>
Voluntary-Deferment Bonus Plan, dated November 21, 1988, in the amount of
$340,849 ("Deferred Compensation Obligation"); provided, that the
--------------------------------
Surviving Entity shall not assume any other liabilities of Raytheon,
including but not limited to any other liabilities under the Voluntary-
Deferment Bonus Plan."
(b) The following definitions are hereby deleted and replaced in their
entirety with the following:
"Cash Merger Consideration" means $339,159,151, representing the
-------------------------
aggregate cash consideration to be paid to Raytheon pursuant to Section
2.6, before giving effect to any adjustment pursuant to Section 2.8."
"Indebtedness" means, as of any date of determination, without
------------
duplication, (i) any indebtedness for borrowed money or issued in
substitution for or exchange of indebtedness for borrowed money, (ii) any
indebtedness evidenced by any note, bond, debenture or other debt security,
(iii) any indebtedness for the deferred purchase price of property or
services with respect to which a Person is liable, contingently or
otherwise, as obligor or otherwise (other than trade payables and other
current liabilities incurred in the ordinary course of business which are
not more than six months past due), (iv) any commitment by which a Person
assures a creditor against loss (including, without limitation, contingent
reimbursement obligations with respect to letters of credit), (v) any
indebtedness guaranteed in any manner by a Person (including, without
limitation, guarantees in the form of an agreement to repurchase or
reimburse), (vi) any obligations under capitalized leases with respect to
which a Person is liable, contingently or otherwise, as obligor, guarantor
or otherwise, or with respect to which obligations a Person assures a
creditor against loss, (vii) cash or book overdrafts, including without
limitation, any held or outstanding checks as of the Closing Date (except
to the extent reflected in Net Working Capital), (viii) any amounts owed
under any litigation settlements (except to the extent reflected in Net
Working Capital), (ix) any dividends or distributions to unitholders
payable as of the Closing Date, (x) any indebtedness secured by a Lien on a
Person's assets and (xi) any unsatisfied obligation for "with drawal
liability" to a "multiemployer plan" as such terms are defined under ERISA;
provided, however, in no event will Indebtedness include indebtedness,
-------- -------
commitments and other obligations in respect of the Receivables Financing
Facilities, Other Receivables Obligations or the Deferred Compensation
Obligation.
2. RAYCAR AND RAYCAF MERGERS. The following paragraphs in their
-------------------------
entirety will be inserted as new Sections 5.9(l) and (m):
(l) Prior to the Closing Date, Raytheon and the Company hereby agree
to (i) form two new subsidiaries in the form of limited liability companies
(the "New LLCs") and (ii) cause RAYCAF and RAYCAR, respectively, to merge with
--------
and into one of the New LLCs ( the "RAYCAF and RAYCAR Mergers"); provided,
------------------------- --------
that the RAYCAF and RAYCAR Mergers must occur on or before the day prior to
the Closing Date. For the purposes of this Agreement, any references to
RAYCAF and RAYCAR hereunder shall mean RAYCAF and RAYCAR and any successor
entities thereto.
2
<PAGE>
(m) In the event that (i) the Merger does not occur on the Closing
Date, (ii) the RAYCAF and RAYCAR Mergers have occurred and (iii) this
Agreement is terminated pursuant Article 11 hereof, Bain hereby agrees to
indemnify and hold harmless the Company for all Covered Liabilities (as
defined in Section 10.2 hereof) related to the unwinding of the RAYCAF and
RAYCAR Mergers, pursuant to the provisions of Article 10 hereof.
3. REVISED EXHIBITS. Exhibits 2.4(b), 8.4(a) and 8.4(b) are hereby
----------------
deleted in their entirety and replaced with the Exhibits on Exhibit A attached
---------
hereto.
4. DEFINITIONS. The following definitions are hereby deleted and
-----------
replaced in their entirety with the following:
"Balance Sheet" means the audited balance sheet of the Commercial Laundry
-------------
Business of Raytheon as of December 31, 1997.
"Excluded Liabilities" means any and all liabilities associated with or
--------------------
arising out of Environmental Law with respect to the Company's formerly
owned facilities in Omro, Wisconsin, Searcy, Arkansas and Wautoma,
Wisconsin, except for those liabilities associated with or arising out of
Environmental Law retained by the Tenant under the Omro Lease pursuant to
Article 7 of the Omro Lease.
"Omro Lease" means the lease agreement, dated as of February 20, 1998,
----------
between Raytheon Holding LLC, as landlord, and the Company, as tenant, for
certain Leased Real Property located in Omro, Wisconsin, as described
therein, as amended.
5. MISCELLANEOUS.
-------------
(a) All references in Section 10.2 of the Merger Agreement to "Bain"
are hereby deleted and replaced in their entirety with "the Surviving Entity".
(b) Article 12 of the Merger Agreement shall govern this
Amendment.
6. EFFECT OF THIS AMENDMENT. The Merger Agreement, as amended
-------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to
the Agreement and Plan of Merger to be executed as of the day and year first
above written.
BAIN/RCL, L.L.C.
By:_________________________________
Name:_______________________________
Title:______________________________
RCL ACQUISITIONS, L.L.C.
By:_________________________________
Name:_______________________________
Title:______________________________
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_________________________________
Name:_______________________________
Title:______________________________
RAYTHEON COMPANY
By:_________________________________
Name:_______________________________
Title:______________________________
4
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF FORMATION
OF
ALLIANCE LAUNDRY SYSTEMS LLC
The undersigned, being duly authorized to execute and file this
Certificate of Formation for the purpose of forming a limited liability company
pursuant to the Delaware Limited Liability Company Act, 6 Del. C. (S)(S) 18-101,
--- -
et seq., does hereby certify as follows:
- -- ---
FIRST
The name of the limited liability company is Alliance Laundry Systems
LLC. (the "Company").
SECOND
The Company's registered office in the State of Delaware is located at
9 Loockerman Street, in the City of Dover, County of Kent, 19901. The
registered agent of the Company for service of process at such address is
National Registered Agents, Inc.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Formation as of the 25th day of March, 1998.
_____________________________
Thaddine G. Gomez,
an authorized person
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ALLIANCE LAUNDRY SYSTEMS LLC
----------------------------
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this
"Agreement"), dated as of ________, 1998, is adopted, executed and agreed to,
- ----------
for good and valuable consideration, by the sole Member. Pursuant to Section
9.1 of that certain Limited Liability Company Agreement of Alliance Laundry
Systems LLC (the "LLC"), dated March 26, 1998 (the "Original Agreement"), the
--- ------------------
parties thereto desire to amend and restate the Original Agreement. Unless
otherwise defined herein, capitalized terms used herein are defined in Section
1.7 hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby amend and restate the Original Agreement as follows:
ARTICLE I
GENERAL PROVISIONS; CAPITAL CONTRIBUTIONS; DEFINITIONS
Section 1.1 Formation. The LLC was formed on March 26, 1998
---------
pursuant to and in accordance with the provisions of the Delaware Limited
Liability Company Act, 6 Del. C. (S)18-101, et seq., as amended from time to
-- ---
time (the "Act"), and the provisions of this Agreement.
---
Section 1.2 Limited Liability Company Agreement . The Member
------------------------------------
hereby executes this Agreement for the purpose of establishing the affairs of
the LLC and the conduct of its business in accordance with the provisions of the
Act. The Member hereby agrees that during the term of the LLC set forth in
Section 1.8, the rights and obligations of the Member with respect to the LLC
will be determined in accordance with the terms and conditions of this Agreement
and, except where the Act provides that such rights and obligations specified in
the Act shall apply "unless otherwise provided in a limited liability company
agreement" or words of similar effect, and such rights and obligations are set
forth in this Agreement, the Act; provided that, notwithstanding the foregoing,
--------
Section 18-210 of the Act shall not apply or be incorporated into this
Agreement.
Section 1.3 Name. The name of the LLC will be "Alliance Laundry
----
Systems LLC," or such other name or names as the Board may from time to time
designate.
Section 1.4 Purpose. The LLC's purpose shall be to carry on any
-------
activities which may be lawfully be carried on by a limited liability company
organized pursuant to the Act.
<PAGE>
Section 1.5 Registered Office; Registered Agent; Place of Business.
------------------------------------------------------
The registered office of the LLC required by the Act to be maintained in the
State of Delaware shall be the office of the initial registered agent named in
the Certificate or such other office (which need not be a place of business of
the LLC) as the Board may designate from time to time in the manner provided by
law. The registered agent of the LLC in the State of Delaware shall be the
initial registered agent named in the Certificate or such other person or
persons as the Board may designate from time to time in the manner provided by
law. The LLC will maintain an office and principal place of business at such
place or places inside or outside the State of Delaware as the Board may
designate from time to time.
Section 1.6 Capital Contributions.
---------------------
(a) The Member shall, promptly following the execution of this
Agreement, contribute to the capital of the LLC an amount as set forth on
Schedule I. The Board shall amend Schedule I from time to time to reflect
---------- ----------
any future capital contributions made by any Participant. Persons
hereafter admitted as Members of the LLC shall make such contributions of
cash (or promissory obligations), property or services to the LLC as shall
be determined by the Board and the Member making the contribution in their
sole discretion at the time of each such admission.
(b) No Participant shall have any responsibility to restore any
negative balance in his, her or its Capital Account or to contribute to or
in respect of liabilities or obligations of the LLC, whether arising in
tort, contract or otherwise, or return distributions made by the LLC except
as required by the Act or other applicable law. The failure of the LLC to
observe any formalities or requirements relating to the exercise of its
powers or management of its business or affairs under this Agreement or the
Act shall not be grounds for imposing personal liability on the
Participants for liabilities of the LLC.
(c) No interest shall be paid by the LLC on capital contributions
or on balances in Capital Accounts.
(d) A Participant shall not be entitled to withdraw any part of
its Capital Account or to receive any distributions from the LLC except as
provided in Articles III and V; nor shall a Participant be entitled to make
any capital contribution to the LLC other than as expressly provided
herein. Any Participant may, with the approval of the Board, make loans to
the LLC, and any loan by a Participant to the LLC shall not be considered
to be a capital contribution for any purpose and shall not result in an
increase in the amount of the Capital Account of such Participant.
Section 1.7 Definitions. For purposes of this Agreement:
-----------
"Assignee" means a person or entity to whom an LLC interest has been
--------
transferred in a Transfer described in Section 4.4, unless and until such person
or entity becomes a Member with respect to such LLC interest.
-2-
<PAGE>
"Board" shall have the meaning assigned to it in Section 4.2 hereof.
-----
"Book Value" means, with respect to any LLC property, the LLC's
----------
adjusted basis for federal income tax purposes, except that the initial Book
Value of any property contributed to the LLC shall be the value of such property
on the date of such contribution, as agreed by the Board and the Member
contributing the property, and the Book Value of any LLC property shall be
adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in
connection with a distribution of such property) or (f) (in connection with a
revaluation of Capital Accounts).
"Capital Account" has the meaning set forth in Section 2.1.
---------------
"Code" means the Internal Revenue Code of 1986, as amended from time
----
to time, and the regulations promulgated thereunder.
"Event of Withdrawal" means the death, expulsion or dissolution of a
-------------------
Member.
"Losses" for any period means all items of LLC loss, deduction and
------
expense for such period determined according to Section 2.2.
"Majority in Interest" means the Member(s) holding a majority of the
--------------------
Percentage Interests of all Members.
"Member" means Alliance Laundry Holdings LLC and any Person admitted
------
to the Company as a Substituted Member or Additional Member; but only so long as
such Person is shown on the Company's books and records as the owner of one or
more Units.
"Participant" means a Member, a Terminated Member or an Assignee.
-----------
"Percentage Interest" means, in respect of each Participant, such
-------------------
Participant's interest in the income, gains, losses, deductions and expenses of
the LLC as set forth on Schedule I.
----------
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Profits" for any period means all items of LLC income and gain for
-------
such period determined according to Section 2.2.
"Securityholders Agreement" shall mean that certain Securityholders
-------------------------
Agreement, dated as of the date hereof, by and among Alliance Laundry Holdings
LLC and each of its Members, as amended or modified from time to time.
"Terminated Member" means a person who has ceased to be a Member
-----------------
pursuant to Section 4.7.
-3-
<PAGE>
Section 1.8 Term. The LLC shall continue until dissolved and
----
terminated in accordance with Article V of this Agreement.
Section 1.9 No State-Law Partnership. The Participant(s) intend
------------------------
that the LLC not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Participant be a partner or joint
venturer of any other Participant, for any purposes other than federal and, if
applicable, state tax purposes, and neither this Agreement nor any other
document entered into by the LLC or any Participant shall be construed to
suggest otherwise. The Participant(s) intend that the LLC shall be treated as a
partnership for federal and, if applicable, state income tax purposes, and that
each Participant and the LLC shall file all tax returns and shall otherwise take
all tax and financial reporting positions in a manner consistent with such
treatment.
ARTICLE II
CAPITAL ACCOUNTS
Section 2.1 Capital Accounts. A "Capital Account" will be
---------------- ---------------
established for each Participant on the books of the LLC and will be adjusted as
follows:
(a) such Participant's contributions to the capital of the LLC
will be credited to his, her or its Capital Account when received by the
LLC;
(b) at the end of each fiscal year of the LLC and upon
dissolution and winding up of the LLC pursuant to Article V, Profits for
such period allocated to such Participant pursuant to Section 3.2 shall be
credited and Losses for such period allocated to such Participant pursuant
to Section 3.2 shall be debited, as the case may be, to such Participant's
Capital Account;
(c) any amounts distributed to such Participant will be debited
against his, her or its Capital Account; and
(d) such Participant's Capital Account will otherwise be adjusted
in accordance with Treas. Reg. (S)1. 704-1(b)(2)(iv).
Section 2.2 Computation of Amounts. For purposes of computing the
----------------------
amount of any item of income, gain, loss, deduction or expense to be reflected
in Capital Accounts, the determination, recognition and classification of each
such item shall be the same as its deter mination, recognition and
classification for federal income tax purposes; provided that:
--------
(a) any income that is exempt from Federal income tax shall be
added to such taxable income or losses and any expenditures of the LLC
described in Section 705(a)(2)(B) of the Code or treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury Regulation Section 1.704-
1(b)(2)(iv)(i), shall be subtracted from such taxable income or losses;
-4-
<PAGE>
(b) if the Book Value of any LLC property is adjusted pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(e) (in connection with a
distribution of such property) or (f) (in connection with a revaluation of
Capital Accounts), the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such property; and
(c) if property that is reflected on the books of the LLC has a
Book Value that differs from the adjusted tax basis of such property,
depreciation, amortization and gain or loss with respect to such property
shall be determined by reference to such Book Value.
Section 2.3 Distribution in Kind. If securities are to be
--------------------
distributed in kind to the Participants pursuant to this Agreement, (i) such
securities shall first be written up or down pursuant to Section 2.2(b) to their
value (as determined pursuant to Article VI as of the date of such
distribution), (ii) the Capital Accounts of the Participant(s) shall be adjusted
immediately prior to the distribution as if such securities were sold at their
value (as so determined) and (iii) the value of such securities (as so
determined) received by each Participant shall be debited against his, her or
its respective Capital Account at the time of distribution.
ARTICLE III
DISTRIBUTIONS AND ALLOCATIONS
Section 3.1 Distributions. Distributions of cash or other assets
-------------
of the LLC shall be made at such times and in such amounts as the Board in its
sole discretion may determine, including without limitation, distributions to
the Member in amounts equal to an amount the Board may determine in good faith
from time to time, to represent the sum of the maximum marginal federal, state
and local income tax rates applicable to the Member or its partners, unitholders
or stockholders, if applicable. Unless the Board determines otherwise,
distributions shall be made to Participant's pro rata based on the Percentage
--------
Interests held by each Participant. Notwithstanding any provision to the
contrary contained in this Agreement, the LLC shall not make a distribution to
any Participant on account of his, her or its interest in the LLC if such
distribution would violate Section 18-607 of the Act or other applicable law.
Section 3.2 Allocation of Profits and Losses. Except as may be
--------------------------------
required by the Code, each item of income, gain, loss, deduction or expense to
the LLC shall be allocated among the Participant(s) in proportion to the
Percentage Interests held by each Participant.
ARTICLE IV
MANAGEMENT AND MEMBER RIGHTS
Section 4.1 Authority of the Board.
----------------------
-5-
<PAGE>
(a) The Board (as defined below) shall have the sole right to
manage the business of the LLC and shall have all powers and rights
necessary, appropriate or advisable to effectuate and carry out the
purposes and business of the LLC, and, no Member, unless such Member is
also on the Board, shall have any authority to act for or bind the LLC but
shall have only the right to vote on or approve the actions herein
specified to be voted on or approved by the Member.
(b) When the taking of such action has been authorized by the
Board, any officer of the LLC or any other person specifically authorized
by the Board, may execute any contract or other agreement or document on
behalf of the LLC and may execute and file on behalf of the LLC with the
Secretary of State of the State of Delaware any certificates of amendment
to the LLC's certificate of formation, one or more restated certificates of
formation and certificates of merger or consolidation and, upon the
dissolution and completion of winding up of the LLC, at any time when there
are no Members, or as otherwise provided in the Act, a certificate of
cancellation canceling the LLC's certificate of formation.
(c) All decisions regarding the management and affairs of the LLC
shall be made by the Board.
Section 4.2 Composition of the Board; Actions; Meetings.
-------------------------------------------
(a) The Board of Managers of the LLC (the "Board") shall consist
-----
of five individuals, which number may be adjusted by the Member, and
subject to the Securityholders Agreement, the Member shall be entitled to
appoint all five individuals to the Board. Each member of the Board is
referred to herein as a "Representative". Subject to the immediately
--------------
preceding sentences and the Securityholders Agreement, the Member may
remove (with or without cause) and, at its option and at any time
thereafter, replace, one or more of the Representatives at any time by
giving written notice pursuant to Section 9.4 of such removal and the name
of the replacement Representative(s) to the Board. A "Chairman" of the
--------
Board shall be elected by the Board for one or more one-year terms. The
initial Board shall consist of those persons set forth on Schedule II
-----------
attached hereto, each such person will be decreed duly appointed to the
Board as of the date hereof. In the event that any Representative
designated hereunder by the Member ceases to serve as a member of the
Board, the resulting vacancy on the Board shall be filled by a
Representative appointed by the Member as provided by this Section 4.2(a).
(b) The Board may act (i) through meetings and written consents
pursuant to Section 4.2(d) and (ii) through committees or through any
Person to whom authority and duties have been delegated pursuant to Section
4.2(g).
(c) A Representative may vote at a meeting of the Board or any
committee thereof either in person or by proxy executed in writing by such
Representative. A telegram, telex, cablegram or similar transmission by the
Representative, or a photographic, photostatic, facsimile or similar
reproduction of a writing executed by the
-6-
<PAGE>
Representative shall (if stated thereon) be treated as a proxy executed in
writing for purposes of this Section 4.2(c). Proxies for use at any meeting
of the Board or any committee thereof or in connection with the taking of
any action by written consent shall be filed with the Board, before or at
the time of the meeting or execution of the written consent as the case may
be. All proxies shall be received and taken charge of and all ballots shall
be received and canvassed by the majority of the Board who shall decide all
questions concerning the qualification of voters, the validity of the
proxies and the acceptance or rejection of votes. No proxy shall be valid
after eleven months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled
with an interest. Should a proxy designate two or more Persons to act as
proxies, unless that instrument shall provide to the contrary, a majority
of such Persons present at any meeting at which their powers thereunder are
to be exercised shall have and may exercise all the powers of voting or
giving consents thereby conferred, or if only one be present, then such
powers may be exercised by that one; or, if an even number attend and a
majority do not agree on any particular issue, the LLC shall not be
required to recognize such proxy with respect to such issue if such proxy
does not specify how the votes that are the subject of such proxy are to be
voted with respect to such issue.
(d) Meetings of the Board and any committee thereof shall be held
at the principal office of the LLC or at such other place as may be
determined by the Board or such committee. Regular meetings of the Board
shall be held on such dates and at such times as shall be determined by the
Board. Special meetings of the Board or any committee may be called by any
one Representative (or, in the case of a special meeting of any committee
of the Board, by any member thereof) on at least twenty-four hours' prior
written notice to the other Representatives, which notice shall state the
purpose or purposes for which such meeting is being called. The actions
taken by the Board or any committee at any meeting (as opposed to by
written consent), however called and noticed, shall be as valid as though
taken at a meeting duly held after regular call and notice if (but not
until), either before, at or after the meeting, the Representative as to
whom it was improperly held signs a written waiver of notice or a consent
to the holding of such meeting or an approval of the minutes thereof. The
actions by the Board or any committee thereof may be taken by vote of the
Board or any committee at a meeting of the Representatives thereof or by
unanimous written consent (without a meeting and without a vote). A
meeting of the Board or any committee may be held by a conference telephone
or similar communications equipment by means of which all individuals
participating in the meeting can be heard.
(e) Each Representative shall have one vote on all matters
submitted to the Board or any committee thereof (whether the consideration
of such matter is taken at a meeting, by written consent or otherwise).
The affirmative vote (whether by proxy or otherwise) of members of the
Board holding a majority of the votes of all members of the Board shall be
the act of the Board. Except as otherwise provided by the Board when
establishing any committee, the affirmative vote (whether by proxy or
otherwise) of members of such committee holding a majority of the votes of
all members of such committee shall be the act of such committee.
-7-
<PAGE>
(f) The LLC shall pay the reasonable out-of-pocket expenses
incurred by each Representative in connection with attending the meetings
of the Board and any committee thereof (unless such expenses shall have
been paid or are required to be paid by any other Person). Except as
otherwise provided in the immediately preceding sentence or elsewhere in
this Agreement, the Representatives shall not be compensated for their
services as members of the Board.
(g) The Board may, from time to time, delegate to one of more
Persons (including any Representative or officer of the LLC and including
through the creation and establishment of one or more committees) such
authority and duties as the Board may deem advisable. In addition, the
Board may assign titles (including, without limitation, managing director,
chairman, chief executive officer, president, principal, vice president,
secretary, assistant secretary, treasurer, or assistant treasurer) and
delegate certain authority and duties to such persons. Any number of
titles may be held by the same Representative or other individual. The
salaries or other compensation, if any, of the officers and agents of the
LLC shall be fixed from time to time by the Board. Any delegation pursuant
to this Section 4.2(g) may be revoked at any time by the Board in its sole
discretion.
(h) Except as otherwise provided herein or in an agreement
entered into by such Person and the LLC, no Representative or any of such
Representative's Affiliates shall be liable to the LLC or to the Member for
any act or omission performed or omitted by such Representative in its
capacity as a member of the Board pursuant to authority granted to such
Person by this Agreement; provided that, except as otherwise provided
-------- ----
herein, such limitation of liability shall not apply to the extent the act
or omission was attributable to such Person's gross negligence, willful
misconduct or knowing violation of law. The Board may exercise any of the
powers granted to it by this Agreement and perform any of the duties
imposed upon it hereunder either directly or by or through its agents, and
no Representative or any of such Representative's Affiliates shall be
responsible for any misconduct or negligence on the part of any such agent
appointed by the Board (so long as such agent was selected in good faith
and with reasonable care). The Board shall be entitled to rely upon the
advice of legal counsel, independent public accountants and other experts,
including financial advisors, and any act of or failure to act by the Board
in good faith reliance on such advice shall in no event subject the Board
or any Representative thereof to liability to the LLC or the Member.
Section 4.3 Indemnification. Except as limited by law and subject
---------------
to the provisions of this Section 4.3, each person and entity shall be entitled
to be indemnified and held harmless on an as incurred basis by the LLC (but only
after first making a claim for indemnification available from any other source
and only to the extent indemnification is not provided by that source) to the
fullest extent permitted under the Act (including indemnification for
negligence, gross negligence and breach of fiduciary duty to the extent so
authorized) as amended from time to time (but, in the case of any such
amendment, only to the extent that such amendment permits the LLC to provide
broader indemnification rights than such law permitted the LLC to provide prior
to such amendment) against all losses, liabilities and expenses, including
attorneys' fees and expenses, arising from claims, actions and proceedings in
which such person or entity may be involved, as a
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<PAGE>
party or otherwise, by reason of his being or having been on the Board, a
Participant or officer of the LLC, or by reason of his serving at the request of
the LLC as a director, officer, manager, member, partner, employee or agent of
another limited liability company or of a corporation, partnership, joint
venture, trust or other enterprise, including a service with respect to an
employee benefit plan whether or not such person or entity continues to be such
at the time any such loss, liability or expense is paid or incurred. The rights
of indemnification provided in this Section 4.2 will be in addition to any
rights to which such person may otherwise be entitled by contract or as a matter
of law and shall extend to his successors and assigns. In particular, and
without limitation of the foregoing, such person or entity shall be entitled to
indemnification by the LLC against expenses (as incurred), including attorneys'
fees and expenses, incurred by such person or entity upon the delivery by such
person or entity to the LLC of a written undertaking (reasonably acceptable to
the Board). The LLC may, to the extent authorized from time to time by the
Board, grant rights to indemnification and to advancement of expenses to any
employee or agent of the LLC to the fullest extent of the provisions of this
Section 4.3 with respect to the indemnification and advancement of expenses of
the Board, Participants and officers of the LLC.
Section 4.4 Transfer of LLC Interest.
------------------------
(a) No Participant shall sell, assign, transfer or otherwise
dispose of, whether voluntarily or involuntarily or by operation of law (a
"Transfer"), all or any portion of his, her or its interest in the LLC
--------
without the prior written consent of the Board, which consent may be given
or withheld in its sole discretion. No Participant shall pledge or
otherwise encumber all or any portion of his, her or its interest in the
LLC, without the prior written consent of the Board, which consent may be
given or withheld in its sole and absolute discretion.
(b) Notwithstanding any other provision of this Agreement, any
Transfer by the Participants in contravention of any of the provisions of
this Section 4.4 shall be void and ineffective, and shall not bind, or be
recognized by, the LLC.
(c) If and to the extent any Transfer of an interest in the LLC
is permitted hereunder, this Agreement (including the Exhibits hereto)
shall be amended by the Board to reflect the Transfer of the interest in
the LLC to the transferee, to admit the transferee as a Member and to
reflect the elimination of the transferring Participant (or the reduction
of such Transferring Participant's interest in the LLC) and (if and to the
extent then required by the Act) a certificate of amendment to the
certificate reflecting such admission and elimination (or reduction) shall
be filed in accordance with the Act. The effectiveness of the Transfer of
an interest in the LLC permitted hereunder and the admission of any
substitute Member pursuant to this Section 4.4 shall be deemed effective
immediately prior to the Transfer of an interest in the LLC to such
Participant or if later on the first date that the Board receives evidence
of such Transfer, including the terms thereof. If the transferring
Participant has transferred all or any of its interest in the LLC pursuant
to this Section 4.4, then, immediately following such transfer or if later
on the first date that the Board receives evidence of such Transfer,
including the terms thereof, the transferring Participant shall cease to be
a Participant with respect to such interest.
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<PAGE>
(d) Any person or entity who acquires in any manner whatsoever
any interest in the LLC, irrespective of whether such person or entity has
accepted and adopted in writing the terms and provisions of this Agreement,
shall be deemed by the acceptance of the benefits of the acquisition
thereof to have (i) made all of the capital contributions made by, (ii)
received all of the distributions received by, and (iii) agreed to be
subject to and bound by all the terms and conditions of this Agreement
that, any predecessor in such interest in the LLC made, received and was
subject to or bound.
Section 4.5 Members Voting Rights; Meetings.
-------------------------------
(a) No Member, unless such Member is also on the Board, shall
have any right, power or duty, including the right to approve or vote on
any matter, except as expressly required by the Act or other applicable law
or as expressly provided for hereunder.
(b) Unless a greater vote is required by the Act or as expressly
provided for hereunder, the affirmative vote of a Majority in Interest of
the Member(s) entitled to vote shall be required to approve any proposed
action.
(c) Meetings of the Member(s) for the transaction of such
business as may properly come before such Member(s) shall be held at such
place, on such date and at such time as the Board shall determine. Special
meetings of Member(s) for any proper purpose or purposes may be called at
any time by the Board or the Member(s) holding a Majority in Interest. The
LLC shall deliver oral or written notice (written notice may be delivered
by mail) stating the date, time, place and purposes of any meeting to each
Member entitled to vote at the meeting. Such notice shall be given not
less than four (4) and no more than sixty (60) days before the date of the
meeting.
(d) Any action required or permitted to be taken at an annual or
special meeting of the Member(s) may be taken without a meeting, without
prior notice, and without a vote, provided that written consents, setting
forth all proposed actions to be taken at such meeting, are signed by the
Member(s) holding at least the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all
Member(s) entitled to vote on such action were present and voted. Every
written consent shall bear the date and signature of each Member who signs
such consent. Prompt notice of the taking of action without a meeting by
less than unanimous written consent shall be given to all Members who have
not consented in writing to such action.
Section 4.6 Additional Members. The Board shall have the sole
------------------
right to admit additional Members upon such terms and conditions, at such time
or times as such Members shall in their sole discretion determine. In
connection with any such admission, the Board shall amend Schedule I to reflect
----------
the name, address and capital contribution of the additional Member and the new
Percentage Interests of all Participants.
Section 4.7 Termination of a Member. A person or entity will no
-----------------------
longer be a Member for purposes of this Agreement upon an Event of Withdrawal.
The Terminated Member
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<PAGE>
shall only be entitled to continue to receive allocation of Profits and Losses
and distributions of the LLC, including distributions pursuant to Article V
hereof, as and when paid by the LLC, to the same extent such Terminated Member
was entitled to such distributions as a Member. Except as provided in Section
9.2, such Terminated Member will not be entitled to participate in any LLC
decision or determination, and his, her or its successors and assigns will
acquire only his, her or its right to receive allocation of Profits and Losses
and to share in LLC distributions.
Section 4.8 Outside Businesses. Any Participant may engage in or
------------------
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the LLC,
and the LLC, the Participants shall have no rights by virtue of this Agreement
in and to such independent ventures or the income or gains derived therefrom,
and the pursuit of any such venture, even if competitive with the business of
the LLC, shall not be deemed wrongful or improper. No Participant shall be
obligated to present any particular investment opportunity to the LLC even if
such opportunity is of a character that, if presented to the LLC, could be taken
by the LLC, and any Participant shall have the right to take for his, her or its
own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment opportunity.
ARTICLE V
DURATION
Section 5.1 Duration. Subject to the provisions of Section 5.2 of
--------
this Agreement, the LLC shall be dissolved and its affairs wound up and
terminated upon the first to occur of the following:
(a) The determination of a Majority in Interest of the
Members;
(b) The occurrence of an Event of Withdrawal with respect
to the Member; or
(c) The entry of a decree of judicial dissolution under
Section 18-802 of the Act.
Except as otherwise set forth in this Article V, the Member(s) intend for the
LLC to have perpetual existence.
Section 5.2 Continuation of the LLC. Notwithstanding the
-----------------------
provisions of Section 5.1(c) hereof, the occurrence of an Event of Withdrawal
shall not dissolve the LLC if within ninety (90) days after the occurrence of
such Event of Withdrawal, the business of the LLC is continued by the agreement
of remaining Member(s) holding not less than a majority in interest (as defined
in Revenue Procedure 94.46 or any successor thereto) of the remaining Member(s).
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<PAGE>
Section 5.3 Winding Up.
----------
Upon dissolution of the LLC, the LLC shall be liquidated in an orderly
manner. The Board shall be the liquidator pursuant to this Agreement and shall
proceed diligently to wind up the affairs of the LLC and make final
distributions as provided herein and in the Act. The costs of liquidation shall
be borne as a LLC expense. The steps to be accomplished by the liquidator are
as follows:
(a) first, the liquidator shall satisfy all of the LLC's debts
and liabilities to creditors other than Participants (whether by payment or
the reasonable provision for payment thereof);
(b) second, the liquidator shall satisfy all of the LLC's debts
and liabilities to Participants (whether by payment or the reasonable
provision for payment thereof); and
(c) third, all remaining assets shall be distributed to the
Participants in accordance with Section 3.1.
Section 5.4 Termination. The LLC shall terminate when all of the
-----------
assets of the LLC, after payment of or due provision for all debts, liabilities
and obligations of the LLC, shall have been distributed to the Participants in
the manner provided for in this Article V, and the certificate of formation of
the LLC shall have been canceled in the manner required by the Act.
ARTICLE VI
VALUATION
6.1 Determination. For purposes of this Agreement, the value of
-------------
any property contributed by or distributed to any Participant shall be valued as
determined by the Board.
ARTICLE VII
CERTIFICATION OF MEMBERSHIP INTERESTS
Section 7.1 Membership Interests Every holder of a membership
--------------------
interest in the LLC shall be entitled to a certificate, signed by, or in the
name of the corporation by the Manager, or any officer of the LLC provided with
such authority pursuant to Section 4.1(b) above, certifying such Member's
percentage interest in the LLC. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the LLC or its employee
or (2) by a registrar, other than the LLC or its employee, the signature of any
such Manager or officer may be facsimile. In case any Manager or officer who
has signed, or whose facsimile signature has been used, on any such certificate
shall cease to be such Manager or officer of the LLC whether because of death,
resignation or otherwise before such certificate has been delivered by the LLC,
such certificate may nevertheless be issued and delivered as though the person
or persons who signed such certificate or
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<PAGE>
whose facsimile signature has been used thereon had not ceased to be such Manger
or officer of the LLC. All certificates for membership interests shall be
consecutively numbered or otherwise identified. The name of the person to whom
the membership interests thereby are issued, with the Percentage Interest and
date of issue, shall be entered on the books of the LLC. Membership interests of
the LLC shall only be transferred on the books of the LLC by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the LLC of the certificate for such membership interests endorsed
by the appropriate person or persons, with such evidence of the authenticity of
such endorsement, transfer, authorization, and other matters at the LLC may
reasonably require. In that event, it shall be the duty of the LLC to issue a
new certificate to the person entitle thereto, cancel the old certificate, and
record the transaction on its books. The Manager may appoint a bank or trust
company organized under the laws of the United States or any state thereof to
act as its transfer agent or registrar, or both in connection with the transfer
of any class or series of membership interests of the LLC.
Section 7.2 Lost Certificates. The Manager may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the LLC alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen, or destroyed. When authorizing such issue
of a new certificate or certificates, the Manager may, in its sole discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen, or destroyed certificate or certificates, or his legal
representative, to give the LLC a bond sufficient to indemnify the LLC against
any claim that may be made against the LLC on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
ARTICLE VIII
BOOKS OF ACCOUNT; MEETINGS
Section 8.1 Books. The Board will maintain on behalf of the LLC
-----
complete and accurate books of account of the LLC's affairs at the LLC's
principal office, which books will be open to inspection by any Member (or his
authorized representative) at any time during ordinary business hours and shall
be maintained in accordance with the Act.
Section 8.2 Fiscal Year. The fiscal year of the LLC shall end on
-----------
December 31 of each year.
Section 8.3 Tax Allocation and Reports.
--------------------------
(a) The income, gains, losses, deductions and credits of the LLC
will be allocated, for federal, state and local income tax purposes, among
the Participants in accordance with the allocation of such income, gains,
losses, deductions and credits among the Participants for computing their
Capital Accounts, except as otherwise provided in the Code or other
applicable law.
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<PAGE>
(b) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, deduction and expense with
respect to any property contributed to the capital of the LLC shall, solely
for tax purposes, be allocated among the Participants so as to take account
of any variation between the adjusted basis of such property to the LLC for
federal income tax purposes and its fair market value at the time of
contribution.
(c) Within 75 days after the end of each fiscal year, the Tax
Matters Partner (as defined below) shall cause the LLC to furnish each
Participant with a copy of the LLC's tax return and form K-1 for such
fiscal year.
(d) The LLC hereby designates the Board to act as the "Tax
Matters Partner" (as defined in Section 6231(a)(7) of the Code) in
accordance with Sections 6221 through 6233 of the Code.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Amendments. This Agreement may be amended or modified
----------
and any provision hereof may be waived only by the consent of a Majority in
Interest of the Members; provided, however, that any amendment or modification
--------
reducing disproportionately a Participant's Percentage Interest or other
interest in the profits or losses or in distributions or increasing such
person's or entity's capital contribution shall be effective only with that
person's or entity's consent.
Section 9.2 Successors. Except as otherwise provided herein, this
----------
Agreement will inure to the benefit of and be binding upon the Participants and
their respective legal representatives, heirs, successors and permitted assigns.
Section 9.3 Governing Law; Severability The Agreement will be
---------------------------
construed in accordance with the laws of the State of Delaware, and, to the
maximum extent possible, in such manner as to comply with an the terms and
conditions of the Act. If it is determined by a court of competent jurisdiction
that any provision of this Agreement is invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
Section 9.4 Notices. All notices, demands and other communications
-------
to be given and delivered under or by reason of provisions under this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered, mailed by first class mail (postage prepaid and return receipt
requested), sent by telecopy or sent by reputable overnight courier service
(charges prepaid) to the addresses or telecopy numbers set forth in Schedule I
----------
hereto or to such other addresses or telecopy numbers as have been supplied in
writing to the LLC.
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<PAGE>
Section 9.5 Complete Agreement; Headings, Counterparts. This
------------------------------------------
Agreement terminates and supersedes all other agreements concerning the subject
matter hereof previously entered into among any of the parties. Descriptive
headings are for convenience only and will not control or affect the meaning or
construction of any provision of this Agreement. Wherever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural, and pronouns stated in either the
masculine, feminine or the neuter gender shall include the masculine, the
feminine and the neuter. This Agreement may be executed in any number of
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts together will constitute one agreement.
Section 9.6 Partition. Each Participant waives, until termination
---------
of the LLC, any and all rights that it may have to maintain an action for
partition of the LLC's property.
Section 9.7 No Strict Construction. The parties hereto have
----------------------
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
* * * * * * * * *
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<PAGE>
IN WITNESS WHEREOF, the Member has caused this Amended and Restated Limited
Liability Company Agreement to be signed as of the date first above written.
MEMBER:
ALLIANCE LAUNDRY HOLDINGS LLC
By: _______________________________________
Its: _______________________________________
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<PAGE>
SCHEDULE I
Capital Contribution Percentage Interest
-------------------- --------------------
Member
- ------
Alliance Laundry Holdings LLC * 100%
* Alliance Laundry Holdings LLC's capital contribution to the capital of the
LLC consists of all of its right, title and interest in, to and under, all
of its assets and liabilities.
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<PAGE>
SCHEDULE II
Initial Board of Managers
-------------------------
Thomas F. L'Esperance
Edward W. Conard
Robert C. Gay
Stephen M. Zide
Stephen Sherrill
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<PAGE>
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
ALLIANCE LAUNDRY CORPORATION
ARTICLE ONE
The name of the corporation is Alliance Laundry Corporation.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 9 East Loockerman Street, in the City of Dover, County of Kent,
19901. The name of its registered agent at such address is National Registered
Agents, Inc.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has
authority to issue is one thousand (1,000) shares of Common Stock, par value one
cent ($0.01) per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Thaddine G. Gomez 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
<PAGE>
ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by
statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places as
may be designated from time to time by the board of directors or in the by-laws
of the corporation. Election of directors need not be by written ballot unless
the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by (S)203 of the
General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation in the manner now
or hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
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<PAGE>
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 28th day of April, 1998.
___________________________________
Thaddine G. Gomez
Sole Incorporator
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<PAGE>
EXHIBIT 3.4
BY-LAWS
OF
ALLIANCE LAUNDRY CORPORATION
A Delaware corporation
ARTICLE I
---------
OFFICES
-------
Section 1. Registered Office. The registered office of the corporation in
--------- -----------------
the State of Delaware shall be located at 9 East Loockerman Street, Dover,
Delaware, County of Kent 19901. The name of the corporation's registered agent
at such address shall be National Registered Agents, Inc. The registered office
and/or registered agent of the corporation may be changed from time to time by
action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
--------- -------------
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
----------
MEETINGS OF STOCKHOLDERS
------------------------
Section 1. Place and Time of Meetings. An annual meeting of the
--------- --------------------------
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall deter mine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
--------- ----------------
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof.
Section 3. Place of Meetings. The board of directors may designate any
--------- -----------------
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is
<PAGE>
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
--------- ------
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting not
less than ten (10) nor more than sixty (60) days before the date of the meeting.
All such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president or the secretary, and if
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, postage prepaid, addressed to the stockholder at his, her or its
address as the same appears on the records of the corporation. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends for the express purpose of objecting at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
--------- -----------------
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
--------- ------
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
--------- ------------------
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
--------- -------------
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one
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<PAGE>
upon which by express provisions of an applicable law or of the certificate of
incorporation a different vote is required, in which case such express provision
shall govern and control the decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
--------- -------------
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of common stock
held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
---------- -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
---------- -------------------------
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corpora tion's principal place of business, or an
officer or agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All
consents properly delivered in accordance with this section shall be deemed to
be recorded when so delivered. No written consent shall be effective to take
the corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the corporation as required by this
-3-
<PAGE>
section, written consents signed by the holders of a sufficient number of shares
to take such corporate action are so recorded. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing. Any
action taken pursuant to such written consent or consents of the stockholders
shall have the same force and effect as if taken by the stockholders at a
meeting thereof.
ARTICLE III
-----------
DIRECTORS
---------
Section 1. General Powers. The business and affairs of the corporation
--------- --------------
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
--------- -----------------------------------
which shall constitute the first board shall be five (5). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
--------- -----------------------
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole. Any director may resign at any time upon written
notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships resulting
--------- ---------
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
--------- ---------------
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
--------- -------------------------
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings
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of the board of directors may be called by or at the request of the president on
at least twenty-four (24) hours notice to each director, either personally, by
telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
--------- -------------------------------------
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
--------- ----------
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
--------- ---------------
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
---------- ------------------------
or any committee thereof may participate in and act at any meeting of such board
or committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
---------- ------------------------------------------
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be
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conclusively presumed to have assented to any action taken unless his or her
dissent shall be entered in the minutes of the meeting or unless his or her
written dissent to such action shall be filed with the person acting as the
secretary of the meeting before the adjournment thereof or shall be forwarded by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to any member
who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
---------- -------------------------
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
----------
OFFICERS
--------
Section 1. Number. The officers of the corporation shall be elected by
--------- ------
the board of directors and shall consist of a president, one or more vice-
presidents, secretary, a treasurer, and such other officers and assistant
officers as may be deemed necessary or desirable by the board of directors. Any
number of offices may be held by the same person. In its discretion, the board
of directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of president and secretary shall be filled as
expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
--------- ---------------------------
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
--------- -------
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
--------- ---------
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
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Section 5. Compensation. Compensation of all officers shall be fixed by
--------- ------------
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The President. The president shall be the chief executive
--------- -------------
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
Section 7. Vice-presidents. The vice-president, or if there shall be more
--------- ---------------
than one, the vice-presidents in the order determined by the board of directors
or by the president, shall, in the absence or disability of the president, act
with all of the powers and be subject to all the restrictions of the president.
The vice-presidents shall also perform such other duties and have such other
powers as the board of directors, the president or these by-laws may, from time
to time, prescribe.
Section 8. The Secretary and Assistant Secretaries. The secretary shall
--------- ---------------------------------------
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these by-
laws may, from time to time, prescribe; and shall have custody of the corporate
seal of the corporation. The secretary, or an assistant secretary, shall have
authority to affix the corporate seal to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors, the president, or secretary may, from
time to time, prescribe.
Section 9. The Treasurer and Assistant Treasurer. The treasurer shall
--------- -------------------------------------
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name and
to the credit of the corporation as may be ordered by the board of directors;
shall cause the funds of the corporation to be disbursed
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when such disbursements have been duly authorized, taking proper vouchers for
such disbursements; and shall render to the president and the board of
directors, at its regular meeting or when the board of directors so requires, an
account of the corporation; shall have such powers and perform such duties as
the board of directors, the president or these by-laws may, from time to time,
prescribe. If required by the board of directors, the treasurer shall give the
corporation a bond (which shall be rendered every six (6) years) in such sums
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of the office of treasurer
and for the restoration to the corporation, in case of death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in the possession or under the control of the
treasurer belonging to the corporation. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors, the president or treasurer may, from time to time, prescribe.
Section 10. Other Officers, Assistant Officers and Agents. Officers,
---------- ---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 11. Absence or Disability of Officers. In the case of the absence
---------- ---------------------------------
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
---------
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
-------------------------------------------------
Section 1. Nature of Indemnity. Each person who was or is made a party or
--------- -------------------
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amend ment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in
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<PAGE>
connection with such proceeding) and such indemnification shall inure to the
benefit of his heirs, executors and administrators; provided, however, that,
except as provided in Section 2 hereof, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification conferred in this Article V shall be a
contract right and, subject to Sections 2 and 5 hereof, shall include the right
to be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition. The corporation may, by action
of its board of directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
--------- -------------------------------------------------------
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall be
made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the corporation fails to respond within sixty (60) days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within thirty (30) days, the right to indemnification
or advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the corporation.
Neither the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the corporation (including its board of directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
--------- ---------------------
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
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<PAGE>
Section 4. Insurance. The corporation may purchase and maintain insurance
--------- ---------
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the corporation or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
--------- --------
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition unless otherwise determined by
the board of directors in the specific case upon receipt of an undertaking by or
on behalf of the director or officer to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
--------- --------------------
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the corporation
as employees or agents of another corporation, partnership, joint venture, trust
or other enterprise, may be indemnified to the extent authorized at any time or
from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
--------- ---------------
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and the
relevant provisions of the General Corporation Law of the State of Delaware or
other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obliga tions then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
--------- -----------------------
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article V
with respect to the resulting or surviving corporation as he or she would have
with respect to such constituent corporation if its separate existence had
continued.
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<PAGE>
ARTICLE VI
----------
CERTIFICATES OF STOCK
---------------------
Section 1. Form. Every holder of stock in the corporation shall be
--------- ----
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary of
the corporation, certifying the number of shares of a specific class or series
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such president, vice-president, secretary, or
assistant secretary may be facsimiles. In case any officer or officers who have
signed, or whose facsimile signature or signatures have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
corporation whether because of death, resignation or otherwise before such
certificate or certificates have been delivered by the corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates or whose
facsimile signature or signatures have been used thereon had not ceased to be
such officer or officers of the corporation. All certificates for shares shall
be consecutively numbered or otherwise identified. The name of the person to
whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of
stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate or
certificates for such shares endorsed by the appropriate person or persons, with
such evidence of the authenticity of such endorsement, transfer, authorization,
and other matters as the corporation may reasonably require, and accompanied by
all necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
--------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
--------- ---------------------------------------------
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting
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of stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
--------- --------------------------------------------------
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stock holders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
--------- ---------------------------------------
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty (60) days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
--------- -----------------------
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person
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entitled to receive dividends, to vote, to receive notifications, and otherwise
to exercise all the rights and powers of an owner. The corporation shall not be
bound to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
--------- -----------------------
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
-----------
GENERAL PROVISIONS
------------------
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
--------- ------------------------
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
--------- ---------
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
--------- -----
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the
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<PAGE>
board of directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this section contained shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
--------- -----------
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
--------- --------------
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
--------- --------------------------------------
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
--------- -------------------------------
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are for
--------- ----------------
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
---------- -----------------------
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
-14-
<PAGE>
ARTICLE VIII
------------
AMENDMENTS
----------
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
-15-
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
------------------------------------------------------------------------
ALLIANCE LAUNDRY SYSTEMS LLC
AND
ALLIANCE LAUNDRY CORPORATION, AS
ISSUERS
ALLIANCE LAUNDRY HOLDINGS LLC
AND
EACH NEWLY ACQUIRED OR
CREATED DOMESTIC SUBSIDIARY
OF THE ISSUERS, AS
GUARANTORS
9 5/8% SENIOR SUBORDINATED NOTES DUE 2008
INDENTURE
Dated as of May 5, 1998
UNITED STATES TRUST COMPANY OF NEW YORK, as
Trustee
------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310(a)(1)........................................................................7.10
(a)(2)......................................................................7.10
(a)(3)......................................................................N.A.
(a)(4)......................................................................N.A.
(a)(5)......................................................................7.10
(i)(b)......................................................................7.10
(ii)(c).....................................................................N.A.
311(a)......................................................................7.11
(b).........................................................................7.11
(iii)(c)....................................................................N.A.
312(a)............................................................................2.5
(b)(5).......................................................................13.3
(iv)(c)......................................................................13.3
313(a)............................................................................7.6
(b)(1).......................................................................10.3
(b)(2).......................................................................7.7
(v)(c).......................................................................7.6
13.2
(v)(d).......................................................................7.6
314(a)............................................................................4.3;
13.2
(A)(b).......................................................................10.2
(c)(1).......................................................................13.4
(c)(2).......................................................................13.4
(c)(3)......................................................................N.A.
(vi)(e)......................................................................13.5
(f).........................................................................N.A.
315(a)............................................................................7.1
(b)..........................................................................7.5
13.2
(B)(c).......................................................................7.1
(d)..........................................................................7.1
(e).........................................................................6.11
316(a)(last sentence).............................................................2.9
(a)(1)(A)....................................................................6.5
(a)(1)(B)....................................................................6.4
(a)(2)......................................................................N.A.
(b)..........................................................................6.7
(C)(c)......................................................................2.12
317(a)(1).........................................................................6.8
(a)(2).......................................................................6.9
(b)..........................................................................2.2
318 (a)..........................................................................13.1
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(b).........................................................................N.A.
(c)..........................................................................13.1
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
2
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.1 DEFINITIONS................................................. 1
SECTION 1.2 OTHER DEFINITIONS........................................... 23
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST
INDENTURE ACT............................................... 23
SECTION 1.4 RULES OF CONSTRUCTION....................................... 24
SECTION 1.5 ONE CLASS OF SECURITIES..................................... 24
ARTICLE 2.
THE NOTES
SECTION 2.1 FORM AND DATING............................................. 25
SECTION 2.2 EXECUTION AND AUTHENTICATION................................ 26
SECTION 2.3 REGISTRAR AND PAYING AGENT.................................. 27
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST......................... 27
SECTION 2.5 HOLDER LISTS................................................ 27
SECTION 2.6 TRANSFER AND EXCHANGE....................................... 28
SECTION 2.7 REPLACEMENT NOTES........................................... 41
SECTION 2.8 OUTSTANDING NOTES........................................... 41
SECTION 2.9 TREASURY NOTES.............................................. 42
SECTION 2.10 TEMPORARY NOTES............................................. 42
SECTION 2.11 CANCELLATION................................................ 42
SECTION 2.12 DEFAULTED INTEREST.......................................... 42
SECTION 2.13 CUSIP NUMBERS............................................... 43
</TABLE>
-i-
<PAGE>
<TABLE>
Page
ARTICLE 3.
REDEMPTION AND PREPAYMENT
<S> <C> <C>
SECTION 3.1 NOTICES TO TRUSTEE.......................................... 43
SECTION 3.2 SELECTION OF NOTES TO BE REDEEMED........................... 43
SECTION 3.3 NOTICE OF REDEMPTION........................................ 44
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION.............................. 45
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE................................. 45
SECTION 3.6 NOTES REDEEMED IN PART...................................... 45
SECTION 3.7 OPTIONAL REDEMPTION......................................... 45
SECTION 3.8 MANDATORY REDEMPTION........................................ 46
SECTION 3.9 OFFER TO PURCHASE BY APPLICATION OF EXCESS
PROCEEDS........................................................... 46
ARTICLE 4.
COVENANTS
SECTION 4.1 PAYMENT OF NOTES............................................ 48
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY............................. 49
SECTION 4.3 REPORTS..................................................... 49
SECTION 4.4 COMPLIANCE CERTIFICATE...................................... 50
SECTION 4.5 TAXES....................................................... 51
SECTION 4.6 STAY, EXTENSION AND USURY LAWS.............................. 51
SECTION 4.7 RESTRICTED PAYMENTS......................................... 51
SECTION 4.8 DIVIDEND AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.............................................. 55
SECTION 4.9 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
PREFERRED STOCK............................................. 56
</TABLE>
-ii-
<PAGE>
<TABLE>
Page
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<S> <C> <C>
SECTION 4.10 ASSET SALES................................................. 59
SECTION 4.11 TRANSACTIONS WITH AFFILIATES................................ 61
SECTION 4.12 LIENS....................................................... 62
SECTION 4.13 BUSINESS ACTIVITIES......................................... 63
SECTION 4.14 CORPORATE EXISTENCE......................................... 63
SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF
CONTROL..................................................... 63
SECTION 4.16 NO SENIOR SUBORDINATED DEBT................................. 64
SECTION 4.17 LIMITATION ON ISSUANCES OF GUARANTEES OF
INDEBTEDNESS....................................................... 64
SECTION 4.18 PAYMENTS FOR CONSENT........................................ 65
ARTICLE 5.
SUCCESSORS
SECTION 5.1 MERGER, CONSOLIDATION, OR SALE OF ASSETS.................... 65
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED........................... 66
ARTICLE 6.
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT........................................... 67
SECTION 6.2 ACCELERATION................................................ 69
SECTION 6.3 OTHER REMEDIES.............................................. 70
SECTION 6.4 WAIVER OF PAST DEFAULTS..................................... 70
SECTION 6.5 CONTROL BY MAJORITY......................................... 70
SECTION 6.6 LIMITATION ON SUITS......................................... 70
SECTION 6.7 RIGHTS OF HOLDERS OF NOTES TO RECEIVE
PAYMENT............................................................ 71
</TABLE>
-iii-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.................................. 71
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM............................ 71
SECTION 6.10 PRIORITIES.................................................. 72
SECTION 6.11 FOR COSTS................................................... 72
ARTICLE 7.
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE........................................... 73
SECTION 7.2 RIGHTS OF TRUSTEE........................................... 74
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE................................ 75
SECTION 7.4 TRUSTEES DISCLAIMER......................................... 75
SECTION 7.5 NOTICE OF DEFAULTS.......................................... 75
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.................. 76
SECTION 7.7 COMPENSATION AND INDEMNITY.................................. 76
SECTION 7.8 REPLACEMENT OF TRUSTEE...................................... 77
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC............................ 78
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION............................... 78
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY............................................................ 78
SECTION 7.12 OTHER CAPACITIES............................................ 79
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR
COVENANT DEFEASANCE................................................ 79
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE.............................. 79
</TABLE>
-iv-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 8.3 COVENANT DEFEASANCE......................................... 80
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT
DEFEASANCE......................................................... 80
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES
TO BE HELD IN TRUST; OTHER MISCELLANEOUS
PROVISIONS......................................................... 81
SECTION 8.6 REPAYMENT TO ISSUERS........................................ 82
SECTION 8.7 REINSTATEMENT............................................... 82
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF NOTES......................... 83
SECTION 9.2 WITH CONSENT OF HOLDERS OF NOTES............................ 84
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT......................... 85
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS........................... 85
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES............................ 86
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC............................. 86
ARTICLE 10.
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE.................................... 86
SECTION 10.2 CERTAIN DEFINITIONS......................................... 86
SECTION 10.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY........................ 87
SECTION 10.4 DEFAULT ON DESIGNATED SENIOR DEBT........................... 88
SECTION 10.5 ACCELERATION OF SECURITIES.................................. 89
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER......................... 89
SECTION 10.7 NOTICE BY ISSUERS........................................... 89
</TABLE>
-v-
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
SECTION 10.8 SUBROGATION................................................. 89
SECTION 10.9 RELATIVE RIGHTS............................................. 90
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY
ISSUERS OR GUARANTORS....................................... 90
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.................... 90
SECTION 10.12 ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT
OR LIMIT RIGHT TO ACCELERATE................................ 91
SECTION 10.13 RIGHTS OF TRUSTEE AND PAYING AGENT.......................... 91
SECTION 10.14 AUTHORIZATION TO EFFECT SUBORDINATION....................... 91
SECTION 10.15 AMENDMENTS.................................................. 91
SECTION 10.16 TRUSTEE'S COMPENSATION NOT PREJUDICED....................... 91
ARTICLE 11.
GUARANTEE
SECTION 11.1 UNCONDITIONAL GUARANTEE..................................... 92
SECTION 11.2 SEVERABILITY................................................ 92
SECTION 11.3 LIMITATION OF GUARANTOR'S LIABILITY......................... 93
SECTION 11.4 CONTRIBUTION................................................ 93
SECTION 11.5 EXECUTION OF GUARANTEE...................................... 93
SECTION 11.6 ADDITIONAL NOTE GUARANTEES.................................. 94
SECTION 11.7 SUBORDINATION OF SUBROGATION AND OTHER
RIGHTS...................................................... 94
ARTICLE 12.
SUBORDINATION OF GUARANTEE
SECTION 12.1 GUARANTEE OBLIGATIONS SUBORDINATED TO
SENIOR DEBT........................................................ 94
</TABLE>
-vi-
<PAGE>
<TABLE>
Page
----
<S> <C>
SECTION 12.2 NO PAYMENT IN CERTAIN CIRCUMSTANCES;
PAYMENT OVER OF PROCEEDS UPON DISSOLUTION,
ETC................................................................ 94
SECTION 12.3 SUBROGATION................................................. 96
SECTION 12.4 OBLIGATIONS OF GUARANTORS UNCONDITIONAL..................... 97
SECTION 12.5 NOTICE TO TRUSTEE........................................... 97
SECTION 12.6 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT........................................... 98
SECTION 12.7 TRUSTEE'S RELATION TO GUARANTOR SENIOR
DEBT........................................................ 98
SECTION 12.8 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS
OR OMISSIONS OF THE PARENT, THE GUARANTORS
OR HOLDERS OF SENIOR DEBT.......................................... 99
SECTION 12.9 NOTEHOLDERS AUTHORIZE TRUSTEE TO
EFFECTUATE SUBORDINATION OF GUARANTEE.............................. 99
SECTION 12.10 THIS ARTICLE NOT TO PREVENT EVENTS OF
DEFAULT............................................................ 99
SECTION 12.11 TRUSTEE'S COMPENSATION NOT PREJUDICED....................... 99
SECTION 12.12 NO WAIVER OF GUARANTEE SUBORDINATION
PROVISIONS........................................................ 100
ARTICLE 13.
MISCELLANEOUS
SECTION 13.1 TRUST INDENTURE ACT CONTROLS............................... 100
SECTION 13.2 NOTICES.................................................... 100
SECTION 13.3 COMMUNICATION BY HOLDERS OF NOTES WITH
OTHER HOLDERS OF NOTES............................................ 101
SECTION 13.4 CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT......................................................... 102
</TABLE>
-vii-
<PAGE>
<TABLE>
<S> <C>
Page
----
SECTION 13.5 STATEMENTS REQUIRED IN CERTIFICATE OR
OPINION............................................................102
SECTION 13.6 RULES BY TRUSTEE AND AGENTS.................................102
SECTION 13.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
EMPLOYEES AND SHAREHOLDERS.........................................103
SECTION 13.8 GOVERNING LAW...............................................103
SECTION 13.9 NO ADVERSE INTERPRETATION OF OTHER
AGREEMENTS.........................................................103
SECTION 13.10 SUCCESSORS..................................................103
SECTION 13.11 SEVERABILITY................................................103
SECTION 13.12 COUNTERPART ORIGINALS.......................................103
SECTION 13.13 TABLE OF CONTENTS, HEADINGS, ETC............................103
</TABLE>
-viii-
<PAGE>
EXHIBITS:
A Form of Note
B Form of Certificate of Transfer
C Form of Certificate of Exchange
D Form of Supplemental Indenture
E Form of Parent Guarantee
-ix-
<PAGE>
INDENTURE dated as of May 5, 1998 among Alliance Laundry Systems LLC,
a Delaware limited liability company (the "Company"), Alliance Laundry
Corporation, a Delaware corporation ("ALC" and, together with the Company, the
"Issuers"), the Guarantors (as defined herein) identified on the signature pages
hereto and United States Trust Company of New York, as trustee (the "Trustee").
The Issuers, the Guarantors and the Trustee agree as follows for the
benefit of the other parties and for the equal and ratable benefit of the
Holders of the 9 5/8% Senior Subordinated Notes due 2008 (the "Initial Notes")
and the 9 5/8% Senior Subordinated Notes due 2008 if and when issued in the
Exchange Offer (the "New Notes" and, together with the Initial Notes, the
"Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any assets acquired by such specified Person.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Permitted Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or a Restricted Subsidiary of the Company; or (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary of the Company; provided, however, that, in the case of
clauses (ii) and (iii), such Restricted Subsidiary is primarily engaged in a
Permitted Business.
"Additional Notes" means up to $90.0 million in aggregate principal
amount of Notes (other than the Initial Notes) issued under this Indenture in
accordance with Sections 2.2 and 4.9 hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent, co-registrar,
authenticating agent or securities custodian.
<PAGE>
2
"Alliance Commercial Appliances Finance LLC" means Alliance Laundry
Finance LLC, a Delaware limited liability company.
"Alliance Commercial Appliances Receivables LLC" means Alliance
Laundry Receivables LLC, a Delaware limited liability company.
"Alliance Laundry S.A." means Alliance Laundry S.A., an Argentine
corporation.
"Appliance Co." means a large consumer appliance company to which the
Company supplies consumer washing machines for sale at retail.
"Applicable Premium" means, with respect to any Note on any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note or (ii) the
excess of (A) the present value at such Redemption Date of (1) the redemption
price of such Note at May 1, 2003 (such redemption price being set forth in the
table above) plus (2) all required interest payments due on such Note through
May 1, 2003 (excluding accrued but unpaid interest), computed using a discount
rate equal to the Treasury Rate at such Redemption Date plus 75 basis points
over (B) the principal amount of such Note, if greater.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such transfer or
exchange.
"Asset Backed Facility" means the $250.0 million revolving loan
agreement entered into between the SPE and Lehman Commercial Paper Inc. on the
date of this Indenture.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practice (provided that the sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole will be governed by the provisions
of Section 4.15 hereof and/or the provisions of Section 5.1 hereof and not by
the provisions of Section 4.10 hereof), and (ii) the issue or sale by the
Company or any of its Restricted Subsidiaries of Equity Interests of any of the
Company's Subsidiaries, in the case of either clause (i) or (ii), whether in a
single transaction or a series of related transactions (a) that have a fair
market value in excess of $1.0 million or (b) for Net Proceeds in excess of $1.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Company to a Restricted
Subsidiary or by a Restricted Subsidiary to the Company or to another Restricted
Subsidiary, (ii) an issuance of Equity Interests by a Restricted Subsidiary to
the Company or to another Restricted Subsidiary, (iii) a Restricted Payment that
is permitted by Section 4.7 hereof, (iv) the sale or discount, in each case
without recourse, of accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof, (v)
the factoring of accounts receivable arising in the ordinary course of business
pursuant to arrangements
<PAGE>
3
customary in the industry, (vi) the licensing of intellectual property, (vii)
disposals or replacements of obsolete, uneconomical, negligible, worn out or
surplus property in the ordinary course of business, (viii) sales of equipment
loans on a non-recourse basis to a third party in an amount at least equal to
75% of the fair market value thereof, and (ix) sales of receivables, equipment
loans and related assets (including contract rights) of the type specified in
the definition of "Qualified Securitization Transaction" to a Securitization
Entity for the fair market value thereof, including consideration in the amount
specified in the proviso to the definition of "Qualified Securitization
Transaction."
"Bain LLC" means Bain/RCL, L.L.C., a Delaware limited liability
company.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the Board of Directors of ALC or any
committee thereof duly authorized to act on behalf of such Board.
"Board of Managers" means the Board of Managers of the Company or of
the Parent, as the case may be, or any committee thereof duly authorized to act
on behalf of such Board.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
or the general partner, in the case of a limited partnership, or member, in the
case of a limited liability company, of such Person (or, if such Person is a
partnership, one of its general partners) to have been duly adopted by the Board
of Directors of such Person or the general partner, in the case of a limited
partnership, or member, in the case of a limited liability company, of such
Person and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"Borrowing Base" means, with respect to any Person, the sum of (x) up
to 90% of the net book value of the non-affiliated accounts receivable of such
Person in accordance with GAAP and (y) up to 60% of the net book value of the
inventory of such Person in accordance with GAAP.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"BRS Investors" means Bruckmann, Rosser, Sherrill & Co., L.P., BCB
Family Partners, L.P., NAZ Family Partners, L.P., Paul D. Kaminski, Bruce C.
Bruckmann, Donald J. Bruckmann, Harold O. Rosser, Stephen C. Sherrill, H. Virgil
Sherrill, Nancy A. Zweng, John Rice Edmonds, Susan Kaider, Marilena Tibrea,
Walker C. Simmons and MLPF&S Custodian FBO Paul Kaminski.
"Business Day" means any day other than a Legal Holiday.
<PAGE>
4
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participation, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distribution of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit and eurodollar time deposits with maturities of six
months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any lender party to the Senior Credit Facility or with any domestic
commercial bank having capital and surplus in excess of $500.0 million and a
Thompson Bank Watch Rating of "B" or better, (iv) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
commercial paper having the highest rating obtainable from Moody's Investors
Service, Inc. or Standard & Poor's Corporation and in each case maturing within
six months after the date of acquisition and (vi) money market funds at least
95% of the assets of which constitute Cash Equivalents of the kinds described in
clauses (i) through (v) of this definition.
"Cedel" means Cedel Bank, S.A.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance, or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act), whether or not otherwise in compliance with the
provisions of the Indenture (other than the Principals and their Related
Parties), (ii) the adoption of a plan relating to the liquidation or dissolution
of the Company, (iii) the consummation of the first transaction (including,
without limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition), directly or indirectly, of more of the Voting Stock of the Company
(measured by voting power rather than number of shares) than is at the time
"beneficially owned" (as defined above) by the
<PAGE>
5
Principals and their Related Parties in the aggregate or (iv) the first day on
which a majority of the members of the Board of Managers of the Company or the
Parent are not Continuing Managers (as defined below).
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning assigned to it in the preamble to this
Indenture.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes, including foreign
withholding taxes to the extent paid, based on income or profits of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was included in computing such Consolidated Net Income, plus
(iii) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
expenses were deducted in computing such Consolidated Net Income, plus (v) one
time non-cash legal, accounting and debt issuance charges resulting from the
Transactions, minus (vi) non-cash items increasing such Consolidated Net Income
for such period, in each case, on a consolidated basis and determined in
accordance with GAAP. Consolidated Cash Flow shall exclude the amortization of
debt issuance costs.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that is
not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment,
<PAGE>
6
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded, (v) any one time non-cash charges
relating to the Transition Plan in an amount not to exceed $5.0 million shall be
excluded, and (vi) the Net Income (but not loss) of any Unrestricted Subsidiary
shall be excluded, whether or not distributed to the Company or one of its
Subsidiaries.
"Continuing Managers" means, as of any date of determination, any
member of the Board of Managers of the Company who (i) was a member of such
Board of Managers on the date of this Indenture, (ii) was nominated for election
or elected to such Board of Managers with the approval of a majority of the
Continuing Managers who were members of such Board at the time of such
nomination or election or (iii) was nominated by a Principal pursuant to the
Securityholders Agreement.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.2 hereof or such other address as to which the
Trustee may give notice to the Company.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.6 hereof, in the form
of Exhibit A-1 hereto except that such Note shall not bear the Global Note
Legend and shall not have the "Schedule of Exchanges of Interests in the Global
Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require
<PAGE>
7
the Issuers to repurchase such Capital Stock upon the occurrence of a Change of
Control or an Asset Sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that the Issuers may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with Section 4.7 hereof.
"Domestic Subsidiary" means any Restricted Subsidiary of the Company
other than a Foreign Subsidiary.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any offering of Qualified Capital Stock of the
Parent, the Company or any successor thereto; provided that, in the event of any
Equity Offering by the Parent, the Parent contributes to the common equity
capital of the Company (other than as Disqualified Stock) the portion of the net
cash proceeds of such Equity Offering necessary to pay the aggregate redemption
price (plus accrued interest and Liquidated Damages thereon, if any, to the
redemption date) of the Notes to be redeemed pursuant to the preceding
paragraph.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Senior Credit Facility) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the referent
Person or any of its Restricted Subsidiaries incurs, assumes, guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at
<PAGE>
8
the beginning of the applicable four-quarter reference period. In addition, for
purposes of making the computation referred to above, Consolidated Cash Flow and
Fixed Charges shall be calculated after giving effect on a pro forma basis for
the period of such calculation to (i) acquisitions that have been made by the
Company or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date as if such transaction had occurred on the first
day of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP and operations or
businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date. For purposes of this definition, whenever pro
forma effect is to be given to a transaction, the pro forma calculations shall
be made in good faith by a responsible financial or accounting officer of the
Company consistent with Article 11 of Regulation S-X, promulgated pursuant to
the Securities Act, as such Regulation is in effect on the date of this
Indenture.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including without limitation, amortization of original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations,
the interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net payments
(if any) pursuant to Hedging Obligations) and (ii) the consolidated interest of
such Person and its Restricted Subsidiaries that was capitalized during such
period and (iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such guarantee or Lien is called upon) and (iv) all dividend payments,
whether or not in cash, on any series of Preferred Stock of such Person or any
of its Restricted Subsidiaries, other than dividend payments on Equity Interests
payable solely in Equity Interests of the Company (other than Disqualified
Stock) or to the Company or a Restricted Subsidiary of the Company. Fixed
Charges shall exclude the amortization of debt issuance costs.
"Foreign Subsidiary" means (a) any Restricted Subsidiary of the
Company that is not organized under the laws of the United States of America or
any state thereof or the District of Columbia and (b) any Restricted Subsidiary
of the Company that has no material assets other than securities of one or more
Foreign Subsidiaries, and other assets relating to an ownership interest in any
such securities or Subsidiaries.
<PAGE>
9
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture, except that
calculations made for purposes of determining compliance with the terms of the
covenants and with other provisions of this Indenture shall be made without
giving effect to depreciation, amortization or other expenses recorded as a
result of the application of purchase accounting in accordance with Accounting
Principles Board Opinion Nos. 16 and 17.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.1, 2.6(b)(iv), 2.6(d)(ii)
or 2.6(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.6(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Guarantee" means (i) the Parent Guarantee, (ii) each Note Guarantee
and (iii) any guarantee of the Notes to be executed by any Subsidiary of the
Company pursuant to the provisions of this Indenture.
"Guarantors" means each of (i) the Parent and (ii) any Subsidiary that
executes a Note Guarantee in accordance with the provisions of this Indenture,
and their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements and
(ii) other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency exchange rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds,
<PAGE>
10
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or banker's acceptances or representing Capital
Lease Obligations or the balance deferred and unpaid of the purchase price of
any property or representing any Hedging Obligations, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing (other than letters of credit and Hedging Obligations) would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, as well as all Indebtedness of others secured by a Lien on any asset
of such Person (whether or not such Indebtedness is assumed by such Person) and,
to the extent not otherwise included, the guarantee by such Person of any
Indebtedness of any other Person (but excluding, with respect to Indebtedness of
a Qualified Securitization Entity, any Limited Originator Recourse or Standard
Securitization Undertakings that might be deemed to constitute guarantees). The
amount of any Indebtedness outstanding as of any date shall be (i) the accreted
value thereof, in the case of any Indebtedness issued with original issue
discount, and (ii) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness. For purposes of calculating the amount of Indebtedness of a
Securitization Entity outstanding as of any date, the face or notional amount of
any interest in receivables or equipment that is outstanding as of such date
shall be deemed to be Indebtedness but any such interests held by Affiliates of
such Securitization Entity shall be excluded for purposes of such calculation.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means a reputable accounting,
appraisal or investment banking firm of national standing.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Notes" means $110.0 million in aggregate principal amount of
Notes issued under this Indenture on the date hereof.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other Obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Restricted Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in third to last
paragraph of Section 4.7 hereof.
<PAGE>
11
"Investors Equity Contribution" means the equity investment in the
Parent by Bain LLC and senior management of the Company of approximately $47.1
million.
"Issuers" has the meaning assigned to it in the preamble to this
Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by the Issuers and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Limited Originator Recourse" means a reimbursement obligation to the
Company or a Restricted Subsidiary in connection with a drawing on a letter of
credit, revolving loan commitment, cash collateral account or other such credit
enhancement issued to support Indebtedness of a Securitization Entity under a
facility for the financing of trade receivables and the warehousing of equipment
loans and leases; provided that the available amount of any such form of credit
enhancement any time shall not exceed 10.0% of the principal amount of such
Indebtedness at such time.
"Liquidated Damages" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement entered into among Bain LLC, Raytheon and the other members as
parties thereto.
"MergeCo" means RCL Acquisitions, L.L.C., a Delaware limited liability
company.
"Merger" means the merger of MergeCo with and into the Parent, with
the Parent being the surviving entity.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any
<PAGE>
12
related provision for taxes on such gain (but not loss), realized in connection
with (a) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (b) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii) any
extraordinary or nonrecurring gain (but not loss), together with any related
provision for taxes on such extraordinary or nonrecurring gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing agreements), amounts required to be applied to
the repayment of Indebtedness (other than Senior Debt under one or more of the
Company's Senior Credit Facilities) secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"New Notes" has the meaning assigned to it in the preamble to this
Indenture.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"Non-US. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means the supplemental indenture, in the form of
Exhibit D hereto, executed and delivered to the Trustee pursuant to which each
Note Guarantor will guarantee payment of the Notes.
"Note Guarantor" means each newly acquired or created Domestic
Subsidiary that executes and delivers a Note Guarantee.
"Notes" has the meaning assigned to it in the preamble to this
Indenture.
<PAGE>
13
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Initial Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating Officer,
the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of any
Person by either the principal executive officer or the principal financial
officer, the treasurer or the principal accounting officer of such Person that
meets the requirements of Section 13.5 hereof.
"144A Global Note" means a global note in the form of Exhibit A-l
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
13.5 hereof. The counsel may be an employee of or counsel to the Issuers, any
Subsidiary of the Issuers or the Trustee.
"Parent" means Alliance Laundry Holdings LLC, a Delaware limited
liability company, or any corporation as successor thereto.
"Parent Contribution" means the contribution by the Parent of
substantially all of its assets and liabilities to the Company.
"Parent Guarantee" means the guarantee in the form of Exhibit E hereto
by the Parent of the Obligations of the Issuers under the Notes and this
Indenture.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Depositary, Euroclear or Cedel,
respectively (and, with respect to The Depository Trust Company, shall include
Euroclear and Cedel).
"Permitted Business" means the lines of business conducted by the
Company and its Subsidiaries on the date hereof and businesses that are
reasonably similar, ancillary or related thereto or which constitute a
reasonable extension or expansion thereof.
"Permitted Investments" means (i) any Investment in the Company or in
a Wholly Owned Restricted Subsidiary of the Company that is a Note Guarantor
(whether
<PAGE>
14
existing on the date of this Indenture or created thereafter); (ii) any
Investment in Cash Equivalents; (iii) any Investment by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (x) such Person becomes a Wholly Owned Restricted Subsidiary of the
Company or (y) such Person is merged, consolidated or amalgamated with or into,
or transfers or conveys substantially all of its assets to, or is liquidated
into, the Company or a Wholly Owned Restricted Subsidiary and Note Guarantor of
the Company; (iv) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with the provisions of Section 4.10 hereof; (v) any acquisition of assets solely
in exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company; (vi) Hedging Obligations permitted by Section 4.9 hereof; (vii)
any Investment by the Company or a Subsidiary of the Company in a Securitization
Entity or any Investment by a Securitization Entity in any other Person in
connection with a Qualified Securitization Transaction; provided that any
Investment in a Securitization Entity is in the form of a Purchase Money Note or
an equity interest and (viii) other Investments in any Person having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (viii) that are at the
time outstanding, not to exceed the greater of (x) $7.5 million and (y) 7.5% of
Total Assets.
"Permitted Liens" means (i) Liens securing Senior Debt (including the
Senior Credit Facilities); (ii) Liens in favor of the Company and any Restricted
Subsidiary; (iii) Liens on property of a Person existing at the time such Person
is merged into or consolidated with the Company or any Restricted Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any assets
other than those of the Person merged into or consolidated with the Company;
(iv) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were in
existence prior to the contemplation of such acquisition; (v) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance or other kinds of social security, or to
secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations of a like nature incurred in the ordinary
course of business; (vi) purchase money Liens to finance property or assets of
the Company or any Restricted Subsidiary of the Company acquired in the ordinary
course of business; provided, however, that (A) the related purchase money
Indebtedness shall not exceed the cost of such property or assets and shall not
be secured by any property or assets of the Company or any Restricted Subsidiary
of the Company other than the property and assets so acquired and (B) the Lien
securing such Indebtedness shall be created within 90 days of such acquisition;
(vii) Liens existing on the date of this Indenture; (viii) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (ix) statutory liens of landlords, mechanics, suppliers,
vendors, warehousemen, carriers or other like Liens arising in the ordinary
course of business; (x) judgment Liens not giving rise to an Event of Default so
long as any appropriate legal proceeding that may have been duly initiated for
the review of
<PAGE>
15
such judgment shall not have been finally terminated or the period within which
such proceeding may be initiated shall not have expired; (xi) easements, rights-
of-way, zoning and similar restrictions and other similar encumbrances or title
defects incurred or imposed, as applicable, in the ordinary course of business
and consistent with industry practices which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto (as such property is used by the Company
or its Subsidiaries) or interfere with the ordinary conduct of the business of
the Company or such Subsidiaries; provided, however, that any such Liens are not
incurred in connection with any borrowing of money or any commitment to loan any
money or to extend any credit; (xii) Liens on assets transferred to a
Securitization Entity or on assets of a Securitization Entity, in either case
incurred in connection with a Qualified Securitization Transaction; (xiii) Liens
incurred in the ordinary course of business of the Company or any Restricted
Subsidiary of the Company with respect to obligations that do not exceed $5.0
million at any one time outstanding and that (a) are not incurred in connection
with the borrowing of money or the obtaining of advances or credit (other than
trade credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary; (xiv)
Liens on assets of Guarantors to secure Senior Debt of such Guarantors that were
permitted by this Indenture to be incurred; (xv) Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries; (xvi)
any interest or title of a lessor under any Capital Lease Obligation; (xvii)
Liens upon specific items of inventory or other goods and proceeds of any Person
securing such Person's obligations in respect of bankers' acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods; (xviii) Liens securing reimbursement
obligations with respect to commercial letters of credit which encumber
documents and other property relating to such letters of credit and products and
proceeds thereof; (xix) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements of the
Company or any of its Restricted Subsidiaries, including rights of offset and
set-off; (xx) Liens securing Hedging Obligations which Hedging Obligations
relate to Indebtedness that is otherwise permitted under this Indenture; (xxi)
leases or subleases granted to others that do not materially interfere with the
ordinary course of business of the Company and its Restricted Subsidiaries;
(xxii) Liens arising from filing Uniform Commercial Code financing statements
regarding leases; (xxiii) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customer duties in connection
with the importation of goods; (xxiv) Liens securing Indebtedness under Currency
Agreements; (xxv) Liens securing Indebtedness of Restricted Subsidiaries that
are Foreign Subsidiaries incurred in reliance on clause (iii) of the second
paragraph of Section 4.9 hereof; and (xxvi) Liens in favor of the Trustee and
any predecessor of the Trustee.
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries or any Disqualified Stock of the
Company issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund other Indebtedness of the Company
or any of its Restricted Subsidiaries (other than intercompany Indebtedness);
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount of
(or accreted value, if applicable), plus accrued interest on, the
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16
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection therewith); (ii)
such Permitted Refinancing Indebtedness has a final maturity date no earlier
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iii) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded or is Disqualified Stock; and (iv) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
who is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded or is Disqualified Stock.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such person over the holder
of the other Capital Stock issued by such Person.
"Principals" means Bain Capital, Inc., Bruckmann, Rosser, Sherrill &
Co., L.P., their respective affiliates and executive officers of the Company as
of the date of this Indenture.
"Private Placement Legend" means the legend set forth in Section
2.6(g)(i) to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Restricted Subsidiary of the Company in connection with a Qualified
Securitization Transaction, which note shall be repaid from cash available to
the Securitization Entity, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owing to such investors and amounts paid
in connection with the purchase of newly generated receivables or newly acquired
equipment.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Stock.
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17
"Qualified Securitization Transaction" means any transaction or series
of transactions pursuant to which the Company or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by the Company or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by a
Securitization Entity), or may grant a security interest in, any receivables or
equipment loans (whether now existing or arising or acquired in the future) of
the Company or any of its Restricted Subsidiaries, and any assets related
thereto including, without limitation, all collateral securing such receivables
and equipment loans, all contracts and contract rights and all guarantees or
other obligations in respect of such receivables and equipment loans, proceeds
of such receivables and equipment loans and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving receivables and equipment (collectively, "transferred
assets"); provided that in the case of any such transfer by the Company or any
of its Restricted Subsidiaries, the transferor receives cash or Purchase Money
Notes in an amount which (when aggregated with the cash and Purchase Money Notes
received by the Company and its Restricted Subsidiaries upon all other such
transfers of transferred assets during the ninety days preceding such transfer)
is at least equal to 75% of the aggregate face amount of all receivables so
transferred during such day and the ninety preceding days.
"Raytheon" means Raytheon Company, a Delaware corporation.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of May 5, 1998, by and among the Issuers, the Parent and the
other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in
the form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in
the form of Exhibit A-2 hereto bearing the Private Placement Legend and
deposited with or on behalf of and registered in the name of the Depositary or
its nominee, issued in a denomination equal to the outstanding principal amount
of the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means (A) any
controlling stockholder, 60% (or more) owned Subsidiary, or spouse or immediate
family member (in
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18
the case of an individual) of such Principal or (B) any trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or Persons beneficially holding a 60% or more controlling interest of which
consist of such Principal and/or such other Persons referred to in the
immediately preceding clause (A).
"Responsible Officer," when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee (or any successor
group of the Trustee) or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private
Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary; provided that, on the
date of this Indenture, all Subsidiaries of the Company shall be Restricted
Subsidiaries (other than the SPE, Alliance Commercial Appliances Receivables
LLC, Alliance Commercial Appliances Finance LLC and Alliance Laundry S.A.).
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Notes and the Guarantees issued under this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securitization Entity" means a Wholly Owned Subsidiary of the Company
(or another Person in which the Company or any Restricted Subsidiary of the
Company makes
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19
an Investment and to which the Company or any Restricted Subsidiary of the
Company transfers receivables or equipment and related assets) that engages in
no activities other than in connection with the financing of receivables or
equipment and that is designated by the Board of Managers of the Company (as
provided below) as a Securitization Entity (a) no portion of the Indebtedness or
any other Obligations (contingent or otherwise) of which (i) is guaranteed by
the Company or any Restricted Subsidiary of the Company other than pursuant to
Standard Securitization Undertakings or Limited Originator Recourse, (ii) is
recourse to or obligates the Company or any Restricted Subsidiary of the Company
(other than the Securitization Entity) in any way other than pursuant to
Standard Securitization Undertakings or Limited Originator Recourse or (iii)
subjects any property or asset of the Company or any Restricted Subsidiary of
the Company (other than the Securitization Entity), directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings or Limited Originator Recourse, (b) with
which neither the Company nor any Restricted Subsidiary of the Company has any
material contract, agreement, arrangement or understanding other than on terms
no less favorable to the Company or such Restricted Subsidiary than those that
might be obtained at the time from Persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing receivables of such entity and (c) to which neither
the Company nor any Restricted Subsidiary of the Company has any obligation to
maintain or preserve such entity's financial condition or cause such entity to
achieve certain levels of operating results. Any such designation by the Board
of Managers of the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Managers of the
Company giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Securityholders Agreement" means the securityholders agreement
entered into among the Parent, Raytheon, Bain LLC, the BRS Investors and senior
management of the Company after the date of this Indenture.
"Seller Preferred Equity" means preferred membership interests with a
liquidation value of $6.0 million due August 21, 2009 issued by the Parent to
Raytheon.
"Seller Subordinated Note" means a junior subordinated promissory note
in the principal amount of $9.0 million due August 21, 2009 issued by the Parent
to Raytheon.
"Senior Credit Facility" means that certain Senior Credit Facility,
dated as of May 5, 1998, by and among the Company, General Electric Capital
Corporation, as administrative agent, and Lehman Commercial Paper Inc., as
syndication agent, providing for up to $75.0 million of revolving credit
borrowings and up to $200.0 million of term loan borrowings, including any
related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified,
renewed, refunded, replaced or refinanced from time to time.
"Senior Credit Facilities" means, with respect to the Company, one or
more debt facilities (including, without limitation, the Senior Credit Facility)
or commercial paper facilities with banks or other institutional lenders
providing for revolving credit loans, term
<PAGE>
20
loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"SPE" means the special purpose single member limited liability
company that is a Subsidiary of the Company and that will enter into the Asset
Backed Facility on the date of this Indenture.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company that are reasonably customary in receivables or
equipment loan transactions.
"Stated Maturity" means, with respect to any installment of interest
or principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subordinated Obligations" means any Indebtedness of the Issuers that
is expressly subordinated or junior in right of payment to the Notes.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-
77bbbb) as in effect on the date on which this Indenture is qualified under the
TIA.
"Total Assets" means the total consolidated assets of the Company and
its Restricted Subsidiaries, as set forth on the Company's most recent
consolidated balance sheet, except that calculations made for the purpose of
determining compliance with the terms of the covenants and with other provisions
of this Indenture shall be made without
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21
giving effect to goodwill, deferred financing costs and other intangibles shown
on the balance sheet as a result of the application of purchase accounting in
accordance with Accounting Principles Board Opinions Nos. 16 and 17.
"Transactions" means the collective reference to the Offering, the
Senior Credit Facility, the Investors Equity Contribution, the Parent
Contribution, the Merger, the Asset Backed Facility and the issuance of the
Seller Subordinated Note and the Seller Preferred Equity.
"Transition Plan" means the process by the Company of establishing at
its Ripon, Wisconsin facility the capability to manufacture small-chassis
frontload washers and dryers beginning in September 1998 and September 1999,
respectively, and to cease production of consumer topload washers for Appliance
Co.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15 (519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to May 1, 2003; provided, however, that if the
period from the Redemption Date to May 1, 2003 is not equal to the constant
maturity of a United Sates Treasury security for which a weekly average yield is
given, the Treasury Rate shall be obtained by linear interpolation (calculated
to the nearest one-twelfth of a year) from the weekly average yields of United
States Treasury securities for which such yields are given, except that if the
period from the Redemption Date to May 1, 2003 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note in the form
of Exhibit A-1 attached hereto that bears the Global Note Legend and that has
the "Schedule of Exchanges of Interests in the Global Note" attached thereto,
and that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means each of the SPE, Alliance Commercial
Appliances Receivables LLC, Alliance Commercial Appliances Finance LLC and
Alliance Laundry S.A. In addition, "Unrestricted Subsidiary" means (i) any
Subsidiary that is designated by the Board of Managers as an Unrestricted
Subsidiary pursuant to a Board Resolution; but only to the extent that such
Subsidiary: (a) has no Indebtedness other than
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22
Non-Recourse Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company; (c) is a Person with respect to which neither the Company nor any of
its Restricted Subsidiaries has any direct or indirect obligation (x) to
subscribe for additional Equity Interests or (y) to maintain or preserve such
Person's financial condition or to cause such Person to achieve any specified
levels of operating results; (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Managers shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the Board
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by the provisions of Section 4.7 hereof. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date in accordance with the provisions of Section 4.9
hereof, the Company shall be in default of such provision). The Board of
Managers of the Company may at any time designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided that such designation shall be deemed to be
an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted under Section 4.9
hereof, calculated on a pro forma basis as if such designation had occurred at
the beginning of the four-quarter reference period, (ii) such Subsidiary shall
execute a Note Guarantee and deliver an Opinion of Counsel in accordance with
the terms of this Indenture and (iii) no Default or Event of Default would be in
existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" of any person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors or the Board of Managers of such Person, as the case may be.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
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23
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.2 OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"..................................4.11
"Asset Sale Offer".......................................4.10
"Authentication Order"................................... 2.2
"Change of Control Offer"................................4.15
"Change of Control Payment"..............................4.15
"Change of Control Payment Date".........................4.15
"Covenant Defeasance".................................... 8.3
"Designated Senior Debt".................................10.2
"DTC".................................................... 2.3
"Event of Default"....................................... 6.1
"Excess Proceeds"........................................4.10
"Funding Guarantor"......................................11.4
"incur".................................................. 4.9
"Legal Defeasance"....................................... 8.2
"Offer Amount"........................................... 3.9
"Offer Period"........................................... 3.9
"Paying Agent"........................................... 2.3
"Payment Blockage Notice"................................10.4
"Payment Default"........................................ 6.1
"Permitted Debt"......................................... 4.9
"Permitted Junior Securities"............................10.2
"Purchase Date".......................................... 3.9
"Redemption Date"........................................ 3.7
"Registrar".............................................. 2.3
"Representative".........................................10.2
"Restricted Payments".................................... 4.7
"Senior Debt"............................................10.2
"Successor Guarantor".................................... 5.2
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
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The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes and the Guarantees;
"indenture security Holder" means a Holder of a Security;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"Obligor" on the indenture securities means the Issuers, the
Guarantors and any successor obligor upon the indenture securities.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) or is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement or successor sections or rules
adopted by the SEC from time to time.
SECTION 1.5 ONE CLASS OF SECURITIES.
The Initial Notes and the New Notes shall vote and consent together on
all matters as one class and none of the Initial Notes or the New Notes shall
have the right to vote or consent as a separate class on any matter.
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25
ARTICLE 2.
THE NOTES
SECTION 2.1 FORM AND DATING.
(a) General.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A hereto. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the Securities shall constitute,
and are hereby expressly made, a part of this Indenture and the Issuers, the
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Security conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of
Exhibits A-1 or A-2 attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A-l attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with written
instructions given by the Holder thereof as required by Section 2.6 hereof.
(c) Temporary Global Notes
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York office, as custodian for the Depositary, and registered
in the name of the Depositary or the nominee of the Depositary for the accounts
of designated agents holding on behalf of Euroclear or Cedel Bank, duly executed
by the Issuers and authenticated by the Trustee as hereinafter provided.
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26
The Restricted Period shall be terminated upon the receipt by the Trustee of (i)
a written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein during the Restricted
Period pursuant to another exemption from registration under the Securities Act
and who will take delivery of a beneficial ownership interest in a 144A Global
Note bearing a Private Placement Legend, all as contemplated by Section
2.6(a)(ii) hereof), and (ii) an Officers' Certificate from the Company.
Following the termination of the Restricted Period, beneficial interests in the
Regulation S Temporary Global Note shall be exchanged for beneficial interests
in Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear Cedel Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Cedel Bank" and "Customer Handbook" of Cedel Bank shall be
applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Global Notes that are held by Participants
through Euroclear or Cedel Bank.
SECTION 2.2 EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for each of the Issuers by manual or
facsimile signature. The Issuers' seals, if any, shall be reproduced on the
Notes and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time a Security is authenticated, the Security shall nevertheless
be valid.
A Security shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee shall, upon a written order of each of the Issuers signed
by two Officers of each Issuer (an "Authentication Order"), authenticate Notes
for original issue up to the aggregate principal amount of $200,000,000. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.7 hereof.
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27
The Trustee may (at the expense of the Issuers) appoint an
authenticating agent acceptable to the Issuers to authenticate Notes. An
authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with Holders or an Affiliate of the Issuers and has the same
protections under Article 7 herein.
SECTION 2.3 REGISTRAR AND PAYING AGENT.
The Issuers shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Issuers may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Issuers may change any
Paying Agent or Registrar without notice to any Holder. The Issuers shall
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Issuers fail to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Issuers, any of
their Subsidiaries or any Guarantor may act as Paying Agent or Registrar.
The Issuers initially appoint The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
will notify the Trustee in writing of any default by the Issuers in making any
such payment. While any such default continues, the Trustee may require a
Paying Agent to pay all money held by it to the Trustee. The Issuers at any
time may require a Paying Agent to pay all money held by it to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than an Issuer or a
Subsidiary) shall have no further liability for the money. If an Issuer, a
Subsidiary or a Guarantor acts as Paying Agent, it shall segregate and hold in a
separate trust funds for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Issuers, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5 HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise
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comply with TIA (S) 312(a). If the Trustee is not the Registrar, the Issuers
shall furnish to the Trustee at least seven Business Days before each interest
payment date and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Holders of Notes and the Issuers shall otherwise
comply with TIA (S) 312(a).
SECTION 2.6 TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the
Depositary to a nominee of the Depositary, by a nominee of the Depositary to the
Depositary or to another nominee of the Depositary, or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. All Global Notes will be exchanged by the Issuers for Definitive
Notes if (i) the Issuers deliver to the Trustee written notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by the Issuers within 120
days after the date of such notice from the Depositary or (ii) the Issuers in
their sole discretion determine that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and deliver a written notice to such
effect to the Trustee; provided that in no event shall the Regulation S
Temporary Global Note be exchanged by the Issuers for Definitive Notes prior to
(x) the expiration of the Restricted Period and (y) the receipt by the Registrar
of any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act. Upon the occurrence of either of the preceding events in (i) or
(ii) above, Definitive Notes shall be issued in such names as the Depositary
shall instruct the Trustee in writing. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.6(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.6(b),(c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes
shall be effected through the Depositary, in accordance with the provisions of
this Indenture and the Applicable Procedures. Beneficial interests in the
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (i) or (ii) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take
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29
delivery thereof in the form of a beneficial interest in the same
Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in
the Temporary Regulation S Global Note may not be made to a U.S. Person or
for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note. No written orders or
instructions shall be required to be delivered to the Registrar to effect
the transfers described in this Section 2.6(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of
beneficial interests that are not subject to Section 2.6(b)(i) above, the
transferor of such beneficial interest must deliver to the Registrar either
(A) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing
the Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Issuers and the Parent in
accordance with Section 2.6(f) hereof, the requirements of this Section
2.6(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the Holder of such beneficial interests in the Restricted
Global Notes. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture and the Notes or otherwise applicable under the Securities Act,
the Trustee shall adjust the principal amount of the relevant Global
Note(s) pursuant to Section 2.6(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.6(b)(ii) above and the
Registrar receives the following:
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(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted Global
Note. A beneficial interest in any Restricted Global Note may be exchanged
by any holder thereof for a beneficial interest in an Unrestricted Global
Note or transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.6(b)(ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of the beneficial interest to be transferred, in the
case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
New Notes or (3) a Person who is an affiliate (as defined in Rule 144)
of the Issuers;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
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and, in each such case set forth in this subparagraph (D), if the Registrar
so requests or if the Applicable Procedures so require, an Opinion of
Counsel in form reasonably acceptable to the Registrar to the effect that
such exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Issuers shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. If any holder of a beneficial interest in a
Restricted Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note or to transfer such beneficial interest to a
Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
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(E) if such beneficial interest is being transferred to the
Issuers or any of their Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(F) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.6(h) hereof,
and the Issuers shall execute and the Trustee shall upon receipt of an
Authentication Order authenticate and deliver to the Person designated in
the instructions a Definitive Note in the appropriate principal amount.
Any Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.6(c) shall be registered
in such name or names and in such authorized denomination or denominations
as the holder of such beneficial interest shall instruct the Registrar
through instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall (at the expense of the Issuers) deliver
such Definitive Notes to the Persons in whose names such Notes are so
registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.6(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Notwithstanding Sections 2.6(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person who takes
delivery thereof in the form of a Definitive Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903(c)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an exemption
from the registration requirements of the Securities Act other than Rule
903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the New
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Issuers;
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(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof,
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in
an Unrestricted Global Note proposes to exchange such beneficial interest
for a Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.6(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.6(h) hereof, and the
Issuers shall execute and the Trustee shall upon receipt of an
Authentication Order authenticate and (at the expense of the Issuers)
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest pursuant to this Section 2.6(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall (at the expense of the Issuers)
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
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34
interest pursuant to this Section 2.6(c)(iii) shall not bear the Private
Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note, a
certificate from such Holder in the form of Exhibit C hereto, including the
certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications in
item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
the Issuers or any of their Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(F) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof, the Trustee shall cancel the
Restricted Definitive Note, increase or cause to be increased the aggregate
principal amount of, in the case of clause (A) above, the appropriate
Restricted Global Note, in the case of clause (B) above, the 144A Global
Note, and in the case of clause (C) above, the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for
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a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer, (2) a Person participating in the distribution of the
New Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Issuers;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the Registration
Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in the
form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to the
effect that such exchange or transfer is in compliance with the Securities
Act and that the restrictions on transfer contained herein and in the
Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.6(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive
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36
Notes to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note at any time. Upon receipt of a
written request for such an exchange or transfer, the Trustee shall cancel
the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Issuers shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.2 hereof, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.6(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.6(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive
Notes. Any Restricted Definitive Note may be exchanged by the Holder
thereof for an
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37
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the New Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Issuers;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (I)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Registrar to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private Placement
Legend are no longer required in order to maintain compliance with the
Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes
to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note. Upon receipt of a request to register such a transfer,
the Registrar shall register the Unrestricted Definitive Notes pursuant to
the instructions from the Holder thereof.
(f) Exchange Offer.
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Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Issuers shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.2, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
applicable Letters of Transmittal that (x) they are not broker-dealers, (y) they
are not participating in a distribution of the New Notes and (z) they are not
affiliates (as defined in Rule 144) of the Issuers, and accepted for exchange in
the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes accepted for
exchange in the Exchange Offer. Concurrently with the issuance of such Notes,
the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly, and the Issuers shall execute
and the Trustee shall authenticate and (at the expense of the Issuers) deliver
to the Persons designated by the Holders of Definitive Notes so accepted
Definitive Notes in the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED
IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE
SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF
THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A)
SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) (a)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A OF THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED
STATES TO A FOREIGN PERSON IN A
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TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO EITHER ISSUER OR (3) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
(B) Notwithstanding the foregoing, any Global Note or Definitive Note
issued pursuant to subparagraphs (b)(iv), (c)(ii), (c)(iii), (d)(ii), (d)(iii),
(e)(ii), (e)(iii) or (f) to this Section 2.6 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS
MAY BE REQUIRED PURSUANT TO SECTION 2.7 OF THE INDENTURE, (II) THIS GLOBAL
NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a)
OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE
FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR
WRITTEN CONSENT OF THE ISSUERS."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES,
ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER
NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL
BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON."
(h) Cancellation and/or Adjustment of Global Notes.
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At such time as all beneficial interests in a particular Global Note
have been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or cancelled in whole and not in part, each such Global
Note shall be returned to or retained and cancelled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of Notes represented
by such Global Note shall be reduced accordingly and an endorsement shall be
made on such Global Note by the Trustee or by the Depositary at the direction of
the Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of an Authentication Order in accordance with
Section 2.2 hereof or upon receipt of a written request of the Registrar.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note
for any registration of transfer or exchange, but the Issuers may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or similar governmental charge payable upon exchange or
transfer pursuant to Sections 2.10, 3.6, 3.9, 4.10, 4.15 and 9.5 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Issuers, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Global Notes
or Definitive Notes surrendered upon such registration of transfer or
exchange.
(v) The Issuers shall not be required (A) to issue, to register
the transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes for
redemption under Section 3.2 hereof and ending at the close of business on
the day of selection, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer
<PAGE>
41
of or to exchange a Note between a record date and the next succeeding
interest payment date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Issuers may deem and
treat the Person in whose name any Note is registered as the absolute owner
of such Note for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and none of the Trustee,
any Agent or the Issuers shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.2 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.6 to
effect a registration of transfer or exchange may be submitted by
facsimile.
SECTION 2.7 REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the Issuers and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Issuers, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Issuers and the Trustee may charge for their expenses in
replacing a Note.
Every replacement Note is an additional obligation of the Issuers and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8 OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because the Issuers or an Affiliate of the
Issuers holds the Note; however, Notes held by the Issuers or a Subsidiary of
the Issuers shall not be deemed to be outstanding for purposes of Section 3.7(b)
hereof.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
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If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than an Issuer, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9 TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Issuers or any Guarantor, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Issuers or any
Guarantor shall be considered as though not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Notes that the Trustee knows are so
owned shall be so disregarded.
SECTION 2.10 TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery, the
Issuers may prepare and the Trustee, upon receipt of an Authentication Order,
shall authenticate temporary Notes. Temporary Notes shall be substantially in
the form of certificated Notes but may have variations that the Issuers consider
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee.
Without unreasonable delay, the Issuers shall prepare and the Trustee
shall authenticate Definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11 CANCELLATION.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered (at the expense of the Issuers) to the Issuers. The Issuers may not
issue new Notes to replace Notes that it has paid or that have been delivered to
the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST.
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43
If the Issuers default in a payment of interest on the Notes, they
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.1 hereof. The Issuers shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Issuers shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Issuers (or, upon the written request of the Issuers, the Trustee in the name
and at the expense of the Issuers) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
SECTION 2.13 CUSIP NUMBERS.
The Issuers in issuing the Notes may use "CUSIP" numbers (if then
generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders, provided, however, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such numbers.
In the event that the Issuers shall issue and the Trustee shall
authenticate any Additional Notes pursuant to this Indenture, the Issuers shall
use their best efforts to obtain the same CUSIP number for such Additional Notes
as is printed on the Notes outstanding at such time; provided, however, that if
any series of Additional Notes is determined, pursuant to an Opinion of Counsel,
to be a different class of security than the Notes outstanding at such time for
federal income tax purposes, the Issuers may obtain a CUSIP number for such
series of Additional Notes that is different from the CUSIP number printed on
the Notes then outstanding.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
SECTION 3.1 NOTICES TO TRUSTEE.
If the Issuers elect to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, they shall furnish to the Trustee,
at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.2 SELECTION OF NOTES TO BE REDEEMED.
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If less than all of the Notes are to be redeemed or purchased in an
offer to purchase at any time, the Trustee shall select the Notes to be redeemed
or purchased among the Holders of the Notes in compliance with the requirements
of the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Issuers of the Notes selected
for redemption and, in the case of any Note selected for partial redemption, the
principal amount thereof to be redeemed. Notes and portions of Notes selected
shall be in amounts of $1,000 or whole multiples of $1,000; except that if all
of the Notes of a Holder are to be redeemed, the entire outstanding amount of
Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
SECTION 3.3 NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.9 hereof, at least 30 days but
not more than 60 days before a redemption date, the Issuers shall mail or cause
to be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Issuers default in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
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45
(g) the paragraph of the Notes and/or Section of this Indenture pursuant to
which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' name and at their expense; provided, however, that
the Issuers shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Issuers shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Issuers any
money deposited with the Trustee or the Paying Agent by the Issuers in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Issuers to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.1 hereof.
SECTION 3.6 NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Issuers shall
issue and, upon receipt of an Authentication Order, the Trustee shall
authenticate for the Holder at the expense of the Issuers a new Note equal in
principal amount to the unredeemed portion of the Note surrendered.
SECTION 3.7 OPTIONAL REDEMPTION.
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(a) Except as set forth in clauses (b) or (c) of this Section 3.7, the
Issuers shall not have the option to redeem the Notes pursuant to this Section
3.7 prior to May 1, 2003. Thereafter, the Issuers shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below plus accrued and unpaid interest and Liquidated Damages,
if any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on May 1 of the years indicated below:
YEAR REDEMPTION PRICE
---- ----------------
2003 104.813%
2004 103.208%
2005 101.604%
2006 and thereafter 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.7,
at any time prior to May 1, 2001, the Issuers may, on any one or more occasions,
redeem up to 35% of the aggregate principal amount of Notes issued under this
Indenture at a redemption price of 109.625% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages thereon, if any, to the
redemption date, with the net cash proceeds of any Equity Offerings; provided
that at least 65% of the aggregate principal amount of Notes issued under this
Indenture remains outstanding immediately after the occurrence of such
redemption (excluding Notes held by the Issuers and their Subsidiaries); and
provided further, that such redemption shall occur within 45 days of the date of
the closing of such Equity Offering.
(c) At any time prior to May 1, 2003, the Notes may also be redeemed,
as a whole but not in part, at the option of the Issuers upon the occurrence of
a Change of Control, upon not less than 30 nor more than 60 days' prior notice
(but in no event may any such redemption occur more than 90 days after the
occurrence of such Change of Control) mailed by first-class mail to each
Holder's registered address, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of
redemption (the "Redemption Date").
(d) Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8 MANDATORY REDEMPTION.
The Issuers shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
SECTION 3.9 OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
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In the event that, pursuant to Section 4.10 hereof, the Issuers shall
be required to commence an Asset Sale Offer, they shall follow the procedures
specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Issuers shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Issuers shall send,
by first class mail, a written notice to the Trustee and to each of the Holders,
with a copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the Asset
Sale Offer. The Asset Sale Offer shall be made to all Holders. The notice,
which shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.9 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue
to accrete or accrue interest;
(d) that, unless the Issuers default in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may
not elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to the Issuers, a
depositary, if appointed by the Issuers, or a
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Paying Agent at the address specified in the notice at least three days
before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Issuers, the depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Issuers shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Issuers so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Issuers shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale
Offer, or if less than the Offer Amount has been tendered, all Notes tendered,
and shall deliver to the Trustee an Officers' Certificate stating that such
Notes or portions thereof were accepted for payment by the Issuers in accordance
with the terms of this Section 3.9. The Issuers, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the Notes tendered by such Holder and accepted by
the Issuers for purchase, and the Issuers shall promptly issue a new Note, and
the Trustee, upon receipt of an Authentication Order from the Issuers shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by the Issuers to the Holder
thereof. The Issuers shall publicly announce the results of the Asset Sale Offer
on the Purchase Date.
Other than as specifically provided in this Section 3.9, any purchase
pursuant to this Section 3.9 shall be made pursuant to the provisions of
Sections 3.1 through 3.6 hereof.
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49
ARTICLE 4.
COVENANTS
SECTION 4.1 PAYMENT OF NOTES.
The Issuers shall pay or cause to be paid the principal of, premium,
if any, and interest and Liquidated Damages, if any, on the Notes on the dates
and in the manner provided in the Notes. Principal, premium, if any, and
interest and Liquidated Damages, if any, shall be considered paid on the date
due if the Paying Agent, if other than the Issuers or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Issuers in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest and Liquidated Damages, if any,
then due. The Issuers shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
The Issuers shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Notes to
the extent lawful; they shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Issuers in respect of the Notes and this Indenture may be
served. The Issuers shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Issuers may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Issuers of their obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Issuers shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.3.
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SECTION 4.3 REPORTS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Notes are outstanding, the Issuers shall furnish to the Trustee
and the Holders of Notes (i) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on Forms 10-Q and 10-
K if the Issuers were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Issuers and
their consolidated Subsidiaries (showing in reasonable detail, either on the
face of the financial statements or in the footnotes thereto, the financial
condition and results of operations of the Issuers and their Restricted
Subsidiaries separate from the financial condition and results of operations of
the Unrestricted Subsidiaries of the Issuers) and, with respect to the annual
information only, a report thereon by the Issuers' certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Issuers were required to file such reports, in each
case within the time periods specified in the SEC's rules and regulations. For
so long as the Parent is a Guarantor of the Notes, the Issuers shall satisfy
their obligations in this covenant with respect to financial information
relating to the Issuers by furnishing financial information relating to the
Parent; provided that the same is accompanied by consolidating information that
explains in reasonable detail the differences between the information relating
to the Parent, on the one hand, and the information relating to the Issuers and
their Restricted Subsidiaries on a stand-alone basis, on the other hand. In
addition, following the consummation of the exchange offer contemplated by the
Registration Rights Agreement, whether or not required by the rules and
regulations of the SEC, the Issuers shall file a copy of all such information
and reports with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request.
(b) For so long as any Notes remain outstanding, the Issuers and the
Guarantors shall furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 4.4 COMPLIANCE CERTIFICATE.
(a) The Issuers and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal quarter, an Officers' Certificate stating that a review
of the activities of the Issuers and their Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether the Issuers have kept, observed, performed and
fulfilled their obligations under this Indenture, and further stating, as to
each such Officer signing such certificate, that to the best of his or her
knowledge the Issuers have kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and are not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge
<PAGE>
51
and what action the Issuers are taking or propose to take with respect thereto)
and that to the best of his or her knowledge no event has occurred and remains
in existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Issuers are taking or propose to
take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3(a) above shall be accompanied by a
written statement of the Issuers' independent public accountants (who shall be a
firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Issuers have violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Issuers shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Issuers are taking or propose to take with
respect thereto.
SECTION 4.5 TAXES.
The Issuers shall pay, and shall cause each of their Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
SECTION 4.6 STAY, EXTENSION AND USURY LAWS.
Each of the Issuers and the Guarantors covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Issuers and each Guarantor (to the extent that they may lawfully do so) hereby
expressly waive all benefit or advantage of any such law, and covenant that they
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
SECTION 4.7 RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity
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52
Interests (including, without limitation, any payment in connection with any
merger or consolidation involving the Company or any of its Restricted
Subsidiaries) or to the direct or indirect holders of the Company's or any of
its Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary
of the Company); (ii) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or consolidation
involving the Company) any Equity Interests of the Company or any direct or
indirect parent of the Company or other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Restricted Subsidiary); (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated to
the Notes or any guarantee thereof, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant described
below under Section 4.9 hereof; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii), (iv), (vi), (vii), (viii) and (ix) of the next succeeding
paragraph), is less than the sum, without duplication, of (i) 50% of the
Consolidated Net Income of the Company and its Restricted Subsidiaries for the
period (taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of the Company's
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus (ii) 100%
of the aggregate net proceeds (including the fair market value of property other
than cash (determined in good faith by the Board of Managers as evidenced by a
certificate filed with the Trustee, except that in the event the value of any
non-cash consideration shall be $15.0 million or more, the value shall be as
determined based upon an opinion or appraisal issued by an Independent Financial
Advisor)) received by the Company since the date of this Indenture as a
contribution to its common equity capital or from the issue or sale of Equity
Interests (other than Disqualified Stock) of the Company (excluding any net
proceeds from an Equity Offering or capital contribution to the extent used to
redeem Notes in accordance with the optional redemption provisions of the Notes)
or from the issue or sale of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other than Equity
Interests (or Disqualified Stock or convertible debt securities) sold to a
Subsidiary of the Company), plus (iii) to the extent that
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53
any Restricted Investment that was made after the date of this Indenture is sold
for cash or otherwise liquidated or repaid for cash, the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any), plus (iv) any dividends (the fair market value of property other than cash
shall be determined in good faith by the Board of Managers as evidenced by a
certificate filed with the Trustee, except that in the event the value of any
non-cash consideration shall be $15.0 million or more, the value shall be as
determined based upon an opinion or appraisal issued by an Independent Financial
Advisor) received by the Company or a Restricted Subsidiary after the date of
this Indenture from an Unrestricted Subsidiary of the Company, to the extent
that such dividends were not otherwise included in Consolidated Net Income of
the Company for such period, plus (v) to the extent that any Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary after the date of this
Indenture, if as a result of such redesignation, (x) the Fixed Charge Coverage
Ratio of the Company on a pro forma basis is lower than such ratio immediately
prior thereto, then the lesser of (A) the fair market value of the Company's
Investment in such Subsidiary as of the date of such redesignation or (B) such
fair market value as of the date on which such Subsidiary was originally
designated as an Unrestricted Subsidiary or (y) the Fixed Charge Coverage Ratio
of the Company on a pro forma basis is equal to or higher than such ratio
immediately prior thereto, the fair market value of the Company's Investment in
such Subsidiary as of the date of such redesignation; provided, further that any
increase in the amount of Restricted Payments permitted to be incurred as a
result of application of subparagraphs (iii), (iv) or (v) above related to
dividends, returns of capital or redesignation of foreign joint ventures shall
be reduced by the difference between (A) the fair market value of any equipment
(as determined by sales by the Company of comparable equipment to unaffiliated
third parties) transferred to such joint ventures in reliance on subparagraph
(xii) of the covenant entitled "Transactions with Affiliates" and (B) the value
received by the Company or any Restricted Subsidiary from such joint venture
with respect to such equipment transfer.
The foregoing provisions shall not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests of the Company or subordinated Indebtedness
of the Company or any Guarantors in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company) of, other Equity Interests of the Company (other than any Disqualified
Stock); provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (ii) of the preceding paragraph provided that no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction; (iii) the defeasance, redemption, repurchase or other
acquisition of subordinated Indebtedness with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness; (iv) the payment of any
dividend by a Restricted Subsidiary of the Company to the holders of its Equity
Interests on a pro rata basis; (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Parent, the
Company or any Restricted Subsidiary of the Company held by any member of the
Company's (or any of its Restricted Subsidiaries') management pursuant to any
management agreement, stock option agreement or similar
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54
agreement; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $5.0 million in
the aggregate since the date of this Indenture (and shall be increased by the
amount of any net cash proceeds to the Company from (x) sales of Equity
Interests of the Parent to management employees subsequent to the date of this
Indenture and (y) any "key-man" life insurance policies which are used to make
such redemptions or repurchases) and no Default or Event of Default shall have
occurred and be continuing immediately after such transaction; provided further,
that the cancellation of Indebtedness owing to the Company from members of
management of the Company or any of its Restricted Subsidiaries in connection
with such a repurchase of Capital Stock of the Parent will not be deemed to
constitute a Restricted Payment under this Indenture; (vi) the making of
distributions, loans or advances to the Parent in an amount not to exceed $1.5
million per annum in order to permit the Parent to pay required and ordinary
operating expenses of the Parent (including, without limitation, directors'
fees, indemnification obligations, professional fees and expenses, but excluding
any payments on or repurchases of the Seller Subordinated Note or the Seller
Preferred Equity); (vii) distributions to the Parent to fund the required tax
obligations of the Parent or its members related to income generated by the
Company and its Restricted Subsidiaries and taxable to such members, including
the tax distributions contemplated by Article IV of the LLC Agreement as in
effect on the date of this Indenture; (viii) repurchases of Capital Stock deemed
to occur upon the exercise of stock options if such Capital Stock represents a
portion of the exercise price thereof; (ix) distributions to the Parent to fund
the Transactions; (x) distributions to the Parent to purchase or redeem the
Seller Subordinated Note and the Seller Preferred Equity pursuant to change of
control provisions contained in the governing instrument relating thereto;
provided, however, that (x) no offer or purchase obligation may be triggered in
respect of such Seller Subordinated Note or Seller Preferred Equity unless a
corresponding obligation also arises with respect to the Notes and (y) in any
event, no repurchase or redemption of any such Seller Subordinated Note or
Seller Preferred Equity may be consummated unless and until the Issuers shall
have satisfied all repurchase obligations with respect to any required purchase
offer made with respect to the Notes; provided, however, that such purchases or
redemption of the Seller Subordinated Note or the Seller Preferred Equity shall
be included in the calculation of the amount of Restricted Payments and provided
that no Default or Event of Default shall have occurred and be continuing as a
consequence thereof; and (xi) if no Default or Event of Default shall have
occurred and be continuing or would occur as a consequence thereof, other
Restricted Payments in an aggregate amount not to exceed $5.0 million since the
date of this Indenture. In addition, any dividend which is declared but not paid
shall not be included in the calculation of Restricted Payments under clause
(c), and any divided which is declared and paid shall be included only once in
the calculation of Restricted Payments under clause (c).
The amount of all Restricted Payments (other than cash) shall be the
fair market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Managers of the Company whose resolution with respect thereto shall
be delivered to the Trustee, such determination to be based upon an opinion or
appraisal issued by an Independent Financial Advisor if such fair market value
<PAGE>
55
exceeds $15.0 million. Not later than the date of making any Restricted Payment,
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.7 were computed, together with a copy of
any fairness opinion or appraisal required by this Indenture.
The Board of Managers may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
Any designation of an Unrestricted Subsidiary by the Board of Managers
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the resolution of the Board of Managers of the Company giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the terms of the Indenture governing the designation of
Unrestricted Subsidiaries and was permitted by this Section 4.7. If, at any
time, any Unrestricted Subsidiary fails to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under Section 4.9 hereof, the Company shall be
in default of such covenant). The Board of Managers of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.9 hereof
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, (ii) such Subsidiary shall
execute a Note Guarantee and deliver an Opinion of Counsel in accordance with
the terms of this Indenture and (iii) no Default or Event of Default would be in
existence following such designation.
SECTION 4.8 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (a) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by,
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56
its profits, or (b) pay any Indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries. However, the foregoing
restrictions will not apply to encumbrances or restrictions existing under or by
reason of (a) Existing Indebtedness as in effect on the date of this Indenture
(b) the Senior Credit Facility as in effect as of the date of this Indenture,
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are no more restrictive, taken as a
whole, with respect to such dividend and other payment restrictions than those
contained in the Senior Credit Facility as in effect on the date of this
Indenture, (c) this Indenture and the Notes, (d) applicable law, (e) any
instrument governing Indebtedness or Capital Stock of a Person acquired by the
Company or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such Indebtedness was incurred in connection
with or in contemplation of such acquisition), which encumbrance or restriction
is not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was permitted by
the terms of this Indenture to be incurred, (f) customary non-assignment
provisions in leases entered into in the ordinary course of business and
consistent with past practices, (g) purchase money obligations for property
acquired in the ordinary course of business that impose restrictions of the
nature described in clause (iii) above on the property so acquired, (h) any
agreement for the sale of a Restricted Subsidiary that restricts distributions
by that Restricted Subsidiary pending its sale, (i) Permitted Refinancing
Indebtedness, provided that the restrictions contained in the agreements
governing such Permitted Financing Indebtedness are no more restrictive, taken
as a whole, than those contained in the agreements governing the Indebtedness
being refinanced, (j) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of the covenant described in Section 4.12 hereof that
limits the right of the debtor to dispose of the assets securing such
Indebtedness, (k) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business, (1) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business, (m) any Purchase Money Note, or other
Indebtedness or other contractual requirements of a Securitization Entity in
connection with a Qualified Securitization Transaction; provided that such
restrictions apply only to such Securitization Entity, (n) other Indebtedness of
a Restricted Subsidiary that is a Guarantor permitted to be incurred subsequent
to the date of this Indenture pursuant to the provisions of the covenant
described in Section 4.9 hereof; provided that any such restrictions are
ordinary and customary with respect to the type of Indebtedness or preferred
stock being incurred or issued (under the relevant circumstances), and (o) any
encumbrances or restrictions imposed by any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings of the contracts, instruments or obligations referred to in clauses
(a) through (n) above; provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings are, in the good faith judgment of the Company's Board of Managers,
no more restrictive with respect to such dividend and other
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57
payment restrictions than those contained in the dividend or other payment
restrictions prior to such amendment, modification, restatement, renewal,
increase, supplement, refunding, replacement or refinancing.
SECTION 4.9 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
The Issuers shall not, and shall not permit any of their Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Debt) and the Issuers shall not issue any Disqualified Stock and shall not
permit any of their Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that the Company or any Guarantor may incur
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock or
preferred stock if (i) no Default or Event of Default shall have occurred and be
continuing at the time of or as consequence of the incurrence of any such
Indebtedness or the issuance of any such Disqualified Stock and (ii) the Fixed
Charge Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or such
Disqualified Stock is issued would have been at least 2.0 to 1.0, determined on
a pro forma basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The provisions of the first paragraph of this Section 4.9 shall not
apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company (and the guarantee thereof by
the Guarantors) of Indebtedness and letters of credit under one or more
Senior Credit Facilities; provided that the aggregate principal amount of
all Indebtedness (with letters of credit being deemed to have a principal
amount equal to the maximum potential liability of the Company and its
Restricted Subsidiaries thereunder) outstanding under all Senior Credit
Facilities after giving effect to such incurrence does not exceed an amount
equal to the greater of (x) $275.0 million less the aggregate amount of all
repayments of any term Indebtedness and all commitment reductions of any
revolving Indebtedness, in each case, under one or more Senior Credit
Facilities pursuant to clause (i) of the third paragraph of the covenant
described in Section 4.10 hereof and (y) the Company's Borrowing Base;
(ii) the incurrence by the Issuers of Indebtedness represented
by the Notes and the Guarantees thereof by the Guarantors in an aggregate
principal amount of $110.0 million outstanding on the date of this
Indenture;
(iii) the incurrence by a Restricted Subsidiary that is a
Foreign Subsidiary and is not a Guarantor of the Notes in an amount at any
one time outstanding that does not exceed (x) $3.0 million plus (y) the
Borrowing Base of such Restricted
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58
Subsidiary; provided, that none of the Company or any other such Restricted
Subsidiary shall be obligated, directly or indirectly, to pay principal,
premium, interest or other amounts thereon or in respect thereof (including
by way of net worth requirements, equity keepwells, etc.);
(iv) the incurrence by the Company and its Subsidiaries of
other Indebtedness outstanding on the date of this Indenture for so long as
such Indebtedness remains outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness (including Capitalized Lease Obligations) to
finance the purchase, lease or improvement of property (real or personal)
or equipment (whether through the direct purchase of assets or the Capital
Stock of any Person owning such assets) in an aggregate principal amount
outstanding not to exceed the greater of (x) $10.0 million and (y) 7.5% of
Total Assets at the time of any incurrence thereof (including any
Refinancing Indebtedness with respect thereto) (which amount may, but need
not, be incurred in whole or in part under the Senior Credit Facilities);
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business,
including, without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with respect
to reimbursement type obligations regarding workers' compensation claims;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from agreements of the Company or a
Restricted Subsidiary of the Company providing for indemnification,
adjustment of purchase price, earn out or other similar obligations, in
each case, incurred or assumed in connection with the disposition of any
business, assets or a Restricted Subsidiary of the Company, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Restricted Subsidiary for the purpose
of financing such acquisition; provided that the maximum assumable
liability in respect of all such Indebtedness shall at no time exceed the
gross proceeds actually received by the Company and its Restricted
Subsidiaries in connection with such disposition;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
of the Company in the ordinary course of business;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with an industrial revenue bond
in an aggregate principal amount not to exceed $10.0 million for the
expansion of the Company's Madisonville, Kentucky facility;
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(x) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by this Indenture
to be incurred under the first paragraph hereof or clauses (ii) and (iv) of
this paragraph or any Indebtedness issued to so refund, refinance or
replace such Indebtedness;
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries; provided, however, that (i) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all Obligations with
respect to the Notes and (ii)(A) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary thereof and (B)
any sale or other transfer of any such Indebtedness to a Person that is not
either the Company or a Restricted Subsidiary thereof shall be deemed, in
each case, to constitute an incurrence of such Indebtedness by the Company
or such Subsidiary, as the case may be, that was not permitted by this
clause (xi);
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred in the normal course
of business and not for speculative purposes used for fixing or hedging
currency or interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding; provided, however, that in the case of Hedging Obligations
that are incurred for the purpose of fixing or hedging interest rate risks
with respect to Indebtedness, the notional principal amount of any such
Hedging Obligation does not exceed the principal amount of the Indebtedness
to which such Hedging Obligation relates;
(xiii) the guarantee by the Company or any of the Guarantors of
Indebtedness that was permitted to be incurred by another provision of this
covenant ;
(xiv) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt; provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xiv);
(xv) the incurrence by a Securitization Entity of Indebtedness
in a Qualified Securitization Transaction that is Non-Recourse Debt with
respect to the Company and its other Restricted Subsidiaries (except for
Standard Securitization Undertakings and Limited Originator Recourse); and
(xvi) the incurrence by the Company or any of its Restricted
Subsidiaries that is a Guarantor of additional Indebtedness and/or the
issuance of Disqualified Stock in an aggregate principal amount or
aggregate liquidation value, as applicable (or
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accreted value, as applicable) at any time outstanding, including all
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (xvi), not to exceed
$30.0 million.
For purposes of determining compliance with this covenant, in the event that an
item of Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (i) through (xvi) above or is entitled to be
incurred pursuant to the first paragraph of this covenant, the Company shall, in
its sole discretion, classify or later reclassify such item of Indebtedness in
any manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount and the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms will not
be deemed to be an incurrence of Indebtedness for purposes of this covenant;
provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
SECTION 4.1 ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Managers set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary, as the case may be, is in
the form of cash or Cash Equivalents; provided that the amount of (x) any
liabilities (as shown on the Company's or such Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (y) any securities,
notes or other obligations received by the Company or any such Restricted
Subsidiary from such transferee that are immediately converted by the Company or
such Restricted Subsidiary into cash (to the extent of the cash received) shall
be deemed to be cash for purposes of this provision.
Notwithstanding the immediately preceding paragraph, the Company and
its Restricted Subsidiaries shall be permitted to consummate an Asset Sale
without complying with the prior paragraph if (i) the Company or the applicable
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets or other
property sold, issued or otherwise disposed of (as evidenced by a resolution of
the Company's Board of Managers set forth in an Officers' Certificate delivered
to the Trustee) and (ii) at least 75% of the consideration for such Asset Sale
constitutes a controlling interest in a Permitted Business, long-term assets
used or useful in a Permitted Business and/or cash or Cash Equivalents; provided
that any cash or Cash Equivalents received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Proceeds subject to the
provisions of the next succeeding paragraph.
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Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply such Net Proceeds, at its option, (i) to repay
Senior Debt and, in the case of any Senior Debt under any revolving credit
facility, effect a corresponding commitment reduction under such credit
facility, (ii) to the acquisition of a controlling interest in a Permitted
Business, the making of a capital expenditure or the acquisition of other
Additional Assets or (iii) a combination of prepayment and investment permitted
by the forgoing clauses (i) and (ii). Pending the final application of any such
Net Proceeds, the Company may temporarily reduce revolving credit borrowings or
otherwise invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales that are not applied or invested
as provided in the first sentence of this paragraph will be deemed to constitute
"Excess Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0
million, the Issuers will be required to make an offer to all Holders of Notes
(an "Asset Sale Offer") to purchase the maximum principal amount of Notes that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in this Indenture (the first date the
aggregate of all such Net Proceeds is equal to $10.0 million or more shall be
deemed an "Asset Sale Offer Trigger Date"). Each Asset Sale Offer will be
mailed to the record Holders as shown on the register of Holders within 25 days
following the Asset Sale Offer Trigger Date, with a copy to the Trustee, and
shall comply with the procedures set forth in this Indenture. Upon receiving
notice of the Asset Sale Offer, Holders may elect to tender their Notes in whole
or in part in integral multiples of $1,000 in exchange for cash. To the extent
that any Excess Proceeds remain after consummation of an Asset Sale Offer, the
Company may use such Excess Proceeds for any purpose not otherwise prohibited by
this Indenture. If the aggregate principal amount of Notes tendered into such
Asset Sale Offer surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased among the Holders
of the Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not so listed, on a pro rata basis, by lot or in accordance with any other
method the Trustee considers fair and appropriate. Upon completion of such
offer to purchase, the amount of Excess Proceeds shall be reset at zero.
The Issuers shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sale
provisions of this Indenture, the Issuers shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached their
obligations under the Asset Sale provisions of this Indenture by virtue thereof.
SECTION 4.11 TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any
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transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to
the Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $3.0
million, a resolution of the Board of Managers set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Managers and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an Independent Financial Advisor. Notwithstanding the foregoing,
the following items shall not be deemed to be Affiliate Transactions: (i) any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (ii) transactions
exclusively between or among the Company and/or its Restricted Subsidiaries,
provided such transactions have not otherwise been prohibited by this Indenture,
(iii) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company, (iv) transactions effected as part of a Qualified
Securitization Transaction, (v) Restricted Payments that are permitted by the
provisions of Section 4.7 hereof, (vi) reasonable fees and compensation paid to,
and indemnity provided on behalf of, officers, directors, employees or
consultants of the Company or any Subsidiary as determined in good faith by the
Company's Board of Managers or senior management, (vii) the payment of
consulting and advisory fees, annual management fees and related expenses to the
Principals made pursuant to any financial advisory, financing, underwriting or
placement agreement or in respect of other investment banking activities,
including, without limitation, in connection with acquisitions or divestitures
which are approved by the Board of Managers of the Company or such Restricted
Subsidiary in good faith, (viii) any agreement as in effect on the date of this
Indenture or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto) in any replacement agreement
thereto so long as any such amendment or replacement agreement is not more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the date of this Indenture, (ix) payments or loans to
employees or consultants which are approved by the Board of Managers of the
Company in good faith, (x) the existence of, or the performance by the Company
or any of its Restricted Subsidiaries of its obligations under the terms of, any
stockholders agreement (including any registration rights agreement or purchase
agreement related thereto) to which it is a party as of the date of this
Indenture and any similar agreements which it may enter into thereafter;
provided, however, that the existence of, or the performance by the Company or
any of its Restricted Subsidiaries of obligations under, any future amendment to
any such existing agreement or under any similar agreement entered into after
the date of this Indenture shall only be permitted by this clause (x) to the
extent that the terms of any such amendment or new agreement are not otherwise
disadvantageous to the Holders of the Notes in any material respect, (xi)
transactions with customers, clients, suppliers, joint venture partners or
purchasers or sellers of goods or services, in each case in the ordinary course
of
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business (including, without limitation, pursuant to joint venture agreements)
and otherwise in compliance with the terms of this Indenture which are fair to
the Company or its Restricted Subsidiaries, in the good faith determination of
the Board of Managers of the Company or the senior management thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party and (xii) in the case of foreign joint ventures,
transfers of equipment for sale outside of North America in exchange for value
not less than the Company's cost of producing such equipment.
SECTION 4.12 LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien of any kind securing
Indebtedness or trade payables (other than Permitted Liens) upon any of their
property or assets, now owned or hereafter acquired, unless (i) in the case of
Liens securing Indebtedness that is expressly subordinated or junior in right of
payment to the Notes, the Notes are secured on a senior basis to the obligations
so secured until such time as such obligations are no longer secured by a Lien
and (ii) in all other cases, the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
SECTION 4.13 BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted Subsidiary
to, engage in any line of business other than Permitted Businesses, except to
such extent as would not be material to the Company and its Restricted
Subsidiaries taken as a whole, and ALC shall not own any operating assets or
other properties or conduct any business other than to serve as an Issuer and
obligor on the Notes.
SECTION 4.14 CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Issuers shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) their
limited liability company or corporate existence, and the corporate,
partnership, limited liability company or other existence of each of their
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Issuers or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Issuers
and their Subsidiaries; provided, however, that the Issuers shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership, limited liability company or other existence of any of their
Subsidiaries, if the Board of Managers or the Board of Directors, as the case
may be, shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Issuers and their Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
SECTION 4.15 OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
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(a) Upon the occurrence of a Change of Control, each Holder of Notes
shall have the right to require the Issuers to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes pursuant to
the offer described in this Section 4.15 (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages thereon, if any, to the date
of purchase (the "Change of Control Payment"). Within 10 days following any
Change of Control, the Issuers shall mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date such notice is
mailed (the "Change of Control Payment Date"), pursuant to the procedures
required by this Indenture and described in such notice. The Issuers shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) On a Change of Control Payment Date, the Issuers shall, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying
Agent an amount equal to the Change of Control Payment in respect of all Notes
or portions thereof so tendered and (iii) deliver or cause to be delivered to
the Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Issuers. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
upon receipt of an Authentication Order authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unpurchased portion of the Notes surrendered, if any; provided that each
such new Note shall be in a principal amount of $1,000 or an integral multiple
thereof. Prior to complying with the provisions of this Section 4.15, but in
any event within 90 days following a Change of Control, the Issuers shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.15. The Issuers shall publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Change of Control provisions described above will be applicable
whether or not other provisions of this Indenture are applicable.
(c) Notwithstanding anything to the contrary in this Section 4.15, the
Issuers shall not be required to make a Change of Control Offer upon a Change of
Control (i) if a third party makes the Change of Control Offer in a manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.15 and Section 3.9 hereof and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer or (ii) the Issuers exercise
their option to purchase all the Notes upon a Change of Control as described in
Section 3.7 hereof.
SECTION 4.16 NO SENIOR SUBORDINATED DEBT.
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Notwithstanding the provisions of Section 4.9 hereof, (i) the Issuers
shall not, directly or indirectly, incur any Indebtedness that is subordinate or
junior in right of payment to any Senior Debt and senior in any respect in right
of payment to the Notes and (ii) no Guarantor shall incur any Indebtedness that
is subordinate or junior in right of payment to its Guarantor Senior Debt and
senior in any respect in right of payment to such Guarantor's Guarantee.
SECTION 4.17 LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee or pledge any assets to secure the payment of any other
Indebtedness of the Company unless such Restricted Subsidiary simultaneously
executes and delivers a supplemental indenture to this Indenture providing for
the Guarantee of the payment of the Notes by such Restricted Subsidiary, which
Guarantee shall be senior to or pari passu with such Restricted Subsidiary's
Guarantee of or pledge to secure such other Indebtedness, unless such other
Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be
subordinated to the Guarantee of such Senior Debt to the same extent as the
Notes are subordinated to such Senior Debt. Notwithstanding the foregoing, any
such Guarantee by a Subsidiary of the Notes shall provide by its terms that it
shall be automatically and unconditionally released and discharged upon any
sale, exchange or transfer, to any Person not an Affiliate of the Company, of
all of the Company's stock in, or all or substantially all the assets of, such
Restricted Subsidiary, which sale, exchange or transfer is made in compliance
with the applicable provisions of this Indenture.
SECTION 4.18 PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of this
Indenture or the Notes unless such consideration is offered to be paid or is
paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5.
SUCCESSORS
SECTION 5.1 MERGER, CONSOLIDATION, OR SALE OF ASSETS.
Neither Issuer may consolidate or merge with or into (whether or not
such Issuer is the surviving corporation), or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its properties or
assets in one or more related transactions, to another corporation, Person or
entity unless (i) the Company is the surviving corporation or the entity or the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease,
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conveyance or other disposition shall have been made is a corporation organized
or existing under the laws of the United States, any state thereof or the
District of Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than such Issuer) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Issuers under the
Registration Rights Agreement, the Notes and this Indenture pursuant to a
supplemental indenture in a form satisfactory to the Trustee; (iii) immediately
prior thereto and immediately after such transaction no Default or Event of
Default exists; and (iv) except in the case of a merger of the Company with or
into a Restricted Subsidiary of the Company and except in the case of a merger
entered into solely for the purpose of reincorporating the Company in another
jurisdiction, the Company or the entity or Person formed by or surviving any
such consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will immediately after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
(x) be permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described in Section 4.9 hereof or (y) the Fixed Charge Coverage Ratio
for the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) would be greater than such
ratio for the Company or such surviving entity immediately prior to such
transaction.
Notwithstanding the foregoing, the Company shall be permitted to
reorganize as a corporation in accordance with the procedures established in
this Indenture, provided that the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the Trustee
confirming that such reorganization is not adverse to Holders of the Notes (it
being recognized that such reorganization shall not be deemed adverse to the
Holders of the Notes solely because (i) of the accrual of deferred tax
liabilities resulting from such reorganization or (ii) the successor or
surviving corporation (a) is subject to income tax as a corporate entity or (b)
is considered to be an "includible corporation" of an affiliated group of
corporations within the meaning of the Code or any similar state or local law)
and certain other conditions are satisfied.
The entity or the Person formed by or surviving any consolidation or
merger (if other than the Company) will succeed to, and be substituted for, and
may exercise every right and power of, the Issuers under this Indenture, but, in
the case of a lease of all or substantially all its assets, neither Issuer will
be released from the obligation to pay the principal of and interest on the
Notes.
SECTION 5.2 SUCCESSOR CORPORATION SUBSTITUTED.
(a) Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.1 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease,
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conveyance or other disposition, the provisions of this Indenture referring to
the "Company" shall refer instead to the successor corporation and not to the
Company), and may exercise every right and power of the Company under this
Indenture with the same effect as if such successor Person had been named as the
Company herein; provided, however, that the predecessor Company shall not be
relieved from the obligation to pay the principal of and interest on the Notes
except in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.1 hereof.
(b) Each Guarantor, if any, shall not, and the Company will not
permit a Guarantor to, consolidate or merge with or into or wind up into
(whether or not such Guarantor is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, any Person unless
(i) such Guarantor is the surviving corporation or the Person formed by or
surviving any such consultation or merger (if other than such Guarantor) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made is a corporation, partnership or limited liability company
organized or existing under the laws of the United States, any state thereof,
the District of Columbia, or any territory thereof (such Guarantor or such
Person, as the case may be, being herein called the "Successor Guarantor"); (ii)
the Successor Guarantor (if other than such Guarantor) expressly assumes all the
obligations of such Guarantor under this Indenture, the Registration Rights
Agreement and such Guarantor's Guarantee pursuant to a supplemental indenture or
other documents or instruments in form reasonably satisfactory to the Trustee;
and (iii) if such merger or consolidation is with a Person other than the
Company or a Restricted Subsidiary, (x) immediately after such transaction no
Default or Event of Default shall have occurred and be continuing any (y) the
Company will, at the time of such transaction after giving pro forma effect
thereto, be permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the covenant
described in Section 4.9 hereof. The Successor Guarantor will succeed to, and be
substituted for, such Guarantor under this Indenture, the Registration Rights
Agreement and such Guarantor's Guarantee.
ARTICLE 6.
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Issuers default in the payment when due of interest on, or
Liquidated Damages, if any, with respect to, the Notes and such default
continues for a period of 30 days, whether or not such payment is
prohibited by the provisions of Article 10 hereof;
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(b) the Issuers default in the payment when due of principal of or
premium, if any, on the Notes, whether or not such payment is prohibited by
the provisions of Article 10 hereof;
(c) the Issuers or any of their Restricted Subsidiaries fail to
comply with any of the provisions of Sections 4.15 or 5.1 hereof;
(d) the Issuers or any of their Restricted Subsidiaries fail for 30
days after written notice by the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes to comply with the
provisions of Sections 4.7, 4.9 or 4.10;
(e) the Issuers, any of their Restricted Subsidiaries or any
Guarantor fails to observe or perform any other covenant, representation,
warranty or other agreement in this Indenture or the Notes for 60 days
after written notice to the Issuers by the Trustee or the Holders of at
least 25% in aggregate principal amount of the Notes then outstanding;
(f) the Company or any of its Subsidiaries defaults under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed
by the Company or any of its Subsidiaries (other than a Securitization
Entity) (or the payment of which is guaranteed by the Company or any of its
Subsidiaries (other than a Securitization Entity)), whether such
Indebtedness or guarantee now exists, or is created after the date of this
Indenture, which default (a) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness on the date of such
default (a "Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $10.0 million or
more;
(g) the Company or any of its Subsidiaries fail to pay a final
judgment or final judgments for the payment of money which are entered by a
court or courts of competent jurisdiction against the Company or any of its
Subsidiaries and such judgment or judgments remain undischarged for a
period (during which execution shall not be effectively stayed) of 60 days,
provided that the aggregate of all such undischarged judgments exceeds $10
million (excluding amounts covered by insurance);
(h) the Issuers or any of their Subsidiaries pursuant to or within
the meaning of Bankruptcy Law:
(i) commence a voluntary case,
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(ii) consent to the entry of an order for relief
against them in an involuntary case,
(iii) consent to the appointment of a Custodian of them or
for all or substantially all of their property,
(iv) make a general assignment for the benefit of their
creditors, or
(v) generally are not paying their debts as they become
due; or
(i) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Issuers or any of their
Subsidiaries in an involuntary case;
(ii) appoints a Custodian of the Issuers or any of
their Subsidiaries or for all or substantially all of the property of the
Issuers or any of their Subsidiaries; or
(iii) orders the liquidation of the Issuers or any of their
Subsidiaries; and the order or decree remains unstayed and in effect for 60
consecutive days.
(j) except as permitted by this Indenture, any Guarantee is held in
any judicial proceeding to be unenforceable or invalid or ceases for any
reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, denies or disaffirms its obligations
under its Guarantee.
SECTION 6.2 ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (h) or (i) of Section 6.1 hereof with respect to the Issuers or any
Subsidiaries) occurs and is continuing, the Trustee or the Holders of at least
25% in principal amount of the then outstanding Notes may declare all the Notes
to be due and payable immediately; provided, that so long as Senior Debt or any
commitment therefore is outstanding under the Senior Credit Facility, any such
notice shall not be effective until the earlier of (i) five Business Days after
such notice is delivered to the representative for such Senior Debt or (ii) the
acceleration of the Senior Debt under the Senior Credit Facility.
Notwithstanding the foregoing, if an Event of Default specified in clause (h) or
(i) of Section 6.1 hereof occurs with respect to the Issuers, any Restricted
Subsidiary of the Company that constitutes a Significant Subsidiary or any group
of Restricted Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes shall be due and payable without further
action or notice. Holders of the Notes may not enforce this Indenture or the
Notes except as provided in this Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any
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trust or power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the then outstanding Notes by notice to the Trustee may on
behalf of the Holders of all of the Notes rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Trustee may on behalf of the Holders
of all of the Notes waive any existing Default or Event or Default and its
consequences under this Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee quarterly a written
statement regarding compliance with this Indenture, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to the
Trustee a written statement specifying such Default or Event of Default.
SECTION 6.3 OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee, in its
sole discretion, may pursue any available remedy to collect the payment of
principal, premium, if any, interest and Liquidated Damages, if any, on the
Notes or to enforce the performance of any provision of the Notes or this
Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.4 WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding Notes by written notice to the Trustee may on behalf of the
Holders of all of the Notes waive an existing Default or Event of Default and
its consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Notes (including in connection with an offer to purchase)
(provided, however, that the Holders of a majority in aggregate principal amount
of the then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.5 CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability. The Trustee may take any other action
consistent with this Indenture relating to any such direction.
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SECTION 6.6 LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee security and indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
security and indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.7 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.8 COLLECTION SUIT BY TRUSTEE.
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If an Event of Default specified in Section 6.1(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Issuers for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the compensation, fees, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the claims
of the Trustee (including any claim for the compensation, fees, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Issuers
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the compensation, fees, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under or
in connection with this Indenture. To the extent that the payment of any such
compensation, fees, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under or in connection
with this Indenture out of the estate in any such proceeding, shall be denied
for any reason, payment of the same shall be secured by a perfected, first
priority Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise, and such Lien in favor of a
predecessor Trustee shall be senior to the Lien in favor of the current Trustee.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES.
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee (including any predecessor Trustee), its agents
and attorneys for amounts due under Section 7.7 hereof, including payment of all
compensation, fees, expenses and liabilities incurred, and all advances made, by
the Trustee and the costs and expenses of collection;
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Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Liquidated Damages, if any and
interest, respectively; and
Third: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder of a
Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall
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examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section ;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), (c), (e) and (f) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be under
no obligation to exercise any of its rights and powers under this Indenture at
the request or direction of any Holders, unless such Holder shall have offered
and, if requested, provided to the Trustee security and indemnity satisfactory
to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed by
it to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuers, personally or by agent or attorney.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel. The Trustee may consult
with counsel and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability
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in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Issuers shall be sufficient if
signed by an Officer of each of the Issuers.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered and, if requested,
provided to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(g) No permissive right of the Trustee to act hereunder shall be
construed as a duty.
(h) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate, an Opinion of Counsel, or both.
(i) Except with respect to Section 4.1 hereof, the Trustee shall have
no duty to inquire as to the performance of the Issuers' covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge
(including actual knowledge) of any Default or Event of Default except (i) any
Event of Default occurring pursuant to Sections 6.1(a) and 6.1(b) hereof or (ii)
any Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
(j) The Trustee shall not be deemed to have notice or knowledge
(including actual knowledge) of any matter unless a Responsible Officer has
actual knowledge thereof or unless written notice thereof is received by the
Trustee at the Corporate Trust Office of the Trustee and such notice references
the Notes generally, the Issuers or this Indenture.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers or any
Affiliate of the Issuers with the same rights it would have if it were not
Trustee. However, in the event that the Trustee
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acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue as trustee or resign. Any
Agent may do the same with like rights and duties. The Trustee is also subject
to Sections 7.10 and 7.11 hereof.
SECTION 7.4 TRUSTEES DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Notes, the Registration
Rights Agreement or the Offering Memorandum; it shall not be accountable for the
Issuers' use of the proceeds from the Notes or any money paid to the Issuers or
upon the Issuers' direction under any provision of this Indenture; it shall not
be responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for any statement
or recital herein or any statement in the Notes or any other document in
connection with the sale of the Notes or pursuant to this Indenture other than
its certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if the
Trustee receives written notice thereof, the Trustee shall (at the expense of
the Issuers) mail to Holders of Notes a notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium, if any, Liquidated Damages, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall (at the expense of the Issuers) mail to the Holders of the Notes a
brief report dated as of such reporting date that complies with TIA (S) 313(a)
(but if no event described in TIA (S) 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA (S) 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Issuers and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA (S) 313(d). The
Issuers shall promptly notify the Trustee when the Notes are listed on any stock
exchange.
SECTION 7.7 COMPENSATION AND INDEMNITY.
The Issuers and the Guarantors jointly and severally agree to pay to
the Trustee from time to time compensation as agreed upon by the Trustee and the
Issuers, and, in the absence of any such agreement, reasonable compensation for
its acceptance of this Indenture and services hereunder. The Trustee's
compensation shall not be limited by any
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law on compensation of a trustee of an express trust. The Issuers and the
Guarantors shall reimburse the Trustee promptly upon request for all
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the compensation,
disbursements and expenses of the Trustee's agents and counsel .
The Issuers and the Guarantors shall indemnify the Trustee against any
and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Issuers and the Guarantors (including this Section 7.7) and defending itself
against any claim (whether asserted by the Issuers, the Guarantors or any Holder
or any other person) or liability in connection with, relating to, or arising
out of (i) the exercise or performance of any of its powers or duties hereunder,
or in connection herewith, and (ii) the validity, invalidity, adequacy or
inadequacy of this Indenture, the Guarantees, the Notes, the Registration Rights
Agreement and the Offering Memorandum, except to the extent any such loss,
liability or expense may be attributable to its negligence or bad faith. The
Trustee shall notify the Issuers and the Guarantors promptly of any claim for
which it intends to seek indemnity. Failure by the Trustee to so notify the
Issuers and the Guarantors shall not relieve the Issuers and the Guarantors of
their obligations hereunder. The Issuers and the Guarantors shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Issuers and the Guarantors shall pay the fees and
expenses of such counsel. The Issuers and the Guarantors need not pay for any
settlement made without their consent, which consent shall not be unreasonably
withheld.
The obligations of the Issuers and the Guarantors to the Trustee under
this Indenture shall survive the satisfaction and discharge of this Indenture
and shall be secured by a Lien as provided in Section 6.9 hereof.
To secure the Issuers' and the Guarantors' payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (b) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to
the extent applicable.
SECTION 7.8 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
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The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Issuers. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may
by a Board Resolution remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after receiving a written request by any Holder of a
Note who has been a bona fide Holder of a Note for at least six months, fails to
comply with Section 7.10, such Holder of a Note may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, the Issuers' obligations under Section 7.7 hereof
shall continue for the benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee or any Agent consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor
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corporation without any further act shall be the successor Trustee or Agent, as
the case may be.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that together with its direct parent, if any, or in the case of
a corporation included in a bank holding company system, its related bank
holding company, has a combined capital and surplus of at least $50 million as
set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA
(S) 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
SECTION 7.12 THER CAPACITIES.
All references in this Indenture to the Trustee shall be deemed to
refer to the Trustee in its capacity as Trustee and in its capacities as any
Agent, to the extent acting in such capacities, and every provision of this
Indenture relating to the conduct or affecting the liability or offering
protection, immunity or indemnity to the Trustee shall be deemed to apply with
the same force and effect to the Trustee acting in its capacities as any Agent.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT
DEFEASANCE.
The Issuers may, at their option and at any time, elect to have either
Section 8.2 or 8.3 hereof be applied to all outstanding Notes and the Guarantees
upon compliance with the conditions set forth below in this Article 8.
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE.
Upon the Issuers' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from their obligations with respect to
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all outstanding Notes and to have each Guarantor's obligations discharged with
respect to its Guarantee on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance
means that the Issuers shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Issuers, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in Section 8.4 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due, (b) the Issuers'
obligations with respect to such Notes under Article 2 and Section 4.2 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee and any
Agent hereunder and the Issuers' and Guarantors' obligations in connection
therewith, including, without limitation, Article 7 and Section 8.5 and 8.7
hereunder, and (d) this Article 8. Subject to compliance with this Article 8,
the Issuers may exercise their option under this Section 8.2 notwithstanding the
prior exercise of its option under Section 8.3 hereof.
SECTION 8.3 COVENANT DEFEASANCE.
Upon the Issuers' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, the Issuers and each Guarantor shall, subject to
the satisfaction of the conditions set forth in Section 8.4 hereof, be released
from its obligations under the covenants contained in Sections 4.7, 4.8, 4.9,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.18, 4.19, and 5.1 hereof with respect to
the outstanding Notes on and after the date the conditions set forth in Section
8.4 are satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose, Covenant Defeasance means that, with respect to the outstanding Notes,
the Issuers may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.1 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.1 hereof of the option applicable to this Section 8.3 hereof, subject to the
satisfaction of the conditions set forth in Section 8.4 hereof, Sections 6.1(d)
through 6.1(f) hereof shall not constitute Events of Default.
SECTION 8.4 CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
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The following shall be the conditions to the application of either
Section 8.2 or 8.3 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and interest and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Issuers must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.2 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
acceptable to the Trustee confirming that (A) the Issuers have received from, or
there has been published by, the Internal Revenue Service a ruling or (B) since
the date of this Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.3 hereof, the Issuers
shall have delivered to the Trustee an Opinion of Counsel in the United States
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit) or insofar
as Sections 6.1(h) or 6.1(i) hereof are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any material agreement
or instrument (other than this Indenture) to which the Issuers or any of their
Subsidiaries is a party or by which the Issuers or any of their Restricted
Subsidiaries are bound;
(f) the Issuers shall have delivered to the Trustee an Opinion of
Counsel (subject to customary qualifications and assumptions) to the effect that
on the 91st day following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
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(g) the Issuers shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Issuers with the intent
of preferring the Holders of Notes over any other creditors of the Issuers or
with the intent of defeating, hindering, delaying or defrauding creditors of the
Issuers or others;
(h) the Issuers shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with; and
(i) the Trustee shall have received such other documents, assurances
and Opinion of Counsel as the Trustee shall have reasonably required.
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.6 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including an Issuer acting as Paying Agent), to the
Holders of such Notes of all sums due and to become due thereon in respect of
principal, premium, if any, and interest, but such money need not be segregated
from other funds except to the extent required by law.
The Issuers and the Guarantors jointly and severally agree to pay and
indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the cash or non-callable Government Securities deposited
pursuant to Section 8.4 hereof or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Issuers from time to time upon the request
of the Issuers any money or non-callable Government Securities held by it as
provided in Section 8.4 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.4(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.6 REPAYMENT TO ISSUERS.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Issuers, in trust for the payment of the principal of, premium, if any,
Liquidated Damages, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, Liquidated Damages, if any,
or interest has become due and payable shall be paid to the Issuers on their
request or (if then held by the Issuers) shall
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be discharged from such trust; and the Holder of such Note shall thereafter, as
a secured creditor, look only to the Issuers for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Issuers as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Issuers cause to be
published once, in The New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Issuers.
SECTION 8.7 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or noncallable Government Securities in accordance with Section 8.2 or
8.3 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Issuers' obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.2 or 8.3 hereof until such time as the Trustee or Paying Agent is
permitted by such court or governmental authority to apply all such money in
accordance with Section 8.2 or 8.3 hereof, as the case may be; provided,
however, that, if the Issuers make any payment of principal of, premium, if any,
Liquidated Damages, if any, or interest on any Note following the reinstatement
of their obligations, the Issuers shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the money held by the Trustee
or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Issuers, the
Guarantors and the Trustee may amend or supplement this Indenture, the
Guarantees or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes or to alter the provisions of Article 2 hereof (including the
related definitions) in a manner that does not materially adversely affect any
Holder;
(c) to provide for the assumption of the Issuers' obligations to the
Holders of the Notes by a successor to the Company pursuant to Article 5 hereof;
(d) to add additional guarantees with respect to the Notes, including
any new Note Guarantees;
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(e) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note; or
(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Issuers accompanied by a resolution of their
respective Board of Managers or Board of Directors, as the case may be,
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 7.2 hereof,
the Trustee shall join with the Issuers in the execution of any amended or
supplemental Indenture authorized or permitted by the terms of this Indenture
and to make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into such
amended or supplemental Indenture that affects its own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.2 WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, the Issuers and the
Trustee may amend or supplement this Indenture (including Sections 3.9, 4.10 and
4.15 hereof) and the Notes and the Guarantees may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Notes then outstanding voting as a single class (including consents obtained
in connection with a tender offer or exchange offer for, or purchase of, the
Notes), and, subject to Sections 6.4 and 6.7 hereof, any existing Default or
Event of Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, Liquidated Damages, if any, or interest on the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the Notes or the
Guarantees may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes). Without the consent of at least 75% in
principal amount of the Notes then outstanding (including consents obtained in
connection with a tender offer or exchange offer for, or purchase of, such
Notes), no waiver or amendment to this Indenture may make any change in the
provisions of Sections 3.9, 4.10 or 4.15 hereof that adversely affects the
rights of any Holder of Notes. Section 2.8 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.2.
Upon the request of the Issuers accompanied by a resolution of their
respective Board of Managers or Board of Directors, as the case may be,
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.2 hereof, the Trustee shall join with the
Issuers in the execution of such amended or supplemental Indenture unless such
amended or supplemental Indenture directly affects the Trustee's own rights,
duties or
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immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Issuers shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Issuers to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.4 and 6.7 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Issuers with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.2 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.9, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest or Liquidated Damages, if any, on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then outstanding Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or premium, if any, or interest or Liquidated Damages, if any,
on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described in Sections 4.10 and 4.15);
or
(h) make any change in the foregoing amendment and waiver provisions.
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SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Issuers in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Issuers may not sign an amendment or supplemental Indenture until the Board
of Managers approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.1 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 13.4 hereof, an Officer's Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE.
The Issuers agree, and each Holder by accepting a Note agrees, that
the Indebtedness evidenced by the Notes is subordinated in right of payment, to
the extent and in
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the manner provided in this Article 10, to the prior payment in full, in cash or
Cash Equivalents, of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of the holders of Senior Debt.
SECTION 10.2 CERTAIN DEFINITIONS.
"Designated Senior Debt" means, (i) any Indebtedness outstanding under
the Senior Credit Facility and (ii) and any other Senior Debt permitted
hereunder the principal amount of which is $25.0 million or more and that has
been designated by the Issuers as "Designated Senior Debt."
"Permitted Junior Securities" means Equity Interests in or debt
securities of any Issuer or any Guarantor that are issued pursuant to a plan of
reorganization of such Issuer or such Guarantor and are subordinated to all
Senior Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt pursuant to Article 10 of the Indenture so long as
(i) the effect of the issuance of such Equity Interests or debt securities is
not to cause the Notes (or relevant Note Guarantee) to be treated as part of the
same class of claims or any class of claims pari passu with, or senior to, such
Senior Debt pursuant to such plan of reorganization and (ii) the rights of the
holders of such Senior Debt are not altered or impaired without their consent.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Debt" means (i) all Indebtedness outstanding under Senior
Credit Facilities and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness permitted to be incurred by the Company under the terms of
this Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes and the Note Guarantees and (iii) all Obligations of the
Company and any Note Guarantor with respect to the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not include (w) any
liability for federal, state, local or other taxes owed or owing by the Issuers,
(x) any Indebtedness of the Company or any Guarantor to any of their
Subsidiaries or other Affiliates (other than Indebtedness of the Company or any
Note Guarantor to Sankaty Partners representing Sankaty Partners' participation
in any one or more of the Senior Credit Facilities where Sankaty Partners is one
of the institutional lenders to such Senior Credit Facilities), (y) any trade
payables or (z) any Indebtedness that is incurred in violation of the
restrictions described in Section 4.9 hereof; provided that Indebtedness under
Senior Credit Facilities will be Senior Debt if the holders of such Senior Debt
shall have received a written certificate from an officer of the Company to the
effect that the incurrence of such Indebtedness does not (or in the case of up
$75.0 million of revolving credit Indebtedness available to be borrowed under
the Senior Credit Facility after the date of the initial borrowing thereunder,
that the incurrence of such entire committed amount would not) violate this
Indenture.
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A distribution may consist of cash, securities or other property, by
set-off or otherwise.
SECTION 10.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Issuers in a liquidation or
dissolution of any Issuer or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Issuer or its property, in
an assignment for the benefit of creditors or any marshalling of such Issuer's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in
full in cash of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt, whether or not such claim is allowed under
applicable law) before Holders of the Notes shall be entitled to receive any
payment with respect to the Notes (except that Holders may receive and retain
(i) Permitted Junior Securities and (ii) payments made from any defeasance trust
created pursuant to Section 8.1 hereof); and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full, any distribution to which Holders would
be entitled but for this Article 10 shall be made to holders of Senior Debt
(except that Holders of Notes may receive and retain (i) Permitted Junior
Securities and (ii) payments made from any defeasance trust created pursuant to
Section 8.1 hereof), as their interests may appear.
SECTION 10.4 DEFAULT ON DESIGNATED SENIOR DEBT.
The Issuers may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes and may not
acquire from the Trustee or any Holder any Notes for cash or property (other
than (i) Permitted Junior Securities and (ii) payments made from any defeasance
trust created pursuant to Section 8.1 hereof) until all principal and other
Obligations with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal of, premium, if any,
or interest with respect to Designated Senior Debt occurs and is continuing
beyond any applicable grace period in the agreement, indenture or other
document governing such Designated Senior Debt; or
(ii) a default, other than a payment default defined in (i), on
Designated Senior Debt occurs and is continuing that then permits holders
of the Designated Senior Debt as to which such default relates to
accelerate its maturity and the Trustee receives a notice of the default (a
"Payment Blockage Notice") from a Representative of the holders of any
Designated Senior Debt. If the Trustee receives any such Payment Blockage
Notice, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until at least 360 days shall have
elapsed since the commencement of the effectiveness of the immediately
prior Payment Blockage
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Notice. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been cured or waived for a period of at least 180 days.
The Issuers may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(1) in the case of a default referred to in Section 10.4(i) hereof,
the date upon which such default is cured or waived or has ceased to exist or
such Designated Senior Debt has been discharged or repaid in full in cash, or
(2) in the case of a default referred to in Section 10.4(ii) hereof,
the earlier of the date on which such default is cured or waived or 179 days
after the date on which the applicable Payment Blockage Notice is received or
has ceased to exist or such Designated Senior Debt has been discharged or repaid
in full in cash, unless the maturity of any Designated Senior Debt has been
accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.5 ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an Event of
Default, the Issuers shall promptly notify holders of Senior Debt of the
acceleration.
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder receives any payment of
any Obligations with respect to the Notes at a time when the Trustee or such
Holder, as applicable, has actual knowledge that such payment is prohibited by
Section 10.4 hereof, such payment shall be held by the Trustee or such Holder,
in trust for the benefit of, and shall be paid forthwith over and delivered,
upon written request, to, the holders of Senior Debt as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other
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Person money or assets to which any holders of Senior Debt shall be entitled by
virtue of this Article 10, except if such payment is made as a result of the
willful misconduct or negligence of the Trustee.
SECTION 10.7 NOTICE BY ISSUERS.
The Issuers shall promptly notify in writing the Trustee and the
Paying Agent of any facts known to the Issuers that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt as provided in this Article 10.
SECTION 10.8 SUBROGATION.
After all Senior Debt is paid in full and until the Notes are paid in
full, Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Issuers and Holders, a payment by the Issuers on the Notes.
SECTION 10.9 RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Issuers and Holders of Notes, the
obligation of the Issuers, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and creditors of
the Issuers other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of Notes.
If the Issuers fail because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY ISSUERS OR
GUARANTORS.
No right of any holder of Senior Debt to enforce the subordination of
the Indebtedness evidenced by the Notes or the related Guarantee shall be
impaired by any act or
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failure to act by the Issuers, any Guarantor or any Holder or by the failure of
the Issuers, any Guarantor or any Holder to comply with this Indenture.
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Issuers referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other Indebtedness of the
Issuers, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.12 ARTICLE 10 NOT TO PREVENT EVENTS OF DEFAULT OR LIMIT
RIGHT TO ACCELERATE.
The failure to make a payment in respect of the Notes, whether
directly or pursuant to any Guarantee, by reason of any provision in this
Article 10 shall not be construed as preventing the occurrence of a Default or
Event of Default. Nothing in this Article 10 shall have any effect on the right
of the Holders or the Trustee to accelerate the maturity of the Notes or to make
a claim for payment under any Guarantee.
SECTION 10.13 RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least five Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article 10. Only the Issuers or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.7 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may
do the same with like rights.
SECTION 10.14 AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or
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appropriate to effectuate the subordination as provided in this Article 10, and
appoints the Trustee to act as such Holder's attorney-in-fact for any and all
such purposes. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.9 hereof at
least 30 days before the expiration of the time to file such claim, the
Representatives are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 10.15 AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the Holders of at least 75% in aggregate
principal amount of the Notes then outstanding if such amendment would adversely
affect the rights of Holders of Notes.
SECTION 10.16 TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article 10 shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
ARTICLE 11.
GUARANTEE
SECTION 11.1 UNCONDITIONAL GUARANTEE.
Each Guarantor hereby unconditionally, jointly and severally,
guarantees to each Holder of a Note authenticated by the Trustee and to the
Trustee and its successors and assigns that: the principal of, interest and
Liquidated Damages, if any, on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration or
otherwise, and interest on the overdue principal and interest on any overdue
interest on the Notes and all other obligations of the Issuers to the Holders or
the Trustee hereunder or under the Notes will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; subject,
however, to the limitations set forth in Section 11.3. Each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions hereof or thereof, the recovery of
any judgment against the Issuers, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of an Issuer, any right to require a proceeding first against an
Issuer, protest, notice and all demands whatsoever and covenants that the Parent
Guarantee or the Note Guarantee, as the case may be, will not be discharged
except by complete performance of the obligations contained in the Notes and
this Indenture. If any Holder or the Trustee is required by any court or
otherwise to return to an Issuer or any Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to an Issuer or any
Guarantor, any amount paid by an Issuer or any Guarantor to the Trustee or
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such Holder, the Parent Guarantee and each Note Guarantee, to the extent
theretofore discharged, shall be reinstated in full force and effect. Each
Guarantor further agrees that, as between each Guarantor, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 for
the purpose of the Parent Guarantee and each Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of
the obligations guaranteed hereby, and (y) in the event of any acceleration of
such obligations as provided in Article 6, such obligations (whether or not due
and payable) shall become due and payable by each Guarantor for the purpose of
the Parent Guarantee and each Note Guarantee.
SECTION 11.2 SEVERABILITY.
In case any provision of this Article 11 shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 11.3 LIMITATION OF GUARANTOR'S LIABILITY.
Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that the
Parent Guarantee and each Note Guarantee not constitute a fraudulent transfer or
conveyance for purposes of Title 11 of the United States Code, as amended, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar U.S. Federal or state or other applicable law. To effectuate the
foregoing intention, the Holders and each Guarantor hereby irrevocably agree
that the obligations of each Guarantor under the Parent Guarantee and each Note
Guarantee shall be limited to the maximum amount as will, after giving effect to
all other contingent and fixed liabilities of such Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor pursuant to
Section 11.4, result in the obligations of such Guarantor not constituting such
a fraudulent transfer or conveyance.
SECTION 11.4 CONTRIBUTION.
In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the Parent
Guarantee or a Note Guarantee, as the case may be, such Funding Guarantor shall
be entitled to a contribution from all other Guarantors in a pro rata amount,
based on the net assets of each Guarantor (including the Funding Guarantor),
determined in accordance with GAAP, subject to Section 11.3, for all payments,
damages and expenses incurred by such Funding Guarantor in discharging the
Issuers' obligations with respect to the Notes or any other Guarantor's
obligations under the Parent Guarantee or a Note Guarantee, as the case may be.
SECTION 11.5 EXECUTION OF GUARANTEE.
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94
To further evidence the Parent Guarantee and each Note Guarantee to
the Holders, each of the Guarantors hereby agrees to execute a guarantee to be
endorsed on each Note ordered to be authenticated and delivered by the Trustee.
Each Guarantor hereby agrees that its guarantee set forth in Section 11.1 shall
remain in full force and effect notwithstanding any failure to endorse on each
Note a guarantee. Each such guarantee shall be signed on behalf of each
Guarantor by its Chairman of the Board, its President or one of its Vice
Presidents prior to the authentication of the Note on which it is endorsed, and
the delivery of such Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of such guarantee on behalf of such
Guarantor. Such signature upon the guarantee may be a manual or facsimile
signature of such officer and may be imprinted or otherwise reproduced on the
guarantee, and in case such officer who shall have signed the guarantee shall
cease to be such officer before the Note on which such guarantee is endorsed
shall have been authenticated and delivered by the Trustee or disposed of by the
Issuers, such Note nevertheless may be authenticated and delivered or disposed
of as though the Person who signed the guarantee had not ceased to be such
officer of such Guarantor.
SECTION 11.6 ADDITIONAL NOTE GUARANTEES.
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Domestic Subsidiary after the date of this Indenture, or if any
Subsidiary becomes a Domestic Subsidiary after the date of this Indenture, then
such newly acquired or created Subsidiary shall execute a Note Guarantee and
deliver an Opinion of Counsel, in accordance with the terms hereof; provided,
that all Subsidiaries that have properly been designated as Unrestricted
Subsidiaries in accordance herewith shall not be subject to the requirements of
this covenant for so long as they continue to constitute Unrestricted
Subsidiaries.
SECTION 11.7 SUBORDINATION OF SUBROGATION AND OTHER RIGHTS.
Each Guarantor hereby agrees that any claim against an Issuer that
arises from the payment, performance or enforcement of such Guarantor's
obligations under the Parent Guarantee or a Note Guarantee or this Indenture,
including, without limitation, any right of subrogation, shall be subject and
subordinate to, and no payment with respect to any such claim of such Guarantor
shall be made before, the payment in full in cash of all outstanding Notes in
accordance with the provisions provided therefor in this Indenture.
ARTICLE 12.
SUBORDINATION OF GUARANTEE
SECTION 12.1 GUARANTEE OBLIGATIONS SUBORDINATED TO SENIOR DEBT.
Each Guarantor covenants and agrees, and the Trustee and each Holder
of the Notes by his acceptance thereof likewise covenants and agrees, that the
Parent Guarantee and each Note Guarantee shall be issued subject to the
provisions of this Article 12; and each person holding any Note, whether upon
original issue or upon transfer, assignment or exchange thereof, accepts and
agrees that all payments of the principal of and interest on the
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95
Notes pursuant to the Parent Guarantee and each Note Guarantee made by or on
behalf of any Guarantor shall, to the extent and in the manner set forth in this
Article 12, be subordinated and junior in right of payment to the prior payment
in full in cash or Cash Equivalents of all amounts payable under Senior Debt of
such Guarantor.
SECTION 12.2 NO PAYMENT IN CERTAIN CIRCUMSTANCES; PAYMENT OVER OF
PROCEEDS UPON DISSOLUTION, ETC.
(a) Upon any payment or distribution of assets of a Guarantor of any
kind or character, whether in cash, property or securities, to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors or marshaling of assets of a Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or other similar proceeding relating to
a Guarantor or its property, whether voluntary or involuntary, all Obligations
due or to become due upon all Senior Debt shall first be paid in full in cash or
Cash Equivalents, or such payment duly provided for to the satisfaction of the
holders of Senior Debt, before any payment or distribution of any kind or
character is made by or on behalf of such Guarantor on account of any
Obligations on the Parent Guarantee or the Note Guarantee of such Guarantor, as
the case may be, or for the acquisition of any of the Notes for cash or property
or otherwise (except that holders of the Notes may receive Permitted Junior
Securities and payments made from any defeasance trust created pursuant to
Section 8.1 hereof). Before any payment may be made by, or on behalf of, any
Guarantor of the principal of, premium, if any, Liquidated Damages, if any, or
interest on the Notes upon any such dissolution or winding-up or total
liquidation or reorganization, any payment or distribution of assets or
securities of such Guarantor of any kind or character, whether in cash, property
or securities, to which the Holders of the Notes or the Trustee on their behalf
would be entitled, but for the subordination provisions of this Indenture, shall
be made by such Guarantor or by any receiver, trustee in bankruptcy, liquidation
trustee, agent or other Person making such payment or distribution, directly to
the holders of the Senior Debt of such Guarantor (pro rata to such holders on
the basis of the respective amounts of such Senior Debt held by such holders) or
their representatives or to the trustee or trustees or agent or agents under any
agreement or indenture pursuant to which any of such Senior Debt may have been
issued, as their respective interests may appear, to the extent necessary to pay
all such Senior Debt in full in cash after giving effect to any prior or
concurrent payment, distribution or provision therefor to or for the holders of
such Senior Debt.
(b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of assets
or securities of any Guarantor of any kind or character, whether in cash,
property or securities, shall be received by the Trustee or any Holder of Notes
at a time when such payment or distribution is prohibited by Section 12.2(a) and
before all obligations in respect of the Senior Debt of such Guarantor are paid
in full in cash or Cash Equivalents, such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered to, the holders of such Senior Debt (pro rata to such holders on the
basis of the respective amounts of such Senior Debt held by such holders) or
their respective representatives, or to the trustee or trustees or agent or
agents under any indenture pursuant to which any of such Senior Debt may have
been issued, as their respective interests may appear, for application
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96
to the payment of such Senior Debt remaining unpaid until all such Senior Debt
has been paid in full in cash or Cash Equivalents after giving effect to any
prior or concurrent payment, distribution or provision therefor to or for the
holders of such Senior Debt.
The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution of
any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided in Article 5 shall not be deemed a dissolution, winding-
up, liquidation or reorganization for the purposes of this Section 12.2 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article 5.
If any default occurs and is continuing in the payment when due,
whether at maturity, upon any redemption, by acceleration or otherwise, of any
principal of, interest on, unpaid drawings for letters of credit issued in
respect of, or regularly accruing fees with respect to, any Senior Debt, no
payment of any kind or character shall be made by or on behalf of a Guarantor or
any other Person on its behalf with respect to any Obligations on the Parent
Guarantee or the Note Guarantee of such Guarantor or to acquire any of the Notes
for cash or property or otherwise (except that holders of the Notes may receive
payments made from any defeasance trust created pursuant to Section 8.1 hereof).
In addition, if any other event of default occurs and is continuing
with respect to any Designated Senior Debt, as such event of default is defined
in the instrument creating or evidencing such Designated Senior Debt, permitting
the holders of such Designated Senior Debt then outstanding to accelerate the
maturity thereof and if the Representative for the respective issue of
Designated Senior Debt gives a Payment Blockage Notice to the Trustee, then,
unless and until all events of default have been cured or waived or have ceased
to exist or the Trustee receives notice from the Representative for the
respective issue of Designated Senior Debt terminating the Payment Blockage
Period, during the Payment Blockage Period, neither Guarantor, nor any other
Person on Guarantor's behalf, shall (x) make any payment of any kind or
character with respect to any Obligations on the Parent Guarantee or the Note
Guarantee of such Guarantor or (y) acquire any of the Notes for cash or property
or otherwise (except that holders of the Notes may receive payments made from
any defeasance trust created pursuant to Section 8.1 hereof).
Notwithstanding anything herein to the contrary, in no event will a
Payment Blockage Period extend beyond 179 days from the date the Payment
Blockage Notice is delivered and only one such Payment Blockage Period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any Payment Blockage Period
with respect to the Designated Senior Debt shall be, or be made, the basis for
commencement of a second Payment Blockage Period by the Representative of such
Designated Senior Debt whether or not within a period of 360 consecutive days,
unless such event of default shall have been cured or waived for a period of not
less than 180 consecutive days (it being acknowledged that any subsequent
action, or any breach of any financial covenants for a period commencing after
the date of commencement of such Payment Blockage Period that, in either case,
would give rise to an
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97
event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
SECTION 12.3 SUBROGATION.
Upon the payment in full in cash or Cash Equivalents of all Senior
Debt of a Guarantor, or provision for payment, the Holders of the Notes shall be
subrogated to the rights of the holders of such Senior Debt to receive payments
or distributions of cash, property or securities of such Guarantor made on such
Senior Debt until the principal of and interest or Liquidated Damages, if any,
on the Notes shall be paid in full in cash or Cash Equivalents; and, for the
purposes of such subrogation, no payments or distributions to the holders of
such Senior Debt of any cash, property or securities to which the Holders of the
Notes or the Trustee on their behalf would be entitled except for the provisions
of this Article 12, and no payment over pursuant to the provisions of this
Article 12 to the holders of such Senior Debt by Holders of the Notes or the
Trustee on their behalf shall, as between such Guarantor, its creditors other
than holders of such Senior Debt, and the Holders of the Notes, be deemed to be
a payment by such Guarantor to or on account of such Senior Debt. It is
understood that the provisions of this Article 12 are and are intended solely
for the purpose of defining the relative rights of the Holders of the Notes, on
the one hand, and the holders of Senior Debt of each Guarantor, on the other
hand.
If any payment or distribution to which the Holders of the Notes would
otherwise have been entitled but for the provisions of this Article 12 shall
have been applied, pursuant to the provisions of this Article 12, to the payment
of all amounts payable under Senior Debt of a Guarantor, then and in such case,
the Holders of the Notes shall be entitled to receive from the holders of such
Senior Debt any payments or distributions received by such holders of Senior
Debt in excess of the amounts required to make payment in full in cash of such
Senior Debt.
SECTION 12.4 OBLIGATIONS OF GUARANTORS UNCONDITIONAL.
Subject to Sections 11.3 and 10.4, nothing contained in this Article
12 or elsewhere in this Indenture or in the Notes or the Parent Guarantee or the
Note Guarantees is intended to or shall impair as among each of the Guarantors
and the Holders of the Notes, the obligation of each Guarantor, which is
absolute and unconditional, to pay to the Holders of the Notes the principal of
and interest or Liquidated Damages, if any, on the Notes as and when the same
shall become due and payable in accordance with the terms of the Parent
Guarantee or the Note Guarantee of such Guarantor, or is intended to or shall
affect the relative rights of the Holders of the Notes and creditors of any
Guarantor other than the holders of Senior Debt of such Guarantor, nor shall
anything herein or therein prevent the Holder of any Note or the Trustee on
their behalf from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article 12 of the holders of Senior Debt in respect of cash, property or
securities of any Guarantor received upon the exercise of any such remedy.
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98
Without limiting the generality of the foregoing, nothing contained in
this Article 12 shall restrict the right of the Trustee or the Holders of Notes
to take any action to declare the Notes to be due and payable prior to their
stated maturity pursuant to Section 6.1 or to pursue any rights or remedies
hereunder; provided, however, that all Senior Debt of any Guarantor then due and
payable shall first be paid in full in cash or Cash Equivalents before the
Holders of the Notes or the Trustee are entitled to receive any direct or
indirect payment from such Guarantor of principal of or interest or Liquidated
Damages, if any, on the Notes pursuant to the Parent Guarantee or the Note
Guarantee, as the case may be.
SECTION 12.5 NOTICE TO TRUSTEE.
The Issuers shall give prompt written notice to the Trustee of any
fact known to the Issuers which would prohibit the making of any payment to or
by the Trustee in respect of the Notes pursuant to the provisions of this
Article 12. The Trustee shall not be charged with knowledge of the existence of
any event of default with respect to any Senior Debt of a Guarantor or of any
other facts which would prohibit the making of any payment to or by the Trustee
unless and until the Trustee shall have received notice in writing at its
Corporate Trust Office to that effect signed by an Officer of an Issuer, or by a
holder of Senior Debt of a Guarantor or trustee or agent therefor; and prior to
the receipt of any such written notice, the Trustee shall, subject to Article 7,
be entitled to assume that no such facts exist. Nothing contained in this
Section 12.5 shall limit the right of the holders of Senior Debt of a Guarantor
to recover payments as contemplated by Section 12.3. The Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of any Senior Debt of a Guarantor
(or a trustee on behalf of, or other representative of, such holder) to
establish that such notice has been given by a holder of such Senior Debt or a
trustee or representative on behalf of any such holder.
In the event that the Trustee determines in good faith that any
evidence is required with respect to the right of any Person as a holder of
Senior Debt of a Guarantor to participate in any payment or distribution
pursuant to this Article 12, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article 12, and if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 12.6 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT.
Upon any payment or distribution of assets or securities of a
Guarantor referred to in this Article 12, the Trustee and the Holders of the
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation
or reorganization proceedings are pending, or upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the Holders
of the
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99
Notes for the purpose of ascertaining the persons entitled to participate in
such distribution, the holders of Senior Debt of such Guarantor and other
indebtedness of such Guarantor, the amounts thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 12.
SECTION 12.7 TRUSTEE'S RELATION TO GUARANTOR SENIOR DEBT.
The Trustee and any Paying Agent shall be enticed to all the rights
set forth in this Article 12 with respect to any Senior Debt of a Guarantor
which may at any time be held by them in their individual or any other capacity
to the same extent as any other holder of Senior Debt of a Guarantor, and
nothing in this Indenture shall deprive the Trustee or any Paying Agent of any
of its rights as such holder.
With respect to the holders of Senior Debt of a Guarantor, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article 12, and no implied covenants or
obligations with respect to the holders of such Senior Debt shall be read into
this Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt of a Guarantor. The Trustee shall
not be liable to any such holders if the Trustee shall in good faith mistakenly
pay over or distribute to Holders of Notes or to the Issuers or to any other
person cash, property or securities to which any holders of Guarantor Senior
Debt shall be entitled by virtue of this Article 12 or otherwise.
SECTION 12.8 SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS
OF THE PARENT, THE GUARANTORS OR HOLDERS OF SENIOR
DEBT.
No right of any present or future holders of any Senior Debt of a
Guarantor to enforce subordination as provided herein shall at any time in any
way be prejudiced or impaired by any act or failure to act on the part of any
Guarantor or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by any Guarantor with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or otherwise
be charged with. The provisions of this Article 12 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of Senior Debt of
a Guarantor.
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100
SECTION 12.8 NOTEHOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF GUARANTEE.
Each Holder of Notes by his acceptance of such Notes authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article 12, and appoints the Trustee his attorney-in-fact for such purposes,
including, in the event of any dissolution, winding-up, total liquidation or
reorganization of any Guarantor (whether in bankruptcy, insolvency,
receivership, reorganization or similar proceedings or upon an assignment for
the benefit of creditors or otherwise) tending towards liquidation of the
business and assets of such Guarantor, the filing of a claim for the unpaid
balance of its or his Notes in the form required in those proceedings.
SECTION 12.10 THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal of or interest
on the Notes by reason of any provision of this Article 12 shall not be
construed as preventing the occurrence of an Event of Default.
SECTION 12.11 TRUSTEE'S COMPENSATION NOT PREJUDICED.
Nothing in this Article 12 shall apply to amounts due to the Trustee
pursuant to other sections in this Indenture.
SECTION 12.12 NO WAIVER OF GUARANTEE SUBORDINATION PROVISIONS.
Without in any way limiting the generality of Section 12.8, the
holders of Senior Debt of a Guarantor may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the Notes,
without incurring responsibility to the Holders of the Notes and without
impairing or releasing the subordination provided in this Article 12 or the
obligations hereunder of the Holders of the Notes to the holders of such Senior
Debt, do any one or more of the following: (a) change the manner, place or terms
of payment or extend the time of payment of, or renew or alter, such Senior Debt
or any instrument evidencing the same or any agreement under which such Senior
Debt is outstanding or secured; (b) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing such Senior Debt; (c)
release any Person liable in any manner for the collection of such Senior Debt;
and (d) exercise or refrain from exercising any rights against any Guarantor and
any other Person.
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101
ARTICLE 13.
MISCELLANEOUS
SECTION 13.1 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA (S) 31 8(c), the imposed duties shall control.
SECTION 13.2 NOTICES.
Any notice or communication by the Issuers, the Guarantors or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' address
If to the Issuers and/or any Guarantor:
Alliance Laundry Systems LLC
Alliance Laundry Corporation
Shepard Street
Ripon, Wisconsin 54971
Telecopier No.: (920) 748-4429
Attention: Chief Financial Officer
With a copy to:
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, New York 10022
Telecopier No.: (212) 446-4900
Attention: Lance C. Balk, Esq.
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Telecopier No.: (212) 852-1626
Attention: Corporate Trust Department
The Issuers, the Guarantors or the Trustee, by notice to the others
may designate additional or different addresses for subsequent notices or
communications.
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102
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it, except for notices or communications to the Trustee, which shall be
effective only upon actual receipt thereof.
If the Issuers mail a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 13.4 COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS
OF NOTES.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Issuers,
the Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
SECTION 13.4 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.5 hereof) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 13.5 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
SECTION 13.5 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
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103
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA
(S) 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.6 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND SHAREHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Issuers, as such, shall have any liability for any obligations of the Company
under the Notes, the Guarantees, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Notes. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the SEC that such a waiver is against public policy.
SECTION 13. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE GUARANTEES WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 13.9 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
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104
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Issuers or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10 SUCCESSORS.
All agreements of the Issuers in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
SECTION 13.11 SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12 COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
105
SIGNATURES
Dated as of May 5, 1998
ALLIANCE LAUNDRY SYSTEMS LLC
By:
-----------------------------
Name:
Title:
ALLIANCE LAUNDRY CORPORATION
By:
-----------------------------
Name:
Title:
ALLIANCE LAUNDRY HOLDINGS LLC
By:
-----------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.1
EXECUTION COPY
$110,000,000
ALLIANCE LAUNDRY SYSTEMS LLC
ALLIANCE LAUNDRY CORPORATION
9.625% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
------------------
April 29, 1998
LEHMAN BROTHERS INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Alliance Laundry Systems LLC, a Delaware limited liability company
(the "Company"), and Alliance Laundry Corporation, a Delaware corporation ("ALC"
and, together with the Company, the "Issuers"), propose to issue and sell to you
(the "Initial Purchasers") $110.0 million in aggregate principal amount at
maturity of its 9.625% Senior Subordinated Notes due 2008 (the "Initial Notes")
to be issued pursuant to the terms of an Indenture (the "Indenture") among the
Issuers, Alliance Laundry Holdings LLC, a Delaware limited liability company
formerly known as Raytheon Commercial Laundry LLC ("Parent") and United States
Trust Company of New York, as trustee (the "Trustee"), relating to the Initial
Notes. The Notes are being offered in connection with the recapitalization of
Parent through the merger of RCL Acquisition, L.L.C. ("MergeCo") with and into
Parent pursuant to which Bain/RCL, L.L.C., a Delaware limited liability company
("Bain LLC"), Bruckmann, Rosser, Sherrill & Co., L.P. and certain of its
affiliates, and certain management investors will acquire 93% of the common
equity of Parent. MergeCo is a direct subsidiary of Bain LLC, a limited
liability company formed at the direction of Bain Capital, Inc. (the "Sponsor").
The Initial Purchasers propose to purchase the respective aggregate principal
amount of Initial Notes set forth opposite their name on Schedule 1 hereto.
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
<PAGE>
2
Payment of principal of, premium, liquidated damages, if any, and
interest on the Notes (as defined) will be unconditionally guaranteed, jointly
and severally, on a senior subordinated basis by Parent (the "Guarantee,"
together with the Notes, the "Securities") and any newly acquired or created
Domestic Subsidiary.
The Initial Notes will be offered and sold to you pursuant to
exemptions from the registration requirements under the Securities Act of 1933,
as amended (the "Securities Act"). The Issuers have prepared a preliminary
offering memorandum, dated April 16, 1998 (the "Preliminary Offering
Memorandum"), and a final offering memorandum (the "Offering Memorandum"), dated
April 29, 1998, relating to the Issuers and the Initial Notes. As described in
the Offering Memorandum, the Company will use the net proceeds from the offering
of the Initial Notes to finance the Merger (as defined in the Offering
Memorandum) and to pay related fees and expenses.
Upon original issuance thereof, and until such time as the same is no
longer required under the applicable requirements of the Securities Act, the
Initial Notes (and all securities issued in exchange therefor or in substitution
thereof) shall bear the following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE SECURITY
EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISION OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY
EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL IF THE ISSUERS SO REQUEST), (2) TO THE ISSUERS OR
(3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
<PAGE>
3
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
You have advised the Issuers that you will make offers (the "Exempt
Resales") of the Initial Notes purchased by you hereunder on the terms set forth
in the Offering Memorandum, as amended or supplemented, solely to (i) persons
whom you reasonably believe to be "qualified institutional buyers," as defined
in Rule 144A under the Securities Act ("QIBs"), and (ii) to persons other than
U.S. Persons in offshore transactions meeting the requirements of Rule 903 and
904 of Regulation S (such persons specified in clauses (i) and (ii) being
referred to herein as the "Eligible Purchasers"). As used herein, the terms
"offshore transaction" and "U.S. person" have the respective meanings given to
them in Regulation S. You will offer the Initial Notes to Eligible Purchasers
initially at a price equal to 100% of the principal amount thereof (or, with
respect to sales to Sankaty Partners, at a price equal to 97% of the principal
amount thereof). Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Initial Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated May 5, 1998 (the "Closing Date"),
in the form of Exhibit A hereto, for so long as such Initial Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Issuers and
Parent, will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Securities Act (the "Exchange Offer Registration Statement")
relating to the Issuers' 9.625% New Notes due 2008 (the "New Notes" and,
together with the Initial Notes, the "Notes") to be offered in exchange for the
Initial Notes (such offer to exchange being referred to collectively as the
"Exchange Offer") and (ii) a shelf registration statement pursuant to Rule 415
under the Securities Act (the "Shelf Registration Statement," and together with
the Exchange Offer Registration Statement, the "Registration Statements")
relating to the resale of the Initial Notes by certain holders of such Notes,
and to use their best efforts to cause such Registration Statements to be
declared effective. This Agreement, the Indenture and the Registration Rights
Agreement are hereinafter referred to collectively as the "Operative Documents."
1. Representations, Warranties and Agreements of the Sponsor and
MergeCo. Each of the Sponsor and MergeCo represents, warrants and agrees as
follows:
(a) The Preliminary Offering Memorandum and the Offering Memorandum
have been prepared by the Issuers and the Sponsor for use by the Initial
Purchasers in connection with the Exempt Resales. No order or decree preventing
the use of the Preliminary Offering Memorandum or the Offering Memorandum, or
any order asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Securities Act, has been issued
and no proceeding for that purpose has commenced or
<PAGE>
4
is pending or, to the knowledge of the Issuers, Parent, the Sponsor or MergeCo
is contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum as
of their respective dates did not, and the Offering Memorandum as of the Closing
Date will not, contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements in or
omissions from the Preliminary Offering Memorandum and the Offering Memorandum
relating to the Initial Purchasers and made in reliance upon and in conformity
with information furnished to the Issuers or Parent in writing by or on behalf
of the Initial Purchasers expressly for use therein.
(c) The market-related and industry-related data and estimates
included in the Preliminary Offering Memorandum and the Offering Memorandum are
based on or derived from sources which the Company, the Sponsor and MergeCo
believe to be reliable and accurate.
(d) Each of Parent and the Company and each of its subsidiaries is a
limited liability company or corporation, as the case may be, duly formed or
incorporated, as the case may be, and validly existing and in good standing
under the laws of Delaware with all requisite limited liability company or
corporate, as the case may be, power and authority to own, lease and operate its
properties and to conduct its business as described in the Preliminary Offering
Memorandum and the Offering Memorandum, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify or to be in good standing would not have a material adverse effect on
the financial condition, business, prospects, properties, net worth or results
of operations of the Company and its subsidiaries, taken as a whole (a "Material
Adverse Effect").
(e) Each of the Issuers, Parent, the Sponsor and MergeCo has all
requisite limited liability company or corporate, as the case may be, power and
authority to execute, deliver and perform its obligations under this Agreement,
the Indenture, the Securities and the Registration Rights Agreement, as
applicable.
(f) This Agreement has been duly and validly authorized, executed and
delivered by each of the Issuers, Parent, the Sponsor and MergeCo and assuming
due authorization, execution and delivery by the Initial Purchasers, constitutes
the valid and binding agreement of each of the Issuers, Parent, the Sponsor and
MergeCo, enforceable against the Issuers, Parent, the Sponsor and MergeCo in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law).
<PAGE>
5
(g) The Registration Rights Agreement has been duly and validly
authorized by each of the Issuers and Parent and, upon its execution and
delivery by each of the Issuers and Parent and, assuming due authorization,
execution and delivery by the Initial Purchasers, will constitute the valid and
binding agreement of each of the Issuers and Parent, enforceable against the
Issuers and Parent in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principals of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law).
(h) The Indenture has been duly and validly authorized by each of the
Issuers and Parent, and upon its execution and delivery by each of the Issuers
and Parent and, assuming due authorization, execution and delivery by the
Trustee, will constitute the valid and binding agreement of each of the Issuers
and Parent, enforceable against the Issuers and Parent in accordance with its
terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law); no
qualification of the Indenture under the Trust Indenture Act of 1939 ("TIA") is
required in connection with the offer and sale of the Initial Notes and the
Guarantee (the "Initial Securities") contemplated hereby or in connection with
the Exempt Resales.
(i) The Guarantee has been duly and validly authorized by Parent, and
upon its execution and delivery by Parent, will constitute the valid and binding
agreement of Parent, enforceable against Parent in accordance with its terms
(subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and other similar laws affecting creditors' rights generally
from time to time in effect and to general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(j) The Initial Notes have been duly and validly authorized by the
Issuers and when duly executed by the Issuers in accordance with the terms of
the Indenture and, assuming due authentication of the Initial Notes by the
Trustee, upon delivery to the Initial Purchasers against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Issuers entitled to the
benefits of the Indenture, enforceable against the Issuers in accordance with
their terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principals of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether in a proceeding in equity or
at law).
(k) The New Notes have been duly and validly authorized by the Issuers
and if and when duly issued and authenticated in accordance with the terms of
the Indenture and, assuming due authentication of the New Notes by the Trustee,
upon delivery in
<PAGE>
6
accordance with the Exchange Offer provided for in the Registration Rights
Agreement, will constitute valid and binding obligations of the Issuers entitled
to the benefits of the Indenture, enforceable against the Issuers in accordance
with their terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principals of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, regardless of whether in a proceeding in equity or
at law).
(l) The Senior Credit Facility, dated as of May 5, 1998, by and among
the Company, the Parent, the various lenders thereto, Lehman Brothers Inc., as
arranger, and Lehman Commercial Paper Inc., as syndication agent, providing for
up to $200 million of term loan borrowings and $75 million of revolving credit
borrowings, and any and all other agreements and instruments ancillary to or
entered into in connection with the transaction contemplated by the Senior
Credit Facility (the "Credit Documents"), were duly and validly authorized,
executed and delivered by the Company and, assuming due authorization, execution
and delivery by the other parties thereto, constitute the valid and binding
agreements of the Company, enforceable against the Company in accordance with
their respective terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law). As of the Closing Date, the Company will have
at least $74.0 million of borrowings available to it under the Senior Credit
Facility (giving effect to the covenants contained in the Senior Credit
Facility) after the Closing of the sale of the Initial Notes hereunder, the
receipt by the Company of the proceeds therefrom and the application of such
proceeds as described under the caption "Use of Proceeds" in the Offering
Memorandum.
(m) The Asset Backed Facility, dated as of May 5, 1998, by and among
the Company, a special purpose single-member limited liability company that is a
subsidiary of the Company (the "SPE") and Lehman Commercial Paper Inc., as
lender, providing for up to $250,000,000 for loans on eligible trade receivables
and eligible equipment loans, and any and all other agreements and instruments
ancillary to or entered into in connection with the transaction contemplated by
the Asset Backed Facility (the "Asset Backed Documents"), were duly and validly
authorized, executed and delivered by the Company and the SPE and, assuming due
authorization, execution and delivery by the other parties thereto, constitute
the valid and binding agreements of the Company and the SPE, enforceable against
the Company and the SPE in accordance with their respective terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(n) All the limited liability company units of Parent and the Company
outstanding prior to the issuance of the Initial Notes have been duly authorized
and validly issued and are fully paid and nonassessable, and the authorized
capitalization of Parent and
<PAGE>
7
the Company conforms to the description thereof under the caption
"Capitalization" in the Offering Memorandum.
(o) Neither the Issuers nor any of their subsidiaries own capital
stock or other equity interests of any corporation or entity other than as
disclosed in the Offering Memorandum. Each of the subsidiaries is a corporation
duly incorporated and validly existing and in good standing under the laws of
its jurisdiction of its incorporation, with all requisite corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum, and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure to so register or
qualify or be in good standing would not have a Material Adverse Effect. All
the outstanding shares of capital stock of each of the Company's subsidiaries
have been duly authorized and validly issued, are fully paid and nonassessable,
and are wholly owned by the Company directly, or indirectly through one of its
other subsidiaries, free and clear of any lien, adverse claim, security
interest, equity or other encumbrance, except as specifically described in the
Offering Memorandum.
(p) There are no legal or governmental proceedings pending or, to the
knowledge of Parent, the Issuers, the Sponsor, MergeCo or their subsidiaries,
threatened against Parent, the Issuers or any of their subsidiaries or to which
any of their respective properties is subject, that are not disclosed in the
Offering Memorandum and which, are reasonably likely to have a Material Adverse
Effect or to materially affect the issuance of the Securities or the
consummation of any of the other transactions contemplated by the Operative
Documents. The Offering Memorandum contains accurate summaries of all material
agreements, contracts, indentures, leases or other instruments. Neither the
Issuers nor any of their subsidiaries are involved in any strike, job action or
labor dispute with any group of employees, and, to the knowledge of the Issuers,
the Sponsor, MergeCo or any of their subsidiaries, no such action or dispute is
threatened.
(q) Except as described in the Offering Memorandum, no material
relationship, direct or indirect, exists between or among the Issuers or any of
their subsidiaries or Parent on the one hand, and the directors, officers,
stockholders, affiliates, customers or suppliers of the Issuers or any of their
subsidiaries or Parent on the other hand.
(r) The execution, delivery and performance of this Agreement and the
other Operative Documents and the issuance of the Initial Notes and the New
Notes and the consummation of the transactions contemplated hereby and thereby
will not conflict with, or result in a breach or violation of any of the terms
or provisions of, or (including with the giving of notice or the lapse of time
or both) constitute a default under (i) any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which Parent, the Issuers,
the Sponsor, MergeCo or any of their subsidiaries is a party or by which Parent,
the Issuers, the Sponsor, MergeCo or any of their subsidiaries is bound or to
which any of the properties or assets of Parent, the Issuers, the Sponsor,
MergeCo or any of their subsidiaries is subject, (ii) the provisions of the
charter, by-laws or other organizational documents of Parent, the Issuers, the
Sponsor, MergeCo or any of their subsidiaries or (iii)
<PAGE>
8
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over Parent, the Issuers, the Sponsor, MergeCo or
any of their subsidiaries or any of their properties or assets, except in the
cases of clause (i) or (iii), such breaches, violations or defaults that in the
aggregate would not have a Material Adverse Effect, and no consent, approval,
authorization or order of, or filing or registration with, any court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement and the other Operative Documents and the issuance
of the Initial Notes and the New Notes and the consummation of the transactions
contemplated hereby and thereby except as may be required by the securities or
"blue sky" laws of any state of the United States in connection with the sale of
the Initial Notes and the New Notes and except as contemplated by the
Registration Rights Agreement.
(s) The accountants, Coopers & Lybrand L.L.P., who have certified
certain of the financial statements included as part of the Offering Memorandum,
are independent public accountants under Rule 101 of the Code of Professional
Conduct of the American Institute of Certified Public Accountants (the "AICPA"),
and its interpretation and rulings.
(t) The combined historical financial statements, together with the
related notes thereto, set forth in the Offering Memorandum comply as to form in
all material respects with the requirements of Regulation S-X under the
Securities Act applicable to registration statements on Form S-1 under the
Securities Act. Such historical financial statements fairly present the
financial position of the Company at the respective dates indicated and the
results of operations and cash flows for the respective periods indicated, in
each case in accordance with generally accepted accounting principles ("GAAP")
consistently applied throughout such periods. The pro forma financial
statements contained in the Offering Memorandum have been prepared on a basis
consistent with such historical statements, except for the pro forma adjustments
specified therein, include all material adjustments to the historical financial
data required by Rule 11-02 of Regulation S-X to reflect the Merger, the
Offering and other related Transactions (each as defined in the Offering
Memorandum), give effect to assumptions made on a reasonable basis and present
fairly in all material respects the historical and proposed transactions
contemplated by the Offering Memorandum and this Agreement. The other financial
information and data included in the Offering Memorandum are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of the Company.
(u) Except as disclosed in the Offering Memorandum, since the date of
the latest audited combined financial statements of the Company and its
subsidiaries included in the Offering Memorandum, neither the Company nor any of
its subsidiaries has incurred any liability or obligation, direct or contingent,
or entered into any transaction, in each case not in the ordinary course of
business, that is material to the Company and its subsidiaries, and there has
been no Material Adverse Effect, nor to the Company's knowledge, any development
or event involving a prospective Material Adverse Effect, and, except as
disclosed in or contemplated by the Offering Memorandum, since the date of the
latest audited consolidated financial statements of the Company included in the
Offering
<PAGE>
9
Memorandum, there has been no (i) dividend or distribution of any kind declared,
paid or made by the Company on any class of its units, (ii) issuance of
securities (other than the Initial Notes offered hereby) or (iii) material
increase in short-term or long-term debt of the Company.
(v) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of combined financial statements in conformity with GAAP and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(w) Each of the Issuers and each of their subsidiaries has good and
marketable title to all property (real and personal) described in the Offering
Memorandum as being owned by them, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the Offering
Memorandum or the Merger Agreement, and all the material property described in
the Offering Memorandum as being held under lease by the Issuers and their
subsidiaries is held by them under valid, subsisting and enforceable leases,
with only such exceptions as would not in the aggregate, have a Material Adverse
Effect. In addition, except as described in the Offering Memorandum, the
consummation of the transactions contemplated by this Agreement will not give
rise to any third party rights of first refusal under any Material Agreement (as
herein defined) as to which the Issuers and any of their subsidiaries or any of
their property or assets may be subject.
(x) Each of the Issuers and each of their subsidiaries owns or
possesses all patents, trademarks, trademark registration, service marks,
service mark registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Offering Memorandum as being owned by any of
them or necessary for the conduct of their respective businesses, and the
Issuers are not aware of any claim to the contrary or any challenge by any other
person to the rights of the Issuers or any of their subsidiaries with respect to
such rights that, if determined adversely to the Issuers or any such subsidiary,
would in the aggregate have a Material Adverse Effect.
(y) Each of the Issuers and each of their subsidiaries has such
permits, licenses, franchises, certificates, consents, orders and other
approvals or authorizations of any governmental or regulatory authority
("Permits"), as are necessary under applicable law to own their respective
properties and to conduct their respective businesses in the manner described in
the Offering Memorandum, except to the extent that the failure to have such
Permits would not have a Material Adverse Effect. Each of the Issuers and each
of their subsidiaries has fulfilled and performed, in all material respects, all
their respective obligations with respect to the Permits, and, to the knowledge
of each of the Issuers and each of their subsidiaries, no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination thereof or results in any other material impairment of
<PAGE>
10
the rights of the holders of any Permit, subject in each case to such
qualification as may be set forth in the Offering Memorandum and except to the
extent that any such revocation or termination would not have a Material Adverse
Effect.
(z) Neither the Issuers nor any of their subsidiaries nor, to the
knowledge of each of the Issuers and each of their subsidiaries, any director,
officer, agent, employee or other person associated with or acting on behalf of
the Issuers or any of their subsidiaries, have used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the Foreign Corrupt Practices Act of 1977; or
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
(aa) Neither the Issuers nor any of their subsidiaries are currently
or will be, upon sale of the Initial Notes in accordance herewith and the
application of the net proceeds therefrom as described in the Offering
Memorandum under the caption "Use of Proceeds," an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(bb) Neither the Issuers nor any affiliate (as defined in Rule 501(b)
of Regulation D ("Regulation D") under the Securities Act) of either Issuer has
directly, or through any agent (provided that no representation is made as to
the Initial Purchasers or any person acting on their behalf), (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or could be integrated with
the offering and sale of the Securities in a manner that would require the
registration of the Securities under the Securities Act or (ii) engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D, including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine, or similar medium
or broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising) in
connection with the offering of the Securities. No securities of the same class
as the Initial Notes have been issued and sold by the Issuers within the six-
month period immediately prior to the date hereof.
(cc) Except as permitted by the Securities Act, the Issuers have not
distributed and, prior to the later to occur of the Closing Date and completion
of the distribution of the Initial Securities, will not distribute any offering
material in connection with the offering and sale of the Initial Securities
other than the Preliminary Offering Memorandum and Offering Memorandum.
(dd) When the Initial Securities are issued and delivered pursuant to
this Agreement, such Initial Securities will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of the Issuers
that are listed on a national securities exchange registered under Section 6 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") or that are
quoted in a United States automated inter-dealer quotation system.
<PAGE>
11
(ee) Assuming (i) that your representations and warranties in Section
2 are true, (ii) compliance by you with your covenants set forth in Section 2
and (iii) that each of the Eligible Purchasers is either (A) an entity that you
reasonably believe to be a QIB or (B) a person who is not a "U.S. person" and
who acquires the Initial Securities outside the United States in an "offshore
transaction" (within the meaning of Regulation S), the purchase of the Initial
Securities by you pursuant hereto and the resale of the Initial Securities
pursuant to the Exempt Resales is exempt from the registration requirements of
the Securities Act.
(ff) Each of the Issuers and each of their subsidiaries is in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Issuers would have any liability; the Issuers
have not incurred and do not except to incur liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "pension plan" or
(ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the "Code");
each "pension plan" for which the Issuers would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification; and the statements set
forth in the Offering Memorandum under the caption "Notice to Investors" do not
include any untrue statements of material facts and do not omit any material
facts necessary in order to make such statements, in light of the circumstances
under which they were made, not misleading.
(gg) Set forth on Exhibit B hereto is a list of each employee pension
or benefit plan with respect to which the Issuers or any entity considered an
affiliate of the Issuers within the meaning of Section 407(d)(7) of ERISA (an
"Affiliate") is a party in interest or a disqualified person. The execution and
delivery of this Agreement, the other Operative Documents and the sale of the
Initial Notes to be purchased by the Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. The representation made by the Issuers in the preceding
sentence is made in reliance upon and subject to the accuracy of, and compliance
with, the representations and covenants made or deemed made by the Eligible
Purchasers as set forth in the Offering Memorandum under the section entitled
"Notice to Investors."
(hh) Except as described in the Offering Memorandum, there are no
contracts, agreements or understandings between the Issuers or any of their
subsidiaries and any person granting such person the right to require the
Issuers or any of their subsidiaries to file a registration statement under the
Securities Act with respect to any securities of the Issuers and their
subsidiaries owned or to be owned by such person or to require the Issuers or
any of their subsidiaries to include such securities in the securities
registered pursuant to the Registration Statements or in any securities being
registered pursuant to any other registration statement filed by the Issuers or
any of their subsidiaries under the Securities Act.
<PAGE>
12
(ii) Each of the Issuers and each of their subsidiaries carries, or
are covered by, insurance in such amounts and covering such risks as is adequate
for the conduct of their businesses and the value of their properties and as is
customary for companies engaged in similar businesses in similar industries.
(jj) Each of the Issuers and each of their subsidiaries has filed all
Federal, state and local income and franchise tax returns required to be filed
through the date hereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Issuers or any of their
subsidiaries nor do the Issuers or any of their subsidiaries have any knowledge
of any tax deficiency which, if determined adversely to the Issuers, would have
a Material Adverse Effect.
(kk) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances by the Issuers or any of their subsidiaries (or,
to the knowledge of the Issuers, any of their predecessors in interest) at, upon
or from any of the property now or previously owned or leased by the Issuers or
any of their subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgement, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgement,
decree or permit, except for any violation or remedial action which would not
have, or could not be reasonably likely to have, singularly or in the aggregate,
a Material Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Issuers or any of their subsidiaries or with respect to which the Issuers
or any of their subsidiaries have knowledge, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the aggregate,
a Material Adverse Effect; and the terms "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.
(ll) None of the Issuers or any of their affiliates or any person
acting on their behalf has engaged or will engage during the applicable
restricted period in any directed selling efforts within the meaning of Rule
902(b) of Regulation S with respect to the Securities, and the Issuers and their
affiliates and all persons acting on their behalf have complied with and will
comply with the offering restriction requirements of Regulation S in connection
with the offering of the Securities outside the United States.
(mm) The sale of the Initial Securities pursuant to Regulation S are
"offshore transactions" and are not part of a plan or scheme to evade the
registration provisions of the Securities Act.
(nn) The Issuers are not required to deliver the information
specified in Rule 144A(d)(4) in connection with the Exempt Resales.
<PAGE>
13
(oo) Neither the Issuers nor any of their subsidiaries has taken or
may take, directly or indirectly, any action designed to cause or result in, or
which has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Securities to facilitate the
sale or resale of the Securities.
(pp) On and immediately after the Closing Date, the Company (after
giving effect to the issuance of the Securities and to the other transactions
related thereto as described in the Offering Memorandum) will be Solvent. As
used in this paragraph, the term "Solvent" means, with respect to a particular
date, that on such date (i) the present fair market value (or present fair
saleable value) of the assets of the Company is not less than the total amount
required to pay the probable liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they become absolute
and matured, (ii) the Company is able to realize upon its assets and pay its
debts and other liabilities, contingent obligations and commitments as they
mature and become due in the normal course of business, (iii) assuming the sale
of the Securities as contemplated by this Agreement and the Offering Memorandum,
the Company is not incurring debts or liabilities beyond its ability to pay as
such debts and liabilities mature and (iv) the Company is not engaged in any
business or transaction, and is not about to engage in any business or
transaction, for which its property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry in
which the Company is engaged. In computing the amount of such contingent
liabilities at any time, it is intended that such liabilities will be computed
at the amount that, in the light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
2. Representations, Warranties and Agreements of the Initial
Purchasers. Each Initial Purchaser represents, warrants and agrees with respect
to itself that:
(a) Such Initial Purchaser is a QIB with such knowledge and experience
in financial and business matters as are necessary in order to evaluate the
merits and risks of an investment in the Securities.
(b) Such Initial Purchaser (i) is not acquiring the Initial Securities
with a view to any distribution thereof or with any present intention of
offering or selling any of the Initial Securities in a transaction that would
violate the Securities Act or the securities laws of any State of the United
States or any other applicable jurisdiction; (ii) in connection with the Exempt
Resales, will solicit offers to buy the Securities only from and will offer to
sell the Securities only to, the Eligible Purchasers in accordance with this
Agreement and on the terms contemplated by the Offering Memorandum; and (iii)
will not offer or sell the Securities pursuant to, nor has it offered or sold
the Securities by, or otherwise engaged in, any form of general solicitation or
general advertising (within the meaning of Regulation D; including, but not
limited to, advertisements, articles, notices or other communications published
in any newspaper, magazine or similar medium or broadcast over television or
radio, or any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising).
<PAGE>
14
(c) Such Initial Purchaser understands that the Issuers and, for
purposes of the opinions to be delivered to you pursuant to Section 7 hereof,
counsel to the Issuers and counsel to the Initial Purchasers, will rely upon the
accuracy and truth of the foregoing representations and you hereby consent to
such reliance.
The terms used in this Section 2 that have meanings assigned to them
in Regulation S are used herein as so defined.
Each Initial Purchaser further agrees that, in connection with the
Exempt Resales, it will solicit offers to buy the Initial Securities only from,
and will offer to sell the Initial Securities only to, the Eligible Purchasers
in Exempt Resales.
3. Purchase of the Securities by the Initial Purchasers. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Sponsor and MergeCo agree to cause
the Issuers to sell $110.0 million in aggregate principal amount of Initial
Notes to the Initial Purchasers and each of the Initial Purchasers, severally
and not jointly, agrees to purchase the aggregate principal amount of Initial
Notes set opposite that Initial Purchaser's name on Schedule 1 hereto. Each
Initial Purchaser will purchase such aggregate principal amount of Initial Notes
at an aggregate purchase price equal to 97.00% of the principal amount thereof
(the "Purchase Price").
The Issuers shall not be obligated to deliver any of the Initial
Securities to be delivered, except upon payment of all the Initial Securities to
be purchased on such Closing Date as provided herein.
4. Delivery of and Payment.
(a) Delivery to the Initial Purchasers of and payment for the Initial
Securities shall be made at 9:30 a.m., New York City time, on the Closing Date
at the offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York,
New York 10017, or such other place or time as you and the Issuers shall
designate.
(b) One or more Initial Notes in definitive form, registered in the
name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), or such
other names as the Initial Purchasers may request upon at least one business
day's notice to the Issuers, having an aggregate principal amount at maturity
corresponding to the aggregate principal amount of Initial Notes sold pursuant
to Eligible Resales (collectively, the "Global Notes"), shall be delivered by
the Issuers to the Initial Purchasers, against payment by the Initial Purchasers
of the purchase price thereof by wire transfer of immediately available funds as
the Issuers may direct by written notice delivered to you one business day prior
to the Closing Date. The Global Notes in definitive form shall be made
available to you for inspection not later than 9:00 a.m. on the business day
immediately preceding the Closing Date.
5. Further Agreements of the Sponsor and MergeCo. Each of the
Sponsor and MergeCo agrees:
<PAGE>
15
(a) To advise you promptly and, if requested by you, to confirm such
advice in writing, of (i) the issuance by any state securities commission of any
stop order suspending the qualification or exemption from qualification of any
Securities for offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by the Commission or any state securities commission
or other regulatory authority, and (ii) the happening of any event that makes
any statement of a material fact made in the Preliminary Offering Memorandum or
the Offering Memorandum untrue or that requires the making of any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The Sponsor and MergeCo shall use their best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of the Securities under any state securities or Blue
Sky laws and, if at any time any state securities commission shall issue any
stop order suspending the qualification or exemption of the Securities under any
state securities or Blue Sky laws, the Sponsor and MergeCo shall use every
reasonable effort to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish to you, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as you may reasonably request. The Sponsor and MergeCo
consent to the use of the Preliminary Offering Memorandum and the Offering
Memorandum, and any amendments and supplements thereto required pursuant to this
Agreement, by you in connection with the Exempt Resales that are in compliance
with this Agreement.
(c) Not to amend or supplement the Offering Memorandum prior to the
Closing Date or during the period referred to in (d) below unless you shall
previously have been advised of, and shall not have reasonably objected to, such
amendment or supplement within a reasonable time, but in any event not longer
than five days after being furnished a copy of such amendment or supplement.
If, in connection with any Exempt Resales or market making transactions after
the date of this Agreement and prior to the consummation of the Exchange Offer,
any event shall occur that, in the judgement of the Company or in the judgement
of counsel to you, makes any statement of a material fact in the Offering
Memorandum untrue or that requires the making of any additions to or changes in
the Offering Memorandum in order to make the statements in the Offering
Memorandum, in light of the circumstances at the time that the Offering
Memorandum is delivered to prospective Eligible Purchasers, not misleading, or
if it is necessary to amend or supplement the Offering Memorandum to comply with
any applicable laws, the Company shall promptly notify you of such event and
prepare an appropriate amendment or supplement to the Offering Memorandum so
that (i) the statements in the Offering Memorandum as amended or supplemented
will, in light of the circumstances at the time that the Offering Memorandum is
delivered to prospective Eligible Purchasers, not be misleading and (ii) the
Offering Memorandum will comply with applicable law.
(d) To cooperate with you and your counsel in connection with the
qualification of the Initial Securities for offer and sale by you and by dealers
under the state securities or Blue Sky laws of such jurisdictions as you may
request (provided, however, that
<PAGE>
16
the Sponsor and MergeCo shall not be obligated to qualify as a foreign
corporation in any jurisdiction in which they are not now so qualified or to
take any action that would subject them to general consent to service of process
in any jurisdiction in which they are not now so subject). The Sponsor and
MergeCo shall continue such qualification in effect so long as required by law
for distribution of the Initial Securities and shall file such consents to
service of process or other documents as may be necessary in order to effect
such qualification.
(e) Prior to the Closing Date, to furnish to you, any internal
combined financial statements of the Company that have been prepared by the
Company for any period subsequent to the period covered by the financial
statements appearing in the Offering Memorandum.
(f) To use its reasonable best efforts to do and perform all things
required to be done and performed under this Agreement by it prior to or after
the Closing Date and to satisfy all conditions precedent on its part to the
delivery of the Initial Securities.
(g) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) that
would be integrated with the sale of the Initial Securities in a manner that
would require the registration under the Securities Act of the sale to you or
the Eligible Purchasers of the Initial Securities.
(h) For a period of 120 days from the date of the Offering Memorandum,
not to, directly or indirectly, sell, contract to sell, grant any option to
purchase, issue any instrument convertible into or exchangeable for, or
otherwise transfer or dispose of, any debt securities of the Issuers or any of
their subsidiaries having a maturity of more than one year from the date of
issue of such securities, except (i) for the New Notes in connection with the
Exchange Offer of (ii) with the prior consent of Lehman Brothers Inc.
(i) For the period that is two years after the Closing Date or for so
long as necessary to comply with Rule 144A in connection with resales by
registered holders or beneficial owners of Initial Notes, whichever is longer,
to make available to such registered holder or beneficial owner of Initial Notes
in connection with any sale thereof and any prospective purchaser of such
Initial Notes from such registered holder or beneficial owner, the information
required by Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
(j) To comply with the agreements in the Registration Rights
Agreement, and all agreements set forth in the representation letters of the
Issuers' to DTC relating to the approval of the Securities by DTC for "book-
entry" transfer.
(k) To use its best efforts to effect the inclusion of the Notes in
the National Association of Securities Dealers, Inc. Automated Quotation System
- - PORTAL ("PORTAL").
<PAGE>
17
(l) To apply the net proceeds from the sale of the Initial Notes being
sold by the Issuers as set forth in the Offering Memorandum under the caption
"Use of Proceeds."
(m) During the period that is two years after the Closing Date, to
take such steps as shall be necessary to ensure that neither the Issuers nor
Parent becomes an "investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the Commission
thereunder.
6. Expenses. Each of the Sponsor and MergeCo agrees, jointly and
severally, that, whether or not the transactions contemplated by this Agreement
are consummated or this Agreement becomes effective or is terminated, to pay all
costs, expenses, fees and taxes incident to and in connection with: (i) the
preparation, printing, filing and distribution of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation, financial
statements) and all amendments and supplements thereto (but not, however, legal
fees and expenses of your counsel incurred in connection therewith), (ii) the
preparation, printing (including, without limitation, word processing and
duplication costs) and delivery of this Agreement, the Indenture, any Blue Sky
Memoranda and any other agreements, memoranda, correspondence and other
documents printed and delivered in connection herewith and with the Exempt
Resales, (iii) the issuance and delivery by the Issuers of the Securities, (iv)
the qualification of the Securities for offer and sale under the securities or
Blue Sky laws of the several states (including, without limitation, the
reasonable fees and disbursements of your counsel relating to such registration
or qualification), (v) furnishing such copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and all amendments and supplements
thereto, as may be reasonably requested by the Initial Purchasers for use in
connection with the initial Exempt Resales, (vi) the preparation of certificates
for the Securities including, without limitation, printing and engraving, (vii)
the fees, disbursements and expenses of the Issuers' counsel and accountants,
(viii) all expenses and listing fees in connection with the application for
quotation of the Initial Notes in PORTAL, (ix) all fees and expenses (including
fees and expenses of counsel) of the Issuers in connection with the approval of
the Securities by DTC for "book-entry" transfer and (x) the performance by the
Sponsor and MergeCo of their other obligations under this Agreement to the
extent not provided for above.
7. Conditions of Initial Purchasers' Obligations. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and again on the Closing Date (as if made again on and as of such
date), of the representations and warranties of the Sponsor and MergeCo
contained herein, to the performance by the Sponsor and MergeCo of their
obligations hereunder and to each of the following additional terms and
conditions:
(a) The Offering Memorandum shall have been printed and copies made
available to you not later than 6:00 p.m., New York City time, on the day
following the date of this Agreement, or at such later date and time as you may
approve in writing.
<PAGE>
18
(b) No Initial Purchaser shall have discovered and disclosed to the
Issuers on or prior to such Closing Date that the Offering Memorandum or the
most recent amendment or supplement thereto contains an untrue statement of a
fact which, in the opinion of Simpson Thacher & Bartlett, counsel for the
Initial Purchasers, is material or omits to state a fact which, in the opinion
of such counsel, is material and is necessary to make the statements, in light
of the circumstances under which they were made, not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the other Operative
Documents, the Merger Agreement, the Offering Memorandum, the Transactions and
all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Initial Purchasers, and the Issuers, the Sponsor and MergeCo
shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Kirkland & Ellis shall have furnished to the Initial Purchasers,
its written opinion, as counsel to the Issuers and Parent, addressed to the
Initial Purchasers and dated as of the Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers and their counsel, to the
effect that:
(i) Each of the Issuers is a limited liability company or
corporation, as the case may be, duly formed or incorporated, as the case may
be. Each of the Issuers and Parent is validly existing and in good standing
under the laws of the state of its formation or incorporation, as the case may
be. Each of the Company and Parent is qualified to do business and is in good
standing in each jurisdiction or place where the nature of its properties or the
conduct of its business requires such qualification.
(ii) Each of the Issuers and Parent has all requisite limited
liability company or corporate, as the case may be, power to own and lease its
respective properties and to conduct its respective business as described in the
Offering Memorandum. Each of the Issuers and Parent has all requisite limited
liability company or corporate, as the case may be, power and authority to
execute, deliver and perform their respective obligations under this Agreement,
the Merger Agreement, the Indenture and the Registration Rights Agreement, and
to authorize, issue and sell the Securities as contemplated by this Agreement.
(iii) The Merger has been duly authorized by Parent and RCL
Acquisitions, L.L.C., a Delaware limited liability company, and has become
effective in accordance with the General Corporation Law of the State of
Delaware, and Parent is the surviving entity in the Merger.
(iv) This Agreement has been duly authorized, executed and delivered
by each of the Issuers and Parent.
<PAGE>
19
(v) The Indenture has been duly authorized, executed and delivered
by each of the Issuers and Parent and constitutes a valid and binding obligation
of each of the Issuers and Parent, enforceable against the Issuers and Parent in
accordance with its terms (subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether in a
proceeding in equity or at law).
(vi) The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Issuers and Parent and constitutes a valid
and binding obligation of each of the Issuers and Parent, enforceable against
the Issuers and Parent in accordance with its terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law).
(vii) The Notes have been duly authorized, executed and delivered by
each of the Issuers and, when paid for by the Initial Purchasers in accordance
with the terms of this Agreement (assuming the due authorization, execution and
delivery of the Indenture by the Trustee and due authentication and delivery of
the Notes by the Trustee in accordance with the Indenture), will constitute
Notes under the terms of the Indenture, will constitute the valid and binding
obligations of each of the Issuers entitled to the benefits of the Indenture,
and will be enforceable against each of the Issuers in accordance with their
terms. The New Notes have been duly authorized by the Issuers and when duly
executed and delivered and authenticated by the Issuers pursuant to the terms of
the Indenture and the Registration Rights Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and due
authentication, execution and delivery of the New Notes by the Trustee in
accordance with the Indenture), will constitute New Notes under the terms of the
Indenture, will constitute the valid and binding obligations of each of the
Issuers entitled to the benefits of the Indenture, and will be enforceable
against each of the Issuers in accordance with their terms (subject to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect and to general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether in a proceeding in equity or at law).
(viii) The Guarantee has been duly authorized by Parent, and when
executed and delivered by Parent in accordance with the terms of the Indenture,
will constitute a valid and binding obligation of Parent, enforceable against
Parent in accordance with its terms (subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and other similar
laws affecting creditors' rights generally from time to time in effect and to
general principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing, regardless of whether
in a proceeding in equity or at law).
<PAGE>
20
(ix) Each of the Senior Credit Facility and the Asset Backed
Facility and the other Credit Documents and Asset Backed Documents has been duly
and validly authorized, executed and delivered by the Company and the SPE, as
the case may be, and, assuming due authorization, execution and delivery by the
other parties thereto, are valid and binding obligations of the Company and the
SPE, as the case may be, enforceable against the Company and the SPE, as the
case may be, in accordance with their respective terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing, regardless
of whether in a proceeding in equity or at law).
(x) All the limited liability company units or shares of capital
stock, as the case may be, of the Issuers outstanding prior to the issuance of
the Initial Notes have been duly authorized and validly issued and are fully
paid and nonassessable, and the authorized capitalization of Parent and the
Company conforms to the description thereof under the caption "Capitalization"
in the Offering Memorandum.
(xi) All the outstanding shares of capital stock of the Company's
subsidiaries listed on Schedule II to such opinion have been duly authorized and
validly issued, are fully paid and nonassessable, and are wholly owned by the
Company directly, or indirectly through one of the other subsidiaries, free and
clear of any lien, adverse claim or security interest.
(xii) The Issuers' and Parent's execution, delivery and performance
of their respective obligations under this Agreement, the Indenture, the
Registration Rights Agreement and the Merger Agreement and the Issuers' sale of
the Notes to the Initial Purchasers in accordance with this Agreement and
performance of their respective obligations under each do not (i) violate the
Company's or Parent's Certificate of Formation or Limited Liability Company
Agreement or ALC's Certificate of Incorporation or Bylaws or (ii) constitute a
violation by the Company, ALC or Parent of any applicable provision of any law,
statute or regulation (except that no opinion is expressed as to compliance with
any disclosure requirement or any prohibition against fraud or misrepresentation
or as to whether performance of the indemnification or contribution provisions
in this Agreement would be permitted) or any order or decree known to such
counsel of any court or government agency or (iii) breach, or result in a
default under, any existing obligation of the Company, ALC or Parent under any
of the agreements listed on Schedule II to such opinion (and which the Issuers
and Parent have represented lists all material agreements and instruments to
which the Issuers and Parent and their subsidiaries or by which the Issuers and
Parent and their subsidiaries are bound or by which their property or assets are
subject provided that no opinion is expressed as to compliance with any
financial test or cross-default provision in any such agreement).
(xiii) To the knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened against the Issuers, or to which
any of their respective properties are subject, that has caused such counsel to
believe that such
<PAGE>
21
proceedings would be required by Item 103 of Regulation S-K to be described in a
registration statement on Form S-1 that have not been so described in the
Offering Memorandum and, to the knowledge of such counsel, there is no contract
to which either Issuer is a party or to which any of their respective property
is subject that has caused such counsel to conclude that such contract is
required to be described in the Offering Memorandum but is not so described.
(xiv) The Issuers' were not required to obtain any consent,
approval, authorization or order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental agency for the
issuance, delivery and sale of the Notes under this Agreement or the performance
by the Issuers and Parent of the Registration Rights Agreement and the Merger
Agreement except for (i) an order of the Commission declaring the registration
statement, to be filed pursuant to the Registration Rights Agreement, effective
and (ii) the order of the Secretary of State of Delaware declaring the Merger
effective.
(xv) Subject to compliance by the Initial Purchasers with the
procedures set forth in this Agreement, it is not necessary in connection with
the sale of the Notes to the Initial Purchasers in accordance with this
Agreement or in connection with the resale of the Notes contemplated by this
Agreement to register the Notes under the Securities Act or to qualify the
Indenture under the TIA.
(xvi) The Issuers are not and, upon sale of the Initial Notes to be
issued and sold in accordance with this Agreement and the application of the net
proceeds to the Company of such sale as described in the Offering Memorandum
under the caption "Use of Proceeds," will not be an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(xvii) When the Initial Securities are issued and delivered pursuant
to this Agreement, such Initial Securities will not be of the same class (within
the meaning of Rule 144A under the Securities Act) as securities of the Issuers
that are listed on a national securities exchange registered under Section 6 of
the Exchange Act or that are quoted in a United States automated inter-dealer
quotation system.
(xviii) To the knowledge of such counsel, except as disclosed in the
Offering Memorandum, there are no contracts, agreements or understandings
between the Issuers or any of their subsidiaries and any person granting such
person the right to require the Issuers or any of their subsidiaries to file a
registration statement under the Securities Act with respect to any securities
of the Issuers owned or to be owned by such person or to require the Issuers or
any of their subsidiaries to include such securities in all the securities
registered pursuant to the Registration Statements or in any securities being
registered pursuant to any other registration statement filed by the Issuers or
any of their subsidiaries under the Securities Act.
(xix) The information in the Offering Memorandum under the heading
"Description of the Notes and "Certain United States Federal Income Tax
Considerations" to
<PAGE>
22
the extent that it summarizes laws, governmental rules or regulations or
documents is correct is all material respects.
In addition, such counsel shall also state that such counsel has
participated in conferences with officers of the Issuers and with the
independent public accountants for the Issuers concerning the preparation of the
Offering Memorandum and, although such counsel has made certain inquiries and
investigations in connection with the preparation of the Offering Memorandum, it
is not passing upon and does not assume any responsibility for the accuracy or
completeness of the statements contained in the Offering Memorandum and on the
basis of the foregoing such counsel's work in connection with this matter did
not disclose any information that gave such counsel reason to believe that the
Offering Memorandum, as of its date or as of the Closing Date, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and other financial data included therein).
The opinion of such counsel may be limited to the laws of the state of
New York, the General Corporation Law and Limited Liability Company Act of the
State of Delaware, and the Federal laws of the United States.
(e) The Initial Purchasers shall have received from Simpson Thacher &
Bartlett, counsel for the Initial Purchasers, such opinion or opinions, dated as
of the Closing Date, with respect to the issuance and sale of the Initial
Securities, the Offering Memorandum and other related matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to such
counsel such documents as they reasonably request for the purpose of enabling
them to pass upon such matters.
(f) The Issuers, Parent and the Trustee shall have entered into the
Indenture and the Initial Purchasers shall have received counterparts, conformed
as executed, thereof.
(g) The Issuers, Parent and the Initial Purchasers shall have entered
into the Registration Rights Agreement and the Initial Purchasers shall have
received counterparts, conformed as executed, thereof.
(h) Bain LLC, MergeCo, Raytheon and Parent shall have entered into
the Merger Agreement and the Initial Purchasers shall have received
counterparts, conformed as executed, thereof.
(i) With respect to the letter of Coopers & Lybrand L.L.P. delivered
to the Initial Purchasers concurrently with the execution of this Agreement (the
"initial letter"), the Issuers shall have furnished to the Initial Purchasers a
letter (as used in this paragraph, the "bring-down letter") of such accountant,
addressed to the Initial Purchasers and dated such Closing Date (i) confirming
that it is an independent public accountant under the guidelines of the American
Institute of Certified Public Accountant, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or developments
since the
<PAGE>
23
respective dates as of which specified financial information is given in the
Offering Memorandum, as of a date not more than two days prior to the date of
the bring-down letter), the conclusions and findings of such firm with respect
to the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the initial letter.
(j) Each of the Issuers shall have furnished to the Initial
Purchasers a certificate, dated as of the Closing Date, of its Chief Executive
Officer or President and its Chief Financial Officer or Treasurer stating that:
(i) The representations, warranties and agreements of the
Issuers and Parent in Section 1 are true and correct as of such Closing Date and
after giving effect to the consummation of the transactions contemplated by this
Agreement; the Issuers and Parent have complied with all their agreements
contained herein, and the condition set forth in Section 7(k) has been
fulfilled; and
(ii) They have carefully examined the Preliminary Offering
Memorandum and the Offering Memorandum and, in their opinion (i) as of their
respective dates and as of the Closing Date, the Preliminary Offering Memorandum
and the Offering Memorandum did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (ii) since the date of the Offering
Memorandum, no event has occurred which should have been set forth in a
supplement or amendment to the Offering Memorandum.
(k) Neither the Issuers nor any of their subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Memorandum (i) any loss or interference with their business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Offering Memorandum or (ii)
any change in the units or long-term debt of the Issuers or any of their
subsidiaries or any change, or any development involving a prospective change,
that would have a Material Adverse Effect, otherwise than as set forth or
contemplated in the Offering Memorandum, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the Initial Purchasers,
so material and adverse as to make it impracticable or inadvisable to proceed
with the payment for and delivery of the Initial Notes being delivered on such
Closing Date on the terms and in the manner contemplated in the Offering
Memorandum.
(l) There shall exist at and as of the Closing Date no conditions
that would constitute a default (or an event that with notice or the lapse of
time, or both, would constitute a default) under the Senior Credit Facility or
the Asset Backed Facility. On the Closing Date, the Senior Credit Facility and
the Asset Backed Facility shall be in full force and effect, shall conform in
all material respects to the description thereof contained in the Offering
Memorandum (after giving effect to the amendment described therein) and shall
not have been modified.
<PAGE>
24
(m) Simpson Thacher & Bartlett shall have been furnished with such
other documents and opinions, in addition to those set forth above, as they may
reasonably require for the purpose of enabling them to review or pass upon the
matters referred to in this Agreement and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
(n) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Issuers' debt
securities by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its
rating of any of the Issuers' debt securities.
(o) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Issuers on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of a
majority in interest of the several Initial Purchasers, impracticable or
inadvisable to proceed with the public offering or delivery of the Securities
being delivered on such Closing Date on the terms and in the manner contemplated
in the Offering Memorandum.
(p) The Initial Notes shall have been approved by the National
Association of Securities Dealers, Inc. for trading in the PORTAL market.
(q) Each of the Issuers and Parent shall have duly authorized,
executed and delivered this Agreement, and assumed all obligations hereunder, in
accordance with Section 18 hereof.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel of the Initial Purchasers.
<PAGE>
25
8. Indemnification and Contribution.
(a) Each of the Sponsor and MergeCo hereby jointly and severally
agrees to indemnify and hold harmless each Initial Purchaser, its officers and
employees and each person, if any, who controls any Initial Purchaser within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Securities), to which that Initial Purchaser, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum or the Offering
Memorandum (in each case as amended or supplemented), (ii) the omission or
alleged omission to state in any Preliminary Offering Memorandum or the Offering
Memorandum (in each case as amended or supplemented) any material fact required
to be stated therein or necessary to make the statements therein not misleading
or (iii) any act or failure to act or any alleged act or failure to act by any
Initial Purchaser in connection with, or relating in any manner to, the
Securities or the offering contemplated hereby, and which is included as part of
or referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clauses (i) or (ii) above (provided that the
Sponsor and MergeCo shall not be liable under this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such acts or failures to act undertaken or omitted to be taken by such Initial
Purchaser through its gross negligence or willful misconduct); and shall
reimburse each Initial Purchaser and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Initial Purchaser, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that the Sponsor and MergeCo shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Offering Memorandum or the Offering
Memorandum (in each case as amended or supplemented) in reliance upon and in
conformity with written information provided by such Initial Purchaser
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Issuers and their subsidiaries, Parent, the
Sponsor and MergeCo may otherwise have to any Initial Purchaser or to any
officer, employee or controlling person of that Initial Purchaser.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Sponsor and MergeCo, their officers and
employees, each of their directors, and each person, if any, who controls the
Sponsor or MergeCo within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Sponsor or MergeCo or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Offering
<PAGE>
26
Memorandum or the Offering Memorandum (in each case as amended or supplemented)
or (ii) the omission or alleged omission to state in any Preliminary Offering
Memorandum or the Offering Memorandum (in each case as amended or supplemented)
any material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information concerning such
Initial Purchaser furnished to the Sponsor or MergeCo by or on behalf of that
Initial Purchaser specifically for inclusion therein, and shall reimburse the
Sponsor and MergeCo and any such director, officer or controlling person for any
legal or other expenses reasonably incurred by the Sponsor or MergeCo or any
such director, officer or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Initial Purchaser may otherwise have to the
Sponsor or MergeCo or any such director, officer, employee or controlling
person.
(c) Promptly after receipt by an indemnified party under this Section
8 of the notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided, however, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice
from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Initial Purchasers shall have the right to employ one separate counsel (in
addition to local counsel, if necessary) to represent jointly the Initial
Purchasers and their respective officers, employees and controlling persons who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Initial Purchasers against the Sponsor, MergeCo
and their subsidiaries under this Section 8 if, in the reasonable judgment of
the Initial Purchasers, it is advisable for the Initial Purchasers, officers,
employees and controlling persons to be jointly represented by separate counsel,
and in that event the fees and expenses of such separate counsel shall be paid
by the Sponsor, MergeCo and their subsidiaries. No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
<PAGE>
27
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its written
consent (which consent shall not be unreasonably withheld), but if settled with
the consent of the indemnifying party or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Sponsor and MergeCo on the one hand and the Initial Purchasers
on the other from the offering of the Initial Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Sponsor and
MergeCo on the one hand and the Initial Purchasers on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Sponsor and MergeCo on
the one hand and the Initial Purchasers on the other with respect to such
offerings shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Initial Securities purchased under this Agreement
(before deducting expenses) received by the Sponsor and MergeCo on the one hand,
and the total discounts and commissions received by the Initial Purchasers with
respect to the Initial Securities purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the Initial
Securities under this Agreement, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault shall be determined
by reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Sponsor and MergeCo or the Initial Purchasers, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Sponsor and
MergeCo and the Initial Purchasers agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Initial Securities
purchased by it were resold to Eligible Purchasers exceeds the
<PAGE>
28
amount of any damages which such Initial Purchaser has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute as provided
in this Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Initial Purchasers severally confirm and the Sponsor and
MergeCo acknowledge that the last paragraph on the cover page, the stabilization
legend on page iii, and the second, third, ninth, tenth and eleventh paragraphs
of the section entitled "Plan of Distribution" constitute the only information
concerning such Initial Purchasers furnished in writing to the Issuers by or on
behalf of the Initial Purchasers specifically for inclusion in the Preliminary
Offering Memorandum or the Offering Memorandum.
9. Termination. The obligations of the Initial Purchasers hereunder
may be terminated by Lehman Brothers Inc. by notice given to the Sponsor or
MergeCo prior to delivery of and payment for the Initial Securities if, prior to
that time, any of the events described in Sections 7(k), 7(n) or 7(o) shall have
occurred or if the Initial Purchasers shall decline to purchase the Initial
Securities for any reason permitted under this Agreement.
10. Reimbursement of Initial Purchasers' Expenses. If the Issuers
shall fail to tender the Initial Notes for delivery to the Initial Purchasers by
reason of any failure, refusal or inability on the part of the Sponsor or
MergeCo to perform any agreement on their part to be performed, or because any
other condition of the Initial Purchasers' obligations hereunder required to be
fulfilled by the Sponsor or MergeCo is not fulfilled, the Sponsor and MergeCo
will reimburse the Initial Purchasers for all reasonable out-of-pocket expenses
(including the customary fees and disbursements of their counsel) incurred by
the Initial Purchasers in connection with this Agreement and the proposed
purchase of the Initial Securities, and upon demand the Sponsor and MergeCo
shall pay the full amount thereof to Lehman Brothers Inc.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) If to the Initial Purchasers, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax: 212-
526-6588), with a copy to Simpson Thacher & Bartlett, 425 Lexington Avenue, New
York, New York 10017, Attention: Rise B. Norman, Esq. (Fax: 212-455-2502); and
(b) If to Issuers, Parent, the Sponsor or MergeCo, shall be delivered
or sent by mail, telex or facsimile transmission to Alliance Laundry Systems
LLC, Shepard Street, Ripon, Wisconsin 54971, Attention: Chief Financial Officer
(Fax: 920-748-4429), with a copy to Kirkland & Ellis, Citicorp Center, 153 East
53rd Street, New York, New York 10022, Attention: Lance C. Balk, Esq. (Fax 212-
446-4900).
<PAGE>
29
Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof. The Issuers, the Sponsor and MergeCo shall be
entitled to act and rely upon any request, consent, notice or agreement given or
made on behalf of the Initial Purchasers by Lehman Brothers Inc. Any notice of
a change of address or facsimile transmission number must be given by the
Issuers, the Sponsor or MergeCo or by the Initial Purchasers, as the case may
be, in writing, at least three days in advance of such change.
12. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, their
personal representatives and successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
the representations, warranties, indemnities and agreements of the Sponsor and
MergeCo contained in this Agreement shall also be deemed to be for the benefit
of the person or persons, if any, who control any Initial Purchaser within the
meaning of Section 15 of the Securities Act.
13. Survival. The respective indemnities, representations,
warranties and agreements of the Initial Purchasers and the Sponsor and MergeCo
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
investigation made by on behalf of any of them or any person controlling any of
them.
14. Definition of the Terms "Business Day." For purposes of this
Agreement "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
15. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of New York without regard to principles of
conflicts of laws thereof.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
18. Effect of Execution. For all purposes hereunder, the
representations, warranties and agreements given and made by the Sponsor and
MergeCo under this Agreement shall be deemed to be given and made by the Issuers
and Parent upon consummation of the Merger and, upon their executing a
counterpart hereof, each of such agreements hereunder shall be enforceable
against each of the Issuers and Parent as if given and made by each of them as
of the date hereof. Simultaneously therewith, the Sponsor shall
<PAGE>
30
be released from all obligations and benefits hereunder, and shall not be deemed
to be a signatory hereunder.
[signature page follows]
<PAGE>
31
If the foregoing correctly sets forth the agreement between the Initial
Purchasers, the Sponsor and MergeCo, please indicate your acceptance in the
space provided for the purpose below.
Very truly yours,
BAIN CAPITAL, INC.
By:
-------------------------------
Name:
Title:
RCL ACQUISITIONS, L.L.C.
By:
-------------------------------
Name:
Title:
Accepted:
LEHMAN BROTHERS INC.,
on behalf of the Initial Purchasers
By:
-------------------------------
Name:
Title:
<PAGE>
Each of the following parties hereby agrees to be bound by the
foregoing agreement and to assume all obligations hereunder in accordance with
Section 18 hereof.
Very truly yours,
ALLIANCE LAUNDRY SYSTEMS LLC
By:
-------------------------------
Name:
Title:
ALLIANCE LAUNDRY CORPORATION
By:
-------------------------------
Name:
Title:
ALLIANCE LAUNDRY HOLDINGS LLC
By:
-------------------------------
Name:
Title:
<PAGE>
SCHEDULE 1
Initial Purchasers Principal Amount of Notes
- ------------------ -------------------------
Lehman Brothers Inc. $ 88,000,000
Credit Suisse First Boston
Corporation $ 22,000,000
------------
Total $110,000,000
============
<PAGE>
EXHIBIT A
Registration Rights Agreement
<PAGE>
EXHIBIT 10.2
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of May 5, 1998
Among
ALLIANCE LAUNDRY SYSTEMS LLC
ALLIANCE LAUNDRY CORPORATION
ALLIANCE LAUNDRY HOLDINGS LLC
and
LEHMAN BROTHERS INC.
and
CREDIT SUISSE FIRST BOSTON CORPORATION
as Initial Purchasers
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Definitions.......................................... 1
2. Securities Subject to This Agreement................. 3
3. Registered Exchange Offer............................ 3
4. Shelf Registration................................... 5
5. Liquidated Damages................................... 6
6. Registration Procedures.............................. 7
7. Registration Expenses................................ 14
8. Indemnification and Contribution..................... 15
9. Rule 144A............................................ 18
10. Participation in Underwritten
Registrations....................................... 18
11. Selection of Underwriters............................ 18
12. Miscellaneous........................................ 18
i
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and
entered into as of May 5, 1998 by and among Alliance Laundry Systems LLC, a
Delaware limited liability company (the "Company"), Alliance Laundry
Corporation, a Delaware corporation ("ALC" and, together with the Company, the
"Issuers"), Alliance Laundry Holdings LLC, a Delaware limited liability company
(the "Parent"), and Lehman Brothers Inc. and Credit Suisse First Boston
Corporation (collectively, the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of April 29, 1998, among the Issuers, the Parent and the
Initial Purchasers (the "Purchase Agreement"), which provides for the sale by
the Issuers to the Initial Purchasers of $110,000,000 aggregate principal amount
of the Issuers' 9 5/8% Senior Subordinated Notes due 2008 (the "Notes"). The
Notes will be guaranteed on a senior subordinated basis by a guarantee (the
"Guarantee") by the Parent and each newly acquired or created domestic
subsidiary. The Notes and the Guarantee are collectively referred to herein as
the "Securities." In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Issuers and the Parent have agreed to provide the
registration rights set forth in this Agreement for the benefit of the Initial
Purchasers and their direct and indirect transferees and assigns. The execution
and delivery of this Agreement is a condition to the Initial Purchasers'
obligations to purchase the Securities under the Purchase Agreement. Capitalized
terms used but not specifically defined herein have the respective meanings
ascribed thereto in the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Broker-Dealer: Any broker or dealer registered under the
-------------
Exchange Act.
Closing Date: The date on which the Securities were sold.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: A registered Exchange Offer shall be deemed
----------
"Consummated" for purposes of this Agreement upon the occurrence of (i) the
filing and effectiveness under the Securities Act of the Exchange Offer
Registration Statement relating to the New Securities to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement
continuously effective and the keeping of the Exchange Offer open for a
period not less than the minimum period required pursuant to Section 3(b)
hereof and (iii) the delivery by the Issuers of the New Securities in the
same aggregate principal amount as the aggregate principal amount of
Transfer Restricted Securities that were validly tendered by Holders
thereof pursuant to the Exchange Offer.
Effectiveness Target Date: As defined in Section 5(a) hereof.
-------------------------
Event Date: As defined in Section 5(b) hereof.
----------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The registration by the Issuers and the Parent
--------------
under the Securities Act of the New Securities pursuant to a Registration
Statement pursuant to which the Issuers offer the Holders of all
outstanding Transfer Restricted Securities the opportunity
<PAGE>
2
to exchange all such outstanding Transfer Restricted Securities held by
such Holders for New Securities in an aggregate amount equal to the
aggregate amount of the Transfer Restricted Securities tendered in such
exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration
-------------------------------------
Statement relating to the Exchange Offer, including the Prospectus which
forms a part thereof.
Exempt Resales: The transactions in which the Initial Purchasers
--------------
propose to sell the Securities to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Securities Act, and to
certain non-U.S. persons.
Holders: As defined in Section 2(b) hereof.
-------
Indenture: The Indenture, dated as of May 5, 1998, between the
---------
Issuers and United States Trust Company of New York, as trustee (the
"Trustee"), pursuant to which the Securities are to be issued, as such
Indenture is amended or supplemented from time to time in accordance with
the terms thereof.
Initial Purchasers: As defined in the preamble hereto.
------------------
Liquidated Damages: As defined in Section 5(a) hereof.
------------------
NASD: National Association of Securities Dealers, Inc.
----
New Securities: The Securities to be issued pursuant to the
--------------
Indenture in the Exchange Offer.
Participant: As defined in Section 8(a) hereof.
-----------
Person: An individual, partnership, corporation, limited
------
liability company, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement,
----------
as amended or supplemented by any prospectus supplement and by all other
amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.
Registration Default: As defined in Section 5(a) hereof.
--------------------
Registration Statement: Any registration statement of the
----------------------
Issuers and the Parent relating to (a) an offering of New Securities
pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration
Statement, which is filed pursuant to the provisions of this Agreement, in
either case, including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all exhibits
and material incorporated by reference therein.
Securities Act: The Securities Act of 1933, as amended.
--------------
<PAGE>
3
Shelf Filing Deadline: As defined in Section 4 hereof.
---------------------
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-
---
77bbbb), as amended.
Transfer Restricted Securities: Each Security, until the
------------------------------
earliest to occur of (a) the date on which such Security has been exchanged
by a person other than a Broker-Dealer for a New Security in the Exchange
Offer, (b) following the exchange by a Broker-Dealer in the Exchange Offer
of a Security for a New Security, the date on which such New Security is
sold to a purchaser who receives from such Broker-Dealer on or prior to the
date of such sale a copy of the prospectus contained in the Exchange Offer
Registration Statement, (c) the date on which such Security has been
effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (d) the date on which
such Security is eligible to be distributed to the public pursuant to Rule
144 under the Securities Act.
Underwritten Registration or Underwritten Offering: A
------------------------- ---------------------
registration in which securities of the Issuers are sold to an underwriter
for reoffering to the public.
2. Securities Subject to This Agreement.
(a) Transfer Restricted Securities. The securities entitled to
------------------------------
the benefits of this Agreement are the Transfer Restricted Securities.
(b) Holders of Transfer Restricted Securities. A Person is
-----------------------------------------
deemed to be a holder of Transfer Restricted Securities (each, a "Holder")
whenever such Person owns Transfer Restricted Securities.
3. Registered Exchange Offer.
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with) or one of the events set forth
in Section 4(a)(ii) has occurred, the Issuers and the Parent shall (i)
cause to be filed with the Commission promptly after the Closing Date, but
in no event later than 90 days after the Closing Date, a Registration
Statement under the Securities Act relating to the New Securities and the
Exchange Offer, (ii) use their respective best efforts to cause such
Registration Statement to become effective no later than 180 days after the
Closing Date, (iii) in connection with the foregoing, file (A) all pre-
effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement
pursuant to Rule 430A under the Securities Act and (C) cause all necessary
filings in connection with the registration and qualification of the New
Securities to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, and (iv) unless the
Exchange Offer would not be permitted by applicable law or Commission
policy, the Issuers will commence the Exchange Offer and use their best
efforts to issue on or prior to 30 business days after the date on which
such Registration Statement was declared effective by the Commission, New
Securities
<PAGE>
4
in exchange for all Securities tendered prior thereto in the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the New Securities to be offered in exchange for the
Transfer Restricted Securities and to permit resales of New Securities held
by Broker-Dealers as contemplated by Section 3(c) below. The 90, 180 and 30
business day periods referred to in (i), (ii) and (iv) of this Section 3(a)
shall not include any period during which the Issuers are pursuing a
Commission ruling pursuant to Section 6(a)(i) below.
(b) The Issuers and the Parent shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously and shall keep the Exchange Offer open for a period of not
less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; provided, however, that
in no event shall such period be less than 20 business days. The Issuers
and the Parent shall cause the Exchange Offer to comply in all material
respects with all applicable federal and state securities laws. No
securities other than the New Securities shall be included in the Exchange
Offer Registration Statement. The Issuers and the Parent shall use their
best efforts to cause the Exchange Offer to be Consummated on the earliest
practicable date after the Exchange Offer Registration Statement has become
effective, but in no event later than 30 business days thereafter.
(c) The Issuers shall indicate in a "Plan of Distribution"
section contained in the Prospectus contained in the Exchange Offer
Registration Statement that any Broker-Dealer who holds Securities that are
Transfer Restricted Securities and that were acquired for its own account
as a result of market-making activities or other trading activities (other
than Transfer Restricted Securities acquired directly from the Issuers),
may exchange such Securities pursuant to the Exchange Offer; however, such
Broker-Dealer may be deemed to be an "underwriter" within the meaning of
the Securities Act and must, therefore, deliver a prospectus meeting the
requirements of the Securities Act in connection with any resales of the
New Securities received by such Broker-Dealer in the Exchange Offer, which
prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-
Dealers that the Commission may require in order to permit such resales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of New Securities held by any such
Broker-Dealer except to the extent required by the Commission as a result
of a change in policy announced after the date of this Agreement.
The Issuers and the Parent shall use their respective best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for resales of New
Securities acquired by Broker-Dealers for their own accounts as a result of
market-making activities or other trading activities and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, for a period of 180 days from the date on which the Exchange Offer
Registration Statement is declared effective.
<PAGE>
5
The Issuers and the Parent shall provide sufficient copies of the
latest version of such Prospectus to Broker-Dealers promptly upon request at any
time during such 180-day period in order to facilitate such resales.
4. Shelf Registration.
(a) Shelf Registration. If (i) the Issuers and the Parent are
------------------
not required to file an Exchange Offer Registration Statement or to
consummate the Exchange Offer because the Exchange Offer is not permitted
by applicable law or Commission policy (after the procedures set forth in
Section 6(a) below have been complied with) or (ii) if any Holder of
Transfer Restricted Securities that is a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act) or an institutional
"accredited investor" (as defined in Rule 501(A)(1), (2), (3) or (7) under
the Securities Act) shall notify the Issuers at least 20 business days
prior to the Consummation of the Exchange Offer (A) that such Holder is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer or (B) that such Holder may not resell the New Securities
acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by
such Holder or (C) that such Holder is a Broker-Dealer and holds Securities
acquired directly from the Issuers or one of its affiliates, then the
Issuers and the Parent shall in lieu of, or in the event of (ii) above, in
addition to, effecting the registration of the New Securities pursuant to
the Exchange Offer Registration Statement use their respective best efforts
to:
(x) cause to be filed a shelf registration statement pursuant to
Rule 415 under the Securities Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "Shelf
Registration Statement"), on or prior to the earlier to occur of (1)
the 30th day after the date on which the Issuers determine that they
are not required to file the Exchange Offer Registration Statement or
(2) the 30th day after the date on which the Issuers receive notice
from a Holder of Transfer Restricted Securities as contemplated by
clause (ii) above (such earlier date being the "Shelf Filing
Deadline"), which Shelf Registration Statement shall provide for
resales of all Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 4(b)
hereof; and
(y) cause such Shelf Registration Statement to be declared
effective by the Commission on or before the 90th day after the Shelf
Filing Deadline.
The Issuers and the Parent shall use their respective best efforts to keep
such Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof to
the extent necessary to ensure that it is available for resales of
Securities by the Holders of Transfer Restricted Securities entitled to the
benefit of this Section 4(a) and to ensure that it conforms with the
requirements of this Agreement, the Securities Act and the policies, rules
and regulations of the Commission as announced from time to time, for a
period ending on the second anniversary of the Closing Date.
<PAGE>
6
(b) Provision by Holders of Certain Information in Connection
---------------------------------------------------------
with the Shelf Registration Statement. No Holder of Transfer Restricted
-------------------------------------
Securities may include any of its Transfer Restricted Securities in any
Shelf Registration Statement pursuant to this Agreement unless and until
such Holder furnishes to the Issuers in writing, within 20 business days
after receipt of a request therefor, such information as the Issuers may
reasonably request for use in connection with any Shelf Registration
Statement or Prospectus or preliminary Prospectus included therein. No
Holder of Transfer Restricted Securities shall be entitled to Liquidated
Damages pursuant to Section 5 hereof unless and until such Holder shall
have used its best efforts to provide all such reasonably requested
information. Each Holder as to which any Shelf Registration Statement is
being effected agrees to furnish promptly to the Issuers all information
required to be disclosed in order to make the information previously
furnished to the Issuers by such Holder not materially misleading.
5. Liquidated Damages
(a) If (a) any of the Registration Statements required by this
Agreement is not filed with the Commission on or prior to the date specified for
such filing in this Agreement, (b) any of such Registration Statements has not
been declared effective by the Commission on or prior to the date specified for
such effectiveness in this Agreement (the "Effectiveness Target Date"), (c) the
Exchange Offer has not been Consummated within 30 business days after the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement or (d) any Registration Statement required by this Agreement is filed
and declared effective but shall thereafter cease to be effective or fail to be
usable for its intended purpose without being succeeded within two business days
by a post-effective amendment to such Registration Statement that cures such
failure and that is itself immediately declared effective (each such event
referred to in clauses (a) through (d), a "Registration Default"), additional
cash interest ("Liquidated Damages") shall accrue to each Holder of the
Securities commencing upon the occurrence of such Registration Default in an
amount equal to $.05 per week per $1,000 principal amount of Securities held by
such Holder. The amount of Liquidated Damages will increase by an additional
$.05 per week per $1,000 principal amount of Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages for all Registration Defaults of $.50 per
week per $1,000 principal amount of Securities. All accrued Liquidated Damages
shall be paid to Holders by the Issuers in the same manner as interest is paid
pursuant to the Indenture. Following the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
Liquidated Damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Issuers set forth in the preceding paragraph
that have accrued and are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Transfer Restricted Security shall have been satisfied in full.
(b) The Issuers shall notify the Trustee within one business day after
each and every date on which an event occurs in respect of which Liquidated
Damages are required to be paid (an "Event Date"). Liquidated Damages shall be
paid by depositing Liquidated Damages with the Trustee, in trust, for the
benefit of the Holders of the Securities, on or before the applicable Interest
Payment Date (whether or not any payment other than Liquidated Damages is
payable on such Securities), in immediately available funds in sums sufficient
to pay the Liquidated Damages then due
<PAGE>
7
to such Holders. Each obligation to pay Liquidated Damages shall be deemed to
accrue from the applicable date of the occurrence of the Registration Default.
6. Registration Procedures.
(a) Exchange Offer Registration Statement. In connection with
-------------------------------------
the Exchange Offer, the Issuers and the Parent shall comply with all of the
provisions of Section 6(c) below, shall use their best efforts to effect
such exchange to permit the sale of Transfer Restricted Securities being
sold in accordance with the intended method or methods of distribution
thereof, and shall comply with all of the following provisions:
(i) If in the reasonable opinion of counsel to the Issuers, there
is a question as to whether the Exchange Offer is permitted by
applicable law, the Issuers hereby agree to seek a no-action letter
or other favorable decision from the Commission allowing the Issuers
to Consummate an Exchange Offer for such Securities. The Issuers
hereby agree to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The
Issuers hereby agree, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff
an analysis prepared by counsel to the Issuers setting forth the
legal bases, if any, upon which such counsel has concluded that such
an Exchange Offer should be permitted and (C) diligently pursue a
resolution (which need not be favorable) by the Commission staff of
such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Issuers,
prior to the Consummation thereof, a written representation to the
Issuers (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Issuers, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement
or understanding with any person to participate in, a distribution of
the New Securities to be issued in the Exchange Offer and (C) it is
acquiring the New Securities in its ordinary course of business. In
addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Issuers' and the Parent's preparations for
the Exchange Offer. Each Holder hereby acknowledges and agrees that
any Broker-Dealer and any such Holder using the Exchange Offer to
participate in a distribution of the securities to be acquired in the
Exchange Offer (1) could not under Commission policy as in effect on
the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991)
----------------------------
and Exxon Capital Holdings Corporation (available May 13, 1988), as
----------------------------------
interpreted in the Commission's letter to Shearman & Sterling dated
July 2, 1993, and similar no-action letters (including Brown & Wood
------------
LLP (available February 7, 1997), and any no-action letter obtained
---
pursuant to clause (i) above) and (2) must comply with the
registration and prospectus delivery requirements of the Securities
Act in connection with a secondary resale transaction and that such a
secondary resale transaction should be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of New Securities
<PAGE>
8
obtained by such Holder in exchange for Securities acquired by such
Holder directly from the Issuers.
(iii) Prior to the effectiveness of the Exchange Offer
Registration Statement, the Issuers shall provide a supplemental
letter to the Commission (A) stating that the Issuers and the Parent
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation
----------------------------------
(available May 13, 1988), Morgan Stanley and Co., Inc. (available
----------------------------
June 5, 1991), Brown & Wood LLP (available February 7, 1997) and, if
----------------
applicable, any no-action letter obtained pursuant to clause (i)
above and (B) including a representation that the Issuers have not
entered into any arrangement or understanding with any Person to
distribute the New Securities to be received in the Exchange Offer
and that, to the best of the Issuers' information and belief, each
Holder participating in the Exchange Offer is acquiring the New
Securities in its ordinary course of business and has no arrangement
or understanding with any Person to participate in the distribution
of the New Securities received in the Exchange Offer.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Issuers and the Parent shall comply with all
the provisions of Section 6(c) below and shall use their best efforts to
effect such registration to permit the sale of the Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and pursuant thereto the Issuers and the Parent will
as expeditiously as possible prepare and file with the Commission a
Registration Statement relating to the registration on any appropriate form
under the Securities Act, which form shall be available for the sale of the
Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) General Provisions. In connection with any Registration
------------------
Statement and any Prospectus required by this Agreement to permit the sale
or resale of Transfer Restricted Securities (including, without limitation,
any Registration Statement and the related Prospectus required to permit
resales of Securities by Broker-Dealers), the Issuers and the Parent shall:
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements
for the period specified in Section 3 or 4 of this Agreement, as
applicable; upon the occurrence of any event that would cause any
such Registration Statement or the Prospectus contained therein (A)
to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Issuers and the
Parent shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any
such misstatement or omission, and, in the case of either clause (A)
or (B), use their best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus
to become usable for their intended purpose(s) as soon as practicable
thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep
<PAGE>
9
the Registration Statement effective for the applicable period set forth in
Section 3 or 4 hereof, as applicable, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to comply
fully with the applicable provisions of Rules 424 and 430A under the
Securities Act in a timely manner; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with
the intended method or methods of distribution by the sellers thereof set
forth in such Registration Statement or supplement to the Prospectus;
(iii) in the case of a Shelf Registration, advise the
underwriter(s), if any, and selling Holders promptly and, if requested by
such Persons, to confirm such advice in writing, (A) when the Prospectus or
any Prospectus supplement or post-effective amendment has been filed, and,
with respect to any Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Securities Act or
of the suspension by any state securities commission of the qualification
of the Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes, or (D) of the existence of any fact or the happening of any event
that makes any statement of a material fact made in the Registration
Statement, the Prospectus, any amendment or supplement thereto, or any
document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at
any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or any state securities
commission or other regulatory authority shall issue an order suspending
the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Issuers
and the Parent shall use their best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) in the case of a Shelf Registration, furnish to each of the
selling or exchanging Holders and each of the underwriter(s), if any,
before filing with the Commission, copies of any Registration Statement or
any Prospectus included therein or any amendments or supplements to any
such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement, if any), which documents will be subject to the review of such
Holders and underwriter(s), if any, for a period of at least five business
days, and the Issuers and the Parent will not file any such Registration
Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents
incorporated by reference) to which selling Holders of a majority in
aggregate principal amount of Transfer Restricted Securities covered by
such Registration Statement or the underwriter(s), if any, shall reasonably
object within five business days after the receipt thereof. A selling
Holder or
<PAGE>
10
underwriter, if any, shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed, contains a material misstatement or
omission;
(v) in the case of a Shelf Registration, promptly prior to the
filing of any document that is to be incorporated by reference into a
Registration Statement or Prospectus, if any, provide copies of such
document to the selling Holders and to the underwriter(s), if any, make the
Issuers' and the Parent's representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such selling
Holders or underwriter(s), if any, reasonably may request;
(vi) in the case of a Shelf Registration, make available at
reasonable times during normal business hours for inspection by the selling
Holders, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by such
selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuers and
the Parent reasonably requested by any such Holder, underwriter, attorney
or accountant in connection with such Registration Statement and cause the
Issuers' and the Parent's officers, directors, managers and employees to
supply all information reasonably requested by any such Holder,
underwriter, attorney or accountant in connection with such Registration
Statement subsequent to the filing thereof and prior to its effectiveness;
(vii) in the case of a Shelf Registration, if requested by
any selling Holders or the underwriter(s), if any, promptly incorporate in
any Registration Statement or Prospectus, pursuant to a supplement or post-
effective amendment if necessary, such information as such selling Holders
and underwriter(s), if any, may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be
sold in such offering, and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Issuers are notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(viii) cause the Transfer Restricted Securities covered
by the Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Securities covered thereby or the underwriter(s), if
any;
(ix) in the case of a Shelf Registration, furnish to each selling
Holder and each of the underwriter(s), if any, without charge, at least one
copy of the Registration Statement, as first filed with the Commission, and
of each amendment thereto, including all documents incorporated by
reference therein, if any, and all exhibits (including exhibits
incorporated therein by reference);
<PAGE>
11
(x) in the case of a Shelf Registration, deliver to each selling
Holder and each of the underwriter(s), if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons reasonably may request; the
Issuers and the Parent hereby consent to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
(xi) in the case of a Shelf Registration, enter into such
agreements (including an underwriting agreement) and make such
representations and warranties which, in the opinion of each of the
Issuers' and the Parent, are reasonably required, and take all such other
reasonable actions in connection therewith, in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant
to any Registration Statement contemplated by this Agreement, all to such
extent as may be reasonably requested by any purchaser or by any Holder of
Transfer Restricted Securities or underwriter, if any, in connection with
any sale or resale pursuant to any Registration Statement contemplated by
this Agreement, provided, that such sale or resale of Transfer Restricted
Securities is for at least $25.0 million principal amount, and in
connection with an Underwritten Registration, the Issuers and the Parent
shall:
(A) upon request, furnish to each selling Holder and each
underwriter, if any, in such substance and scope as they may request
and as are customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of the effectiveness of the
Shelf Registration Statement, signed by (y) the Chairman of the
Board, its President or a Vice President and (z) the Chief
Financial Officer of the Issuers and the Parent, confirming, as
of the date thereof, such matters as such parties may
reasonably request;
(2) an opinion, dated the date of the effectiveness of the
Shelf Registration Statement, of counsel for the Issuers,
covering such matters as such parties may reasonably request,
and in any event including a statement to the effect that such
counsel has participated in conferences with officers and other
representatives of the Issuers and the Parent, representatives
of the independent public accountants for the Issuers, the
Initial Purchasers' representatives and the Initial Purchasers'
counsel in connection with the preparation of such Registration
Statement and the related Prospectus and have considered the
matters required to be stated therein and the statements
contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such
statements, and that such counsel advises that, on the basis of
the foregoing (relying as to materiality to a large extent upon
facts provided to such counsel by officers and other
representatives of the Issuers and the Parent and
<PAGE>
12
without independent check or verification), no facts came to
such counsel's attention that caused such counsel to believe
that the applicable Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date, contained an untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may
state further that such counsel assumes no responsibility for,
and has not independently verified, the accuracy, completeness
or fairness of the financial statements, notes and schedules
and other financial and statistical data included in any
Registration Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the date of the
effectiveness of the Shelf Registration Statement, from the
Issuers' independent accountants, in the customary form and
covering matters of the type customarily covered in comfort
letters by underwriters in connection with primary underwritten
offerings.
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with clause (A)
above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Issuers and the Parent
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Issuers
and the Parent contemplated in clause (A)(1) above cease to be true and
correct, the Issuers and the Parent shall so advise the Initial Purchasers
and the underwriter(s), if any, and each selling Holder promptly and, if
requested by such Persons, shall confirm such advice in writing.
(xii) in the case of a Shelf Registration, prior to any
public offering of Transfer Restricted Securities, cooperate with the
selling Holders, the underwriter(s), if any, and their respective counsel
in connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders or underwriter(s) may reasonably
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the
<PAGE>
13
Shelf Registration Statement; provided, however, that neither Issuer shall
be required to register or qualify as a foreign corporation where it is not
now so qualified or to take any action that would subject it to the service
of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) in the case of a Shelf Registration, shall issue,
upon the request of any Holder of Securities covered by the Shelf
Registration Statement, New Securities in the same amount as the Securities
surrendered to the Issuers by such Holder in exchange therefor or being
sold by such Holder, such New Securities to be registered in the name of
such Holder or in the name of the purchaser(s) of such Securities, as the
case may be; in return, the Securities held by such Holder shall be
surrendered to the Issuers for cancellation;
(xiv) in the case of a Shelf Registration, cooperate with the
selling Holders and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the Holders or the underwriter(s), if any, may
request at least two business days prior to any sale of Transfer Restricted
Securities made by such underwriter(s);
(xv) use their best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities,
subject to the proviso contained in clause (xii) above;
(xvi) if any fact or event contemplated by clause (c)(iii)(D)
above shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xvii) obtain CUSIP numbers for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
and provide certificates for the Transfer Restricted Securities;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities
as may be necessary to enable the Holders selling Transfer Restricted
Securities to consummate the disposition of such Transfer Restricted
Securities; provided, however, that neither Issuer shall be required to
<PAGE>
14
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to service of process
in suits or to taxation, other than as to matters and transactions relating
to the Registration Statement, in any jurisdiction where it is not now so
subject;
(xix) otherwise use their best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to their security holders, as soon as practicable, a consolidated
earning statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm or best efforts Underwritten Offering or (B) if not
sold to underwriters in such an offering, beginning with the first month of
the respective Issuers' first fiscal quarter commencing after the effective
date of the Registration Statement;
(xx) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement, and, in connection therewith, cooperate with the Trustee
and the Holders of Securities to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance with
the terms of the TIA, and execute and use their best efforts to cause the
Trustee to execute all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xxi) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice from the Issuers of the existence
of any fact of the kind described in Section 6(c)(iii)(D) hereof, such
Holder will forthwith discontinue disposition of Transfer Restricted
Securities pursuant to the applicable Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 6(c)(xvi) hereof, or until it is advised in writing
(the "Advice") by the Issuers that the use of the Prospectus may be
resumed, and has received copies of any additional or supplemental filings
that are incorporated by reference in the Prospectus. If so directed by
the Issuers, each Holder will deliver to the Issuers (at the Issuers'
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Transfer Restricted Securities
that was current at the time of receipt of such notice. In the event the
Issuers shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the
copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xvi) hereof or shall have received the Advice.
7. Registration Expenses.
<PAGE>
15
All expenses incident to the Issuers' and the Parent's
performance of or compliance with this Agreement will be borne by the
Issuers and the Parent, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and
filing fees and expenses (including filings made by any purchaser or Holder
with the NASD (and, if applicable, the fees and expenses of any "qualified
independent underwriter" and its one counsel that may be required by the
rules and regulations of the NASD)); (ii) all fees and expenses of
compliance with federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing certificates for the New
Securities to be issued in the Exchange Offer and printing of
Prospectuses), and associated messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Issuers and
the Parent; (v) all application and filing fees in connection with listing
Securities on a national securities exchange or automated quotation system,
and the obtaining of a rating of the Securities, if applicable; and (vi)
all fees and disbursements of independent certified public accountants of
the Issuers (including the expenses of any special audit and comfort
letters required by or incident to such performance).
The Issuers and the Parent will, in any event, bear their
internal expenses (including, without limitation, all salaries and expenses
of their officers and employees performing legal or accounting duties), the
expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Issuers or the Parent.
8. Indemnification and Contribution.
(a) In connection with a Shelf Registration Statement or in connection
with any delivery of a Prospectus contained in an Exchange Offer Registration
Statement by any participating Broker-Dealer or Initial Purchaser, as
applicable, who seeks to sell New Securities, the Issuers and the Parent shall
indemnify and hold harmless each Holder of Transfer Restricted Securities
included within any such Shelf Registration Statement and each participating
Broker-Dealer or Initial Purchaser selling New Securities, and each person, if
any, who controls any such person within the meaning of Section 15 of the
Securities Act (each, a "Participant") from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Securities) to which such Participant or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
each Participant promptly upon demand for any legal expenses of one counsel (in
addition to local counsel, if necessary) or other expenses reasonably incurred
by such Participant in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that (i) the Issuers and the Parent
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any untrue
statement or alleged untrue statement or omission or alleged omission made in
any such Registration Statement or any prospectus forming part thereof or in any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Issuers or the Parent by or on behalf of any
Participant specifically for inclusion therein; and provided further that as to
any preliminary Prospectus, the indemnity agreement contained in this Section
8(a) shall not
<PAGE>
16
inure to the benefit of any such Participant or any controlling person of such
Participant on account of any loss, claim, damage, liability or action arising
from the sale of the New Securities to any person by that Participant if (i)
that Participant failed to send or give a copy of the Prospectus, as the same
may be amended or supplemented, to that person within the time required by the
Securities Act and (ii) the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact in such
preliminary Prospectus was corrected in the Prospectus, unless, in each case,
such failure resulted from non-compliance by the Issuers or the Parent with
Section 6(c). The foregoing indemnity agreement is in addition to any liability
which the Issuers or the Parent may otherwise have to any Participant or to any
controlling person of that Participant.
(b) Each Participant, severally and not jointly, shall indemnify and
hold harmless the Issuers, the Parent, their respective directors, officers,
employees or agents and each person, if any, who controls the Issuers within the
meaning of Section 15 of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof, to
which the Issuers, the Parent or any such director, officer, employees or agents
or controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary Prospectus, Registration Statement or
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Issuers or the Parent by or on behalf of
that Participant specifically for inclusion herein, and shall reimburse the
Issuers, the Parent and any such director, officer, employee or agent or
controlling person for any legal or other expenses reasonably incurred by the
Issuers, the Parent or any such director, officer, employee or agent or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Participant may otherwise have to the Issuers, the Parent or
any such director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified party, and
it shall have notified the indemnifying party thereof, the indemnifying party
shall be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume the
defense thereof. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the indemnified party shall have
the right to employ separate counsel to represent jointly the indemnified party
and those other Participants and their respective officers, employees and
controlling persons who may be subject
<PAGE>
17
to liability arising out of any claim in respect of which indemnity may be
sought by the Participants against the indemnifying party under this Section 8
if, in the reasonable judgment of the indemnified party it is advisable for the
indemnified party and those Participants, officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
customary fees and expenses of such separate counsel shall be paid by the
indemnifying party. In no event shall the indemnifying parties be liable for the
fees and expenses of more than one counsel (in addition to local counsel). Each
indemnified party, as a condition of the indemnity agreements contained in
Section 8, shall use its best efforts to cooperate with the indemnifying party
in the defense of any such action or claim. No indemnifying party shall (i)
without the prior written consent of the indemnified parties (which consent
shall not be unreasonably withheld), settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the Issuers
and the Parent on the one hand and the Participants on the other with respect to
the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to whether
the untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Issuers
and the Parent or the Participants, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Issuers, the Parent and the Participants agree that
it would not be just and equitable if contributions pursuant to this Section
8(d) were to be determined by pro rata allocation (even if the Participants were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 8(d) shall be deemed to include, for purposes of this
Section 8(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), no Participant
shall be required to contribute any amount in excess of the amount by which
proceeds received by such Participant from an offering of the Notes exceeds the
amount of any damages which such Participant has otherwise paid or become liable
to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Participants' obligations to contribute as provided in
this Section 8(d) are several and not joint.
<PAGE>
18
9. Rule 144A.
Each of the Issuers hereby agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding, to make available to any
Holder or beneficial owner of Transfer Restricted Securities in connection with
any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Securities Act in order to permit resales of such
Transfer Restricted Securities pursuant to Rule 144A.
10. Participation in Underwritten Registrations.
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
11. Selection of Underwriters.
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; provided that such investment bankers and managers must be
reasonably satisfactory to the Issuers.
12. Miscellaneous.
(a) Remedies. The Issuers and the Parent agree that monetary
--------
damages (including Liquidated Damages) would not be adequate compensation
for any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers and the Parent will
--------------------------
not on or after the date of this Agreement enter into any agreement with
respect to their securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions
hereof. The Issuers and the Parent have not previously entered into any
agreement granting any registration rights with respect to their securities
to any Person. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Issuers' securities under any agreement in effect on the
date hereof.
(c) Adjustments Affecting the Securities. The Issuers and the
------------------------------------
Parent will not take any action, or permit any change to occur, with
respect to Securities that would materially and adversely affect the
ability of the Holders to Consummate any Exchange Offer unless such action
or change is required by applicable law.
<PAGE>
19
(d) Amendments and Waivers. The provisions of this Agreement may
----------------------
not be amended, modified or supplemented, and waivers or consents to or
departures from the provisions hereof may not be given unless the Issuers
and the Parent have obtained the written consent of Holders of a majority
of the outstanding principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does
not affect directly or indirectly the rights of other Holders whose
securities are not being tendered pursuant to such Exchange Offer may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities being tendered or registered.
(e) Notices. All notices and other communications provided for
-------
or permitted hereunder shall be made in writing by hand-delivery, first-
class mail (registered or certified, return receipt requested), telex,
telecopier, or air courier guaranteeing overnight delivery:
(i) if to a Holder, at the address of such Holder
maintained by the Registrar under the Indenture;
(ii) if to the Issuers:
Alliance Laundry Systems LLC
Alliance Laundry Corporation
Shepard Street
Ripon, Wisconsin 54971
Facsimile: (920) 748-4429
With a copy to:
Lance C. Balk
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Facsimile: (212) 446-4900; and
(iii) if to the Parent:
Raytheon Commercial Laundry LLC
Shepard Street
Ripon, Wisconsin 54971
Facsimile: (920) 748-4429
<PAGE>
20
With a copy to:
Lance C. Balk
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022
Facsimile: (212) 446-4900
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next business day, if timely delivered to an air
courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall
be concurrently delivered by the Person giving the same to the Trustee at
the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent
such successor or assign acquired Transfer Restricted Securities from such
Holder.
(g) Counterparts. This Agreement may be executed in any number
------------
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience
--------
of reference only and shall not limit or otherwise affect the meaning
hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(j) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect
and of the remaining provisions contained herein shall not be affected or
impaired thereby.
(k) Entire Agreement. This Agreement together with the other
----------------
transaction documents is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
<PAGE>
21
warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Issuers with
respect to the Transfer Restricted Securities. This Agreement supersedes
all prior agreements and understandings between the parties with respect to
such subject matter.
(l) Required Consents. Whenever the consent or approval of
-----------------
Holders of a specified percentage of Transfer Restricted Securities is
required hereunder, Transfer Restricted Securities held by the Issuers or
its affiliates (as such term is defined in Rule 405 under the Securities
Act) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
<PAGE>
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
ALLIANCE LAUNDRY SYSTEMS LLC
By:
---------------------------------
Name:
Title:
ALLIANCE LAUNDRY CORPORATION
By:
---------------------------------
Name:
Title:
ALLIANCE LAUNDRY HOLDINGS LLC
By:
---------------------------------
Name:
Title:
Accepted as of the date thereof:
LEHMAN BROTHERS INC.,
on behalf of the Initial Purchasers
By:
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10.3
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE LAUNDRY HOLDINGS LLC
ALLIANCE LAUNDRY SYSTEMS LLC
-------------------------------------------------
$275,000,000
CREDIT AGREEMENT
May 5, 1998
-------------------------------------------------
LEHMAN BROTHERS INC.
as Arranger
LEHMAN COMMERCIAL PAPER INC.
as Syndication Agent
and
GENERAL ELECTRIC CAPITAL CORPORATION
as Administrative Agent
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
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TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS 2
1.1 Defined Terms 2
1.2 Other Definitional Provisions 29
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS 29
2.1 Term Loan Commitments 29
2.2 Procedure for Term Loan Borrowing 30
2.3 Repayment of Term Loans 30
2.4 Revolving Credit Commitments 30
2.5 Procedure for Revolving Credit Borrowing 31
2.6 Swing Line Commitment 31
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans 32
2.8 Repayment of Loans; Evidence of Debt 33
2.9 Commitment Fees, etc. 34
2.10 Termination or Reduction of Revolving Credit Commitments 34
2.11 Optional Prepayments 34
2.12 Mandatory Prepayments and Commitment Reductions 35
2.13 Conversion and Continuation Options 36
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches 37
2.15 Interest Rates and Payment Dates 37
2.16 Computation of Interest and Fees 38
2.17 Inability to Determine Interest Rate 38
2.18 Pro Rata Treatment and Payments 39
2.19 Requirements of Law 41
2.20 Taxes 42
2.21 Indemnity 44
2.22 Illegality 44
2.23 Change of Lending Office 44
2.24 Replacement of Lenders under Certain Circumstances 45
SECTION 3. LETTERS OF CREDIT 45
3.1 L/C Commitment 45
3.2 Procedure for Issuance of Letter of Credit 46
3.3 Fees and Other Charges 47
3.4 L/C Participations 47
3.5 Reimbursement Obligation of the Borrower 48
3.6 Obligations Absolute 49
3.7 Letter of Credit Payments 50
3.8 Applications 50
</TABLE>
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SECTION 4. REPRESENTATIONS AND WARRANTIES 50
4.1 Financial Condition 50
4.2 No Change 51
4.3 Existence; Compliance with Law 51
4.4 Power; Authorization; Enforceable Obligations 51
4.5 No Legal Bar 52
4.6 No Material Litigation 52
4.7 No Default 52
4.8 Ownership of Property; Liens 52
4.9 Intellectual Property 52
4.10 Taxes 53
4.11 Federal Regulations 53
4.12 Labor Matters 53
4.13 ERISA 53
4.14 Investment Company Act; Other Regulations 54
4.15 Subsidiaries 54
4.16 Use of Proceeds 54
4.17 Environmental Matters 54
4.18 Accuracy of Information, etc 55
4.19 Security Documents 56
4.20 Solvency 56
4.21 Senior Indebtedness 56
4.22 Regulation H 56
4.23 Year 2000 Compliance 56
SECTION 5. CONDITIONS PRECEDENT 57
5.1 Conditions to Initial Extension of Credit 57
5.2 Conditions to Each Extension of Credit 61
SECTION 6. AFFIRMATIVE COVENANTS 62
6.1 Financial Statements 62
6.2 Certificates; Other Information 63
6.3 Payment of Obligations 64
6.4 Conduct of Business and Maintenance of Existence, etc. 65
6.5 Maintenance of Property; Insurance 65
6.6 Inspection of Property; Books and Records; Discussions 65
6.7 Notices 65
6.8 Environmental Laws 66
6.9 Interest Rate Protection 66
6.10 Additional Collateral, etc 66
6.11 Further Assurances 68
SECTION 7. NEGATIVE COVENANTS 68
7.1 Financial Condition Covenants 68
7.2 Limitation on Indebtedness 70
7.3 Limitation on Liens 73
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
7.4 Limitation on Fundamental Changes 76
7.5 Limitation on Disposition of Property 76
7.6 Limitation on Restricted Payments 78
7.7 Limitation on Capital Expenditures 80
7.8 Limitation on Investments 80
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments 82
7.10 Limitation on Transactions with Affiliates 83
7.11 Limitation on Sales and Leasebacks 84
7.12 Limitation on Changes in Fiscal Periods 84
7.13 Limitation on Negative Pledge Clauses 84
7.14 Limitation on Restrictions on Subsidiary Distributions 85
7.15 Limitation on Lines of Business 85
7.16 Limitation on Amendments to Recapitalization Documents 85
7.17 Limitation on Activities of Holdings and Alliance Laundry
Corporation 85
SECTION 8. EVENTS OF DEFAULT 86
SECTION 9. THE AGENTS 90
9.1 Appointment 90
9.2 Delegation of Duties 90
9.3 Exculpatory Provisions 90
9.4 Reliance by the Agents 91
9.5 Notice of Default 91
9.6 Non-Reliance on Agents and Other Lenders 91
9.7 Indemnification 92
9.8 Agent in Its Individual Capacity 92
9.9 Successor Administrative Agent 93
9.10 Authorization to Release Liens 93
9.11 The Arranger 93
SECTION 10. MISCELLANEOUS 93
10.1 Amendments and Waivers 93
10.2 Notices 94
10.3 No Waiver; Cumulative Remedies 96
10.4 Survival of Representations and Warranties 96
10.5 Payment of Expenses 96
10.6 Successors and Assigns; Participations and Assignments 97
10.7 Adjustments; Set-off 99
10.8 Counterparts 100
10.9 Severability 100
10.10 Integration 100
10.11 GOVERNING LAW 100
10.12 Submission To Jurisdiction; Waivers 100
10.13 Acknowledgements 101
10.14 Confidentiality 101
10.15 Enforceability; Usury 102
10.16 WAIVERS OF JURY TRIAL 102
</TABLE>
-iii-
<PAGE>
ANNEXES:
A Pricing Grid
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
4.1(b) Undisclosed Liabilities
4.4 Consents, Authorizations, Filings and Notices
4.6 Material Litigation
4.15 Subsidiaries
4.17 Environmental Matters
4.19(a) UCC Filing Jurisdictions
4.19(b) Mortgage Filing Jurisdictions
7.2(d) Existing Indebtedness
7.3(f) Existing Liens
7.8 Existing Investments
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F Form of Legal Opinion of Kirkland & Ellis
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
G-3 Form of Swing Line Note
H Form of Prepayment Option Notice
I Form of Exemption Certificate
-iv-
<PAGE>
EXHIBIT 10.3
CREDIT AGREEMENT, dated as of May 5, 1998, among ALLIANCE LAUNDRY
HOLDINGS LLC (formerly known as Raytheon Commercial Laundry LLC), a Delaware
limited liability company ("Holdings"), ALLIANCE LAUNDRY SYSTEMS LLC, a Delaware
--------
limited liability company (the "Borrower"), the several banks and other
--------
financial institutions or entities from time to time parties to this Agreement
(the "Lenders"), LEHMAN BROTHERS INC., as advisor and arranger (in such
-------
capacity, the "Arranger"), LEHMAN COMMERCIAL PAPER INC., as syndication agent
--------
(in such capacity, the "Syndication Agent"), and GENERAL ELECTRIC CAPITAL
-----------------
CORPORATION, as administrative agent (in such capacity, the "Administrative
--------------
Agent").
- -----
W I T N E S S E T H:
-------------------
WHEREAS, Bain/RCL, L.L.C., a Delaware limited liability company
("Bain/RCL"), RCL Acquisitions, L.L.C., a Delaware limited liability company
- ----------
("MergeCo"), Holdings and Raytheon Company, a Delaware corporation ("Raytheon"),
- --------- --------
have entered into that certain Agreement and Plan of Merger, dated as of
February 21, 1998 (as amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof, the "Merger Agreement"), pursuant to
----------------
which each such entity will participate in a leveraged recapitalization
transaction involving Holdings (the "Recapitalization"; references herein to the
----------------
Recapitalization include all financings and other transactions contemplated by
this Agreement to occur on the Closing Date);
WHEREAS, pursuant to the Merger Agreement, the Recapitalization will
be accomplished through the following steps: (a) Bain/RCL, its affiliates,
certain members of management of Holdings and its Subsidiaries and certain other
investors will contribute at least $45,250,000 in cash common equity to MergeCo;
(b) Holdings will transfer as a capital contribution all of its assets and
liabilities to the Borrower (the "Capital Contribution"); (c) MergeCo will be
--------------------
merged with and into Holdings, with Holdings as the surviving entity (the
"Merger"); (d) the Borrower will, together with Alliance Laundry Corporation, a
- -------
Delaware corporation ("Alliance Laundry Corporation"), issue $110,000,000 in
----------------------------
aggregate principal amount of 9% Senior Subordinated Notes due 2008; (e) on
the date hereof, the Borrower will make a special distribution and/or loan in
cash to Holdings in the amount of approximately $269,400,000 (the "Intercompany
------------
Distribution"), the proceeds of which will be used to pay a portion of the cash
- ------------
consideration for the Merger and related fees and expenses; and (f) pursuant to
the Merger, (i) the limited liability company interests in Holdings owned by
Raytheon prior to the Merger will be converted into the right to receive (A)
$339,500,000 in cash (subject to adjustment as provided in the Merger Agreement
(as in effect on the date hereof)), which will be financed in part with the
proceeds of the Intercompany Distribution, (B) common limited liability company
interests of Holdings, as the surviving entity of the Merger, with a value of
approximately $3,500,000, (C) subordinated notes of Holdings in an aggregate
principal amount of $9,000,000 (as amended, supplemented or otherwise modified
from time to time in accordance with the terms hereof, the "Subordinated Seller
-------------------
Notes"), and (D) preferred limited liability company interests of Holdings, as
- -----
the surviving entity of the Merger, having an aggregate liquidation preference
of $6,000,000 (as amended, supplemented or otherwise modified from time to time
in accordance with the terms hereof, the "Seller Preferred Membership
---------------------------
Interests", and together with the Subordinated Seller Notes, the "Seller
------
Securities"), and (ii) the limited liability company interests in MergeCo shall
- ----------
be converted into common limited liability company interests of Holdings, as
<PAGE>
2
the surviving entity of the Merger, with a value of $47,100,000 and representing
93% of the outstanding common limited liability company interests of Holdings
after the Merger;
WHEREAS, Holdings and the Borrower have requested that the Lenders
make available the credit facilities pursuant to this Agreement in order to
finance a portion of the Recapitalization, to pay related fees and expenses and
to provide for the general corporate purposes and working capital requirements
of the Borrower and its Subsidiaries following the Recapitalization; and
WHEREAS, the Lenders are willing to make such credit facilities
available upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
-------------
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Accounts Receivable": as to the Borrower or any of its Subsidiaries,
-------------------
any right to payment (including interest payments) for goods sold or leased
or for services rendered by the Borrower or such Subsidiary in the ordinary
course of business.
"Acquired Person": as to any Person, any other Person (i) at least 80%
---------------
of the Capital Stock of which is owned by such Person and (ii) which is
consolidated with such Person in accordance with GAAP.
"Acquisition": as to any Person, the acquisition by such Person of
-----------
(a) Capital Stock of any other Person if, after giving effect to the
acquisition of such Capital Stock, such other Person would be (i) an
Acquired Person of such Person and (ii) a Subsidiary Guarantor, (b) all or
substantially all of the assets of any other Person or (c) assets
constituting one or more business units of any other Person.
"Adjustment Date": as defined in the Pricing Grid.
---------------
"Administrative Agent": as defined in the Preamble to this Agreement.
--------------------
"Affiliate": as to any Person, any other Person which, directly or
---------
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, to direct or cause the direction
of the management and policies of such Person, whether by contract or
otherwise.
"Agents": the collective reference to the Syndication Agent and the
------
Administrative Agent.
<PAGE>
3
"Aggregate Exposure": with respect to any Lender at any time, an
------------------
amount equal to (a) until the Closing Date, the aggregate amount of such
Lender's Commitments at such time and (b) thereafter, the sum of (i) the
aggregate then unpaid principal amount of such Lender's Term Loan and (ii)
the amount of such Lender's Revolving Credit Commitment then in effect or,
if the Revolving Credit Commitments have been terminated, the amount of
such Lender's Revolving Extensions of Credit then outstanding.
"Aggregate Exposure Percentage" with respect to any Lender at any
-----------------------------
time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all the Lenders at such
time.
"Agreement": this Credit Agreement, as amended, supplemented or
---------
otherwise modified from time to time.
"Alliance Laundry Corporation": as defined in the recitals to this
----------------------------
Agreement.
"ALSA": Alliance Laundry S.A. (formerly known as Raytheon Appliances
----
S.A.), an Argentina corporation.
"Applicable Margin": for each Type of Loan, the rate per annum set
-----------------
forth under the relevant column heading below:
Base Rate Eurodollar
Loans Loans
--------- ----------
Revolving Credit Loans 1.375% 2.375%
Swing Line Loans 1.375% 2.375%
Term Loans 1.625% 2.625%
provided, that, on and after the first Adjustment Date occurring after the
--------
completion of two full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin with respect to Revolving Credit Loans, Swing
Line Loans and Term Loans will be determined pursuant to the Pricing Grid.
"Application": an application, in such form as the relevant Issuing
-----------
Lender may specify from time to time, requesting such Issuing Lender to
open a Letter of Credit.
"Arranger": as defined in the Preamble to this Agreement.
--------
"Approved Fund": means, with respect to any Lender that is a fund
-------------
that invests in commercial loans, any other fund that invests in commercial
loans and is managed by the same investment advisor as such Lender or by an
Affiliate or such investment advisor.
"Asset Sale": any Disposition of Property or series of related
----------
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c), (d), (e), (f), (g), (m), (n), (p), (r), (s) or (t)(i)
of Section 7.5) which yields gross proceeds to Holdings, the Borrower or
any of its Subsidiaries (valued at the initial principal amount
<PAGE>
4
thereof in the case of non-cash proceeds consisting of notes or other debt
securities and valued at fair market value in the case of other non-cash
proceeds) in excess of $500,000.
"Assignee": as defined in Section 10.6(c).
--------
"Assignor": as defined in Section 10.6(c).
--------
"Available Revolving Credit Commitment": as to any Revolving Credit
-------------------------------------
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment then in effect over (b) such Lender's
----
Revolving Extensions of Credit then outstanding; provided, that (i) in
--------
calculating any Lender's (other than the Swing Line Lender's) Revolving
Extensions of Credit for the purpose of determining such Lender's Available
Revolving Credit Commitment pursuant to Section 2.9(a), the aggregate
principal amount of Swing Line Loans then outstanding shall be deemed to be
zero and (ii) in calculating the Swing Line Lender's Revolving Extensions
of Credit for the purpose of determining the Swing Line Lender's Available
Revolving Credit Commitment pursuant to Section 2.9(a), the Swing Line
Lender's Revolving Extensions of Credit shall be deemed to include the
aggregate principal amount of the Swing Line Loans then outstanding.
"Bain Investors": collectively, Bain/RCL, BCIP Associate, II, BCIP
--------------
Associates II, BCIP Associates II-B, Bain Capital Fund V, L.P., Bain
Capital Fund V-B, L.P., BCIP Trust Associates II, and BCIP Trust Associate,
II-B.
"Bain/RCL": as defined in the recitals to this Agreement.
--------
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
----------
shall mean the rate of interest per annum publicly announced from time to
time by the Reference Lender as its prime or base rate in effect at its
principal office in New York City (the Prime Rate not being intended to be
the lowest rate of interest charged by the Reference Lender in connection
with extensions of credit to debtors). Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
---------------
based upon the Base Rate.
"Benefitted Lender": as defined in Section 10.7.
-----------------
"Board": the Board of Governors of the Federal Reserve System of the
-----
United States (or any successor).
"Borrower": as defined in the Preamble to this Agreement.
--------
<PAGE>
5
"Borrowing Date": any Business Day specified by the Borrower as a
--------------
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"BRS": Bruckman, Rosser, Sherrill and Co., L.P.
---
"Business Day": (i) for all purposes other than as covered by clause
------------
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (ii) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) and which is also a day for
trading by and between banks in Dollar deposits in the interbank eurodollar
market.
"CapEx Carryforward Amount": as defined in Section 7.7.
-------------------------
"Capital Contribution": as defined in the recitals to this Agreement.
--------------------
"Capital Expenditures": for any period, with respect to any Person,
--------------------
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Lease Obligations": with respect to any Person, the
-------------------------
obligations of such Person to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such
Person under GAAP, and, for the purposes of this Agreement, the amount of
such obligations at any time shall be the capitalized amount thereof at
such time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of
the foregoing.
"Cash Equivalents": (a) (i) with respect to the Borrower or any
----------------
Domestic Subsidiary, marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States or (ii) with respect to any Foreign Subsidiary, marketable direct
obligations issued by, or unconditionally guaranteed by, the government of
the jurisdiction of organization of such Foreign Subsidiary or issued by
any agency thereof and backed by the full faith and credit of such
government, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, bankers' acceptances, time
deposits, eurodollar time deposits or overnight bank deposits having
maturities of one year or less from the date of acquisition issued by any
Lender or by any commercial
<PAGE>
6
bank organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000
(or, in the case of any certificate of deposit, bankers' acceptances, time
deposits, eurodollar time deposits or overnight time deposits of any
Foreign Subsidiary, issued by any commercial bank having capital and
surplus of not less than $500,000,000 (or the equivalent thereof)); (c)
commercial paper rated at least A-2 (or the equivalent thereof) by Standard
& Poor's Ratings Services ("S&P") or P-2 (or the equivalent thereof) by
---
Moody's Investors Service, Inc. ("Moody's"), or carrying an equivalent
-------
rating by a nationally recognized rating agency, if both of the two named
rating agencies cease publishing ratings of commercial paper generally, and
maturing within one year from the date of acquisition; (d) repurchase
obligations of any Lender or of any commercial bank satisfying the
applicable requirements of clause (b) of this definition, having a term of
not more than 30 days with respect to securities of the types described in
clauses (a) and (b) of this definition; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A (or the equivalent
thereof) by S&P or A (or the equivalent thereof) by Moody's or carry an
equivalent rating by a nationally recognized rating agency if both of the
two named rating agencies cease publishing ratings of such type generally;
(f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this
definition; or (g) shares of money market mutual or similar funds which
invest substantially in assets satisfying the requirements of clauses (a)
through (f) of this definition.
"Closing Date": the date on which the conditions precedent set forth
------------
in Section 5.1 shall have been satisfied or waived, which date is May 5,
1998.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all Property of the Loan Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Commitment": as to any Lender, the sum of the Term Loan Commitment
----------
and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": 0.50% per annum; provided, that on and after
------------------- --------
the first Adjustment Date occurring after the completion of two full fiscal
quarters of the Borrower after the Closing Date, the Commitment Fee Rate
will be determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Borrower within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code.
<PAGE>
7
"Compliance Certificate": a certificate duly executed by a
----------------------
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential Information
-----------------------------------
Memorandum dated April, 1998 and furnished to the Lenders.
"Consolidated Cash Interest Expense": for any period, the
----------------------------------
Consolidated Interest Expense payable in cash during such period, provided,
--------
that, the Consolidated Interest Expense accrued with respect to the Senior
----
Subordinated Notes during such period shall be deemed to be payable in cash
during such period.
"Consolidated Current Assets": at any date, all amounts (other than
---------------------------
cash, Cash Equivalents and deferred income taxes) which would, in
conformity with GAAP, be set forth opposite the caption "total current
assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts which
--------------------------------
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Borrower and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt (including accrued but unpaid interest)
of the Borrower and its Subsidiaries and (b) without duplication of clause
(a) above, all Indebtedness (including accrued but unpaid interest)
consisting of Term Loans, Revolving Credit Loans, Letters of Credit or
Swing Line Loans to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
-------------------
such period plus the sum of (a) cash interest margin of the Borrower and
----
its Subsidiaries (including the Securitization Entities) from Notes
Receivable (after giving effect to any Hedge Agreements relating to such
Notes Receivables) and (b) without duplication and to the extent reflected
as a charge in the statement of such Consolidated Net Income for such
period, the sum of (i) income tax expense (including franchise taxes
imposed in lieu of income taxes), (ii) interest expense associated with
Indebtedness (including the Loans and the Letters of Credit) and Hedge
Agreements, but excluding any interest expense associated with any
Indebtedness (including Letters of Credit) issued in connection with any
Permitted Receivables Financing, (iii) amortization or writeoff of deferred
financing fees, debt discount and debt issuance costs and commissions,
discounts and other fees and charges associated with Indebtedness
(including the Loans, the Letters of Credit and any Indebtedness issued in
connection with any Permitted Receivables Financing) and Hedge Agreements,
(iv) depreciation and amortization expense, (v) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (vi) any
extraordinary, unusual or non-recurring expenses or losses (including,
whether or not otherwise includable as a
<PAGE>
8
separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary course of
business, and charges for the writeoff of any step-up in basis of inventory
required in a transaction which is accounted for under the purchase method
of accounting and (vii) any other non-cash charges and minus, to the extent
-----
included in the statement of such Consolidated Net Income for such period,
the sum of (x) interest income, (y) any extraordinary, unusual or non-
recurring income or gains (including, whether or not otherwise includable
as a separate item in the statement of such Consolidated Net Income for
such period, gains on the sales of assets outside of the ordinary course of
business) and (z) any other non-cash income, all as determined on a
consolidated basis.
"Consolidated Interest Coverage Ratio": for any period, the ratio of
------------------------------------
(a) Consolidated EBITDA for such period to (b) Consolidated Cash Interest
Expense for such period.
"Consolidated Interest Expense": for any period, total interest
-----------------------------
expense (including that attributable to Capital Lease Obligations) of the
Borrower and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Borrower and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing
and net costs under Hedge Agreements in respect of interest rates to the
extent such net costs are allocable to such period in accordance with GAAP,
but excluding any interest expense associated with any Indebtedness
(including Letters of Credit) issued in connection with any Permitted
Receivables Financing).
"Consolidated Leverage Ratio": as at the last day of any period of
---------------------------
four consecutive fiscal quarters of the Borrower, the ratio of (a)
Consolidated Total Debt on such day to (b) Consolidated EBITDA for such
period; provided that for purposes of calculating Consolidated EBITDA for
--------
any period, the Consolidated EBITDA of any Person or assets acquired by the
Borrower or any of its Subsidiaries during such period pursuant to an
Acquisition or Subsidiary Acquisition permitted hereunder (including the
portion of such period prior to the consummation of such Acquisition or
Subsidiary Acquisition) shall be included on a pro forma basis for such
--- -----
period (assuming that (i) the consummation of such acquisition and the
incurrence, assumption or repayment of any Indebtedness in connection
therewith occurred on the first day of such period and (ii) any cost
savings to be implemented in connection with such Acquisition or Subsidiary
Acquisition as to which the Borrower shall have provided support for the
calculation thereof in conformity with Regulation S-X under the Securities
Act as in effect on the date hereof had been effected on the first day of
such period) if the Borrower shall deliver to the Administrative Agent a
certificate of a Responsible Officer setting forth, consistent with Article
11 of Regulation S-X under the Securities Act as in effect on the date
hereof, the calculations required to support such pro forma adjustments.
--- -----
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income (or loss) of any Person accrued prior to the date
it becomes a Subsidiary of the Borrower or is merged into or consolidated
with the Borrower or any of its Subsidiaries pursuant to an Acquisition
permitted hereunder, (b) the income (or loss) of any Person (other than a
Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form
of dividends or similar distributions and (c) the undistributed earnings of
any Subsidiary of the Borrower to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at
the time permitted by the
<PAGE>
9
terms of any Contractual Obligation (other than under any Loan Document) or
Requirement of Law applicable to such Subsidiary.
"Consolidated Senior Debt": all Funded Debt under this Agreement and
------------------------
all other Funded Debt of the Borrower and its Subsidiaries (excluding all
other Funded Debt of the Borrower and its Subsidiaries which is
subordinated to the Funded Debt under this Agreement on terms no less
favorable than the terms of the Senior Subordinated Notes).
"Consolidated Senior Debt Leverage Ratio": as at the last day of any
---------------------------------------
period of four consecutive fiscal quarters of the Borrower, the ratio of
(a) Consolidated Senior Debt on such day to (b) Consolidated EBITDA for
such period; provided that for purposes of calculating Consolidated EBITDA
--------
for any period, the Consolidated EBITDA of any Person or assets acquired by
the Borrower or any of its Subsidiaries during such period pursuant to an
Acquisition or Subsidiary Acquisition permitted hereunder (including the
portion of such period prior to the consummation of such Acquisition or
Subsidiary Acquisition) shall be included on a pro forma basis for such
--- -----
period (assuming that (i) the consummation of such acquisition and the
incurrence, assumption or repayment of any Indebtedness in connection
therewith occurred on the first day of such period and (ii) any cost
savings to be implemented in connection with such Acquisition or Subsidiary
Acquisition as to which the Borrower shall have provided support for the
calculation thereof in conformity with Regulation S-X under the Securities
Act as in effect on the date hereof had been effected on the first day of
such period) if the Borrower shall deliver to the Administrative Agent a
certificate of a Responsible Officer setting forth, consistent with Article
11 of Regulation S-X under the Securities Act as in effect on the date
hereof, the calculations required to support such pro forma adjustments.
--- -----
"Consolidated Total Debt": at any date, the aggregate principal
-----------------------
amount of all Funded Debt of the Borrower and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital": at any date, the excess of
----------------------------
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Control Investment Affiliate": as to any Person, any other Person
----------------------------
which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such Person whether
by contract or otherwise.
"Default": any of the events specified in Section 8, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Designated Equity Amounts": at any date, the amount equal to the
-------------------------
aggregate amount of Net Cash Proceeds received by Holdings from the
issuance of Capital Stock
<PAGE>
10
(other than to the Borrower or any Subsidiary of Holdings or the Borrower)
or from any capital contribution to Holdings by a Person other than the
Borrower or any Subsidiary of Holdings or the Borrower which have been
designated in writing by the Borrower to the Administrative Agent as
"Permitted Expenditure Amounts" so long as such Net Cash Proceeds are
utilized by Holdings, the Borrower or any of its Subsidiaries within 45
days after such receipt for an Expenditure Use Amount.
"Disposition": with respect to any Property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition
thereof (excluding the sale by Holdings of its own Capital Stock); the
terms "Dispose" and "Disposed of" shall have correlative meanings.
------- -----------
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Domestic Subsidiary": any Subsidiary of the Borrower organized or
-------------------
incorporated under the laws of any jurisdiction within the United States of
America.
"ECF Percentage": 75%; provided, that, with respect to any fiscal
-------------- --------
year of the Borrower ending on or after December 31, 1999, the ECF
Percentage with respect to such fiscal year shall be 50% if the
Consolidated Leverage Ratio at the last day of the period of four
consecutive fiscal quarters ending on the last day of such fiscal year is
not greater than 4.00 to 1.0.
"Eligible Assignee": means (a) a Lender or an Affiliate of a Lender,
-----------------
(b) a commercial bank organized under the laws of the United States or any
state and having total assets in excess of $500,000,000 or an Affiliate of
any such bank or (c) any other fund or financial institution or Affiliate
or Approved Fund thereof that in the ordinary course of business extends
credit or invests in extensions of credit of a type similar to the
Revolving Credit Loans and has total assets of at least $100,000,000.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of the environment, as now or
at any time hereafter in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
<PAGE>
11
"Eurodollar Base Rate": with respect to each day during each Interest
--------------------
Period pertaining to a Eurodollar Loan, the rate per annum determined on
the basis of the rate for deposits in Dollars for a period equal to such
Interest Period commencing on the first day of such Interest Period
appearing on Page 3750 of the Dow Jones Markets screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period. In the event that such rate does not appear on Page 3750 of the
Dow Jones Markets screen (or otherwise on such screen), the "Eurodollar
----------
Base Rate" for purposes of this definition shall mean, with respect to each
---------
day during each Interest Period pertaining to a Eurodollar Loan, the rate
at which the Administrative Agent is offered Dollar deposits by first class
banks at or about 11:00 A.M., New York City time, two Business Days prior
to the beginning of such Interest Period in the interbank eurodollar market
for delivery on the first day of such Interest Period for the number of
days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which is
----------------
based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
---------------
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
-----------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
------------------
the then current Interest Periods with respect to all of which begin on the
same date and end on the same later date (whether or not such Loans shall
originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
----------------
provided that any requirement for the giving of notice, the lapse of time,
--------
or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Borrower, the excess,
----------------
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income
for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges (including depreciation and amortization, but excluding any non-
cash charges associated with any Permitted Receivables Financing) deducted
in arriving at such Consolidated Net Income, (iii) decreases in
Consolidated Working Capital for such fiscal year, (iv) an amount equal to
the aggregate net non-cash loss on the Disposition of Property by the
Borrower and
<PAGE>
12
its Subsidiaries during such fiscal year (other than sales of inventory in
the ordinary course of business and sales of Receivables pursuant to any
Permitted Receivables Financing), to the extent deducted in determining
such Consolidated Net Income, (v) the net increase during such fiscal year
(if any) in deferred tax accounts of the Borrower, (vi) the amount by which
Consolidated Working Capital was increased as a result of the payment in
such fiscal year of items referred to in clause (b)(xvi) below, (vii) any
unused CapEx Carryforward Amount from the prior fiscal year, (viii)
decreases during such fiscal year in the retained interest of the Borrower
and its Subsidiaries in any Securitization Entity resulting from the sale
of Receivables to such Securitization Entity in connection with a Permitted
Receivables financing and (ix) any cash deposits returned to the Borrower
and its Subsidiaries in respect of the Limited Originator Recourse during
such fiscal year over (b) the sum, without duplication, of----(i) an amount
equal to the amount of all non-cash credits included in determining such
Consolidated Net Income, (ii) the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such fiscal year on account of
Capital Expenditures (excluding the principal amount of Indebtedness
incurred in connection with such expenditures and any such expenditures
financed with the proceeds of any portion of any Reinvestment Deferred
Amount that exceeded any gain included in the determination of Consolidated
Net Income recognized as a result of the event that gave rise to such
Reinvestment Deferred Amount or Permitted Expenditure Amounts), (iii) the
CapEx Carryforward Amount for such fiscal year, (iv) the aggregate amount
of all prepayments of Revolving Credit Loans and Swing Line Loans during
such fiscal year to the extent accompanying permanent optional reductions
of the Revolving Credit Commitments and all optional prepayments of the
Term Loans and other Funded Debt (to the extent such Funded Debt may not be
reborrowed under the terms of such Funded Debt) during such fiscal year,
(v) the aggregate amount of all regularly scheduled principal payments of
Funded Debt (including, without limitation, the Term Loans) of the Borrower
and its Subsidiaries made during such fiscal year (other than in respect of
any revolving credit facility to the extent there is not an equivalent
permanent reduction in commitments thereunder), (vi) increases in
Consolidated Working Capital for such fiscal year, (vii) an amount equal to
the aggregate net non-cash gain on the Disposition of Property by the
Borrower and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent included in
determining such Consolidated Net Income, (viii) the net decrease during
such fiscal year (if any) in deferred tax accounts of the Borrower, (ix)
cash expenses paid during such period in connection with the issuance
pursuant to the Senior Subordinated Note Indenture of senior subordinated
notes in exchange for the 9% Senior Subordinated Notes issued pursuant to
the Senior Subordinated Note Indenture on the Closing Date to the extent
not deducted in determining such Consolidated Net Income, (x) any cash
payments made during such period in permanent satisfaction of non-current
liabilities of the Borrower and its Subsidiaries, (xi) any cash payments
made during such fiscal year in respect of restructuring charges to the
extent not deducted in determining such Consolidated Net Income, (xii) any
Restricted Payments permitted under Section 7.6 and made in cash during
such fiscal year, (xiii) increases during such fiscal year in the retained
interest of the Borrower and its Subsidiaries in any Securitization Entity
resulting from the sale of Receivables to such Securitization Entity in
connection with a Permitted Receivables Financing, (xiv) any cash payments
made during such fiscal year pursuant to Investments permitted under
Sections 7.8(d), 7.8(i) (other than in respect of Acquisitions consummated
in accordance with clause (i)(A)(y) of the proviso to Section 7.8(i)),
7.8(l) and 7.8(p) and which results in a net increase during such fiscal
year in the outstanding or unreturned cash balance of such Investments,
(xv) any gain recognized as a result of any Asset Sale or Recovery Event to
the extent such gain was included in determining such Consolidated Net
Income, (xvi) the amount of non cash charges that decreased Consolidated
Working Capital during such fiscal year which resulted from items that the
Borrower reasonably determines in good faith are expected to be paid in
cash in the immediately following fiscal year and (xvii) any cash deposits
made by the Borrower and its Subsidiaries pursuant to the Limited
Originator Recourse during such fiscal year.
"Excess Cash Flow Application Date": as defined in Section 2.12(c).
---------------------------------
<PAGE>
13
"Excluded Subsidiaries": collectively, any Foreign Subsidiaries and
---------------------
any Securitization Entities.
"Expenditure Use Amounts": at any date, the amount equal to the sum
-----------------------
of (a) all amounts utilized by Holdings, the Borrower and its Subsidiaries
as of such date to finance Capital Expenditures, other than Capital
Expenditures which are (i) not in excess of the permitted Capital
Expenditures for the relevant fiscal year as set forth in Section 7.7(a)
and any CapEx Carryforward Amounts from the prior fiscal year, (ii)
financed with Reinvestment Deferred Amounts, or (iii) attributable to all
or a portion of the cost of Acquisitions or Subsidiary Acquisitions
permitted under Section 7.8, (b) all amounts utilized by Holdings, the
Borrower and its Subsidiaries as of such date to finance Acquisitions
permitted pursuant to Section 7.8(i), except to the extent that the
consideration (determined in accordance with Section 7.8(i)) for all such
Acquisitions made since the Closing Date does not exceed $30,000,000 in the
aggregate, (c) all amounts utilized by the Borrower as of such date to
repurchase or redeem Senior Subordinated Notes permitted pursuant to
Section 7.9(a) and (d) all amounts utilized by the Borrower and the
Subsidiary Guarantors as of such date to finance Investments (other than
Acquisitions) pursuant to Section 7.8(i), except to the extent that the
consideration (determined in accordance with Section 7.8(i)) for all such
Investments (other than Acquisitions) made since the Closing Date does not
exceed $5,000,000 in the aggregate.
"Facility": each of (a) the Term Loan Commitments and the Term Loans
--------
made thereunder (the "Term Loan Facility") and (b) the Revolving Credit
------------------
Commitments and the extensions of credit made thereunder (the "Revolving
---------
Credit Facility").
---------------
"Federal Funds Effective Rate": for any day, the weighted average of
----------------------------
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Foreign Subsidiary": any Subsidiary of the Borrower that is not a
------------------
Domestic Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person that
-----------
matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders
to extend credit during a period of more than one year from such date,
including, without limitation, all current maturities and current sinking
fund payments in respect of such Indebtedness whether or not required to be
paid within one year from the date of its creation and, in the case of the
Borrower, Indebtedness in respect of the Loans, provided that (a) any
--------
Indebtedness of such Person in respect of the undrawn portion of any letter
of credit shall not constitute Funded Debt of such Person and (b) any
undrawn loan commitment or cash collateral deposit pursuant to the Limited
<PAGE>
14
Originator Recourse shall not constitute Funded Debt of the Borrower and
its Subsidiaries.
"Funding Office": the office specified from time to time by the
--------------
Administrative Agent as its funding office by notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United States
----
of America as in effect from time to time, except that for purposes of
Section 7.1, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered pursuant to
Section 4.1(b), except that calculations made for purposes of determining
compliance with Section 7.1 and for purposes of determining the Applicable
Margin shall be made without giving effect to depreciation, amortization or
other expenses to the extent recorded as a result of the application of
purchase accounting in accordance with Accounting Principles Board Opinion
Nos. 16 and 17. In the event that any "Accounting Change" (as defined
below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement,
then the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Borrower's financial condition shall be the
same after such Accounting Changes as if such Accounting Changes had not
been made. Until such time as such an amendment shall have been executed
and delivered by the Borrower, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement
shall continue to be calculated or construed as if such Accounting Changes
had not occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, the National
Association of Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
----------------------------------
Agreement to be executed and delivered by Holdings, Alliance Laundry
Corporation, the Borrower and each Subsidiary Guarantor, substantially in
the form of Exhibit A, as the same may be amended, supplemented or
otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
-------------------
(the "primary obligor") in any manner, whether directly or indirectly,
---------------
including, without limitation, any
<PAGE>
15
obligation of the guaranteeing person, whether or not contingent, (i) to
purchase any such primary obligation or any Property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the
purchase or payment of any such primary obligation or (2) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase Property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the
-------- -------
term Guarantee Obligation shall not include endorsements of instruments for
deposit or collection or standard contractual indemnities entered into, in
each case, in the ordinary course of business. The amount of any Guarantee
Obligation of any guaranteeing person shall be deemed to be the lower of
(a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b)
the maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrower in good faith.
"Guarantors": the collective reference to Holdings, Alliance Laundry
----------
Corporation and the Subsidiary Guarantors.
"Hedge Agreements": all interest rate or currency swaps, caps or
----------------
collar agreements or similar arrangements or foreign exchange contracts
entered into by the Borrower or any of its Subsidiaries providing for
protection against fluctuations in interest rates or currency exchange
rates or the exchange of nominal interest obligations, either generally or
under specific contingencies.
"Holdings": as defined in the Preamble to this Agreement.
--------
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than current accounts or trade payables and accrued expenses incurred in
the ordinary course of such Person's business and excluding any such
obligations arising under ERISA other than such obligations which must be
satisfied within the succeeding twelve months) to the extent such
obligations would appear as liabilities on a consolidated balance sheet of
such Person prepared in accordance with GAAP, (c) all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to Property acquired by such Person
(even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such Property), (e) all Capital Lease Obligations of such Person, (f) the
face amount of all obligations of such Person, contingent or otherwise, as
an account party under acceptance, letter of credit or similar facilities,
(g) all Guarantee Obligations of such Person in respect of obligations of
the kind referred to in clauses (a) through (f) above;
<PAGE>
16
(h) all obligations of the kind referred to in clauses (a) through (g)
above secured by (or for which the holder of such obligation has an
existing right, contingent or otherwise, to be secured by) any Lien on
Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, and (i) for the purposes of
Section 8(e) only, all obligations of such Person in respect of Hedge
Agreements. The amount of any Indebtedness under (x) clause (h) shall be
equal to the lesser of (A) the stated amount of the relevant obligations
and (B) the fair market value of the Property subject to the relevant Lien
and (y) clause (i) shall be the net amount, including any net termination
payments, required to be paid to a counterparty rather than the notional
amount of the applicable Hedge Agreement.
"Indemnified Liabilities": as defined in Section 10.5.
-----------------------
"Indemnitee": as defined in Section 10.5.
----------
"Initial Receivables Facility": as defined in Section 5.1(c).
----------------------------
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the first day
---------------------
of each April, July, October and January to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the last
day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other than
any Revolving Credit Loan that is a Base Rate Loan and any Swing Line
Loan), the date of any repayment or prepayment made in respect thereof.
"Intercompany Distribution": as defined in the recitals to this
-------------------------
Agreement.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
---------------
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending, (i) in the case of any
such period ending on or prior to the date which is 30 days after the
Closing Date, one week thereafter and (ii) in the case of any such period
ending on or after the date which is 30 days after the Closing Date, one,
two,
<PAGE>
17
three or six or (if available to all Lenders under the relevant
Facility) nine or twelve months thereafter, as selected by the Borrower in
its notice of borrowing or notice of conversion, as the case may be, given
with respect thereto; and (b) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending, (i) in the case of any such period ending on or
prior to the date which is 30 days after the Closing Date, ending one week
thereafter and (ii) in the case of any such period ending on or after the
date which is 30 days after the Closing Date, one, two, three or six or (if
available to all Lenders under the relevant Facility) nine or twelve months
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last
day of the then current Interest Period with respect thereto; provided
--------
that, all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) (A) any Interest Period with respect to any Revolving
Credit Loan that would otherwise extend beyond the Scheduled Revolving
Credit Termination Date shall end on the Revolving Credit Termination
Date and (B) any Interest Period with respect to any Term Loan that
would otherwise extend beyond the date final payment is due on the
Term Loans shall end on such due date;
(iii) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrower shall select Interest Periods so as not
to require a prepayment of any Eurodollar Loan during an Interest
Period for such Loan in connection with any scheduled payment of
principal with respect thereto.
"Investments": as defined in Section 7.8.
-----------
"Issuing Lender": (a) any Lender designated as the "Issuing Lender"
--------------
in a written notice from the Administrative Agent and the Borrower to the
Lenders and (b) any commercial bank reasonably acceptable to the Borrower
which is designated as the "Issuing Lender" by the Administrative Agent and
subject to a Master L/C Agreement with the Administrative Agent, in each
case in its capacity as issuer of any Letter of Credit.
"L/C Commitment": $25,000,000.
--------------
"L/C Fee Payment Date": the first day of each April, July, October
--------------------
and January and the last day of the Revolving Credit Commitment Period.
<PAGE>
18
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters
of Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
----------------
Credit Lenders.
"Lenders": as defined in the Preamble to this Agreement.
-------
"Letters of Credit": as defined in Section 3.1(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever, in each case,
for the purpose of securing any obligation of any Person (including,
without limitation, any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any
of the foregoing).
"Limited Originator Recourse": a reimbursement obligation of the
---------------------------
Borrower or any of its Subsidiaries with respect to a letter of credit,
revolving loan commitment, cash collateral account or other such credit
enhancement issued in connection with the incurrence of Indebtedness by a
Securitization Entity under a Permitted Receivables Financing; provided,
--------
that the aggregate available amount of all such credit enhancements at any
time shall not exceed 10.0% of the principal amount of such Indebtedness at
such time.
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents the Notes
--------------
and the Applications.
"Loan Parties": Holdings, the Borrower, Alliance Laundry Corporation
------------
and each Subsidiary of the Borrower which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
-------------------------
holders of more than 50% of the aggregate unpaid principal amount of the
Term Loans or the Total Revolving Extensions of Credit, as the case may be,
outstanding under such Facility (or, in the case of the Revolving Credit
Facility, prior to any termination of the Revolving Credit Commitments, the
holders of more than 50% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
------------------------------------------
Lenders in respect of the Revolving Credit Facility.
"Management Notes": as defined in Section 7.6(b).
----------------
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, assets, property or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken
<PAGE>
19
as a whole or (b) the validity or enforceability of this Agreement or any
of the other Loan Documents or the rights or remedies, taken as a whole, of
the Administrative Agent or the Lenders hereunder or thereunder.
"Material Subsidiary": any Subsidiary of Holdings or the Borrower
-------------------
which has assets (valued at their fair market value) or annual revenues
which are in excess of $2,500,000.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"MergeCo": as defined in the recitals to this Agreement.
-------
"Merger": as defined in the recitals to this Agreement.
------
"Merger Agreement": as defined in the recitals to this Agreement.
----------------
"Mortgaged Properties": the real properties listed on Schedule 1.1B,
--------------------
as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
---------
Loan Party in favor of, or for the benefit of, the Administrative Agent for
the benefit of the Lenders, substantially in the form of Exhibit D (with
such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded), as
the same may be amended, supplemented or otherwise modified from time to
time.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
-----------------
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or the sale or disposition of any non-
cash consideration or otherwise, but only as and when received and
excluding the portion of such deferred payment constituting interest) of
such Asset Sale or Recovery Event, net of attorneys' fees, accountants'
fees, investment banking fees, amounts required to be applied to the
repayment of Indebtedness secured by a Lien expressly permitted hereunder
on any asset which is the subject of such Asset Sale or Recovery Event
(other than any Lien pursuant to a Security Document) and other customary
costs, fees and expenses actually incurred in connection therewith and net
of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any
tax sharing arrangements) and net of amounts deposited in escrow in
connection therewith or reasonably expected to be paid as a result
<PAGE>
20
of any purchase price adjustment, indemnities or reserves related thereto
(such amounts shall be Net Cash Proceeds to the extent and at the time
released or not required to be so used) and (b) in connection with any
issuance or sale of equity securities or debt securities or instruments or
the incurrence of loans or capital contribution, the cash proceeds received
from such issuance, incurrence or capital contribution, net of attorneys'
fees, investment banking fees, accountants' fees, underwriting discounts
and commissions and other customary fees and expenses actually incurred in
connection therewith.
"Non-Excluded Taxes": as defined in Section 2.20(a).
------------------
"Non-U.S. Lender": as defined in Section 2.20(d).
---------------
"Notes": the collective reference to any promissory note evidencing
-----
Loans.
"Notes Receivable": as to the Borrower or any of its Subsidiaries,
----------------
any right to payment in respect of loans or finance leases made by the
Borrower or such Subsidiary to its customers or users of the Borrower's or
any Subsidiary's product or customers of distributors of such products in
the ordinary course of business.
"Obligations": the unpaid principal of and interest on (including,
-----------
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Borrower, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and Reimbursement Obligations and all other
obligations and liabilities of the Borrower to the Administrative Agent or
to any Lender (or, in the case of Hedge Agreements, any affiliate of any
Lender), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document, the
Letters of Credit, any Hedge Agreement entered into with any Lender or any
affiliate of any Lender, or any other document made, delivered or executed
by any Loan Party in connection herewith or therewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that
are required to be paid by the Borrower pursuant hereto) or otherwise.
"Other Taxes": any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other
Loan Document.
"Participant": as defined in Section 10.6(b).
-----------
"Payment Office": the office specified from time to time by the
--------------
Administrative Agent as its payment office by notice to the Borrower and
the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA (or any successor).
<PAGE>
21
"Permitted Co-Investors": (i) BRS, BCB Family Partners, L.P., NAZ
----------------------
Family Partners, L.P., Paul D. Kaminski, Bruce C. Bruckmann, Donald J.
Bruckmann, Harold O. Rosser, Stephen C. Sherrill, H. Virgil Sherrill, Nancy
A. Zweng, John Rice Emunds, Susan Kaider, Marilena Tibrea, Walker C.
Simmons, MLPF&S Custodian FBO Paul Kaminski, and BRS/RCL Investment Corp.
or (ii) any Person or Persons which acquire the Capital Stock of Holdings
owned by such Persons referred to in the preceding clause (i) on the
Closing Date with the consent of Bain/RCL, and in the case of each of
clauses (i) and (ii) above, any of their respective Related Parties and
Control Investment Affiliates.
"Permitted Expenditure Amounts": at any date, the amount equal to (a)
-----------------------------
the sum of (i) all Designated Equity Amounts as of such date, (ii) any
portion of the Excess Cash Flow of the Borrower for fiscal years completed
since the Closing Date which was not required to be applied toward the
prepayment of the Term Loan and the reduction of the Revolving Credit
Commitments pursuant to the provisions of Section 2.12(c) and (iii) 50% of
the aggregate Prepayment Amounts declined by the Term Loan Lenders pursuant
to Section 2.18(d) as of such date minus (b) the aggregate amount of
Expenditure Use Amounts as of such date.
"Permitted Investors": the collective reference to the Sponsor, the
-------------------
Bain Investors and their respective Related Parties and Control Investment
Affiliates.
"Permitted Receivables Financing": (a) the Initial Receivables
-------------------------------
Facility, as the same may be amended, modified, changed or replaced from
time to time and/or (b) any other off-balance sheet transaction providing
for the sale of Receivables by the Borrower and its Subsidiaries to a
Securitization Entity or any other Person (other than Holdings, the
Borrower or any of their respective Subsidiaries) which transaction may
include limited recourse to the Borrower and its Subsidiaries (not to
exceed the Limited Originator Recourse) based on the collectability of the
Receivables sold.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
------------
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
-----------------------
"Projections": as defined in Section 6.2(c).
-----------
"Properties": as defined in Section 4.17(a).
----------
<PAGE>
22
"Property": any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Raytheon": as defined in the recitals to this Agreement.
--------
"Recapitalization": as defined in the recitals to this Agreement.
----------------
"Recapitalization Documents": the collective reference to the Merger
--------------------------
Agreement and all other documents and agreements delivered in connection
therewith on the Closing Date.
"Receivables": as to the Borrower or any of its Subsidiaries,
-----------
collectively, the Accounts Receivable and Notes Receivable of the Borrower
or such Subsidiary, as the case may be.
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding
relating to any asset of Holdings, the Borrower or any of its Subsidiaries
with a value in excess of $500,000.
"Reference Lender": Citibank, N.A. or its successor.
----------------
"Refunded Swing Line Loans": as defined in Section 2.7(b).
-------------------------
"Refunding Date": as defined in Section 2.7(c).
--------------
"Register": as defined in Section 10.6(d).
--------
"Regulation U": Regulation U of the Board as in effect from time to
------------
time.
"Reimbursement Obligation": the obligation of the Borrower to
------------------------
reimburse the relevant Issuing Lender or the Administrative Agent, as the
case may be, pursuant to Section 3.5 for amounts drawn under Letters of
Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by Holdings, the Borrower
or any of its Subsidiaries in connection therewith which are not applied to
prepay the Term Loans or reduce the Revolving Credit Commitments pursuant
to Section 2.12(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Event of Default has occurred and is continuing and
that the Borrower (directly or indirectly through a Subsidiary Guarantor)
(in the case of any Asset Sale or Recovery Event relating to assets of the
Borrower or a Subsidiary Guarantor) or any Subsidiary (in the case of any
Asset Sale or Recovery Event relating to assets of a Subsidiary which is
<PAGE>
23
not a Subsidiary Guarantor) intends and expects to use all or a specified
portion of the Net Cash Proceeds of an Asset Sale or Recovery Event to
acquire assets (directly or through the purchase of the Capital Stock of a
Person pursuant to an Acquisition or (in the case of any Asset Sale or
Recovery Event relating to assets of a Subsidiary which is not a Subsidiary
Guarantor or the Capital Stock of any such Subsidiary) Subsidiary
Acquisition) useful in its business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets (directly or through the purchase of the Capital Stock of a Person
pursuant to an Acquisition or (in the case of any Asset Sale or Recovery
Event relating to assets of a Subsidiary which is not a Subsidiary
Guarantor or the Capital Stock of any such Subsidiary) Subsidiary
Acquisition) useful in the Borrower's or any of its Subsidiaries' business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring six months after such
Reinvestment Event (or (i) in the case of any Reinvestment Event arising
out of any Asset Sale in connection with the Ripon Transition, the date
occurring nine months after such Reinvestment Event, or (ii) in the case of
any Reinvestment Event arising out of a casualty insurance claim where the
Borrower or any of its Subsidiaries is rebuilding or restoring the property
subject to such casualty, the date occurring twelve months after such
Reinvestment Event) and (b) the date on which the Borrower shall have
determined not to, or shall have otherwise ceased to, acquire assets
(directly or through the purchase of the Capital Stock of a Person pursuant
to an Acquisition or (in the case of any Asset Sale or Recovery Event
relating to assets of a Subsidiary which is not a Subsidiary Guarantor or
the Capital Stock of any such Subsidiary) Subsidiary Acquisition) useful in
the Borrower's or any of its Subsidiaries' business with all or any portion
of the relevant Reinvestment Deferred Amount.
"Related Party": with respect to any Person, any stockholder,
-------------
officer, employee or partner of such Person and (a) trusts for the benefit
of such Person or the spouses, issue, parents or other relatives of such
Person, (b) entities controlling or controlled by such Person and (c) in
the event of the death of any such individual Person, heirs or testamentary
legatees of such Person.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
----------------
ERISA, other than those events as to which the notice period is waived
under subsections .22, .23, .25, .27 or .28 of PBGC Reg. (S) 4043.
"Required Lenders": at any time, the holders of more than 50% of (a)
----------------
until the Closing Date, the Commitments and (b) thereafter, the sum of (i)
the aggregate unpaid principal amount of the Term Loans then outstanding
and (ii) the Total Revolving Credit Commitments then in effect or, if the
Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit then outstanding.
<PAGE>
24
"Required Prepayment Lenders": the Majority Facility Lenders in
---------------------------
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or
-------------------
chief financial officer of the Borrower, but in any event, with respect to
financial matters, the chief financial officer of the Borrower.
"Restricted Payments": as defined in Section 7.6.
-------------------
"Revolving Credit Commitment": as to any Lender, the obligation of
---------------------------
such Lender, if any, to make Revolving Credit Loans and participate in
Swing Line Loans and Letters of Credit (or guarantees by the Administrative
Agent in respect of Letters of Credit issued by Issuing Lenders which are
not Lenders), in an aggregate principal and/or face amount not to exceed
the amount set forth under the heading "Revolving Credit Commitment"
opposite such Lender's name on Schedule 1.1A, as the same may be changed
from time to time pursuant to the terms hereof. The original amount of the
Total Revolving Credit Commitments is $75,000,000.
"Revolving Credit Commitment Period": the period from and including
----------------------------------
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Facility": as defined in the definition of
-------------------------
"Facility" contained in this Section 1.1.
---------
"Revolving Credit Lender": each Lender which has a Revolving Credit
-----------------------
Commitment or which is the holder of Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
----------------------
"Revolving Credit Percentage": as to any Revolving Credit Lender at
---------------------------
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the aggregate principal amount of such Lender's
Revolving Extensions of Credit then outstanding constitutes of the
aggregate principal amount of the Revolving Extensions of Credit of all the
Revolving Credit Lenders then outstanding).
"Revolving Credit Termination Date": the Scheduled Revolving Credit
---------------------------------
Termination Date.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
------------------------------
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving
<PAGE>
25
Credit Loans made by such Lender then outstanding, (b) such Lender's
Revolving Credit Percentage of the L/C Obligations then outstanding and (c)
such Lender's Revolving Credit Percentage of the aggregate principal amount
of Swing Line Loans then outstanding.
"Ripon Transition": collectively, (a) the establishment of the
----------------
capability to manufacture small-chassis frontload washers and dryers at the
manufacturing facility located in Ripon, Wisconsin and (b) the Disposition
by the Borrower and its Subsidiaries of Property located at the Ripon
facility on the Closing Date which is not intended to be used at the Ripon
facility after the establishment of the manufacturing capability described
in clause (a).
"Sale/Leaseback Transaction": as defined in Section 7.11.
--------------------------
"Scheduled Revolving Credit Termination Date": the fifth anniversary
-------------------------------------------
of the Closing Date.
"Securities Act": the Securities Act of 1933, as amended.
--------------
"Securitization Documentation": the collective reference to the
----------------------------
documentation pursuant to which any Permitted Receivables Financing
(including the Initial Receivables Facility) is established and maintained.
"Securitization Entity": as to the Borrower or any of its
---------------------
Subsidiaries, a corporation, partnership, trust, limited liability company
or other entity that is formed by the Borrower or such Subsidiary for the
purpose of purchasing or financing Receivables of the Borrower and/or its
Subsidiaries pursuant to any Permitted Receivables Financing and that is
designated as a "Securitization Entity" in a written notice delivered to
the Administrative Agent by the Borrower (including Alliance Commercial
Appliances Receivables LLC, Alliance Commercial Appliances Finance LLC and
Alliance Laundry Receivables Warehouse, LLC) so long as (a) such
corporation, partnership, trust, limited liability company or other entity
engages in no business and incurs no Indebtedness or other liabilities or
obligations other than those related to or incidental to the relevant
Permitted Receivables Financing, (b) neither the Borrower nor any
Subsidiary issues or incurs any Indebtedness or Guarantee Obligations
(other than Limited Originator Recourse) in respect of, or grants any Lien
on any of its assets or properties to secure, any Indebtedness, liabilities
or other obligations of such corporation, partnership, trust, limited
liability company or other entity or otherwise relating to such Permitted
Receivables Financing, (c) neither Holdings, the Borrower nor any of their
respective Subsidiaries has any material contract, agreement, arrangement
or understanding other than on terms no less favorable to Holdings, the
Borrower or such Subsidiary than those that might be obtained at that time
from Persons that are not Affiliates of the Borrower, other than fees
payable in the ordinary course of business in connection with servicing
receivables of such entity, and (d) neither Holdings, the Borrower nor any
of their respective Subsidiaries has any obligation to maintain such
entity's financial condition or cause such entity to achieve certain levels
of operating results.
<PAGE>
26
"Security Documents": the collective reference to the Guarantee and
------------------
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to and accepted by the Administrative Agent granting a
Lien on any Property of any Person to secure the obligations and
liabilities of any Loan Party under any Loan Document.
"Seller Preferred Membership Interests": as defined in the recitals
-------------------------------------
to this Agreement.
"Seller Securities": as defined in the recitals to this Agreement.
-----------------
"Senior Subordinated Note Indenture": the indenture entered into by
----------------------------------
the Borrower and certain of its Subsidiaries in connection with the
issuance of the Senior Subordinated Notes on the Closing Date, together
with all instruments and other agreements entered into on the Closing Date
by the Borrower or such Subsidiaries in connection therewith, as the same
may be amended, supplemented or otherwise modified from time to time in
compliance with Section 7.9.
"Senior Subordinated Notes": the 9% Senior Subordinated Notes due
-------------------------
2008 issued pursuant to the Senior Subordinated Note Indenture and any
senior subordinated notes having the same terms and conditions as such
Senior Subordinated Notes issued in exchange for such Senior Subordinated
Notes pursuant to the Senior Subordinated Note Indenture, as the same may
be amended, supplemented or otherwise modified from time to time in
compliance with Section 7.9.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the "present fair saleable value" (as determined
in accordance with applicable federal and state laws governing
determination of the insolvency of debtors) of the assets of such Person
will, as of such date, be greater than the amount that will be required to
pay the liability of such Person on its debts as such debts become absolute
and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its business,
and (d) such Person will be able to pay its debts as they mature. For
purposes of this definition, (i) "debt" means liability on a "claim", (ii)
"claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured or
(y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured, and (iii) the Borrower may
assume, so long as no Default or Event of Default shall have occurred and
be continuing at the time such assumption is made, that all or a portion of
the
<PAGE>
27
outstanding Term Loans or Indebtedness permitted under Section 7.2(f)
will be refinanced at the maturity thereof.
"Specified Change of Control": a "Change of Control" as defined in
---------------------------
the Senior Subordinated Note Indenture.
"Sponsor": Bain Capital, Inc.
-------
"Subordinated Seller Notes": as defined in the recitals to this
-------------------------
Agreement.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, (a) all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Borrower and (b) except as otherwise expressly provided
herein, for purposes of this Agreement, (i) no Securitization Entity shall
be a Subsidiary of the Borrower or Holdings and (ii) ALSA shall not be a
Subsidiary of the Borrower or Holdings unless the Administrative Agent and
the Borrower shall otherwise agree.
"Subsidiary Acquisition": any Investment (other than an Acquisition)
----------------------
which results in the creation or acquisition of a Subsidiary.
"Subsidiary Guarantor": each Subsidiary of the Borrower other than
--------------------
any Excluded Subsidiary.
"Swing Line Commitment": the obligation of the Swing Line Lender to
---------------------
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $10,000,000.
"Swing Line Lender": General Electric Capital Corporation, in its
-----------------
capacity as the lender of Swing Line Loans.
"Swing Line Loans": as defined in Section 2.6.
----------------
"Swing Line Participation Amount": as defined in Section 2.7(c).
-------------------------------
"Syndication Agent": as defined in the Preamble to this Agreement.
-----------------
"Tax Refund": as defined in Section 2.20(f).
----------
"Term Loan": as defined in Section 2.1.
---------
"Term Loan Commitment": as to each Term Loan Lender, the obligation
--------------------
of such Lender, if any, to make a Term Loan to the Borrower hereunder in a
principal amount
<PAGE>
28
not to exceed the amount set forth under the heading "Term Loan Commitment"
opposite such Lender's name on Schedule 1.1A. The original aggregate amount
of the Term Loan Commitments is $200,000,000.
"Term Loan Facility": as defined in the definition of "Facility"
------------------
contained in this Section 1.1.
"Term Loan Lender": each Lender which has a Term Loan Commitment or
----------------
which is the holder of a Term Loan.
"Term Loan Percentage": as to any Lender at any time, the percentage
--------------------
which such Lender's Term Loan Commitment then constitutes of the aggregate
Term Loan Commitments (or, at any time after the Closing Date, the
percentage which the principal amount of such Lender's Term Loan then
outstanding constitutes of the aggregate principal amount of the Term Loans
then outstanding); provided, that solely for purposes of calculating the
--------
amount of each installment of Term Loans (other than the last installment)
payable to a Term Loan Lender pursuant to Section 2.3, such Term Loan
Lender's Term Loan Percentage shall be calculated without giving effect to
any portion of any prior mandatory or optional prepayment attributable to
such Term Loan Lender's Term Loans which shall have been declined by such
Term Loan Lender (or, in the case of any Term Loan Lender which shall have
acquired its Term Loans by assignment from another Person, by such other
Person).
"Total Revolving Credit Commitments": at any time, the aggregate
----------------------------------
amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate
------------------------------------
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders outstanding at such time.
"Transferee": as defined in Section 10.14.
----------
"Type": as to any Loan, its nature as a Base Rate Loan or a
----
Eurodollar Loan.
"UCC Filing Collateral": Collateral (other than fixtures) as to which
---------------------
filing financing statements under the Uniform Commercial Code of the
applicable jurisdiction is an appropriate method of perfection of a
security interest in such Collateral.
"Uniform Customs": the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares
required by law and/or other nominal amounts of shares or other equity
interests required by law to be held other than by such Person) is owned by
such Person directly and/or through other Wholly Owned Subsidiaries.
<PAGE>
29
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
---------------------------------
a Wholly Owned Subsidiary of Holdings or the Borrower.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and in any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to Holdings, the Borrower and its Subsidiaries not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
---------------------
hereof each Term Loan Lender severally agrees to make a term loan (each, a "Term
----
Loan") to the Borrower on the Closing Date in an amount equal to the amount of
- ----
the Term Loan Commitment of such Lender. The Term Loans may from time to time
be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and
notified to the Administrative Agent in accordance with Sections 2.2 and 2.13.
2.2 Procedure for Term Loan Borrowing. The Borrower shall give the
---------------------------------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, on the Closing
Date) requesting that the Term Loan Lenders make the Term Loans on the Closing
Date. The Term Loans made on the Closing Date shall initially be Base Rate
Loans, and no Term Loan may be converted into or continued as a Eurodollar Loan
with an Interest Period longer than one week prior to the date which is 30 days
after the Closing Date. Upon receipt of such notice the Administrative Agent
shall promptly notify each Term Loan Lender thereof. Not later than 12:00 Noon,
New York City time, on the Closing Date each Term Loan Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the Term Loan to be made by such Lender.
The Administrative Agent shall transfer to the account of the Borrower specified
by the Borrower the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.
<PAGE>
30
2.3 Repayment of Term Loans. The Borrower shall pay to the
-----------------------
Administrative Agent, for the account of the Term Loan Lenders, the principal
amount of the Term Loans in twenty consecutive quarterly installments payable on
the last day of March, June, September and December of each year, commencing on
September 30, 2000, each of which shall be in an amount equal to the amount set
forth below opposite such installment (and, upon receipt thereof, the
Administrative Agent will distribute to each Term Loan Lender its Term Loan
Percentage of each such payment):
Installment Principal Amount
----------- ----------------
1-12 $250,000 per installment
13-16 10,000,000 per installment
17-20 39,250,000 per installment
2.4 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
----------------------
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the sum of (i) the L/C Obligations then outstanding and
(ii) the aggregate principal amount of the Swing Line Loans then outstanding,
does not exceed the amount of such Lender's Revolving Credit Commitment. During
the Revolving Credit Commitment Period, the Borrower may use the Revolving
Credit Commitments by borrowing, prepaying the Revolving Credit Loans in whole
or in part, and reborrowing, all in accordance with the terms and conditions
hereof. The Revolving Credit Loans may from time to time be Eurodollar Loans or
Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agent in accordance with Sections 2.5 and 2.13, provided that no
--------
Revolving Credit Loan shall be made as a Eurodollar Loan after the day that is
one month prior to the Revolving Credit Termination Date.
(b) The Borrower shall repay all outstanding Revolving Credit Loans
on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrower may
----------------------------------------
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrower shall give the
--------
Administrative Agent irrevocable notice (which notice may be given by telephone,
promptly confirmed by telecopy) (which notice must be received by the
Administrative Agent prior to 3:00 P.M., New York City time, (a) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or
(b) one Business Day prior to the requested Borrowing Date, in the case of Base
Rate Loans) specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date, (iii) the account to which the
proceeds of such Loans should be transferred and (iv) in the case of Eurodollar
Loans, the respective length of the initial Interest Periods therefor. Any
Revolving Credit Loans made on the Closing Date shall initially be Base Rate
Loans, and no Revolving Credit Loan may be converted into or continued as a
Eurodollar Loan with an Interest Period longer than one week prior to the date
which is 30 days after the Closing Date. Each borrowing under the Revolving
Credit Commitments shall be in an amount equal to (x) in the case of Base Rate
Loans, at least $250,000 (or, if the then aggregate Available Revolving Credit
Commitments are less than $250,000, such lesser amount) and (y) in the case of
Eurodollar
<PAGE>
31
Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof;
provided, that (A) the Swing Line Lender may request, on behalf of the Borrower,
- --------
borrowings under the Revolving Credit Commitments which are Base Rate Loans in
other amounts pursuant to Section 2.7 and (B) borrowings of Base Rate Loans
contemplated under Section 3.5 shall not be subject to the requirements of this
sentence. Upon receipt of any such notice from the Borrower, the Administrative
Agent shall promptly notify each Revolving Credit Lender thereof. Each
Revolving Credit Lender will make the amount of its pro rata share of each
--- ----
borrowing available to the Administrative Agent for the account of the Borrower
at the Funding Office prior to 12:00 Noon, New York City time, on the Borrowing
Date requested by the Borrower in Dollars and in funds immediately available to
the Administrative Agent. Such borrowing will then be made immediately
available on such day to the Borrower by the Administrative Agent transferring
to the account of the Borrower specified by the Borrower the aggregate of the
amounts made available to the Administrative Agent by the Revolving Credit
Lenders and in like funds as received by the Administrative Agent.
2.6 Swing Line Commitment. (a) Subject to the terms and conditions
---------------------
hereof, the Swing Line Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Revolving Credit Commitments from time to
time during the Revolving Credit Commitment Period by making swing line loans
("Swing Line Loans") to the Borrower; provided that (i) the aggregate principal
- ------------------ --------
amount of Swing Line Loans outstanding at any time shall not exceed the Swing
Line Commitment then in effect (notwithstanding that the Swing Line Loans
outstanding at any time, when aggregated with the Swing Line Lender's other
outstanding Revolving Credit Loans hereunder, may exceed the Swing Line
Commitment then in effect) and (ii) the Borrower shall not request, and the
Swing Line Lender shall not make, any Swing Line Loan if, after giving effect to
the making of such Swing Line Loan, the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. During the Revolving
Credit Commitment Period, the Borrower may use the Swing Line Commitment by
borrowing, repaying and reborrowing, all in accordance with the terms and
conditions hereof. Swing Line Loans shall be Base Rate Loans only.
(b) The Borrower shall repay all outstanding Swing Line Loans on the
Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line
-----------------------------------------------------------
Loans. (a) Whenever the Borrower desires that the Swing Line Lender make Swing
Line Loans it shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:30 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed, (ii) the account to
which such amount should be transferred and (iii) the requested Borrowing Date
(which shall be a Business Day during the Revolving Credit Commitment Period).
Each borrowing under the Swing Line Commitment shall be in a minimum amount
equal to $50,000. Not later than 4:30 P.M., New York City time, on the Borrowing
Date specified in a notice in respect of Swing Line Loans, the Swing Line Lender
shall make available to the Administrative Agent at the Funding Office an amount
in Dollars and in immediately available funds equal to the amount of the Swing
Line Loan to be made by the Swing Line Lender. The Administrative Agent shall
make the proceeds of such Swing Line Loan available to the Borrower on such
Borrowing Date by transferring such proceeds to the account of the Borrower
specified by the Borrower on such Borrowing Date in immediately available funds.
<PAGE>
32
(b) The Swing Line Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one Business
Day's notice to the Administrative Agent given by the Swing Line Lender no later
than 12:00 Noon, New York City time, request each Revolving Credit Lender to
make, and each Revolving Credit Lender hereby severally agrees to make, a
Revolving Credit Loan, in an amount equal to such Revolving Credit Lender's
Revolving Credit Percentage of the aggregate amount of the Swing Line Loans (the
"Refunded Swing Line Loans") outstanding on the date of such notice, to repay
-------------------------
the Swing Line Lender. Upon receipt of any such notice from the Swing Line
Lender, the Administrative Agent shall promptly notify the Revolving Credit
Lenders thereof. Each Revolving Credit Lender shall make the amount of such
Revolving Credit Loan available to the Administrative Agent at the Funding
Office in immediately available funds, not later than 10:00 A.M., New York City
time, one Business Day after the date of such notice. The proceeds of such
Revolving Credit Loans shall be immediately made available by the Administrative
Agent to the Swing Line Lender for application by the Swing Line Lender to the
repayment of the Refunded Swing Line Loans.
(c) If prior to the time a Revolving Credit Loan would have otherwise
been made pursuant to Section 2.7(b), one of the events described in Section
8(f) shall have occurred and be continuing with respect to the Borrower or if
for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"), purchase for cash an undivided participating interest in
--------------
the then outstanding Swing Line Loans by paying to the Swing Line Lender an
amount (the "Swing Line Participation Amount") equal to (i) such Revolving
-------------------------------
Credit Lender's Revolving Credit Percentage times (ii) the sum of the aggregate
-----
principal amount of Swing Line Loans then outstanding which were to have been
repaid with such Revolving Credit Loans.
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
--- ----
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
-------- -------
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 2.5 or 5; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower; (iv) any breach of this
<PAGE>
33
Agreement or any other Loan Document by the Borrower, any other Loan Party or
any other Revolving Credit Lender; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.
2.8 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
------------------------------------
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender, Term Loan Lender or the Swing Line
Lender, as the case may be, (i) the then unpaid principal amount of each
Revolving Credit Loan of such Revolving Credit Lender on the Revolving Credit
Termination Date (or such earlier date on which the Loans become due and payable
pursuant to Section 8), (ii) the then unpaid principal amount of each Swing Line
Loan of such Swing Line Lender on the Revolving Credit Termination Date (or such
earlier date on which the Loans become due and payable pursuant to Section 8)
and (iii) the principal amount of the Term Loan of such Term Loan Lender in
installments according to the amortization schedule set forth in Section 2.3 (or
on such earlier date on which the Loans become due and payable pursuant to
Section 8). The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof
until payment in full thereof at the rates per annum, and on the dates, set
forth in Section 2.15.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrower therein recorded (absent manifest error); provided,
--------
however, that the failure of any Lender or the Administrative Agent to maintain
- -------
the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loans made to such Borrower by such Lender in accordance with the terms of this
Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing the Term Loan, Revolving Credit Loans
or Swing Line Loans, as the case may be, of such Lender, substantially in the
forms of Exhibit G-1, G-2 or G-3, respectively, with appropriate insertions as
to date and principal amount.
2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to the
---------------------
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment
<PAGE>
34
Period, computed at the Commitment Fee Rate on the average daily amount of the
Available Revolving Credit Commitment of such Lender during the period for which
payment is made, payable quarterly in arrears on the first day of each April,
July, October and January of each year, commencing on the first of such dates to
occur after the date hereof and on the Revolving Credit Termination Date.
(b) The Borrower agrees to pay to the Syndication Agent the fees in
the amounts and on the dates previously agreed to in writing by the Borrower and
the Syndication Agent.
(c) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates from time to time agreed to in writing by the
Borrower and the Administrative Agent.
2.10 Termination or Reduction of Revolving Credit Commitments. The
--------------------------------------------------------
Borrower shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
--------
that no such termination or reduction of Revolving Credit Commitments shall be
permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect. Upon receipt of any such notice from the Borrower,
the Administrative Agent shall promptly notify each Revolving Credit Lender
thereof.
2.11 Optional Prepayments. The Borrower may at any time and from
--------------------
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent prior to 12:00
Noon, New York City time, at least three Business Days prior thereto in the case
of Eurodollar Loans or prior to 12:00 Noon, New York City time, at least one
Business Day prior thereto in the case of Base Rate Loans (other than Swing Line
Loans) or prior to 12:00 Noon, New York City time, on the date of such
prepayment in the case of Swing Line Loans, which notice shall specify the date
and amount of prepayment and whether the prepayment is of Eurodollar Loans or
Base Rate Loans; provided, that if a Eurodollar Loan is prepaid on any day other
--------
than the last day of the Interest Period applicable thereto, the Borrower shall
also pay any amounts then due and owing pursuant to Section 2.21. Upon receipt
of any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with
(except in the case of Revolving Credit Loans which are Base Rate Loans and
Swing Line Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and Revolving Credit Loans shall be in a minimum
principal amount of $250,000. Partial prepayments of Swing Line Loans shall be
in a minimum principal amount of $50,000.
2.12 Mandatory Prepayments and Commitment Reductions. (a) Unless
-----------------------------------------------
the Required Prepayment Lenders shall otherwise agree and without prejudice to
Section 7.2, if any Indebtedness is incurred by Holdings, the Borrower or any of
its Subsidiaries (excluding any Indebtedness incurred in accordance with Section
7.2 as in effect on the date of this Agreement), an amount equal to 100% of the
Net Cash Proceeds thereof shall be applied on the date of such
<PAGE>
35
issuance or incurrence toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 2.12(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date Holdings, the Borrower or any of its Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof within five Business Days
thereafter, 100% of such Net Cash Proceeds shall be applied on such fifth
Business Day toward the prepayment of the Term Loans and the reduction of the
Revolving Credit Commitments as set forth in Section 2.12(d); provided, that,
--------
notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of Asset
Sales (other than Asset Sales in connection with the Ripon Transition) that may
be excluded from the foregoing requirement pursuant to a Reinvestment Notice
shall not exceed $5,000,000 in any fiscal year of the Borrower, (ii) on each
Reinvestment Prepayment Date, an amount equal to the Reinvestment Prepayment
Amount with respect to the relevant Reinvestment Event shall be applied toward
the prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(d) and (iii) for purposes of this
Section 2.12(b), the Net Cash Proceeds of any Asset Sale pursuant to Section
7.5(k) shall be equal to the lesser of (A) the amount of such Net Cash Proceeds
and (B) the aggregate amount of Investments made by Holdings, the Borrower or
any of their respective Subsidiaries in the relevant Foreign Subsidiary after
the Closing Date and, in no event, shall the Net Cash Proceeds of all Asset
Sales in respect of the Capital Stock of any Foreign Subsidiary for purposes of
this Section 2.12(b) exceed the aggregate amount of Investments made by
Holdings, the Borrower and their respective Subsidiaries in such Foreign
Subsidiary after the Closing Date.
(c) Unless the Required Prepayment Lenders shall otherwise agree, if,
for any fiscal year of the Borrower commencing with the fiscal year ending on or
about December 31, 1999, there shall be Excess Cash Flow, the Borrower shall, on
the relevant Excess Cash Flow Application Date, apply the ECF Percentage of such
Excess Cash Flow toward the prepayment of the Term Loans and the reduction of
the Revolving Credit Commitments as set forth in Section 2.12(d). Each such
prepayment and commitment reduction shall be made on a date (an "Excess Cash
-----------
Flow Application Date") no later than five Business Days after the earlier of
- ---------------------
(i) the date on which the financial statements of the Borrower referred to in
Section 6.1(a), for the fiscal year with respect to which such prepayment is
made, are required to be delivered to the Lenders and (ii) the date such
financial statements are actually delivered.
(d) Subject to Section 2.18, amounts to be applied in connection with
prepayments and Commitment reductions made pursuant to this Section shall be
applied, first, to the prepayment of the Term Loans and, second, to reduce
----- ------
permanently the Revolving Credit Commitments. Any such reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of the Revolving
Credit Loans and/or Swing Line Loans to the extent, if any, that the Total
Revolving Extensions of Credit exceed the amount of the Total Revolving Credit
Commitments as so reduced, provided that if the aggregate principal amount of
--------
Revolving Credit Loans and Swing Line Loans then outstanding is less than the
amount of such excess (because L/C Obligations constitute a portion thereof),
the Borrower shall, to the extent of the balance of such excess, replace
outstanding Letters of Credit and/or deposit an amount in cash in a cash
collateral account established with the Administrative Agent for the benefit of
the Lenders on terms and conditions satisfactory to the Administrative Agent.
The application of any prepayment pursuant to this Section shall be made first
to Base Rate Loans and second to
<PAGE>
36
Eurodollar Loans (in a manner, to the extent practicable and permitted
hereunder, which minimizes amounts payable under Section 2.21 as a result of
such prepayment). Each prepayment of the Loans under this Section (except in the
case of Revolving Credit Loans that are Base Rate Loans and Swing Line Loans)
shall be accompanied by accrued interest to the date of such prepayment on the
amount prepaid.
(e) Any prepayment of Loans and/or reduction of Commitments pursuant
to this Section, and the rights of the Lenders in respect thereof, are subject
to the provisions of Section 2.18.
2.13 Conversion and Continuation Options. (a) Subject to
-----------------------------------
Sections 2.2 and 2.5, the Borrower may elect from time to time to convert
Eurodollar Loans to Base Rate Loans by giving the Administrative Agent at least
two Business Days' prior irrevocable notice of such election. The Borrower may
elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election (which notice shall specify the length of the initial Interest
Period therefor), provided that no Base Rate Loan under a particular Facility
--------
may be converted into a Eurodollar Loan (i) when any Event of Default has
occurred and is continuing and the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
conversions or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility. Upon receipt of any
such notice the Administrative Agent shall promptly notify each relevant Lender
thereof.
(b) Subject to Sections 2.2 and 2.5, any Eurodollar Loan may be
continued as such upon the expiration of the then current Interest Period with
respect thereto by the Borrower giving irrevocable notice to the Administrative
Agent, in accordance with the applicable provisions of the term "Interest
Period" set forth in Section 1.1, of the length of the next Interest Period to
be applicable to such Loans, provided that no Eurodollar Loan under a particular
--------
Facility may be continued as such (i) when any Event of Default has occurred and
is continuing and the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and provided, further, that if the Borrower
-------- -------
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches.
---------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the minimum principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $100,000
in excess thereof and (b) no more than one Eurodollar Tranche shall be
outstanding at any time prior to the day which is 30 days after the Closing Date
and no more than eight Eurodollar Tranches shall be outstanding at any one time
thereafter.
<PAGE>
37
2.15 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section plus 2%
----
or (y) in the case of Reimbursement Obligations, the rate applicable to Base
Rate Loans under the Revolving Credit Facility plus 2%, and (ii) if all or a
----
portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall (to the extent permitted by applicable law) bear interest at a rate
per annum equal to the rate then applicable to Base Rate Loans under the
relevant Facility plus 2% (or, in the case of any such other amounts that do not
----
relate to a particular Facility, the rate then applicable to Base Rate Loans
under the Revolving Credit Facility plus 2%), in each case, with respect to
----
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
--------
shall be payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest, fees and
--------------------------------
commissions payable pursuant hereto shall be calculated on the basis of a 360-
day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on
a Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.15(a).
2.17 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
<PAGE>
38
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower, absent
manifest error) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate in accordance with the terms thereof for such Interest
Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans under the relevant Facility shall be made or
continued as such, nor shall the Borrower have the right to convert Loans under
the relevant Facility to Eurodollar Loans. The Administrative Agent shall
withdraw (i) any such notice pursuant to clause (a) above if the Administrative
Agent determines that the relevant circumstances have ceased to exist and (ii)
any such notice pursuant to clause (b) above upon receipt of notice from the
Majority Facility Lenders in respect of the relevant Facility that the relevant
circumstances described in such clause (b) have ceased to exist.
2.18 Pro Rata Treatment and Payments. (a) Each borrowing by the
-------------------------------
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Term Loan Percentages or Revolving
--- ----
Credit Percentages, as the case may be, of the relevant Lenders. Each payment
(other than prepayments) in respect of principal or interest in respect of the
Loans, each payment in respect of fees payable hereunder, and each payment in
respect of Reimbursement Obligations, shall be applied to the amounts of such
obligations owing to the Lenders pro rata according to the respective amounts
--- ----
then due and owing to the Lenders.
(b) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Term Loans shall be made pro rata
--- ----
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Loan Lenders (except as otherwise provided in Section 2.18(d)).
The amount of each principal prepayment of the Term Loans shall be applied to
reduce the then remaining installments of the Term Loans, pro rata based upon
--- ----
the then remaining principal amount thereof. Amounts prepaid on account of the
Term Loans may not be reborrowed.
(c) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
- --- ----
Revolving Credit Loans then held by the Revolving Credit Lenders.
<PAGE>
39
(d) Notwithstanding anything to the contrary in Section 2.12 or this
Section, after the aggregate principal amount of the Term Loans has been reduced
to $150,000,000, each Term Loan Lender may, at its option, decline all or any
portion of any mandatory prepayment applicable to the Term Loans of such Lender;
accordingly, with respect to the amount of any mandatory prepayment described in
Section 2.12 that is allocated to the Term Loans (such amounts, the "Prepayment
----------
Amount") the Borrower will, in lieu of applying such amount to the prepayment of
- ------
Term Loans as provided in Section 2.12(d), on the date specified in Section 2.12
for such prepayment, give the Administrative Agent telephonic notice (promptly
confirmed in writing) of the aggregate amount required to be applied to prepay
Term Loans and requesting that the Administrative Agent prepare and provide to
each Term Loan Lender a notice (each, a "Prepayment Option Notice") as described
------------------------
below. As promptly as practicable after receiving such notice from the
Borrower, the Administrative Agent will send to each Term Loan Lender a
Prepayment Option Notice, which shall be in the form of Exhibit H and shall
include an offer by the Borrower to prepay on the date (each a "Prepayment
----------
Date") that is 10 Business Days after the date of the Prepayment Option Notice,
the Term Loan of such Term Loan Lender by an amount equal to the portion of the
Prepayment Amount indicated in such Lender's Prepayment Option Notice as being
applicable to such Lender's Term Loans. On the Prepayment Date, (i) the
Borrower shall pay to the Administrative Agent the aggregate amount necessary to
prepay that portion of the outstanding relevant Term Loans in respect of which
Lenders have accepted full or partial prepayment as described above (such
Lenders, the "Accepting Lenders") as notified by the Administrative Agent to the
-----------------
Borrower, and such amount shall be applied to reduce the Prepayment Amounts, as
applicable, with respect to each Accepting Lender, (ii) the Revolving Credit
Commitments shall be reduced by an amount equal to 50% of the portion of the
Prepayment Amount not accepted by the Term Loan Lenders (and, such reduction
shall be accompanied by prepayment of the Revolving Credit Loans and/or Swing
Line Loans to the extent, if any, that the Total Revolving Extensions of Credit
exceed the amount of the Total Revolving Credit Commitments as so reduced,
provided that if the aggregate principal amount of Revolving Credit Loans and
- --------
Swing Line Loans then outstanding is less than the amount of such excess
(because L/C Obligations constitute a portion thereof), the Borrower shall, to
the extent of the balance of such excess, replace outstanding Letters of Credit
and/or deposit an amount in cash in a cash collateral account established with
the Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent) and (iii) the Borrower shall be
entitled to retain the remaining 50% of the portion of the Prepayment Amount not
accepted by the Lenders.
(e) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 2:00 P.M., New
York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Payment Office, in Dollars and in immediately
available funds. The Administrative Agent shall distribute such payments to the
Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar Loans) becomes due and payable
on a day other than a Business Day, such payment shall be extended to the next
succeeding Business Day. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day unless the result of such extension
would be to extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. In the case of
any extension of any
<PAGE>
40
payment of principal pursuant to the preceding two sentences, interest thereon
shall be payable at the then applicable rate during such extension.
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, but shall not be required to, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent. A certificate of the Administrative
Agent submitted to any Lender with respect to any amounts owing under this
paragraph shall be presumed correct in the absence of manifest error. If such
Lender's share of such borrowing is not made available to the Administrative
Agent by such Lender within three Business Days of such Borrowing Date, the
Administrative Agent shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Base Rate Loans under the relevant
Facility, on the Business Day following the date of demand, from the Borrower.
(g) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
--- ----
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
2.19 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.20 and changes in the rate of tax on the overall net income or
profits of such Lender);
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances, loans
or other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
<PAGE>
41
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
within 10 days of its demand therefor, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event in reasonable detail by reason of which it
has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the Borrower (with a copy to the Administrative
Agent) of a written request therefor setting forth in reasonable detail the
basis therefor, the Borrower shall pay to such Lender within 10 days after
receipt of such request such additional amount or amounts as will compensate
such Lender for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 2.19 or Section 2.21, it shall promptly notify the
Borrower (with a copy to the Administrative Agent) of the event by reason of
which it has become so entitled, provided that no Lender shall be entitled to
--------
claim any such additional amount with respect to the period which is more than
180 days prior to the delivery of such notice. A certificate as to any
additional amounts payable pursuant to this Section 2.19 or Section 2.21
submitted by such Lender to the Borrower (with a copy to the Administrative
Agent) setting forth in reasonable detail the calculation of such amounts and
the basis therefor shall be presumptively correct in the absence of manifest
error. The agreements in this Section shall survive the termination of this
Agreement and the payment of the Loans and all other amounts payable hereunder.
2.20 Taxes. (a) Except as otherwise provided herein, all payments
-----
made by the Borrower under this Agreement shall be made free and clear of, and
without deduction or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions
or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on any Agent or any Lender
as a result of a present or former connection between such Agent or such Lender
and the jurisdiction of the Governmental Authority imposing such tax or any
political subdivision or taxing authority thereof or therein (other than any
such connection arising solely and directly from such Agent or such Lender
having executed, delivered or performed its obligations or received a payment
<PAGE>
42
under, or enforced, this Agreement or any other Loan Document). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld
------------------
from any amounts payable to any Agent or any Lender hereunder, the amounts so
payable to such Agent or such Lender shall be increased to the extent necessary
to yield to such Agent or such Lender (after payment of all Non-Excluded Taxes
and Other Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however, that the
-------- -------
Borrower shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes (i) that are attributable to such
Lender's failure to comply with the requirements of paragraph (d) or (e) of this
Section or (ii) that are United States withholding taxes imposed on amounts
payable to such Lender or Participant at the time the Lender or Participant
becomes a party to this Agreement, except to the extent that such Lender's
assignor (if any) was entitled, at the time of assignment, to receive additional
amounts from the Borrower with respect to such Non-Excluded Taxes pursuant to
Section 2.20(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent the required receipts or other required
documentary evidence, the Borrower shall indemnify the Agents and the Lenders
for any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 2.20 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a United States Person as
defined in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver
---------------
to the Borrower and the Administrative Agent (or, in the case of a Participant,
to the Lender from which the related participation shall have been purchased)
two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" a statement substantially in the form of
Exhibit I and a Form W-8, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Loan Documents,
together with any other certificate or statement of exemption required under the
Codes or Regulations issued thereunder. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this Agreement (or,
in the case of any Participant, on or before the date such Participant purchases
the related participation). In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Borrower (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of
<PAGE>
43
this paragraph, a Non-U.S. Lender shall not be required to deliver any form
pursuant to this paragraph that such Non-U.S. Lender is not legally able to
deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
--------
legally entitled to complete, execute and deliver such documentation and in such
Lender's reasonable judgment such completion, execution or submission would not
materially prejudice the legal position of such Lender.
(f) If the Administrative Agent or any Lender receives a refund or
otherwise would have received a refund but for the offset of the amount of such
refund against the Lender's Non-Excluded Taxes ("Tax Refund"), which in the good
----------
faith judgment of such Lender is allocable to Non-Excluded Taxes paid by the
Borrower, it shall promptly pay such Tax Refund to the Borrower, net of all out-
of-pocket expenses of such Lender incurred in obtaining such Tax Refund,
provided, however, that the Borrower agrees to promptly return such Tax Refund
- -------- -------
to the Administrative Agent or the applicable Lender, as the case may be, if it
receives notice from the Administrative Agent or applicable Lender that such
Administrative Agent or Lender is required to repay such Tax Refund but only if
such repayment is required because the initial Tax Refund was permitted in
error.
2.21 Indemnity. The Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense (other than any loss of
Applicable Margin) which such Lender may sustain or incur as a consequence of
(a) default by the Borrower in making a borrowing of, conversion into or
continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Borrower in making any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day of
an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest which would
have accrued on the amount so prepaid, or not so borrowed, converted or
continued, for the period from the date of such prepayment or of such failure to
borrow, convert or continue to the last day of such Interest Period (or, in the
case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
----
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any
amounts payable pursuant to this Section submitted to the Borrower by any Lender
shall be presumptively correct in the absence of manifest error. This covenant
shall survive the termination of this Agreement and the payment of the Loans and
all other amounts payable hereunder.
<PAGE>
44
2.22 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs
on a day which is not the last day of the then current Interest Period with
respect thereto, the Borrower shall pay to such Lender such amounts, if any, as
may be required pursuant to Section 2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 2.19 or 2.20(a)
with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
--------
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
-------- -------
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.19 or 2.20(a).
2.24 Replacement of Lenders under Certain Circumstances. The
--------------------------------------------------
Borrower shall be permitted to (a) replace any Lender which (i) defaults in its
obligation to make Loans hereunder, (ii) is not required to make Eurodollar
Loans pursuant to Section 2.22 or (iii) in connection with any proposed
amendment, modification, supplement or waiver with respect to any of the
provisions of the Loan Documents as contemplated in Section 10.1 where such
amendment, modification, supplement or waiver has been approved by the Required
Lenders (and, if applicable, the Required Prepayment Lenders and/or Majority
Facility Lenders) in accordance with such Section, fails to consent to any such
proposed action and (b) replace or remove any Lender which requests
reimbursement for amounts owing pursuant to Section 2.19 or 2.20 and, if the
Borrower elects to remove such Lender, terminate such Lender's Revolving Credit
Commitment hereunder; provided that (A) (i) such replacement or removal, as the
--------
case may be, does not conflict with any Requirement of Law, (ii) no Event of
Default shall have occurred and be continuing at the time of such replacement or
removal, as the case may be, (iii) prior to any such replacement or removal, as
the case may be, pursuant to clause (b) above such Lender shall have taken no
action under Section 2.23 so as to eliminate the continued need for payment of
amounts owing pursuant to Section 2.19 or 2.20, (iv) the Borrower shall be
liable to such replaced or removed Lender under Section 2.21 if any Eurodollar
Loan owing to such replaced Lender shall be purchased other than on the last day
of the Interest Period relating thereto and (v) any such replacement or removal,
as the case may be, shall not be deemed to be a waiver of any rights which the
Borrower, the Administrative Agent or any other Lender shall have against the
replaced or removed Lender, (B) in the case of replacement of a Lender under
this Section 2.24, (i) the replacement financial institution shall purchase, at
par, all Loans and other amounts owing to such replaced Lender on or prior to
the date of replacement, (ii) the replacement financial institution, if not
already a Lender, shall be reasonably satisfactory to the Administrative Agent,
(iii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 10.6 (provided that no registration
and processing fee
<PAGE>
45
referred to therein shall be required to be paid in connection therewith), and
(iv) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.19 or
2.20, (C) if the Borrower elects to remove a Lender under clause (b) of this
Section 2.24 and if such Lender has any Loans outstanding at such time, the
consent of the Administrative Agent and the Required Lenders shall be required
to terminate such Lender's Revolving Credit Commitment and (D) in the case of
replacement of a non-consenting Lender under clause (a)(iii) of this Section
2.24, the Borrower shall replace such Lender within 60 days of such Lender's
failure to consent to the proposed action.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
(i) each Issuing Lender which is a Lender, in reliance on the agreements of the
other Revolving Credit Lenders set forth in Section 3.4(a), agrees to issue
letters of credit ("Letters of Credit") for the account of the Borrower on any
-----------------
Business Day during the Revolving Credit Commitment Period in such form as may
be approved from time to time by such Issuing Lender and (ii) in the event no
Issuing Lender is a Lender, the Administrative Agent, in reliance on the
agreements of the other Revolving Credit Lenders set forth in Section 3.4(a),
agrees to cause Letters of Credit to be issued by an Issuing Lender for the
account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by such
Issuing Lender; provided that no Issuing Lender shall have any obligation to nor
--------
shall any Issuing Lender issue any Letter of Credit and the Administrative Agent
shall not have any obligation to and shall not cause any Letter of Credit to be
issued if, after giving effect to such issuance, (i) the L/C Obligations would
exceed the L/C Commitment or (ii) the aggregate amount of the Available
Revolving Credit Commitments would be less than zero. Each Letter of Credit
shall (i) be denominated in Dollars and (ii) expire no later than the earlier of
(x) the first anniversary of its date of issuance and (y) the date which is five
Business Days prior to the Scheduled Revolving Credit Termination Date, provided
--------
that any Letter of Credit with a one-year term may provide for the renewal
thereof for additional one-year periods (which shall in no event extend beyond
the date referred to in clause (y) above).
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) No Issuing Lender shall at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause such
Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law. The Administrative Agent shall not at any time
be obligated to cause any Letter of Credit to be issued hereunder if such
issuance would conflict with, or cause the Administrative Agent, such Issuing
Lender or any L/C Participant to exceed any limits imposed by, any applicable
Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrower may
------------------------------------------
from time to time request that an Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender and the Administrative Agent at their
respective addresses for notices specified herein an Application therefor,
completed to the satisfaction of the relevant Issuing Lender and the
Administrative Agent, and such other certificates, documents and other papers
and information as
<PAGE>
46
the Issuing Lender or the Administrative Agent may request. In the case of any
Letter of Credit to be issued by an Issuing Lender which is a Lender, upon
receipt of any Application, such Issuing Lender will process such Application
and the certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall
such Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by such Issuing Lender and the Borrower. In the case
of any Letter of Credit not to be issued by an Issuing Lender which is a Lender,
upon receipt of any Application, the Administrative Agent shall cause such
Issuing Lender to process such Application and the certificates, documents and
other papers and information delivered to it in connection therewith in
accordance with its customary procedures and to promptly issue the Letter of
Credit requested thereby (but in no event shall the Administrative Agent be
required to cause such Issuing Lender to issue any Letter of Credit earlier than
three Business Days after its receipt of the Application therefor and all such
other certificates, documents and other papers and information relating thereto)
by issuing the original of such Letter of Credit to the beneficiary thereof or
as otherwise may be agreed to by the Administrative Agent and the Borrower. The
relevant Issuing Lender shall furnish a copy of such Letter of Credit to the
Borrower and the Administrative Agent promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Administrative Agent, which
shall in turn promptly furnish to the Lenders, notice of the issuance of each
Letter of Credit (including the amount and expiration date thereof).
3.3 Fees and Other Charges. (a) The Borrower will pay a fee on the
----------------------
undrawn face amount of all outstanding Letters of Credit at a per annum rate
equal to the Applicable Margin then in effect with respect to Eurodollar Loans
under the Revolving Credit Facility, shared ratably among the Revolving Credit
Lenders and payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date. In addition, (i) in the case of any Letter of Credit issued by
an Issuing Lender which is a Lender, the Borrower shall pay to such Issuing
Lender for its own account a fronting fee on the undrawn face amount of all
outstanding Letters of Credit issued by such Issuing Lender at a rate per annum
of 0.25%, payable quarterly in arrears on each L/C Fee Payment Date after the
issuance date and (ii) in the case of any Letter of Credit issued by an Issuing
Lender which is not a Lender, the Borrower shall pay to the Administrative Agent
for its own account a fronting fee on the undrawn face amount of all outstanding
Letters of Credit issued by such Issuing Lender which is not a Lender at a rate
per annum to be agreed by the Administrative Agent and the Borrower payable
quarterly in arrears on each L/C Fee Payment Date after the issuance date.
(b) In addition to the foregoing fees, the Borrower shall pay or
reimburse each Issuing Lender for such normal, reasonable and customary costs
and expenses as are incurred or charged by such Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit issued by it.
3.4 L/C Participations. (a) (i) In the case of Letters of Credit
------------------
issued by an Issuing Lender which is a Lender, such Issuing Lender irrevocably
agrees to grant and hereby grants to each L/C Participant, and, to induce such
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts
<PAGE>
47
and purchases from such Issuing Lender, on the terms and conditions hereinafter
stated, for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Revolving Credit Percentage in such Issuing
Lender's obligations and rights under each Letter of Credit issued by such
Issuing Lender hereunder and the amount of each draft paid by such Issuing
Lender thereunder. Each L/C Participant unconditionally and irrevocably agrees
with each such Issuing Lender that, if a draft is paid under any Letter of
Credit for which such Issuing Lender is not reimbursed in full by the Borrower
in accordance with the terms of this Agreement, such L/C Participant shall pay
to such Issuing Lender upon demand at such Issuing Lender's address for notices
specified herein an amount equal to such L/C Participant's Revolving Credit
Percentage of the amount of such draft, or any part thereof, which is not so
reimbursed.
(ii) In the case of Letters of Credit issued by an Issuing Lender
which is not a Lender, the Administrative Agent irrevocably agrees to grant and
hereby grants to each L/C Participant, and, to induce the Administrative Agent
to cause such Issuing Lender to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Administrative Agent, on the terms and conditions hereinafter
stated, for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Revolving Credit Percentage in the
Administrative Agent's obligations and rights under each such Letter of Credit
issued hereunder and the amount of each payment made by the Administrative Agent
in respect of any draft paid by such Issuing Lender thereunder. Each L/C
Participant unconditionally and irrevocably agrees with the Administrative Agent
that, if the Administrative Agent makes a payment in respect of a draft paid
under any such Letter of Credit for which the Administrative Agent is not
reimbursed in full by the Borrower in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Administrative Agent upon
demand at the Administrative Agent's address for notices specified herein an
amount equal to such L/C Participant's Revolving Credit Percentage of the amount
of such payment, or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant pursuant
to Section 3.4(a) in respect of any unreimbursed portion of any payment made by
the relevant Issuing Lender or the Administrative Agent, as the case may be,
under any Letter of Credit is paid to the relevant Issuing Lender or the
Administrative Agent, as the case may be, within three Business Days after the
date such payment is due (provided that demand for payment is received prior to
2:00 P.M., New York City time), such L/C Participant shall pay to the relevant
Issuing Lender or the Administrative Agent, as the case may be, on demand an
amount equal to the product of (i) such amount, times (ii the daily average
Federal Funds Effective Rate during the period from and including the date such
payment is required to the date on which such payment is immediately available
to the Issuing Lender, times (ii a fraction the numerator of which is the number
of days that elapse during such period and the denominator of which is 360. If
any such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the relevant Issuing Lender or the
Administrative Agent, as the case may be, by such L/C Participant within three
Business Days after the date such payment is due, such Issuing Lender or the
Administrative Agent, as the case may be, shall be entitled to recover from such
L/C Participant, on demand, such amount with interest thereon calculated from
such due date at the rate per annum applicable to Base Rate Loans under the
Revolving Credit Facility. A certificate of the relevant Issuing Lender or the
Administrative Agent submitted to any L/C
<PAGE>
48
Participant with respect to any amounts owing under this Section shall be
presumed correct in the absence of manifest error.
(c) Whenever, at any time after an Issuing Lender or the
Administrative Agent has made payment under or in respect of any Letter of
Credit and has received from any L/C Participant its pro rata share of such
--- ----
payment in accordance with Section 3.4(a), such Issuing Lender or the
Administrative Agent receives any payment related to such Letter of Credit
(whether directly from the Borrower or otherwise, including proceeds of
collateral applied thereto by the relevant Issuing Lender or the Administrative
Agent, as the case may be), or any payment of interest on account thereof, such
Issuing Lender or the Administrative Agent, as the case may be, will distribute
to such L/C Participant its pro rata share thereof; provided, however, that in
--- ---- -------- -------
the event that any such payment received by such Issuing Lender or the
Administrative Agent shall be required to be returned by such Issuing Lender or
the Administrative Agent, as the case may be, such L/C Participant shall return
to such Issuing Lender or the Administrative Agent, as the case may be, the
portion thereof previously distributed by such Issuing Lender or the
Administrative Agent, as the case may be, to it.
3.5 Reimbursement Obligation of the Borrower. The Borrower agrees,
----------------------------------------
in accordance with the terms of the provisions of this Section, to reimburse (a)
in the case of any Letter of Credit issued by an Issuing Lender which is a
Lender, such Issuing Lender for the amount of (i) such draft so paid and (ii)
any taxes, fees, charges or other costs or expenses incurred by the Issuing
Lender in connection with such payment and (b) in the case of any Letter of
Credit issued by an Issuing Lender which is not a Lender, the Administrative
Agent for the amount of any payment made by the Administrative Agent in respect
of any drawing under any such Letter of Credit. Each such payment shall be made
to the relevant Issuing Lender or the Administrative Agent, as the case may be,
at its address for notices specified herein in lawful money of the United States
of America and in immediately available funds. If any draft shall be presented
for payment under any Letter of Credit, (a) in the case of any Letter of Credit
issued by an Issuing Lender which is a Lender, such Issuing Lender shall
promptly notify the Borrower of the date and amount thereof and (b) in the case
of any Letter of Credit issued by an Issuing Lender which is not a Lender, the
Administrative Agent shall promptly notify the Borrower of the date and amount
thereof. If the relevant Issuing Lender or the Administrative Agent, as the
case may be, notifies the Borrower prior to 12:00 Noon, New York City time, on
any Business Day, of any drawing under any Letter of Credit, the Borrower shall
reimburse such Issuing Lender or the Administrative Agent, as the case may be,
pursuant to this Section with respect to such drawing on the next Business Day.
If the relevant Issuing Lender or the Administrative Agent, as the case may be,
notifies the Borrower after 12:00 Noon, New York City time, on any Business Day
of any drawing under any Letter of Credit, the Borrower shall reimburse such
Issuing Lender or the Administrative Agent, as the case may be, pursuant to this
Section with respect to such drawing on the second succeeding Business Day.
Interest shall be payable on any and all amounts remaining unpaid by the
Borrower under this Section from the date of the related drawing until payment
in full at the rate set forth in (i) until the second Business Day following the
date of such drawing, Section 2.15(b) and (ii) thereafter, Section 2.15(c).
Each drawing under any Letter of Credit shall (unless an event of the type
described in clause (i) or (ii) of Section 8(f) shall have occurred and be
continuing with respect to the Borrower, in which case the procedures specified
in Section 3.4 for funding by L/C Participants shall apply) constitute a request
by the Borrower to the Administrative Agent for a borrowing pursuant to Section
2.5 of Base Rate Loans (or, at the option of the Administrative Agent and the
Swing Line Lender in
<PAGE>
49
their sole discretion, a borrowing pursuant to Section 2.7 of Swing Line Loans)
in the amount of such drawing. The Borrowing Date with respect to such borrowing
shall be the date of such drawing.
3.6 Obligations Absolute. Except as otherwise provided in this
--------------------
Section, the Borrower's obligations under this Section 3 shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or have had
against any Issuing Lender, the Administrative Agent, any beneficiary of a
Letter of Credit or any other Person. The Borrower also agrees with the Issuing
Lenders and the Administrative Agent that the Issuing Lenders and the
Administrative Agent shall not be responsible for, and the Borrower's
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrower and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrower against any
beneficiary of such Letter of Credit or any such transferee. The Issuing
Lenders and the Administrative Agent shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions resulting from the gross negligence or willful
misconduct of the relevant Issuing Lender or the Administrative Agent, as the
case may be. The Borrower agrees that any action taken or omitted by the
Issuing Lenders and the Administrative Agent under or in connection with any
Letter of Credit or the related drafts or documents, if done in the absence of
gross negligence or willful misconduct and in accordance with the standards of
care specified in the Uniform Customs and the Uniform Commercial Code of the
State of New York, shall be binding on the Borrower and shall not result in any
liability of the Issuing Lenders or the Administrative Agent to the Borrower.
3.7 Letter of Credit Payments. The responsibility of the Issuing
-------------------------
Lenders to the Borrower in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any
------------
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, Holdings
and the Borrower hereby jointly and severally represent and warrant to each
Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- --- -----
balance sheet of the Borrower and its consolidated Subsidiaries as at December
31, 1997 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
-----------------------
of which have heretofore been furnished to
<PAGE>
50
each Lender, has been prepared giving effect (as if such events had occurred on
such date) to (i) the consummation of the Recapitalization, including the Loans
to be made and the Senior Subordinated Notes and Seller Securities to be issued
on the Closing Date and the use of proceeds thereof and (ii) the payment of fees
and expenses in connection with the foregoing. The Pro Forma Balance Sheet has
been prepared based on the best information reasonably available to Holdings and
the Borrower as of the date of delivery thereof and on good faith estimates and
assumptions believed to be reasonable at the time made, and presents fairly in
all material respects on a pro forma basis the estimated financial position of
--- -----
the Borrower and its consolidated Subsidiaries as at December 31, 1997, assuming
that the events specified in the preceding sentence had actually occurred at
such date.
(b) The audited combined statements of assets, liabilities and parent
company investment of the Commercial Laundry Business of Raytheon as at December
31, 1996 and December 31, 1997, and the related combined statements of income,
of parent company investment and of cash flows for the fiscal years ended on
such dates, reported on by and accompanied by an unqualified report from Coopers
& Lybrand L.L.P., present fairly in all material respects the combined financial
condition of the Commercial Laundry Business of Raytheon as at such date, and
the combined results of its operations and its combined cash flows for the
respective fiscal years then ended. The unaudited combined statement of assets,
liabilities and parent company investment of the Commercial Laundry Business of
Raytheon as at March 31, 1998, and the related unaudited combined statements of
income, of parent company investment and cash flows for the three-month period
ended on such date, present fairly in all material respects the combined
financial condition of the Commercial Laundry Business of Raytheon as at such
date, and the combined results of its operations and its combined cash flows for
the three-month period then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein and for the absence of
certain notes thereto). As of the Closing Date after giving effect to the
Recapitalization, Holdings, the Borrower and its Subsidiaries own substantially
all of the assets used in connection with the conduct of the Commercial Laundry
Business of Raytheon prior to the Closing Date. Except as set forth on Schedule
4.1(b), as of the Closing Date, Holdings, the Borrower and their respective
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities or liabilities for taxes, or any long-term leases or unusual forward
or long-term commitments, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, which are not reflected in the most recent financial statements
referred to in this paragraph but which would in accordance with GAAP be so
reflected in a consolidated balance sheet of the Borrower as of the Closing
Date.
4.2 No Change. Since December 31, 1997 there has been no development
---------
or event which has had or could reasonably be expected to have a Material
Adverse Effect (it being understood that the consummation of the
Recapitalization on the Closing Date shall not constitute or be deemed to have a
Material Adverse Effect). As of the Closing Date, there has been no development
or event which has had or could reasonably be expected to have a material
adverse effect on the Recapitalization.
4.3 Existence; Compliance with Law. Each of Holdings, the Borrower
------------------------------
and their respective Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws
<PAGE>
51
of the jurisdiction of its organization, (b) has the power and authority, and
the legal right, to own and operate its Property, to lease the Property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of Property or
the conduct of its business requires such qualification, except to the extent
the failure to be so qualified and/or in good standing could not reasonably be
expected to have a Material Adverse Effect, and (d) is in compliance with all
Requirements of Law except to the extent that the failure to comply therewith
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
4.4 Power; Authorization; Enforceable Obligations. Each Loan Party
---------------------------------------------
has the power and authority, and the legal right, to make, deliver and perform
the Loan Documents to which it is a party and, in the case of the Borrower, to
borrow hereunder. Each Loan Party has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents to which
it is a party and, in the case of the Borrower, to authorize the borrowings on
the terms and conditions of this Agreement. No consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the
Recapitalization or the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the other
Loan Documents, except (i) consents, authorizations, filings and notices
described in Schedule 4.4 or 8.2 to the Merger Agreement, which consents,
authorizations, filings and notices have been obtained or made and (except as
otherwise disclosed on such Schedule) are in full force and effect, (ii) other
consents required in connection with the Recapitalization, the failure to obtain
which could not reasonably be expected to have a Material Adverse Effect, (iii)
the filings referred to in Section 4.19 and (iv) consents, authorizations,
filings and notices required after the Closing Date in the ordinary course of
business which have been obtained or made and are in full force and effect.
Each Loan Document has been duly executed and delivered on behalf of each Loan
Party party thereto. This Agreement and each other Loan Document constitutes a
legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of Holdings, the Borrower or
any of their respective Subsidiaries and will not result in, or require, the
creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any Requirement of Law or any such Contractual Obligation
(other than the Liens created by the Security Documents). No Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. Except as disclosed on Schedule 4.6, no
----------------------
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of Holdings or the
Borrower, threatened by or against Holdings, the Borrower or any of their
respective Subsidiaries or against any of their respective properties or
revenues (a)
<PAGE>
52
with respect to any of the Loan Documents or (b) which could reasonably be
expected to have a Material Adverse Effect.
4.7 No Default. Neither Holdings, the Borrower nor any of their
----------
respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
4.8 Ownership of Property; Liens. Each of Holdings, the Borrower and
----------------------------
their respective Subsidiaries has title in fee simple to, or a valid leasehold
interest in, all its material real property, and good title to, or a valid
leasehold interest in, all its other Property material to the conduct of its
Business, and none of such Property is subject to any Lien except as permitted
by Section 7.3.
4.9 Intellectual Property. Holdings, the Borrower and each of their
---------------------
respective Subsidiaries owns, or is licensed to use, all Intellectual Property
necessary for the conduct of its business as currently conducted, except for any
failure to so own or license Intellectual Property which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
No claim has been asserted and is pending by any Person against Holdings, the
Borrower or any of their respective Subsidiaries challenging or questioning the
use of any Intellectual Property by Holdings, the Borrower or any of their
respective Subsidiaries or the validity or effectiveness of any Intellectual
Property used by Holdings, the Borrower or any of their respective Subsidiaries,
except for any claims which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. The use of
Intellectual Property by Holdings, the Borrower and their respective
Subsidiaries does not infringe on the rights of any Person in any material
respect and in any manner which could reasonably be expected to have a Material
Adverse Effect.
4.10 Taxes. Each of Holdings, the Borrower and each of their
-----
respective Subsidiaries has filed or caused to be filed all Federal, state and
other material tax returns which are required to be filed and has paid all
material taxes shown to be due and payable on said returns prior to the date
penalties or interest attach thereto or on any assessments made against it or
any of its Property and all other material taxes, fees or other charges imposed
on it or any of its Property by any Governmental Authority (other than any the
amount or validity of which are currently being contested in good faith by
appropriate proceedings and with respect to which reserves in conformity with
GAAP have been provided on the books of Holdings, the Borrower or their
respective Subsidiaries, as the case may be); no tax Lien has been filed which
is not permitted under Section 7.3, and, to the knowledge of Holdings and the
Borrower, no claim is being asserted, with respect to any such tax, fee or other
charge.
4.11 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under or Regulation U as now and from time
to time hereafter in effect or for any purpose which violates the provisions of
the Regulations of the Board. If requested by any Lender or the Administrative
Agent, the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 referred to in Regulation U.
<PAGE>
53
4.12 Labor Matters. There are no strikes or other labor disputes
-------------
against Holdings, the Borrower or any of their respective Subsidiaries pending
or, to the knowledge of Holdings or the Borrower, threatened that (individually
or in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the Borrower
and their respective Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be expected to
have a Material Adverse Effect. All payments due from Holdings, the Borrower or
any of their respective Subsidiaries on account of employee health and welfare
insurance that (individually or in the aggregate) could reasonably be expected
to have a Material Adverse Effect if not paid have been paid or accrued as a
liability on the books of Holdings, the Borrower or the relevant Subsidiary.
4.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no
Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based
on those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Borrower nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
which has resulted or could reasonably be expected to result in a material
liability under ERISA, and neither the Borrower nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if the
Borrower or any such Commonly Controlled Entity were to withdraw completely from
all Multiemployer Plans as of the valuation date most closely preceding the date
on which this representation is made or deemed made. No such Multiemployer Plan
is in Reorganization or Insolvent.
4.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.15 Subsidiaries. The Subsidiaries listed on Schedule 4.15
------------
constitute all the Subsidiaries of Holdings and the Borrower at the date hereof.
4.16 Use of Proceeds. The proceeds of the Term Loans shall be used
---------------
to finance the Recapitalization and to pay related fees and expenses. The
proceeds of the Revolving Credit Loans and the Swing Line Loans, and the Letters
of Credit, shall be used to finance a portion of the Recapitalization and to pay
related fees and expenses and for general corporate and working capital
purposes.
4.17 Environmental Matters. Except as set forth on Schedule 4.17:
---------------------
<PAGE>
54
(a) The facilities and properties owned, leased or operated by
Holdings, the Borrower or any of their respective Subsidiaries (the
"Properties") do not contain any Materials of Environmental Concern in amounts
----------
or concentrations or under circumstances which (i) constitute a violation of, or
(ii) could give rise to liability under, any Environmental Law, except in either
case insofar as such violation or liability, or any aggregation thereof, could
not reasonably be expected to result in a Material Adverse Effect.
(b) The Properties and all operations at the Properties are in
compliance, and have in the last five years been in material compliance, with
all applicable Environmental Laws,except for any failures to comply which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, and there is no contamination at, under or about the
Properties or violation of any Environmental Law with respect to the Properties
or the business operated by Holdings, the Borrower or any of their respective
Subsidiaries (the "Business") which could reasonably be expected to result in a
--------
Material Adverse Effect. Neither Holdings, the Borrower nor any of their
respective Subsidiaries has assumed any liability of any other Person under
Environmental Laws which could reasonably be expected to have a Material Adverse
Effect.
(c) Neither Holdings, the Borrower nor any of their respective
Subsidiaries has received any written notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Properties or
the Business, nor does Holdings or the Borrower have knowledge or reason to
believe that any such notice will be received or is being threatened, except
insofar as such notice or threatened notice, or any aggregation thereof, does
not involve a matter or matters that constitute a breach of any other
representation contained in this Section 4.17.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law, except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation thereof, could not reasonably be expected to result in a Material
Adverse Effect.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of Holdings or the Borrower, threatened, under
any Environmental Law to which Holdings, the Borrower or any of their respective
Subsidiaries is or will be named as a party with respect to the Properties or
the Business, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Properties or the Business, except insofar as such proceeding, action,
decree, order or other requirement, or any aggregation thereof, could not
reasonably be expected to result in a Material Adverse Effect.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of Holdings, the Borrower or any of their respective Subsidiaries
in connection with the Properties or otherwise in connection with the Business,
in violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws, except insofar as any such violation or liability
referred to in
<PAGE>
55
this paragraph, or any aggregation thereof, could not reasonably be expected to
result in a Material Adverse Effect.
4.18 Accuracy of Information, etc. Subject to the next succeeding
----------------------------
sentence and to the qualification provided therein, no statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, taken as a whole, contained as of the
date such statement, information, document or certificate was so furnished, any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein, taken as
a whole, not misleading. The projections and pro forma financial information
--- -----
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Borrower to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, in the Confidential Information Memorandum or in any other
documents, certificates and statements furnished to the Administrative Agent and
the Lenders for use in connection with the transactions contemplated hereby and
by the other Loan Documents.
4.19 Security Documents. (a) The Guarantee and Collateral Agreement
------------------
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent,
together with proper endorsements executed in blank and, in the case of the UCC
Filing Collateral described in the Guarantee and Collateral Agreement, when
financing statements in appropriate form are filed in the offices specified on
Schedule 4.19(a), the Guarantee and Collateral Agreement shall, except as
otherwise provided therein, constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds thereof, as security for the Obligations (as defined
in the Guarantee and Collateral Agreement), in each case prior and superior in
right to any other Person other than Liens permitted under Section 7.3 (except
Section 7.3(j)).
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.19(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person other than Liens permitted under Section 7.3 (except Section
7.3(j)).
<PAGE>
56
4.20 Solvency. The Loan Parties are, and after giving effect to the
--------
Recapitalization and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.21 Senior Indebtedness. The Obligations, and the obligations of
-------------------
each Subsidiary Guarantor under the Guarantee and Collateral Agreement,
constitute "Senior Debt" and "Designated Senior Debt" of the Borrower, in each
case under and as defined in the Senior Subordinated Note Indenture. No
Indebtedness (other than the Obligations owing by the Borrower under the Loan
Documents) has been designated as "Designated Senior Debt" under the Senior
Subordinated Note Indenture.
4.22 Regulation H. No Mortgage, other than Mortgages for which the
------------
Borrower has delivered notice to the Administrative Agent, encumbers improved
real property which is located in an area that has been identified by the
Secretary of Housing and Urban Development as an area having special flood
hazards and in which flood insurance has been made available under the National
Flood Insurance Act of 1968.
4.23 Year 2000 Compliance. To the best knowledge of Holdings and the
--------------------
Borrower, any requirements for upgrade or replacement projects to permit the
proper functioning of such computer and management information systems after the
year 2000 could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to May 15, 1998 and prior to or concurrently
with the making of such extension of credit on the Closing Date, of the
following conditions precedent:
(a) Loan Documents. The Syndication Agent shall have received (i)
--------------
this Agreement, executed and delivered by a duly authorized officer of
Holdings and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of Holdings, the
Borrower and each Subsidiary Guarantor, (iii) a Mortgage covering each of
the Mortgaged Properties, executed and delivered by a duly authorized
officer of each party thereto, and (iv) to the extent requested on or prior
to the Closing Date, for the account of each relevant Lender, Notes
conforming to the requirements hereof and executed and delivered by a duly
authorized officer of the Borrower.
(b) Recapitalization. The Recapitalization shall have been or shall
----------------
be concurrently consummated for aggregate consideration not exceeding
$358,000,000 pursuant to and in accordance with the Merger Agreement
(subject to adjustment as provided in the Merger Agreement (as in effect on
the date hereof)), and no representation or other material provision
thereof shall have been waived, amended, supplemented or otherwise modified
without the prior written consent of the Agents. Without limiting the
foregoing, the following transactions shall have been consummated, in each
case on terms and conditions reasonably satisfactory to the Lenders:
<PAGE>
57
(i) Bain/RCL and its affiliates and other investors shall have
contributed at least $45,250,000 in cash common equity to MergeCo;
(ii) Holdings shall have transferred as a capital contribution
all of its assets and liabilities to the Borrower;
(iii) the Merger shall have been consummated in accordance with
applicable law;
(iv) the Borrower shall have received the net proceeds from the
issuance by the Borrower and Alliance Laundry Corporation of at least
$110,000,000 in aggregate principal amount of Senior Subordinated
Notes; and
(v) pursuant to the Merger, (1) the limited liability company
interests owned by Raytheon prior to the Merger shall have been
converted into (A) the right to receive $339,500,000 in cash (subject
to adjustment as provided in the Merger Agreement (as in effect on the
date hereof)), which will be financed in part with the proceeds of the
Intercompany Distribution, (B) common limited liability company
interests of Holdings, as the surviving entity of the Merger, with a
value of approximately $3,500,000, (C) Subordinated Seller Notes in an
aggregate principal amount of $9,000,000 and (D) Seller Preferred
Membership Interests having an aggregate liquidation preference of
$6,000,000 and (2) the limited liability company interests in MergeCo
shall be converted into membership interests of Holdings, as the
surviving entity in the Merger, with a value of $47,100,000 and
representing 93% of the outstanding common limited liability company
interests in Holdings following the Merger.
(c) Accounts Receivables and Notes Receivable Financing. The Agents
---------------------------------------------------
and the Lenders shall have received evidence reasonably satisfactory to
them that the Borrower shall have established a $250,000,000 non-recourse
off-balance sheet receivables purchase and equipment financing facility (as
the same may be amended, modified or changed from time to time, the
"Initial Receivables Facility") on terms and conditions satisfactory to the
-----------------------------
Agents and the Lenders. Without limiting the foregoing, the Initial
Receivables Facility shall have a term of at least five years.
(d) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
---------------------------------------------
have received (i) the Pro Forma Balance Sheet, (ii) audited combined
financial statements of the Commercial Laundry Business of Raytheon for the
1996 and 1997 fiscal years and (iii) interim combined financial statements
of the Commercial Laundry Business of Raytheon for the three-month period
ended on or about March 31, 1998, and such financial statements shall not,
in the reasonable judgment of the Lenders, reflect any material adverse
change in the consolidated financial condition of the Commercial Laundry
Business of Raytheon, as reflected in the financial statements or
projections contained in the Confidential Information Memorandum.
(e) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary in connection with the
Recapitalization, the continuing operations of Holdings, the Borrower and
their respective Subsidiaries and the
<PAGE>
58
transactions contemplated hereby shall have been obtained and be in full
force and effect, and all applicable waiting periods shall have expired
without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
Recapitalization or the financing contemplated hereby.
(f) Related Agreements. The Syndication Agent shall have received
------------------
(in a form reasonably satisfactory to the Syndication Agent), with a copy
for each Lender, true and correct copies, certified as to authenticity by
Holdings, of the Merger Agreement and such other documents or instruments
as may be reasonably requested by the Syndication Agent, including, without
limitation, a copy of the Senior Subordinated Note Indenture and any other
debt instrument, security agreement or other material contract to which any
Loan Party may be a party.
(g) Fees. The Lenders, the Syndication Agent, the Arranger and the
----
Administrative Agent shall have received all fees required to be paid, and
all expenses for which invoices have been presented, on or before the
Closing Date. All such amounts will be paid with proceeds of Loans made on
the Closing Date and will be reflected in the funding instructions given by
the Borrower to the Administrative Agent on or before the Closing Date.
(h) Business Plan. The Lenders shall have received a satisfactory
-------------
business plan for fiscal years 1998-2006 and a satisfactory written
analysis of the business and prospects of the Holdings and its Subsidiaries
for the period from the Closing Date through the final maturity of the Term
Loans, and any differences between such information and corresponding
information provided in writing to the Syndication Agent previously shall
be satisfactory to the Syndication Agent in all material respects.
(i) Solvency Certificate. The Lenders shall have received a solvency
--------------------
certificate from the chief financial officer of Holdings which shall
document the solvency of Holdings and its Subsidiaries considered as a
whole and of the Borrower and its Subsidiaries considered as a whole after
giving effect to the Recapitalization and the transactions contemplated
hereby and shall otherwise be in form and substance satisfactory to the
Lenders.
(j) Lien Searches. The Syndication Agent shall have received the
-------------
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of Holdings or its Subsidiaries except for liens
permitted by Section 7.3 or liens to be discharged prior to the Closing
Date pursuant to documentation satisfactory in form and substance to the
Syndication Agent.
(k) Environmental Condition. The Arranger and the Syndication Agent
-----------------------
shall be satisfied with the environmental condition of the real properties
of Holdings and its Subsidiaries.
(l) Expenses. The Syndication Agent shall have received satisfactory
--------
evidence that the aggregate fees and expenses incurred and to be incurred
by Holdings, the
<PAGE>
59
Borrower and their respective Subsidiaries in connection with the
Recapitalization and the financing thereof shall not exceed $22,500,000.
(m) Closing Certificate. The Syndication Agent shall have received,
-------------------
with a counterpart for each Lender, a certificate of each Loan Party, dated
the Closing Date, substantially in the form of Exhibit C, with appropriate
insertions and attachments.
(n) Legal Opinions. The Agents shall have received the following
--------------
executed legal opinions:
(i) the legal opinion of Kirkland & Ellis, counsel to Holdings
and its Subsidiaries, substantially in the form of Exhibit F; and
(ii) the legal opinion of Logan, Martin & Ratliff,Sorenson Law
Offices and Foley & Lardner and of such other special and local
counsel as may be required by the Syndication Agent.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agents may
reasonably require.
(o) Pledged Stock; Stock Power; Pledged Notes. The Syndication Agent
-----------------------------------------
shall have received on behalf of the Administrative Agent (i) the
certificates representing the shares of Capital Stock pledged pursuant to
the Guarantee and Collateral Agreement, together with an undated stock
power for each such certificate executed in blank by a duly authorized
officer of the pledgor thereof, provided that, the Borrower shall have 90
--------
days after the Closing Date to deliver the certificates representing the
pledged Capital Stock of ALSA to the Administrative Agent, and (ii) each
promissory note pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank satisfactory to the
Syndication Agent) by the pledgor thereof.
(p) Filings, Registrations and Recordings. Each document (including,
-------------------------------------
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Syndication Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall be in proper form for filing,
registration or recordation and shall have been delivered to the
Syndication Agent.
(q) Title Insurance; Flood Insurance. (i) If requested by the
--------------------------------
Syndication Agent, the Syndication Agent shall have received, and the title
insurance company issuing the policy referred to in clause (ii) below (the
"Title Insurance Company") shall have received, maps or plats of an as-
-----------------------
built survey of the sites of the Mortgaged Properties certified to the
Agents and the Title Insurance Company in a manner satisfactory to them,
dated a date satisfactory to the Syndication Agent and the Title Insurance
Company by an independent professional licensed land surveyor satisfactory
to the Syndication Agent and the Title Insurance Company, which maps or
plats and the surveys on which they are
<PAGE>
60
based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing,
there shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings, structures
and other improvements and the established building setback lines; (B) the
lines of streets abutting the sites and width thereof; (C) all access and
other easements appurtenant to the sites; (D) all roadways, paths,
driveways, easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a physical
inspection of the sites or otherwise known to the surveyor; (E) any
encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the site is described as being on a filed
map, a legend relating the survey to said map; and (G) the flood zone
designations, if any, in which the Mortgaged Properties are located.
(ii) The Syndication Agent (on behalf of the Administrative Agent)
shall have received in respect of each Mortgaged Property a mortgagee's
title insurance policy (or policies) or marked up unconditional binder for
such insurance. Each such policy shall (A) be in an amount satisfactory to
the Syndication Agent; (B) be issued at ordinary rates; (C) insure that the
Mortgage insured thereby creates a valid first Lien on such Mortgaged
Property free and clear of all defects and encumbrances, except as
disclosed therein; (D) name the Administrative Agent for the benefit of the
Lenders as the insured thereunder; (E) be in the form of ALTA Loan Policy -
1970 (Amended 10/17/70 and 10/17/84) (or equivalent policies); (F) contain
such endorsements and affirmative coverage as the Agents may reasonably
request and (G) be issued by title insurance companies satisfactory to the
Syndication Agent (including any such title insurance companies acting as
co-insurers or reinsurers, at the option of the Syndication Agent). The
Syndication Agent shall have received evidence satisfactory to it that all
premiums in respect of each such policy, all charges for mortgage recording
tax, and all related expenses, if any, have been paid.
(iii) If requested by the Syndication Agent, the Syndication Agent
(on behalf of the Administrative Agent) shall have received (A) a policy of
flood insurance which (1) covers any parcel of improved real property which
is encumbered by any Mortgage, (2) is written in an amount not less than
the outstanding principal amount of the indebtedness secured by such
Mortgage which is reasonably allocable to such real property or the maximum
limit of coverage made available with respect to the particular type of
property under the National Flood Insurance Act of 1968, whichever is less,
and (3) has a term ending not later than the maturity of the Indebtedness
secured by such Mortgage and is otherwise in form and substance
satisfactory to the Syndication Agent and (B) confirmation that the
Borrower has received the notice required pursuant to Section 208(e)(3) of
Regulation H of the Board.
(iv) To the extent requested, the Syndication Agent shall have
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in clause
(ii) above and a copy of all other material documents affecting the
Mortgaged Properties.
<PAGE>
61
(r) Availability. The aggregate principal amount of Revolving Credit
------------
Loans outstanding on the Closing Date shall not exceed $5,000,000 after
giving effect to the Recapitalization and the consummation of the other
transactions contemplated hereby.
(s) Insurance. The Syndication Agent (on behalf of the
---------
Administrative Agent) shall have received insurance certificates satisfying
the requirements of Section 5.3 of the Guarantee and Collateral Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrower
hereunder shall constitute a representation and warranty by the Borrower as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit (which has not
been cash collateralized in the manner described in the final paragraph of
Section 8) remains outstanding or any Loan or other amount is owing (including,
without limitation, accrued interest and fees) to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall and shall cause each of their
respective Subsidiaries to:
6.1 Financial Statements. Furnish to the Administrative Agent (for
--------------------
distribution to the Lenders) and to the Syndication Agent:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of the Borrower (commencing with the fiscal year
ending on or about December 31, 1998), a copy of the audited consolidated
balance sheet of the Borrower and its consolidated Subsidiaries as at the
end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case (commencing
with the balance sheet and related statements of income and of cash flows
with respect to the fiscal year ending on or about December 31, 1999) in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the
<PAGE>
62
audit, by Price Waterhouse L.L.P. or other independent certified public
accountants of nationally recognized standing;
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower (commencing with the fiscal quarter ending on or about
September 30, 1998), the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter
and the related unaudited consolidated statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth (commencing with the balance sheet and
related statements of income and of cash flows with respect to the fiscal
quarter ending on or about September 30, 1999) in each case in comparative
form the figures for the previous year, certified by a Responsible Officer
as being fairly stated in all material respects (subject to normal year-end
audit adjustments and the absence of certain footnotes); and
(c) as soon as available, but in any event not later than 30 days
after the end of each month occurring during each fiscal year of the
Borrower (other than the third, sixth, ninth and twelfth such month),
commencing with the fiscal month ending on or about October 31, 1998, the
unaudited consolidated balance sheets of the Borrower and its Subsidiaries
as at the end of such month and the related unaudited consolidated
statements of income and of cash flows for such month and the portion of
the fiscal year through the end of such month, setting forth (commencing
with the balance sheet and related statements of income and of cash flows
with respect to the month ending on or about October 31, 1999) in each case
in comparative form the figures for the previous year, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments and the absence of certain
footnotes);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
6.2 Certificates; Other Information. Furnish to the Administrative
-------------------------------
Agent (with copies for each Lender) and to the Syndication Agent or, in the case
of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default under Section 7.1, except as specified in such
certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1, (i) a certificate of a Responsible Officer stating
that such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (ii) in the
case of quarterly or annual financial statements, (x) a Compliance
Certificate containing all information necessary for determining compliance
by Holdings, the Borrower and their respective Subsidiaries with the
provisions of this
<PAGE>
63
Agreement referred to therein (including, without limitation, Section 7.1)
as of the last day of the fiscal quarter or fiscal year of the Borrower, as
the case may be, and (y) to the extent not previously disclosed to the
Administrative Agent, a listing of any county or state within the United
States where any Loan Party keeps inventory or equipment and of any
Intellectual Property acquired by any Loan Party since the date of the most
recent list delivered pursuant to this clause (y) (or, in the case of the
first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 30 days
after the end of each fiscal year of the Borrower, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Borrower and its Subsidiaries as of the end of the
following fiscal year and the related consolidated statements of projected
cash flow, projected changes in financial position and projected income)
and, as soon as available, significant revisions, if any, of such budget
and projections with respect to such fiscal year which are delivered to the
Board of Managers of Holdings for its review (collectively, the
"Projections"), which Projections shall in each case be accompanied by a
------------
certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information and assumptions at the time made
in light of the circumstances then existing and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) within 45 days after the end of each fiscal quarter of the
Borrower during any period in which the Borrower is not required to file
periodic reports on Forms 10-K and 10-Q with the Securities and Exchange
Commission, a narrative discussion and analysis of the financial condition
and results of operations of the Borrower and its Subsidiaries for such
fiscal quarter and for the period from the beginning of the then current
fiscal year to the end of such fiscal quarter, as compared to the portion
of the Projections covering such periods and to the comparable periods of
the previous year when comparisons are required under Section 6.1;
(e) no later than 10 Business Days prior to the proposed
effectiveness thereof, copies of substantially final drafts of any proposed
amendment, supplement, waiver or other modification with respect to the
Senior Subordinated Note Indenture, the Seller Securities or the
Recapitalization Documents which is prohibited by Section 7.9 or 7.16 (and
the effectiveness of any such proposed amendment, supplement, waiver or
other modification shall be conditioned upon the receipt of any necessary
consent thereto required under this Agreement);
(f) within five days after the same are sent, copies of all financial
statements and reports (including reports on Form 10-K, 10-Q and 8-K) which
Holdings or the Borrower sends generally to the holders of any class of its
debt securities or public equity securities and, promptly after the same
are filed, copies of all financial statements and reports which Holdings or
the Borrower may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(g) promptly upon receipt thereof, copies of any management or other
similar letters received from the accountants performing the audit of the
financial statements pursuant to Section 6.1(a); and
<PAGE>
64
(h) promptly, such additional financial and other information
concerning Holdings, the Borrower or any of their respective Subsidiaries
as any Lender may from time to time reasonably request.
6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where (a) the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of Holdings, the Borrower or their respective Subsidiaries, as the
case may be, or (b) the failure to so pay, discharge or otherwise satisfy any
such obligations could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence, etc. 1 (a)
------------------------------------------------------
(i) Preserve, renew and keep in full force and effect its existence and (ii)
take all reasonable action to maintain all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, except, in each
case, as otherwise permitted by Section 7.4 and except, in the case of clause
(ii) above, to the extent that failure to do so could not reasonably be expected
to have a Material Adverse Effect; and1 (b) comply with all Contractual
Obligations (other than in respect of Indebtedness) and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all material
----------------------------------
tangible Property useful and necessary in its business in good working order and
condition, ordinary wear and tear and damage occurring as a result of a casualty
event excepted, and (b) maintain with financially sound and reputable insurance
companies insurance on all its Property in at least such amounts and against at
least such risks (but including in any event public liability, product liability
and business interruption) as are usually insured against in the same general
area by companies engaged in the same or a similar business.
6.6 Inspection of Property; Books and Records; Discussions. (a)
------------------------------------------------------
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender, at its own expense, to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of Holdings, the Borrower and their respective Subsidiaries with officers and
employees of Holdings, the Borrower and their respective Subsidiaries and, in
the presence of a Responsible Officer, with its independent certified public
accountants, provided that all such visits and inspections shall be coordinated
--------
through the Administrative Agent.
6.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
(a) the occurrence of any Default or Event of Default;
<PAGE>
65
(b) any litigation, investigation or proceeding which may exist at
any time affecting Holdings, the Borrower or any of their respective
Subsidiaries, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) the following events, as soon as possible and in any event within
30 days after the Borrower knows or has reason to know thereof unless any
such event could not, individually or together with all such other events,
result in any liability to the Borrower or any Commonly Controlled Entity
which could reasonably be expected to have a Material Adverse Effect: (i)
the occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan;
(d) each consent, amendment or waiver requested under the Merger
Agreement on or prior to the Closing Date; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action Holdings, the Borrower or the relevant Subsidiary
proposes to take with respect thereto.
6.8 Environmental Laws. (a) Comply with, and ensure compliance in
------------------
all material respects by all tenants and subtenants, if any, with, all
applicable Environmental Laws, and obtain and comply with and maintain, and
ensure that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws, except for such failures to comply which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws, except for, in each
case, such failures which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
6.9 Interest Rate Protection. In the case of the Borrower, within
------------------------
180 days after the Closing Date, enter into Hedge Agreements to the extent
necessary to provide that 33% of the aggregate principal amount of the Term
Loans is subject to either a fixed interest rate or interest rate protection for
a period of not less than three years, which Hedge Agreements shall have terms
and conditions reasonably satisfactory to the Agents.
<PAGE>
66
6.10 Additional Collateral, etc. (a) With respect to any Property
--------------------------
acquired after the Closing Date by Holdings, the Borrower or any other Guarantor
(other than (x) any Property described in paragraph (b), (c) or (d) below and
(y) any Property subject to a Lien expressly permitted by Section 7.3(g),
7.3(k), 7.3(n), 7.3(p), 7.3(q), 7.3(r), 7.3(v) or 7.3(w) to the extent the terms
of the agreements with respect to such Liens prohibit the granting of a Lien for
the benefit of the Lenders on such Property) as to which the Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly
(i) execute and deliver to the Administrative Agent such amendments to the
Guarantee and Collateral Agreement or such other documents as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a security interest in such Property and (ii) take all
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in such
Property (subject to Liens permitted under Section 7.3 (except Section 7.3(j)),
including without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by Holdings, the Borrower or any other Guarantor (other than
any such real property subject to a Lien expressly permitted by Section 7.3(g)
or 7.3(k)), promptly (i) execute and deliver a first priority Mortgage in favor
of the Administrative Agent, for the benefit of the Lenders, covering such real
property (subject to Liens permitted under Section 7.3 (except Section 7.3(j))),
(ii) if requested by the Administrative Agent, provide the Lenders with (x)
title and extended coverage insurance covering such real property in an amount
at least equal to the purchase price of such real estate (or such other amount
as shall be reasonably specified by the Administrative Agent) as well as a
current ALTA survey thereof, together with a surveyor's certificate, and (y) any
consents or estoppels reasonably deemed necessary by the Administrative Agent in
connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Administrative Agent, and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Subsidiary (other than an Excluded
Subsidiary) created or acquired after the Closing Date (which, for the purposes
of this paragraph, shall include any existing Subsidiary that ceases to be an
Excluded Subsidiary), by Holdings, the Borrower or any of their respective
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable to grant to the Administrative Agent, for the
benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by Holdings, the Borrower or
any of their respective Domestic Subsidiaries (subject to Liens permitted under
Section 7.3 (except Section 7.3(j))), (ii) deliver to the Administrative Agent
the certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of
Holdings, the Borrower or such Subsidiary, as the case may be, (iii) cause such
new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement
and (B) to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary (subject to Liens permitted under
Section 7.3 (except Section
<PAGE>
67
7.3(j))), including, without limitation, the filing of Uniform Commercial Code
financing statements in such jurisdictions as may be required by the Guarantee
and Collateral Agreement or by law or as may be requested by the Administrative
Agent, and (iv) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions relating to the matters described above,
which opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Administrative Agent.
(d) With respect to any new Excluded Subsidiary created or acquired
after the Closing Date by Holdings, the Borrower or any of their respective
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable in order to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by Holdings, the Borrower or
any of their respective Subsidiaries (provided that in no event shall more than
65% of the total outstanding Capital Stock of any such new Foreign Subsidiary be
required to be so pledged), (ii) deliver to the Administrative Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized officer of
Holdings, the Borrower or such Subsidiary, as the case may be, and take such
other action as may be necessary in the opinion of the Administrative Agent, to
perfect the Lien of the Administrative Agent thereon, and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
6.11 Further Assurances. (a) In the case of the Borrower, from time
------------------
to time execute and deliver, or cause to be executed and delivered, such
additional instruments, certificates or documents, and take all such actions, as
the Administrative Agent may reasonably request, for the purposes of
implementing or effectuating the provisions of this Agreement and the other Loan
Documents, or of more fully perfecting or renewing the rights of the
Administrative Agent and the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof or with
respect to any other property or assets hereafter acquired by the Borrower which
may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the
exercise by the Administrative Agent or any Lender of any power, right,
privilege or remedy pursuant to this Agreement or the other Loan Documents which
requires any consent, approval, recording, qualification or authorization of any
Governmental Authority, the Borrower will execute and deliver, or will cause the
execution and delivery of, all applications, certifications, instruments and
other documents and papers that the Administrative Agent or such Lender may be
required to obtain from the Borrower or any of its Subsidiaries for such
governmental consent, approval, recording, qualification or authorization.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Borrower hereby jointly and severally agree that, so
long as the Commitments remain in effect, any Letter of Credit (which has not
been cash collateralized in the manner described in the final paragraph of
Section 8) remains outstanding or any Loan or other amount (including, without
limitation, accrued interest and fees) is owing to any Lender or any Agent
hereunder, each of Holdings and the Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly:
<PAGE>
68
7.1 Financial Condition Covenants.
-----------------------------
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
---------------------------
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Borrower ending with any fiscal quarter set forth below to exceed the ratio
set forth below opposite such fiscal quarter:
Consolidated
Fiscal Quarter Ending On or About Leverage Ratio
--------------------------------- --------------
September 30, 1998 6.50 to 1.00
December 31, 1998 6.50 to 1.00
March 31, 1999 6.50 to 1.00
June 30, 1999 6.50 to 1.00
September 30, 1999 6.50 to 1.00
December 31, 1999 6.50 to 1.00
March 31, 2000 7.00 to 1.00
June 30, 2000 7.10 to 1.00
September 30, 2000 7.00 to 1.00
December 31, 2000 6.40 to 1.00
March 31, 2001 6.40 to 1.00
June 30, 2001 6.40 to 1.00
September 30, 2001 6.40 to 1.00
December 31, 2001 6.00 to 1.00
March 31, 2002 6.00 to 1.00
June 30, 2002 6.00 to 1.00
September 30, 2002 6.00 to 1.00
December 31, 2002 5.25 to 1.00
March 31, 2003 5.25 to 1.00
June 30, 2003 5.25 to 1.00
September 30, 2003 5.25 to 1.00
December 31, 2003 4.25 to 1.00
March 31, 2004 4.25 to 1.00
June 30, 2004 4.25 to 1.00
September 30, 2004 4.25 to 1.00
December 31, 2004 and each Fiscal
Quarter thereafter 3.10 to 1.00
(b) Consolidated Interest Coverage Ratio. Permit the Consolidated
------------------------------------
Interest Coverage Ratio for any period of four consecutive fiscal quarters of
the Borrower (or, if less, the number of full fiscal quarters subsequent to the
Closing Date) ending with any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
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69
Consolidated Interest
Fiscal Quarter Ending On or About Coverage Ratio
--------------------------------- ---------------------
September 30, 1998 1.60 to 1.00
December 31, 1998 1.60 to 1.00
March 31, 1999 1.60 to 1.00
June 30, 1999 1.60 to 1.00
September 30, 1999 1.60 to 1.00
December 31, 1999 1.60 to 1.00
March 31, 2000 1.50 to 1.00
June 30, 2000 1.45 to 1.00
September 30, 2000 1.45 to 1.00
December 31, 2000 1.60 to 1.00
March 31, 2001 1.60 to 1.00
June 30, 2001 1.60 to 1.00
September 30, 2001 1.60 to 1.00
December 31, 2001 1.70 to 1.00
March 31, 2002 1.70 to 1.00
June 30, 2002 1.70 to 1.00
September 30, 2002 1.70 to 1.00
December 31, 2002 1.90 to 1.00
March 31, 2003 1.90 to 1.00
June 30, 2003 1.90 to 1.00
September 30, 2003 1.90 to 1.00
December 31, 2003 2.30 to 1.00
March 31, 2004 2.30 to 1.00
June 30, 2004 2.30 to 1.00
September 30, 2004 2.30 to 1.00
December 31, 2004 and each Fiscal
Quarter thereafter 3.00 to 1.00
; provided, that for the purposes of determining the ratio described above for
--------
the fiscal quarters of the Borrower ending on or about September 30, 1998,
December 31, 1998 and March 31, 1999, Consolidated Cash Interest Expense for the
relevant period shall be deemed to equal Consolidated Cash Interest Expense for
such fiscal quarter (and, in the case of the latter two such determinations,
each previous fiscal quarter commencing after the Closing Date) multiplied by 4,
-------------
2 and 4/3, respectively.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document
(including Indebtedness in respect of Loans and Letters of Credit);
(b) Indebtedness of the Borrower to any Subsidiary and, subject to
Section 7.8(i) in the case of Indebtedness of a Subsidiary that is not a
Subsidiary Guarantor, of any Subsidiary to the Borrower or any other
Subsidiary;
<PAGE>
70
(c) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted by Section 7.3(g) in an aggregate
principal amount not to exceed $7,500,000 at any one time outstanding;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d);
(e) subject to Section 7.8(i) in the case of Guarantee Obligations in
respect of obligations of Subsidiaries that are not Subsidiary Guarantors,
Guarantee Obligations made in the ordinary course of business by the
Borrower or any of its Subsidiaries of obligations (other than
Indebtedness) of the Borrower or any Subsidiary;
(f) (i) Indebtedness of the Borrower and Alliance Laundry Corporation
in respect of (A) the Senior Subordinated Notes in an aggregate principal
amount not to exceed $110,000,000 or (B) any other senior subordinated
notes issued to refinance the Senior Subordinated Notes having
substantially the same terms and conditions as the Senior Subordinated
Notes (except that the final maturity thereof shall be longer than the
final maturity of the Senior Subordinated Notes) and in an aggregate
principal amount not to exceed $110,000,000 and (ii) Guarantee Obligations
of Holdings or any Subsidiary Guarantor in respect of such Indebtedness;
provided that any Indebtedness permitted under clause (i)(B) and any such
--------
Guarantee Obligations are subordinated to the same extent as the
obligations of the Borrower and Alliance Laundry Corporation in respect of
the Senior Subordinated Notes;
(g) Indebtedness of Holdings in respect of the Intercompany
Distribution in an aggregate principal amount, together with dividends and
distributions paid to Holdings pursuant to Section 7.6(d), not to exceed
$269,500,000 plus the amount of any purchase price adjustment required to
be paid by Holdings pursuant to the Merger Agreement (as in effect on the
date hereof);
(h) Indebtedness of Holdings in respect of the Subordinated Seller
Notes (or any subordinated notes issued to refinance the Subordinated
Seller Notes having substantially the same terms and conditions as the
Subordinated Seller Notes (except that the final maturity thereof shall be
longer than the final maturity of the Subordinated Seller Notes)) in an
initial principal amount not to exceed $9,000,000 plus the amount of
interest on such Subordinated Seller Notes paid in-kind or through
accretion or capitalization;
(i) Indebtedness of the Borrower or any of its Subsidiaries arising
out of any Sale/Leaseback Transaction permitted under Section 7.11 in an
aggregate amount not to exceed $2,500,000;
(j) (i) Indebtedness of a Person which becomes a Subsidiary after the
Closing Date pursuant to an Acquisition or Subsidiary Acquisition permitted
under Section 7.8(i), (ii) Indebtedness secured by Liens permitted under
Section 7.3(k) and (iii) Indebtedness of a Person assumed by the Borrower
or any Subsidiary Guarantor pursuant to a merger of such Person with and
into the Borrower or such Subsidiary Guarantor pursuant to an Acquisition
or Subsidiary Acquisition permitted under Section 7.8(i), provided that,
--------
(A) such Indebtedness was not incurred or created in connection with or in
anticipation of the
<PAGE>
71
relevant Acquisition or Subsidiary Acquisition and (B) no Default or Event
of Default would result therefrom;
(k) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business, provided that such
--------
Indebtedness is extinguished within two Business Days of notice to the
Borrower or the relevant Subsidiary of its incurrence;
(l) Indebtedness of Holdings in respect of Management Notes;
(m) Indebtedness in respect of performance bonds, bid bonds, appeal
bonds, surety bonds, completion guarantees or other similar obligations
arising in the ordinary course of business, provided that no such bond or
--------
similar obligation is provided to secure the repayment of other
Indebtedness;
(n) Indebtedness arising out of purchase price adjustments and
customary indemnifications by the Borrower or any of its Subsidiaries in
connection with the Recapitalization or any Acquisition or Subsidiary
Acquisition permitted under Section 7.8;
(o) Indebtedness of the Borrower or any of its Subsidiaries in
respect of industrial revenue bonds issued to finance the expansion of the
facility located in Madisonville, Kentucky, provided that the aggregate
--------
principal amount of such Indebtedness does not exceed $10,000,000;
(p) (i) Indebtedness of any Foreign Subsidiary incurred to finance
the working capital requirements of such Foreign Subsidiary in an amount
not to exceed the sum of 90% of such Foreign Subsidiary's Accounts
Receivable and 60% of such Foreign Subsidiary's inventory and (ii) other
Indebtedness of Foreign Subsidiaries not to exceed $2,500,000 in the
aggregate at any one time outstanding;
(q) additional Indebtedness not otherwise permitted under this
Section 7.2 provided that the aggregate outstanding principal amount of
--------
such Indebtedness does not exceed $10,000,000 prior to the completion of
the Ripon Transition and $20,000,000 at any time thereafter;
(r) Indebtedness of Holdings in respect of any Restricted Payment
made to it and permitted pursuant to Section 7.6 to the extent such
Restricted Payment is recharacterized as a loan instead of a distribution;
(s) Indebtedness incurred by the Borrower or any Subsidiary Guarantor
to finance any Acquisition or Subsidiary Acquisition permitted under
Section 7.8(i) in an aggregate principal amount not to exceed the excess of
(x) $35,000,000 over (y) the aggregate amount of all Indebtedness assumed
by the Borrower and the Subsidiary Guarantors (including any Acquired
Persons) in connection with all such Acquisitions and Subsidiary
Acquisitions consummated in reliance upon clause (i)(A)(x) of the proviso
to such Section, provided that, (i) if any Consolidated Senior Debt is
--------
incurred in connection with any such Acquisition, after giving effect to
such Indebtedness and the related Acquisitions or Subsidiary Acquisitions
on a pro forma basis as if such Indebtedness had been incurred
<PAGE>
72
and such Acquisitions or Subsidiary Acquisitions had occurred on the first
day of the most recent period of four consecutive quarters of the Borrower,
the Consolidated Senior Debt Leverage Ratio on the last day of such period
would not have been greater than 3.75 to 1.0 and the Borrower would have
been in compliance with the covenants set forth in Section 7.1 on such date
and (ii) after giving effect to such Indebtedness and the related
Acquisitions or Subsidiary Acquisitions, no Default or Event of Default
shall have occurred and be continuing;
(t) (i) Indebtedness of the Borrower or any Subsidiary Guarantor
consisting of Guarantee Obligations in respect of any Indebtedness of the
Borrower or any Subsidiary Guarantor incurred pursuant to paragraphs (c),
(i), (j), (m), (n), (o), (q), (s) or (u) of this Section, (ii) Indebtedness
of any Subsidiary (other than a Subsidiary Guarantor) consisting of
Guarantee Obligations of any Indebtedness of the Borrower or any other
Subsidiary of any of the Borrower or any other Subsidiary and (iii) subject
to Section 7.8(i), any Indebtedness of the Borrower or Subsidiary Guarantor
consisting of Guarantee Obligations in respect of Indebtedness of any
Subsidiary (other than a Subsidiary Guarantor);
(u) Indebtedness incurred in connection with the financing of
insurance premiums in the ordinary course of business;
(v) In connection with Permitted Receivables Financings, Limited
Originator Recourse; and
(w) subject to Section 7.3(f), any renewals, extensions, refundings
or refinancings of any Indebtedness permitted under paragraphs (c), (d),
(k) and (p) of this Section, provided that the principal amount of such
--------
Indebtedness is not increased pursuant to any such renewal, extension,
refunding or refinancing;
provided, however, that no Indebtedness of Holdings, the Borrower or any of
- -------- -------
their respective Subsidiaries (other than Indebtedness under this Agreement)
shall be designated as "Designated Senior Debt" or shall be "Senior Credit
Facilities" under and as defined in the Senior Subordinated Note Indenture
without the prior written consent of the Agents and the Required Lenders.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its Property, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes, assessments or governmental charges or levies
not yet delinquent or which are being contested in good faith by
appropriate proceedings; provided that adequate reserves with respect
--------
thereto are maintained on the books of the Borrower or its Subsidiaries, as
the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlords' or other like Liens arising in the ordinary course
of business, and Liens imposed by law, in each case which are not overdue
for a period of more than 30 days or which are being contested in good
faith by appropriate proceedings;
<PAGE>
73
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, tenders, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions, minor defects or
irregularities of title and other similar encumbrances incurred in the
ordinary course of business which, in the aggregate, are not substantial in
amount and which do not in any case materially detract from the value of
the Property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
(f) (i) Liens in existence on the date hereof listed on Schedule
7.3(d), securing Indebtedness permitted by Section 7.2(d) and (ii) Liens
securing Indebtedness permitted under Section 7.2(s), provided that no such
--------
Lien is spread to cover any additional Property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition,
repair or improvement of fixed or capital assets (including any interest or
title of a lessor under any Capital Lease Obligation) and real property;
provided that (i) such Liens shall be created within 180 days after the
--------
acquisition of such fixed or capital assets or real property, as the case
may be, (ii) such Liens do not at any time encumber any Property other than
the Property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to this Agreement and the Security
Documents;
(i) Liens arising from judgments or decrees which do not result in an
Event of Default under Section 8(h);
(j) Liens securing Indebtedness of Foreign Subsidiaries permitted to
be incurred pursuant to Section 7.2(p), so long as any such Lien attaches
only to the assets of the respective Foreign Subsidiary that has incurred
such Indebtedness;
(k) Liens on any assets of a Person which becomes a Subsidiary after
the date hereof pursuant to an Acquisition or Subsidiary Acquisition
permitted under Section 7.8(i) and Liens on fixed assets otherwise acquired
pursuant to any such Acquisition or Subsidiary Acquisition, provided that
--------
(i) such Liens existed at the time such Person became a Subsidiary or such
assets were acquired, as the case may be, and were not created in
anticipation of the acquisition, (ii) any such Lien does not by its terms
cover any property or assets after the time such Person becomes a
Subsidiary or such assets were acquired, as the case may be, which were not
covered immediately prior thereto and (iii) any such Lien does not by its
terms secure any Indebtedness other than Indebtedness
<PAGE>
74
existing immediately prior to the time such Person becomes a Subsidiary or
such assets are acquired, as the case may be;
(l) all building codes and zoning ordinances and other laws,
ordinances, regulations, rules, orders or determinations of any federal,
state, county, municipal or other governmental authority now or hereafter
enacted;
(m) Liens on the Property financed with the proceeds of the
Indebtedness permitted by Section 7.2(o) to secure such Indebtedness;
(n) Liens securing reimbursement of obligations in respect of (i)
documentary letters of credit, provided that such Liens cover only the
--------
documents, the goods covered thereby and the proceeds thereof and (ii)
bankers' acceptances created in respect of drawings under such letters of
credit, provided that such Liens cover only the specific goods financed
--------
under such letter of credit and the proceeds thereof;
(o) Liens consisting of rights of set-off of a customary nature or
bankers' liens on amounts on deposit, whether arising by contract or
operation of law, incurred in the ordinary course of business;
(p) Liens encumbering customary initial deposits in respect of
commodity trading accounts or other brokerage accounts incurred in the
ordinary course of business;
(q) Liens solely on any cash earnest money deposits made by the
Borrower or any of the Subsidiary Guarantors in connection with any letter
of intent or purchase agreement entered into by it in connection with an
Acquisition or Subsidiary Acquisition permitted under Section 7.8(i);
(r) Liens on assets sold pursuant to Sale/Leaseback Transactions
permitted under Section 7.11;
(s) Liens not otherwise permitted by this Section 7.3 so long as
neither (i) the aggregate outstanding principal amount of the obligations
secured thereby nor (ii) the aggregate fair market value (determined, in
the case of each such Lien, as of the date such Lien is incurred) of the
assets subject thereto exceeds (as to the Borrower and all Subsidiaries)
$2,500,000 at any one time;
(t) Liens on goods in favor of customs and revenue authorities which
secure payment of customs duties in connection with the importation of such
goods;
(u) Liens securing obligations (other than Indebtedness) under
operating, reciprocal easements or similar agreements entered into in the
ordinary course of business by the Borrower and its Subsidiaries which do
not materially interfere with the ordinary conduct of the business of the
Borrower and its Subsidiaries;
(v) Liens consisting of any right of set-off granted to any financial
institution acting as a lockbox bank in connection with a Permitted
Receivables Financing;
<PAGE>
75
(w) Liens on insurance policies and the proceeds thereof securing the
financing of premiums with respect thereto; and
(x) Liens filed for the purpose of perfecting the ownership interests
of a purchaser of Receivables, equipment loans and related assets pursuant
to any Permitted Receivables Financing.
7.4 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Subsidiary of the Borrower may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing or
--------
surviving corporation) or with or into any Subsidiary (provided that, if
--------
any Subsidiary party to such merger or consolidation is a Subsidiary
Guarantor, the surviving entity shall also be a Subsidiary Guarantor);
(b) (i) the Borrower may Dispose of any or all of its assets
(including the Capital Stock of any Subsidiary) to any Subsidiary Guarantor
which, after giving effect to such Disposition, is and remains a Material
Subsidiary or, subject to Section 7.8(i), any other Subsidiary and (ii) any
Subsidiary may Dispose of any or all of its assets (including Capital Stock
of any other Subsidiary) (upon voluntary liquidation, dissolution or
otherwise) to the Borrower or any other Subsidiary, provided that if any
--------
such Subsidiary Disposing of any or all of its assets to a Subsidiary is a
Subsidiary Guarantor, the Subsidiary to which such assets are sold or
transferred must also be a Subsidiary Guarantor;
(c) the Merger shall be permitted;
(d) the Borrower or any Subsidiary may merge with or consolidate with
any Person in connection with any Acquisition or Subsidiary Acquisition
permitted hereunder, provided that (i) (A) if the Borrower is a party
--------
thereto, the Borrower is the surviving entity of such merger or
consolidation and (B) if a Subsidiary Guarantor is a party thereto, the
surviving entity of such merger or consolidation is a Subsidiary Guarantor
and (ii) no Default or Event of Default shall have occurred and be
continuing or would result therefrom; and
(e) Dispositions permitted under Section 7.5.
7.5 Limitation on Disposition of Property. Dispose of any of its
-------------------------------------
Property (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete, worn out or surplus property in the
ordinary course of business;
(b) the sale or lease of inventory or equipment in the ordinary
course of business;
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76
(c) the sale or discount, in each case without recourse, of Accounts
Receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof to the extent not
transferred in connection with any Permitted Receivables Financing;
(d) the sale or exchange of specific items of equipment for
replacement items of equipment in the ordinary course of business which are
the functional equivalent of the item of equipment so exchanged;
(e) Dispositions permitted by Section 7.4(a) or (b);
(f) the sale or issuance of any Subsidiary's Capital Stock to the
Borrower or of the Borrower to Holdings or (i) in the case of a Wholly
Owned Subsidiary, to the Subsidiary which owns the remainder of such
Subsidiary's Capital Stock and (ii) in the case of a Subsidiary that is not
a Wholly Owned Subsidiary, pro rata to the holders of the Capital Stock of
--- ----
such Subsidiary;
(g) the Disposition of other assets having a fair market value not to
exceed $500,000 in the aggregate for any fiscal year of the Borrower;
(h) any Disposition or Recovery Event, provided, that (i) the
--------
requirements of Section 2.12(b) are complied with in connection therewith
and (ii) the aggregate amount of all such Dispositions in any fiscal year
of the Borrower shall not exceed $5,000,000;
(i) Dispositions of assets sold pursuant to a Sale/Leaseback
Transaction permitted under Section 7.11;
(j) Dispositions of non-core assets acquired pursuant to Acquisitions
or Subsidiary Acquisitions permitted under Section 7.8(i);
(k) Dispositions of all or any portion of the Capital Stock or assets
of any Foreign Subsidiary;
(l) Dispositions (i) in connection with the Ripon Transition and (ii)
of the Capital Stock of, or all or any portion of the assets of, ALSA;
(m) Dispositions by Holdings to the Borrower pursuant to the Capital
Contribution;
(n) sales and transfers of Receivables, equipment loans and related
assets (including contract rights) by the Borrower and its Subsidiaries
(including the Securitization Entities) in connection with the Initial
Receivables Facility or any other Permitted Receivables Financing pursuant
to the applicable Securitization Documentation, provided, that (i) the
--------
principal amount of cash and the purchase money notes received as
consideration in any such sale or transfer (when aggregated with the cash
and purchase money notes received as consideration upon all such other
sales of Receivables, equipment loans and related assets during the ninety
days preceding such sale or transfer) is at least equal to 75% of the
aggregate face amount of all Receivables so sold or
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77
transferred on such day and during the ninety preceding days, (ii) the
Borrower and its Subsidiaries may only receive such purchase money notes to
the extent such purchase money notes are issuable pursuant to the
Securitization Documentation for the Initial Receivables Facility as in
effect on the date hereof and (iii) in the event that an "Event of Default"
occurs in respect of the Borrower under Section 8(k) of the Loan and
Security Agreement, dated as of May 5, 1998, among Alliance Laundry
Receivables Warehouse LLC, the financial institutions party thereto as
lenders, and Lehman Commercial Paper Inc., as agent for such lenders, or
any successor or similar provision in any other Securitization
Documentation with respect to any Permitted Receivables Financing, the
consideration for any such sale or transfer during the continuation of any
such Event of Default shall include cash at least equal to 75% of the face
amount of any Receivable sold pursuant to any such sale or transfer unless
otherwise approved by the Administrative Agent;
(o) Restricted Payments permitted under Section 7.6;
(p) leases and licenses of real or personal property (including
Intellectual Property) in the ordinary course of business;
(q) Dispositions of all or any portion of the Capital Stock or assets
of any Subsidiary (other than a Material Subsidiary);
(r) sales of equipment loans on a non-recourse basis to a third
parties in an amount equal to at least 75% of the fair market value
thereof;
(s) the sale of Accounts Receivable pursuant to arrangements
customary to the industry; and
(t) Dispositions of (i) Cash Equivalents and (ii) Investments (other
than Acquisitions);
provided, however, that to the extent that any of the foregoing constitute an
- -------- -------
Asset Sale, at least 75% of the consideration received in connection with such
Asset Sale shall consist of cash, Cash Equivalents, Capital Stock of a
Subsidiary or fixed assets used or useful in the business of the Borrower and
its Subsidiaries.
7.6 Limitation on Restricted Payments. Declare or pay any dividend
---------------------------------
(other than dividends payable solely in similar Capital Stock of the Person
making such dividend or by increasing the liquidation preference of any such
Capital Stock) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of Holdings (including,
without limitation, the Seller Preferred Membership Interests), the Borrower or
any Subsidiary, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of Holdings, the Borrower or any Subsidiary
(collectively, "Restricted Payments"), except that:
-------------------
(a) any Subsidiary may make Restricted Payments to the holders of its
Capital Stock ratably in accordance with their respective ownership
interests;
<PAGE>
78
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Borrower may pay dividends or distributions to Holdings
to permit Holdings to (i) (A) purchase Holdings' Capital Stock or options
to purchase Capital Stock from present or former officers or employees of
Holdings, the Borrower or any of their respective Subsidiaries upon the
death, disability or termination of employment of such officer or employee
or (B) make payments on promissory notes ("Management Notes") issued by
----------------
Holdings to any such officers or employees of Holdings, the Borrower or any
of their respective Subsidiaries to finance the purchase of Capital Stock
or options to purchase Capital Stock upon the death, disability or
termination of employment of any such officer or employee, provided, that
--------
the aggregate amount of payments (not including the forgiveness of any
Indebtedness described in Section 7.8(o)) under this clause (i) subsequent
to the date hereof (net of any proceeds received by Holdings subsequent to
the date hereof in connection with resales of any Capital Stock or options
to purchase Capital Stock so purchased) shall not exceed $1,000,000 during
the first year after the Closing Date, $2,000,000 during the second year
after the Closing Date or $5,000,000 in the aggregate subsequent to the
Closing Date; provided, that Holdings shall also be permitted to make such
--------
purchases with the Net Cash Proceeds to Holdings or the Borrower from any
"key-man" life insurance policies received after the Closing Date, (ii) pay
fees, expenses and other amounts to the Sponsor and its Control Investment
Affiliates expressly permitted by Section 7.10 and (iii) to pay directors'
fees and expenses and indemnity obligations;
(c) the Borrower may pay dividends or distributions to Holdings to
permit Holdings to (i) pay corporate overhead expenses incurred in the
ordinary course of business not to exceed $1,500,000 in any fiscal year and
(ii) pay any taxes which are due and payable by Holdings and the Borrower
as part of a consolidated group;
(d) dividends or distributions paid by the Borrower to Holdings
pursuant to the Intercompany Distribution in an aggregate amount, together
with the aggregate principal amount of Indebtedness incurred pursuant to
Section 7.2(g), not to exceed $269,500,000 plus the amount of any purchase
price adjustment required to be paid by Holdings pursuant to the Merger
Agreement (as in effect on the date hereof);
(e) Restricted Payments by Holdings pursuant to the Recapitalization
shall be permitted;
(f) cash distributions by the Borrower to Holdings and by Holdings to
the holders of its Capital Stock to enable such holders to make tax
payments resulting from the net income of the Borrower and its Subsidiaries
in any fiscal year (including the tax distributions contemplated by Article
IV of the limited liability company agreement of the Borrower as in effect
on the date hereof), provided that prior to the making of each such
--------
distribution, the Borrower shall have delivered to the Administrative Agent
a certificate of a Responsible Officer of the Borrower setting forth in
reasonable detail the highest federal, state and local tax rates applicable
to such holders (after giving effect to deductions for such state and local
taxes applicable thereto);
(g) cash distributions by the Borrower to Holdings, to enable
Holdings to make payments under the Transition Services Agreement, dated as
of May 5, 1998, between
<PAGE>
79
Raytheon and Holdings (as in effect on the date hereof) in connection with
the Recapitalization; and
(h) repurchases of Capital Stock deemed to occur as a result of the
surrender of such Capital Stock for cancellation in connection with the
exercise of stock options.
7.7 Limitation on Capital Expenditures. Make or commit to make any
----------------------------------
Capital Expenditure, except (a) Capital Expenditures of the Borrower and its
Subsidiaries in the ordinary course of business in any fiscal year of the
Borrower set forth below not exceeding the amount set forth below opposite such
fiscal year:
Fiscal Year Amount
------------- --------
1998 $17,500,000
1999 $25,000,000
2000 and thereafter $15,000,000
; provided, that (i) up to 50% of any such amount referred to above (without
--------
giving effect to any additional Capital Expenditures permitted during such
fiscal year pursuant to clause (ii) below), if not so expended in the fiscal
year for which it is permitted (as to such fiscal year, the "CapEx Carryforward
------------------
Amount"), may be carried over for expenditure in the next succeeding fiscal
- ------
year, (ii) Capital Expenditures made pursuant to this clause (a) during any
fiscal year shall be deemed made, first, in respect of amounts permitted for
-----
such fiscal year as provided above and, second, in respect of amounts carried
------
over from the prior fiscal year pursuant to subclause (i) above, (b) Capital
Expenditures made with the proceeds of any Reinvestment Deferred Amount, (c)
Capital Expenditures in any fiscal year made with the then unused Permitted
Expenditure Amounts and (d) Capital Expenditures attributable to all or a
portion of the cost of Acquisitions and Subsidiary Acquisitions permitted under
Section 7.8.
7.8 Limitation on Investments. Make any advance, loan, extension of
-------------------------
credit (by way of guaranty or otherwise) or capital contribution to, or purchase
any Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting an ongoing business from, or make any other investment in,
any other Person (all of the foregoing, "Investments"), except:
-----------
(a) extensions of trade credit in the ordinary course of business,
including Accounts Receivable;
(b) investments in cash and Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 7.2(b) and (e) ;
(d) loans and advances to employees of Holdings, the Borrower or any
Subsidiaries of the Borrower in the ordinary course of business (including,
without limitation, for travel, entertainment and relocation expenses) in
an aggregate amount for Holdings, the Borrower and Subsidiaries of the
Borrower not to exceed $500,000 at any one time outstanding;
<PAGE>
80
(e) Investments by Holdings in the Borrower and the Subsidiary
Guarantors, including Investments in respect of the Intercompany
Distribution;
(f) Investments existing on the date hereof and listed on Schedule
7.8;
(g) Investments in assets useful in the Borrower's or its
Subsidiaries' business (including through Acquisitions or Subsidiary
Acquisitions) made by the Borrower or any of its Subsidiaries with the
proceeds of any Reinvestment Deferred Amount;
(h) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 7.8(c)) by Holdings, the Borrower or any
of its Subsidiaries in the Borrower or any Person that, prior to such
investment, is a Subsidiary Guarantor;
(i) Acquisitions and other Investments by the Borrower and the
Subsidiary Guarantors (other than Alliance Laundry Corporation) (including,
without limitation, Investments by the Borrower and the Subsidiary
Guarantors in Subsidiaries that are not Subsidiary Guarantors), provided
--------
that (i) (A) the aggregate consideration (including assumed Indebtedness,
but excluding consideration in the form of Capital Stock of Holdings) for
all such Acquisitions after the Closing Date shall not exceed the sum of
(x) $30,000,000 and (y) the then unused Permitted Expenditure Amount at
such time, (B) if any Consolidated Senior Debt is incurred in connection
with any such Acquisition after giving effect to such Acquisition on a pro
forma basis as if such Acquisition has occurred on the first day of the
most recent period of four consecutive fiscal quarters, the Consolidated
Senior Debt Leverage Ratio on the last day of such period would not have
been greater than 3.75 to 1.0, (C) prior to the consummation of any such
Acquisition, the Administrative Agent shall have received a certificate of
a Responsible Officer setting forth the calculations required to determine
compliance with clauses (A) and (B) above and certifying that the
conditions set forth in this Section 7.8(i) have been satisfied and (D) no
Default or Event of Default shall have then occurred and be continuing or
would result therefrom and (ii) after giving effect to any such Investment
(other than an Acquisition), the aggregate outstanding or unreturned amount
(including the aggregate consideration (including assumed Indebtedness) for
all Subsidiary Acquisitions, but excluding any consideration in the form of
Capital Stock of Holdings) of all such Investments (other than
Acquisitions) (including Investments in the nature of sales and transfers
of assets for less than fair market value and Guarantee Obligations
pursuant to Section 7.2(e) or 7.2(t)) made subsequent to the Closing Date
shall not exceed the sum of (A) $5,000,000, (B) an amount equal to the
excess of (x) the Designated Equity Amounts as of the date of such
Investment over (y) the then unused Permitted Expenditure Amounts based
upon such Designated Equity Amounts, (C) the Net Cash Proceeds from any
Disposition pursuant to Section 7.5(l)(ii) (other than any net Cash
Proceeds applied to prepay Loans) and (D) any other cash received on any
such Investments, provided, further, that the conversion of any
-------- -------
Indebtedness owed to the Borrower or any Subsidiary by any Subsidiary that
is not a Subsidiary Guarantor into equity of such Subsidiary shall not
constitute an additional Investment in such Subsidiary by the Borrower or
such Subsidiary for purposes of clause (ii) of the limitation contained in
the immediately preceding proviso;
<PAGE>
81
(j) Investments received in connection with the collection of
Accounts Receivable in the ordinary course of business and Investments
(including debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in good faith settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business;
(k) Investments received in connection with any Asset Sale or other
Disposition permitted hereunder;
(l) loans and advances (including in respect of Notes Receivable) to
suppliers and customers or users of the Borrower or any Subsidiary's
products or customers of distributors of such products in the ordinary
course of business consistent with past practice;
(m) Investments resulting from the contribution or transfer of the
Capital Stock or assets of ALSA to a joint venture entered into by the
Borrower after the Closing Date;
(n) Investments by the Borrower or any of its Subsidiaries arising
out of sales and transfers of Receivables, equipment loans and related
assets pursuant to Section 7.5(n);
(o) loans and advances to members of management of Holdings in an
aggregate amount not to exceed $2,000,000 plus payment-in-kind interest at
any time outstanding in connection with the acquisition of Capital Stock of
Holdings by such members of management on the Closing Date pursuant to the
Recapitalization;
(p) Investments in ALSA not to exceed $1,000,000 in the aggregate;
(q) Investments in respect of the purchase money notes described in
Section 7.5(n);
(r) Investments (i) arising out of any repurchase pursuant to Section
7.9 of Senior Subordinated Notes or other Indebtedness permitted under
Section 7.2(f) or (ii) any repurchase of Indebtedness in connection with
the refinancing thereof to the extent permitted under Section 7.2;
(s) Investments by Subsidiaries which are not Subsidiary Guarantors
in the Borrower or any other Subsidiary; and
(t) Investments arising out of the Limited Originator Recourse.
7.9 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments. (a) Make or offer to make any optional or voluntary payment,
- -----------
prepayment, repurchase or redemption of, or otherwise voluntarily or optionally
defease, the Senior Subordinated Notes (or any other Indebtedness permitted
under Section 7.2(f)) or the Subordinated Seller Notes (or any other
Indebtedness permitted under Section 7.2(h)) (except for the exchange of the
9% Senior Subordinated Note Due 2008 for senior subordinated notes having
substantially the same terms and conditions contemplated under the Senior
Subordinated Note Indenture or for the refinancing of the Senior Subordinated
Notes and Subordinated Seller Notes in accordance with Section 7.2(f)
<PAGE>
82
or 7.2(h), as the case may be), provided that, so long as no Default or Event
--------
of Default shall have occurred and by continuing or would result therefrom, the
Borrower may repurchase or redeem Senior Subordinated Notes in an aggregate
principal amount not to exceed an amount equal to the excess of (x) 50% of the
aggregate Prepayment Amounts declined by the Term Loan Lenders pursuant to
Section 2.18(d) as of the date of such repurchase or redemption over (y) the
then unused Permitted Expenditure Amounts based upon such Prepayment Amounts,
(b) amend, modify or otherwise change, or consent or agree to any amendment,
modification, waiver or other change to, any of the terms of the Senior
Subordinated Notes (or any other Indebtedness permitted under Section 7.2(f)) or
the Subordinated Seller Notes (or any other Indebtedness permitted under Section
7.2(h)) (other than any such amendment, modification, waiver or other change
which (i) (A) would extend the maturity or reduce the amount of any payment of
principal thereof, reduce the rate or extend the date for payment of interest
thereon or relax any covenant or other restriction applicable to the Borrower or
any of its Subsidiaries and (B) does not involve the payment of a consent fee or
(ii) is not adverse in any respect to the interests of the Lenders in the
reasonable opinion of the Administrative Agent), (c) designate any Indebtedness
(other than the Obligations) as "Designated Senior Indebtedness" or "Senior
Credit Facilities" for the purposes of the Senior Subordinated Note Indenture,
(d) amend its certificate of incorporation in any manner determined by the
Administrative Agent to be adverse to the Lenders or (e) make, offer to make or
(after giving effect to any applicable subordination provisions) become
obligated to make any repurchase of any Seller Securities upon any "change of
control" (as such term is defined in the Seller Securities).
7.10 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than Holdings,
the Borrower or any Subsidiary Guarantor) unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of business
of Holdings, the Borrower or such Subsidiary, as the case may be, and (c) upon
fair and reasonable terms no less favorable to Holdings, the Borrower or such
Subsidiary, as the case may be, than it would obtain in a comparable arm's
length transaction with a Person which is not an Affiliate or Holdings, the
Borrower or such Subsidiary. Notwithstanding the foregoing, the following
transactions shall be permitted: (i) the Borrower and its Subsidiaries may pay
management, advisory or similar fees and expenses to the Sponsor and its Control
Investment Affiliates in an aggregate amount not to exceed $1,000,000 in any
fiscal year of the Borrower (plus reasonable out-of-pocket expenses incurred by
Sponsor and its Affiliates in providing services to Holdings and the Borrower in
connection with the Recapitalization or in connection with ongoing services
provided from time to time), (ii) the Recapitalization shall be permitted, (iii)
Holdings, the Borrower and their respective Subsidiaries may pay customary fees
to, and the reasonable out-of-pocket expenses of, its Board of Directors and may
provide customary indemnities for the benefit of members of its Board of
Directors, (iv) the payment by Holdings or the Borrower, in connection with the
Recapitalization, any Acquisition, divestiture or financing transaction that is
consummated by Holdings, the Borrower or any of their respective Subsidiaries,
of a transaction fee and expenses to the Sponsor and its Affiliates pursuant to
the Bain Advisory Services Agreement (as in effect on the date hereof) for such
transaction, (v) transactions with Subsidiaries that are not Subsidiary
Guarantors, joint venture partners or purchasers or sellers of goods or
services, in each case in the ordinary course of business (including, without
limitation, pursuant to joint venture agreements) and otherwise in compliance
with the terms of the Loan Documents which are fair to the Borrower or its
Subsidiaries, in the good faith determination of the Board of
<PAGE>
83
Managers of the Borrower or the senior management thereof, or are on terms at
least as favorable as might reasonably been obtained at such time from an
unaffiliated party, (vi) any employment agreement entered into by Holdings or
any of its Subsidiaries or employee compensation payments in the ordinary course
of business and consistent with past practices of the Borrower or such
Subsidiary, (vii) Restricted Payments that are permitted by the provisions of
Section 7.6, (viii) payments or loans to employees or consultants which are
approved by the Board of Managers in good faith, (ix) in the case of foreign
joint ventures, transfers of equipment for sale outside of North America in
exchange for value not less than the Borrower's cost of producing such equipment
and (x) transactions effected pursuant to a Permitted Receivables Financing
(including the servicing of Receivables sold thereunder by the Borrower or any
of its Subsidiaries).
7.11 Limitation on Sales and Leasebacks. Enter into any arrangement
----------------------------------
with any Person providing for the leasing by Holdings, the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by Holdings, the Borrower or such Subsidiary to such Person or to
any other Person to whom funds have been or are to be advanced by such Person on
the security of such property or rental obligations of Holdings, the Borrower or
such Subsidiary (a "Sale/Leaseback Transaction"), except for Sale/Leaseback
--------------------------
Transactions by the Borrower and its Subsidiaries with an aggregate sales price
not to exceed $2,500,000 during the terms of this Agreement.
7.12 Limitation on Changes in Fiscal Periods. Permit the fiscal year
---------------------------------------
of the Borrower to end on a day other than December 31 or change the Borrower's
method of determining fiscal quarters.
7.13 Limitation on Negative Pledge Clauses. Enter into or suffer to
-------------------------------------
exist or become effective any agreement which prohibits or limits the ability of
Holdings, the Borrower or any of their respective Subsidiaries to create, incur,
assume or suffer to exist any Lien upon any of its Property or revenues, whether
now owned or hereafter acquired, to secure the Obligations or, in the case of
any Guarantor, its obligations under the Guarantee and Collateral Agreement,
other than (a) this Agreement and the other Loan Documents, (b) any agreements
governing any purchase money Liens or Capital Lease Obligations otherwise
permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby), (c) any agreement relating to a
Disposition of Property by the Borrower or any of its Subsidiaries (in which
case, any prohibition or restriction shall only be effective against the
Property to be Disposed in such Disposition), (d) any agreement with respect to
Indebtedness of a Foreign Subsidiary permitted under Section 7.2(p) (in which
case, any prohibition or restriction shall only be effective against the
Property of such Foreign Subsidiary), (e) the Senior Subordinated Note Indenture
(or any agreement governing any other Indebtedness permitted under Section
7.2(f)), (f) any agreement which prohibits the creation of Liens to secure the
Senior Subordinated Notes (or any agreement governing any other Indebtedness
permitted under Section 7.2(f)) or the Subordinated Seller Note (or any
agreement governing any other Indebtedness permitted under Section 7.2(h)), (g)
the Securitization Documentation (in which case, any prohibition or restriction
shall only be effective against the Property of the relevant Securitization
Entities), (h) customary non-assignment provisions in leases entered into in the
ordinary course of business and (i) any agreements relating to Liens permitted
under Section 7.3(g), 7.3(k), 7.3(n), 7.3(p), 7.3(q) 7.3(r), 7.3(v) or 7.3(w)
(in which case, any prohibition or restriction shall only be effective against
the Property subject to the relevant Lien).
<PAGE>
84
7.14 Limitation on Restrictions on Subsidiary Distributions. Enter
------------------------------------------------------
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to (a) make Restricted Payments in
respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness
owed to, the Borrower or any other Subsidiary, (b) make Investments in the
Borrower or any other Subsidiary or (c) transfer any of its assets to the
Borrower or any other Subsidiary, except for such encumbrances or restrictions
existing under or by reason of (i) any restrictions existing under the Loan
Documents, (ii) any restrictions with respect to a Subsidiary imposed pursuant
to an agreement which has been entered into in connection with the Disposition
of all or substantially all of the Capital Stock or assets of such Subsidiary,
(iii) applicable law, (iv) the Senior Subordinated Note Indenture (or any other
agreement governing Indebtedness permitted under Section 7.2(f)), (v) customary
provisions restricting the assignment of rights under contracts, (vi) the
Securitization Documentation (in which case, any prohibition or restriction
shall only be effective against the relevant Securitization Entities), (vii) any
agreement with respect to Indebtedness of a Foreign Subsidiary permitted under
Section 7.2(p) or Indebtedness of a Subsidiary permitted under Section 7.2(j)
(in which case, any prohibition or restriction shall only be effective against
such Subsidiary), (viii) customary non-assignment provisions in leases entered
into in the ordinary course of business and consistent with past practices, (ix)
purchase money obligations for property acquired in the ordinary course of
business that impose restrictions of the nature described in clause (c) above on
the property so acquired, (x) any agreement for the sale of a Subsidiary that
restricts distributions by that Subsidiary pending its sale, (xi) provisions
with respect to the disposition or distribution of assets or property in joint
venture agreements and other similar agreements entered into in the ordinary
course of business, (xii) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into the ordinary course of
business and (xiii) restrictions on rights to dispose of assets subject to Liens
permitted under Section 7.3(g), 7.3(k), 7.3(n), 7.3(p), 7.3(r), 7.3(s), 7.3(v)
or 7.3(w).
7.15 Limitation on Lines of Business. Enter into any business,
-------------------------------
either directly or through any Subsidiary, except for those businesses in
which the Borrower and its Subsidiaries are engaged on the date of this
Agreement (after giving effect to the Recapitalization), including, without
limitation, businesses and activities related to the cleansing of textiles
and/or garments and, in each case, activities directly related thereto or
ancillary, complementary or reasonably related thereto.
7.16 Limitation on Amendments to Recapitalization Documents. Amend,
------------------------------------------------------
supplement or otherwise modify (pursuant to a waiver or otherwise) the terms and
conditions of the Merger Agreement or any other document delivered by Raytheon,
Holdings or any of their affiliates in connection therewith except to the extent
that any such amendment, supplement or modification could not reasonably be
expected to have a Material Adverse Effect.
7.17 Limitation on Activities of Holdings and Alliance Laundry
---------------------------------------------------------
Corporation. In the case of Holdings and Alliance Laundry Corporation,
- -----------
notwithstanding anything to the contrary in this Agreement or any other Loan
Document, (a) conduct, transact or otherwise engage in, or commit to conduct,
transact or otherwise engage in, any business or operations other than (i) in
the case of Holdings, those incidental to its ownership of the Capital Stock of
its Subsidiaries and those incidental to Investments by or in Holdings permitted
hereunder, (ii) those incidental to the issuance of the Senior Subordinated
Notes (or any other Indebtedness permitted under Section 7.2(f)), (iii)
activities incidental to the maintenance of its existence and compliance with
<PAGE>
85
applicable laws and legal, tax and accounting matters related thereto and
activities relating to its employees, (iv) activities relating to the
performance of obligations under the Loan Documents to which it is a party and
(v) the receipt and payment of Restricted Payments permitted under Section 7.6,
(b) incur, create, assume or suffer to exist any Indebtedness or other
liabilities or financial obligations, except (i) nonconsensual obligations
imposed by operation of law, (ii) pursuant to the Loan Documents to which it is
a party, (iii) obligations with respect to its Capital Stock, (iv) in the case
of Holdings, in respect of the Senior Subordinated Notes (or any other
Indebtedness permitted under Section 7.2(f)), the Subordinated Seller Notes and
the Management Notes (or any other Indebtedness permitted under Section 7.2(h),
(v) obligations to its employees, officers and directors not prohibited
hereunder (vi) obligations under the Recapitalization Documents (as in effect on
the date hereof), and (vii) in the case of Alliance Laundry Corporation, in
respect of the Senior Subordinated Notes (or any other Indebtedness permitted
under Section 7.2(f)), or (c) own, lease, manage or otherwise operate any
properties or assets (including cash (other than cash received in connection
with dividends paid by the Borrower in accordance with Section 7.6 pending
application in the manner contemplated by said Section) and Cash Equivalents)
other than, in the case of Holdings only, the ownership of shares of Capital
Stock of the Borrower or in respect of notes issued to Holdings by management in
respect of the purchase of its Capital Stock.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
the Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other written statement furnished by
it at any time under or in connection with this Agreement or any such other
Loan Document shall prove to have been inaccurate in any material respect
on or as of the date made or deemed made; or
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
6.4(a) (with respect to Holdings and the Borrower only) or Section 7 of
this Agreement; or
(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after the
earlier of (x) the date upon which the Borrower knows or should reasonably
be expected to know the existence of such default or (y) the date upon
which the Borrower receives notice of such default from the Administrative
Agent or any Lender; or
<PAGE>
86
(e) Holdings, the Borrower or any of their respective Subsidiaries
shall (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation, but
excluding the Loans) on the scheduled or original due date with respect
thereto beyond the period of grace, if any, provided in the instrument or
agreement under which such Indebtedness has created; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to cause,
or to permit the holder or beneficiary of such Indebtedness (or a trustee
or agent on behalf of such holder or beneficiary) to cause, with the giving
of notice if required, such Indebtedness to become due prior to its stated
maturity or (in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; provided, that a default, event or condition
--------
described in clause (i), (ii) or (iii) of this paragraph (e) shall not at
any time constitute an Event of Default unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii)
and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which exceeds
in the aggregate $5,000,000; or
(f) (i) Holdings, the Borrower or any of their respective Material
Subsidiaries shall commence any case, proceeding or other action (A) under
any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or Holdings, the
Borrower or any of their respective Material Subsidiaries shall make a
general assignment for the benefit of its creditors; or (ii) there shall be
commenced against Holdings, the Borrower or any of their respective
Material Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against Holdings, the Borrower or any of their
respective Material Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets which
results in the entry of an order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within 60 days
from the entry thereof; or (iv) Holdings, the Borrower or any of their
respective Material Subsidiaries shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) Holdings, the
Borrower or any of their respective Material Subsidiaries shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay
its debts as they become due; or
<PAGE>
87
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings, the Borrower or any of their respective Subsidiaries involving in
the aggregate a liability (to the extent not paid or covered by insurance)
of $2,500,000 or more, and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect in all material respects (other than in accordance
with its terms), or any Loan Party or any Affiliate of any Loan Party shall
so assert, or any Lien created by any of the Security Documents shall cease
to be enforceable and of the same effect and priority purported to be
created thereby as to Collateral having an aggregate value in excess of
$1,000,000; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect other than in accordance with its terms or any Loan Party shall so
assert; or
(k) (i) Prior to the effectiveness of an initial registered public
offering of common limited liability company interests by Holdings, (A) the
Permitted Investors and the Permitted Co-Investors together shall cease to
have the power to vote or direct the voting of securities having at least
60% of the ordinary voting power for the election of directors or managers
of Holdings (determined on a fully diluted basis), (B) the Permitted
Investors and the Permitted Co-Investors together shall cease to own of
record and beneficially at least 70% of the outstanding common limited
liability company interests of Holdings owned by the Permitted Investors
and the Permitted Co-Investors on the Closing Date, (C) the Permitted
Investors shall cease to have the power to vote or direct the voting of
securities having at least 40% of the ordinary voting power for the
election of directors or managers of Holdings (determined on a fully
diluted basis), (D) the Permitted Investors shall cease to own of record
and beneficially at least 70% of the outstanding common limited liability
company interests of Holdings owned by the Permitted Investors
<PAGE>
88
on the Closing Date or (E) the board of directors or managers of Holdings
shall cease to consist of a majority of directors or managers appointed by
the Permitted Investors; (ii) after the effectiveness of an initial
registered public offering of common limited liability company interests by
Holdings, (A) 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")), excluding the Permitted Investors, shall (x) become, or
obtain rights (whether by means or 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 a greater percentage of
the outstanding common limited liability company interests of Holdings than
the percentage of such common limited liability company interests then
owned by the Permitted Investors or (y) have the power to vote or direct
the voting of a greater percentage of the securities having the ordinary
voting power for the election of directors or managers of Holdings
(determined on a fully diluted basis) than the percentage of such
securities then owned by the Permitted Investors; (iii) Holdings shall
cease to own and control, of record and beneficially, directly, 100% of
each class of outstanding Capital Stock of the Borrower free and clear of
all Liens (except Liens created by the Guarantee and Collateral Agreement);
or (iv) a Specified Change of Control shall occur; or
(l) (i) The Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiary Guarantors under the Guarantee and Collateral
Agreement, as the case may be, as provided in the Senior Subordinated Note
Indenture, or any Loan Party, any Affiliate of any Loan Party, the trustee
in respect of the Senior Subordinated Notes or the holders of at least 25%
in aggregate principal amount of the Senior Subordinated Notes shall so
assert or (ii) the Subordinated Seller Notes shall cease, for any reason,
to be validly subordinated to the Obligations;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Loan Documents (including, without limitation, all
amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Majority Revolving Credit Facility Lenders,
the Administrative Agent may, or upon the request of the Majority Revolving
Credit Facility Lenders, the Administrative Agent shall, by notice to the
Borrower declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; and (ii)
with the consent of the Required Lenders, the Administrative Agent may, or upon
the request of the Required Lenders, the Administrative Agent shall, by notice
to the Borrower, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement and the other Loan Documents
(including, without limitation, all amounts of L/C Obligations, whether or not
the beneficiaries of the then outstanding Letters of Credit shall have presented
the documents required thereunder) to be due and payable forthwith, whereupon
the same shall immediately become due and payable. With respect to all Letters
of Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this Section, the
<PAGE>
89
Borrower shall at such time deposit in a cash collateral account opened by the
Administrative Agent an amount equal to the aggregate then undrawn and unexpired
amount of such Letters of Credit. Amounts held in such cash collateral account
shall be applied by the Administrative Agent to the payment of drafts drawn
under such Letters of Credit, and the unused portion thereof after all such
Letters of Credit shall have expired or been fully drawn upon, if any, shall be
applied to repay other obligations of the Borrower hereunder and under the other
Loan Documents. After all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied and
all other obligations of the Borrower hereunder and under the other Loan
Documents shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the Borrower (or such other Person as
may be lawfully entitled thereto).
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein or in any other Loan Document, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
Without limiting the foregoing, it is expressly understood and agreed that the
Agents shall not be responsible in determining whether the conditions set forth
in Section 5 have been satisfied.
9.2 Delegation of Duties. Each Agent may execute any of its duties
--------------------
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their
----------------------
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party hereto or thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any
<PAGE>
90
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.
9.4 Reliance by the Agents. Each Agent shall be entitled to rely,
----------------------
and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation reasonably
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to Holdings or the other Loan Parties),
independent accountants and other experts selected by the Administrative Agent.
The Agents may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Lenders required to so act as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Each Agent shall in all cases be fully protected in acting, or
in refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Lenders required to so act, and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all the Lenders and all future holders of the Loans.
9.5 Notice of Default. No Agent shall be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, Holdings or the Borrower referring
to this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative
Agent receives such a notice, the Administrative Agent shall give notice thereof
to the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders); provided that
--------
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
----------------------------------------
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions
<PAGE>
91
in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigation as it deems necessary to inform itself
as to the business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices,
reports and other documents expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of
a Loan Party which may come into the possession of such Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in
---------------
its capacity as such (to the extent not reimbursed by Holdings or the Borrower
and without limiting the obligation of Holdings or the Borrower to do so),
ratably according to their respective Aggregate Exposure Percentages in effect
on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Loan Documents or any documents contemplated by
or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
--------
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements which are found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted from such Agent's gross negligence or willful misconduct. The
agreements in this Section 9.7 shall survive the payment of the Loans and all
other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent was not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon 30 days' prior written notice to the
Lenders, the Syndication Agent, the Issuing Lenders and the Swing Line Lender
and the Borrower. If the Administrative Agent shall resign as Administrative
Agent under this Agreement and the other Loan Documents, then the Required
Lenders shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall (unless an Event of Default under Section 8(f) with
respect to the Borrower shall have occurred and be continuing) be subject to
approval by the Borrower (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and
<PAGE>
92
approval, and the former Administrative Agent's rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to
this Agreement or any holders of the Loans. If no successor agent has accepted
appointment as Administrative Agent by the date that is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nonetheless become effective and the
Required Lenders shall perform the duties of the Administrative Agent until such
time as the Required Lenders appoint a successor agent as provided for above.
The Syndication Agent may, at any time, by notice to the Lenders and the
Administrative Agent, resign as Syndication Agent hereunder, whereupon the
duties, rights, obligations and responsibilities hereunder shall automatically
be assumed by, and inure to the benefit of, the Administrative Agent, without
any further act by the Syndication Agent, the Administrative Agent or any
Lender. After any retiring Agent's resignation as Agent, the provisions of this
Section 9 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was an Agent under this Agreement and the other Loan
Documents.
9.10 Authorization to Release Liens. The Administrative Agent is
------------------------------
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Borrower or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 10.1.
9.11 The Arranger. The Arranger, in its capacity as such, shall have
------------
no duties or responsibilities, and shall incur no liability, under this
Agreement and the other Loan Documents.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(except with respect to amendments to the Security Documents contemplated under
Section 6.10, with the written consent of the Required Lenders) the Agents and
each Loan Party party to the relevant Loan Document may, from time to time, (a)
enter into written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Agents, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
- -------- -------
modification shall (i) forgive the principal amount or extend the final
scheduled date of maturity of any Loan or Reimbursement Obligation, extend the
scheduled date of any amortization payment in respect of any Term Loan, reduce
the stated rate of any interest or fee payable hereunder or extend the scheduled
date of any payment thereof, or increase the stated amount or extend the
expiration date of any Commitment of any Lender, in each case without the
consent of each Lender directly affected thereby; (ii) amend, modify or waive
any provision of this Section or reduce any percentage specified in the
definition of Required Lenders or Required Prepayment Lenders, consent to the
assignment or transfer by the Borrower of any of its rights and obligations
under
<PAGE>
93
this Agreement and the other Loan Documents, release all or substantially
all of the Collateral or release all or substantially all of the Subsidiary
Guarantors from their obligations under the Guarantee and Collateral Agreement,
in each case without the consent of all Lenders, except as otherwise provided in
this Agreement or any other Loan Document; (iii) amend, modify or waive any
condition precedent to any extension of credit under the Revolving Credit
Facility set forth in Section 5.2 (including, without limitation, in connection
with any waiver of an existing Default or Event of Default) or amend, modify or
waive any provision of Section 2.3 without the consent of the Majority Revolving
Credit Facility Lenders; (iv) reduce the percentage specified in the definition
of Majority Facility Lenders with respect to any Facility without the written
consent of all Lenders under such Facility; (v) amend, modify or waive any
provision of Section 9 without the consent of the Agents; (vi) amend, modify or
waive any provision of Section 2.6 or 2.7 without the written consent of the
Swing Line Lender; (vii) amend, modify or waive any provision of Section 2.18
without the consent of each Lender directly affected thereby or amend, modify or
waive any provision of Section 2.12(a), 2.12(b) or 2.12(c) without the consent
of the Required Prepayment Lenders; (viii) amend, modify or waive any provision
of Section 3 without the consent of the Issuing Lenders and the Administrative
Agent; or (ix) amend, modify or waive Section 9.11 without the consent of the
Arranger. Any such waiver and any such amendment, supplement or modification
shall apply equally to each of the Lenders and shall be binding upon the Loan
Parties, the Lenders, the Agents and all future holders of the Loans. In the
case of any waiver, the Loan Parties, the Lenders and the Agents shall be
restored to their former position and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon. Any
such waiver, amendment, supplement or modification shall be effected by a
written instrument signed by the parties required to sign pursuant to the
foregoing provisions of this Section; provided, that delivery of an executed
--------
signature page of any such instrument by facsimile transmission shall be
effective as delivery of a manually executed counterpart thereof.
10.2 Notices. Except as otherwise provided herein, all notices,
-------
requests and demands to or upon the respective parties hereto to be effective
shall be in writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered,
or three Business Days after being deposited in the mail, postage prepaid, or,
in the case of telecopy notice, when received, addressed (a) in the case of
Holdings, the Borrower and the Administrative Agent, as follows and (b) in the
case of the Lenders, as set forth on Schedule 1.1A or, in the case of a Lender
which becomes a party to this Agreement pursuant to an Assignment and
Acceptance, in such Assignment and Acceptance or (c) in the case of any party,
to such other address as such party may hereafter notify to the other parties
hereto:
Holdings: Alliance Laundry Holdings LLC
c/o Bain Capital, Inc.
Two Copley Plaza
6th Floor
Boston, Massachusetts 02116
Attention: Steve Zide
Telecopy: (617) 572-3274
with copies to: Kirkland & Ellis
200 East Randolph Drive
<PAGE>
94
Chicago, Illinois 60601
Attention: James Learner
Telecopy: (312) 861-2200
The Borrower: Alliance Laundry Systems LLC
P.O. Box 990
Shepard Street
Ripon, WI 54971-0990
Attention: Chief Financial Officer
Telecopy: (920) 748-1629
with copies to: Bain Capital, Inc.
Two Copley Plaza
6th Floor
Boston, Massachusetts 02116
Attention: Steve Zide
Telecopy: (617) 572-3274
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: James Learner
Telecopy: (312) 861-2200
The Syndication Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michele Swanson
Telecopy: (212) 528-0819
Telephone: (212) 526-0330
The Administrative Agent: General Electric Capital Corporation
335 Madison Avenue
New York, NY 10017
Attention: Daniel Gagliardo
Telecopy: (212) 309-8783
provided that any notice, request or demand to or upon either Agent or any
- --------
Lender shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of either Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The
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95
rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans and other extensions of credit hereunder.
10.5 Payment of Expenses. The Borrower agrees (a) to pay or
-------------------
reimburse the Agents and the Arranger for all their reasonable out-of-pocket
costs and expenses incurred in connection with the development, preparation,
syndication and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Agents for all its reasonable costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including, without limitation, the reasonable fees and disbursements
of counsel (including the allocated fees and expenses of in-house counsel) to
each Lender and of counsel to the Agents, (c) to pay, indemnify, and hold each
Lender, the Arranger and the Agents harmless from, any and all recording and
filing fees and any and all liabilities with respect to, or resulting from any
delay in paying, stamp, excise (other than excise taxes imposed in lieu of
income taxes) and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other
documents, and (d) to pay, indemnify, and hold each Lender, the Arranger and the
Agents and their respective officers, directors, employees, affiliates, agents
and controlling persons (each, an "Indemnitee") harmless from and against any
----------
and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever with respect to the execution, delivery, enforcement and performance
of this Agreement, the other Loan Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use of
proceeds of the Loans or the Letters of Credit or the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of Holdings, the Borrower any of their respective Subsidiaries or any
of the Properties (all the foregoing in this clause (d), collectively, the
"Indemnified Liabilities"), provided, that the Borrower shall have no obligation
- ------------------------ --------
hereunder to any Indemnitee with respect to Indemnified Liabilities to the
extent such Indemnified Liabilities (i) are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (ii) arise from disputes
among the Agents or among the Lenders. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrower agrees not to assert and to
cause its Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries so to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws that any of them might have by statute or
otherwise against any Indemnitee. The agreements in this Section shall survive
repayment of the Loans and all other amounts payable hereunder.
<PAGE>
96
10.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of Holdings, the
Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
-----------
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan or other interest for all purposes under this Agreement and the other Loan
Documents, and the Borrower and the Agents shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents. In no event
shall any Participant under any such participation have any right to approve any
amendment or waiver of any provision of any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would reduce the principal of, or the stated rate of interest
on, the Loans or any fees payable hereunder, or postpone the date of the final
maturity of the Loans or Reimbursement Obligations, in each case to the extent
subject to such participation. The Borrower agrees that if amounts outstanding
under this Agreement and the Loans are due or unpaid after any applicable grace
periods, or shall have been declared or shall have become due and payable upon
the occurrence and during the continuation of an Event of Default, each
Participant shall, to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement, provided that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 10.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to
the benefits of Sections 2.19, 2.20 and 2.21 with respect to its participation
in the Commitments and the Loans and Letters of Credit outstanding from time to
time as if it was a Lender; provided that, in the case of Section 2.20, such
--------
Participant shall have complied with the requirements of said Section and
provided, further, that no Participant shall be entitled to receive any greater
- -------- -------
amount pursuant to any such Section than the transferor Lender would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Lender to such Participant had no such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
--------
law, at any time and from time to time assign to any Lender or any affiliate or
Approved Fund thereof or, with the consent of the Borrower and the Agents
(which, in each case, shall not be unreasonably withheld or delayed), to an
additional bank, financial institution or other entity (an "Assignee") all or
--------
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit E, executed by
such Assignee and such Assignor (and, where the consent of the Borrower or the
Agents is required pursuant to the foregoing provisions, by the Borrower and
such other Persons) and delivered to the Administrative Agent
<PAGE>
97
for its acceptance and recording in the Register; provided that (i) no such
--------
assignment to an Assignee (other than any Lender or any affiliate or Approved
Fund thereof) shall be in an aggregate principal amount of less than $5,000,000
(other than in the case of an assignment of all of a Lender's interests under
this Agreement), unless otherwise agreed by the Borrower, the Syndication Agent
and the Administrative Agent and (ii) if the Assignor is a Revolving Credit
Lender, such Assignor's rights and obligations with respect to its Revolving
Credit Commitment or any part thereof shall be assigned to an Eligible Assignee.
Any such assignment need not be ratable as among the Facilities. Upon such
execution, delivery, acceptance and recording, from and after the effective date
determined pursuant to such Assignment and Acceptance, (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have (in addition to the rights and obligations
theretofore held by it) the rights and obligations of a Lender hereunder with a
Commitment and/or Loans as set forth therein, and (y) the Assignor thereunder
shall, to the extent provided in such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of an Assignor's rights and obligations under this
Agreement, such Assignor shall cease to be a party hereto). Notwithstanding any
provision of this Section, the consent of the Borrower shall not be required for
any assignment which occurs at any time when any Event of Default shall have
occurred and be continuing under Section 8(f) with respect to the Borrower.
(d) The Administrative Agent shall maintain at its address referred
to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
--------
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time. The entries in the Register shall be conclusive,
in the absence of manifest error, and the Borrower, the Administrative Agent and
the Lenders shall treat each Person whose name is recorded in the Register as
the owner of the Loans and any Notes evidencing such Loans recorded therein for
all purposes of this Agreement. Any assignment of any Loan, whether or not
evidenced by a Note, shall be effective only upon appropriate entries with
respect thereto being made in the Register (and each Note shall expressly so
provide). Any assignment or transfer of all or part of a Loan evidenced by a
Note shall be registered on the Register only upon surrender for registration of
assignment or transfer of the Note evidencing such Loan, accompanied by a duly
executed Assignment and Acceptance; thereupon one or more new Notes in the same
aggregate principal amount shall be issued to the Assignor and the designated
Assignee, and the old Notes shall be returned by the Administrative Agent to the
Borrower marked "cancelled". The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in any case where the consent of any other Person
is required by Section 10.6(c), by each such other Person) together with payment
to the Administrative Agent of a registration and processing fee of $3,000
(except that no such registration and processing fee shall be payable (y) in
connection with an assignment by Lehman Commercial Paper Inc. or (z) in the case
of an Assignee which is already a Lender or is an affiliate or Approved Fund of
a Lender or a Person under common management with a Lender), the Administrative
Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Borrower. On or prior to such effective date,
<PAGE>
98
the Borrower, at its own expense, upon request, shall execute and deliver to the
Administrative Agent (in exchange for the Revolving Credit Note and/or
applicable Term Notes, as the case may be, of the assigning Lender) a new
Revolving Credit Note and/or applicable Term Notes, as the case may be, to the
order of such Assignee in an amount equal to the Revolving Credit Commitment
and/or applicable Term Loans, as the case may be, assumed or acquired by it
pursuant to such Assignment and Acceptance and, if the Assignor has retained a
Revolving Credit Commitment and/or Term Loans, as the case may be, upon request,
a new Revolving Credit Note and/or Term Notes, as the case may be, to the order
of the Assignor in an amount equal to the Revolving Credit Commitment and/or
applicable Term Loans, as the case may be, retained by it hereunder. Such new
Note or Notes shall be dated the Closing Date and shall otherwise be in the form
of the Note or Notes replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank
in accordance with applicable law.
10.7 Adjustments; Set-off. (a) Except to the extent that this
--------------------
Agreement provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a "Benefitted Lender") shall
-----------------
at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 8(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
-------- -------
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to Holdings or the
Borrower, any such notice being expressly waived by Holdings and the Borrower to
the extent permitted by applicable law, upon any amount becoming due and payable
by Holdings or the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) after any applicable grace period, to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or the
account of Holdings or the Borrower, as the case may be. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
setoff and application made by such Lender, provided that the failure to give
--------
such notice shall not affect the validity of such setoff and application.
<PAGE>
99
10.8 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents (and
-----------
the other agreements referred to in Section 2.9) represent the agreement of
Holdings, the Borrower, the Subsidiaries, the Agents, the Arranger and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Agents, the Arranger or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
-----------------------------------
Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to Holdings
or the Borrower, as the case may be, at its address set forth in Section
10.2 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
<PAGE>
100
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
10.13 Acknowledgements. Each of Holdings and the Borrower hereby
----------------
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) no Agent, Lender or the Arranger has any fiduciary relationship
with or duty to Holdings or the Borrower arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent, the Syndication Agent and
the Lenders, on one hand, and Holdings and the Borrower, on the other hand,
in connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among Holdings, the Borrower and the Lenders.
10.14 Confidentiality. Each of the Agents and the Lenders agrees to
---------------
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement; provided that nothing herein shall prevent any Agent
--------
or any Lender from disclosing any such information (a) to either Agent, any
other Lender or any affiliate of any Lender, (b) to any Participant or Assignee
(each, a "Transferee") or prospective Transferee which agrees in writing to
----------
comply with the provisions of this Section, (c) any of its employees, directors,
agents, attorneys, accountants and other professional advisors, (d) upon the
request or demand of any Governmental Authority having jurisdiction over it (in
which case (except when the relevant Governmental Authority is conducting a
regular examination) the relevant Agent or Lender shall give the Borrower prior
notice thereof to the extent practicable), (e) in response to any order of any
court or other Governmental Authority or as may otherwise be required pursuant
to any Requirement of Law (in which case the relevant Agent or Lender shall give
the Borrower prior notice thereof to the extent practicable), (f) if requested
or required to do so in connection with any litigation or similar proceeding (in
which case the relevant Agent or Lender shall give the Borrower prior notice
thereof to the extent practicable), (g) which has been publicly disclosed other
than in breach of this Section 10.14 by such Agent or Lender, (h) to the
National Association of Insurance Commissioners or any similar organization or
any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in connection with ratings issued with
respect to such Lender, (i) in connection with the exercise of any remedy
hereunder or under any other Loan Document or (j) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section 10.14).
10.15 Enforceability; Usury. In no event shall any provision of this
---------------------
Agreement, the Notes, or any other instrument evidencing or securing the
indebtedness of the Borrower hereunder ever obligate the Borrower to pay or
allow any Lender to collect interest on the Loans or any other indebtedness of
the Borrower hereunder at a rate greater than the maximum non-
<PAGE>
101
usurious rate permitted by applicable law (herein referred to as the "Highest
--------
Lawful Rate"), or obligate the Borrower to pay any taxes, assessments, charges,
- -----------
insurance premiums or other amounts to the extent that such payments, when added
to the interest payable on the Loans, would be held to constitute the payment by
the Borrower of interest at a rate greater than the Highest Lawful Rate; and
this provision shall control over any provision to the contrary.
Without limiting the generality of the foregoing, in the event the
maturity of all or any part of the principal amount of the indebtedness of the
Borrower hereunder shall be accelerated for any reason, then such principal
amount so accelerated shall be credited with any interest theretofore paid
thereon in advance and remaining unearned at the time of such acceleration. If,
pursuant to the terms of this Agreement or the Notes, any funds are applied to
the payment of any part of the principal amount of the indebtedness of the
Borrower hereunder prior to the maturity thereof, then (a) any interest which
would otherwise thereafter accrue on the principal amount so paid by such
application shall be canceled, and (b) the indebtedness of the Borrower
hereunder remaining unpaid after such application shall be credited with the
amount of all interest, if any, theretofore collected on the principal amount so
paid by such application and remaining unearned at the date of said application;
and if the funds so applied shall be sufficient to pay in full all the
indebtedness of the Borrower hereunder, then the Lenders shall refund to the
Borrower all interest theretofore paid thereon in advance and remaining unearned
at the time of such acceleration. Regardless of any other provision in this
Agreement, or in any of the written evidences of the indebtedness of the
Borrower hereunder, the Borrower shall never be required to pay any unearned
interest on such indebtedness or any portion thereof, and shall never be
required to pay interest thereon at a rate in excess of the Highest Lawful Rate
construed by courts having competent jurisdiction thereof.
10.16 WAIVERS OF JURY TRIAL. HOLDINGS, THE BORROWER, THE AGENTS, THE
---------------------
ARRANGER AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
102
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
ALLIANCE LAUNDRY HOLDINGS LLC
By:
----------------------------------------
Name:
Title:
ALLIANCE LAUNDRY SYSTEMS LLC
By:
----------------------------------------
Name:
Title:
LEHMAN BROTHERS INC.,
as Arranger
By:
----------------------------------------
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:
----------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Administrative Agent
and as a
Lender
By:
----------------------------------------
Name:
Title: Duly Authorized Signatory
<PAGE>
103
Annex A
-------
PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS,
TERM LOANS AND COMMITMENT FEES
<TABLE>
<CAPTION>
Revolving Revolving
Credit Term Loan Credit Term Loan
Applicable Applicable Applicable Applicable
Margin Margin for Margin for Margin for
Consolidated for Eurodollar Eurodollar Base Rate Base Rate Commitment
Leverage Ratio Loans Loans Loans Loans Fee Rate
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Greater than
5.5 to 1.0 2.375% 2.625% 1.375% 1.625% 0.500%
Less than or equal
to 5.5 to 1.0
but greater than
5.0 to 1.0 2.125% 2.375% 1.125% 1.375% 0.500%
Less than or equal
to 5.0 to 1.0 but 1.875% 2.125% 0.875% 1.125% 0.375%
Greater than 4.5 to 1.0
less than or equal
to 4.5 to 1.0 1.625% 2.125% 0.625% 1.125% 0.375%
=========================================================================================
</TABLE>
Changes in the Applicable Margin with respect to Loans or in the Commitment Fee
Rate resulting from changes in the Consolidated Leverage Ratio shall become
effective on the date (the "Adjustment Date") on which financial statements are
---------------
delivered to the Lenders pursuant to Section 6.1 (but in any event not later
than the 45th day after the end of each of the first three quarterly periods of
each fiscal year or the 90th day after the end of each fiscal year, as the case
may be) and shall remain in effect until the next change to be effected pursuant
to this paragraph. If any financial statements referred to above are not
delivered within the time periods specified above, then, until such financial
statements are delivered, the Consolidated Leverage Ratio as at the end of the
fiscal period that would have been covered thereby shall for the purposes of
this definition be deemed to be greater than 5.5 to 1. Each determination of
the Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of the Borrower ending
at the end of the period covered by the relevant financial statements.
<PAGE>
104
SCHEDULES 1.1A
COMMITMENTS: LENDING OFFICES AND ADDRESSES
Revolving Term
Name of Lender and Credit Loan
Information for Notices Commitments Commitments
- ------------------------- ----------- ------------
<PAGE>
105
SCHEDULE 1.1B
MORTGAGED PROPERTY
<PAGE>
106
SCHEDULE 4.1
CERTAIN DISPOSITIONS AND OTHER TRANSACTIONS
<PAGE>
107
SCHEDULE 4.4
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
<PAGE>
108
SCHEDULE 4.15
SUBSIDIARIES
<PAGE>
109
SCHEDULE 4.19(a)
UCC FILING JURISDICTIONS
<PAGE>
110
SCHEDULE 4.19(b)
MORTGAGE FILING JURISDICTIONS
<PAGE>
111
SCHEDULE 7.2(d)
EXISTING INDEBTEDNESS
<PAGE>
112
SCHEDULE 7.3(f)
EXISTING LIENS
<PAGE>
113
SCHEDULE 7.8
EXISTING INVESTMENTS
<PAGE>
EXHIBIT A TO
CREDIT AGREEMENT
----------------
[FORM OF GUARANTEE AND
COLLATERAL AGREEMENT]
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
made by
ALLIANCE LAUNDRY HOLDINGS LLC
ALLIANCE LAUNDRY SYSTEMS LLC
and certain of their Subsidiaries
in favor of
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent
Dated as of May 5, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINED TERMS.......................................................... 1
1.1 Definitions......................................................... 1
1.2 Other Definitional Provisions....................................... 5
SECTION 2. GUARANTEE.............................................................. 6
2.1 Guarantee........................................................... 6
2.2 Right of Contribution............................................... 7
2.3 No Subrogation...................................................... 7
2.4 Amendments, etc. with respect to the Borrower Obligations........... 7
2.5 Guarantee Absolute and Unconditional................................ 8
2.6 Reinstatement....................................................... 9
2.7 Payments............................................................ 9
SECTION 3. GRANT OF SECURITY INTEREST............................................. 9
SECTION 4. REPRESENTATIONS AND WARRANTIES......................................... 10
4.1 Representations in Credit Agreement................................. 10
4.2 No Other Liens...................................................... 10
4.3 Perfected First Priority Liens...................................... 10
4.4 Chief Executive Office.............................................. 10
4.5 Inventory and Equipment............................................. 11
4.6 Farm Products....................................................... 11
4.7 Investment Property................................................. 11
4.8 Receivables......................................................... 11
4.9 Contracts........................................................... 11
4.10 Intellectual Property............................................... 12
4.11 Commercial Tort Claims.............................................. 13
SECTION 5. COVENANTS.............................................................. 13
5.1 Covenants in Credit Agreement....................................... 13
5.2 Delivery of Instruments, Certified Securities and Chattel Paper..... 13
5.3 Maintenance of Insurance............................................ 13
5.4 Payment of Obligations.............................................. 14
5.5 Maintenance of Perfected Security Interest; Further Documentation... 14
5.6 Changes in Locations, Name, etc..................................... 14
5.7 Notices............................................................. 15
5.8 Investment Property................................................. 15
5.9 Receivables......................................................... 16
5.10 Intellectual Property............................................... 17
SECTION 6. REMEDIAL PROVISIONS.................................................... 18
6.1 Certain Matters Relating to Receivables............................. 18
6.2 Communications with Obligors; Grantors Remain Liable................ 19
</TABLE>
i
<PAGE>
<TABLE>
Page
----
<S> <C> <C>
6.3 Pledged Stock....................................................... 19
6.4 Proceeds to be Turned Over To Administrative Agent.................. 20
6.5 Application of Proceeds............................................. 20
6.6 Code and Other Remedies............................................. 21
6.7 Registration Rights................................................. 22
6.8 Waiver; Deficiency.................................................. 23
SECTION 7. THE ADMINISTRATIVE AGENT............................................... 23
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc......... 23
7.2 Duty of Administrative Agent........................................ 24
7.3 Execution of Financing Statements................................... 25
7.4 Authority of Administrative Agent................................... 25
SECTION 8. MISCELLANEOUS.......................................................... 25
8.1 Amendments in Writing............................................... 25
8.2 Notices............................................................. 25
8.3 No Waiver by Course of Conduct; Cumulative Remedies................. 26
8.4 Enforcement Expenses; Indemnification............................... 26
8.5 Successors and Assigns.............................................. 26
8.6 Set-Off............................................................. 26
8.7 Counterparts........................................................ 27
8.8 Severability........................................................ 27
8.9 Section Headings.................................................... 27
8.10 Integration......................................................... 27
8.11 GOVERNING LAW....................................................... 27
8.12 Submission To Jurisdiction; Waivers................................. 27
8.13 Acknowledgements.................................................... 28
8.14 Additional Grantors................................................. 28
8.15 Releases............................................................ 28
8.16 WAIVER OF JURY TRIAL................................................ 29
</TABLE>
SCHEDULES
- ---------
Schedule 1 Notice Addresses
Schedule 2 Investment Property
Schedule 3 Perfection Matters
Schedule 4 Jurisdictions of Organization and Chief Executive Offices
Schedule 5 Inventory and Equipment Locations
Schedule 6 Intellectual Property
Schedule 7 Contracts
Schedule 8 Government Contracts
Schedule 9 Commercial Tort Claims
ii
<PAGE>
GUARANTEE AND COLLATERAL AGREEMENT, dated as of May 5, 1998, made by
each of the signatories hereto (together with any other entity that may become a
party hereto as provided herein, the "Grantors"), in favor of General Electric
--------
Capital Corporation, as Administrative Agent (in such capacity, the
"Administrative Agent") for the banks and other financial institutions (the
- ---------------------
"Lenders") from time to time parties to the Credit Agreement, dated as of May 5,
- --------
1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Alliance Laundry Holdings LLC ("Holdings"), Alliance
- ----------------- --------
Laundry Systems LLC (the "Borrower"), the Lenders, Lehman Brothers, Inc., as
--------
Arranger, Lehman Commercial Paper Inc., as Syndication Agent, and the
Administrative Agent.
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make extensions of credit to the Borrower upon the terms and subject
to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of companies
that includes each other Grantor;
WHEREAS, the proceeds of the extensions of credit under the Credit
Agreement will be used in part to enable the Borrower to make valuable transfers
to one or more of the other Grantors in connection with the operation of their
respective businesses;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective extensions of credit to the Borrower under the Credit
Agreement that the Grantors shall have executed and delivered this Agreement to
the Administrative Agent for the benefit of the Lenders and the Agents;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1 Definitions. (a) Unless otherwise defined herein, terms defined
-----------
in the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement, and the following terms are used herein as defined in the
New York UCC: Account, Certificated Security, Chattel Paper, Document,
Equipment, Farm Products, Instrument, Inventory and Investment Property.
(b) The following terms shall have the following meanings:
<PAGE>
2
"Agreement": this Guarantee and Collateral Agreement, as the same may
---------
be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
--------------------
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender (or, in the case of any Hedge Agreement referred to
below, any Affiliate of any Lender), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement,
this Agreement, the other Loan Documents, any Letter of Credit or any Hedge
Agreement entered into by the Borrower with any Lender (or any Affiliate of
any Lender) or any other document made, delivered or given by any Loan
Party in connection therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that
are required to be paid by the Borrower pursuant to the terms of any of the
foregoing agreements).
"Collateral": as defined in Section 3.
----------
"Collateral Account": any collateral account established by the
------------------
Administrative Agent as provided in Section 6.1 or 6.4.
"Commercial Tort Claim": as defined in the Uniform Commercial Code of
---------------------
any applicable jurisdiction and, in any event, including, without
limitation, any claim arising in tort if the claim is generally assignable
under applicable law and (a) the claimant is an organization or (b) the
claimant is an individual, the claim does not include damages arising out
of bodily injury to or the death of an individual and the claim arose in
the course of the claimant's business or profession. It is understood that
no Grantor shall be required to perfect a security interest in any
Commercial Tort Claim owned by it except to the extent such security
interest may be perfected by filing a financing statement under the Uniform
Commercial Code as in effect in the applicable jurisdiction.
"Contracts": the contracts and agreements listed in Schedule 7, as
--------- ----------
the same may be amended, supplemented or otherwise modified from time to
time, including, without limitation, (i) all rights of any Grantor to
receive moneys due and to become due to it thereunder or in connection
therewith, (ii) all rights of any Grantor to damages arising thereunder and
(iii) all rights of any Grantor to perform and to exercise all remedies
thereunder.
"Copyrights": (i) all copyrights arising under the laws of the United
----------
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
----------
recordings thereof, and all applications in connection therewith,
<PAGE>
3
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
------------------
licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
----------
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.
"Deposit Account": as defined in the Uniform Commercial Code of any
---------------
applicable jurisdiction and, in any event, including, without limitation,
any demand, time, savings, passbook or like account maintained with a
depositary institution.
"Foreign Subsidiary": any Subsidiary organized under the laws of any
------------------
jurisdiction outside the United States of America.
"Foreign Subsidiary Voting Stock": the voting Capital Stock of any
-------------------------------
Foreign Subsidiary.
"General Intangibles": all "general intangibles" as such term is
-------------------
defined in Section 9-106 of the New York UCC and, in any event, including,
without limitation, with respect to any Grantor, all contracts, leases,
licenses, agreements, instruments and indentures in any form, and portions
thereof, to which such Grantor is a party or under which such Grantor has
any right, title or interest or to which such Grantor or any property of
such Grantor is subject, as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (i) all
rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of such Grantor to
damages arising thereunder and (iii) all rights of such Grantor to perform
and to exercise all remedies thereunder, in each case to the extent the
grant by such Grantor of a security interest pursuant to this Agreement in
its right, title and interest in such contract, agreement, instrument or
indenture is not prohibited by such contract, lease, license, agreement,
instrument or indenture without the consent of any other party thereto,
would not give any other party to such contract, lease, license, agreement,
instrument or indenture the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents) or is not prohibited by law; provided,
--------
that the foregoing limitation shall not affect, limit, restrict or impair
the grant by such Grantor of a security interest pursuant to this Agreement
in any Receivable or any money or other amounts due or to become due under
any such contract, agreement, instrument or indenture to the extent
permitted by applicable law.
"Guarantor Obligations": with respect to any Guarantor, all
---------------------
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2)
or any other Loan Document to which such Guarantor is a party, in each case
whether on account of guarantee obligations, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to
<PAGE>
4
the Lenders that are required to be paid by such Guarantor pursuant to the
terms of this Agreement or any other Loan Document).
"Guarantors": the collective reference to each Grantor other than the
----------
Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps, caps
----------------
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the
Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.
"Intercompany Note": any promissory note evidencing loans made by any
-----------------
Grantor to Holdings or any of its Subsidiaries.
"Investment Property": the collective reference to (a) all
-------------------
"investment property" as such term is defined in Section 9-115 of the New
York UCC in effect on the date hereof or at any time hereafter (other than
any Foreign Subsidiary Voting Stock excluded from the definition of
"Pledged Stock") and (b) whether or not constituting "investment property"
as so defined, all Pledged Notes and all Pledged Stock.
"Issuers": the collective reference to each issuer of any Investment
-------
Property pledged hereunder.
"New York UCC": the Uniform Commercial Code as from time to time in
------------
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
-----------
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.
"Patents": (i) all letters patent of the United States, any other
-------
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in Schedule 6, (ii) all
----------
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in Schedule
--------
6, and (iii) all rights to obtain any reissues or extensions of the
-
foregoing.
"Patent License": all agreements, whether written or oral, providing
--------------
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
----------
<PAGE>
5
"Pledged Notes": all promissory notes listed on Schedule 2, all
------------- ----------
Intercompany Notes at any time issued to any Grantor and all other
promissory notes issued to or held by any Grantor (including promissory
notes issued in connection with loans or advances made by any Grantor to
its customers but excluding promissory notes issued in connection with
extensions of trade credit by any Grantor in the ordinary course of
business).
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
------------- ----------
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Person that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect; provided that in no event shall more than 65% of the total
outstanding Foreign Subsidiary Voting Stock of any Foreign Subsidiary be
required to be pledged hereunder.
"Proceeds": all "proceeds" as such term is defined in Section 9-
--------
306(1) of the New York UCC and, in any event, shall include, without
limitation, all dividends and other income from the Investment Property,
collections thereon and distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
----------
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account), to the extent such right is
owned by such Grantor. A Receivable shall not be considered to be owned by
a Grantor if it has been transferred by such Grantor in a transaction which
is intended to constitute a sale or which results in derecognition of such
Receivable from the financial statements of such Grantor.
"Securities Act": the Securities Act of 1933, as amended.
--------------
"Trademarks": (i) all trademarks, trade names, corporate names,
----------
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in Schedule 6, and (ii) the
----------
right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
-----------------
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in Schedule 6.
----------
1.2 Other Definitional Provisions. (a) The words "hereof,"
-----------------------------
"herein", "hereto" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section and Schedule references are to this
Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
<PAGE>
6
(c) Where the context requires herein, terms relating to the
Collateral or any part thereof, when used in relation to a Grantor, shall refer
to such Grantor's Collateral or the relevant part thereof.
(d) Where the context requires, any Hedge Agreement entered into by
any Grantor with any Lender or any Affiliate of any Lender shall, for purposes
of this Agreement, be a "Loan Document" and any such Affiliate of a Lender
-------------
shall, for purposes of this Agreement, be a "Lender" for purposes of this
------
Agreement.
(e) The Agents and the Arranger are collectively referred to herein
as the "Agents".
SECTION 2. GUARANTEE
2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
---------
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Agents and the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by the Borrower when due (whether at the stated
maturity, by acceleration or otherwise) of the Borrower Obligations.
(b) Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of each Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by such Guarantor under applicable federal and state laws relating to the
insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent, any other Agent
or any Lender hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall have been terminated, notwithstanding that from time to time
during the term of the Credit Agreement the Borrower may be free from any
Borrower Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any other
guarantor or any other Person or received or collected by any Agent or any
Lender from the Borrower, any of the Guarantors, any other guarantor or any
other Person by virtue of any action or proceeding or any set-off or
appropriation or application at any time or from time to time in reduction of or
in payment of the Borrower Obligations shall be deemed to modify, reduce,
release or otherwise affect the liability of any Guarantor hereunder which
shall, notwithstanding any such payment (other than any payment made in respect
of the Borrower Obligations or any payment received or collected in respect of
the Borrower Obligations), remain liable for the Borrower Obligations up to the
maximum liability of such Guarantor hereunder until the
<PAGE>
7
Borrower Obligations are paid in full, no Letter of Credit shall be outstanding
and the Commitments are terminated.
2.2 Right of Contribution. Each Subsidiary Guarantor hereby agrees
---------------------
that to the extent that a Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Subsidiary Guarantor's right of contribution shall be
subject to the terms and conditions of Section 2.3. The provisions of this
Section 2.2 shall in no respect limit the obligations and liabilities of any
Subsidiary Guarantor to the Agents and the Lenders, and each Subsidiary
Guarantor shall remain liable to the Agents and the Lenders for the full amount
guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
--------------
Guarantor hereunder or any set-off or application of funds of any Guarantor by
any Agent or any Lender, no Guarantor shall be entitled to be subrogated to any
of the rights of any Agent or any Lender against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by any
Agent or any Lender for the payment of the Borrower Obligations, nor shall any
Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by such Guarantor
hereunder, until all amounts owing to the Agents and the Lenders by the Borrower
on account of the Borrower Obligations are paid in full, no Letter of Credit
shall be outstanding and the Commitments are terminated. If any amount shall be
paid to any Guarantor on account of such subrogation rights at any time when the
Commitments shall not have terminated, any Letter of Credit shall be outstanding
or any amounts owing in respect of the Borrower Obligations shall not have been
paid in full, such amount shall be held by such Guarantor in trust for the
Agents and the Lenders, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly indorsed
by such Guarantor to the Administrative Agent, if required), to be applied
against the Borrower Obligations, whether matured or unmatured, in such order as
the Administrative Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations. Each
---------------------------------------------------------
Guarantor shall remain obligated hereunder notwithstanding that, without any
reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by any Agent or any Lender may be rescinded by such Agent or
such Lender and any of the Borrower Obligations continued, and the Borrower
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
any Agent or any Lender, and the Credit Agreement and the other Loan Documents
and any other documents executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Administrative Agent (or the requisite Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by any Agent or any Lender for the payment of the
Borrower Obligations may be sold, exchanged, waived, surrendered or released.
No Agent or Lender shall have any obligation to protect, secure, perfect or
insure any Lien at any time held by it as security for the Borrower Obligations
or for the guarantee contained in this Section 2 or any property subject
thereto.
<PAGE>
8
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by any Agent or any
Lender upon the guarantee contained in this Section 2 or acceptance of the
guarantee contained in this Section 2; the Borrower Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 2; and all dealings between the Borrower and any of
the Guarantors, on the one hand, and the Agents and the Lenders, on the other
hand, likewise shall be conclusively presumed to have been had or consummated in
reliance upon the guarantee contained in this Section 2. Each Guarantor waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Borrower or any of the Guarantors with respect to the
Borrower Obligations. Each Guarantor understands and agrees that the guarantee
contained in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
any Agent or any Lender, (b) any defense, set-off or counterclaim (other than a
defense of payment or performance) which may at any time be available to or be
asserted by the Borrower or any other Person against any Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower from the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, any
Agent or any Lender may, but shall be under no obligation to, make a similar
demand on or otherwise pursue such rights and remedies as it may have against
the Borrower, any other Guarantor or any other Person or against any collateral
security or guarantee for the Borrower Obligations or any right of offset with
respect thereto, and any failure by any Agent or any Lender to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Agent or any Lender against any Guarantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
-------------
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by any Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
--------
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at the
Payment Office specified in the Credit Agreement.
<PAGE>
9
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers as collateral security to
the Administrative Agent, and hereby grants to the Administrative Agent, for the
ratable benefit of the Agents and the Lenders, a security interest in, all of
the following property now owned or at any time hereafter acquired by such
Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"), as
----------
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Commercial Tort Claims;
(d) all Contracts;
(e) all Deposit Accounts;
(f) all Documents;
(g) all Equipment;
(h) all General Intangibles;
(i) all Instruments;
(j) all Intellectual Property;
(k) all Inventory;
(l) all Investment Property;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing;
provided that no Lien shall be granted in any Property upon which a Lien is not
- --------
required to be granted pursuant to Section 6.10 of the Credit Agreement.
<PAGE>
10
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to each Agent and each Lender that:
4.1 Representations in Credit Agreement . In the case of each
------------------------------------
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which representations and warranties is
hereby incorporated herein by reference, are true and correct, and each Agent
and each Lender shall be entitled to rely on each of them as if they were fully
set forth herein, provided that each reference in each such representation and
--------
warranty to the Borrower's knowledge shall, for the purposes of this Section
4.1, be deemed to be a reference to such Guarantor's knowledge.
4.2 No Other Liens. Except for the security interest granted to the
--------------
Administrative Agent for the ratable benefit of the Agents and the Lenders
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, all of such Grantor's Collateral is free and
clear of any and all Liens or claims of others.
4.3 Perfected First Priority Liens. The security interests granted
------------------------------
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other documents
----------
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the U.C.C. Filing Collateral in favor of the Administrative
Agent, for the ratable benefit of the Agents and the Lenders, as collateral
security for such Grantor's Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting to
purchase any such Collateral from such Grantor and (b) are prior to all other
Liens on such Collateral other than Liens permitted under Section 7.3 of the
Credit Agreement (except Section 7.3(j)).
4.4 Chief Executive Office. On the date hereof, such Grantor's
----------------------
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
----------
4.5 Inventory and Equipment. On the date hereof, such Grantor's
-----------------------
Inventory and Equipment (other than motor vehicles and mobile goods) are kept at
the locations listed on Schedule 5.
----------
4.6 Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
4.7 Investment Property. (a) The shares of Pledged Stock pledged
-------------------
by such Grantor hereunder constitute all the issued and outstanding shares of
all classes of the Capital Stock of each Issuer (other than Alliance Commercial
Appliances Receivables LLC and Alliance Commercial Appliances Finance LLC) owned
by such Grantor or, in the case of Foreign Subsidiary Voting Stock, if less, 65%
of the outstanding Foreign Subsidiary Voting Stock of each relevant Issuer.
<PAGE>
11
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) To the best of such Grantor's knowledge, each of the Pledged
Notes constitutes the legal, valid and binding obligation of the obligor with
respect thereto, enforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has good
and marketable title to, the Investment Property pledged by it hereunder, free
of any and all Liens or options in favor of, or claims of, any other Person,
except the security interest created by this Agreement and other Liens permitted
under Section 7.3 of the Credit Agreement (except Section 7.3(j)).
4.8 Receivables. (a) No amount payable to such Grantor under or in
-----------
connection with any Receivable is evidenced by any Instrument or Chattel Paper
(to the extent the aggregate amount of such Instruments and Chattel Paper
exceeds $100,000) which has not been delivered to the Administrative Agent,
except for Receivables which such Grantor expects to transfer within 90 days of
the date of the origination of such Receivables pursuant to a Permitted
Receivables Financing.
(b) Except as set forth on Schedule 8, as of the date hereof, none of
----------
the obligors on any Receivables is a Governmental Authority.
(c) The amounts represented by such Grantor to the Agents the Lenders
from time to time as owing to such Grantor in respect of the Receivables will at
such times be accurate in all material respects.
4.9 Contracts. (a) No consent of any party (other than such
---------
Grantor) to any Contract is required, or purports to be required, in connection
with the execution, delivery and performance of this Agreement.
(b) Each Contract is in full force and effect and constitutes a valid
and legally enforceable obligation of the Grantors party thereto, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(c) No material consent or material authorization of, filing with, or
other act by or in respect of, any Governmental Authority is required in
connection with the execution, delivery, performance, validity or enforceability
of any of the Contracts by any Grantor party thereto other than those which have
been duly obtained, made or performed, are in full force and effect and do not
subject the scope of any such Contract to any material adverse limitation,
either specific or general in nature.
(d) As of the Closing Date, neither such Grantor nor (to the best of
such Grantor's knowledge) any of the other parties to the Contracts is in
default in the performance or
<PAGE>
12
observance of any of the terms thereof in any manner that, in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(e) The right, title and interest of such Grantor in, to and under
the Contracts are not subject to any defenses, offsets, counterclaims or claims
that, in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(f) As of the date hereof, such Grantor has delivered to the
Administrative Agent a complete and correct copy of each Contract, including all
amendments, supplements and other modifications thereto.
(g) No amount payable to such Grantor under or in connection with any
Contract is evidenced by any Instrument or Chattel Paper (to the extent the
aggregate amount of such Instruments and Chattel Paper exceeds $100,000) which
has not been delivered to the Administrative Agent.
(h) None of the parties to any Contract is a Governmental Authority.
4.10 Intellectual Property. (a) Schedule 6 lists all registered
--------------------- ----------
Intellectual Property owned by such Grantor in its own name on the date hereof.
(b) On the date hereof, all material Intellectual Property owned by
such Grantor is valid, subsisting, unexpired and enforceable, has not been
abandoned and, to such Grantor's knowledge, does not infringe the intellectual
property rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof, none of
----------
the material Intellectual Property used by such Grantor in its business is the
subject of any licensing or franchise agreement pursuant to which such Grantor
is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would directly limit, cancel or question the
validity of, or such Grantor's rights in, any Intellectual Property in any
respect that could reasonably be expected to have a Material Adverse Effect.
(e) No action or proceeding is pending, or, to the knowledge of such
Grantor, threatened, on the date hereof (i) seeking to limit, cancel or question
the validity of any Intellectual Property owned by such Grantor or such
Grantor's ownership interest therein, and (ii) which, if adversely determined,
would have a material adverse effect on the value of any Intellectual Property
owned by such Grantor.
4.11 Commercial Tort Claims. Schedule 9 is a complete and correct
---------------------- ----------
description of all Commercial Tort Claims owned by such Grantor on the date
hereof.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Agents and the Lenders
that, from and after the date of this Agreement until the Obligations shall have
been paid in full, no Letter of Credit shall be outstanding and the Commitments
shall have terminated:
<PAGE>
13
5.1 Covenants in Credit Agreement. In the case of each Guarantor,
-----------------------------
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken, as the case may be, so
that no Default or Event of Default is caused by the failure to take such action
or to refrain from taking such action by such Guarantor or any of its
Subsidiaries.
5.2 Delivery of Instruments, Certified Securities and Chattel Paper.
---------------------------------------------------------------
Except as provided in Section 4.8, if any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument,
Certificated Security or Chattel Paper (to the extent that the aggregate amount
of such Chattel Paper exceeds $100,000), such Instrument, Certificated Security
or Chattel Paper shall be immediately delivered to the Administrative Agent,
duly indorsed in a manner satisfactory to the Administrative Agent, to be held
as Collateral pursuant to this Agreement.
5.3 Maintenance of Insurance. (a) Such Grantor will maintain, with
------------------------
financially sound and reputable companies, insurance policies (i) insuring the
Inventory and Equipment against loss by fire, explosion, theft and such other
casualties as may be reasonably satisfactory to the Administrative Agent and
(ii) to the extent requested by the Administrative Agent, insuring such Grantor,
the Agents and the Lenders against liability for personal injury and property
damage relating to such Inventory and Equipment, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the Administrative Agent.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such insurance
as the Administrative Agent may from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
----------------------
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and governmental charges or levies imposed
upon the Collateral, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect to
the Collateral, except (a) that no such charge need be paid if the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been
provided on the books of such Grantor or (b) where the failure to pay, discharge
or otherwise satisfy such obligations could not, individually or in the
aggregate, reasonably be expected to result in the sale, forfeiture or loss of
any material portion of the Collateral or any interest therein, other than as a
result of a Lien permitted under Section 7.3 of the Credit Agreement.
5.5 Maintenance of Perfected Security Interest; Further
---------------------------------------------------
Documentation. (a) Such Grantor shall maintain the security interest created
by this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
<PAGE>
14
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the assets and property of such Grantor and such other reports in
connection therewith as the Administrative Agent may reasonably request, all in
reasonable detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, (i) filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby and
(ii) in the case of Investment Property, Deposit Accounts and any other relevant
Collateral, taking any actions necessary to enable the Administrative Agent to
obtain "control" (within the meaning of the applicable Uniform Commercial Code)
with respect thereto, provided that no such action shall be required with
--------
respect to Deposit Accounts unless an Event of Default shall have occurred and
be continuing.
5.6 Changes in Locations, Name, etc. Such Grantor will not, except
--------------------------------
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain the
validity, perfection and priority of the security interests provided for herein
and (b) if applicable, a written supplement to Schedule 5 or Schedule 4, as the
----------
case may be, showing any additional location at which Inventory or Equipment
shall be kept or any change in its jurisdiction of organization or the location
of its chief executive office or sole place of business:
(i) permit any of the Inventory or Equipment to be kept at a location
other than those listed on Schedule 5 and other than temporary transfers
----------
(for a period not to exceed three months in any event) of Equipment from
any location set forth in Schedule 5 to another location if done for the
----------
limited purpose of repairing, refurbishing, or overhauling such Equipment
in the ordinary course of business;
(ii) change its jurisdiction of organization or the location of its
chief executive office or sole place of business from that referred to in
Section 4.4; or
(iii) change its name, identity or organizational structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Administrative Agent and
-------
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Administrative Agent to exercise any of its
remedies hereunder; and
<PAGE>
15
(b) the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Investment Property. (a) If such Grantor shall become entitled
-------------------
to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Agents and the Lenders, hold the same in trust for the
Agents and the Lenders and deliver the same forthwith to the Administrative
Agent in the exact form received, duly indorsed by such Grantor to the
Administrative Agent, if required, together with an undated stock power covering
such certificate duly executed in blank by such Grantor and with, if the
Administrative Agent so requests, signature guaranteed, to be held by the
Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer (other
than a liquidation or dissolution permitted under the Credit Agreement) shall be
paid over to the Administrative Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any distribution of capital
shall be made on or in respect of the Investment Property or any property shall
be distributed upon or with respect to the Investment Property, in either case,
pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, the property so distributed
shall, unless otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of the Investment Property
shall be received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Agents and the Lenders, segregated from other funds of
such Grantor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
such Grantor will not (i) vote to enable, or take any other action to permit,
any Issuer to issue any stock or other equity securities of any nature or to
issue any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer
unless such stock or other securities are subject to a perfected security
interest hereunder, (ii) sell, assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the Investment Property or the Proceeds
thereof (except pursuant to a transaction expressly permitted by the Credit
Agreement), (iii) create, incur or permit to exist any Lien or option in favor
of, or any claim of any Person with respect to, any of the Investment Property
or the Proceeds thereof, or any interest therein, except for the security
interests created by this Agreement or as otherwise permitted under Section 7.3
of the Credit Agreement or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Administrative Agent to
sell, assign or transfer any of the Investment Property or the Proceeds thereof,
other than the Senior Subordinated Note Indenture (or any other indenture
governing Indebtedness permitted under Section 7.2(f) of the Credit Agreement)
or any agreement entered into in connection with a sale of the Capital Stock of
any Subsidiary permitted under the Credit Agreement.
<PAGE>
16
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Investment Property issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in Section
5.8(a) with respect to the Investment Property issued by it, (iii) the terms of
Sections 6.3(c) and 6.7 shall apply to it, mutatis mutandis, with respect to all
------- --------
actions that may be required of it pursuant to Section 6.3(c) or 6.7 with
respect to the Investment Property issued by it and (iv) it will comply with
instructions originated by the Administrative Agent with respect to Investment
Property issued by it without any further consent of the owner thereof.
(d) No Grantor shall permit any other Person (other than the
Administrative Agent) to exercise or obtain "control" (within the meaning of
Section 8-106 of the New York UCC in effect on the date hereof or at any time
hereafter) in connection with any Lien of any of its Investment Property
(including Cash Equivalents) in connection with the grant of a Lien by such
Grantor to or for the benefit of such Person or any other Person (other than the
Administrative Agent) except as otherwise permitted under Section 7.3 of the
Credit Agreement.
5.9 Receivables. (a) Other than in the ordinary course of business
-----------
consistent with its past practice, such Grantor will not (i) grant any extension
of the time of payment of any material Receivable, (ii) compromise or settle any
material Receivable for a materially lesser amount thereof, (iii) release,
wholly or partially in any material respect, any Person liable for the payment
of any material Receivable, (iv) allow any material credit or discount
whatsoever on any material Receivable or (v) amend, supplement or modify any
material Receivable in any manner that could materially adversely affect the
value thereof.
(b) Such Grantor will deliver to the Administrative Agent a copy of
each material demand, notice or document received by it that questions or calls
into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10 Intellectual Property. (a) Such Grantor (either itself or
---------------------
through licensees) will (i) subject to such Grantor's reasonable business
judgment, continue to use each material Trademark on each and every trademark
class of goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such Trademark in full
force free from any claim of abandonment for non-use, (ii) subject to such
Grantor's reasonable business judgment, maintain as in the past the quality of
products and services offered under such Trademark, (iii) use such Trademark
with the appropriate notice of registration and all other notices and legends
required by applicable Requirements of Law, (iv) not adopt or use any mark which
is confusingly similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Agents and the Lenders,
shall obtain a perfected security interest in such mark pursuant to this
Agreement, and (v) subject to such Grantor's reasonable business judgment, not
(and not permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby such Trademark may become invalidated or impaired in
any way.
(b) Such Grantor (either itself or through licensees) will not do any
act, or omit to do any act, whereby any material Patent may become forfeited,
abandoned or dedicated to the public.
<PAGE>
17
(c) Subject to such Grantor's reasonable business judgment, such
Grantor (either itself or through licensees) (i) will employ each material
Copyright and (ii) will not (and will not permit any licensee or sublicensee
thereof to) do any act or knowingly omit to do any act whereby any material
portion of the Copyrights may become invalidated or otherwise impaired. Subject
to such Grantor's reasonable business judgment, such Grantor will not (either
itself or through licensees) do any act whereby any material portion of the
Copyrights may fall into the public domain.
(d) Such Grantor (either itself or through licensees) will not do any
act that knowingly uses any material Intellectual Property to infringe the
intellectual property rights of any other Person.
(e) Such Grantor will notify the Administrative Agent and the Lenders
promptly if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(f) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within ten Business Days after the last day
of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
General Intangibles of such Grantor relating thereto or represented thereby.
(g) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(h) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the
Administrative Agent after it learns thereof and in its reasonable business
judgment sue for infringement, misappropriation or dilution, to seek injunctive
relief where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution.
<PAGE>
18
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables. (a) After the
---------------------------------------
occurrence and during the continuation of any Event of Default, the
Administrative Agent shall have the right to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers
advisable, and each Grantor shall furnish all such assistance and information as
the Administrative Agent may require in connection with such test verifications.
At any time and from time to time, upon the Administrative Agent's request and
at the expense of the relevant Grantor, such Grantor shall cause independent
public accountants or others satisfactory to the Administrative Agent to furnish
to the Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, and the Administrative Agent may curtail or
terminate said authority at any time after the occurrence and during the
continuance of an Event of Default. If required by the Administrative Agent at
any time after the occurrence and during the continuance of an Event of Default,
any payments of Receivables, when collected by any Grantor, (i) shall be
forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account maintained under the
sole dominion and control of the Administrative Agent, subject to withdrawal by
the Administrative Agent for the account of the Agents and the Lenders only as
provided in Section 6.5, and (ii) until so turned over, shall be held by such
Grantor in trust for the Agents and the Lenders, segregated from other funds of
such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied
by a report identifying in reasonable detail the nature and source of the
payments included in the deposit.
(c) At the Administrative Agent's request, each Grantor shall deliver
to the Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Receivables,
including, without limitation, all original orders, invoices and shipping
receipts.
6.2 Communications with Obligors; Grantors Remain Liable. (a) The
----------------------------------------------------
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables that the Receivables have been assigned
to the Administrative Agent for the ratable benefit of the Agents and the
Lenders and that payments in respect thereof shall be made directly to the
Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither any
Agent nor any Lender shall have any obligation or liability under any Receivable
(or any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by any Agent or any Lender of any payment relating
thereto, nor shall
<PAGE>
19
any Agent or any Lender be obligated in any manner to perform any of the
obligations of any Grantor under or pursuant to any Receivable (or any agreement
giving rise thereto) to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party thereunder, to present or file any claim, or to take
any action to enforce any performance or to collect the payment of any amounts
which may have been assigned to it or to which it may be entitled at any time or
times.
6.3 Pledged Stock. (a) Unless an Event of Default shall have
-------------
occurred and be continuing and the Administrative Agent shall have given notice
to the relevant Grantor of the Administrative Agent's intent to exercise its
corresponding rights pursuant to Section 6.3(b), each Grantor shall be permitted
to receive all cash dividends and distributions paid in respect of the Pledged
Stock and other Investment Property and all payments made in respect of the
Pledged Notes, in each case paid in the normal course of business of the
relevant Issuer and consistent with past practice, to the extent permitted in
the Credit Agreement, and to exercise all voting and corporate rights with
respect to the Investment Property; provided, however, that no vote shall be
-------- -------
cast or corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would impair the Collateral or which
would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the
Obligations in the order set forth in Section 6.5 and (ii) any or all of the
Investment Property shall be registered in the name of the Administrative Agent
or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such
Investment Property at any meeting of shareholders, partners or members of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange and subscription and any other rights, privileges or
options pertaining to such Investment Property as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Investment Property upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the
organizational structure of any Issuer, or upon the exercise by any Grantor or
the Administrative Agent of any right, privilege or option pertaining to such
Investment Property, and in connection therewith, the right to deposit and
deliver any and all of the Investment Property with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for property actually received by it, but the Administrative
Agent shall have no duty to any Grantor to exercise any such right, privilege or
option and shall not be responsible for any failure to do so or delay in so
doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of any
Investment Property pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any
<PAGE>
20
dividends or other payments with respect to the Investment Property directly to
the Administrative Agent.
6.4 Proceeds to be Turned Over To Administrative Agent. In addition
--------------------------------------------------
to the rights of the Administrative Agent and the Lenders specified in Section
6.1 with respect to payments of Receivables, if an Event of Default shall occur
and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and other near-cash items shall be held by such Grantor in trust for the
Agents and the Lenders, segregated from other funds of such Grantor, and shall,
forthwith upon receipt by such Grantor, be turned over to the Administrative
Agent in the exact form received by such Grantor (duly indorsed by such Grantor
to the Administrative Agent, if required). All Proceeds received by the
Administrative Agent hereunder shall be held by the Administrative Agent in a
Collateral Account maintained under its sole dominion and control. All Proceeds
while held by the Administrative Agent in a Collateral Account (or by such
Grantor in trust for the Administrative Agent and the Lenders) shall continue to
be held as collateral security for all the Obligations and shall not constitute
payment thereof until applied as provided in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed upon
-----------------------
by the Borrower and the Administrative Agent or, if an Event of Default shall
have occurred and be continuing, at any time at the Administrative Agent's
election, the Administrative Agent may apply all or any part of Proceeds
constituting Collateral, whether or not held in any Collateral Account, and any
proceeds of the guarantee set forth in Section 2, in payment of the Obligations
in the following order:
First, to pay incurred and unpaid fees and expenses of the
-----
Administrative Agent under the Loan Documents;
Second, to the Administrative Agent, for application by it towards
------
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Agents and the Lenders according to the
--- ----
amounts of the Obligations then due and owing and remaining unpaid to the
Agents and the Lenders;
Third, to the Administrative Agent, for application by it towards
-----
prepayment of the Obligations, pro rata among the Agents and Lenders
--- ----
according to the amounts of the Obligations then held by the Agents and the
Lenders; and
Fourth, any balance of such Proceeds remaining after the then
------
outstanding Obligations shall have been paid in full, no Letters of Credit
shall be outstanding and the Commitments shall have terminated shall be
paid over to the Borrower or to whomsoever may be lawfully entitled to
receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
-----------------------
be continuing, the Administrative Agent, on behalf of the Agents and the
Lenders, may exercise, in addition to all other rights and remedies granted to
them in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the New York UCC or any other applicable law. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon any
Grantor or any other Person (all
<PAGE>
21
and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Any Agent or any Lender shall have the right upon
any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in any Grantor, which right
or equity is hereby waived and released. Each Grantor further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it available
to the Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at such Grantor's premises or elsewhere. The
Administrative Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 6.6, after deducting all reasonable costs and expenses
of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of the Agents and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment in
whole or in part of the Obligations, in such order as the Administrative Agent
may elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the New York UCC, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against any Agent or any Lender arising out of the
exercise by it of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition.
6.7 Registration Rights. (a) If the Administrative Agent shall
-------------------
determine to exercise its right to sell any or all of the Pledged Stock pursuant
to Section 6.6, and if in the opinion of the Administrative Agent it is
necessary or advisable to have the Pledged Stock, or that portion thereof to be
sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may
be, in the opinion of the Administrative Agent, necessary or advisable to
register the Pledged Stock, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its best efforts to cause the
registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to
cause such Issuer to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative Agent shall designate
and to make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the provisions
of Section 11(a) of the Securities Act.
<PAGE>
22
(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.
(c) Each Grantor agrees to use its best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 6.7 valid and
binding and in compliance with any and all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any of the covenants contained in
this Section 6.7 will cause irreparable injury to the Agents and the Lenders,
that the Agents and the Lenders have no adequate remedy at law in respect of
such breach and, as a consequence, that each and every covenant contained in
this Section 6.7 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that no
Event of Default has occurred under the Credit Agreement.
6.8 Waiver; Deficiency. Each Grantor waives and agrees not to assert
------------------
any rights or privileges which it may acquire under Section 9-112 of the New
York UCC. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by any
Agent or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc. (a)
-----------------------------------------------------------
Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement in each case after the occurrence and during the continuation of
an Event of Default, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or with respect to any other Collateral and
<PAGE>
23
file any claim or take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by the Administrative Agent for
the purpose of collecting any and all such moneys due under any Receivable
or with respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's security interest in such Intellectual Property and
the goodwill and general intangibles of such Grantor relating thereto or
represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof;
(iv) execute, in connection with any sale provided for in Section 6.6
or 6.7, any indorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or proceeding brought
against such Grantor with respect to any Collateral; (6) settle, compromise
or adjust any such suit, action or proceeding and, in connection therewith,
give such discharges or releases as the Administrative Agent may deem
appropriate; (7) assign any Copyright, Patent or Trademark (along with the
goodwill of the business to which any such Copyright, Patent or Trademark
pertains), throughout the world for such term or terms, on such conditions,
and in such manner, as the Administrative Agent shall in its sole
discretion determine; and (8) generally, sell, transfer, pledge and make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Administrative Agent were the
absolute owner thereof for all purposes, and do, at the Administrative
Agent's option and such Grantor's expense, at any time, or from time to
time, all acts and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the Administrative
Agent's security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
<PAGE>
24
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in connection
with actions undertaken as provided in this Section 7.1, together with interest
thereon at a rate per annum equal to the rate per annum at which interest would
then be payable on past due Revolving Credit Loans that are Base Rate Loans
under the Credit Agreement, from the date of payment by the Administrative Agent
to the date reimbursed by the relevant Grantor, shall be payable by such Grantor
to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
----------------------------
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. No Agent or Lender nor
any of their respective officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Grantor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part thereof.
The powers conferred on the Agents and the Lenders hereunder are solely to
protect the Agents' and the Lenders' interests in the Collateral and shall not
impose any duty upon any Agent or any Lender to exercise any such powers. The
Agents and the Lenders shall be accountable only for amounts that they actually
receive as a result of the exercise of such powers, and neither they nor any of
their officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross
negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402 of
---------------------------------
the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
---------------------------------
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the
<PAGE>
25
Lenders with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
---------------------
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 10.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
-------
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 10.2 of the Credit Agreement; provided that any such
--------
notice, request or demand to or upon any Guarantor (other than Holdings) shall
be addressed to such Guarantor at its notice address set forth on Schedule 1.
----------
8.3 No Waiver by Course of Conduct; Cumulative Remedies. No Agent or
---------------------------------------------------
Lender shall by any act (except by a written instrument pursuant to Section
8.1), delay, indulgence, omission or otherwise be deemed to have waived any
right or remedy hereunder or to have acquiesced in any Default or Event of
Default. No failure to exercise, nor any delay in exercising, on the part of
any Agent or any Lender, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by any Agent or any
Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which any Agent or any Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
-------------------------------------
agrees to pay or reimburse each Lender and each Agent for all its reasonable
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or otherwise enforcing or preserving any rights
under this Agreement and the other Loan Documents to which such Guarantor is a
party, including, without limitation, the reasonable fees and disbursements of
counsel (including the allocated fees and expenses of in-house counsel) to each
Lender and of counsel to each Agent.
(b) Each Guarantor agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Agents and the
Lenders harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 10.5 of the Credit Agreement.
<PAGE>
26
(d) The agreements in this Section shall survive repayment of the
Obligations and all other amounts payable under the Credit Agreement and the
other Loan Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon the
----------------------
successors and assigns of each Grantor and shall inure to the benefit of the
Agents and the Lenders and their successors and assigns; provided that no
--------
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent.
8.6 Set-Off. Each Grantor hereby irrevocably authorizes each Agent
-------
and each Lender at any time and from time to time while an Event of Default
pursuant to Section 8(a) of the Credit Agreement shall have occurred and be
continuing, without notice to such Grantor or any other Grantor, any such notice
being expressly waived by each Grantor, to set-off and appropriate and apply any
and all deposits (general or special, time or demand, provisional or final), in
any currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Agent or such Lender to or for the
credit or the account of such Grantor, or any part thereof in such amounts as
such Agent or such Lender may elect, against and on account of the obligations
and liabilities of such Grantor to such Agent or such Lender hereunder and
claims of every nature and description of such Agent or such Lender against such
Grantor, in any currency, whether arising hereunder, under the Credit Agreement,
any other Loan Document or otherwise, as such Agent or such Lender may elect,
whether or not any Agent or any Lender has made any demand for payment and
although such obligations, liabilities and claims may be contingent or
unmatured. Each Agent and each Lender shall notify such Grantor promptly of any
such set-off and the application made by it of the proceeds thereof, provided
--------
that the failure to give such notice shall not affect the validity of such set-
off and application. The rights of the Agents and each Lender under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Agents or such Lender may have.
8.7 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
----------------
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
8.10 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Grantors, the Agents and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by any Agent or any Lender relative
to subject matter hereof and thereof not expressly set forth or referred to
herein or in the other Loan Documents.
<PAGE>
27
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission To Jurisdiction; Waivers. Each Grantor hereby
-----------------------------------
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
----------------
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents to which it is a
party;
(b) no Agent or Lender has any fiduciary relationship with or duty to
any Grantor arising out of or in connection with this Agreement or any of
the other Loan Documents, and the relationship between the Grantors, on the
one hand, and the Agents and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Grantors and the Lenders.
8.14 Additional Grantors. Each Subsidiary of the Borrower that is
-------------------
required to become a party to this Agreement pursuant to Section 6.10 of the
Credit Agreement shall become
<PAGE>
28
a Grantor for all purposes of this Agreement upon execution and delivery by such
Subsidiary of an Assumption Agreement in the form of Annex 1 hereto.
8.15 Releases. (a) At such time as the Loans, the Reimbursement
--------
Obligations and the other Obligations (other than unasserted contingent
indemnity and other obligations which expressly survive the termination of the
Credit Agreement and are not then due and payable) shall have been paid in full,
the Commitments have been terminated and no Letters of Credit shall be
outstanding which have not been fully cash collateralized in accordance with the
Credit Agreement or otherwise collateralized in a manner satisfactory to the
Issuing Lender in its sole discretion, the Collateral shall be released from the
Liens created hereby, and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Administrative Agent and
each Grantor hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following
any such termination, the Administrative Agent shall deliver to such Grantor any
Collateral held by the Administrative Agent hereunder, and execute and deliver
to such Grantor such documents as such Grantor shall reasonably request to
evidence such termination.
(b) If any of the Collateral (including transfers of Receivables and
related assets in a Permitted Receivables Financing) shall be sold, transferred
or otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, such Collateral shall be automatically released from the Lien of this
Agreement and the other Loan Documents without further action on the part of any
Grantor, any Agent or the Lenders, and shall cease to constitute Collateral
hereunder, and then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Borrower, a
Subsidiary Guarantor shall be released from its obligations hereunder in the
event that all the Capital Stock of such Subsidiary Guarantor shall be sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
--------------------
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
29
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
and Collateral Agreement to be duly executed and delivered as of the date first
above written.
ALLIANCE LAUNDRY HOLDINGS LLC
By: ________________________________________
Title:
ALLIANCE LAUNDRY SYSTEMS LLC
By: ________________________________________
Title:
ALLIANCE LAUNDRY CORPORATION
By: ________________________________________
Title:
<PAGE>
Schedule 1
----------
NOTICE ADDRESSES OF GUARANTORS
<PAGE>
Schedule 2
----------
DESCRIPTION OF INVESTMENT PROPERTY
PLEDGED STOCK:
Issuer Class of Stock Stock Certificate No. No. of
- --------------------- ------------------ -------------------------- Shares
---------
PLEDGED NOTES:
Issuer Payee Principal Amount
- ------------------------- ----------------- ------------------------
<PAGE>
Schedule 3
----------
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
-------------------------------
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
----------------------------
[List all filings]
Actions with respect to Pledged Stock
-------------------------------------
Other Actions
-------------
[Describe other actions to be taken]
<PAGE>
Schedule 4
----------
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor Location
------- --------
<PAGE>
Schedule 5
----------
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
------- ---------
<PAGE>
Schedule 6
----------
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
<PAGE>
Schedule 7
----------
CONTRACTS
1. Merger Agreement.
2. All Hedge Agreements to which the Grantor is a party.
<PAGE>
Schedule 8
----------
GOVERNMENT CONTRACTS
<PAGE>
Schedule 9
----------
COMMERCIAL TORT CLAIMS
<PAGE>
ACKNOWLEDGEMENT AND CONSENT*
The undersigned hereby acknowledges receipt of a copy of the Guarantee and
Collateral Agreement, dated as of May 5, 1998 (the "Agreement"), made by the
---------
Grantors parties thereto in favor of General Electric Capital Corporation, as
Administrative Agent. The undersigned agrees for the benefit of the Agents and
the Lenders as follows:
1. The undersigned will be bound by the terms of the Agreement and will
comply with such terms insofar as such terms are applicable to the undersigned.
2. The undersigned will notify the Administrative Agent promptly in
writing of the occurrence of any of the events described in Section 5.8(a) of
the Agreement.
3. The terms of Sections 6.3(a) and 6.7 of the Agreement shall apply to
it, mutatis mutandis, with respect to all actions that may be required of it
------- --------
pursuant to Section 6.3(a) or 6.7 of the Agreement.
4. The undersigned agrees to comply with instructions originated by the
Administrative Agent with respect to Investment Property issued by it without
further consent of the owner thereof.
[NAME OF ISSUER]
By ___________________________________
Title _________________________________
Address for Notices:
_______________________________________
_______________________________________
Fax: _________________________________
__________________
* This consent is necessary only with respect to any Issuer which is not
also a Grantor.
<PAGE>
ANNEX 1 TO
GUARANTEE AND COLLATERAL AGREEMENT
----------------------------------
ASSUMPTION AGREEMENT, dated as of ________________, made by
______________________________, a ______________ (the "Additional Grantor"), in
------------------
favor of General Electric Capital Corporation, as administrative agent (in such
capacity, the "Administrative Agent") for the banks and other financial
--------------------
institutions (the "Lenders") parties to the Credit Agreement referred to below.
-------
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Alliance Laundry Systems LLC (the "Borrower"), Alliance
--------
Laundry Holdings LLC, the Lenders, the Administrative Agent Lehman Brothers
Inc., as Arranger, and Lehman Commercial Paper Inc., as Syndication Agent, have
entered into a Credit Agreement, dated as of May 5, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement");
----------------
WHEREAS, in connection with the Credit Agreement, the Borrower and
certain of its Affiliates (other than the Additional Grantor) have entered into
the Guarantee and Collateral Agreement, dated as of May 5, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Guarantee and
-------------
Collateral Agreement") in favor of the Administrative Agent for the benefit of
- --------------------
the Agents (as defined therein) and the Lenders;
WHEREAS, the Credit Agreement requires the Additional Grantor to
become a party to the Guarantee and Collateral Agreement; and
WHEREAS, the Additional Grantor has agreed to execute and deliver this
Assumption Agreement in order to become a party to the Guarantee and Collateral
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
----------------------------------
this Assumption Agreement, the Additional Grantor, as provided in Section 8.14
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Grantor thereunder with the same force
and effect as if originally named therein as a Grantor and, without limiting the
generality of the foregoing, hereby expressly assumes all obligations and
liabilities of a Grantor thereunder. The information set forth in Annex 1-A
hereto is hereby added to the information set forth in Schedules ____________**
to the Guarantee and Collateral Agreement. The Additional Grantor hereby
represents and warrants that each of the representations and warranties
contained in Section 4 of the Guarantee and Collateral Agreement is true and
correct on and as the date hereof (after giving effect to this Assumption
Agreement) with respect to such Grantor as if made on and as of such date.
_____________________
** Refer to each Schedule which needs to be supplemented.
<PAGE>
2
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
-------------
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GRANTOR]
By:_______________________________________________
Name:
Title:
<PAGE>
EXHIBIT B TO
CREDIT AGREEMENT
----------------
[FORM OF COMPLIANCE CERTIFICATE]
This Compliance Certificate is delivered to you pursuant to Section
6.2 of the Credit Agreement, dated as of May 5, 1998 (as amended, supplemented
or modified from time to time, the "Credit Agreement"), among Alliance Laundry
----------------
Holdings LLC ("Holdings"), Alliance Laundry Systems LLC (the "Borrower"), the
-------- --------
banks and other financial institutions from time to time party thereto as
lenders (the "Lenders"), Lehman Brothers, Inc., as Arranger, Lehman Commercial
-------
Paper Inc., as Syndication Agent, and General Electric Capital Corporation, as
Administrative Agent for the Lenders (in such capacity, the "Administrative
--------------
Agent"). Terms defined in the Credit Agreement and not otherwise defined herein
- -----
are used herein with the meanings so defined.
1. I am the duly elected, qualified and acting [Chief Financial
Officer] [Vice President - Finance] of the Borrower.
2. I have reviewed and are familiar with the contents of this
Certificate.
3. I have reviewed the terms of the Credit Agreement and the Loan
Documents and have made or caused to be made under my supervision, a review in
reasonable detail of the transactions and condition of the Borrower during the
accounting period covered by the financial statements attached hereto as
Attachment 1 (the "Financial Statements"). Such review did not disclose the
- ------------ --------------------
existence during or at the end of the accounting period covered by the Financial
Statements, and I have no knowledge of the existence, as of the date of this
Certificate, of any condition or event which constitutes a Default or Event of
Default [, except as set forth below].
4. Attached hereto as Attachment 2 are the computations (a) showing
------------
compliance with the covenants set forth in Sections 7.1, 7.2(q), 7.3(s), 7.5(h),
7.6(f), 7.7 and 7.8(i) of the Credit Agreement and (b) required to determine the
Applicable Margin and Commitment Fee Rate.
IN WITNESS WHEREOF, I execute this Certificate this ____ day of
__________, ____.
ALLIANCE LAUNDRY SYSTEMS LLC
By: _____________________________
Title: ________________________
<PAGE>
Attachment 2
to Exhibit B
The information described herein is as of ___________________, and pertains
to the period from ________________ ____, to ________________ ____.
[Set forth Calculations]
<PAGE>
EXHIBIT C TO
CREDIT AGREEMENT
----------------
[FORM OF CLOSING CERTIFICATE]
CLOSING CERTIFICATE
Pursuant to subsection 5.1(m) of the Credit Agreement, dated as of May
5, 1998 (the "Credit Agreement"; terms defined therein being used herein as
----------------
therein defined), among Alliance Laundry Holdings LLC ("Holdings"), Alliance
--------
Laundry Systems LLC (the "Borrower"), the Lenders parties thereto, Lehman
--------
Brothers, Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent,
and General Electric Capital Corporation, as Administrative Agent, the
undersigned [INSERT TITLE OF OFFICER] of [INSERT NAME OF COMPANY] (the
"Company") hereby certifies as follows:
-------
1. The representations and warranties of the Company set forth in
each of the Loan Documents to which it is a party or which are contained in any
certificate furnished by or on behalf of the Company pursuant to any of the Loan
Documents to which it is a party are true and correct in all material respects
on and as of the date hereof with the same effect as if made on the date hereof,
except for representations and warranties expressly stated to relate to a
specific earlier date, in which case such representations and warranties were
true and correct in all material respects as of such earlier date.
2. ___________________ is the duly elected and qualified Secretary of
the Company and the signature set forth for such officer below is such officer's
true and genuine signature.
3. No Default or Event of Default has occurred and is continuing as
of the date hereof or after giving effect to the Loans to be made on the date
hereof.
The undersigned Secretary of the Company certifies as follows:
4. There are no liquidation or dissolution proceedings pending or to
my knowledge threatened against the Company, nor has any other event occurred
adversely affecting or threatening the continued existence of the Company.
5. The Company is a [corporation duly incorporated] [limited
liability company duly formed], validly existing and in good standing under the
laws of the jurisdiction of its organization.
6. Attached hereto as Annex 1 is a true and complete copy of
-------
resolutions duly adopted by the Board of [Directors] [Managers] of the Company
on _____________, 1998; such resolutions have not in any way been amended,
modified, revoked or rescinded, have been in full force and effect since their
adoption to and including the date hereof and are now in full force and effect
and are the only proceedings of the Company now in force relating to or
affecting the matters referred to therein.
7. Attached hereto as Annex 2 is a true and complete copy of the [By-
-------
Laws] [Amended and Restated Limited Liability Company Agreement] of the Company
as in effect on the date hereof.
<PAGE>
2
8. Attached hereto as Annex 3 is a true and complete copy of the
-------
Certificate of [Incorporation] [Formation] of the Company as in effect on the
date hereof, and such certificate has not been amended, repealed, modified or
restated.
9. The following persons are now duly elected and qualified officers
of the Company holding the offices indicated next to their respective names
below, and such officers have held such offices with the Company at all times
since the date indicated next to their respective titles to and including the
date hereof, and the signatures appearing opposite their respective names below
are the true and genuine signatures of such officers, and each of such officers
is duly authorized to execute and deliver on behalf of the Company each of the
Loan Documents to which it is a party and any certificate or other document to
be delivered by the Company pursuant to the Loan Documents to which it is a
party:
Name Office Date Signature
---- ------ ---- ---------
IN WITNESS WHEREOF, the undersigned have hereunto set our names as of
the date set forth below.
__________________________ ____________________________
Name: Name:
Title: Title:
Date: _______________, 1998
<PAGE>
EXHIBIT E TO
CREDIT AGREEMENT
----------------
[FORM OF
ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of May 5, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement"), among Alliance Laundry Holdings LLC ("Holdings"), Alliance Laundry
- --------- --------
Systems LLC (the "Borrower"), the Lenders parties thereto, Lehman Brothers,
--------
Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent, and
General Electric Capital Corporation, as administrative agent for the Lenders
(in such capacity, the "Administrative Agent"). Unless otherwise defined herein,
--------------------
terms defined in the Credit Agreement and used herein shall have the meanings
given to them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "Assignor") and the
--------
Assignee identified on Schedule l hereto (the "Assignee") agree as follows:
--------
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule 1 hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
-----------------
the Credit Agreement with respect to those credit facilities contained in the
Credit Agreement as are set forth on Schedule 1 hereto (individually, an
"Assigned Facility"; collectively, the "Assigned Facilities"), in a principal
- ------------------ -------------------
amount for each Assigned Facility as set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Loan Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Holdings, the Borrower, any of their respective
Subsidiaries or any other obligor or the performance or observance by Holdings,
the Borrower, any of their respective Subsidiaries or any other obligor of any
of their respective obligations under the Credit Agreement or any other Loan
Document or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches any Notes held by it evidencing the Assigned
Facilities and (i) requests that the Administrative Agent, upon request by the
Assignee, exchange the attached Notes for a new Note or Notes payable to the
Assignee and (ii) if the Assignor has retained any interest in the Assigned
Facility, requests that the Administrative Agent exchange the attached Notes for
a new Note or Notes payable to the Assignor, in each case in amounts which
reflect the assignment being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to Sections 4.1 and 6.1 thereof and such
other documents and information as it has deemed appropriate to make
<PAGE>
2
its own credit analysis and decision to enter into this Assignment and
Acceptance; (c) agrees that it will, independently and without reliance upon the
Assignor, the Agents or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; (d) appoints and authorizes the Agents to take such action as
agent on its behalf and to exercise such powers and discretion under the Credit
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Agents by the terms
thereof, together with such powers as are incidental thereto; and (e) agrees
that it will be bound by the provisions of the Credit Agreement and will perform
in accordance with its terms all the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Lender including, if it
is organized under the laws of a jurisdiction outside the United States, its
obligation pursuant to Section 2.20(d) of the Credit Agreement.
4. Subject to receipt of any consents required under the Credit
Agreement and the payment of any processing fee required under Section 10.6(e)
of the Credit Agreement, the effective date of this Assignment and Acceptance
shall be the Effective Date of Assignment described in Schedule 1 hereto (the
"Effective Date"). Following the execution of this Assignment and Acceptance,
- ---------------
it will be delivered to the Administrative Agent for acceptance by it and
recording by the Administrative Agent pursuant to the Credit Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) [to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date] [to the Assignee whether such amounts have accrued prior to the Effective
Date or accrue subsequent to the Effective Date. The Assignor and the Assignee
shall make all appropriate adjustments in payments by the Agent for periods
prior to the Effective Date or with respect to the making of this assignment
directly between themselves].
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule 1 hereto.
<PAGE>
Schedule 1
to Assignment and Acceptance
Name of Assignor: ______________________________________________
Name of Assignee: ______________________________________________
Effective Date of Assignment: __________________________________
Credit Principal
Facility Assigned Amount Assigned Commitment Percentage Assigned1
- --------------------------- ----------------- ---------------------------------
$____________ __._____________%
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By:_______________________________ By:_____________________________
Title: Title:
Accepted [and Consented To]: [Consented To:
________________, as Administrative Agent ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________ By:_____________________________
Title: Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent
By:_____________________________
Title:]
_______________________
1. Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.
<PAGE>
TERM NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO
BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$5,800,000.00 New York, New York
May 5, 1998
FOR VALUE RECEIVED, the undersigned, ALLIANCE LAUNDRY SYSTEMS LLC, a
Delaware limited liability company (the "Borrower"), hereby unconditionally
--------
promises to pay to GENERAL ELECTRIC CREDIT CORPORATION (the "Lender") or its
------
registered assigns at the Payment Office specified in the Credit Agreement (as
hereinafter defined), in lawful money of the United States and in immediately
available funds, the principal amount of (a) FIVE MILLION EIGHT HUNDRED THOUSAND
DOLLARS ($5,800,000.00), or, if less, (b) the unpaid principal amount of the
Term Loan of the Lender outstanding under the Credit Agreement. The principal
amount shall be paid in the amounts and on the dates specified in Section 2.3 of
the Credit Agreement. The Borrower further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.15 of the
Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on continuations thereof which shall be
attached hereto and made a part hereof the date, Type and amount of the Term
Loan evidenced hereby and the date and amount of each payment or prepayment of
principal with respect thereto, each conversion of all or a portion thereof to
another Type, each continuation of all or a portion thereof as the same Type
and, in the case of Eurodollar Loans, the length of each Interest Period and the
Eurodollar Rate with respect thereto. Each such endorsement shall constitute
prima facie evidence of the accuracy of the information endorsed. The failure
- ----- -----
to make any such endorsement or any error in any such endorsement shall not
affect the obligations of the Borrower in respect of the Term Loan.
This Note (a) is one of the Term Notes referred to in the Credit
Agreement, dated as of May 5, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Alliance Laundry
----------------
Holdings LLC, the Borrower, the Lender, the other banks and financial
institutions or entities from time to time parties thereto, Lehman Brothers,
Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent, and
General Electric Capital Corporation, as Administrative Agent, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit Agreement.
This Note is secured and guaranteed as provided in the Loan Documents.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Note in respect thereof.
<PAGE>
2
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 10.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
ALLIANCE LAUNDRY SYSTEMS LLC
By: _______________________________
Name:
Title:
<PAGE>
Schedule A
to Term Note
------------
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________
Amount Amount of Base Rate
Amount of Base Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance Notation
Date Rate Loans Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans Made By
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
===================================================================================================================================
</TABLE>
<PAGE>
Schedule B
to Term Note
------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________
Unpaid
Interest Period Amount of Amount of Principal
and Eurodollar Principal of Eurodollar Loans Balance of Notation
Amount of Amount Converted Rate with Eurodollar Loans Converted to Eurodollar Made
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid Base Rate Loans Loans By
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
===================================================================================================================================
</TABLE>
<PAGE>
REVOLVING CREDIT NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO
BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$8,700,000.00 New York, New York
May 5, 1998
FOR VALUE RECEIVED, the undersigned, ALLIANCE LAUNDRY SYSTEMS LLC, a
Delaware limited liability company (the "Borrower"), hereby unconditionally
--------
promises to pay to GENERAL ELECTRIC CREDIT CORPORATION (the "Lender") or its
------
registered assigns at the Payment Office specified in the Credit Agreement (as
hereinafter defined), in lawful money of the United States and in immediately
available funds, on the Revolving Credit Termination Date the principal amount
of (a) EIGHT MILLION SEVEN HUNDRED THOUSAND DOLLARS ($8,700,000.00) or, if less,
(b) the aggregate unpaid principal amount of all Revolving Credit Loans of the
Lender outstanding under the Credit Agreement. The Borrower further agrees to
pay interest in like money at such Payment Office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates specified in
Section 2.15 of the Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on continuations thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan of the Lender outstanding under the Credit Agreement and
the date and amount of each payment or prepayment of principal thereof, each
continuation of all or a portion thereof as the same Type, each conversion of
all or a portion thereof to another Type and, in the case of Eurodollar Loans,
the length of each Interest Period and the Eurodollar Rate with respect thereto.
Each such endorsement shall constitute prima facie evidence of the accuracy of
----- -----
the information endorsed. The failure to make any such endorsement or any error
in any such endorsement shall not affect the obligations of the Borrower in
respect of any Revolving Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in the
Credit Agreement, dated as of May 5, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Alliance Laundry
----------------
Holdings LLC, the Borrower, the Lender, the other banks and financial
institutions or entities from time to time parties thereto, Lehman Brothers,
Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent, and
General Electric Capital Corporation, as Administrative Agent, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit Agreement.
This Note is secured and guaranteed as provided in the Loan Documents.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Note in respect thereof.
<PAGE>
2
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 10.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
ALLIANCE LAUNDRY SYSTEMS LLC
By: _______________________________
Name:
Title:
<PAGE>
Schedule A
to Revolving Credit Note
------------------------
LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________
Amount Amount of Base Rate
Amount of Base Converted to Amount of Principal of Loans Converted to Unpaid Principal Balance Notation
Date Rate Loans Base Rate Loans Base Rate Loans Repaid Eurodollar Loans of Base Rate Loans Made By
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
===================================================================================================================================
</TABLE>
<PAGE>
Schedule B
to Revolving Credit Note
------------------------
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
___________________________________________________________________________________________________________________________________
Unpaid
Interest Period Amount of Amount of Principal
and Eurodollar Principal of Eurodollar Loans Balance of Notation
Amount of Amount Converted Rate with Eurodollar Loans Converted to Eurodollar Made
Date Eurodollar Loans to Eurodollar Loans Respect Thereto Repaid Base Rate Loans Loans By
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
===================================================================================================================================
</TABLE>
<PAGE>
SWING LINE NOTE
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO
BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$10,000,000 New York, New York
May 5, 1998
FOR VALUE RECEIVED, the undersigned, ALLIANCE LAUNDRY SYSTEMS LLC, a
Delaware limited liability company (the "Borrower"), hereby unconditionally
--------
promises to pay to GENERAL ELECTRIC CREDIT CORPORATION (the "Swing Line Lender")
-----------------
or its registered assigns at the Payment Office specified in the Credit
Agreement (as hereinafter defined) in lawful money of the United States and in
immediately available funds, on the Revolving Credit Termination Date the
principal amount of (a) TEN MILLION DOLLARS ($10,000,000) or, if less, (b) the
aggregate unpaid principal amount of all Swing Line Loans made by the Swing Line
Lender to the Borrower pursuant to Section 2.6 of the Credit Agreement. The
Borrower further agrees to pay interest in like money at such office on the
unpaid principal amount hereof from time to time outstanding at the rates and on
the dates specified in Section 2.15 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedule
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Swing Line
Loan made pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal thereof. Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed. The
----- -----
failure to make any such endorsement or any error in any such endorsement shall
not affect the obligations of the Borrower in respect of any Swing Line Loan.
This Note (a) is the Swing Line Note referred to in the Credit
Agreement, dated as of May 5, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Alliance Laundry
----------------
Holdings LLC, the Borrower, the Swing Line Lender, the other banks and financial
institutions or entities from time to time parties thereto, Lehman Brothers,
Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent, and
General Electric Capital Corporation, as Administrative Agent, (b) is subject to
the provisions of the Credit Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in the Credit Agreement.
This Note is secured and guaranteed as provided in the Loan Documents.
Reference is hereby made to the Loan Documents for a description of the
properties and assets in which a security interest has been granted, the nature
and extent of the security and the guarantees, the terms and conditions upon
which the security interests and each guarantee were granted and the rights of
the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
<PAGE>
2
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 10.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
ALLIANCE LAUNDRY SYSTEMS LLC
By: _______________________________
Name:
Title:
<PAGE>
Schedule A
to Swing Line Note
------------------
LOANS AND REPAYMENTS OF SWING LINE LOANS
<TABLE>
<CAPTION>
_______________________________________________________________________________________________________________________
Amount of Amount of Principal of Swing Unpaid Principal Balance of
Date Swing Line Loans Line Loans Repaid Swing Line Loans Notation Made By
_______________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________
=======================================================================================================================
</TABLE>
<PAGE>
EXHIBIT H TO
CREDIT AGREEMENT
----------------
[FORM OF
PREPAYMENT OPTION NOTICE]
[Name and Address of
Term Loan Lender]
Attention of [ ]
Telecopy No. [ ]
[Date]
Ladies and Gentlemen:
The undersigned, General Electric Capital Corporation, as
administrative agent (in such capacity, the "Administrative Agent") for the
--------------------
Lenders, refers to the Credit Agreement, dated as of May 5, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
----------------
among Alliance Laundry Holdings LLC, Alliance Laundry Systems LLC (the
"Borrower"), the Lenders from time to time parties thereto, Lehman Brothers,
--------
Inc., as Arranger, Lehman Commercial Paper Inc., as Syndication Agent and the
Administrative Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
The Administrative Agent hereby gives notice of an offer of prepayment made by
the Borrower pursuant to Section 2.18(d) of the Credit Agreement of the
Prepayment Amount. The portion of the Prepayment Amount to be allocated to the
Term Loan held by you and the date on which such prepayment will be made to you
(should you elect to receive such prepayment) are set forth below:
(A) Total Prepayment Amount _____________
(B) Portion of Prepayment Amount to be received by
you _____________
(C) Prepayment Date (10 Business Days after the date
of this Prepayment Option Notice) _____________
IF YOU DO NOT WISH TO RECEIVE ALL OF THE PREPAYMENT AMOUNT TO BE
ALLOCATED TO YOU ON THE PREPAYMENT DATE INDICATED IN PARAGRAPH (C) ABOVE, please
sign this notice in the space provided below and indicate the percentage of the
Prepayment Amount otherwise payable to you which you do not wish to receive.
Please return this notice as so completed via telecopy to the attention of
<PAGE>
2
[___________________] at ____________________, no later than [10:00] a.m., New
-------------------------------
York City time, on the Prepayment Date, at Telecopy No. [________________]. IF
- --------------
YOU DO NOT RETURN THIS NOTICE, YOU WILL RECEIVE 100% OF THE PREPAYMENT AMOUNT
ALLOCATED TO YOU ON THE PREPAYMENT DATE.
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent
By: ______________________________________
Name:
Title:
[Term Loan Lender]
By: ______________________________________
Name:
Title:
Percentage of
Prepayment Amount Allocated to You
Declined: _________%
<PAGE>
EXHIBIT I TO
CREDIT AGREEMENT
----------------
[FORM OF EXEMPTION CERTIFICATE]
Reference is made to the Credit Agreement, dated as of May 5, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
------
Agreement") among Alliance Laundry Holdings LLC ("Holdings"), Alliance Laundry
- --------- --------
Systems LLC, a Delaware limited liability company (the "Borrower"), the several
--------
banks and other financial institutions from time to time parties thereto (the
"Lenders"), Lehman Brothers, Inc., as Arranger, Lehman Commercial Paper Inc., as
- --------
Syndication Agent, and General Electric Capital Corporation, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent").
--------------------
Capitalized terms used herein that are not defined herein shall have the
meanings ascribed to them in the Credit Agreement. ______________________ (the
"Non-U.S. Lender") is providing this certificate pursuant to Section 2.20(d) of
- ----------------
the Credit Agreement. The Non-U.S. Lender hereby represents and warrants that:
1. The Non-U.S. Lender is the sole record and beneficial owner of
the Loans or the obligations evidenced by Note(s) in respect of which it is
providing this certificate.
2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In
----
this regard, the Non-U.S. Lender further represents and warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other legal
requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for purposes of
any tax, securities law or other filing or submission made to any
Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other
legal requirements;
3. The Non-U.S. Lender is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code; and
4. The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section
881(c)(3)(C) of the Code.
5. The income from the Note(s) held by the undersigned is not
effectively connected with the conduct of a trade or business within the United
States (as hereinafter defined).
6. The undersigned is a person other than (i) a citizen or resident
of the United States of America, its territories and possessions (including the
Commonwealth of Puerto Rico and all other areas subject to its jurisdiction)
(for purposes of this Certificate, the "United States"), (ii) a corporation or
-------------
partnership created or organized under the laws of the United States or any
political subdivision thereof or therein, (iii) an estate that is subject to
United States federal income taxation regardless of the source of its income or
(iv) a trust which is subject to the supervision of a court within the United
States and the control of a United States fiduciary as described in section
7701(a)(30) of the Code; and
<PAGE>
2
7. The undersigned is not a natural person.
By executing this certificate, the undersigned agrees that (1) if the
information provided on this certificate changes, the undersigned shall so
inform the Administrative Agent and the Borrower in writing within thirty days
of such change and (2) the undersigned shall furnish the Administrative Agent
and the Borrower a properly completed and currently effective certificate in
either the calendar year in which payment is to be made by the Administrative
Agent and the Borrower to the undersigned, or in either of the two calendar
years preceding such payment.
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate.
[NAME OF NON-U.S. LENDER]
By: ____________________________
Name:
Title:
Date: ____________________
<PAGE>
SCHEDULE I
[Waived Conditions Precedent]
[Describe any conditions precedent waived on
Closing Date and terms of any waiver]
<PAGE>
ANNEX 1
[Board Resolutions]
<PAGE>
ANNEX 2
[By-Laws]
[Limited Liability Company Agreement]
<PAGE>
ANNEX 3
[Certificate of Incorporation]
[Certificate of Formation]
<PAGE>
EXHIBIT 10.4
============
LOAN AND SECURITY AGREEMENT
_____________________________
DATED AS OF MAY 5, 1998
______________________________
ALLIANCE LAUNDRY RECEIVABLES WAREHOUSE LLC
THE LENDERS PARTY HERETO
AND
LEHMAN COMMERCIAL PAPER INC.
AS AGENT
<PAGE>
LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS................................. 1
1.01. Certain Defined Terms................................................... 1
1.02. Accounting Terms and Determinations..................................... 26
SECTION 2. LOANS, NOTE AND PREPAYMENTS........................................ 26
2.01. Loans................................................................... 27
2.02. Note.................................................................... 27
2.03. Procedure for Borrowing................................................. 28
2.04. Repayment of Loans; Interest............................................ 28
2.05. Optional Prepayments.................................................... 29
2.06. Mandatory Prepayment or Pledge.......................................... 29
2.07. Indemnity............................................................... 31
2.08. Purpose of Loans........................................................ 31
2.09. Fees.................................................................... 31
2.10. Inability to Determine Interest Rate.................................... 31
2.11. Requirements of Law..................................................... 32
2.12. Taxes................................................................... 33
2.13. Illegality.............................................................. 35
2.14. Conversions Pursuant to Sections 2.10 and 2.13.......................... 35
SECTION 3. PAYMENTS; COMPUTATIONS; ETC........................................ 36
3.01. Payments................................................................ 37
3.02. Computations............................................................ 37
3.03. Extension Fee........................................................... 37
SECTION 4. COLLATERAL SECURITY................................................ 37
4.01. Collateral; Security Interest........................................... 37
4.02. Further Assurances...................................................... 39
4.03. Changes in Locations, Name, etc......................................... 39
4.04. Agent's Appointment as Attorney-in-Fact................................. 39
4.05. Performance by Agent of Borrower's Obligations.......................... 41
4.06. Remedies................................................................ 41
4.07. Limitation on Duties Regarding Presentation of Collateral............... 42
4.08. Powers Coupled with an Interest......................................... 42
4.09. Release of Security Interest............................................ 42
4.10. Trade Receivable Lockbox Accounts....................................... 43
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.11. Equipment Loan Lockbox Accounts..........................................44
4.12. Excess Spread Account....................................................46
4.13. Legending of Chattel Paper...............................................47
SECTION 5. CONDITIONS PRECEDENT..................................................47
5.01. Initial Loan.............................................................47
5.02. Initial and Subsequent Loans.............................................49
SECTION 6. REPRESENTATIONS AND WARRANTIES........................................50
6.01. Financial Condition......................................................50
6.02. No Change................................................................50
6.03. Existence; Compliance with Law...........................................51
6.04. Power; Authorization; Enforceable Obligations............................51
6.05. No Legal Bar.............................................................51
6.06. No Litigation............................................................52
6.07. No Default...............................................................52
6.08. Collateral; Collateral Security..........................................52
6.09. Chief Executive Office...................................................52
6.10. Location of Books and Records............................................53
6.11. No Burdensome Restrictions...............................................53
6.12. Taxes....................................................................53
6.13. Margin Regulations.......................................................53
6.14. Investment Company Act; Other Regulations................................53
6.15. Subsidiaries.............................................................53
6.16. Eligible Assets..........................................................53
6.17. Origination and Collections of Assets....................................53
6.18. No Adverse Selection.....................................................54
6.19. Equipment Loans..........................................................54
6.20. Borrower Solvent.........................................................54
6.21. ERISA....................................................................54
6.22. Other Agreements.........................................................55
6.23. Ownership of Borrower....................................................55
SECTION 7. COVENANTS OF THE BORROWER.............................................55
7.01. Financial Reporting......................................................55
7.02. Existence, etc...........................................................56
7.03. Insurance................................................................56
7.04. Prohibition of Fundamental Changes.......................................57
7.05. Notices..................................................................57
7.06. Periodic Due Diligence Review............................................57
7.07. Limitation on Liens on Collateral........................................58
7.08. Underwriting Guidelines..................................................58
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.09. Limitation on Transactions with Affiliates...............................58
7.10. Limitation on Changes in Fiscal Year.....................................58
7.11. Limitations on Modifications, Waivers and Extensions of Assets...........58
7.12. Further Identification of Collateral.....................................59
7.13. Limitation on Collection Account.........................................59
7.14. No Transfer..............................................................59
7.15. Repayment of Loans if Asset is Found Defective...........................59
7.16. Borrowing Base Certificate...............................................60
7.17. Monthly Officer's Certificate............................................60
7.18. Data Pool Report.........................................................60
7.19. Net Worth................................................................60
7.20. Limitation on Guarantee Obligations......................................60
7.21. Letter of Credit.........................................................61
7.22. Limitation on Dividends..................................................62
7.23. Limitation on Investments, Loans and Advances............................63
7.24. Limitation on Optional Payments and Modifications of Debt Instruments....63
7.25. Limitation on Sales and Leasebacks.......................................63
7.26. Limitations on Negative Pledge Clauses...................................63
7.27. Limitation on Lines of Business; Subsidiaries............................63
7.28. Limitation on Indebtedness...............................................63
7.29. Other Agreements.........................................................64
7.30. Currency Protection......................................................64
7.31. Purchase of Receivables from the Originators.............................65
7.32. Payment of Taxes, etc....................................................65
7.33. Maintenance of Approvals, Filings and Registrations......................65
7.34. Change in Payment Instructions to Obligors...............................65
7.35. Separate Corporate Existence.............................................65
SECTION 8. EVENTS OF DEFAULT.....................................................67
SECTION 9. REMEDIES UPON DEFAULT.................................................70
SECTION 10. NO DUTY ON LENDERS' PART.............................................70
SECTION 11. THE AGENT............................................................71
11.01. Appointment.............................................................71
11.02. Delegation of Duties....................................................71
11.03. Exculpatory Provisions..................................................71
11.04. Reliance By Agent.......................................................72
11.05. Notice of Default.......................................................72
11.06. Non-Reliance on Agent and Other Lenders.................................72
11.07. Indemnification.........................................................73
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
11.08. Agent, in Its Individual Capacity.......................................73
11.09. Successor Agent.........................................................73
SECTION 12. MISCELLANEOUS........................................................74
12.01. Waiver..................................................................74
12.02. Notices.................................................................74
12.03. Indemnification and Expenses............................................74
12.04. Amendments..............................................................75
12.05. Successors and Assigns..................................................76
12.06. Survival................................................................76
12.07. Captions................................................................77
12.08. Counterparts............................................................77
12.09. Loan Agreement Constitutes Security Agreement; Governing Law............77
12.10. Submission To Jurisdiction; Waivers.....................................77
12.11. Waiver of Jury Trial....................................................78
12.12. Acknowledgments.........................................................78
12.13. Hypothecation or Pledge of Loans........................................78
12.14. Servicing...............................................................78
12.15. Sharing.................................................................79
12.16. Third Party Beneficiary Rights..........................................80
12.17. Confidentiality.........................................................80
12.18. Integration.............................................................81
</TABLE>
iv
<PAGE>
SCHEDULES
- ---------
SCHEDULE 4.10 Trade Receivable Lockbox Banks
SCHEDULE 4.11 Equipment Loan Lockbox Banks
SCHEDULE 6.08 Filing Jurisdictions and Offices
SCHEDULE 6.16 Representations and Warranties with respect to Equipment
Loans and Trade Receivables
EXHIBITS
--------
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Request for Borrowing
EXHIBIT C Form of Underwriting Letter Agreement
EXHIBIT D-1 Form of Trade Receivable Lockbox Assignment Agreement
EXHIBIT D-2 Form of Equipment Loan Lockbox Assignment Agreement
EXHIBIT E Form of Funding Date Data Pool Report
EXHIBIT F Form of Equipment Loan Monthly Data Pool Report
EXHIBIT G Form of Trade Receivables Monthly Data Pool Report
v
<PAGE>
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT, dated as of May 5, 1998, between ALLIANCE
LAUNDRY RECEIVABLES WAREHOUSE LLC, a Delaware limited liability company (the
"Borrower"), the financial institutions party hereto as lenders (the "Lenders")
- --------- -------
and LEHMAN COMMERCIAL PAPER INC., a New York corporation, as agent for the
Lenders (the "Agent").
-----
RECITALS
The Borrower wishes to obtain financing from time to time to provide
(i) interim funding to enable the Borrower to purchase Equipment Loans (as
defined below) from the Originators (as defined below), which Equipment Loans
are to be warehoused prior to their transfer to one or more trusts or other
securitization vehicles to be sponsored by the Borrower or an Affiliate thereof
and (ii) funding to enable the Borrower to purchase Trade Receivables (as
defined below) from the Originators, which Equipment Loans and Trade Receivables
shall, directly or indirectly, secure the Loans (as defined herein) to be made
by the Lenders hereunder.
The Lenders have agreed, subject to the terms and conditions of this
Loan Agreement, to provide such funding, with the proceeds of the sale of all
equipment loan asset-backed securities issued by any such trust or other
vehicle, together with other funds of the Borrower, being used to repay any
Loans made hereunder.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01. Certain Defined Terms.
----------------------
As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1.01 or in other provisions of this
Loan Agreement in the singular to have the same meanings when used in the plural
and vice versa):
"ACAF" shall mean Alliance Commercial Appliances Finance LLC, a
----
Delaware limited liability company, the surviving company of the merger of
Raytheon Commercial Appliances Finance Corporation with and into ACAF.
"ACAF Receivables Purchase Agreement" shall mean that certain
-----------------------------------
Receivables Purchase Agreement, dated as of March 26, 1997, among ACAF, Falcon
Asset Securitization Corporation, certain financial institutions parties thereto
and The First National Bank of Chicago, as agent, as amended from time to time.
"ACAR" shall mean Alliance Commercial Appliances Receivables LLC, a
----
Delaware limited liability company, the surviving company of the merger of
Raytheon
<PAGE>
Commercial Appliances Receivables Corporation with and into ACAR.
"ACAR Receivables Purchase Agreement" shall mean that certain
------------------------------------
Receivables Purchase Agreement, dated as of December 27, 1997, among ACAR,
Preferred Receivables Funding Corporation, certain financial institutions
parties thereto and The First National Bank of Chicago, as agent, as amended
from time to time.
"Affected Loan" shall have the meaning specified in Section 2.14.
-------------
"Affiliate" shall mean, with respect to any Person, any other Person
---------
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" (together
with the correlative meanings of "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" shall have the meaning specified in the preamble to this Loan
-----
Agreement.
"Agent Account" shall have the meaning specified in Section 3.01
-------------
hereof.
"Allotted Period" shall mean, with respect to an Eligible Equipment
---------------
Loan, the period ending on the last day of the twenty-fourth month following the
date on which such Eligible Equipment Loan was first included in the Borrowing
Base; provided, that upon the payment of the Extension Fee described in Section
--------
3.03 hereof with respect to such Equipment Loan, such period shall be extended
for an additional six months; provided, further, that in no case shall an
-------- -------
Eligible Equipment Loan have an Allotted Period in excess of thirty-six months
from the date on which such Eligible Equipment Loan was first included in the
Borrowing Base.
"ALS" shall mean Alliance Laundry Systems LLC, a Delaware limited
---
liability company.
"Amana" shall mean Amana Company, L.P., a Delaware limited
-----
partnership.
"Amana Trigger Event" shall mean the occurrence of any one of the
-------------------
following events:
(a) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Amana is equal to or greater than 5.0%
of the aggregate Collateral Value of all Eligible Trade Receivables included in
the Borrowing Base, the average for the most recently completed fiscal month and
the immediately preceding fiscal month of the product of (i) the aggregate
outstanding balance of Trade Receivables included in the Borrowing Base due from
2
<PAGE>
Amana which became Delinquent Receivables during such fiscal month as a
percentage of the aggregate outstanding balance of Trade Receivables included in
the Borrowing Base due from Amana at the end of each such fiscal month and (ii)
a fraction, the numerator of which is the number of days in the corresponding
calendar month and the denominator of which is the number of days in each such
fiscal month shall exceed 5.5%; or
(b) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Amana is equal to or greater than 5.0%
of the aggregate Collateral Value of all Eligible Trade Receivables included in
the Borrowing Base, the average for the most recently completed fiscal month and
the immediately preceding fiscal month of the product of (i) the aggregate
amount of Dilutions for such fiscal month with respect to Trade Receivables
included in the Borrowing Base due from Amana as a percentage of the aggregate
outstanding balance of Trade Receivables included in the Borrowing Base due from
Amana at the end of each such fiscal month (other than August, September,
October or November) and (ii) a fraction, the numerator of which is the number
of days in the corresponding calendar month and the denominator of which is the
number of days in each such fiscal month shall exceed 6.0% or, for August,
September, October or November, shall exceed 8.0%; or
(c) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Amana is equal to or greater than 5.0%
of the aggregate Collateral Value of all Eligible Trade Receivables included in
the Borrowing Base, the average for the most recently completed fiscal month and
the immediately preceding fiscal month of the product of (i) the aggregate
outstanding balance of Trade Receivables included in the Borrowing Base due from
Amana which became Defaulted Receivables during such fiscal month as a
percentage of the aggregate outstanding balance of Trade Receivables included in
the Borrowing Base due from Amana at the end of each such fiscal month and (ii)
a fraction, the numerator of which is the number of days in the corresponding
calendar month and the denominator of which is the number of days in each such
fiscal month shall exceed 4.0%.
"Applicable Margin" shall mean, for each type of Loan, the rate per
-----------------
annum set forth under the relevant column heading below:
Federal Funds Rate Loans LIBOR Loans
-------------------------- ------------
1.00% 1.00%
"Approved Affiliate" shall mean ACAF, ACAR, Alliance Laundry Holdings
------------------
LLC (formerly known as Raytheon Commercial Laundry LLC) and any other Affiliate
of the Borrower approved in writing by the Agent.
"Asset" shall mean any (i) Trade Receivable or (ii) Equipment Loan.
-----
"Asset Schedule" shall mean a schedule of Assets setting forth the
--------------
following
3
<PAGE>
applicable information as to each Asset pledged to the Agent for the benefit of
the Lenders hereunder:
(a) with respect to any Asset:
(i) the Asset identifying number, if any;
(ii) the Obligor's name and relationship, if any, to other Obligors;
and
(iii) the paid-through date;
(b) with respect to any Equipment Loan:
(i) the street address where the Equipment is in use (including the
city, state and zip code);
(ii) if such Equipment Loan is a finance lease, the Discounted
Present Value of the remaining payments;
(iii) the original number of months to maturity and the number of
months remaining to maturity from the date of such Asset Schedule;
(iv) the Contract Rate;
(v) the interest rate basis (whether a fixed or floating rate of
interest) and, if a floating rate of interest, the interest rate index, the
margin above such index and the interest rate adjustment dates;
(vi) the amount of the current monthly payment;
(vii) the original amount funded under such Asset;
(viii)the closing date of such Asset;
(ix) the first payment date; and
(x) the month and year the Equipment was purchased; and
(c) with respect to any Trade Receivable:
(i) the outstanding amount of such Trade Receivable;
(ii) whether such Trade Receivable is an Interest Bearing Receivable
or a Trade Receivable the Obligor of which is a Foreign Obligor; and
4
<PAGE>
(iii) the payment terms with respect to such Trade Receivable.
"Available Letter of Credit Amount" shall mean, with respect to any
---------------------------------
Letter of Credit on any date of determination, an amount equal to the amount
available to be drawn under such Letter of Credit on such date of determination.
"Bain Investors" shall mean, collectively, Bain/RCL, L.L.C., BCIP
--------------
Associate, II, BCIP Associates II-B, Bain Capital Fund V, L.P., Bain Capital
Fund V-B, L.P., BCIP Trust Associates II, and BCIP Trust Associate, II-B.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
---------------
1978, as amended from time to time.
"Board" shall mean the Board of Governors of the Federal Reserve
-----
System of the United States (or any successor).
"Borrower" shall have the meaning specified in the heading hereof.
--------
"Borrowing Base" shall mean the sum of (i) 100% of the aggregate
--------------
Collateral Value of all Eligible Assets and (ii) the value of all additional
Collateral pledged to the Agent pursuant to Section 2.06(b). Solely for the
purpose of determining the value of all additional Collateral (to the extent
such additional Collateral is not an Eligible Trade Receivable or an Eligible
Equipment Loan), "value" shall mean, as of any date of determination with
respect to such additional Collateral, the price at which such additional
Collateral could be sold as of such date, as determined by the Agent in its
commercially reasonable discretion.
"BRS" shall mean Bruckner, Rosser, Sherrill and Co., Inc.
---
"Business Day" shall mean any day (i) on which banks are not
------------
authorized or required to close in New York, New York, (ii) on which the Agent
is not authorized or required to close in New York and (iii) if the applicable
Business Day relates to any computation or payment to be made with respect to
the LIBOR Rate, on which dealings in dollar deposits are carried on in the
London interbank market.
"Canadian Dollars" shall mean lawful money of Canada.
----------------
"Capital Lease", as applied to any Person or entity, shall mean any
-------------
lease of any property (whether real, personal or mixed) by that Person or entity
as lessee that, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of that Person or entity.
"Capital Stock" shall mean (i) in the case of a corporation,
-------------
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or
5
<PAGE>
limited liability company, partnership or membership interests (whether general
or limited) and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral Account" shall have the meaning specified in Section
-----------------------
7.21(b) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time.
"Coinmach" shall mean Coinmach Laundry Corporation, a Delaware
--------
corporation.
"Coinmach Trigger Event" shall mean the occurrence of any one of the
----------------------
following events:
(a) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Coinmach is equal to or greater than
5.0% of the aggregate Collateral Value of all Eligible Trade Receivables
included in the Borrowing Base, the average for the most recently completed
fiscal month and the immediately preceding fiscal month of the product of (i)
the aggregate outstanding balance of Trade Receivables included in the Borrowing
Base due from Coinmach which became Delinquent Receivables during such fiscal
month as a percentage of the aggregate outstanding balance of all Trade
Receivables included in the Borrowing Base due from Coinmach at the end of each
such fiscal month and (ii) a fraction, the numerator of which is the number of
days in the corresponding calendar month and the denominator of which is the
number of days in each such fiscal month shall exceed 5.5%; or
(b) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Coinmach is equal to or greater than
5.0% of the aggregate Collateral Value of all Eligible Trade Receivables
included in the Borrowing Base, the average for the most recently completed
fiscal month and the immediately preceding fiscal month of the product of (i)
the aggregate amount of Dilutions for such fiscal month with respect to Trade
Receivables included in the Borrowing Base due from Coinmach as a percentage of
the aggregate outstanding balance of all Trade Receivables included in the
Borrowing Base due from Coinmach at the end of each such fiscal month (other
than August, September, October or November) and (ii) a fraction, the numerator
of which is the number of days in the corresponding calendar month and the
denominator of which is the number of days in each such fiscal month shall
exceed 6.0% or, for August, September, October or November, shall exceed 8.0%;
or
(c) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Coinmach is equal to or greater than
5.0% of the aggregate Collateral Value of all Eligible Trade Receivables
included in the Borrowing Base, the average for the most recently completed
fiscal month and the immediately preceding fiscal month of the
6
<PAGE>
product of (i) the aggregate outstanding balance of Trade Receivables due from
Coinmach included in the Borrowing Base which became Defaulted Receivables
during such fiscal month as a percentage of the aggregate outstanding balance of
all Trade Receivables included in the Borrowing Base due from Coinmach at the
end of each such fiscal month and (ii) a fraction, the numerator of which is the
number of days in the corresponding calendar month and the denominator of which
is the number of days in each such fiscal month shall exceed 4.0%.
"Collateral" shall have the meaning specified in Section 4.01(a)
----------
hereof.
"Collateral Value" shall mean, as of any date of determination, in
----------------
respect of (a) an Eligible Equipment Loan, the lesser of (i) (A) with respect to
Eligible Equipment Loans which are not finance leases, 90% of the outstanding
principal balance of such Eligible Equipment Loan as of such date and (B) with
respect to Eligible Equipment Loans which are finance leases, 90% of the
Discounted Present Value of such Eligible Equipment Loans, and (ii) 90% of the
Market Value with respect to such Eligible Equipment Loan as of such date, and
(b) an Eligible Trade Receivable, 85% of the outstanding amount of such Eligible
Trade Receivable as of such date; provided, however, that the "Collateral Value"
-------- -------
with respect to the outstanding amount of Eligible Trade Receivables included in
the Borrowing Base in respect of which (A) Amana (and its Affiliates) is the
Obligor which outstanding amount exceeds the greater of (x) 5% of the
outstanding amount of Trade Receivables and (y) $4,000,000 (but are less than
the concentration limit set forth in clause (b)(iii) below) and (B) Coinmach
(and its Affiliates) is the Obligor which outstanding amount exceeds the greater
of (x) 5% of the outstanding amount of Trade Receivables and (y) $4,000,000 (but
are less than the concentration limit set forth in clause (b)(iv) below) shall
equal 75% of the outstanding amount of such Eligible Trade Receivables as of
such date; provided, further, that the "Collateral Value" with respect to (u)
-------- -------
any Eligible Equipment Loan which is greater than ninety (90) days Past Due, (v)
any Eligible Trade Receivable which is greater than sixty (60) days Past Due,
(w) any Eligible Equipment Loan which has been included in the Borrowing Base
for more than the Allotted Period, (x) any Eligible Asset in respect of which
there is a breach of a representation and warranty set forth on Schedule 6.16
(assuming each representation and warranty is made as of the date Collateral
Value is determined) and (y) any Eligible Equipment Loan which has an original
term of more than eighty-four (84) months, shall in each of the foregoing cases
equal zero; provided, further, that:
-------- -------
(a) with respect to Eligible Equipment Loans:
(i) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base in respect of which the same Person (or its
Affiliates) is the Obligor shall not exceed $9,000,000 at any time;
(ii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base due from the three Obligors (or their
respective Affiliates) with the greatest outstanding principal balance of
Equipment Loans
7
<PAGE>
shall not exceed $10,000,000 at any time when the sum of the aggregate
outstanding principal balance of the Loans is $50,000,000 or less;
(iii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base due from the two Obligors (or their
respective Affiliates) with the greatest outstanding principal balance of
Equipment Loans shall not exceed $16,000,000 at any time;
(iv) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base due from the five Obligors (or their
respective Affiliates) with the greatest outstanding principal balance of
Equipment Loans shall not exceed $27,000,000 at any time;
(v) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base which are greater than sixty (60) days Past
Due but equal to or less than ninety (90) days Past Due shall not at any
time exceed 1.0% of the aggregate Collateral Value of all Eligible
Equipment Loans included in the Borrowing Base at such time;
(vi) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base in respect of which the Equipment was, on
the date of origination of such Eligible Equipment Loan, used or
reconditioned shall not at any time exceed 20% of the aggregate Collateral
Value of all Eligible Equipment Loans included in the Borrowing Base at
such time;
(vii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base which are payable in Canadian Dollars shall
not at any time exceed the greater of (x) $5,000,000 (or the equivalent
thereof in Canadian Dollars) and (y) 5.0% of the aggregate Collateral Value
of all Eligible Equipment Loans included in the Borrowing Base at such
time;
(viii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base in respect of which an employee of any
Originator is the Obligor shall not at any time exceed the greater of (x)
$2,000,000 and (y) 1.0% of the aggregate Collateral Value of all Eligible
Equipment Loans included in the Borrowing Base at such time; and
(ix) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base which provide for any "balloon" or other
form of lump sum payment at the end of their respective term shall not at
any time exceed the greater of (x) $2,000,000 and (y) 1.0% of the aggregate
Collateral Value of all Eligible Equipment Loans included in the Borrowing
Base at such time; and
8
<PAGE>
(b) with respect to Eligible Trade Receivables:
(i) the aggregate Collateral Value of Eligible Trade Receivables
(other than Eligible Trade Receivables the Obligor of which is Amana or
Coinmach) included in the Borrowing Base in respect of which the same
Person (or its Affiliates) is the Obligor shall not exceed the greater of
(x) $4,000,000 and (y) 5.0% of the aggregate Collateral Value of all
Eligible Trade Receivables included in the Borrowing Base at such time;
(ii) the aggregate Collateral Value of Eligible Trade Receivables
(other than Eligible Trade Receivables the Obligor of which is Amana or
Coinmach) included in the Borrowing Base due from the three Obligors (or
their respective Affiliates) with the greatest outstanding amount of Trade
Receivables shall not exceed $10,000,000 at any time;
(iii) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which Amana (or its
Affiliates) is the Obligor shall not exceed 10% of the aggregate Collateral
Value of all Eligible Trade Receivables included in the Borrowing Base at
any time;
(iv) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which Coinmach (or its
Affiliates) is the Obligor shall not exceed 15% of the aggregate Collateral
Value of all Eligible Trade Receivables included in the Borrowing Base at
any time;
(v) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are greater than thirty (30) days Past
Due but equal to or less than sixty (60) days Past Due shall not at any
time exceed 10.0% of the aggregate Collateral Value of all Eligible Trade
Receivables included in the Borrowing Base at such time;
(vi) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base the Obligors in respect of which are Foreign
Obligors and are located in the same country shall not exceed $3,000,000 at
any time;
(vii) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which the Obligors are Foreign
Obligors shall not at any time exceed 35.0% of the aggregate Collateral
Value of all Eligible Trade Receivables included in the Borrowing Base at
such time;
(viii) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are Interest Bearing Receivables shall
not
9
<PAGE>
exceed the greater of (1) $9,000,000 and (2) 15% of the aggregate
Collateral Value of all Eligible Trade Receivables included in the
Borrowing Base at any time;
(ix) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are Interest Bearing Receivables in
respect of which the same Person (or its Affiliates) is the Obligor and
which have payment terms which do not exceed 150 days after the billing
date therefor shall not exceed $750,000 at any time;
(x) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are not required to be paid in full
until a date between 121 days and 150 days, inclusive, after the billing
date therefor shall not exceed 2.0% of the aggregate Collateral Value of
all Eligible Trade Receivables included in the Borrowing Base at any time;
and
(xi) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which an agency, a department,
an instrumentality or a political subdivision of the United States or of
any state or local government is the Obligor shall not exceed 5.0% of the
aggregate Collateral Value of all Trade Receivables included in the
Borrowing Base at such time.
"Collections" shall mean, with respect to any Asset, the sum of all
-----------
amounts, whether in the form of cash, checks, drafts, or other instruments,
received by the Borrower, an Originator, the Servicer or in a Trade Receivable
Lockbox Account or Equipment Loan Lockbox Account in payment of, or applied to,
any amount owed by an Obligor on account of such Asset (including but not
limited to all amounts received on account of any Defaulted Receivable or
Defaulted Equipment Loan), including, without limitation, all amounts in respect
of fees with respect to such Asset.
"Commitment" shall mean, with respect to a Lender, an amount equal to
----------
the product of (i) such Lender's Commitment Percentage and (ii) the Maximum
Credit.
"Commitment Percentage" shall mean, with respect to a Lender, the
---------------------
percentage set forth opposite its signature hereto (as such percentage may be
changed to give effect to any assignment by such Lender).
"Contract Rate" shall mean, with respect to an Equipment Loan, the
-------------
interest rate on such Equipment Loan as determined in accordance with the
Borrower's customary practices in effect as of the date hereof.
"Contractual Obligation" shall mean as to any Person, any provision of
----------------------
any security issued by such Person or of any agreement, instrument or other
undertaking to which
10
<PAGE>
such Person is a party or by which it or any of its property is bound.
"Control Investment Affiliates" shall mean, as to any Person, any
-----------------------------
other Person which directly or indirectly, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, to direct or cause the direction
of the management and policies of such Person, whether by contract, or
otherwise.
"Credit Agreement" shall mean the Credit Agreement among Alliance
----------------
Laundry Holdings LLC, ALS, Lehman Brothers Inc., as Arranger, Lehman Commercial
Paper Inc., as Syndication Agent, and General Electric Capital Corporation, as
administrative agent.
"Default" shall mean an Event of Default or an event that with notice
-------
or lapse of time or both would become an Event of Default.
"Default Ratio" shall mean, for any fiscal month, the product of (x) a
-------------
percentage equal to (i) the aggregate outstanding balance of Trade Receivables
(whether or not Eligible Trade Receivables) which first became Defaulted
Receivables during such fiscal month divided by (ii) the aggregate outstanding
balance of all Trade Receivables (whether or not Eligible Trade Receivables) at
the end of such fiscal month and (y) a fraction, the numerator of which is the
number of days in the corresponding calendar month and the denominator of which
is the number of days in such fiscal month.
"Default Ratio - Equipment Loans" shall mean, for any calendar month,
-------------------------------
a percentage equal to (i) the aggregate outstanding balance of Equipment Loans
(whether or not Eligible Equipment Loans) which first became Defaulted Equipment
Loans during such calendar month divided by (ii) the aggregate outstanding
balance of all Equipment Loans (whether or not Eligible Equipment Loans) at the
end of such calendar month.
"Defaulted Equipment Loan" shall mean an Equipment Loan (a) which, in
------------------------
the reasonable judgment of the related Originator, has become uncollectible or
has been written off the books of such Originator by reason of the related
Obligor's inability to pay or (b) which is more than ninety (90) days Past Due.
"Defaulted Receivable" shall mean a Trade Receivable (a) which, in the
--------------------
reasonable judgment of the related Originator, has become uncollectible or has
been written off the books of such Originator by reason of the related Obligor's
inability to pay or (b) which is more than ninety (90) days Past Due.
"Delinquency Ratio" shall mean, for any fiscal month, the product of
-----------------
(x) a percentage equal to (i) the aggregate outstanding balance of Trade
Receivables (whether or not Eligible Trade Receivables) which first became
Delinquent Receivables during such fiscal month divided by (ii) the aggregate
outstanding balance of all Trade Receivables (whether or not
11
<PAGE>
Eligible Trade Receivables) at the end of such fiscal month and (ii) a fraction,
the numerator of which is the number of days in the corresponding calendar month
and the denominator of which is the number of days in such fiscal month.
"Delinquency Ratio - Equipment Loans" shall mean, for any calendar
-----------------------------------
month, a percentage equal to (i) the aggregate outstanding balance of Equipment
Loans (whether or not Eligible Equipment Loans) which first became Delinquent
Equipment Loans during such calendar month divided by (ii) the aggregate
outstanding balance of all Equipment Loans (whether or not Eligible Equipment
Loans) at the end of such calendar month.
"Delinquent Equipment Loan" shall mean an Equipment Loan as to which
-------------------------
any payment, or part thereof, remains unpaid for 31 days or more from the
original due date thereof.
"Delinquent Receivable" shall mean a Trade Receivable as to which any
---------------------
payment of the principal thereof and, in the case of an Interest Bearing
Receivable, the interest with respect thereto, or part thereof, remains unpaid
for sixty-one (61) days or more from the original due date thereof.
"Demand Deposit Account" shall have the meaning specified in Section
----------------------
4.10(a) hereof.
"Dilution" shall mean, for any fiscal month, a reduction of the
--------
outstanding balance of a Trade Receivable first granted to an Obligor during
such fiscal month other than as a result of a Collection or such Trade
Receivable becoming a Defaulted Receivable.
"Dilution Ratio" shall mean, for any fiscal month, the product of (i)
--------------
a percentage equal to (i) the aggregate dollar amount of Dilutions (including,
without limitation, non-cash credits) first occurring in such fiscal month
divided by (ii) the aggregate outstanding balance of all Trade Receivables
(whether or not Eligible Trade Receivables) at the end of such fiscal month and
(ii) a fraction, the numerator of which is the number of days in the
corresponding calendar month and the denominator of which is the number of days
in such fiscal month.
"Discount Rate" shall mean a rate equal to the sum of (i) the rate
-------------
announced by Citibank, N.A. from time to time as its "prime rate", as published
in The Wall Street Journal, Northeastern Edition plus (ii) 2.0%.
"Discounted Present Value" shall mean, for any Equipment Loan which is
------------------------
a finance lease, as of any date of determination, the present value of the then
remaining payments under such Equipment Loan, discounted at the Discount Rate,
as determined by the Borrower and set forth in an Asset Schedule or a Borrowing
Base Certificate, as the case may be.
"Dollars" and "$" shall mean lawful money of the United States of
------- -
America.
12
<PAGE>
"Drawing Amount" shall have the meaning specified in Section 2.06(c)
--------------
hereof.
"Effective Date" shall mean the date upon which the conditions
--------------
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Assets" shall mean Eligible Equipment Loans and Eligible
---------------
Trade Receivables.
"Eligible Deposit Account" shall mean either (a) a segregated account
------------------------
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank) or, with respect to
Foreign Receivables, under the laws of Canada or any province thereof, having
corporate trust powers and acting as trustee or depository for funds deposited
in such account, so long as any of the securities of such depository institution
shall have a long-term unsecured debt rating of A by Standard & Poor's and by
Moody's Investors Service, Inc. (or its equivalent) (and if neither Standard &
Poor's nor Moody's Investors Service, Inc. rates securities of such depository
institution, then so long as such depository institution is otherwise acceptable
to the Agent).
"Eligible Equipment Loan" shall mean an Equipment Loan as to which the
-----------------------
applicable representations and warranties on Schedule 6.16 hereof are correct.
"Eligible Institution" shall mean a depository institution organized
--------------------
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank) or, with
respect to Eligible Equipment Loans which are payable in Canadian Dollars, under
the laws of Canada or any province thereof, (i) which has either (A) a long-term
unsecured debt rating of AA by Standard & Poor's and Aa by Moody's Investors
Service, Inc. (or its equivalent) or (B) short-term unsecured debt rating or
certificate of deposit rating of A-1+ by Standard & Poor's and Prime-1 by
Moody's Investors Service, Inc. (or its equivalent) (and if neither Standard &
Poor's nor Moody's Investors Service, Inc. rates such depository institution,
then which is otherwise acceptable to the Agent) and (ii) whose deposits are
insured by the Federal Deposit Insurance Corporation (or any successor) (or,
with respect to Eligible Equipment Loans which are payable in Canadian Dollars,
an organization performing a similar function).
"Eligible Letter of Credit Issuer," which shall initially be ABN AMRO
--------------------------------
Bank N.V., shall mean a Qualifying Financial Institution that is acceptable to
the Agent and the Borrower.
"Eligible Trade Receivable" shall mean a Trade Receivable as to which
-------------------------
the applicable representations and warranties on Schedule 6.16 hereof are
correct.
"Equipment" shall mean equipment that conforms with the Underwriting
---------
13
<PAGE>
Guidelines (including, without limitation, renewals and replacements thereof and
additions thereto).
"Equipment Loan" shall mean a loan or finance lease secured by
--------------
Equipment, which loan or finance lease was (i) originated by an Originator, (ii)
purchased by the Borrower from such Originator or otherwise conveyed to the
Borrower by such Originator pursuant to the Transfer Agreement and (iii)
approved by such Originator in accordance with the Underwriting Guidelines in
effect at the time of such origination in the ordinary course of such
Originator's business, including without limitation, the obligation to pay any
finance, interest, late payment or similar charges with respect thereto.
"Equipment Loan Documents" shall mean, with respect to an Equipment
------------------------
Loan, the following documents:
(a) original counterparts of the related loan agreement, executed by a
duly authorized representative of the Obligor and the related Originator;
(b) if received, the acknowledgment copy of each UCC-1 Financing
Statement filed or recorded in connection with such Equipment Loan, with
evidence of filing or recording thereon, or if not yet received, a copy of each
such UCC-1 Financing Statement, if any;
(c) if received, the acknowledgment copy of each filed or recorded
intervening UCC-3 assignment, showing a chain to the Borrower, of each UCC-1
Financing Statement, or if not yet received, a copy of each such UCC-3
assignment, if any;
(d) a copy of an insurance certificate or other evidence satisfactory
to the Agent that all Insurance Policies required to be maintained by the
related Obligor with respect to the related Equipment are in full force and
effect; and
(e) all documents (if any) evidencing or relating to recourse or
support obligations, guarantees, indemnities or security, and all letters of
credit relating thereto (if any).
"Equipment Loan Lockbox" shall have the meaning specified in Section
----------------------
4.11(a) hereof.
"Equipment Loan Lockbox Accounts" shall have the meaning specified in
-------------------------------
Section 4.11(a) hereof.
"Equipment Loan Lockbox Assignment Agreement" shall have the meaning
-------------------------------------------
specified in Section 4.11(a) hereof.
"Equipment Loan Lockbox Banks" shall have the meaning specified in
----------------------------
Section 4.11(a) hereof.
14
<PAGE>
"Equipment Loan Lockbox Notice" shall have the meaning specified in
-----------------------------
Section 4.11(e) hereof.
"Equipment Loan Monthly Data Pool Report" shall mean, with respect to
---------------------------------------
any calendar month, a computer diskette or direct modem electronic transmission,
containing (i) a complete data profile report in Excel format substantially in
the form of Exhibit F hereto (including an updated Asset Schedule with respect
to Eligible Equipment Loans at the end of the calendar month most recently
completed), and (ii) any other information with respect to Eligible Equipment
Loans reasonably requested by the Agent.
"Equipment Loan Monthly Report Date" shall mean the tenth Business Day
----------------------------------
following the end of any calendar month.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
---------------
incorporated) which, together with the Borrower, is treated as single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
-----------
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA upon the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Borrower or any ERISA Affiliate from
the Pension Benefit Guaranty Corporation of any notice relating to the intention
to terminate any Plan or to appoint a trustee to administer any Plan; (g) the
receipt by the Borrower or any ERISA Affiliate of any notice concerning the
imposition of withdrawal liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; and (h) the occurrence of a "prohibited transaction" with
respect to which the Borrower is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which the Borrower could otherwise
be liable.
"Eurocurrency Reserve Requirements" shall mean, for any day as applied
---------------------------------
to a LIBOR Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic,
15
<PAGE>
supplemental, marginal and emergency reserves under any regulations of the Board
or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Event of Default" shall have the meaning specified in Section 8
----------------
hereof.
"Excess Spread Sweep Event" shall mean the occurrence of any one of
-------------------------
the following events:
(a) the average of the Delinquency Ratio - Equipment Loans for any two
consecutive calendar months shall exceed 4.0%; or
(b) the average of the Default Ratio - Equipment Loans for any two
consecutive calendar months shall exceed 2.5%; or
(c) the average of the Delinquency Ratio - Trade Receivables for any
two consecutive fiscal months shall exceed 4.0%; or
(d) the average of the Default Ratio - Trade Receivables for any two
consecutive fiscal months shall exceed 3.0%.
For purposes of this Loan Agreement, an Excess Spread Sweep Event
shall be deemed to be continuing during the period beginning on the date of the
occurrence of such Excess Spread Sweep Event and ending on the date which is
four months after the date such Excess Spread Sweep Event is cured.
"Existing Purchase Agreements" shall mean the ACAF Receivables
----------------------------
Purchase Agreement and the ACAR Receivables Purchase Agreement.
"Extension Fee" shall have the meaning specified in Section 3.03
-------------
hereof.
"FCIA" shall mean the Foreign Credit Insurance Agency, and its
----
successors.
"FCIA Insurance" shall mean credit insurance issued by FCIA.
--------------
"Federal Funds Rate" shall mean, for any day, the weighted average of
------------------
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
16
<PAGE>
"Federal Funds Rate Loan" shall mean a Loan the rate of interest
-----------------------
applicable to which is based upon the Federal Funds Rate.
"Foreign Obligor" shall mean any Obligor that is not a resident of the
---------------
United States.
"Funding Date" shall mean the date on which a Loan is made hereunder.
------------
"Funding Date Data Pool Report" shall mean, with respect to any
-----------------------------
Funding Date, a computer diskette or direct modem electronic transmission,
containing (i) a complete data profile report in Excel format substantially in
the form of Exhibit E hereto (including an updated Asset Schedule at the end of
the calendar month (in the case of Equipment Loans) or fiscal month (in the case
of Trade Receivables) most recently completed), and (ii) any other information
reasonably requested by the Agent.
"GAAP" shall mean generally accepted accounting principles in the
----
United States as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board and the rules and regulations of the
Securities and Exchange Commission, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances of the Borrower as of the
date of determination.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Affiliates or any of its properties.
"Guarantee Obligation" shall mean a guarantee, an endorsement, a
--------------------
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an agreement
to purchase, sell or lease (as lessee or lessor) property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of such debtor's obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other similar instrument
for the benefit of another Person, but excluding endorsements for collection or
deposit in the ordinary course of business.
"Indebtedness" shall mean, for any Person: (a) obligations created,
------------
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of property to another Person
subject to an understanding or agreement,
17
<PAGE>
contingent or otherwise, to repurchase such property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition price of
property or services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within ninety (90)
days of the date the respective goods are delivered or the respective services
are rendered; (c) Indebtedness of others secured by a Lien on the property of
such Person, whether or not the respective indebtedness so secured has been
assumed by such Person; (d) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Leases of such Person; and
(f) Indebtedness of others guaranteed by such Person.
"Indemnified Parties" shall have the meaning specified in Section
-------------------
12.03(a).
"Independent Manager" shall have the meaning specified in Section
-------------------
7.35(vi).
"Insurance Policy" shall mean, with respect to an Equipment Loan, any
----------------
insurance policy benefiting the holder of such Equipment Loan providing coverage
with respect to the related Equipment and/or the related Obligor.
"Intercreditor Agreement" shall mean that certain Intercreditor
-----------------------
Agreement dated as of May 4, 1998 among The First National Bank of Chicago, as
agent, the Agent, ALS, ACAR and the Borrower, as amended, supplemented or
otherwise modified from time to time.
"Interest Bearing Receivable" shall mean a Trade Receivable with
---------------------------
respect to which interest (at short-term interest rates agreed to by such
Obligor and the related Originator and not for this purpose meaning default
interest with respect to amounts due on such Trade Receivable if it is Past Due)
accrues on the outstanding balance thereof.
"Interest Payment Date" shall mean the first (1st) Business Day of
---------------------
each calendar month.
"Interest Period" shall mean with respect to any Loan: (a) initially,
---------------
the period commencing on the Funding Date with respect to such Loan to but
excluding the first Business Day of the next succeeding calendar month; and (b)
thereafter, each period commencing on the first Business Day of a calendar month
to but excluding the first Business Day of the next succeeding calendar month;
provided, that the foregoing provisions relating to Interest Periods are subject
- --------
to the provision that any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date.
"Investment" shall mean, with respect to any Person, any investment
----------
made by such Person by stock purchase, option or warrant purchase, capital
contribution, loan, advance, acquisition of Indebtedness, Guarantee Obligations
or otherwise.
18
<PAGE>
"L/C Replacement Date" shall have the meaning specified in Section
--------------------
7.21(b).
"Lender" shall have the meaning specified in the preamble to this Loan
------
Agreement.
"Letter of Credit" shall mean an irrevocable letter of credit in favor
----------------
of the Agent delivered by an Eligible Letter of Credit Issuer pursuant to the
terms of a Reimbursement Agreement. The initial Letter of Credit shall have an
expiration date one year from the date of issuance thereof, which expiration
date shall be automatically extended until the first anniversary of the then
current expiration date (but in no event shall the expiration date be later than
May 5, 2003) unless either (i) ALS and the Borrower provide written notice to
the Agent and the issuer of such Letter of Credit on or before the close of
business on the 15th day of the calendar month preceding the calendar month in
which the expiration date is then scheduled to occur that they wish to terminate
the Letter of Credit on the next expiration date thereof or (ii) the issuer of
the Letter of Credit notifies ALS and the Borrower on or before the 60th day
preceding the then-current expiration date of the Letter of Credit that it will
not automatically extend the expiration date of the Letter of Credit.
"Letter of Credit Deficiency Event" shall mean, at any time of
---------------------------------
determination, the Available Letter of Credit Amount (or, if applicable, the
amount on deposit in the Cash Collateral Account) at such time is less than the
Required Letter of Credit Amount at such time; provided, that, a Letter of
--------
Credit Deficiency Event shall be deemed not to exist if the Agent determines, in
its reasonable discretion, that such Letter of Credit Deficiency Event has
occurred solely as the result of the failure to exist sufficient availability
under the Reimbursement Agreement (other than as a result of the occurrence of
an event of default or an event which, with the passage of time or the giving of
notice or both, would become an event of default) to reinstate the amount
available to be drawn thereunder to an amount equal to the Required Letter of
Credit Amount.
"Letter of Credit Issuer" shall mean, with respect to any Letter of
-----------------------
Credit, the bank, banks or other similar institution or institutions party to
the related Reimbursement Agreement.
"LIBOR Base Rate" shall mean, with respect to each day during each
---------------
Interest Period pertaining to a LIBOR Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate Service (or otherwise on such service),
the "LIBOR Base Rate" for purposes of this definition shall be determined by
reference to such other comparable publicly quoted service for displaying
eurodollar rates as may be reasonably selected by the Lender or, in the absence
of such availability, by reference to the arithmetic average (rounded upwards to
the nearest 1/100th of 1%) of the rates at which deposits in United States
dollars are offered by four reference banks reasonably selected by the Agent in
the interbank eurodollar market at or about 11:00 A.M. (London time), two
Business Days prior to the beginning of such
19
<PAGE>
Interest Period for delivery on the first day of such Interest Period for the
number of days comprised therein.
"LIBOR Loan" shall mean a Loan the rate of interest applicable to
----------
which is based upon the LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each day during each Interest
----------
Period pertaining to a LIBOR Loan, a rate per annum, expressed as a percentage
(rounded upward to the nearest 1/100th of 1%), determined for such day, equal to
the LIBOR Base Rate divided by 1.00 minus the Eurocurrency Reserve Requirements.
"Lien" shall mean any mortgage, lien, encumbrance, charge or other
----
security interest, whether arising under contract, by operation of law, judicial
process or otherwise.
"Loan" shall have the meaning specified in Section 2.01(a) hereof.
----
"Loan Agreement" shall mean this Loan and Security Agreement, as same
--------------
may be amended, supplemented or otherwise modified from time to time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
--------------
Note, the Lockbox Assignment Agreements, the Intercreditor Agreement, the
Transfer Agreement and the Reimbursement Agreement.
"Majority Lenders" shall mean, at any time, Lenders holding at least a
----------------
majority of the then aggregate unpaid principal balance of the Loans, or, if no
such principal amount is then outstanding, Lenders having at least a majority of
the total Commitments; provided that, for purposes hereof, neither the Borrower
--------
nor any of its Affiliates shall be included in (i) the Lenders holding such
amount of the Loans or having such amount of the Commitments or (ii) determining
the aggregate unpaid principal amount of the Loans or the total Commitments.
"Market Value" shall mean, as of any date of determination with
------------
respect to an Eligible Asset, the price at which such Eligible Asset could be
sold as of such date, as determined by the Agent, in its commercially reasonable
discretion.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, assets, property, condition (financial or otherwise) or prospects
of the Borrower, or (b) the validity or enforceability of (i) this Loan
Agreement, the Note or the other Loan Documents or (ii) the rights or remedies
of the Agent or the Lenders hereunder or thereunder.
"Maximum Credit" shall mean $250,000,000.
--------------
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
------------------
as defined in Section 4001(a) of ERISA.
20
<PAGE>
"Non-Excluded Taxes" shall have the meaning specified in Section
------------------
2.12(a).
"Non-U.S. Lender" shall have the meaning specified in Section 2.12(d).
---------------
"Note" shall mean a promissory note provided for by Section 2.02(a)
----
hereof for Loans made by the Lenders and any promissory note delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Obligations" shall mean the unpaid principal of and interest on the
-----------
Note and all other obligations and liabilities of the Borrower to the Lenders
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Loan Agreement, the Note or
the other Loan Documents and any other document made, delivered or given in
connection therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all reasonable fees and disbursements of counsel to the Agent and the Lenders)
or otherwise.
"Obligor" shall mean, with respect to an Asset, the Person who owes
-------
payments under such Asset.
"Operating Agreement" shall mean that certain Limited Liability
-------------------
Company Agreement dated as of May 4, 1998 adopted, executed , and agreed to by
ALS.
"Originator" shall mean ALS and each Approved Affiliate.
----------
"Originator Entity" shall have the meaning specified in Section 7.35.
-----------------
"Other Taxes" shall mean any and all present or future stamp or
-----------
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, the Loan Agreement.
"Past Due" shall mean, with respect to any Equipment Loan or Trade
--------
Receivable, the condition in which any payment thereof, or part thereof, then
due and payable is unpaid, commencing on the day after the original due date
thereof.
"Permitted Investment" shall mean any of the following Investments:
--------------------
21
<PAGE>
(a) any book-entry securities, negotiable instruments or securities
represented by instruments in bearer or registered form which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
full and timely payment by, the full faith and credit of the United States
of America;
(ii) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America or any state thereof (or any domestic branch
of a foreign bank) and subject to supervision and examination by Federal or
state banking or depository institutions authorities; provided, however,
-------- -------
that at the time of the investment or contractual commitment to invest
therein the commercial paper or other short-term unsecured debt obligations
(other than such obligations the rating of which is based on the credit of
a Person other than such depository institution or trust company) thereof
shall be rated at least A-1 by Standard & Poor's, P-1 by Moody's Investors
Service, Inc. or F-1 by Fitch Investors Service, Inc.;
(iii) commercial paper, at the time of the investment or contractual
commitment to invest therein, rated at least A-1 by Standard & Poor's or P-
1 by Moody's Investors Service, Inc.;
(iv) investments in money market funds having, at the time of the
investment or contractual commitment to invest therein, ratings of at
least A-1 by Standard & Poor's or P-1 by Moody's Investors Service, Inc.
(including funds for which the Agent or the Lenders or any of their
respective affiliates is investment manager or advisor);
(v) bankers' acceptances issued by any depository institution or
trust company referred to in clause (iii) above;
(vi) any other investment permitted by Moody's Investors Service,
Inc. or Standard & Poor's for short-term investment of funds supporting
securities with a rating of A-1/P-1 or better; or
(vii) any other investment agreed to in writing by the Borrower and
the Agent;
(b) deposits in cash into accounts with any Eligible Institution;
and
(c) Investments by the Borrower in a Special Purpose Entity in
connection with a Permitted Securitization.
"Permitted Co-Investors" shall mean, BRS or any Person which acquires
----------------------
BRS's interest in Alliance Laundry Holdings LLC with the consent of Bain/RCL,
L.L.C.
"Permitted Investors" shall mean the collective reference to Bain
-------------------
Capital, Inc., the
22
<PAGE>
Bain Investors and their respective Control Investment Affiliates.
"Permitted Lien" shall mean (i) any Lien to be released simultaneously
--------------
with the pledge to the Agent hereunder, (ii) any Lien or ownership arising under
the Loan Documents, (iii) liens for taxes, assessments or charges of any
governmental authority (other than liens arising under Section 6321 of the
Internal Revenue Code or Section 302(f) or 4068 of ERISA) and liens of
landlords, carriers, warehousemen, mechanics and materialmen imposed by law in
the ordinary course of business, in each case (a) for amounts not yet due or (b)
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP, provided that the aggregate amount secured
by all liens referred to in this clause (b) does not exceed $500,000, (iv) any
Liens arising solely as a result of any action taken by the Agent or the Lenders
under the Loan Documents, (v) with respect to Trade Receivable Lockbox Accounts,
liens in favor of The First National Bank of Chicago, as agent, under the
Existing Purchase Agreements, the Trade Receivable Lockbox Assignment Agreements
and any related agreements; provided, that such liens shall cease to be
--------
Permitted Liens on July 31, 1998, and (vi) with respect to any Equipment, liens
in favor of Borrower arising under the applicable Equipment Loan Documents, and
mechanics' liens, landlords' liens and similar statutory liens or encumbrances
on the applicable Obligor's interest in the Equipment.
"Permitted Refinancing Indebtedness" shall mean Indebtedness incurred
----------------------------------
by the Borrower in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund any Indebtedness permitted
to be incurred under this Loan Agreement; provided, that the principal amount
--------
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued and unpaid interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith).
"Permitted Securitization" shall mean any transaction or series of
------------------------
related transactions for the sale or financing of receivables or similar assets
(the "Sold Assets") owned by the Borrower pursuant to which the Sold Assets are
held by or transferred to a special purpose entity structured in a manner which
enhances the credit or diminishes the bankruptcy risks attendant upon creditors
of such entity (any such entity so structured, a "Special Purpose Entity").
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
112 of the Code or Section 307 of ERISA and in respect of which the Borrower or
any ERISA Affiliate is (or if such plan were
23
<PAGE>
terminated would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Post-Default Rate" shall mean a rate per annum equal to 2.0% plus the
-----------------
interest rate then applicable to the Loans.
"Principal Collections" shall mean, with respect to an Equipment Loan,
---------------------
that portion of Collections attributable, in accordance with the Servicer's
customary practices, to principal payments on such Equipment Loan.
"Qualifying Financial Institution" shall mean a financial institution
--------------------------------
(i) with capital and surplus in excess of $100,000,000 having a long-term
unsecured and senior debt credit rating of at least A (or the equivalent
thereof) by Moody's Investors Service, Inc. and Standard & Poor's or (ii) whose
obligations are guaranteed by its parent company if such parent company has
credit ratings at least equal to the credit ratings referred to in clause (i)
above.
"Regulations G, T, U and X" shall mean Regulations G, T, U and X of
-------------------------
the Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"Reimbursement Agreement" shall mean the Credit Agreement, or such
-----------------------
other the agreement between ALS and the related Letter of Credit Issuer
containing reimbursement provisions with respect to a Letter of Credit.
"Request for Borrowing" shall have the meaning specified in Section
---------------------
2.03(a) hereof.
"Required Excess Spread Amount" shall mean (x) at any time (i) when
-----------------------------
the aggregate principal amount of Loans outstanding exceeds $125,00,000 and (ii)
during which an Excess Spread Sweep Event has occurred and is continuing, 5% of
the aggregate principal amount of Loans outstanding at such time, and (y) at any
other time, zero.
"Required Letter of Credit Amount" shall mean (i) at any time when the
--------------------------------
aggregate principal amount of Loans outstanding is less than or equal to
$125,000,000, an amount equal to 10.0% of the aggregate principal amount of
Loans outstanding at such time, and (ii) at any time when the aggregate
principal amount of Loans outstanding is greater than $125,000,000, an amount
equal to 5.0% of the aggregate principal amount of Loans outstanding at such
time.
"Requirement of Law" shall mean as to any Person, any law, treaty,
------------------
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
24
<PAGE>
"Responsible Officer" shall mean, as to any Person, the chief
-------------------
executive officer, or, with respect to financial matters, the chief financial
officer, treasurer or a director of financial services.
"Secured Obligations" shall have the meaning specified in Section
-------------------
4.01(b) hereof.
"Servicer" shall mean ALS, as servicer of the Assets under the
--------
Transfer Agreement, and any successor thereto approved by the Agent.
"Servicing Agreement" shall have the meaning specified in Section
-------------------
12.14(c) hereof.
"Servicing Records" shall have the meaning specified in Section
-----------------
12.14(b) hereof.
"Sold Assets" shall have the meaning specified in the definition of
-----------
Permitted Securitization.
"Special Purpose Entity" shall have the meaning specified in the
----------------------
definition of Permitted Securitization.
"Stated Amount" shall mean, with respect to a Letter of Credit, the
-------------
"Stated Amount" as defined in such Letter of Credit.
"Subordinated Debt" shall have the meaning specified in Section 8(y)
-----------------
hereof.
"Subsidiary" shall mean, as to any Person, a corporation, partnership
----------
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Tangible Net Worth" shall mean, with respect to any Person, without
------------------
duplication, as of any date of determination, the aggregate amount of
shareholders' equity of such Person determined in conformity with GAAP as set
forth in the financial statements of the such Person.
"Termination Date" shall mean May 5, 2003.
----------------
"Trade Receivable" shall mean any indebtedness and other obligations
----------------
(other than an Equipment Loan) owed to an Originator (prior to giving effect to
any sale or other transfer to the Borrower under the Transfer Agreement or any
transfer or conveyance hereunder) whether constituting an account, chattel paper
or a general intangible, arising in connection with the sale of goods or
merchandise or the rendering of services by such Originator, which includes,
without limitation, the obligation to pay any finance, interest, late payment or
similar charges with respect
25
<PAGE>
thereto, which was purchased by the Borrower from such Originator or otherwise
conveyed to the Borrower by such Originator pursuant to the Transfer Agreement.
Indebtedness and other rights and obligations arising from any one transaction,
including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Trade Receivable
separate from a Trade Receivable consisting of the indebtedness and other rights
and obligations arising from any other transaction. Restructurings and
extensions of such indebtedness and other rights and obligations including,
without limitation, a restructuring in which a new Obligor is permitted to
assume the obligations of an existing Obligor, shall not be deemed to give rise
to the creation of new Trade Receivables.
"Trade Receivable Collections" shall mean, with respect to any Trade
----------------------------
Receivable comprising Collateral for the Loan, the sum of all amounts, whether
in the form of cash, checks, drafts, or other instruments, received by the
Borrower, the related Originator, the Servicer or in a Trade Receivable Lockbox
Account in payment of, or applied to, any amount owed by an Obligor on account
of such Trade Receivable (including but not limited to all amounts received on
account of any Defaulted Receivable).
"Trade Receivable Lockbox" shall have the meaning specified in Section
------------------------
4.10(a) hereof.
"Trade Receivable Lockbox Accounts" shall have the meaning specified
---------------------------------
in Section 4.10(a) hereof.
"Trade Receivable Lockbox Assignment Agreement" shall have the meaning
---------------------------------------------
specified in Section 4.10(a) hereof.
"Trade Receivable Lockbox Banks" shall have the meaning specified in
------------------------------
Section 4.10(a) hereof.
"Trade Receivable Lockbox Notice" shall have the meaning specified in
-------------------------------
Section 4.10(e) hereof.
"Trade Receivables Monthly Data Pool Report" shall mean, with respect
------------------------------------------
to any fiscal month, a computer diskette or direct modem electronic
transmission, containing (i) a complete data profile report in Excel format
substantially in the form of Exhibit G hereto (including an updated Asset
Schedule with respect to Eligible Trade Receivables at the end of the fiscal
month most recently completed), and (ii) any other information with respect to
Eligible Trade Receivables reasonably requested by the Agent.
"Trade Receivables Monthly Report Date" shall mean the tenth Business
-------------------------------------
Day following the end of any fiscal month.
"Transfer Agreement" shall mean that certain Receivables Purchase
------------------
Agreement
26
<PAGE>
dated as of May 5, 1998 between the Borrower, as buyer, and each Originator, as
seller, as amended, supplemented or otherwise modified from time to time.
"Underwriting Guidelines" shall mean the Underwriting Guidelines and
-----------------------
Policies and Procedures Manual (as defined in the Transfer Agreement).
"Underwriting Letter Agreement" shall mean that certain letter
-----------------------------
agreement dated as of the date hereof by and between the Borrower and the Agent
with respect to its right of first refusal to provide certain investment banking
services through its Affiliates to the Borrower and its Affiliates,
substantially in the form attached to this Loan Agreement as Exhibit C.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
-----------------------
effect on the date hereof in the State of New York; provided, that if by reason
--------
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
1.02. Accounting Terms and Determinations.
------------------------------------
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Agent or any
Lender hereunder shall be prepared, in accordance with GAAP.
27
<PAGE>
SECTION 2. LOANS, NOTE AND PREPAYMENTS.
- -------------------------------------------
2.01. Loans.
-----
(a) Subject to the terms and conditions of this Loan Agreement, each
Lender hereby severally and not jointly shall from time to time make loans
(individually, a "Loan" and collectively, the "Loans") to the Borrower in
---- -----
Dollars, on any Business Day from and including the Effective Date to but
excluding the Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the lesser of (i) such Lender's Commitment
and (ii) such Lender's Commitment Percentage of the Borrowing Base; provided,
--------
however, that (x) the aggregate principal amount of Loans secured by Equipment
- -------
Loans at any time outstanding made by such Lender shall not exceed such Lender's
Commitment Percentage of the aggregate Collateral Value of Eligible Equipment
Loans and (y) the aggregate principal amount of Loans secured by Trade
Receivables at any time outstanding made by such Lender shall not exceed such
Lender's Commitment Percentage of the aggregate Collateral Value of Eligible
Trade Receivables. All Loans shall be made by the Lenders proportionately to
their respective Commitment Percentages, it being understood that no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Loan hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of any such failure. A Lender shall not be
obligated to make a Loan pursuant to this Section 2.01 on any date to the extent
that (i) the aggregate principal amount of all outstanding Loans immediately
after the making of such requested Loan and all other Loans to be made on such
date would exceed the Maximum Credit, (ii) the aggregate principal amount of all
outstanding Loans secured by Equipment Loans immediately after the making of
such requested Loan and all other Loans to be made on such date would exceed
$200,000,000, or (iii) the aggregate principal amount of all outstanding Loans
secured by Trade Receivables immediately after the making of such requested Loan
and all other Loans to be made on such date would exceed $100,000,000. Subject
to the terms and conditions of this Loan Agreement, during the term of this Loan
Agreement the Borrower may borrow, repay and reborrow hereunder.
(b) In no event shall a Loan be made on a Funding Date when (i) any
Default or Event of Default has occurred and is continuing or would exist after
the making of such Loan on such Funding Date or (ii) a Letter of Credit
Deficiency Event has occurred; provided, that if a Letter of Credit Deficient
--------
Event is no longer continuing, the Lenders may, in their sole discretion, make
Loans to the Borrower. In no event shall a new Loan secured by Trade
Receivables due from Amana or Coinmach be made on a Funding Date when an Amana
Trigger Event or a Coinmach Trigger Event, as the case may be, has occurred and
is continuing or would exist after the making of such new Loan on the Funding
Date.
2.02. Note.
----
(a) Each Loan made by a Lender shall be evidenced by a single
promissory
28
<PAGE>
note of the Borrower substantially in the form of Exhibit A hereto (the "Note"),
----
dated the date of the initial Loan, payable to the Agent for the benefit of the
Lenders in a principal amount equal to the Maximum Commitment and otherwise duly
completed. The Agent may, and shall at the request of the Majority Lenders,
require the Borrower to subdivide the Note by exchange for promissory notes of
lesser denominations payable to each Lender in a principal amount equal to the
Commitment of such Lender.
(b) The date, amount and interest rate of each Loan made by a Lender
to the Borrower, and each payment made on account of the principal thereof,
shall be recorded by such Lender on its books and, prior to any transfer of such
Lender's Note, endorsed by such Lender on the schedule attached to such Note or
any continuation thereof; provided, that the failure of a Lender to make any
--------
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing hereunder or under such Lender's
Note in respect of Loans.
2.03. Procedure for Borrowing.
-----------------------
(a) The Borrower may request one or more borrowings hereunder, on
any Business Day during the period from and including the Effective Date to but
excluding the Termination Date, by delivering to the Agent, with respect to each
such borrowing, an irrevocable written request for borrowing, substantially in
the form of Exhib it B (a "Request for Borrowing"), which request must be
---------------------
received by the Agent no later than 11:00 a.m., New York City time, one (1)
Business Day prior to the requested Funding Date. Such Request for Borrowing
shall (i) attach an Asset Schedule (and a computer readable diskette or
collateral tape) in respect of the Eligible Assets that the Borrower proposes to
pledge to the Lenders and include in the Borrowing Base in connection with such
Loan, (ii) specify the requested Funding Date, which shall be at least one (1)
Business Day after the date of such Request for Borrowing, (iii) specify whether
such Loan shall be secured by Equipment Loans or Trade Receivables and (iv)
attach an officer's certificate signed by a Responsible Officer of the Borrower
certifying that the statements set forth in Sections 5.02(a) and (b) hereof are
true and correct as of the date of such Request for Borrowing and will be true
and correct as of the requested Funding Date. Promptly after receipt of a
Request for Borrowing, the Agent shall notify the Lenders of the proposed
borrowing.
(b) Notwithstanding anything to the contrary in this Loan
Agreement, the Lenders shall have no obligation to make any Loans hereunder if
there shall have occurred any material adverse change in the financial condition
of the Borrower. The Agent shall promptly notify the Borrower of any
determination by the Agent of the foregoing.
2.04. Repayment of Loans; Interest.
----------------------------
(a) Each outstanding Loan shall mature, and the principal amount
thereof shall be payable, on the Termination Date.
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<PAGE>
(b) Each Loan made by the Lenders shall be a LIBOR Rate Loan
(unless converted to a Federal Funds Rate Loan in accordance with Section 2.14)
and shall bear interest on the unpaid principal amount thereof for the period
from and including the Funding Date with respect to such Loan to but excluding
the date such Loan shall be paid in full. Each LIBOR Loan shall bear interest
for each day during each Interest Period with respect thereto at a rate per
annum equal to the LIBOR Rate determined for such day plus the Applicable
Margin, and each Federal Funds Rate Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Federal Funds Rate plus the Applicable Margin. Notwithstanding the foregoing,
the Borrower hereby promises to pay to each Lender interest at the applicable
Post-Default Rate on any principal of any Loan and on any other amount payable
by the Borrower hereunder or under any Note or any other Loan Document that
shall not be paid in full when due (whether at stated maturity, by acceleration
or by mandatory prepayment or otherwise), for the period from and including the
due date thereof to but excluding the date the same is paid in full (both before
and after judgment).
(c) Accrued interest on each Loan shall be payable on each Interest
Payment Date, on the date of any prepayment of any Loan (other than a Loan
secured by Trade Receivables prepaid in accordance with Section 4.10(d)) and on
the Termination Date, except that interest payable at the Post-Default Rate
shall be payable from time to time on demand.
2.05. Optional Prepayments
--------------------
The Loans are repayable at any time without premium or
penalty, in whole or in part, but subject to Section 2.07. Any amounts prepaid
shall be applied to repay the outstanding principal amount of any Loans
(together with interest thereon) until paid in full. If the Borrower intends to
repay a Loan, the Borrower shall give two (2) Business Days' prior written
notice thereof to the Agent. If such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid. Except as otherwise
provided in this Loan Agreement to the contrary, all payments received by the
Agent hereunder shall be remitted to each Lender pro rata based on such Lender's
Commitment Percentage. If the due date of any payment hereunder or under a Note
would otherwise fall on a day which is not a Business Day, such due date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension. Partial
prepayments shall be in an aggregate principal amount of $100,000 or more.
Amounts prepaid may be reborrowed in accordance with the terms of this Loan
Agreement. Notwithstanding the provisions of this Loan Agreement to the
contrary, the provisions of this Section 2.05 (other than the immediately
preceding sentence and the first sentence of this Section 2.05) shall not be
applicable to the prepayment in accordance with Section 4.10(d) of Loans secured
by Trade Receivables.
2.06. Mandatory Prepayment or Pledge.
------------------------------
30
<PAGE>
(a) In the event the Borrower sells or otherwise disposes of an Asset,
whether through a Permitted Securitization or otherwise, the Borrower shall
simultaneous with the closing thereof prepay the Loans in an amount equal to the
lesser of (i) the net proceeds (after payment of all reasonable costs and
expenses incurred in connection therewith) received by the Borrower from any
such transaction and (ii) an amount designated by the Borrower in its sole
discretion, provided, that after giving effect to such repayment (A) the
--------
aggregate outstanding amount of Loans secured by Equipment Loans shall not
exceed the aggregate Collateral Value of Eligible Equipment Loans included in
the Borrowing Base and (B) the aggregate outstanding amount of Loans secured by
Trade Receivables shall not exceed the aggregate Collateral Value of Eligible
Trade Receivables included in the Borrowing Base.
(b) If at any time (i) the Borrowing Base with respect to Equipment
Loans, as determined by the Agent with notice given by the Agent to the Borrower
on any Business Day, is less than the aggregate amount of outstanding Loans
secured by Equipment Loans or (ii) the Borrowing Base with respect to Trade
Receivables, as determined by the Agent with notice given by the Agent to the
Borrower on any Business Day, is less than the aggregate amount of outstanding
Loans secured by Trade Receivables (in each case, with respect to all Assets in
which the Agent retains a security interest pursuant to this Loan Agreement),
the Borrower shall no later than five (5) Business Days after receipt of such
notice, either prepay the applicable Loans in part or in whole or pledge
additional Collateral to the Agent (which Collateral shall be in all respects
acceptable to the Agent; provided, that such Collateral shall be deemed to be in
--------
all respects acceptable to the Agent if such Collateral is Eligible Equipment
Loans or Eligible Trade Receivables, as applicable), such that after giving
effect to such prepayment or pledge the applicable Borrowing Base is not less
than the outstanding principal amount of the related Loans.
(c) In the event the Borrower fails to prepay the Loans or pledge
additional Collateral pursuant to subsection (a) or (b) above, the Agent shall
make a drawing on the Letter of Credit in an amount (up to the lesser of (x) the
Available Letter of Credit Amount on the date of such drawing and (y) the
positive result, if any, of (1) the Required Letter of Credit Amount on the date
of such drawing minus (2) the aggregate amount drawn on the Letter of Credit
prior to the date of such drawing with respect to which the Letter of Credit has
not been reinstated) (such amount drawn, the "Drawing Amount") equal to (i) in
--------------
the case of subsection (a) above the net proceeds received by the Borrower in
connection with the sale or other disposition of Assets or (ii) in the case of
subsection (b) above, the amount which when applied to the payment of the
outstanding principal amount of the Loans would cause the Borrowing Base to be
equal to the outstanding principal amount of the Loans. Any Drawing Amount
shall be applied by the Lenders to the payment of the outstanding principal
amount of the Loans.
(d) Notwithstanding the provisions of subsections (a) and (b) of this
Section 2.06, if (i) as the result of the sale or other disposition of an
Equipment Loan or a Trade Receivable the Borrowing Base with respect to Eligible
Equipment Loans or Eligible Trade Receivables, as the case may be, is less than
the aggregate outstanding principal amount of Loans
31
<PAGE>
secured by Eligible Equipment Loans or Eligible Trade Receivables, as the case
may be, or (ii) the Agent gives the Borrower notice in accordance with
subsection (b) of this Section 2.06, the Borrower may, in lieu of or in addition
to the payments or pledges contemplated by subsections (a) and (b) of this
Section 2.06, convert Loans of one type into Loans of another type in an amount
designated by the Borrower in its sole discretion, provided, that after giving
--------
effect to such conversion, repayment and/or pledge (A) the aggregate outstanding
amount of Loans secured by Equipment Loans shall not exceed the aggregate
Collateral Value of Eligible Equipment Loans included in the Borrowing Base and
(B) the aggregate outstanding amount of Loans secured by Trade Receivables shall
not exceed the aggregate Collateral Value of Eligible Trade Receivables included
in the Borrowing Base
2.07. Indemnity
---------
Upon demand by a Lender, the Borrower shall indemnify such Lender
and hold such Lender harmless from any net loss or expense (not to include any
lost profit or opportunity) which such Lender sustains or incurs as a
consequence of (i) default by the Borrower in making any prepayment after the
Borrower has given a notice in accordance with Section 2.05 of a prepayment of a
Loan, (ii) any optional prepayment in accordance with Section 2.05 (other than
any prepayment in accordance with Section 4.10(d) of Loans secured by Trade
Receivables) or mandatory prepayment required pursuant to Section 2.06 (other
than a mandatory prepayment through a Permitted Securitization) on any day other
than the last day of an Interest Period (including, without limitation, in each
case, any such loss or expense arising from the reemployment of funds obtained
by such Lender to maintain its Loans hereunder or from fees payable to terminate
the deposits from which such funds were obtained) or (iii) default by the
Borrower in making a borrowing of LIBOR Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Loan Agreement. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, for the period from the date of such prepayment or of such failure to
borrow to the last day of such Interest Period (or, in the case of a failure to
borrow, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate (providing reasonable support as to any amounts due) as to
any amounts payable pursuant to this Section 2.07 submitted to the Borrower by
such Lender shall be conclusive in the absence of manifest error. This Section
2.07 shall survive termination of this Loan Agreement and payment of the Note.
2.08. Purpose of Loans
----------------
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<PAGE>
Each Loan shall be used to finance the Eligible Assets
identified to the Agent in writing on each Asset Schedule, as such Asset
Schedule may be amended from time to time.
2.09. Fees
----
The Borrower agrees to pay to the Agent and the Lenders such fees
at such times as set forth in a separate letter agreement between the Borrower
and the Agent.
2.10. Inability to Determine Interest Rate
------------------------------------
If prior to the first day of any Interest Period:
(a) a Lender shall have reasonably determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate for such Interest Period, or
(b) the LIBOR Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to a Lender (as
reasonably determined and certified by such Lender) of making or maintaining
their affected Loans during such Interest Period,
such Lender shall give facsimile or telephonic notice thereof to the Borrower as
soon as practicable thereafter. If such notice is given (x) any LIBOR Loans
requested to be made on the first day of such Interest Period shall be made as
Federal Funds Rate Loans, (y) any Loans that were to have been converted on the
first day of such Interest Period to LIBOR Loans in accordance with Section 2.14
shall be continued as Federal Funds Rate Loans and (z) any outstanding LIBOR
Loans shall be converted on the last day of the then current Interest Period to
Federal Funds Rate Loans in accordance with Section 2.14. Until such Lender
provides notice to the Borrower pursuant to Section 2.14 that the circumstances
which gave rise to the original notice under this Section no longer exist, no
further LIBOR Loans shall be made or continued as such.
2.11. Requirements of Law.
-------------------
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
33
<PAGE>
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to this Loan Agreement or any LIBOR Loan made by it, or change
the basis of taxation of payments to the Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.12 and changes in the rate of
tax on the overall net income of the Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(iii) shall impose on the Lender any other condition,
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, continuing or
maintaining LIBOR Loans, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If such Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.11, it shall
promptly notify the Borrower of the event by reason of which it has become so
entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material in its commercially reasonable discretion, then from time to time,
after submission by such Lender to the Borrower of a written request therefor,
the Borrower shall promptly pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction.
(c) A certificate (providing reasonable support as to the amounts
requested) as to any additional amounts payable pursuant to this Section 2.11
submitted by such Lender to the Borrower shall be conclusive in the absence of
manifest error. The obligations of the Borrower pursuant to this Section 2.11
shall survive the termination of this Loan Agreement and the payment of the
Loans and all other amounts payable hereunder.
34
<PAGE>
2.12. Taxes.
-----
(a) All payments made by the Borrower under this Loan Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on any Lender as a result of a present or former connection between such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this Loan
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
------------
Taxes") or Other Taxes are required to be withheld from any amounts payable to a
Lender hereunder, the amounts so payable to such Lender shall be increased to
the extent necessary to yield to such Lender (after payment of all Non-Excluded
Taxes and Other Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Loan Agreement, provided, however,
-------- -------
that the Borrower shall not be required to increase any such amounts payable to
a Lender with respect to any Non-Excluded Taxes (i) that are attributable to
such Lender's failure to comply with the requirements of paragraph (d) or (e) of
this Section 2.12 or (ii) that are United States withholding taxes imposed on
amounts payable to such Lender at the time such Lender becomes a party to this
Loan Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to Section 2.12(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
affected Lender a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the affected Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify such Lender for any incremental taxes,
interest or penalties that may become payable by such Lender as a result of any
such failure. The agreements in this Section 2.12 shall survive the termination
of this Loan Agreement and the payment of the Loans and all other amounts
payable hereunder.
(d) Each Lender that is not a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States (or any jurisdiction thereof), or any estate
or trust that is subject to federal income taxation
35
<PAGE>
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
---------------
the Borrower two copies of either U.S. Internal Revenue Service Form 1001 or
Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto properly completed and duly executed by such Non-
U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrower under this Loan Agreement and
the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Loan Agreement. In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-
U.S. Lender shall promptly notify the Borrower at any time it determines that it
is no longer in a position to provide any previously delivered certificate to
the Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
Section 2.12(d), a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.12(d) that such Non-U.S. Lender is not legally able
to deliver.
(e) Without limiting the requirements of Section 2.12(d), a Lender
that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under
this Loan Agreement shall deliver to the Borrower, at the time or times
prescribed by applicable law or reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate,
provided that such Lender is legally entitled to complete, execute and deliver
- --------
such documentation and in the Lender's reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender.
(f) If a Lender receives a refund in respect of Non-Excluded Taxes
paid by the Borrower, which in the good faith judgment of such Lender is
allocable to such payment, it shall promptly pay such refund, together with any
other amounts paid by the Borrower in connection with such refunded Non-Excluded
Taxes, to the Borrower, net of all out-of-pocket expenses of such Lender
incurred in obtaining such refund, provided that the Borrower agrees to promptly
--------
return such refund to such Lender if it receives notice from such Lender that
such Lender is required to repay such refund.
2.13. Illegality
----------
Notwithstanding any other provision herein, if the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for a Lender to make or maintain LIBOR Loans as
contemplated by this Loan Agreement, (a) the commitment of such Lender hereunder
to make LIBOR Loans shall forthwith be suspended until
36
<PAGE>
such time as such Lender may again make and maintain LIBOR Loans and (b)
the Loans then outstanding as LIBOR Loans, if any, shall be converted into
Federal Funds Rate Loans in accordance with Section 2.14. If any such conversion
of a LIBOR Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 2.07.
2.14. Conversions Pursuant to Sections 2.10 and 2.13
----------------------------------------------
If the LIBOR Loans (such LIBOR Loans being herein called "Affected
Loans") are to be converted pursuant to Section 2.10 or 2.13, such Affected
Loans shall be automatically converted into Federal Funds Rate Loans on the last
day(s) of the then current Interest Period(s) for such Affected Loans (or, in
the case of a conversion required by Section 2.13, on such earlier date as the
affected Lender may specify to the Borrower). Unless and until the affected
Lenders give notice that the circumstances specified in Section 2.10 or 2.13, as
the case may be, which gave rise to such conversion no longer exist, to the
extent that the Affected Loans have been so converted, all payments and
prepayments of principal which would otherwise be applied to the Affected Loans
shall be applied instead to the applicable Federal Funds Rate Loans into which
such Affected Loans were converted. The affected Lenders shall give such notice
as soon as practicable thereafter, but in no event later than the last day(s) of
the then current Interest Period(s) for the Affected Loans if such circumstances
cease to exist at any time prior to the last day(s) of such Interest Period(s).
Upon notice from the affected Lenders that the circumstances specified in
Section 2.10 or 2.13, as the case may be, which gave rise to such conversion no
longer exist, to the extent that the Affected Loans have been converted to
Federal Funds Rate Loans, the Affected Loans shall be automatically converted
into LIBOR Loans on the last day(s) of the then current Interest Period(s) for
the Affected Loans.
37
<PAGE>
SECTION 3. PAYMENTS; COMPUTATIONS; ETC.
3.01. Payments
--------
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the Note shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Agent at the following
account maintained by the Agent (the "Agent Account"): Citibank N.A., for the
account of Lehman Commercial Paper Inc., for the benefit of the Lenders party to
the Loan and Security Agreement, Account # 40615659, ABA # 021000089, Reference:
Alliance Laundry Receivables Warehouse LLC (with instructions to please confirm
to Christopher Czako at (201) 524-4494), not later than 2:00 p.m., New York City
time, on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day).
3.02. Computations
------------
Interest on the Loans shall be computed on the basis of a 360-day
year for the actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable.
3.03. Extension Fee
-------------
The Borrower may, upon two Business Days' prior written notice to
the Agent, extend the Allotted Period with respect to any Eligible Equipment
Loan which is not Past Due or is not a Defaulted Equipment Loan by the payment
of a fee (the "Extension Fee") in an amount equal to 0.35% of the Collateral
Value of such Eligible Equipment Loan as the close of business on the last day
of the then current Allotted Period. The Extension Fee shall be payable on or
prior to the last Business Day of the then current Allotted Period in accordance
with Section 3.01 hereof. Notwithstanding anything to the contrary contained
herein, the Allotted Period with respect to any Equipment Loan shall not exceed
thirty-six (36) months.
SECTION 4. COLLATERAL SECURITY.
4.01. Collateral; Security Interest.
-----------------------------
(a) All of the Borrower's right, title and interest in, to
and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, for
so long as the Agent retains its security interest in the same and excluding the
portion of the Collateral in which the Agent has released its security interest
hereunder pursuant to Section 4.09 below, is hereinafter referred to as the
"Collateral":
----------
(i) all Assets;
38
<PAGE>
(ii) Equipment Loan Documents related thereto;
(iii) all rights, remedies, powers and privileges of the Borrower
under such Equipment Loan Documents (including, without limitation, all
rights of the Borrower in and to the Equipment and other interests that are
the subject of the Equipment Loans) and such Trade Receivables;
(iv) all Servicing Records and other books and records (including,
without limitation, computer programs, tapes and other computer storage
media) relating to any of the foregoing;
(v) all recourse or support obligations, surety bonds, guarantees,
indemnities and security relating to any of the foregoing and all letters
of credit relating thereto;
(vi) all insurance policies covering the related Equipment and any
proceeds with respect thereto and all FCIA Insurance covering Trade
Receivables the Obligors with respect to which are not resident in the
United States;
(vii) to the extent not included in the foregoing, all "accounts,"
"chattel paper," "instruments," "goods" and "general intangibles" (as
defined in the Uniform Commercial Code) relating to or constituting any and
all of the foregoing in whole or in part;
(viii) all lockboxes, bank accounts or cash collateral accounts, any
rights in and to any escrow assets or any similar accounts or assets
relating to, or containing or constituting Collections or proceeds of or
distributions on, any of the foregoing (including, without limitation, the
Equipment Loan Lockbox Account, the Trade Receivable Lockbox Accounts and,
if applicable, the Cash Collateral Account) and all cash or other property
on deposit therein;
(ix) all other property of the Borrower of any nature whatsoever
(including, without limitation, all "documents," "equipment" and
"inventory" (as defined in the Uniform Commercial Code);
(x) all rights of the Borrower against the Originators under the
Transfer Agreement; and
(xi) any and all replacements, substitutions, distributions on or
proceeds of any and all of the foregoing.
(b) The Borrower hereby assigns, pledges and grants a security
interest in the Collateral to the Agent for the benefit of the Lenders to secure
the repayment of principal of and
39
<PAGE>
interest on all Loans and all other amounts owing to the Lenders hereunder,
under the Note and under the other Loan Documents (collectively, the "Secured
-------
Obligations"). The Borrower agrees to mark its computer programs and tapes to
- -----------
evidence the interests granted to the Agent hereunder.
4.02. Further Assurances
------------------
At any time and from time to time, upon the written request of the
Agent or any Lender, and at the sole expense of the Borrower, the Borrower will
promptly and duly execute and deliver, or will promptly cause to be executed and
delivered, such further instruments and documents and take such further action
as the Agent or such Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby and the termination
of the Liens conveyed to The First National Bank of Chicago under the Existing
Purchase Agreements with respect to Trade Receivables and any related assets
upon the satisfaction in full of all obligations secured thereby. The Borrower
also hereby authorizes the Agent to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03. Changes in Locations, Name, etc.
--------------------------------
The Borrower shall not (i) change the location of its chief
executive office or chief place of business from that specified in Section 6
hereof or (ii) change its name, identity or corporate structure (or the
equivalent) or change the location where it maintains its records with respect
to the Collateral unless it shall have given the Agent at least 30 days prior
written notice thereof and shall have delivered to the Agent all Uniform
Commercial Code financing statements and amendments thereto as the Agent or any
Lender shall request and shall have taken all other actions deemed necessary by
the Agent or any Lender to continue its perfected status in the Collateral with
the same or better priority.
4.04. Agent's Appointment as Attorney-in-Fact.
---------------------------------------
(a) The Borrower hereby irrevocably constitutes and appoints the
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Agent the power and right, on behalf of the Borrower,
40
<PAGE>
without assent by, but with notice to, the Borrower, to do the following:
(i) in the name of the Borrower or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
insurance or with respect to any other Collateral and to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting any
and all such moneys due under any such insurance or with respect to any
other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and (G)
subject to the Uniform Commercial Code and other applicable law, generally,
to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and to do, at
the Agent's option and the Borrower's expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to protect,
preserve or realize upon the Collateral and the Agent's Liens thereon and
to effect the intent of this Loan Agreement, all as fully and effectively
as the Borrower might do.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Notwithstanding the foregoing, the power of attorney hereby granted
may be exercised only after the occurrence and during the continuance of any
Event of Default hereunder.
(b) The Borrower also authorizes the Agent, at any time after the
occurrence and during the continuance of any Event of Default hereunder, to
execute, in connection with the
41
<PAGE>
sale provided for in Section 4.06 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Agent are solely to protect the
Agent's and each Lender's interests in the Collateral and shall not impose any
duty upon the Agent to exercise any such powers. The Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Agent nor any of its officers, directors, or employees
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
4.05. Performance by Agent of Borrower's Obligations
----------------------------------------------
If the Borrower fails to perform or comply with any of its
agreements contained in the Loan Documents and the Agent shall itself perform or
comply, or otherwise cause performance or compliance, with such agreements, the
expenses of the Agent incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to the
Post-Default Rate, shall be payable by the Borrower to the Agent on demand and
shall constitute Secured Obligations.
4.06. Remedies
--------
If an Event of Default shall occur and be continuing, the Agent,
on behalf of the Lenders, may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Agent without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice otherwise required by this Loan Agreement or
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, advertisements and notices, except for
those specifically provided for elsewhere in this Loan Agreement are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of the Agent or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem commercially reasonable under the circumstances, for cash or on credit
or for future delivery without assumption of any credit risk. Each Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Borrower
further agrees, at the Agent's request, to assemble the Collateral and make it
available to the Agent at places which
42
<PAGE>
the Agent shall reasonably select, whether at the Borrower's premises or
elsewhere. The net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or relating to the Collateral or the rights of the
Agent or the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, shall be applied to the payment in whole or
in part of the Secured Obligations, in such order as the Agent may elect, and
only after such application and after the payment by the Lender of any other
amount required or permitted by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Uniform Commercial Code, need the Lenders
account for the surplus, if any, to the Borrower. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Agent or the Lenders arising out of the exercise by the
Agent or the Lenders of any of their respective rights hereunder, other than
those claims, damages and demands arising from the gross negligence or willful
misconduct of the Agent or a Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least ten (10) days before such sale or other
disposition. The Borrower shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay the
Secured Obligations and the reasonable fees and disbursements of any attorneys
employed by the Agent or a Lender to collect such deficiency.
4.07. Limitation on Duties Regarding Presentation of Collateral
---------------------------------------------------------
The Agent's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Agent deals with similar property for its own account.
Neither the Agent nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
43
<PAGE>
4.08. Powers Coupled with an Interest
-------------------------------
All authorizations and agencies herein contained with respect to
the Collateral are irrevocable and powers coupled with an interest.
4.09. Release of Security Interest.
----------------------------
(a) Upon termination of this Loan Agreement and repayment to
the Lenders of all Secured Obligations and the performance of all then existing
obligations under the Loan Documents, the Agent shall release its security
interest in any remaining Collateral. In addition, from time to time, upon
request of the Borrower, the Agent shall release its security interest in the
Collateral referred to in such request, provided, that, at the time of and
--------
following any such release there shall not have occurred a Default under this
Loan Agreement; provided, further, that following any such release, (i) the
-------- -------
aggregate amount of Loans outstanding secured by Equipment Loans shall not
exceed the Borrowing Base with respect to Equipment Loans and (ii) the aggregate
amount of Loans outstanding secured by Trade Receivables shall not exceed the
Borrowing Base with respect to Trade Receivables (in each case, with respect to
all Assets in which the Agent retains a security interest pursuant to this Loan
Agreement). The preparation and filing of any documents in order to release the
Agent's security interest in the Collateral pursuant to this Section shall be at
the expense of the Borrower.
(b) If the Borrower desires to make any sale or other
disposition of property permitted by Section 7.14, whether through a Permitted
Securitization or otherwise, the Borrower shall (i) provide the Agent not less
than five (5) Business Days notice of such intention and (ii) make any
prepayment of the Loans or delivery of additional Collateral required pursuant
to Section 2.06 concurrently with such sale or other disposition. Upon or
concurrently with the satisfaction by the Borrower of the provisions set forth
in clauses (i) and (ii) of the preceding sentence, the Agent shall release its
security interest in such property so sold or ot herwise disposed of; provided,
--------
that the Agent shall not be obligated to deliver any such release unless after
giving effect to such sale or other disposition (after giving effect to any
application of the proceeds received upon such sale or other disposition), (x)
the aggregate principal amount of Loans outstanding shall not exceed the
Borrowing Base, (y) the aggregate amount of Loans outstanding secured by
Equipment Loans shall not exceed the Borrowing Base with respect to Equipment
Loans and (z) the aggregate amount of Loans outstanding secured by Trade
Receivables shall not exceed the Borrowing Base with respect to Trade
Receivables (in each case, with respect to all Assets in which the Agent retains
a security interest pursuant to this Loan Agreement). Any such release shall be
evidenced by a written instrument and a Uniform Commercial Code termination
statement or amendment executed by Agent delivered to the Borrower. The Borrower
shall be responsible for the preparation of such instruments and termination
statements or amendments.
4.10. Trade Receivable Lockbox Accounts.
---------------------------------
44
<PAGE>
(a) The Borrower and, pursuant to the ACAR Receivables Purchase
Agreement, ACAR have established with the banks listed on Schedule 4.10 (the
"Trade Receivable Lockbox Banks") the lockboxes described on Schedule 4.10 (such
- -------------------------------
lockboxes and each additional or substitute lockbox, a "Trade Receivable
----------------
Lockbox"), the related demand deposit accounts and the other accounts described
on Schedule 4.10 (such demand deposit accounts, other accounts and each
additional or substitute account, a "Trade Receivable Demand Deposit Account")
---------------------------------------
(all such Trade Receivable Lockboxes together with their related Trade
Receivable Demand Deposit Accounts being referred to herein as the "Trade
-----
Receivable Lockbox Accounts"). On or prior to the initial Funding Date, the
- ---------------------------
Borrower shall collaterally assign to the Agent for the benefit of the Lenders
its interest in each Trade Receivable Lockbox Account pursuant to one or more
lockbox and deposit account assignment agreements, substantially in the form of
Exhibit D-1 attached to this Loan Agreement or in other form satisfactory to the
Agent (as amended, supplemented or otherwise modified from time to time, the
"Trade Receivable Lockbox Assignment Agreement"). The Borrower may from time to
- ----------------------------------------------
time designate additional or substitute Trade Receivable Lockbox Accounts by
written notice to the Agent and delivery of a Trade Receivable Lockbox
Assignment Agreement with respect thereto, and such Trade Receivable Lockbox
Accounts shall thereupon constitute "Trade Receivable Lockbox Accounts" for all
purposes hereof. The terms and conditions of each Trade Receivable Lockbox
Account shall be in all respects satisfactory to the Agent. Unless otherwise
approved by the Agent, the Borrower shall instruct each Obligor with respect to
a Trade Receivable comprising Collateral for the Loan (i) to make all payments
with respect thereto to a Trade Receivable Lockbox or a Trade Receivable Demand
Deposit Account and (ii) to cause all account debtors and other obligors with
respect to any obligations securing any such Trade Receivable comprising
Collateral for the Loan to make all payments with respect thereto to the related
Obligor or a Trade Receivable Lockbox. Pursuant to the Trade Receivable Lockbox
Assignment Agreement, the Trade Receivable Lockbox Bank shall be instructed to
deposit all payments in respect of Trade Receivables received in any Trade
Receivable Lockbox into the related Trade Receivable Demand Deposit Account. In
the case of any remittances received in any Trade Receivable Lockbox Accounts
that shall have been identified, to the satisfaction of the Servicer, to not
constitute remittances in respect of Trade Receivables, the Servicer shall
promptly remit such items to the Person identified to it as being the owner of
such remittances. The Borrower shall have the right to withdraw remittances
from the Trade Receivable Lockbox Accounts which are not attributable to Trade
Receivables.
(b) All Trade Receivables Collections received directly by the
Borrower without deposit into a Trade Receivable Lockbox or a Trade Receivable
Demand Deposit Account shall be promptly deposited by the Borrower in the exact
form received, except for any endorsement by the Borrower to the Agent, if
required, in the appropriate Trade Receivable Lockbox Account, and until so
deposited, shall be deemed to be held in trust by the Borrower for and as the
Agent's property and shall not be commingled with the Borrower's other funds.
(c) The Borrower will not, nor will it permit or allow others on its
behalf to, establish a collection account for the receipt of payments with
respect to the Trade Receivables
45
<PAGE>
with a financial institution other than the Trade Receivable Lockbox Accounts
provided for herein.
(d) The Borrower shall direct the Trade Receivable Lockbox Bank to
cause all Trade Receivables Collections deposited in the Trade Receivable
Lockbox Accounts, if any, to be remitted to the Agent Account on a daily basis.
All such Trade Receivables Collections shall be applied by the Lenders to the
payment of the principal amount of the Loans secured by Trade Receivables on the
Business Day of receipt in the Agent Account. For purposes of this Section
4.10(d), any proceeds deposited in the Agent Account after 12:00 p.m., New York
City time, on any Business Day shall be deemed to have been deposited therein on
the next succeeding Business Day.
(e) Upon the occurrence of an Event of Default, the Agent may take
control of the Trade Receivable Lockbox Accounts by delivering to the related
Trade Receivable Lockbox Banks notice in substantially the form attached to the
Trade Receivable Lockbox Assignment Agreement (the "Trade Receivable Lockbox
------------------------
Notice"). From and after the delivery of the Trade Receivable Lockbox Notice,
- ------
the related Trade Receivable Lockbox Accounts shall be under the exclusive
dominion and control of the Agent and the Borrower shall have no right of
withdrawal from such Trade Receivable Lockbox Accounts.
4.11. Equipment Loan Lockbox Accounts.
-------------------------------
(a) The Borrower has established with the banks listed on Schedule
4.11 (the "Equipment Loan Lockbox Banks") the lockboxes described on Schedule
----------------------------
4.11 (such lockboxes and each additional or substitute lockbox, an "Equipment
---------
Loan Lockbox"), the related demand deposit accounts and the other accounts
- ------------
described on Schedule 4.11 (such demand deposit accounts, other accounts and
each additional or substitute account, a "Equipment Loan Demand Deposit
-----------------------------
Account") (all such Equipment Loan Lockboxes together with their related
Equipment Loan Demand Deposit Accounts being referred to herein as the
"Equipment Loan Lockbox Accounts"). On or prior to the initial Funding Date,
- --------------------------------
the Borrower shall deliver to the Agent with respect to each Equipment Loan
Lockbox Account a lockbox and deposit account assignment agreement,
substantially in the form of Exhibit D-2 attached to this Loan Agreement or in
other form satisfactory to the Agent (as amended, supplemented or otherwise
modified from time to time, the "Equipment Loan Lockbox Assignment Agreement")
-------------------------------------------
executed by the Borrower and the related Equipment Loan Lockbox Bank. The
Borrower may from time to time designate additional or substitute Equipment Loan
Lockbox Accounts by written notice to the Agent and delivery of an Equipment
Loan Lockbox Assignment Agreement with respect thereto, and such Equipment Loan
Lockbox Accounts shall thereupon constitute "Equipment Loan Lockbox Accounts"
for all purposes hereof. The terms and conditions of each Equipment Loan
Lockbox Account shall be in all respects satisfactory to the Agent. Unless
otherwise approved by the Agent, the Borrower shall instruct each Obligor with
respect to an Equipment Loan to make all payments with respect thereto to an
Equipment Loan Lockbox or an Equipment Loan Demand
46
<PAGE>
Deposit Account. In the case of any remittances received in any Equipment Loan
Lockbox Accounts that shall have been identified, to the satisfaction of the
Servicer, to not constitute remittances in respect of Equipment Loans, the
Servicer shall promptly remit such items to the Person identified to it as being
the owner of such remittances. The Borrower shall have the right to withdraw
remittances from the Equipment Loan Lockbox Accounts which are not attributable
to Equipment Loans.
(b) All proceeds of Equipment Loans received directly by the Borrower
without deposit into an Equipment Loan Lockbox or an Equipment Loan Demand
Deposit Account shall be promptly deposited by the Borrower in the exact form
received, except for any endorsement by the Borrower to the Agent, if required,
in the appropriate Equipment Loan Lockbox Account, and until so deposited, shall
be deemed to be held in trust by the Borrower for and as the Agent's property
and shall not be commingled with the Borrower's other funds.
(c) The Borrower will not, nor will it permit or allow others on its
behalf to, establish a collection account for the receipt of payments with
respect to the Equipment Loans with a financial institution other than the
Equipment Loan Lockbox Accounts provided for herein.
(d) Funds on deposit in any Equipment Loan Lockbox Account shall be
invested in Permitted Investments selected in writing by the Borrower; provided,
--------
that following the occurrence of an Event of Default, the Agent may select such
Permitted Investments; provided, further, that it is understood and agreed that
-------- -------
the Agent shall not be liable for any loss arising from such investments in
Permitted Investments. All such Permitted Investments shall be held for the
benefit of the Agent, for the benefit of the Lenders, and the Borrower. Funds
on deposit in the Equipment Loan Lockbox Accounts shall be invested in Permitted
Investments that will mature so that such funds will be available on each
Interest Payment Date.
(e) Upon the occurrence of an Event of Default, the Agent may take
control of the Equipment Loan Lockbox Accounts by delivering to the related
Equipment Loan Lockbox Banks notice in substantially the form attached to the
Equipment Loan Lockbox Assignment Agreement (the "Equipment Loan Lockbox
----------------------
Notice"). From and after the delivery of the Equipment Loan Lockbox Notice, the
related Equipment Loan Lockbox Accounts shall be under the exclusive dominion
and control of the Agent and the Borrower shall have no right of withdrawal from
such Equipment Loan Lockbox Accounts.
(f) On each Interest Payment Date, (i) Principal Collections on
deposit in the Equipment Loan Lockbox Account shall be paid to the Agent,
for the benefit of the Lenders, to be applied by the Lenders to the payment
of the principal on the Loans secured by Equipment Loans and (ii) the other
amounts on deposit in the Equipment Loan Lockbox Accounts shall be applied
as follows:
first, to the Agent, for the benefit of the Lenders, interest on the
-----
Loans accrued
47
<PAGE>
through such day and not previously paid,
second, in the event an Excess Spread Sweep Event shall have occurred
------
and is continuing, to the Excess Spread Account in an amount equal to the
lesser of (x) remaining available funds and (y) the amount which after such
deposit in the Excess Spread Account shall cause the amount on deposit
therein to equal the Required Excess Spread Amount, and
third, to the Borrower in an amount equal to remaining available
-----
funds; provided, that if a Default or an Event of Default has occurred and
--------
is continuing such remaining funds shall be paid to the Agent at the Agent
Account for the benefit of the Lenders to be applied to the payment of the
Obligations on the Business Day of receipt in the Agent Account.
4.12. Excess Spread Account.
---------------------
(a) The Borrower has established an excess spread account (the
"Excess Spread Account") in the name of the Agent for the benefit of the
---------------------
Lenders. The Excess Spread Account will be funded in accordance with Section
4.11(f) of this Loan Agreement.
(b) Funds on deposit in the Excess Spread Account shall be
invested in Permitted Investments selected in writing by the Borrower;
provided, that following the occurrence of a Default, the Agent may select such
- --------
Permitted Investments; provided, further, that it is understood and agreed that
-------- -------
the Agent shall not be liable for any loss arising from such investments in
Permitted Investments. All such Permitted Investments shall be held for the
benefit of the Agent, for the benefit of the Lenders.
(c) Except as otherwise provided for herein, the Excess Spread
Account shall be under the sole dominion and control of the Agent. If, at any
time, the Excess Spread Account ceases to be an Eligible Deposit Account, then
the Borrower (or the Agent on its behalf) shall within twenty (20) Business Days
(or such longer period as to which the Agent may consent) establish a new Excess
Spread Account (which shall be an Eligible Deposit Account) and shall transfer
any cash and/or any investments to such new Excess Spread Account. In connection
with the foregoing, the Borrower agrees that the Borrower shall notify the Agent
in writing promptly upon the Excess Spread Account ceasing to be an Eligible
Deposit Account.
(d) If the amount on deposit in the Excess Spread Account on any
Interest Payment Date (after giving effect to any deposits therein and
withdrawals therefrom) is greater than the Required Excess Spread Amount, such
excess shall be paid to the Borrower; provided, that if a Default or an Event of
--------
Default has occurred and is continuing such excess shall be paid to the Agent at
the Agent Account for the benefit of the Lenders to be applied to the payment of
the Obligations on the Business Day of receipt in the Agent Account.
48
<PAGE>
4.13. Legending of Chattel Paper
--------------------------
All original chattel paper that is not held by the Agent or its agent
and that constitutes part of the Collateral shall be stamped or otherwise marked
with the following legend:
"This is the original of this instrument, and a security interest has
been granted in this instrument to Lehman Commercial Paper Inc., as
agent for the benefit of the lenders party to that certain Loan and
Security Agreement dated as of May 5, 1998 among Alliance Laundry
Receivables Warehouse LLC, such lenders and Lehman Commercial Paper
Inc."
Each original of any chattel paper that is retained by the Borrower shall be
stamped or otherwise marked as an "Original."
SECTION 5. CONDITIONS PRECEDENT.
- ---------- ---------------------
5.01. Initial Loan
------------
The agreement of each Lender to make the initial Loan requested to be
made by it hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the following conditions
precedent:
(a) Loan Documents. The Agent shall have received (i) this Loan
--------------
Agreement and the other Loan Documents, executed and delivered by a duly
authorized officer of the Borrower and/or by the other parties thereto, and (ii)
a Note payable to the order of the Agent for the benefit of the Lenders,
executed and delivered by a duly authorized officer of the Borrower, in each
case conforming to the requirements hereof.
(b) Corporate Proceedings. The Agent shall have received a
---------------------
certificate of the Secretary or Assistant Secretary of each of the Borrower and
ALS, dated as of a date reasonably satisfactory to the Agent, certifying (A) (i)
that attached thereto is a true, complete and correct copy of resolutions duly
adopted by the Board of Directors of the Borrower or ALS, as the case may be,
authorizing (1) the execution, delivery and performance of the Loan Documents to
which it is a party, and (2) the transactions contemplated thereunder, and (ii)
that such resolutions have not been amended, modified, revoked or rescinded, and
(B) as to the incumbency and specimen signature of each officer executing any
Loan Documents on behalf of the Borrower or ALS, as the case may be, and such
certificate and the resolutions attached thereto shall be in form and substance
satisfactory to the Agent.
(c) Corporate Documents. The Agent shall have received true and
-------------------
complete copies of the Operating Agreement and by-laws of the Borrower and ALS,
certified as such as of the Closing Date by the Secretary or an Assistant
Secretary of the Borrower and ALS,
49
<PAGE>
respectively.
(d) Legal Opinions. The Agent shall have received the executed
--------------
legal opinion of Kirkland & Ellis, counsel to the Borrower and ALS, in form and
substance satisfactory to the Agent and its counsel.
(e) Fees and Expenses. The Agent and the Lenders shall have received
-----------------
all fees and expenses required to be paid by the Borrower on or prior to the
initial Funding Date.
(f) Underwriting Guidelines. The Agent and the Borrower shall have
-----------------------
agreed upon the Underwriting Guidelines for the Assets.
(g) Underwriting Letter Agreement. The Agent shall have received the
-----------------------------
Underwriting Letter Agreement, executed by a duly authorized officer of the
Borrower.
(h) Reimbursement Agreement. The Agent shall have received an
-----------------------
executed copy of the Reimbursement Agreement, which shall be in form and
substance satisfactory to the Agent.
(i) Filings, Registrations, Recordings. Any documents required to be
----------------------------------
filed, registered or recorded in order to create, in favor of the Agent for the
benefit of the Lenders, a perfected, first priority security interest in the
Collateral, subject to no Liens other than Permitted Liens, shall have been
properly prepared for filing, registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are required
to perfect such first priority security interest (including, without limitation,
a financing statement on Form UCC-1 naming the Borrower as the debtor and the
Agent as secured party and describing the Collateral, and proceeds thereof, as
the collateral).
(j) UCC Searches. The Agent shall have received the results of
------------
Uniform Commercial Code searches made at Borrower's expense with respect to the
Borrower in the state in which its chief executive office is located and all
other states in which filings are required to be made pursuant to Section
5.02(f), together with copies of financing statements disclosed by such searches
and such searches shall disclose no Liens on any assets encumbered by this Loan
Agreement (other than Permitted Liens) or, if Liens other than Permitted Liens
are disclosed, the Agent shall have received satisfactory evidence of release of
such Liens.
(k) Lockbox Agreement. The Agent shall have received an agreement, or
-----------------
an amendment to or assignment of an existing agreement, which shall be in form
and substance satisfactory to the Agent, executed by duly authorized officers of
the Borrower, the Servicer and each of the Equipment Loan Lockbox Banks and the
Trade Receivable Lockbox Banks.
(l) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated
50
<PAGE>
by this Loan Agreement and the other Loan Documents shall be reasonably
satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it or any
Lender may reasonably request.
5.02. Initial and Subsequent Loans
----------------------------
The agreement of each Lender to make any Loan requested to be made by
it on any date (including the initial Loan) is subject to the satisfaction of
the following conditions precedent:
(a) No Default. No Default shall have occurred and be continuing
----------
on such date or after giving effect to the Loans requested to be made on such
date.
(b) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Borrower in or pursuant to the Loan Documents shall be
true and correct in all material respects (in the case of the representations
and warranties in Section 6.16 and Schedule 6.16, solely with respect to Assets
included in the Borrowing Base) on and as of such date as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
(c) Borrowing Base. The aggregate outstanding principal amount of the
--------------
Loans shall not exceed the Borrowing Base on such date and would not exceed the
Borrowing Base after giving effect to the Loans requested to be made on such
date.
(d) Due Diligence Review. The Agent shall have completed its due
--------------------
diligence review, if any, of the Equipment Loan Documents relating to the
Equipment Loans being pledged in connection with the Loans being made on such
Funding Date, the results of which are satisfactory to the Agent. The Agent
may, upon receipt of a Request for Borrowing with respect to a Loan secured by
Equipment Loans, request the Borrower to provide to the Agent copies of
Equipment Loan Documents relating to such Equipment Loans. If, within one
Business Day of the Agent's receipt of copies of such Equipment Loan Documents,
the Agent does not notify the Borrower that the results of the Agent's due
diligence review of such Equipment Loan Documents are not satisfactory, the
condition precedent contained in this subsection (d) shall be deemed to be
satisfied.
(e) Letter of Credit. The Agent shall have received an executed
----------------
Letter of Credit, which shall be in form and substance satisfactory to the
Agent. The Letter of Credit, together with the Stated Amount of all other
outstanding Letters of Credit issued to the Agent, shall have a Stated Amount
equal to the Required Letter of Credit Amount.
The Borrower may, in lieu of delivering a Letter of Credit or Letters
of Credit to the Agent, establish a Cash Collateral Account in the name of the
Agent for the benefit of the
51
<PAGE>
Lenders and deposit, or cause to be deposited, in the Cash Collateral Account an
amount equal to the Required Letter of Credit Amount. If the Borrower
establishes such Cash Collateral Account and makes the required deposit therein,
all references in this Loan Agreement to the Letter of Credit and the Drawing
Amount shall be deemed to refer to such Cash Collateral Account and withdrawals
therefrom, respectively, and the provisions of Section 7.21 (other than
subsections (a) and (b) thereof) shall be applicable to such Cash Collateral
Account.
Each Request for Borrowing by the Borrower hereunder shall constitute
a certification by the Borrower to the effect set forth in paragraphs (a), (b)
and (c) of this Section 5.02 (both as of the date of such Request for Borrowing
and, unless the Borrower otherwise notifies the Agent prior to the date of such
borrowing, as of the date of such borrowing).
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender that throughout
the term of this Loan Agreement:
6.01. Financial Condition.
-------------------
(a) The Borrower had, at the date of its most recent balance
sheet, no Guarantee Obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment (including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, or other financial derivative), which is not reflected in the
foregoing statements or in the notes thereto.
(b) No statement of fact made by or on behalf of Borrower in this
Loan Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading.
6.02. No Change
---------
Since January 1, 1998, there has been no development or event nor any
prospective development or event, which has had or could reasonably be expected
to have a Material Adverse Effect.
6.03. Existence; Compliance with Law
------------------------------
The Borrower (a) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(b) has the power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee, to carry on its business
as now being or as proposed to be conducted, to originate, acquire and own
Assets, and to finance such Assets pursuant to this Loan Agreement, the lack of
which would be
52
<PAGE>
reasonably likely to have a Material Adverse Effect, (c) is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify would be reasonably likely (either individually
or in the aggregate) to have a Material Adverse Effect, and (d) is in compliance
in all material respects with all Requirements of Law (including environmental
law).
6.04. Power; Authorization; Enforceable Obligations.
---------------------------------------------
(a) The Borrower has the power and authority, and the legal right,
to make, deliver and perform this Loan Agreement, the Note and each other Loan
Document to which it is a party, and to borrow and to grant Liens hereunder, and
has taken all necessary action to authorize the borrowings and the granting of
Liens on the terms and conditions of this Loan Agreement, the Note and each
other Loan Document to which it is a party, and the execution, delivery and
performance of this Loan Agreement, the Note, and each other Loan Document to
which it is a party.
(b) No consent or authorization of, approval by, notice to, filing
with or other act by or in respect of, any Governmental Authority or any other
Person is required or necessary in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of this
Loan Agreement or the Note or any other Loan Document, except (i) for filings
and recordings in respect of the Liens created pursuant to this Loan Agreement,
and (ii) as previously obtained and currently in full force and effect.
(c) This Loan Agreement has been duly and validly executed and
delivered by the Borrower and constitutes, and the Note and each other Loan
Document when executed and delivered on behalf of the Borrower will constitute,
a legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.05. No Legal Bar.
------------
The execution, delivery and performance of this Loan Agreement and the
Note, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or Contractual Obligation of the Borrower and
will not result in, or require, the creation or imposition of any Lien on any of
its properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
6.06. No Litigation.
-------------
There are no actions, suits, arbitrations, investigations or
proceedings of or before any arbitrator or Governmental Authority pending or, to
the knowledge of the Borrower,
53
<PAGE>
threatened against the Borrower or against any of its properties or revenues,
(i) with respect to this Loan Agreement or the Note or any of the transactions
contemplated hereby, or (ii) which could reasonably be expected to have a
Material Adverse Effect.
6.07. No Default
----------
. The Borrower is not in default under or with respect to any
of its Contractual Obligations in any respect which could reasonably be expected
to have a Material Adverse Effect. No Default has occurred and is continuing.
6.08. Collateral; Collateral Security.
-------------------------------
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any other Person (other than
pursuant to the Existing Purchase Agreements), and immediately prior to the
pledge of such Collateral, the Borrower was the sole owner of the Collateral and
had good and marketable title thereto, free and clear of all Liens, in each case
except for Permitted Liens.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Agent for the benefit of the Lenders a valid security
interest in all right, title and interest of the Borrower in, to and under the
Collateral.
(c) Upon the filing of financing statements on Form UCC-1 naming
the Agent as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 6.08
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
54
<PAGE>
6.09. Chief Executive Office.
----------------------
The Borrower's chief executive office on the Effective Date is located
at Shepard and Hall Street, Ripon, Wisconsin 54971.
6.10. Location of Books and Records
-----------------------------
The location where the Borrower keeps its books and records,
including all computer tapes and records relating to the Collateral, is its
chief executive office.
6.11. No Burdensome Restrictions
--------------------------
No Requirement of Law or Contractual Obligation of the Borrower has a
Material Adverse Effect.
6.12. Taxes
-----
The Borrower has filed all Federal income tax returns and all other
material tax returns that are required to be filed by it and has paid all taxes
due pursuant to such returns or pursuant to any assessment received by it,
except for any such taxes or assessments, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves in conformity with GAAP have been provided.
No tax Lien has been filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax or assessment.
6.13. Margin Regulations
------------------
Neither the making of any Loan hereunder, nor the use of the proceeds
thereof, will violate or be inconsistent with the provisions of Regulation G, T,
U or X.
6.14. Investment Company Act; Other Regulations
-----------------------------------------
The Borrower is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended. The Borrower is not subject to regulation under any Federal or
state statute or regulation which limits its ability to incur indebtedness.
6.15. Subsidiaries
------------
At the date hereof, the Borrower has no Subsidiaries.
6.16. Eligible Assets
---------------
With respect to every Asset included or to be included in the
Borrowing Base,
55
<PAGE>
the representations and warranties set forth on Schedule 6.16 hereto are true
and correct in all material respects.
6.17. Origination and Collections of Assets.
-------------------------------------
(a) The Assets were acquired by the Borrower from an Originator
pursuant to the Transfer Agreement, and the origination and collection practices
used by such Originator with respect to each Asset originated by such Originator
have been in all respects legal, proper, prudent and customary in the equipment
financing and servicing business. All such Assets are in conformity with the
Underwriting Guidelines.
(b) With respect to each Asset sold by an Originator to the
Borrower, the Borrower shall have paid or promised to pay to such Originator at
the time of such sale an amount not less than the outstanding balance of such
Asset.
(c) The Transfer Agreement is effective to, and shall, sell to the
Borrower (and the Borrower shall acquire) from each Originator all right, title
and interest of such Originator in each such Asset originated by such Originator
and Collections with respect thereto free and clear of any Lien other than Liens
released simultaneously with the Borrower's purchase of such Asset.
6.18. No Adverse Selection
--------------------
Subject to the limitations and requirements set forth in this Loan
Agreement, the Borrower used no selection procedures that identified the Assets
as being less desirable or valuable than other comparable equipment loans or
trade receivables owned by the Borrower.
6.19. Equipment Loans
---------------
Except with respect to Equipment Loans whose outstanding principal
balance is less than or equal to $10,000, the Borrower has a perfected first
priority Lien in the Equipment that is subject to the Equipment Loans.
6.20. Borrower Solvent
----------------
As of the date hereof and immediately after giving effect to each
Loan, the fair value of the property of the Borrower is greater than the fair
value of the liabilities (including, without limitation, contingent liabilities)
of the Borrower and the Borrower is and will be solvent, is and will be able to
pay its debts as they mature and does not and will not have unreasonably small
capital to engage in the business in which it is engaged and proposes to engage.
6.21. ERISA
-----
56
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As of the date hereof and as of the Effective Date and each
Funding Date: (a) each of Borrower and its ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA and the Code and
regulations and published interpretations thereunder, and (b) no ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in liability of
the Borrower which would be material to the Borrower.
6.22. Other Agreements
----------------
The Borrower is not a party to, or bound by, any contract,
agreement or instrument other than the Loan Documents and other contracts,
agreements or instruments executed in connection with the transactions
contemplated by the Loan and copies of which have been delivered to the Agent.
6.23. Ownership of Borrower
---------------------
ALS is the registered owner of all of the issued and outstanding
Capital Stock of the Borrower, all of which Capital Stock has been validly
issued, is fully paid and nonassessable and is owned of record by ALS.
57
<PAGE>
SECTION 7. COVENANTS OF THE BORROWER.
The Borrower covenants and agrees with the Lender that, so long as
any Loan is outstanding and until payment in full of all Secured Obligations:
7.01. Financial Reporting
-------------------
The Borrower shall deliver or cause to be delivered to the Agent:
(a) as soon as available and in any event within sixty (60) days
after the end of each of the first three quarterly fiscal periods of each fiscal
year of the Servicer, the consolidated and consolidating balance sheets of the
Servicer and its consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated and consolidating statements of income and
retained earnings for the Servicer and its consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of the Servicer,
which certificate shall state that said consolidated financial statements fairly
present the consolidated and consolidating financial condition and results of
operations of the Servicer and its Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and for, such period (subject to normal
year-end audit adjustments and the omission of footnotes);
(b) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Servicer, the consolidated and
consolidating balance sheets of the Servicer and its consolidated Subsidiaries
as at the end of such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for the Servicer
and its consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated and consolidating financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Servicer and its consolidated Subsidiaries as
at the end of, and for, such fiscal year in accordance with GAAP;
(c) promptly upon transmission or receipt thereof, copies of any
filings and registrations with, and reports to or from, the Securities and
Exchange Commission or any national securities exchange, or any successor
agency, and copies of all financial statements, proxy statements, notices and
reports as the Servicer or any of its Subsidiaries shall send to its
shareholders generally or to a holder of any Indebtedness owed by the Servicer
or any of its Subsidiaries; and
58
<PAGE>
(d) from time to time such other information regarding the
financial condition,
59
<PAGE>
operations, or business of the Servicer, the Borrower and any Subsidiary of the
Servicer as the Agent may reasonably request.
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed in all material respects all of its covenants and
other agreements, and satisfied every condition, contained in this Loan
Agreement and the other Loan Documents to be observed, performed or satisfied by
it, and that such Responsible Officer has obtained no knowledge of any Default
except as specified in such certificate (and, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
the Borrower has taken or proposes to take with respect thereto).
7.02. Existence, etc.
---------------
The Borrower will:
-----------------
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises;
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect; and
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied.
7.03. Insurance
---------
The Borrower shall maintain insurance with financially sound and
reputable insurance companies, and with respect to property and risks of a
character usually maintained by entities engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such entities. In addition, the Borrower shall
obtain and maintain at its own expense and keep in full force and effect
throughout the term of this Loan Agreement (i) a blanket fidelity bond and an
errors and omissions insurance policy covering its officers in an amount at
least equal to $1,000,000 per occurrence and $2,000,000 in aggregate and (ii)
FCIA Insurance with respect to Trade Receivables owed by Foreign Obligors, which
insurance policies shall be obtained from insurance companies which are
acceptable to the Agent in its reasonable discretion.
7.04. Prohibition of Fundamental Changes
----------------------------------
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<PAGE>
The Borrower shall not (a) enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation, winding up or dissolution), (b) sell all or
substantially all of its assets, (c) change its name, identity or organizational
structure, or (d) change its chief executive office or its principal place of
business.
7.05. Notices
-------
The Borrower shall give notice to the Lender, promptly upon the
Borrower obtaining notice thereof, of:
(a) the occurrence of any Default;
(b) any default related to any Collateral, any Material Adverse
Effect and any event or change in circumstances which could reasonably be
expected to have a Material Adverse Effect;
(c) with respect to any Equipment Loan pledged to the Agent
hereunder, if the underlying Equipment has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to affect materially and adversely the value as
collateral of such pledged Equipment Loan; and
(d) the occurrence of any event of default, or any event that
with notice or lapse of time or both would become an event of default, under the
Reimbursement Agreement.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
7.06. Periodic Due Diligence Review
-----------------------------
The Borrower acknowledges that the Agent and each Lender has the
right to perform continuing due diligence reviews with respect to the Assets,
for purposes of verifying compliance with the representations, warranties and
covenants made hereunder, or otherwise, and the Borrower agrees that upon
reasonable prior notice to the Borrower, the Agent, any Lender or their
respective authorized representatives will be permitted during normal business
hours to examine, inspect, make copies of, and make extracts of, the Equipment
Loan Documents and any and all documents, records, agreements, instruments or
information relating to the Assets in the possession, or under the control, of
the Borrower. The Borrower further agrees that the Borrower shall reimburse the
Agent and each Lender for any and all out-of-pocket costs and expenses incurred
by the Agent or such Lender in connection with the Agent's or such Lender's
activities pursuant to this Section 7.06; provided, that so long as no Event of
Default has occurred and is continuing, such costs and $10,000 during any period
of twelve (12) consecutive months.
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7.07. Limitation on Liens on Collateral
---------------------------------
The Borrower will not, nor will it permit or allow others to, create,
incur or permit to exist any Lien on the Collateral, other than Permitted Liens.
The Borrower will defend the Collateral against, and will take such other action
as is necessary to remove, any Lien on the Collateral, other than Permitted
Liens, and the Borrower will defend the right, title and interest of the Agent
and Lenders in and to any Collateral.
7.08. Underwriting Guidelines
-----------------------
Without the prior written consent of the Agent, the Borrower shall not
amend or otherwise modify, or permit the amendment or modification of, the
Underwriting Guidelines.
7.09. Limitation on Transactions with Affiliates
------------------------------------------
The Borrower shall not enter into any transaction (including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service), with any Affiliate except to the extent that such transaction
is (a) otherwise permitted under this Loan Agreement, (b) in the ordinary course
of the Borrower's business and (c) upon fair and reasonable terms no less
favorable to the Borrower than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
7.10. Limitation on Changes in Fiscal Year
------------------------------------
The Borrower shall not permit its fiscal year to end on a day other
than December 31.
7.11. Limitations on Modifications, Waivers and Extensions of Assets
--------------------------------------------------------------
The Borrower shall not, nor shall it permit or allow others to, amend,
modify, terminate or waive any provision of any Asset in any manner which could
reasonably be expected to materially adversely affect the value of such Asset
as Collateral; provided, however, that the Borrower may, in accordance with the
-------- -------
Underwriting Guidelines, extend the maturity of any Asset or adjust the
outstanding balance of any Asset as the Borrower may determine to be appropriate
to maximize collections thereof. The Borrower shall (i) exercise promptly and
diligently each and every material right which the Borrower may have under each
Asset (other than any right of termination, but including the enforcement of
warranty, servicing and other obligations of manufacturers and other parties)
except where the failure to so act could not reasonably be expected to
materially adversely affect the value of such Asset as Collateral and (ii)
deliver to the Agent a copy of each material demand, notice or document received
by it relating in any way to any Asset.
7.12. Further Identification of Collateral
------------------------------------
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<PAGE>
The Borrower shall furnish to the Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent or any Lender may
reasonably request, all in reasonable detail.
7.13. Limitation on Collection Account
--------------------------------
The Borrower shall not, nor shall it permit or allow others on its
behalf to, establish an Equipment Loan Lockbox Account, a Trade Receivable
Lockbox Account or other collection account for the receipt of payments pursuant
to the Assets with a financial institution other than one acceptable to the
Agent in the exercise of its reasonable discretion and upon such terms as
reasonably required by the Agent.
7.14. No Transfer
-----------
The Borrower shall not sell, lease, transfer, assign or otherwise
dispose of any Collateral, except in accordance with the procedures and
conditions set forth in Section 2.06 of this Loan Agreement.
7.15. Repayment of Loans if Asset is Found Defective.
----------------------------------------------
(a) Upon discovery by the Borrower, the Agent or a Lender of any
breach of any representation or warranty listed on Schedule 6.16 hereto, the
party discovering such breach shall promptly give notice of such discovery to
the other.
(b) The Agent may, and upon the request of the Majority Lenders
shall, require the Borrower to prepay the amount of any Loan made in respect of
any Asset (i) which breaches one or more of the representations and warranties
listed on Schedule 6.16 hereto or (ii) with respect to any Equipment Loan, which
is determined by the Agent to be unacceptable for inclusion in a Permitted
Securitization (which condition shall continue unremedied for a period of ten
(10) Business Days) (in each case, a "Defective Asset"), in each case no
later than five (5) Business Days after notice from the Agent to the Borrower;
provided, however, that the Borrower shall not be required to prepay the
- -------- -------
amount of any Loan in respect of a Defective Asset if, at the time such Asset
first becomes a Defective Asset, (a) the aggregate amount of Loans outstanding
secured by Equipment Loans does not exceed the Borrowing Base with respect to
Equipment Loans (excluding the Defective Asset) and (b) the aggregate amount of
Loans outstanding secured by Trade Receivables does not exceed the Borrowing
Base with respect to Trade Receivables (excluding the Defective Asset). If the
Borrower fails to prepay any such Loan it is required to prepay, the Agent may
make a drawing on the Letter of Credit in an amount (up to the lesser of (x) the
Available Letter of Credit Amount on the date of such drawing and (y) the
positive result, if any, of (1) the Required Letter of Credit Amount on the date
of such drawing minus (2) the aggregate amount drawn on the Letter of Credit
prior to the date of such drawing with respect to which the Letter of Credit has
not been reinstated) equal to the amount of the Loan made in
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<PAGE>
respect of the affected Asset. The drawing shall be applied by the Lenders to
prepay the amount of such Loan.
64
<PAGE>
7.16. Borrowing Base Certificate
--------------------------
The Borrower shall deliver to the Agent on each Interest Payment Date
a certificate in a form acceptable to the Agent setting forth the Borrowing Base
(including the Borrowing Base with respect to Equipment Loans and Trade
Receivables separately) as at the last Business Day of the prior calendar month.
When calculating the Borrowing Base with respect to an Eligible Equipment Loan
which is not a finance lease, the Borrower may assume that the Collateral Value
of such Eligible Equipment Loan is 90% of the outstanding principal balance of
such Eligible Equipment Loan. When calculating the Borrowing Base with respect
to an Eligible Equipment Loan which is a finance lease, the Borrower may assume
that the Collateral Value of such Eligible Equipment Loan is 90% of the
Discounted Present Value of such Eligible Equipment Loan.
7.17. Monthly Officer's Certificate
-----------------------------
The Borrower shall deliver to the Lender, no later than 30 days after
the last day of each calendar month, a certificate of the Borrower's Director of
Financial Services, Chief Financial Officer or Treasurer certifying that, to the
best of each such officer's knowledge, as of the last day of such calendar
month, (i) the Borrower was in compliance in all material respects with all of
the terms, conditions and requirements of this Loan Agreement (including the
financial covenant set forth in Section 7.19 of this Loan Agreement)
(accompanied by supporting documentation and calculations showing such
compliance), and (ii) no Event of Default exists.
7.18. Data Pool Report
----------------
At least one Business Day prior to a Funding Date, the Borrower shall
deliver to the Agent, a Funding Date Data Pool Report. On each Monthly Report
Date with respect to Eligible Equipment Loans and Eligible Trade Receivables,
the Borrower shall deliver to the Agent, an Equipment Loan Monthly Data Pool
Report and a Trade Receivables Monthly Data Pool Report.
7.19. Net Worth
---------
The Borrower shall have at all times Tangible Net Worth in an amount
equal to or greater than $250,000.
7.20. Limitation on Guarantee Obligations
-----------------------------------
The Borrower shall not become or be liable for any Guarantee
Obligation in respect of the Indebtedness of another Person.
7.21. Letter of Credit.
----------------
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<PAGE>
(a) If a Letter of Credit Issuer ceases to be a Qualifying Financial
Institution, the Borrower shall, within thirty (30) days, deliver to the Agent a
replacement letter of credit, or other comparable form of credit enhancement
reasonably acceptable to the Agent, which shall replace the Letter of Credit
issued by such Letter of Credit Issuer for all purposes of this Loan Agreement,
and upon such delivery, the Agent shall return such Letter of Credit to such
Letter of Credit Issuer for cancellation and all references to such Letter of
Credit and such Letter of Credit Issuer shall thereafter be deemed to refer to
such replacement letter of credit or other form of credit enhancement and the
issuer thereof, respectively; provided that the following conditions are
--------
satisfied:
(i) The replacement letter of credit or other form of credit
enhancement shall be irrevocable and issued by an Eligible Letter of Credit
Issuer and shall be on substantially the same terms and in substantially
the same form as such Letter of Credit, provided that the Stated Amount of
--------
the replacement letter of credit or other form of credit enhancement,
together with the Stated Amount of any other Letter of Credit which will be
in effect following such replacement, shall be at least equal to the
Required Letter of Credit Amount. The replacement letter of credit and the
Reimbursement Agreement relating thereto or such other form of credit
enhancement and the reimbursement agreement relating thereto shall be in
form and substance reasonably satisfactory to the Agent.
(ii) The Borrower shall have delivered the proposed form of the
replacement letter of credit and the applicable Reimbursement Agreement or
such other form of credit enhancement and the reimbursement agreement
relating thereto to the Agent at least five (5) days prior to the proposed
date on which such Letter of Credit is to be replaced.
(iii) The Borrower shall have caused to be delivered to the Agent a
certificate of a Responsible Officer and an incumbency certificate, duly
executed by an officer of the replacement letter of credit issuer, together
with an opinion of counsel to the replacement letter of credit issuer, all
in substantially the same form as the certificates and opinion delivered to
the Agent in connection with the issuance of such Letter of Credit, or in
such other form as may have been approved by the Agent.
(b) If the Borrower does not deliver a replacement letter of credit or
other form of credit enhancement as described above when required, the Borrower
shall establish a cash collateral account (the "Cash Collateral Account") in the
-----------------------
name of the Agent for the benefit of the Lenders and the Borrower, and the Agent
shall on the day such replacement letter of credit was required to be delivered
(the "L/C Replacement Date") make a drawing on the current Letter of Credit in
--------------------
an amount equal to the lesser of (x) the Available Letter of Credit Amount on
the date of such drawing and (y) the positive result, if any, of (1) the
Required Letter of Credit Amount
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on the date of such drawing minus (2) the aggregate amount drawn on the Letter
of Credit prior to the date of such drawing with respect to which the Letter of
Credit has not been reinstated, which amount shall be deposited in the Cash
Collateral Account. From and after the L/C Replacement Date, the Borrower shall
cause to be on deposit at all times in the Cash Collateral Account an amount
equal to or greater than the Required Letter of Credit Amount; provided, that
--------
the failure to cause such amount to be on deposit therein shall not be an
Event of Default under this Loan Agreement, but shall constitute a Letter of
Credit Deficiency Event. All references in this Loan Agreement to the Letter of
Credit and the Drawing Amount shall, from and after the deposit in the Cash
Collateral Account as set forth in this paragraph, be deemed to refer to such
Cash Collateral Account and withdrawals therefrom, respectively.
(c) Funds on deposit in the Cash Collateral Account shall be invested
in Permitted Investments selected in writing by the Borrower; provided, that
--------
following the occurrence of an Event of Default, the Agent may select such
Permitted Investments; provided, further, that it is understood and agreed that
-------- -------
the Agent shall not be liable for any loss arising from such investments in
Permitted Investments. All such Permitted Investments shall be held for the
benefit of the Lenders and the Borrower.
(d) Except as otherwise provided for herein, the Cash Collateral
Account shall be under the sole dominion and control of the Agent for the
benefit of the Lenders and the Borrower. If at any time, the Cash Collateral
Account ceases to be an Eligible Deposit Account, then the Borrower (or the
Agent on its behalf) shall within twenty (20) Business Days (or such longer
period as to which the Agent may consent) establish a new Cash Collateral
Account as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Cash Collateral Account. In connection with the
foregoing, the Borrower agrees that the Borrower shall notify the Agent in
writing promptly upon the Cash Collateral Account ceasing to be an Eligible
Deposit Account.
(e) If the amount on deposit in the Cash Collateral Account on any
Interest Payment Date is greater than the Required Letter of Credit Amount, such
excess shall be paid to the Borrower. If the Borrower delivers a replacement
Letter of Credit or other form of credit enhancement as described in subsection
(a) of this Section 7.21 after the L/C Replacement Date, the amount on deposit
in the Cash Collateral Account shall be paid to the Borrower.
7.22. Limitation on Dividends
-----------------------
If a Default or an Event of Default has occurred and is continuing,
the Borrower shall not declare or pay any dividend (other than dividends payable
solely in Capital Stock of the Borrower) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of the Borrower or any warrants or options to purchase
any such Capital Stock, whether now or hereafter outstanding, or make any other
distribution in
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respect thereof, either directly or indirectly, whether in cash or property or
in obligations of the Borrower.
7.23. Limitation on Investments, Loans and Advances
---------------------------------------------
The Borrower shall not make any advance, loan, extension of credit or
capital contribution to, purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in, any Person other than Special Purpose Entities.
7.24. Limitation on Optional Payments and Modifications of Debt Instruments
---------------------------------------------------------
The Borrower shall not (a) make any optional payment or prepayment on or
redemption or purchase of any Indebtedness (other than the Loans), or (b) amend,
modify or change, or consent or agree to any amendment, modification or change
to any of the terms of any Indebtedness (other than any such amendment,
modification or change which would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon).
7.25. Limitation on Sales and Leasebacks
----------------------------------
The Borrower shall not enter into any arrangement with any Person providing
for the leasing by the Borrower of real or personal property which has been or
is to be sold or transferred by the Borrower to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower.
7.26. Limitations on Negative Pledge Clauses
--------------------------------------
The Borrower shall not enter into with any Person any agreement, other than
this Loan Agreement, which prohibits or limits the ability of the Borrower to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
7.27. Limitation on Lines of Business; Subsidiaries
---------------------------------------------
The Borrower shall not enter into any business, either directly or through
any Subsidiary, except for those businesses in which the Borrower is engaged on
the date of this Loan Agreement. The Borrower shall not create any Subsidiaries
other than Special Purpose Entities.
7.28. Limitation on Indebtedness
--------------------------
The Borrower shall not be liable for or create, assume, incur, guarantee, or
in any
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manner become liable, contingently or otherwise, in respect of any Indebtedness,
except:
(a) the Loans;
(b) other Indebtedness to the Agent and the Lenders arising under
this Loan Agreement and the other Loan Documents and to the Servicer arising
under the Transfer Agreement;
(c) debt of the Borrower in favor of the Originators under the
Transfer Agreement and other Loan Documents, which debt is evidenced by a
promissory note of the Borrower under which the Borrower's payment obligations
shall be subordinated to all Obligations of the Borrower under the Loan
Documents;
(d) the Letter of Credit;
(e) obligations in connection with operating expenses arising in the
ordinary course of the Borrower's business;
(f) indebtedness or other liability on account of incidentals or
services supplied or furnished to the Borrower (including accountants' and
attorneys' fees), provided, that such other indebtedness is incurred in
--------
connection with the transactions contemplated hereby and the aggregate amount of
the indebtedness or liabilities described in this clause (f) shall not exceed
$10,000 at any one time outstanding; and
(g) with the prior written consent of the Agent, which consent may be
withheld at the Agent's sole discretion, indebtedness incurred in respect of
interest rate swap agreements, interest rate cap agreements, interest rate
collar agreements and other agreements or arrangements designed to protect the
Borrower against fluctuations in interest rates entered into in order to fix or
cap the interest rate on Indebtedness permitted to be incurred by this Loan
Agreement, which such agreements or arrangements shall be satisfactory to the
Agent in its sole discretion.
7.29. Other Agreements
----------------
The Borrower shall duly and punctually pay and perform each of its
obligations under the Loan Documents. The Borrower shall not amend the Transfer
Agreement. or replace the Servicer under the Transfer Agreement, without the
consent of the Agent, except for such amendments which shall not adversely
affect the Lenders. The Borrower shall enforce the obligations of the
Originators under the Transfer Agreement.
7.30. Currency Protection
-------------------
On any date on which the aggregate Collateral Value of Eligible
Equipment Loans which are payable in Canadian Dollars included in the Borrowing
Base exceeds 3.0% of
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the aggregate Collateral Value of all Eligible Equipment Loans included in the
Borrowing Base on such date, the Borrower shall have in effect, unless otherwise
waived in writing by the Agent in its sole discretion, currency hedging
agreements reasonably acceptable to with the Agent, which agreements shall be
with the Agent or an Affiliate thereof if such agreements are on market terms
and conditions or, if not with the Agent or an Affiliate thereof, with a
counterparty reasonably acceptable to the Agent.
7.31. Purchase of Receivables from the Originators
--------------------------------------------
With respect to any Asset sold by an Originator to the Borrower, the
Borrower shall have paid or promised to pay to such Originator the purchase
price therefor set forth in the Transfer Agreement.
7.32. Payment of Taxes, etc.
----------------------
The Borrower shall pay and discharge all taxes, assessments, and
governmental charges or levies imposed upon it or upon its income or profits,
prior to the date on which penalties attach thereto, and all lawful claims,
which, if unpaid, might become a Lien or charge upon any of its assets.
7.33. Maintenance of Approvals, Filings and Registrations
---------------------------------------------------
The Borrower shall at all times maintain in effect, renew and comply
with all the terms and conditions of all consents, licenses, approvals and
authorizations as may be necessary or appropriate under any applicable law or
regulation for the execution, delivery and performance of the Loan Documents and
to make the Loan Documents legal, valid, binding and enforceable against the
Borrower.
7.34. Change in Payment Instructions to Obligors
------------------------------------------
Except as otherwise permitted by Section 7.11, the Borrower shall not
make any change in its instructions to Obligors regarding the payments to be
made to the Borrower unless the Agent and the Lenders shall have received, at
least 10 days before the proposed effective date therefor, written notice of
such change; provided, however, that the Borrower may, without notice to the
-------- -------
Agent and the Lenders, make a change in its instructions to a particular Obligor
with respect to a particular payment not exceeding $1,000,000 on a Delinquent
Equipment Loan or a Delinquent Receivable if the Borrower determines in its
reasonable discretion that such change is appropriate to maximize collections,
or the timeliness thereof, with respect to such Obligor.
7.35. Separate Corporate Existence
----------------------------
The Borrower hereby acknowledges that the Agent and the Lenders are
entering into the transactions contemplated by this Loan Agreement in reliance
upon the Borrower's
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identity as a separate legal entity from the Originators or any Originator
Entity (as defined below). Therefore, from and after the date of execution and
delivery of this Loan Agreement, the Borrower shall take all reasonable steps
including, without limitation, all steps that the Agent and a Lender may from
time to time reasonably request to maintain the Borrower's identity as a
separate legal entity and to make it manifest to third parties that the Borrower
is an entity with assets and liabilities distinct from those of the Originators
and any Affiliates (other than the Borrower) thereof (each of the Originators
and their respective Affiliates (other than the Borrower) shall be referred to
herein as an "Originator Entity"), and not just a division of any Originator
Entity. Without limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth in Section 7.02, the Borrower shall:
(i) require that all full-time employees of the Borrower identify
themselves as such and not as employees of any Originator Entity
(including, without limitation, by means of providing appropriate employees
with business or identification cards identifying such employees as the
Borrower's employees);
(ii) compensate all employees, consultants and agents directly, from
the Borrower's bank accounts, for services provided to the Borrower by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of the Borrower is also an employee, consultant or
agent of any Originator Entity, allocate the compensation of such employee,
consultant or agent between the Borrower and such Originator Entity on a
basis which reflects the services rendered to the Borrower and such
Originator Entity;
(iii) clearly identify its offices (by signage or otherwise) as its
offices, and all such offices will occupy space that is separate and
distinct from any space occupied by ALS or any Originator Entity even if
such office space is leased or subleased from, or is on or near premises
occupied by ALS or any Originator Entity;
(iv) have a separate telephone number, which will be answered only in
its name;
(v) allocate all overhead expenses (including, without limitation
telephone and other utility charges) for items shared between the Borrower
and any Originator Entity on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on a
basis reasonably related to actual use;
(vi) at all times have at least one member of its Board of Managers
(an "Independent Manager") who is not (A) a director, officer or employee
-------------------
of any Originator Entity, (B) a person related to any officer or director
of any Originator
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Entity, (C) a holder (directly or indirectly) of any voting securities of
any Originator Entity, or (D) a person related to a holder (directly or
indirectly) of any voting securities of any Originator Entity;
(vii) maintain the Borrower's books and records separate from those
of any Originator Entity;
(viii) prepare its financial statements separately from those of
other Originator Entities and insure that any consolidated financial
statements of ALS that include the Borrower have detailed notes clearly
stating that the Borrower is a separate corporate entity and that its
assets will be available first and foremost to satisfy the claims of its
creditors;
(ix) other than in connection with an Originator Entity's capacity
as a servicer of the Assets, not commingle funds or other assets of
Borrower with those of any other Originator Entity and not maintain bank
accounts or other depository accounts to which any Originator Entity is
also an account party, into which any Originator Entity makes deposits or
from which any Originator Entity has the power to make withdrawals;
(x) not permit any Originator Entity to pay any of the Borrower's
operating expenses except pursuant to allocation arrangements that comply
with the requirements of subparagraph (ii) of this Section 7.35; and
(xi) not permit the Borrower to be named as an insured on the
insurance policy covering the property of any Originator Entity, or enter
into an agreement with the holder of such policy whereby in the event of a
loss in connection with such property, proceeds are paid to the Borrower.
SECTION 8. EVENTS OF DEFAULT.
Each of the following events shall constitute an event of default (an
"Event of Default") hereunder:
----------------
(a) the Borrower shall default in the payment of any principal of or
interest on any Loan when due (whether at stated maturity, upon acceleration or
otherwise), provided, that, with respect to any optional prepayment, such
--------
default have continued unremedied for five (5) Business Days; or
(b) the Borrower shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after notification by
the Agent of such default, and such default shall have continued unremedied for
ten (10) Business Days; or
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(c) any representation, warranty or certification made or deemed made
herein (other than any representation or warranty contained on Schedule 6.16
with respect to an Asset) or in any other Loan Document by the Borrower or any
certificate furnished to the Agent or any Lender pursuant to the provisions
thereof, shall prove to have been false or misleading in any material respect as
of the time made or furnished, and continues to be incorrect in any material
respect for a period of thirty (30) days after the earlier of (i) the date on
which written notice of the breach, requiring the same to be remedied, shall
have been given to the Borrower by the Agent and (ii) the date on which the
Borrower reasonably should have known of the breach; or
(d) the Borrower shall fail to comply with or shall fail to observe or
perform any agreement (other than as described in clause (a) or (b) above)
contained in this Loan Agreement or any other Loan Document, which failure
continues unremedied for a period of thirty (30) days after the earlier of (i)
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Borrower by the Agent and (ii) the date
on which the Borrower reasonably should have known of such failure; or
(e) a final judgment or judgments for the payment of money in excess
of $100,000 in the aggregate shall be rendered against the Borrower or the
Servicer by one or more courts, administrative tribunals or other bodies having
jurisdiction over them and the same shall not be discharged (or provision shall
not be made for such discharge) or bonded, or a stay of execution thereof shall
not be procured, within 60 days from the date of entry thereof and the Borrower
or the Servicer shall not, within said period of 60 days, or such longer period
during which execution of the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(f) the Borrower or the Servicer shall admit in writing its inability
to pay its debts as such debts become due; or
(g) the Borrower, the Servicer or the Letter of Credit Issuer shall
(i) apply for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or any other law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts or (vi) take
any corporate or other action for the purpose of effecting any of the foregoing;
or
(h) a proceeding or case shall be commenced, without the application
or consent of the Borrower, the Servicer or the Letter of Credit Issuer, in any
court of competent
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jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of the Borrower, the Servicer or the Letter of Credit Issuer or of all or
any substantial part of its property, or (iii) similar relief in respect of the
Borrower, the Servicer or the Letter of Credit Issuer under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 or more days; or a final
order for relief against the Borrower, the Servicer or the Letter of Credit
Issuer shall be entered in an involuntary case under the Bankruptcy Code or any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts;
or
(i) the Letter of Credit shall for whatever reason be terminated or
cease to be in full force and effect, or the enforceability thereof shall be
contested by any party thereto (other than the Lenders), and a replacement
letter of credit acceptable to the Agent or a Cash Collateral Account shall not
have been provided or established, as the case may be, in accordance with this
Loan Agreement; or
(j) the Borrower or the Servicer grants, or suffers to exist, any Lien
on any Collateral other than as permitted by this Loan Agreement or the Transfer
Agreement, or the Liens on the Collateral contemplated hereby cease to be first
priority perfected Liens on any Collateral in favor of the Agent for the benefit
of the Lenders; or
(k) any materially adverse change in the properties, business,
condition (financial or otherwise) or prospects of the Borrower or the Servicer,
in each case as determined by the Agent in its sole discretion, or the existence
of any other condition which, in the Agent's sole discretion, constitutes a
material impairment of the Borrower's ability to perform its obligations under
this Loan Agreement, the Note or any other Loan Document or has or could have a
Material Adverse Effect; provided, that a material adverse change in the
--------
Collateral Value of any Asset shall not result in Event of Default under this
subsection (k); or
(l) the Borrower or the Servicer shall fail to perform or shall
violate any other material agreement or instrument between either of them and a
Lender or any of its Affiliates and such failure or violation continues
unremedied after any applicable grace period therefor, or the Borrower or the
Servicer shall fail to pay when due or within any applicable grace period
therefor any portion of any single obligation constituting Indebtedness of the
Borrower in excess of $100,000 or of the Servicer in excess of $5,000,000; or
any default or other event shall occur under or with respect to any agreement
under which any single obligation constituting Indebtedness of the Borrower in
excess of $100,000 or of the Servicer in excess of $5,000,000 was created or is
governed, the effect of which is to cause, or to permit the holder or holder of
such Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any
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single obligation constituting Indebtedness of Borrower in excess of $100,000 or
of the Servicer in excess of $5,000,000 shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled payment), prior
to the stated maturity thereof; or
(m) (i) ALS shall not own 100% of the Borrower, or (ii) any Person or
entity or any group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934) of Persons and/or entities (in each case, other than
Permitted Investors, Permitted Co-Investors and/or current management of ALS and
Alliance Laundry Holdings LLC), shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, in one or more
transactions, of securities of ALS (or other securities convertible into such
securities) representing 51% or more of the combined voting power of all
securities of ALS entitled to vote in the election of the Board of Managers of
ALS (other than the Person or entities owning such securities on the Effective
Date); or
(n) the occurrence of an event of default, or an event that with
notice or lapse of time or both would become an event of default, under the
Reimbursement Agreement; or
(o) the average of the Delinquency Ratio for any two consecutive
fiscal months shall exceed 5.5%; or
(p) the average of the Dilution Ratio for any two consecutive fiscal
months (other than August, September, October or November) shall exceed 6.0% or
the average of the Dilution Ratio for any two consecutive fiscal months during
August, September, October and November shall exceed 8.0%; or
(q) the average of the Default Ratio for any two consecutive fiscal
months shall exceed 4.0%.
SECTION 9. REMEDIES UPON DEFAULT.
(a) Upon the occurrence of one or more Events of Default other than
those referred to in Section 8(g) or (h), the Agent may and shall, upon the
request of the Majority Lenders, immediately declare the principal amount of
the Loans then outstanding under the Note to be immediately due and payable,
together with all interest thereon and fees and expenses accruing under this
Loan Agreement; provided, that upon the occurrence of an Event of Default
--------
referred to in Section 8(g) or (h), such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of one or more Events of Default, the Agent
shall
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have the right to obtain physical possession of the Servicing Records and all
other files of the Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the Borrower or any third party acting for the Borrower and the
Borrower shall deliver to the Agent such assignments as the Agent or any Lender
shall request. The Agent shall be entitled to specific performance of all
agreements of the Borrower contained in this Loan Agreement.
SECTION 10. NO DUTY ON LENDERS' PART.
The powers conferred on the Lenders hereunder are solely to protect
the Lenders' interests in the Collateral and shall not impose any duty upon any
of them to exercise any such powers. Each Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct.
SECTION 11. THE AGENT.
11.01. Appointment
-----------
Each Lender hereby irrevocably designates and appoints the Agent as
the agent of such Lender under this Loan Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes the Agent, in such capacity, to take
such actions on its behalf under the provisions of this Loan Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Loan Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Loan Agreement, the Agent shall have no duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Loan Agreement or any other Loan Document or
otherwise exist against the Agent.
11.02. Delegation of Duties
--------------------
The Agent may execute any of its duties under this Loan Agreement and
the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to the advice of counsel concerning all matters pertaining to such
duties. The Agent shall be responsible for the negligence or misconduct of any
agents or attorneys in-fact selected by it.
11.03. Exculpatory Provisions
----------------------
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be
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taken by it or such Person under or in connection with this Loan Agreement or
any other Loan Documents (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the Borrower
or any officer thereof contained in this Loan Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Loan Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Loan Agreement
or any other Loan Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Loan Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Borrower.
11.04. Reliance By Agent
-----------------
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, facsimile, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Loan Agreement or any other
Loan Document unless it shall first receive such advice or concurrence of the
Majority Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Loan Agreement and the other Loan Documents in accordance
with a request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
11.05. Notice of Default
-----------------
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to this Loan Agreement,
describing such Default or Event of Default and stating that such notice is a
'notice of default'. In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Majority Lenders; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with
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respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
11.06. Non-Reliance on Agent and Other Lenders
---------------------------------------
Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Agent
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Loan Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Loan Agreement and the
other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
11.07. Indemnification.
---------------
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitments in
effect on the date on which indemnification is sought, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of, the Commitments, this Loan Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
- --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Loans Instrumentsand all other amounts
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payable hereunder.
11.08. Agent, in Its Individual Capacity
---------------------------------
The Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Agent was not acting in such capacity hereunder and under the other Loan
Documents. With respect to the Loans made or renewed by it and the Note issued
to it, the Agent shall have the same rights and powers under this Loan Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Agent, and the terms "Lender" and "Lenders" shall include the
Agent in its individual capacity.
11.09. Successor Agent
---------------
The Agent may resign as Agent upon 30 days' notice to the Lenders. If
the Agent shall resign as Agent under this Loan Agreement and the other Loan
Documents then the Majority Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall succeed to the
rights, powers and duties of the Agent hereunder. Effective upon such
appointment and approval, the term "Agent" shall mean and include such successor
agent, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent, any of the parties to this Loan Agreement or any holders of the Loans.
After any retiring Agent's resignation as Agent, the provisions of this Article
XI shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Loan Agreement and the other Loan Documents.
SECTION 12. MISCELLANEOUS.
12.01. Waiver
------
No failure on the part of the Agent or a Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under any
Loan Document preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
12.02. Notices
-------
Except as otherwise expressly permitted by this Loan Agreement, all
notices, requests and other communications provided for herein (including,
without limitation, any modifications of, or waivers, requests or consents
under, this Loan Agreement) shall be delivered or sent by registered, certified
or express mail, postage prepaid, return receipt requested, or given or made by
facsimile, in each case, to the intended recipient at the "Address for Notices"
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specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement, all such
notices, requests and other communications shall be deemed to have been duly
given (i) in the case of facsimile transmission, when transmitted if on a
Business Day and during business hours in the place of receipt, otherwise notice
shall be deemed to have been given at 10:00 a.m. on the next Business Day in the
place of receipt, (ii) in the case of personal delivery, on the date of delivery
if on a Business Day and during business hours in the place of receipt,
otherwise notice shall be deemed to have been given at 10:00 a.m. on the next
Business Day in the place of receipt and (iii) in the case of a mailed notice,
upon receipt if on a Business Day, otherwise on the next Business Day, in each
case given or addressed as aforesaid.
12.03. Indemnification and Expenses.
----------------------------
(a) The Borrower agrees to hold the Agent, each Lender and their
respective parents, subsidiaries, Affiliates, directors, officers, employees,
representatives, agents, successors, assigns and attorneys (collectively, the
"Indemnified Parties") harmless from and indemnify the Indemnified Parties
- --------------------
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by, or asserted against the Indemnified
Parties, relating to or arising out of, this Loan Agreement, the Note, any other
Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby or the use or proposed use of the
proceeds thereof, excluding, however, (i) any liabilities, losses, damages,
judgments, costs or expenses of any kind to the extent resulting from (w) the
Indemnified Parties' gross negligence or willful misconduct, (x) any act or
omission of the Servicer (if not the Borrower, an Originator or an Affiliate of
either thereof), (y) the failure of the Letter of Credit Issuer to honor a
drawing on the Letter of Credit, or (z) the failure of a Permitted Investment to
be paid on time or any reduction in the value thereof, or (ii) any liabilities,
losses, damages, judgments, costs or expenses (except as otherwise provided in
this Loan Agreement) to the extent resulting from any default or delinquency of
any Asset. In any suit, proceeding or action brought by any Indemnified Party
in connection with any Asset for any sum owing thereunder, or to enforce any
provisions of any Asset, the Borrower shall save, indemnify and hold such
Indemnified Party harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction of
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by the Borrower of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such account debtor or obligor or its successors from the Borrower. The
Borrower also agrees to reimburse the Agent and each Lender for all costs and
expenses incurred in connection with the enforcement or the preservation of the
Agent's and such Lender's rights under this Loan Agreement, the Note, any other
Loan
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Document or any transaction contemplated hereby or thereby and with any
amendment, supplement or modification to, this Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith requested by Borrower (including, without limitation, the fees and
disbursements of its counsel). The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender the
reasonable out-of-pocket costs and expenses incurred by the Agent and each
Lender in connection with the development, preparation and consummation of the
transactions contemplated hereby and by the other Loan Documents, including,
without limitation, (i) all the reasonable fees, disbursements and expenses of
Latham & Watkins, counsel to the Agent and any local counsel to the Agent, and
(ii) all the reasonable due diligence, inspection, testing and review costs and
expenses incurred by the Lender with respect to Collateral under this Loan
Agreement (including, but not limited to, those costs and expenses incurred by
the Agent pursuant to Section 12.13 hereto).
12.04. Amendments.
----------
(a) Except as provided in Section 12.04(b), this Loan Agreement and
the Note may be amended or supplemented with the consent of the Borrower and the
Majority Lenders and any existing default or compliance with any provision of
this Loan Agreement or the Note may be waived with the consent of the Majority
Lenders. A Note held by the Borrower or any of its Affiliates shall not be
deemed to be outstanding for purposes of this Section 12.04.
(b) Without the consent of the Borrower and each Lender affected, an
amendment or waiver may not: (i) reduce the principal amount of any Loan, (ii)
change the fixed maturity of any Loan, (iii) reduce the rate of or change the
time for payment of interest on any Loan, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Loans or any other amounts payable under any of the Loan Documents, (v) make any
Loan payable in money other than that stated in the applicable Loan, (vi) make
any change in the provisions of this Loan Agreement relating to the rights of
Lenders to receive payments of principal of, premium, if any, or interest on the
Loans or (vii) make any change in the foregoing amendment and waiver provisions.
(c) The Borrower shall not and shall not permit an Originator or any
Subsidiary of an Originator to, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Lender
for or as an inducement to any consent, waiver or amendment permitted by Section
12.04(a) unless such consideration is offered to be paid or is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents applicable to such consent, waiver or agreement.
12.05. Successors and Assigns
----------------------
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This Loan Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. The
Borrower may not sell, assign or transfer any interest in the Loan Documents or
any portion thereof (including, without limitation, the Borrower's right, title,
interest, remedies, powers and duties hereunder and thereunder) without the
prior written consent of the Agent. Each Lender shall have the right to sell,
assign or participate, in whole or in part, this Loan Agreement, its Note and/or
any of the other Loan Documents and the obligations hereunder to any Person. In
the event that a Lender shall determine to make any such sale, assignment or
participation, the Borrower shall cooperate with such Lender in consummating the
same in all respects, including by executing and delivering any substitute Notes
in such denominations as such Lender may request in its sole discretion.
12.06. Survival
--------
The obligations of the Borrower under Sections 2.07 and 12.03 hereof
shall survive the repayment of the Loans and the termination of this Loan
Agreement. In addition, each representation and warranty made, or deemed to be
made by a Request for Borrowing, herein or pursuant hereto shall survive the
making of such representation and warranty, and the Lenders shall not be deemed
to have waived, by reason of making any Loans, any Default that may arise by
reason of such representation or warranty proving to have been false or
misleading, notwithstanding that the Lenders may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such Loan was made.
12.07. Captions
--------
The table of contents and captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Loan Agreement.
12.08. Counterparts
------------
This Loan Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Loan Agreement by signing any such
counterpart.
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12.09. Loan Agreement Constitutes Security Agreement; Governing Law.
------------------------------------------------------------
This Loan Agreement shall be governed by and construed in accordance
with New York law, and shall constitute a security agreement within the meaning
of the Uniform Commercial Code.
12.10. Submission To Jurisdiction; Waivers
-----------------------------------
The Borrower hereby irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) AGREES THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT, TO THE EXTENT PERMITTED BY LAW, SERVICE OF PROCESS IN
ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE LENDERS SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION.
12.11. Waiver of Jury Trial
--------------------
EACH OF THE BORROWER, THE AGENT AND EACH LENDER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LOAN
AGREEMENT, ANY
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OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.12. Acknowledgments
---------------
The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) neither the Agent nor any Lender has a fiduciary relationship to
the Borrower, and the relationship between the Borrower and the Lenders is
solely that of debtor and creditor; and
(c) no joint venture exists between the Agent and the Lenders, on the
one hand, and the Borrower, on the other hand.
12.13. Hypothecation or Pledge of Loans
--------------------------------
The Agent for the benefit of the Lenders shall have free and
unrestricted use of all Collateral and nothing in this Loan Agreement shall
preclude the Agent from engaging in repurchase transactions with the Lender's
interest in the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Lender's interest in the Collateral.
Nothing contained in this Loan Agreement shall obligate the Agent to segregate
any Collateral delivered to the Agent by the Borrower.
12.14. Servicing.
---------
(a) The Borrower shall, or shall cause the Servicer to, service and
administer the Assets in accordance with the Underwriting Guidelines and with
due care and customary and prudent servicing procedures for trade receivables,
equipment leases, security agreements and installment sale contracts of a
similar type and, prior to the occurrence of an Event of Default, shall have
full power and authority to do any and all things not inconsistent with the
provisions of this Loan Agreement which it may deem necessary or desirable in
connection with such servicing and administration. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) the date on which the Agent delivers a notice to the Servicer
that an Event of Default has occurred and such servicing contract shall
terminate, or (ii) the date on which all the Secured Obligations have been paid
in full, or (iii) the transfer of servicing approved by the Borrower and the
Agent.
(b) If the Assets are serviced by the Borrower, an Originator or an
Affiliate of either thereof, all servicing records, including, but not limited
to, any and all servicing
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agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Assets (the "Servicing Records") shall be held for
-----------------
the benefit of the Agent and the Lenders. The Borrower covenants to safeguard
such Servicing Records and to deliver them promptly to the Agent or its designee
at the Agent's request after an Event of Default.
(c) If the Assets are serviced by a Servicer other than the Borrower
or ALS, the Borrower (i) shall provide a copy of the related servicing agreement
to the Agent (the "Servicing Agreement"); and (ii) hereby irrevocably assigns to
-------------------
the Agent for the benefit of the Lenders and the Agent's successors and assigns
all right, title, interest in and the benefits of the Servicing Agreement with
respect to the Assets, which assignment shall terminate when the outstanding
principal amount of the Loans, together with all interest accrued thereon, and
all other amounts due to the Lenders under this Loan Agreement have been paid in
full and the Lenders' obligations to make Loans under this Loan Agreement has
terminated.
(d) The Borrower shall provide to the Agent a letter from the Servicer
to the effect that upon the occurrence of an Event of Default, the Agent may
replace the Servicer, terminate any servicing agreement and transfer such
servicing to its designee, at no cost or expense to the Agent or the Lenders, it
being agreed that the Borrower will pay any and all fees required to be paid in
connection with the foregoing.
12.15. Sharing
-------
The Lenders agree among themselves that if any Lender shall obtain
payment (whether through the exercise of a right of banker's lien, set-off or
otherwise) in respect of the obligations of the Borrower hereunder to such
Lender and as a result thereof such Lender shall have received an amount in
excess of its ratable share of such payment, such Lender shall promptly purchase
from the other Lenders such participations, or make such other adjustments, as
may be equitable to the end that the Lenders shall share the benefit of such
payment pro rata in accordance with their Commitment Percentages hereunder;
provided, however, that if all or a portion of such payment is thereafter
- -------- -------
rescinded or must otherwise be restored, such purchase or adjustment shall be
pro tanto rescinded and the purchase price restored (without interest). The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender so purchasing a participation may exercise any and all rights of banker's
lien.
12.16. Third Party Beneficiary Rights
------------------------------
The Borrower hereby assigns to the Agent for the benefit of the
Lenders all rights of the Borrower against the Originators under the Transfer
Agreement and agrees that the Agent and the Lenders shall be third party
beneficiaries of the Borrower's rights under the Transfer Agreement and shall be
entitled to enforce such rights against the Originators as if the
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Agent and the Lenders had been parties to the Transfer Agreement.
12.17. Confidentiality
---------------
For the purposes of this Section 12.17, "Confidential Information"
------------ -----------
means information delivered to the Agent or a Lender by or on behalf of the
Borrower in connection with the transactions contemplated by or otherwise
pursuant to this Loan Agreement that is proprietary in nature; provided, that
--------
such term does not include information that:
(a) was publicly known prior to the time of such disclosure;
(b) subsequently becomes publicly known through no act or omission by
the Agent or a Lender or any Person acting on its behalf;
(c) otherwise becomes known to the Agent or a Lender other than
through disclosure by the Borrower or a Person who has a confidential
relationship with the Borrower; or
(d) constitutes financial statements delivered under Section 7 that
are otherwise publicly available.
The Agent and each Lender will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by the Agent and
such Lender in good faith to protect confidential information of third parties
delivered to it; provided, that the Agent and such Lender may deliver or
--------
disclose Confidential Information to:
their respective directors, officers, partners, employees, agents,
attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the Loans);
their respective financial advisors and other professional advisors
who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 12.17;
any other holder of any Loan;
any institutional investor to which such Lender sells or offers to
sell any Loan or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of
this Section 12.17);
any Person from whom the Agent or such Lender offers to purchase any
security of the Borrower (if such Person has agreed in writing
prior to its receipt
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of such Confidential Information to be bound by the provisions of this
Section 12.17);
(i) any federal or state regulatory authority having jurisdiction over the
Agent or such Lender;
the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that
requires access to information about such Lender's investment
portfolio; or
any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to the Agent or such Lender, (x)
in response to any subpoena or other legal process, (y) in
connection with any litigation to which the Agent or such Lender
is a party, or (z) if a Default or Event of Default has occurred
and is continuing, to the extent the Agent or such Lender may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under the Loans, this Loan Agreement and
other Loan Documents.
12.18. Integration
-----------
This Agreement and the other Loan Documents contain a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and thereof and shall together constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof, superseding all prior oral or written understandings.
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IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
ALLIANCE LAUNDRY RECEIVABLES
WAREHOUSE LLC
By: _________________________
Name:
Title:
Address for Notices:
Shepard and Hall Streets
Ripon, Wisconsin 54971
Attention: John Adams
Facsimile No.: (920) 748-4477
Telephone No.: (920) 748-1649
LEHMAN COMMERCIAL PAPER INC., as
Agent
By: _________________________
Name:
Title:
Address for Notices:
Three World Financial Center
New York, New York 10285
Attention: Mr. Vincent Primiano
Facsimile No.: 212-526-5484
Telephone No.: 212-526-5840
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Commitment Percentage: 100% LEHMAN COMMERCIAL PAPER INC., as
Lender
By: _________________________
Name:
Title:
Address for Notices:
Three World Financial Center
New York, New York 10285
Attention: Mr. Vincent Primiano
Facsimile No.: 212-526-5484
Telephone No.: 212-526-5840
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<PAGE>
SCHEDULE 4.10
TRADE RECEIVABLE LOCKBOX BANKS
<TABLE>
<CAPTION>
BANK LOCKBOX ADDRESS DEMAND DEPOSIT ACCOUNT #
---- --------------- ------------------------
<S> <C> <C>
Bank of America National Trust P.O. Box 91117 77-05484
and Savings Association Chicago, Illinois 60693
Firstar Bank Milwaukee, N.A. N.A. 112-520-473
</TABLE>
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SCHEDULE 4.11
EQUIPMENT LOAN LOCKBOX BANKS
<TABLE>
<CAPTION>
BANK LOCKBOX ADDRESS DEMAND DEPOSIT ACCOUNT #
---- --------------- ------------------------
<S> <C> <C>
Mellon Bank, N.A. Lockbox No. 10173 006-8427
Dept. CH10173
Palatine, Illinois 60055-0173
</TABLE>
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SCHEDULE 6.08
FILING JURISDICTIONS AND OFFICES
Jurisdiction Office
State of Wisconsin Secretary of State
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<PAGE>
SCHEDULE 6.16
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
IN RESPECT OF THE ASSETS
As to each Asset included in the Borrowing Base on a Funding Date
(and, with respect to Equipment Loans, the related Equipment), the Borrower
shall be deemed to make the following representations and warranties to the
Agent and the Lenders as of such date and as of each date the Collateral Value
is determined:
(i) All information in respect of such Asset set forth in the Asset
Schedule is true and correct in all material respects and such Asset and all
accompanying documents are complete and authentic and all signatures thereon are
genuine;
(ii) Such Asset arose from a bona fide loan or sale of merchandise or
rendering of services to an Obligor having the legal capacity to contract,
complying with all applicable State and Federal laws and regulations and is not
subject to any counterclaim, defense or contractual right of set-off;
(iii) All amounts represented to be payable on such Asset are, in
fact, payable in Dollars or, in the case of Equipment Loans, Canadian Dollars
and in accordance with the provisions of such Asset;
(iv) Any property subject to any security interest given in
connection with such Asset is not subject to any encumbrance other than such
security interest and Permitted Liens;
(v) The Borrower holds good and indefeasible title to, and is the
sole owner (or assignee) of, such Asset, and such Asset is not subject to any
Liens, other than Permitted Liens;
(vi) Prior to a purchase pursuant to the Transfer Agreement, an
Originator was the legal and beneficial owner of the Assets sold to the Borrower
by such Originator pursuant to the Transfer Agreement free and clear of any
Lien, other than Permitted Liens;
(vii) Such Asset conforms to the description thereof as set forth
on the related Asset Schedule;
(viii) Such Asset, at the time of purchase by the Borrower from an
Originator, was not a Defaulted Receivable and, unless the Borrower has notified
the Agent to the contrary, was not otherwise excluded from another warehouse
facility or securitization;
(ix) (A) Each such Asset which is an Equipment Loan contains
provisions requiring the user to maintain appropriate liability insurance with
respect thereto, and making the
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user absolutely and unconditionally liable for all payments required to be made
thereunder, without any right of set-off for any reason whatsoever, subject only
to the user's right of quiet enjoyment, (B) such Equipment Loan may not be
prepaid unless the amount required to be paid by or on behalf of a user in
respect of such prepayment is at all times equal to or in excess of the
principal balance and accrued interest at the Contract Rate and (C) the rights
with respect to such Equipment Loan are assignable by the Borrower without the
consent of any Person;
(x) All requirements of applicable Federal, state and local laws,
and regulations thereunder, including, without limitation, usury laws, if any,
in respect of such Asset have been complied with in all material respects;
(xi) Such Asset represents the legal, valid and binding payment
obligation of the related Obligor, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other laws (including, but not limited to,
principles of equity) affecting the rights of creditors;
(xii) No instrument of release or waiver has been executed in
connection with such Asset, and the Obligor in respect of such Asset has not
been released from its obligations thereunder, in whole or in part, and, with
respect to Equipment Loans, no action has been taken by the Borrower to release
any Equipment from the lien granted by the related Equipment Loan, in whole or
in part;
(xiii) Except as otherwise permitted by Section 7.11, such Asset
has not been amended after the date on which such Asset is listed on such Asset
Schedule and pledged to the Agent hereunder in any material respect or such that
the amount of any monthly payment or the total number of the monthly payments is
increased or decreased;
(xiv) No right of rescission, set-off, counterclaim or defense has
been asserted with respect to such Asset;
(xv) There are no proceedings or investigations pending, or, to the
best of Borrower's knowledge, threatened, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of such Asset, (B) asserting the bankruptcy or
insolvency of a user, (C) seeking to prevent payment and performance of such
Asset, or (D) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Asset;
(xvi) Each of the Borrower and the related Originator has duly
fulfilled all obligations in all material respects on its part to be fulfilled
under or in connection with such Asset originated by such Originator and has
done nothing to impair the rights of the Lenders in such Asset or payments with
respect thereto;
(xvii) There is no default, breach, violation or event of
acceleration existing under such Asset, and no event has occurred which, with
the passage of time or with notice, would
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constitute a default, breach, violation or event of acceleration;
(xviii) Each Asset which is an Equipment Loan has been duly and
properly executed by the parties thereto;
(xix) Such Asset was not selected by the Borrower on any basis
intended to adversely affect the value of the Agent's security interest therein;
(xx) Such Asset was not originated in, nor is it subject to the
laws of, any jurisdiction the laws of which would make unlawful the pledge,
transfer or assignment of such document under this Loan Agreement, including any
sale in accordance with this Loan Agreement;
(xxi) Immediately after the pledge, assignment and transfer to the
Agent as herein contemplated, all necessary action will have been taken to grant
a valid and enforceable first priority perfected security interest in such Asset
in favor of Agent (including the filing or amendment of UCC financing statements
in all applicable jurisdictions, except as set forth in Section 6.19) and all
payments to become due thereunder and, with respect to an Equipment Loan, all
rights of the Borrower in the Equipment that is the subject of such Equipment
Loan, except for those subsequent Liens which, by operation of law, take
priority over a previously perfected security interest;
(xxii) (A) Such Asset has not been sold, transferred, assigned or
pledged by the Borrower to any Person other than the Agent and (B) upon
execution and delivery hereof by the Borrower, the Agent will have a first
priority perfected security interest in all of the right, title and interest of
the Borrower in and to such Asset and the payments to become due thereunder,
free and clear of all Liens (except Permitted Liens);
(xxiii) The Borrower's computer records have been marked to indicate
that such Asset has been pledged, assigned and transferred to the Agent pursuant
to this Loan Agreement;
(xxiv) All insurance policies required to be maintained by each
Equipment Loan are in full force and effect and such insurance policies are of a
type customary for the Equipment covered thereby;
(xxv) The credit standing of the Obligor under such Asset was
approved by the related Originator using its customary practices and procedures;
to the best of the Borrower's knowledge, the Obligor is not insolvent or in
bankruptcy and the Borrower has no knowledge of any circumstances or condition
with respect to such Asset, the Equipment or the Obligor's credit standing that
could reasonably be expected to cause the Agent to regard such Asset as an
unacceptable security, cause such Asset to become a Delinquent Receivable, with
respect to a Trade Receivable, or a Delinquent Equipment Loan, with respect to
an Equipment Loan, or adversely affect the value or marketability of such Asset;
95
<PAGE>
(xxvi) The Equipment securing such Equipment Loan was properly
delivered to the user in good repair, without defects and in satisfactory order
and, to the best of the Borrower's knowledge, is in proper working order as of
the date on which such Equipment Loan was pledged to the Agent and listed on the
related Asset Schedule;
(xxvii) The Asset was originated without any fraud or
misrepresentation on the part of the related Originator;
(xxviii) No action has been taken by the Borrower to convey any right
to any Person that would result in such Person having a right to payments due
under the Asset that is senior to, or equal with, that of the Lenders;
(xxix) All taxes of any nature or description whatsoever relating
to the Asset that are due and owing have been paid in full;
(xxx) To the best of the Borrower's knowledge, no Obligor is an
Affiliate of the Borrower or any Originator;
Such Asset is an "account", "chattel paper" or a "general intangible"
within the meaning of Section 9-105 or Section 9-106 of the UCC of all
applicable jurisdictions and is freely transferable without the consent of the
related Obligor or any other Person; and
If such Asset constitutes "chattel paper" for purposes of Sections 9-
105(1)(b) and 9-308 of the Uniform Commercial Code as in effect in any
applicable jurisdiction, there is only one original executed counterpart.
96
<PAGE>
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$ 250,000,000________ __, 19__
New York, New York
FOR VALUE RECEIVED, ALLIANCE LAUNDRY RECEIVABLES WAREHOUSE LLC, a
Delaware limited liability company (the "Borrower"), hereby promises to pay to
--------
the order of LEHMAN COMMERCIAL PAPER INC. (the "Agent"), for the benefit of the
-----
Lenders (as defined below), at the principal office of the Agent at Three World
Financial Center, New York, New York, 10285, in lawful money of the United
States, and in immediately available funds, the principal sum of TWO HUNDRED
FIFTY MILLION DOLLARS ($250,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lenders to the
Borrower under the Loan Agreement referred to below), on the dates and in the
principal amounts provided in the Loan Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Loan
Agreement.
The date, amount and interest rate of each Loan made by the Lenders to
the Borrower, and each payment made on account of the principal thereof, shall
be recorded by the Agent on its books and, prior to any transfer of this Note,
endorsed by the Agent on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Agent to make any such recordation or
--------
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing under the Loan Agreement or hereunder in respect of
the Loans made by the Lenders.
This Note is the Note referred to in the Loan and Security Agreement
dated as of May 5, 1998 (as amended, supplemented or otherwise modified and in
effect from time to time, the "Loan Agreement") among the Borrower, the lenders
--------------
party thereto (the "Lenders") and the Agent, and evidences Loans made by the
-------
Lenders thereunder. Terms used but not defined in this Note have the respective
meanings assigned to them in the Loan Agreement.
The Borrower agrees to pay all the Agent's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Agent's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges,
97
<PAGE>
admits and agrees that the Borrower's obligations under this Note are recourse
obligations of the Borrower to which the Borrower pledges its full faith and
credit.
The Borrower, and any endorsers or guarantors hereof, (a) severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayments of this Note, (b) expressly agree that this
Note, or any payment hereunder, may be extended from time to time, and consent
to the acceptance of further Collateral, the release of any Collateral for this
Note, the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Agent or a Lender, in
order to enforce payment of this Note, to first institute or exhaust the Agent's
or such Lender's remedies against the Borrower or any other party liable hereon
or against any Collateral for this Note. No extension of time for the payment
of this Note, or any installment hereof, made by agreement by the Agent or a
Lender with any person now or hereafter liable for the payment of this Note,
shall affect the liability under this Note of the Borrower, even if the Borrower
is not a party to such agreement; provided, however, that the Lenders and the
-------- -------
Borrower, by written agreement between them, may affect the liability of the
Borrower.
Any reference herein to the Agent shall be deemed to include and
apply to each Lender and every subsequent holder of this Note. Reference is
made to the Loan Agreement for provisions concerning optional and mandatory
prepayments, Collateral, acceleration and other material terms affecting this
Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK WHOSE LAWS THE BORROWER EXPRESSLY ELECTS TO APPLY TO THIS
NOTE. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE OR
ARISING OUT OF THIS NOTE MAY BE COMMENCED IN THE SUPREME COURT OF THE STATE OF
NEW YORK, BOROUGH OF MANHATTAN, OR IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK.
ALLIANCE LAUNDRY RECEIVABLES
WAREHOUSE LLC
By: _______________________________
Name:
Title:
98
<PAGE>
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
<TABLE>
<S> <C> <C> <C> <C> <C>
Principal Amount Interest Amount Paid Unpaid Principal Notation
Date Made of Loan Rate or Prepaid Amount Made by
- --------- ---------------- --------- ----------- ---------------- ---------
</TABLE>
99
<PAGE>
EXHIBIT B
[FORM OF REQUEST FOR BORROWING]
REQUEST FOR BORROWING
[insert date]
Lehman Commercial Paper Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285-0800
Attention: Vincent Primiano
Request for Borrowing No. :_____________________
Ladies/Gentlemen:
Reference is made to the Loan and Security Agreement, dated as of
May 5, 1998, as the same may from time to time be amended, modified or
supplemented (the "Loan Agreement"; capitalized terms used but not
--------------
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Alliance Laundry Receivables Warehouse LLC, the lenders
party thereto (the "Lenders") and you, as agent for the Lenders.
-------
In accordance with Section 2.03(a) of the Loan Agreement, we hereby
request that the Lenders make a Loan to us on ____________________ [insert
requested Funding Date, which must be at least two (2) Business Days from the
date of the request], in connection with which we propose to pledge to you for
the benefit of the Lenders as Collateral the Assets set forth on the Asset
Schedule attached hereto.
Very truly yours,
ALLIANCE LAUNDRY RECEIVABLES
WAREHOUSE LLC
By: ________________________
Name:
Title:
100
<PAGE>
SCHEDULE I TO REQUEST FOR BORROWING
ASSETS PROPOSED TO BE PLEDGED
-----------------------------
ON FUNDING DATE
---------------
[attach Asset Schedule]
101
<PAGE>
EXHIBIT C
[FORM OF UNDERWRITING LETTER AGREEMENT]
102
<PAGE>
EXHIBIT D-1
[FORM OF TRADE RECEIVABLE LOCKBOX ASSIGNMENT AGREEMENT]
103
<PAGE>
EXHIBIT D-2
[FORM OF EQUIPMENT LOAN LOCKBOX ASSIGNMENT AGREEMENT]
104
<PAGE>
EXHIBIT E
[FORM OF FUNDING DATE DATA POOL REPORT]
105
<PAGE>
EXHIBIT F
[FORM OF EQUIPMENT LOAN MONTHLY DATA POOL REPORT]
106
<PAGE>
EXHIBIT G
[FORM OF TRADE RECEIVABLES MONTHLY DATA POOL REPORT]
107
<PAGE>
EXHIBIT 10.5
___________________________________
ALLIANCE LAUNDRY HOLDINGS LLC
___________________________________
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
Dated as of May 5, 1998
THE COMPANY INTERESTS REPRESENTED BY THIS AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH
INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY
TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS OR EXEMPTION
THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL RESTRICTIONS ON
TRANSFERABILITY SET FORTH HEREIN.
THE COMPANY INTERESTS REPRESENTED BY THIS AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER
SPECIFIED IN THE SECURITYHOLDERS AGREEMENT, DATED AS OF MAY 5, 1998, AS AMENDED
OR MODIFIED FROM TIME TO TIME, AMONG THE ISSUER (THE "COMPANY"), AND CERTAIN
INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH
INTERESTS UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY
TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE
HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
ARTICLE I DEFINITIONS..................................................1
ARTICLE II ORGANIZATIONAL MATTERS.......................................9
2.1 Formation of Company.........................................9
2.2 Limited Liability Company Agreement..........................9
2.3 Name.........................................................9
2.4 Purpose......................................................9
2.5 Principal Office; Registered Office..........................9
2.6 Term.........................................................9
2.7 No State-Law Partnership....................................10
ARTICLE III CAPITAL CONTRIBUTIONS.......................................10
3.1 Unitholders.................................................10
3.2 Capital Accounts............................................10
3.3 Negative Capital Accounts...................................11
3.4 No Withdrawal...............................................12
3.5 Loans From Unitholders......................................12
ARTICLE IV DISTRIBUTIONS AND ALLOCATIONS...............................12
4.1 Distributions...............................................12
4.2 Allocations.................................................14
4.3 Special Allocations.........................................14
4.4 Tax Allocations.............................................15
4.5 Curative Allocations........................................16
4.6 Indemnification and Reimbursement for Payments on Behalf
of a Unitholder.............................................16
ARTICLE V MANAGEMENT..................................................17
5.1 Authority of Board..........................................17
5.2 Actions of the Board; Composition...........................17
5.3 Proxies.....................................................18
5.4 Meetings, etc...............................................18
5.5 Delegation of Authority.....................................19
5.6 Purchase of Units...........................................19
5.7 Limitation of Liability.....................................20
ARTICLE VI RIGHTS AND OBLIGATIONS OF UNITHOLDERS.......................21
6.1 Limitation of Liability.....................................21
6.2 Lack of Authority...........................................21
6.3 No Right of Partition.......................................21
i
<PAGE>
PAGE
----
6.4 Indemnification.............................................21
6.5 Members Right to Act........................................22
6.6 Conflicts of Interest.......................................23
ARTICLE VII BOOKS, RECORDS, ACCOUNTING AND REPORTS.......................24
7.1 Records and Accounting......................................24
7.2 Fiscal Year.................................................24
7.3 Reports.....................................................24
7.4 Transmission of Communications..............................25
ARTICLE VIII TAX MATTERS.................................................25
8.1 Preparation of Tax Returns..................................25
8.2 Tax Elections...............................................25
8.3 Tax Controversies...........................................25
ARTICLE IX TRANSFER OF COMPANY INTERESTS...............................26
9.1 Transfer In General.........................................26
9.2 Assignee's Rights...........................................26
9.3 Assignor's Rights and Obligations...........................27
ARTICLE X ADMISSION OF MEMBERS........................................27
10.1 Substituted Members.........................................27
10.2 Additional Members..........................................27
ARTICLE XI WITHDRAWAL AND RESIGNATION OF UNITHOLDERS...................28
11.1 Withdrawal and Resignation of Unitholders...................28
ARTICLE XII DISSOLUTION AND LIQUIDATION..................................28
12.1 Dissolution.................................................28
12.2 Liquidation and Termination.................................28
12.3 Deferment; Distribution in Kind.............................29
12.4 Cancellation of Certificate.................................30
12.5 Reasonable Time for Winding Up..............................30
12.6 Return of Capital...........................................30
12.7 Liquidity Event or IPO......................................30
ARTICLE XIII VALUATION...................................................31
13.1 Determination...............................................31
13.2 Determination of Fair Market................................31
ARTICLE XIV GENERAL PROVISIONS...........................................32
ii
<PAGE>
PAGE
----
14.1 Power of Attorney...........................................32
14.2 Amendments..................................................32
14.3 Title to Company Assets.....................................33
14.4 Addresses and Notices.......................................33
14.5 Binding Effect..............................................34
14.6 Creditors...................................................34
14.7 Waiver......................................................34
14.8 Counterparts................................................34
14.9 Applicable Law..............................................34
14.10 Severability................................................34
14.11 Further Action..............................................34
14.12 Expenses....................................................35
14.13 Offset......................................................35
14.14 Entire Agreement............................................35
14.15 Remedies....................................................35
14.16 Opt-in to Article 8 of the Uniform Commercial Code..........35
14.17 Descriptive Headings; Interpretation........................36
iii
<PAGE>
ALLIANCE LAUNDRY HOLDINGS LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated
as of May 5, 1998, is entered into by and among the Members a party hereto.
Pursuant to Section 13.9 of that certain Limited Liability Company Agreement of
Raytheon Commercial Laundry, LLC dated as of August 21, 1997 (the "Original
--------
Agreement"), the parties thereto desire to amend and restate the Original
- ---------
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby amend and restate the Original Agreement as follows:
ARTICLE I
DEFINITIONS
The following definitions shall be applied to the terms used in this
Agreement for all purposes, unless otherwise clearly indicated to the contrary.
"Additional Member" means a Person admitted to the Company as a Member
-----------------
pursuant to Section 10.2.
"Adjusted Capital Account Deficit" means with respect to any Capital
--------------------------------
Account as of the end of any Taxable Year, the amount by which the balance in
such Capital Account is less than zero. For this purpose, such Person's Capital
Account balance shall be:
(i) reduced for any items described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6), and
(ii) increased for any amount such Person is obligated to contribute
or is treated as being obligated to contribute to the Company
pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c)
(relating to partner liabilities to a partnership) or 1.704-
2(g)(1) and 1.704-2(i) (relating to minimum gain).
"Admission Date" is defined in Section 9.3.
--------------
"Affiliate" of any Person means any Person that directly or indirectly
---------
controls, is controlled by, or is under common control with the Person in
question.
"Agreement" means this Amended and Restated Limited Liability Company
---------
Agreement of Alliance Laundry Holdings LLC.
<PAGE>
"Assignee" means a Person to whom a Company Interest has been
--------
transferred in accordance with the terms of the Securityholders Agreement, but
who has not become a Member pursuant to Article X.
"Bain" means Bain/RCL, L.L.C.
----
"Bain Group" means Bain/RCL, L.L.C., and each of its respective
----------
Affiliates and successors.
"Bain Members" is defined in Section 5.2(b).
------------
"Bain Units" means Units held by members of the Bain Group.
----------
"Base Rate" means, on any date, a variable rate per annum equal to the
---------
rate of interest most recently published by The Wall Street Journal as the
-----------------------
"prime rate" at large U.S. money center banks.
"Board" means the Board of Managers of the Company.
-----
"Book Value" means, with respect to any Company property, the
----------
Company's adjusted basis for federal income tax purposes, adjusted from time to
time to reflect the adjustments required or permitted by Treasury Regulation
Section 1.704-1(b)(2)(iv)(d)-(g).
"BRS" shall mean BRS/RCL Investment Corp., BCB Family Partners, L.P.,
---
Stephen C. Sherrill, NAZ Family Partners, L.P., H. Virgil Sherrill, Paul D.
Kaminski, Nancy A. Zweng, Bruce C. Bruckmann, John Rice Edmonds, Donald J.
Bruckmann, Susan Kaider, Harold O. Rosser, Marilena Tibrea, Walker C. Simmons,
MLPF&S Custodian FBO Paul Kaminski and their Affiliates, Permitted Transferees
(as defined in the Securityholders Agreement) and successors.
"Capital Account" means the capital account maintained for a Member
---------------
pursuant to Section 3.2.
"Capital Contribution" means any cash, cash equivalents, promissory
--------------------
obligations or the Fair Market Value of other property which a Unitholder
contributes or is deemed to have contributed to the Company pursuant to Section
3.1 or 5.1.
"Cash Inflows" means the sum of all Capital Contributions made by the
------------
Investors from and after the date of this Agreement with respect to or in
exchange for Investor Units.
"Cash Outflows" means the sum of all cash Distributions and the Fair
-------------
Market Value of all other Distributions made by the Company to the Investors,
together with the sum of all other cash payments and the Fair Market Value of
all other payments made by unaffiliated third parties to, or otherwise received
by, the Investors (other than in connection with a repurchase of securities
pursuant to an Executive Agreement) from and after the date of this Agreement
with respect to or in exchange for Investor Units; provided that in the event
-------- ----
that property is distributed subject to
2
<PAGE>
contingencies or restrictions that might affect its Fair Market Value (e.g.,
non-publicly traded stock, publicly traded stock subject to restrictions or
limitations or a right to receive future consideration pursuant to an earn out),
such Distribution shall not be considered a "Cash Outflow" until the date such
distributed property is first sold by one of the Investors (i) in or after an
underwritten public offering of securities by the Company or (ii) to any person
who is not an Affiliate of any Unitholder or the Company.
"Certificate" means the Company's Certificate of Formation as filed
-----------
with the Secretary of State of Delaware.
"Chairman" is defined in Section 5.2(b).
--------
"Change in Control" shall mean the first to occur of (i) the
-----------------
occurrence of a Liquidity Event or (ii) (A) the Company (or its successor as a
result of merger, consolidation, reorganization or sale) becoming a reporting
company under the Securities Exchange Act of 1934 as a result of the
registration of its common equity securities thereunder and (B) the Investors
and their affiliates collectively ceasing to own at least 50% of the aggregate
number of Common Units that they own on the date hereof (as adjusted for a
dividend or split or exchange or in connection with a combination of units,
recapitalization, merger, consolidation or other reorganization).
"Class A Unit" means a Unit representing a fractional part of the
------------
Company Interests of the Unitholders and having the rights and obligations
specified with respect to Class A Units in this Agreement.
"Class A Unitholder" means a holder of Class A Units.
------------------
"Class B Unit" means a Unit representing a fractional part of the
------------
Company Interests of the Unitholders and having the rights and obligations
specified with respect to Class B Units in this Agreement.
"Class B Unitholder" means a holder of Class B Units.
------------------
"Class C Unit" means a Unit representing a fractional part of the
------------
Company Interests of the Unitholders and having the rights and obligations
specified with respect to the Class C Units in the Agreement.
"Class C Unitholder" means a holder of Class C Units.
------------------
"Class L Unit" means a Unit representing a fractional part of the
------------
Company Interests of the Unitholders and having the rights and obligations
specified with respect to the Class L Units in this Agreement.
"Class L Unitholder" means a holder of Class L Units.
------------------
3
<PAGE>
"Class L Yield" means, with respect to each Class L Unit, the amount
-------------
accruing on such Class L Unit on a daily basis, at the rate of 12% per annum,
compounded on the last day of each calendar quarter, on (a) the Unreturned
Capital of such Class L Unit plus (b) Unpaid Class L Yield thereon, for all
----
prior quarterly periods. In calculating the amount of any Distribution to be
made during a period, the portion of a Class L Unit's Class L Yield for such
portion of such period elapsing before such Distribution is made shall be taken
into account with respect to determining the amount of such Distribution with
respect to Class L Yield.
"Code" means the United States Internal Revenue Code of 1986, as
----
amended. Such term shall, at the Board's sole discretion, be deemed to include
any future amendments to the Code and any corresponding provisions of succeeding
Code provisions (whether or not such amendments and corresponding provisions are
mandatory or discretionary).
"Commitment" means, with respect to each Unitholder, the aggregate
----------
amount of Capital Contributions made or agreed to be made by such Unitholder as
specified in Schedule I attached hereto as the same may be modified from time to
----------
time under the terms of this Agreement.
"Common Unit" means a Unit representing a fractional part of the
-----------
Company Interests of the Unitholders and having the rights and obligations
specified with respect to Class L Units, Class A Units, Class B Units or Class C
Units in this Agreement; provided that a "Common Unit" will not include (i) a
--------
Class B Unit unless and until such Class B Unit is a Vested Class B Unit and the
Target B Multiple has been achieved, or (ii) a Class C Unit unless and until
such Class C Unit is a Vested Class C Unit and the Target C Multiple has been
achieved. Without limiting the generality of the immediately preceding sentence
and in furtherance thereof, any Units that are not included as "Common Units"
pursuant to the proviso contained in the immediately preceding sentence at the
time of any determination thereof, shall not be deemed outstanding for purposes
of Section 4.1(a)(iv) at the time of such determination.
"Common Unitholder" means a holder of Common Units.
-----------------
"Company" means Alliance Laundry Holdings LLC, a Delaware limited
-------
liability company, established in accordance with this Agreement as such limited
liability company may be from time to time constituted, and including its
successors.
"Company Interest" means the interest of a Unitholder in Profits,
----------------
Losses and Distributions.
"Delaware Act" means the Delaware Limited Liability Company Act, 6
------------
Del.L. (S) 18-101, et seq., as it may be amended from time to time, and any
-------
successor to the Delaware Act.
"Distribution" means each distribution made by the Company to a
------------
Unitholder, whether in cash, property or securities of the Company and whether
by liquidating distribution, redemption, repurchase or otherwise; provided that
--------
none of the following shall be a Distribution: (a) any redemption or repurchase
by the Company of any securities, and (b) any recapitalization or exchange of
securities of the Company, and any subdivision (by Unit split or otherwise) or
any
4
<PAGE>
combination (by reverse Unit split or otherwise) of any outstanding Units
and (c) any distribution made by the Company pursuant to Section 4.1(c) hereof.
"Equity Securities" means (i) Units or other equity interests in the
-----------------
Company (including other classes or groups thereof having such relative rights,
powers and duties as may from time to time be established by the Board,
including rights, powers and/or duties senior to existing classes and groups of
Units and other equity interests in the Company), (ii) obligations, evidences of
indebtedness or other securities or interests convertible or exchangeable into
Units or other equity interests in the Company and (iii) warrants, options or
other rights to purchase or otherwise acquire Units or other equity interests in
the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Event of Withdrawal" means the death, retirement, resignation,
-------------------
expulsion, bankruptcy or dissolution of a Member, or the occurrence of any other
event that terminates the continued membership of a Member in the Company.
"Executive Agreements" means those certain Executive Unit Purchase
--------------------
Agreements and IRA and Executive Unit Purchase Agreements, by and among the
Company and certain employees of the Company, and/or trustees for various
employees' IRAs, as in effect from time to time.
"Fair Market Value" means, with respect to any asset or equity
-----------------
interest, its fair market value determined according to Article XIII.
"Fiscal Period" means any interim accounting period within a Taxable
-------------
Year established by the Board and which is permitted or required by Code Section
706.
"Fiscal Year" means the Company's annual accounting period established
-----------
pursuant to Section 7.2.
"Governmental Entity" means the United States of America or any other
-------------------
nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
"Indemnified Person" is defined in Section 6.4(a).
------------------
"Independent Third Party" means any Person or group of Persons
-----------------------
collaborating with respect to a transaction that, immediately prior to the
contemplated transaction, does not own, individually or collectively, in excess
of 10% of the Company's Units on a fully-diluted basis (a "10% Owner"), who is
---------
not controlling, controlled by or under common control with any such 10% Owner
and who is not the spouse or descendent (by birth or adoption) of any such 10%
Owner or a trust for the benefit of such 10% Owner and/or such other Persons.
"Investor Units" means, collectively, Class A Units and Class L Units.
--------------
5
<PAGE>
"Investors" means members of the Bain Group.
---------
"IPO" means the initial sale pursuant to a registration statement
---
filed under the Securities Act of any Equity Securities of the Company, whether
by the Company or any holder of equity securities of the Company.
"Liens" means any mortgage, pledge, security interest, encumbrance,
-----
lien or charge of any kind (including, without limitation, any conditional sale
or other title retention agreement or lease in the nature thereof), any sale of
receivables with recourse against the Company, any Subsidiary or any Affiliate,
any filing or agreement to file a financing statement as debtor under the
Uniform Commercial Code or any similar statute other than to reflect ownership
by a third party of property leased to the Company or any Subsidiaries under a
lease which is not in the nature of a conditional sale or title retention
agreement, or any subordination arrangement in favor of another Person (other
than any subordination arising in the ordinary course of business).
"Liquidity Event" means (a) any sale to an Independent Third Party of
---------------
all or substantially all (as defined in the Model Business Corporation Act) of
the assets of the Company and its Subsidiaries on a consolidated basis in one
transaction or series of related transactions, (b) any sale to an Independent
Third Party of all or substantially all of the Common Units (or a transaction
having a similar effect as contemplated by Section 12.7) in one transaction or
series of related transactions but excluding any sales of Common Units in a
Public Sale (as defined in the Securityholders Agreement) or (c) a merger or
consolidation or other transaction which accomplishes one of the foregoing.
"Losses" means items of Company loss and deduction determined
------
according to Section 3.2.
"Member" means each of the members named on Schedule I attached hereto
------ ----------
and any Person admitted to the Company as a Substituted Member or Additional
Member; but only so long as such Person is shown on the Company's books and
records as the owner of one or more Units.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain, the Company, Raytheon and Raytheon
Commercial Laundry LLC, as amended from time to time.
"Minimum Gain" means the partnership minimum gain determined pursuant
------------
to Treasury Regulation Section 1.704-2(d).
"Note" means that certain Junior Subordinated Note in the original
----
principal amount of $9,000,000 issued by the Company to Raytheon.
"Person" means an individual or a corporation, partnership, limited
------
liability company, trust, unincorporated organization, association or other
entity.
6
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"Preferred Redemption Date" shall mean the earlier to occur of (i) a
-------------------------
Change in Control, (ii) the consummation of an IPO and (iii) the date that is
eleven and one-half years from date hereof.
"Preferred Unit" means a Unit representing a fractional part of the
--------------
Company Interests of the Unitholders and having the preference rights and other
rights and obligations specified with respect to Preferred Units in this
Agreement.
"Preferred Unitholder" means a holder of Preferred Units.
--------------------
"Profits" means items of Company income and gain determined according
-------
to Section 3.2.
"Raytheon" means Raytheon Company, a Delaware corporation, and any
--------
transferee of Common Interests issued to it.
"Representative" is defined in Section 5.2(b).
--------------
"Securities Act" means the Securities Act of 1933, as amended, and
--------------
applicable rules and regulations thereunder, and any successor to such statute,
rules or regulations. Any reference herein to a specific section, rule or
regulation of the Securities Act shall be deemed to include any corresponding
provisions of future law.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement, dated as of the date hereof, by and among the Company and each of its
Members, as amended or modified from time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity (other than
a corporation), a majority of partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity. For purposes hereof, references to a
"Subsidiary" of the Company shall be given effect only at such times that the
Company has one or more Subsidiaries, and, unless otherwise indicated, the term
"Subsidiary" refers to a Subsidiary of the Company.
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<PAGE>
"Substituted Member" means a Person that is admitted as a Member to
------------------
the Company pursuant to Section 10.1.
"Target B Multiple" means Cash Outflows divided by Cash Inflows which
-----------------
yield a result greater than or equal to 1.0.
"Target C Multiple" means Cash Outflows divided by Cash Inflows which
-----------------
yield a result greater than or equal to 3.0.
"Tax Matters Partner" has the meaning given to such term in Section
-------------------
6231 of the Code.
"Taxable Year" means the Company's accounting period for federal
------------
income tax purposes determined pursuant to Section 7.2.
"Treasury Regulations" means the income tax regulations promulgated
--------------------
under the Code and effective as of the date hereof. Such term shall, at the
Board's sole discretion, be deemed to include any future amendments to such
regulations and any corresponding provisions of succeeding regulations (whether
or not such amendments and corresponding provisions are mandatory or
discretionary).
"Unit" means a Company Interest of a Member or an Assignee in the
----
Company representing a fractional part of the Company Interests of all Members
and Assignees and shall include Common Units and Preferred Units; provided that
-------- ----
any class or group of Units issued shall have relative rights, powers and duties
set forth in this Agreement and the Company Interest represented by such class
or group of Units shall be determined in accordance with such relative rights,
powers and duties.
"Unitholder" means any owner of one or more Units as reflected on the
----------
Company's books and records.
"Unitholder Group" is defined in Section 6.6.
----------------
"Unpaid Class L Yield" of any Class L Unit means, as of any date, an
--------------------
amount equal to the excess, if any, of (a) the aggregate Class L Yield accrued
on such Class L Unit for all periods prior to such date, over (b) the aggregate
amount of prior Distributions made by the Company that constitute payment of
Class L Yield on such Class L Unit.
"Unreturned Capital" means, with respect to a Preferred Unit or a
------------------
Class L Unit, the excess, if any, of the Capital Contribution made in exchange
for or on account of such Unit over all Distributions made by the Company that
constitute a return of the Capital Contribution therefor pursuant to Section
4.1(a)(ii) or 4(a)(iv).
"Vested Class B Units" means any Class B Units which have time vested
--------------------
in accordance with the terms of the Executive Agreement pursuant to which such
Units were acquired.
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<PAGE>
"Vested Class C Units" means any Class C Units which have time vested
--------------------
in accordance with the terms of the Executive Agreement pursuant to which such
Units were acquired.
"Vested Common Units" means collectively Vested Class B Units and
-------------------
Vested Class C Units.
ARTICLE II
ORGANIZATIONAL MATTERS
2.1 FORMATION OF COMPANY. The Company was formed on August 21, 1997
pursuant to the provisions of the Delaware Act and the provisions of this
Agreement.
2.2 LIMITED LIABILITY COMPANY AGREEMENT. The Members hereby execute
this Agreement for the purpose of establishing the affairs of the Company and
the conduct of its business in accordance with the provisions of the Delaware
Act. The Members hereby agree that during the term of the Company set forth in
Section 2.6 the rights and obligations of the Unitholders with respect to the
Company will be determined in accordance with the terms and conditions of this
Agreement and, except where the Delaware Act provides that such rights and
obligations specified in the Delaware Act shall apply "unless otherwise provided
in a limited liability company agreement" or words of similar effect, and such
rights and obligations are set forth in this Agreement, the Delaware Act;
provided that, notwithstanding the foregoing, Section 18-210 of the Delaware Act
- --------
shall not apply or be incorporated into this Agreement.
2.3 NAME. The name of the Company shall be "Alliance Laundry
Holdings LLC." The Board in its sole discretion may change the name of the
Company at any time and from time to time. Notification of any such change
shall be given to all Unitholders. The Company's business may be conducted
under its name and/or any other name or names deemed advisable by the Board.
2.4 PURPOSE. The purpose and business of the Company shall be any
business which may lawfully be conducted by a limited liability company formed
pursuant to the Delaware Act.
2.5 PRINCIPAL OFFICE; REGISTERED OFFICE. The principal office of the
Company shall be at P.O. Box 990, Ripon, WI 54971-0990 or such other place as
the Board may from time to time designate. The Company may maintain offices at
such other place or places as the Board deems advisable. Notification of any
such change shall be given to all Unitholders. The address of the registered
office of the Company in the State of Delaware shall be 1 East Loockermann
Street, Dover, DE 19901, and the registered agent for service of process on the
Company in the State of Delaware at such registered office shall be National
Registered Agents, Inc.
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<PAGE>
2.6 TERM. The term of the Company commenced upon the filing of the
Certificate in accordance with the Delaware Act and shall continue in existence
until termination and dissolution thereof in accordance with the provisions of
Article XII.
2.7 NO STATE-LAW PARTNERSHIP. The Unitholders intend that the
Company not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Unitholder be a partner or joint
venturer of any other Unitholder by virtue of this Agreement, for any purposes
other than as set forth in the last sentence of this Section 2.7, and neither
this Agreement nor any other document entered into by the Company or any
Unitholder relating to the subject matter hereof shall be construed to suggest
otherwise. The Unitholders intend that the Company shall be treated as a
partnership for federal and, if applicable, state or local income tax purposes,
and that each Unitholder and the Company shall file all tax returns and shall
otherwise take all tax and financial reporting positions in a manner consistent
with such treatment.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 UNITHOLDERS.
(a) Each Unitholder named on Schedule I attached hereto has made
----------
Capital Contributions to the Company as set forth on Schedule I in exchange for
-----------
the Units specified thereon; it being understood that interest paid by any
Unitholder on Capital Contributions made by such Unitholder in the form of a
promissory note pursuant to Section 3.1(b) below shall not be deemed a Capital
Contribution and the paying of such interest shall not result in any increase in
the amount of the Capital Account of such Unitholder.
(b) Notwithstanding the provisions of paragraph (a) above, the Board
may, at its sole option, permit Members to satisfy their Capital Contributions
by the issuance to the Company of a promissory note with a principal amount
equal to the amount of its Capital Contribution required hereunder.
(c) Subsequent to the closing of the transactions contemplated by the
Merger Agreement, each Unitholder who is issued Units by the Company shall make
the Capital Contributions to the Company as determined by the Board pursuant to
Section 5.1 in exchange for such Units.
3.2 CAPITAL ACCOUNTS.
(a) The Company shall maintain a separate Capital Account for each
Unitholder according to the rules of Treasury Regulation Section 1.704-
1(b)(2)(iv). For this purpose, the Company may (in the discretion of the
Board), upon the occurrence of the events specified in Treasury Regulation
Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in
10
<PAGE>
accordance with the rules of such regulation and Treasury Regulation Section
1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property.
(b) For purposes of computing the amount of any item of Company
income, gain, loss or deduction to be allocated pursuant to Article IV and to be
reflected in the Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes (including any
method of depreciation, cost recovery or amortization used for this purpose);
provided that:
- -------- ----
(i) The computation of all items of income, gain, loss and
deduction shall include those items described in Code Section
705(a)(l)(B) or Code Section 705(a)(2)(B) and Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the
fact that such items are not includable in gross income or are
not deductible for federal income tax purposes.
(ii) If the Book Value of any Company property is adjusted pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the
amount of such adjustment shall be taken into account as gain
or loss from the disposition of such property.
(iii) Items of income, gain, loss or deduction attributable to the
disposition of Company property having a Book Value that
differs from its adjusted basis for tax purposes shall be
computed by reference to the Book Value of such property.
(iv) Items of depreciation, amortization and other cost recovery
deductions with respect to Company property having a Book Value
that differs from its adjusted basis for tax purposes shall be
computed by reference to the proper ty's Book Value in
accordance with Treasury Regulation Section 1.704-
1(b)(2)(iv)(g).
(v) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Sections 732(d), 734(b) or
743(b) is required, pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining
Capital Accounts, the amount of such adjustment to the Capital
Accounts shall be treated as an item of gain (if the adjustment
increases the basis of the asset) or loss (if the adjustment
decreases such basis).
3.3 NEGATIVE CAPITAL ACCOUNTS. No Unitholder shall be required to
pay to any other Unitholder or the Company any deficit or negative balance which
may exist from time to time in such Unitholder's Capital Account (including upon
and after dissolution of the Company).
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<PAGE>
3.4 NO WITHDRAWAL. No Person shall be entitled to withdraw any part
of such Person's Capital Contribution or Capital Account or to receive any
Distribution from the Company, except as expressly provided herein or in the
Securityholders Agreement.
3.5 LOANS FROM UNITHOLDERS. Loans by Unitholders to the Company
shall not be considered Capital Contributions. If any Unitholder shall transfer
funds to the Company in excess of the amounts required hereunder to be
contributed by such Unitholder to the capital of the Company, the transfer of
such excess shall not result in any increase in the amount of the Capital
Account of such Unitholder. The amount of any such excess, to the extent
approved by the Board and the Unitholder, shall be a debt of the Company to such
Unitholder and shall be payable or collectible in accordance with such terms and
conditions as are set by the Board and agreed to by such Unitholder and
otherwise promptly repaid to such Unitholder.
ARTICLE IV
DISTRIBUTIONS AND ALLOCATIONS
4.1 DISTRIBUTIONS.
(a) Except as otherwise set forth in this Section 4.1, the Board may
in its sole discretion make Distributions at any time or from time to time.
Except as otherwise set forth in this Section 4.1, each Distribution shall be
made in the following order and priority:
(i) first, to the holders of Preferred Units, an amount equal to the
aggregate Unreturned Capital with respect to such Preferred Unitholders'
outstanding Preferred Units (in the proportion that each Unitholder's share of
Unreturned Capital with respect to Preferred Units bears to the aggregate amount
of Unreturned Capital with respect to all such Preferred Units outstanding
immediately prior to such Distribution) until each such Unitholder has received
Distributions under this clause (i) in respect of such Unitholder's Preferred
Units in an amount equal to the aggregate Unreturned Capital with respect to
such Unitholder's outstanding Preferred Units immediately prior to such
Distribution, and no Distribution or any portion thereof may be made under any
of the other paragraphs below until the entire amount of Unreturned Capital with
respect to the outstanding Preferred Units immediately prior to such
Distribution has been paid in full;
(ii) second, to the Class L Unitholders, an amount equal to the
aggregate Unpaid Class L Yield with respect to such Class L Unitholders'
outstanding Class L Units (in the proportion that each Class L Unitholder's
share of Unpaid Class L Yield with respect to such Class L Units bears to the
aggregate Unpaid Class L Yield with respect to all Class L Units immediately
prior to such Distribution) until each such Unitholder has received
Distributions under this clause (ii) in respect of such Unitholder's Class L
Units in an amount equal to the aggregate Unpaid Class L Yield with respect to
such Unitholder's outstanding Class L Units immediately prior to such
Distribution, and no Distribution or any portion thereof shall be made under any
of the other paragraphs below until the entire amount of the Unpaid Class L
Yield with respect to the outstanding Class L Units immediately prior to such
Distribution has been paid in full;
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<PAGE>
(iii) third, to the Class L Unitholders, an amount equal to the
aggregate Unreturned Capital with respect to such Class L Unitholders'
outstanding Class L Units (in the proportion that each Unitholder's share of
Unreturned Capital with respect to such Class L Units bears to the aggregate
Unreturned Capital with respect to all such Class L Units immediately prior to
such Distribution) until each such Unitholder has received Distributions under
this clause (iii) in respect of such Unitholder's Class L Units in an amount
equal to the aggregate Unreturned Capital with respect to such Unitholder's
outstanding Class L Units immediately prior to such Distribution, and no
Distribution or any portion thereof shall be made under any of the other
paragraphs below until the entire amount of the Unreturned Capital with respect
to the outstanding Class L Units immediately prior to such Distribution has been
paid in full; and
(iv) fourth, to the Common Unitholders, an amount equal to the amount
of such Distribution that has not been distributed pursuant to paragraphs (i)
through (iii) of this Section 4.1(a) above (ratably among such Unitholders based
upon the number of outstanding Common Units held by each such Unitholder
immediately prior to such Distribution).
(b) Notwithstanding anything to the contrary herein, on the Preferred
Redemption Date, the Company shall make a distribution to the each holder of
Preferred Units an amount equal to the aggregate Unreturned Capital with respect
to such Preferred Unitholders' outstanding Preferred Units; provided, however,
-------- -------
that, notwithstanding the foregoing, if the Senior Indebtedness (as defined in
the Note) is in default and payment hereunder is prohibited thereby, amounts
required to be paid pursuant to this paragraph shall not be permitted to be paid
by the Company to the holder of the Preferred Units.
(c) The Company may in the sole discretion of the Board, subject to
any restrictions contained in the financing agreements to which the Company or
any of its Affiliates is a party, distribute to each Unitholder within 75 days
after the close of each Taxable Year (or at such earlier times and in such
amounts as determined in good faith by the Board to be appropriate to enable the
Unitholder to pay estimated income tax liabilities) an amount equal to 46% (or,
at the Board's sole discretion such greater or lesser percentage as the Board
may determine in good faith from time to time, to represent the sum of the
maximum marginal federal, state and local income tax rates applicable to any
Unitholder or its partners or stockholders, if applicable) of
(i) the Profits for such Fiscal Year allocated to such Unitholder
pursuant to Section 4.2 and 4.3, reduced by
----------
(ii) the sum of (x) the Losses for such Fiscal Year allocated to such
Unitholder pursuant to Sections 4.2 and 4.3 and (y) the excess of
the aggregate Losses over the aggregate Profits for all prior
fiscal years allocated to such Unitholder pursuant to Sections
4.2 and 4.3 but only to the extent that such excess Losses have
not expired unused pursuant to applicable Code provisions
(provided that, any Unitholder claiming Losses to have expired
unused shall provide the Company with documentation thereof and
shall not have used Losses from any other investment ahead of
Losses allocated to such Unitholder hereunder).
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<PAGE>
(d) Each Distribution pursuant to Sections 4.1(a), 4.1(b) and 4.1(c)
shall be made to the Persons shown on the Company's books and records as
Unitholders as of the date of such Distribution; provided, however, that any
-------- -------
transferor and transferee of Units may mutually agree as to which of them should
receive payment of any Distribution under Section 4.1(c).
4.2 ALLOCATIONS.
(a) Except as otherwise provided in Section 4.3, Profits and Losses
for any Fiscal Year shall be allocated among the Unitholders in such a manner
that, as of the end of such Fiscal Year, the sum of (i) the Capital Account of
each Unitholder, (ii) such Unitholder's share of Minimum Gain (as determined
according to Treasury Regulation Section 1.704-2(g)) and (iii) such Unitholder's
partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section
1.704-2(i)(3)) shall be equal to the respective net amounts, positive or
negative, which would be distributed to them or for which they would be liable
to the Company under the Delaware Act, determined as if the Company were to (i)
liquidate the assets of the Company for an amount equal to their Book Value and
(ii) distribute the proceeds of liquidation pursuant to Section 12.2.
(b) For purposes of this Section 4.2, if Profits exceed Losses for a
Fiscal Year, (i) Losses shall first be allocated to Unitholders whose Capital
Accounts are reduced as a result of the allocations under Section 4.2(a), in an
amount equal to the amount by which such Capital Accounts have been reduced and
(ii) Profits and any remaining Losses shall be allocated to Unitholders whose
Capital Accounts are increased as a result of the allocations under Section
4.2(a), in the proportion that the amount of the increase in such Unitholder's
Capital Accounts as a result of the allocations under Section 4.2(a) bears to
the aggregate amount of the increase in all such Unitholders' Capital Accounts
as a result of the allocations under Section 4.2(a).
(c) For purposes of this Section 4.2, if Losses exceed Profits for a
Fiscal Year, (i) Profits shall first be allocated to Unitholders whose Capital
Accounts are increased as a result of the allocations under Section 4.2(a), in
an amount equal to the amount by which such Capital Accounts have been increased
and (ii) Losses and any remaining Profits shall be allocated to Unitholders
whose Capital Accounts are reduced as a result of the allocations under Section
4.2(a), in the proportion that the amount of the reduction in such Unitholder's
Capital Accounts as a result of the allocations under Section 4.2(a) bears to
the aggregate amount of the reduction in all such Unitholders' Capital Accounts
as a result of the allocations under Section 4.2(a).
4.3 SPECIAL ALLOCATIONS.
(a) Losses attributable to partner nonrecourse debt (as defined in
Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner
required by Treasury Regulation Section 1.704-2(i). If there is a net decrease
during a Taxable Year in partner nonrecourse debt minimum gain (as defined in
Treasury Regulation Section 1.704-2(i)(3)), Profits for such Taxable Year (and,
if necessary, for subsequent Taxable Years) shall be allocated to the
Unitholders in the amounts and of such character as determined according to
Treasury Regulation Section 1.704-2(i)(4).
14
<PAGE>
(b) Nonrecourse deductions (as determined according to Treasury
Regulation Section 1.704-2(b)(1)) for any Taxable Year shall be allocated to
each Common Unitholder ratably among such Common Unitholders based upon the
number of outstanding Common Units held by each such Common Unitholder
immediately prior to such allocation. Except as otherwise provided in Section
4.3(a), if there is a net decrease in the Minimum Gain during any Taxable Year,
each Unitholder shall be allocated Profits for such Taxable Year (and, if
necessary, for subsequent Taxable Years) in the amounts and of such character as
determined according to Treasury Regula tion Section 1.704-2(f). This Section
4.3(b) is intended to be a minimum gain chargeback provision that complies with
the requirements of Treasury Regulation Section 1.704-2(f), and shall be
interpreted in a manner consistent therewith.
(c) If any Unitholder that unexpectedly receives an adjustment,
allocation or distribution described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the
end of any Taxable Year, computed after the application of Sections 4.3(a) and
4.3(b) but before the application of any other provision of this Article IV,
then Profits for such Taxable Year shall be allocated to such Unitholder in
proportion to, and to the extent of, such Adjusted Capital Account Deficit.
This Section 4.3(c) is intended to be a qualified income offset provision as
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted in a manner consistent therewith.
(d) Profits and Losses described in Section 3.2(b)(v) shall be
allocated in a manner consistent with the manner that the adjustments to the
Capital Accounts are required to be made pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(j), (k) and (m).
(e) If, and to the extent that, any Unitholder is deemed to recognize
any item of income, gain, loss, deduction or credit as a result of any
transaction between such Unitholder and the Company pursuant to Code Sections
1272-1274, 7872, 483, 482 or any similar provision now or hereafter in effect,
and the Board determines that any corresponding Profit or Loss of the Company
should be allocated to the Unitholder who recognized such item in order to
reflect the Unitholder's economic interests in the Company, then the Board may
so allocate such Profit or Loss.
4.4 TAX ALLOCATIONS.
(a) The income, gains, losses, deductions and credits of the Company
will be allocated, for federal, state and local income tax purposes, among the
Unitholders in accordance with the allocation of such income, gains, losses,
deductions and credits among the Unitholders for computing their Capital
Accounts; except that if any such allocation is not permitted by the Code or
other applicable law, the Company's subsequent income, gains, losses, deductions
and credits will be allocated among the Unitholders so as to reflect as nearly
as possible the allocation set forth herein in computing their Capital Accounts.
(b) Items of Company taxable income, gain, loss and deduction with
respect to any property contributed to the capital of the Company shall be
allocated among the Unitholders in accordance with Code Section 704(c) so as to
take account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its Book Value.
15
<PAGE>
(c) If the Book Value of any Company asset is adjusted pursuant to the
requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f)
subsequent allocations of items of taxable income, gain, loss and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Book Value in the
same manner as under Code Section 704(c).
(d) Allocations of tax credits, tax credit recapture, and any items
related thereto shall be allocated to the Unitholders according to their
interests in such items as determined by the Board taking into account the
principles of Treasury Regulation Section 1.704-1(b)(4)(ii).
(e) Allocations pursuant to this Section 4.4 are solely for purposes
of federal, state and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Profits,
Losses, Distributions or other Company items pursuant to any provision of this
Agreement.
(f) The Company shall not be required to apply the "traditional
method" of allocation permitted by Treasury Registration Section 1.704-3(b)(i).
4.5 CURATIVE ALLOCATIONS. The allocations set forth in Section 4.3
(the "Regulatory Allocations") are intended to comply with certain requirements
----------------------
of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory
Allocations may not be consistent with the manner in which the Unitholders
intend to allocate Profit and Loss of the Company or make Company distributions.
Accordingly, notwithstanding the other provisions of this Article IV, but
subject to the Regulatory Allocations, income, gain, deduction, and loss shall
be reallocated among the Unitholders so as to eliminate the effect of the
Regulatory Allocations and thereby cause the respective Capital Accounts of the
Unitholders to be in the amounts (or as close thereto as possible) they would
have been if Profit and Loss (and such other items of income, gain, deduction
and loss) had been allocated without reference to the Regulatory Allocations.
In general, the Unitholders anticipate that this will be accomplished by
specially allocating other Profit and Loss (and such other items of income,
gain, deduction and loss) among the Unitholders so that the net amount of the
Regulatory Allocations and such special allocations to each such Unitholder is
zero. In addition, if in any Fiscal Year or Fiscal Period there is a decrease
in partnership minimum gain, or in partner nonrecourse debt minimum gain, and
application of the minimum gain chargeback requirements set forth in Section
4.3(a) or Section 4.3(b) would cause a distortion in the economic arrangement
among the Unitholders, the Unitholders may, if they do not expect that the
Company will have sufficient other income to correct such distortion, request
the Internal Revenue Service to waive either or both of such minimum gain
chargeback requirements. If such request is granted, this Agreement shall be
applied in such instance as if it did not contain such minimum gain chargeback
requirement.
4.6 INDEMNIFICATION AND REIMBURSEMENT FOR PAYMENTS ON BEHALF OF A
UNITHOLDER. Except as otherwise provided in Section 14.12, if the Company is
obligated to pay any amount to a Governmental Entity (or otherwise makes a
payment to a Governmental Entity) that is specifically attributable to a
Unitholder or a Unitholder's status as such (including federal withholding
taxes, state personal property taxes, and state unincorporated business taxes),
then such
16
<PAGE>
Person shall indemnify the Company in full for the entire amount paid (including
interest, penalties and related expenses). The Board may offset Distributions to
which a Person is otherwise entitled under this Agreement against such Person's
obligation to indemnify the Company under this Section 4.6. A Unitholder's
obligation to make contributions to the Company under this Section 4.6 shall
survive the termination, dissolution, liquidation and winding up of the Company,
and for purposes of this Section 4.6, the Company shall be treated as continuing
in existence. The Company may pursue and enforce all rights and remedies it may
have against each Unitholder under this Section 4.6, including instituting a
lawsuit to collect such contribution with interest calculated at a rate equal to
the Base Rate plus three percentage points per annum (but not in excess of the
highest rate per annum permitted by law).
ARTICLE V
MANAGEMENT
5.1 AUTHORITY OF BOARD. Except for situations in which the approval
of the Members is specifically required by this Agreement, but subject to any
applicable provisions of the Securityholders Agreement (i) the Board shall
conduct, direct and exercise full control over all activities of the Company and
(ii) all management powers over the business and affairs of the Company shall be
exclusively vested in the Board. Without limiting the generality of the
foregoing, subject to the Securityholders Agreement, (x) the Board shall have
sole and complete discretion in determining whether to issue Equity Securities,
the number of Equity Securities to be issued at any particular time, the Capital
Contribution or purchase price for any Equity Securities issued, and all other
terms and conditions governing the issuance of Equity Securities and (y) the
Board may in its sole and complete discretion enter into, approve, and
consummate any merger, consolidation, sale of all or any part of its assets,
Liquidity Event or other extraordinary transaction, and execute and deliver on
behalf of the Company or the Unitholders any agreement, document and instrument
in connection therewith (including amendments, if any, to this Agreement or
adoptions of new constituent documents) without the approval or consent of any
Unitholder. No Representative shall have the authority to bind the Company,
unless such authority has been granted to such Representative by the Board.
5.2 ACTIONS OF THE BOARD; COMPOSITION.
(a) The Board may act (i) through meetings and written consents
pursuant to Section 5.4, (ii) through committees pursuant to Section 5.4(a) and
(iii) through any Person to whom authority and duties have been delegated
pursuant to Section 5.5.
(b) The Board shall consist of five individuals, which number may be
adjusted by the vote of the Bain Members, and, subject to the Securityholders
Agreement, the Members holding a majority of the Bain Units (the "Bain
----
Members") shall be entitled to appoint such Board Members. Each member of the
- --------
Board is referred to herein as a "Representative." Subject to the immediately
--------------
preceding sentences and the Securityholders Agreement, the Bain Members may
remove (with or without cause) and, at their option and at any time thereafter,
replace, one or more
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of the Representatives at any time by giving written notice pursuant to Section
14.5 of such removal and the name of the replacement Representative(s) to the
Board, if any; provided that any such replacement Representative is eligible
--------
to be appointed as a Representative pursuant to the immediately preceding
sentences in this Section 5.2(b). A "Chairman" of the Board shall be elected
--------
by the Board for one or more one-year terms.
(c) The initial Board shall consist of those persons set forth on
Schedule II attached hereto, each such person will be decreed duly appointed to
- -----------
the Board as of the first Business Day following the date hereof.
(d) In the event that any Representative designated hereunder by the
Bain Members ceases to serve as a member of the Board, the resulting vacancy on
the Board shall be filled by a Representative appointed by the Bain Members as
provided by Section 5.2(b).
5.3 PROXIES. A Representative may vote at a meeting of the Board or
any committee thereof either in person or by proxy executed in writing by such
Representative. A telegram, telex, cablegram or similar transmission by the
Representative, or a photographic, photostatic, facsimile or similar
reproduction of a writing executed by the Representative shall (if stated
thereon) be treated as a proxy executed in writing for purposes of this Section
5.3. Proxies for use at any meeting of the Board or any committee thereof or in
connection with the taking of any action by written consent shall be filed with
the Board, before or at the time of the meeting or execution of the written
consent as the case may be. All proxies shall be received and taken charge of
and all ballots shall be received and canvassed by the majority of the Board who
shall decide all questions concerning the qualification of voters, the validity
of the proxies and the acceptance or rejection of votes. No proxy shall be
valid after eleven months from the date of its execution unless otherwise
provided in the proxy. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable and the proxy is coupled with
an interest. Should a proxy designate two or more Persons to act as proxies,
unless that instrument shall provide to the contrary, a majority of such Persons
present at any meeting at which their powers thereunder are to be exercised
shall have and may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be exercised by that
one; or, if an even number attend and a majority do not agree on any particular
issue, the Company shall not be required to recognize such proxy with respect to
such issue if such proxy does not specify how the votes that are the subject of
such proxy are to be voted with respect to such issue.
5.4 MEETINGS, ETC.
(a) Meetings of the Board and any committee thereof shall be held at
the principal office of the Company or at such other place as may be determined
by the Board or such committee. Regular meetings of the Board shall be held on
such dates and at such times as shall be determined by the Board. Special
meetings of the Board or any committee may be called by any one Representative
(or, in the case of a special meeting of any committee of the Board, by any
member thereof) on at least twenty-four hours' prior written notice to the other
Representatives, which notice shall state the purpose or purposes for which such
meeting is being called. The actions taken by the Board or any committee at any
meeting (as opposed to by written consent), however called and
18
<PAGE>
noticed, shall be as valid as though taken at a meeting duly held after regular
call and notice if (but not until), either before, at or after the meeting, the
Representative as to whom it was improperly held signs a written waiver of
notice or a consent to the holding of such meeting or an approval of the minutes
thereof. The actions by the Board or any committee thereof may be taken by vote
of the Board or any committee at a meeting of the Representatives thereof or by
unanimous written consent (without a meeting and without a vote). A meeting of
the Board or any committee may be held by conference telephone or similar
communications equipment by means of which all individuals participating in the
meeting can be heard.
(b) Each Representative shall have one vote on all matters submitted
to the Board or any committee thereof (whether the consideration of such matter
is taken at a meeting, by written consent or otherwise). The affirmative vote
(whether by proxy or otherwise) of members of the Board holding a majority of
the votes of all members of the Board shall be the act of the Board. Except as
otherwise provided by the Board when establishing any committee, the affirmative
vote (whether by proxy or otherwise) of members of such committee holding a
majority of the votes of all members of such committee shall be the act of such
committee.
(c) The Company shall pay the reasonable out-of-pocket expenses
incurred by each Representative in connection with attending the meetings of the
Board and any committee thereof (unless such expenses shall have been paid or
are required to be paid by any other Person). Except as otherwise provided in
the immediately preceding sentence or elsewhere in this Agreement, the
Representatives shall not be compensated for their services as members of the
Board.
5.5 DELEGATION OF AUTHORITY. The Board may, from time to time,
delegate to one of more Persons (including any Representative or officer of the
Company and including through the creation and establishment of one or more
committees) such authority and duties as the Board may deem advisable. In
addition, the Board may assign titles (including, without limitation, managing
director, chairman, chief executive officer, president, principal, vice
president, secretary, assistant secretary, treasurer, or assistant treasurer)
and delegate certain authority and duties to such persons. Any number of titles
may be held by the same Representative or other individual. The salaries or
other compensation, if any, of the officers and agents of the Company shall be
fixed from time to time by the Board. Any delegation pursuant to this Section
5.5 may be revoked at any time by the Board in its sole discretion.
5.6 PURCHASE OF UNITS. The Board may cause the Company to purchase
or otherwise acquire Units, or may purchase or otherwise acquire Units on behalf
of the Company. As long as such Units are owned by or on behalf of the Company,
such Units will not be considered outstanding for any purpose. Notwithstanding
the foregoing, as long as the Note or any Preferred Units are outstanding, the
Company shall not repurchase or otherwise acquire Units issued directly or
indirectly to the Bain Group without the consent of Raytheon (or if the Note or
the Preferred Units have been transferred, the then current transferee thereof).
Except as required under Section 12.7 hereof, nothing in this Agreement shall be
deemed to require Raytheon to sell Common Units.
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<PAGE>
5.7 LIMITATION OF LIABILITY. (a) Except as otherwise provided
herein or in an agreement entered into by such Person and the Company, no
Representative or any of such Representative's Affiliates shall be liable to the
Company or to any Member for any act or omission performed or omitted by such
Representative in its capacity as a member of the Board pursuant to authority
granted to such Person by this Agreement; provided that, except as otherwise
-------- ----
provided herein, such limitation of liability shall not apply to the extent the
act or omission was attributable to such Person's gross negligence, willful
misconduct or knowing violation of law. The Board may exercise any of the
powers granted to it by this Agreement and perform any of the duties imposed
upon it hereunder either directly or by or through its agents, and no
Representative or any of such Representative's Affiliates shall be responsible
for any misconduct or negligence on the part of any such agent appointed by the
Board (so long as such agent was selected in good faith and with reasonable
care). The Board shall be entitled to rely upon the advice of legal counsel,
independent public accountants and other experts, including financial advisors,
and any act of or failure to act by the Board in good faith reliance on such
advice shall in no event subject the Board or any Representative thereof to
liability to the Company or any Member.
(b) Whenever this Agreement or any other agreement contemplated herein
provides that the Board shall act in a manner which is, or provide terms which
are, "fair and reasonable" to the Company or any Unitholder, the Board shall
determine such appropriate action or provide such terms considering, in each
case, the relative interests of each party to such agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable United States generally
accepted accounting practices or principles.
(c) Whenever in this Agreement or any other agreement contemplated
herein, the Board is permitted or required to take any action or to make a
decision in its "sole discretion" or "discretion," with "complete discretion" or
under a grant of similar authority or latitude, the Board shall be entitled to
consider such interests and factors as it desires, provided that, the Board
-------- ----
shall act in good faith.
(d) Whenever in this Agreement the Board is permitted or required to
take any action or to make a decision in its "good faith" or under another
express standard, the Board shall act under such express standard and, to the
extent permitted by applicable law, shall not be subject to any other or
different standards imposed by this Agreement or any other agreement
contemplated herein, and, notwithstanding anything contained herein to the
contrary, so long as the Board acts in good faith, the resolution, action or
terms so made, taken or provided by the Board shall not constitute a breach of
this Agreement or any other agreement contemplated herein or impose liability
upon the Board, any representative thereof or any of such Representative's
Affiliates.
(e) No power delegated to the Board hereunder shall, merely because
its exercise is authorized hereunder, be deemed to satisfy the duty of the Board
to act in good faith or its duty of loyalty to the Unitholders.
20
<PAGE>
ARTICLE VI
RIGHTS AND OBLIGATIONS OF UNITHOLDERS
6.1 LIMITATION OF LIABILITY. Except as provided in this Agreement or
in the Delaware Act, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company and no Unitholder or Representative
shall be obligated personally for any such debts, obligation or liability solely
by reason of being a Unitholder or acting as a Representative of the Company.
Except as otherwise provided in this Agreement, a Unitholder's liability (in its
capacity as such) for Company liabilities and Losses shall be limited to such
Unitholder's interest in the Company's assets; provided that a Unitholder shall
-------- ----
be required to return to the Company any Distribution made to it in clear and
manifest accounting or similar error. The immediately preceding sentence shall
constitute a compromise to which all Unitholders have consented within the
meaning of the Delaware Act. Notwithstanding anything contained herein to the
contrary, the failure of the Company to observe any formalities or requirements
relating to the exercise of its powers or management of its business and affairs
under this Agreement or the Delaware Act shall not be grounds for imposing
personal liability on the Unitholders for liabilities of the Company.
6.2 LACK OF AUTHORITY. No Unitholder in its capacity as such (other
than through its Representative or as a Representative) has the authority or
power to act for or on behalf of the Company, to do any act that would be
binding on the Company or to make any expenditures on behalf of the Company and
the Unitholders hereby consent to the exercise by the Board and the
Representatives of the powers conferred on them by law and this Agreement.
6.3 NO RIGHT OF PARTITION. No Unitholder shall have the right to
seek or obtain partition by court decree or operation of law of any Company
property, or the right to own or use particular or individual assets of the
Company.
6.4 INDEMNIFICATION.
(a) Subject to Section 4.6, the Company hereby agrees to indemnify and
hold harmless any Person (each an "Indemnified Person") to the fullest extent
------------------
permitted under the Delaware Act, as the same now exists or may hereafter be
amended, substituted or replaced (but, in the case of any such amendment,
substitution or replacement only to the extent that such amendment, substitution
or replacement permits the Company to provide broader indemnification rights
than the Company is providing immediately prior to such amendment), against all
expenses, liabilities and losses (including attorneys' fees, judgments, fines,
excise taxes or penalties) reasonably incurred or suffered by such Person (or
one or more of such Person's Affiliates) by reason of the fact that such Person
is or was a Unitholder or is or was serving as a Representative, officer,
director, principal, member, employee or agent of the Company or is or was
serving at the request of the Company as a Representative, officer, director,
principal, member, employee or agent of another corporation, partnership, joint
venture, limited liability company, trust or other enterprise; provided that
-------- ----
(unless the Board otherwise consents) no Indemnified Person shall be indemnified
for any expenses, liabilities and losses suffered that are attributable to such
Indemnified Person or its Affiliates gross negligence, willful misconduct or
knowing violation of law or for any present or future breaches of any
representations, warranties or covenants by such Indemnified Person or its
21
<PAGE>
Affiliates contained herein or in the other agreements with the Company.
Expenses, including attorneys' fees, incurred by any such Indemnified Person in
defending a proceeding shall be paid by the Company in advance of the final
disposition of such proceeding, including any appeal therefrom, upon receipt of
an undertaking by or on behalf of such Indemnified Person to repay such amount
if it shall ultimately be determined that such Indemnified Person is not
entitled to be indemnified by the Company.
(b) The right to indemnification and the advancement of expenses
conferred in this Section 6.4 shall not be exclusive of any other right which
any Person may have or hereafter acquire under any statute, agreement, by-law,
vote of Representatives or otherwise.
(c) The Company may maintain insurance, at its expense, to protect any
Indemnified Person against any expense, liability or loss described in Section
6.4(a) above whether or not the Company would have the power to indemnify such
Indemnified Person against such expense, liability or loss under the provisions
of this Section 6.4.
(d) Notwithstanding anything contained herein to the contrary
(including in this Section 6.4), any indemnity by the Company relating to the
matters covered in this Section 6.4 shall be provided out of and to the extent
of Company assets only and no Unitholder (unless such Unitholder otherwise
agrees in writing or is found in a final decision by a court of competent
jurisdiction to have personal liability on account thereof) shall have personal
liability on account thereof or shall be required to make additional Capital
Contributions to help satisfy such indemnity of the Company.
(e) If this Section 6.4 or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify and hold harmless each Indemnified Person pursuant to
this Section 6.4 to the fullest extent permitted by any applicable portion of
this Section 6.4 that shall not have been invalidated and to the fullest extent
permitted by applicable law.
6.5 MEMBERS RIGHT TO ACT. For situations which the approval of the
Members (rather than the approval of the Board on behalf of the Members) is
required, the Members shall act through meetings and written consents as
described in paragraphs (a) and (b) below:
(a) Except as otherwise provided by this Agreement, acts by the
Members holding a majority of the Class A Units shall be the act of the Members.
Any Member entitled to vote at a meeting of Members or to express consent or
dissent to Company action in writing without a meeting may authorize another
person or persons to act for them by proxy. A telegram, telex, cablegram or
similar transmission by the Member, or a photographic, photostatic, facsimile or
similar reproduction of a writing executed by the Member shall (if stated
thereon) be treated as a proxy executed in writing for purposes of this Section
6.5(a). No proxy shall be voted or acted upon after eleven months from the date
thereof, unless the proxy provides for a longer period. A proxy shall be
revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the
22
<PAGE>
proxy is coupled with an interest. Should a proxy designate two or more Persons
to act as proxies, unless that instrument shall provide to the contrary, a
majority of such Persons present at any meeting at which their powers thereunder
are to be exercised shall have and may exercise all the powers of voting or
giving consents thereby conferred, or if only one be present, then such powers
may be exercised by that one; or, if an even number attend and a majority do not
agree on any particular issue, the Company shall not be required to recognize
such proxy with respect to such issue if such proxy does not specify how the
votes that are the subject of such proxy are to be voted with respect to such
issue.
(b) The actions by the Members permitted hereunder may be taken at a
meeting called by Members holding at least 20% of the Class A Units on at least
five days' prior written notice to the other Members entitled to vote, which
notice shall state the purpose or purposes for which such meeting is being
called. The actions taken by the Members entitled to vote or consent at any
meeting (as opposed to by written consent), however called and noticed, shall be
as valid as though taken at a meeting duly held after regular call and notice if
(but not until), either before, at or after the meeting, the Members entitled to
vote or consent as to whom it was improperly held signs a written waiver of
notice or a consent to the holding of such meeting or an approval of the minutes
thereof. The actions by the Members entitled to vote or consent may be taken by
vote of the Members entitled to vote or consent at a meeting or by written
consent (without a meeting, without notice and without a vote) so long as such
consent is signed by the Members having not less than the minimum number of
Units that would be necessary to authorize or take such action at a meeting at
which all Members entitled to vote thereon were present and voted. Prompt
notice of the action so taken without a meeting shall be given to those Members
entitled to vote or consent who have not consented in writing. Any action taken
pursuant to such written consent of the Members shall have the same force and
effect as if taken by the Members at a meeting thereof.
(c) Except as specifically provided herein to the contrary, the owners
of Class B Units, Class C Units, Class L Units and Preferred Units (in their
capacity as owners of such Units) shall not have any right to vote on any matter
or consent to any matter on which Members are otherwise entitled to vote or
consent.
6.6 CONFLICTS OF INTEREST.
(a) A Unitholder, its Affiliates and each of their respective
stockholders, Representatives, directors, officers, controlling persons,
partners and employees (collectively, the "Unitholder Group") may have business
----------------
interests and engage in business activities in addition to those relating to the
Company and its Subsidiaries, except as any such Person may have otherwise
agreed hereafter with the Company in writing (e.g. the Executive Agreements).
Neither the Company nor any of the other Unitholders shall have any rights by
virtue of this Agreement in any business ventures of any such Person except for
any business interests or activities which any such Person has agreed in writing
with the Company to not pursue or consummate (whether directly or indirectly),
in which case all of such Person's direct and indirect interest in such business
interests or activities shall become an asset of the Company and the Company
shall be entitled to all rights in such business interests or activities and to
all income or profits derived therefrom.
23
<PAGE>
(b) No member of the Unitholder Group shall be obligated to present
any particular investment or business opportunity to the Company even if the
opportunity is of a character which, if presented to the Company, could be
undertaken by the Company or any of its Subsidiaries, except as otherwise agreed
hereafter by any such Person with the Company in writing (e.g. the Executive
Agreements). Each member of the Unitholder Group shall have the right to
undertake any such opportunity for itself for its own account or on behalf of
another or to recommend any such opportunity to other Persons, except as
otherwise agreed by any such Person with the Company in writing, in which case
all of such Person's direct and indirect interest in such business interests or
activities shall become an asset of the Company and the Company shall be
entitled to all rights in such business interests or activities and to all
income or profits derived therefrom.
(c) Neither the Merger Agreement nor any other contractual obligation
of Raytheon or any of its Affiliates prior to the closing of the transactions
contemplated by the Merger Agreement shall be deemed an agreement with the
Company to which this Section 6.6 applies.
ARTICLE VII
BOOKS, RECORDS, ACCOUNTING AND REPORTS
7.1 RECORDS AND ACCOUNTING. The Company shall keep, or cause to be
kept, appropriate books and records with respect to the Company's business,
including all books and records necessary to provide any information, lists and
copies of documents required to be provided pursuant to Section 7.3 or pursuant
to applicable laws. All matters concerning (i) the determination of the
relative amount of allocations and distributions among the Unitholders pursuant
to Articles III and IV and (ii) accounting procedures and determinations, and
other determinations not specifically and expressly provided for by the terms of
this Agreement, shall be determined by the Board, whose determination shall be
final and conclusive as to all of the Unitholders absent manifest clerical
error.
7.2 FISCAL YEAR. The Fiscal Year of the Company shall end on
December 31 of each year or such other annual accounting period as may be
established by the Board.
7.3 REPORTS.
(a) The Company shall deliver or cause to be delivered to each
Unitholder, within 120 days after the end of each Fiscal Year, an annual report
containing the following:
(i) consolidated statements of income and cash flows of the Company
and its Subsidiaries for such Fiscal Year, and a consolidated
balance sheet of the Company and its Subsidiaries as of the end
of such Fiscal Year, all prepared in accordance with generally
accepted accounting principals, consistently applied, and audited
by an independent accounting firm of recognized
24
<PAGE>
national standing and a copy of such firm's annual management
letter regarding internal controls and other matters to the
Board;
(ii) a statement of changes in the Unitholder's equity and the
Unitholder's Capital Account balance for such Fiscal Year; and
(iii) a general description of the Company's activities during such
Fiscal Year.
(b) The Company shall, to the extent required by the Delaware Act,
deliver or cause to be delivered to each Unitholder with reasonable promptness,
such other information and financial data concerning the Company and its
Subsidiaries as any Unitholder shall from time to time reasonably request;
provided that furnishing such information shall not be financially burdensome on
- -------- ----
the Company, the Board or their Subsidiaries or unreasonably time consuming for
the employees of the Company, the Board or their Subsidiaries.
(c) The Company shall use reasonable efforts to deliver or cause to be
delivered, within 75 days after the end of each Fiscal Year, to each Person who
was a Unitholder at any time during such Fiscal Year all information necessary
for the preparation of such Person's United States federal and state income tax
returns.
7.4 TRANSMISSION OF COMMUNICATIONS. Each Person that owns or
controls Units on behalf of, or for the benefit of, another Person or Persons
shall be responsible for conveying any report, notice or other communication
received from the Board to such other Person or Persons.
ARTICLE VII
TAX MATTERS
8.1 PREPARATION OF TAX RETURNS. The Company shall arrange for the
preparation and timely filing of all returns required to be filed by the
Company.
8.2 TAX ELECTIONS. The Taxable Year shall be the Fiscal Year set
forth in Section 7.2, unless the Board shall determine otherwise in its sole
discretion and in compliance with applicable laws. The Board shall, in its sole
discretion, determine whether to make or revoke any available election pursuant
to the Code. Each Unitholder will upon request supply any information necessary
to give proper effect to such election. Except as otherwise permitted herein,
the Company shall not make or revoke any tax election adverse to Raytheon
relative to the Bain Group.
8.3 TAX CONTROVERSIES. Bain/RCL, L.L.C. is hereby designated the Tax
Matters Partner and is authorized and required to represent the Company (at the
Company's expense) in connection with all examinations of the Company's affairs
by tax authorities, including resulting administrative and judicial proceedings,
and to expend Company funds for professional services and reasonably incurred in
connection therewith. Each Unitholder agrees to cooperate with the Company and
to do or refrain from doing any or all things reasonably requested by the
Company
25
<PAGE>
with respect to the conduct of such proceedings. The Tax Matters Partner shall
keep all Unitholders fully informed of the progress of any examinations, audits
or other proceedings, and all Unitholders shall have the right to participate in
any such examinations, audits or other proceedings. Notwithstanding the
foregoing, the Tax Matters Partner shall not settle or otherwise compromise any
issue in any such examination, audit or other proceeding without first obtaining
approval of the Board and, to the extent any settlement or compromise affects
Raytheon adversely to the Bain Group, the consent of Raytheon.
ARTICLE IX
TRANSFER OF COMPANY INTERESTS
9.1 TRANSFER IN GENERAL. THE TRANSFER OF ANY INTEREST IN THE COMPANY
IS SUBJECT TO THE RESTRICTIONS ON TRANSFER CONTAINED IN THE SECURITYHOLDERS
AGREEMENT, AS AMENDED OR MODIFIED FROM TIME TO TIME, AND, WITH RESPECT TO
UNITHOLDERS A PARTY THERETO, THE EXECUTIVE AGREEMENTS, WHICH RESTRICTIONS ARE
INCORPORATED HEREIN BY REFERENCE. IN ADDITION, NO UNITHOLDER MAY TRANSFER ALL OR
ANY PORTION OF SUCH UNITHOLDER'S INTEREST IN THE COMPANY WITHOUT THE PRIOR
WRITTEN CONSENT OF THE BOARD IF SUCH TRANSFER WOULD (A) CAUSE THE COMPANY TO
HAVE MORE THAN 100 PARTNERS WITHIN THE MEANING OF TREASURY REGULATION SECTION
1.7704-1(H) OR (B) CAUSE THE COMPANY TO HAVE TO REGISTER AS AN INVESTMENT
COMPANY FOR PURPOSES OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.
9.2 ASSIGNEE'S RIGHTS.
(a) A permitted transfer of a Company Interest shall be effective as
of the date of assignment and compliance with the conditions to such transfer
and such transfer shall be shown on the books and records of the Company.
Profits, Losses and other Company items shall be allocated between the
transferor and the Assignee according to Code Section 706. Distributions made
before the effective date of such transfer shall be paid to the transferor, and
Distributions made after such date shall be paid to the Assignee.
(b) Unless and until an Assignee becomes a Member pursuant to Article
X, the Assignee shall not be entitled to any of the rights granted to a Member
hereunder or under applicable law, other than the rights granted specifically to
Assignees pursuant to this Agreement and to have the other rights granted to
Assignees pursuant to the Delaware Act; provided that, without relieving the
--------
transferring Unitholder from any such limitations or obligations as more fully
described in Section 9.3, such Assignee shall be bound by any limitations and
obligations of a Unitholder contained herein that a Member would be bound on
account of the Assignee's Company Interest (including the obligation to make
Capital Contributions on account of such Company Interest).
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9.3 ASSIGNOR'S RIGHTS AND OBLIGATIONS. Any Member who shall
transfer any Units or other interest in the Company shall cease to be a
Unitholder with respect to such Units or other interest and shall no longer have
any rights or privileges of a Unitholder with respect to such Units or other
interest (it being understood, however, that the applicable provisions of
Sections 5.7 and 6.4 shall continue to inure to such Person's benefit), except
that unless and until the Assignee is admitted as a substituted Member in
accordance with the provisions of Article X (the "Admission Date"), (i) such
--------------
assigning Unitholder shall retain all of the duties, liabilities and obligations
of a Unitholder with respect to such Units or other interest, including, without
limitation, the obligation (together with its Assignee pursuant to Section
9.2(b)) to make and return Capital Contributions on account of such Units or
other interest pursuant to the terms of this Agreement and (ii) the Board may,
in its sole discretion, reinstate all or any portion of the rights and
privileges of such Unitholder with respect to such Units or other interest for
any period of time prior to the Admission Date. Nothing contained herein shall
relieve any Unitholder who Transfers any Units or other interest in the Company
from any liability of such Unitholder to the Company with respect to such Units
or other interest that may exist on the Admission Date or that is otherwise
specified in the Delaware Act and incorporated into this Agreement or for any
liability to the Company or any other Person for any materially false statement
made by such Unitholder (in its capacity as such) in the Securityholders
Agreement or an Executive Agreement or for any present or future breaches of any
representations, warranties or covenants by such Unitholder (in its capacity as
such) contained herein or in the other agreements with the Company.
ARTICLE X
ADMISSION OF MEMBERS
10.1 SUBSTITUTED MEMBERS. In connection with the permitted transfer
of a Company Interest of a Unitholder, the transferee shall become a Substituted
Member on the effective date of such transfer, which effective date shall not be
earlier than the date of compliance with the conditions to such transfer
(without any Board or Member consent unless one of the conditions to such
transfer (as set forth in Section 1 of the Securityholders Agreement) is that
Board or Member consent is required for the admission of such transferee, in
which case such consent must first be obtained), and such admission shall be
shown on the books and records of the Company.
10.2 ADDITIONAL MEMBERS. A Person may be admitted to the Company as
an Additional Member only upon furnishing to the Board (a) a letter of
acceptance, in form satisfactory to the Board, of all the terms and conditions
of this Agreement, including the power of attorney granted in Section 14.1, and
(b) such other documents or instruments as may be necessary or appropriate to
effect such Person's admission as a Member (including the Securityholders
Agreement and such other documents referenced therein). Such admission shall
become effective on the date on which the Board determines in its sole
discretion that such conditions have been satisfied, each of the conditions
contained in the Securityholders Agreement to the issuance of Units to such
Member have been satisfied, and when any such admission is shown on the books
and records of the Company.
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ARTICLE XI
WITHDRAWAL AND RESIGNATION OF UNITHOLDERS
11.1 WITHDRAWAL AND RESIGNATION OF UNITHOLDERS. No Unitholder shall
have the power or right to withdraw or otherwise resign from the Company prior
to the dissolution and winding up of the Company pursuant to Article XII without
the prior written consent of the Board, except as otherwise expressly permitted
by this Agreement. Any Unitholder, however, that withdraws or otherwise resigns
from the Company without the prior written consent of the Board upon or
following the dissolution and winding up of the Company pursuant to Article XII
but prior to such Unitholder receiving the full amount of Distributions from the
Company to which such Unitholder is entitled pursuant to Article XII shall be
liable to the Company for all damages directly or indirectly caused by the
withdrawal or resignation of such Unitholder, and such Unitholder shall be
entitled to receive the fair value of his equity interest in the Company as of
the date of its resignation (or, if less, the amount that such Unitholder would
have received on account of such equity interest had such Unitholder not
resigned or otherwise withdrawn from the Company), as conclusively determined by
the Board, on the sixth month anniversary date (or such earlier date determined
by the Board) following the completion of the distribution of Company assets as
provided in Article XII to all other Unitholders. Upon a transfer of all of a
Unitholder's Units in a transfer permitted by the Securityholders Agreement and
this Agreement, subject to the provisions of Section 9.3, such Unitholder shall
cease to be a Unitholder.
ARTICLE XII
DISSOLUTION AND LIQUIDATION
12.1 DISSOLUTION. The Company shall not be dissolved by the admission
of Additional Members or Substituted Members. The Company shall dissolve, and
its affairs shall be wound up, upon:
(a) the vote of the Board holding at least a majority of the votes of
all members of the Board; or
(b) the entry of a decree of judicial dissolution of the Company under
Section 35-5 of the Delaware Act or an administrative dissolution under Section
18-802 of the Delaware Act.
Except as otherwise set forth in this Article XII, the Company is
intended to have perpetual existence. An Event of Withdrawal shall not cause a
dissolution of the Company and the Company shall continue in existence subject
to the terms and conditions of this Agreement.
12.2 LIQUIDATION AND TERMINATION. On dissolution of the Company, the
Board shall act as liquidator or may appoint one or more Representatives or
Members as liquidator. The liquidators shall proceed diligently to wind up the
affairs of the Company and make final
28
<PAGE>
distributions as provided herein and in the Delaware Act. The costs of
liquidation shall be borne as a Company expense. Until final distribution, the
liquidators shall continue to operate the Company properties with all of the
power and authority of the Board. The steps to be accomplished by the
liquidators are as follows:
(a) as promptly as possible after dissolution and again after final
liquidation, the liquidators shall cause a proper accounting to be made by a
recognized firm of certified public accountants of the Company's assets,
liabilities and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;
(b) the liquidators shall cause the notice described in the Delaware
Act to be mailed to each known creditor of and claimant against the Company in
the manner described thereunder;
(c) the liquidators shall pay, satisfy or discharge from Company funds
(to the extent available therefor) all of the debts, liabilities and obligations
of the Company (including, without limitation, all expenses incurred in
liquidation) or otherwise make adequate provision (to the extent the remaining
property or assets of the Company can so provide) for payment and discharge
thereof (including, without limitation, the establishment of a cash fund for
contingent liabilities in such amount and for such term as the liquidators may
reasonably determine); and
(d) all remaining assets of the Company shall be distributed to the
holders of Units in accordance with Section 4.1 (a) by the end of the taxable
year of the Company during which the liquidation of the Company occurs (or, if
later, 90 days after the date of the liquidation).
The distribution of cash and/or property to a Unitholder in accordance with the
provisions of this Section 12.2 and Section 12.3 below constitutes a complete
return to the Unitholder of its Capital Contributions and a complete
distribution to the Unitholder of its interest in the Company and all the
Company's property and constitutes a compromise to which all Unitholders have
consented within the meaning of the Delaware Act. To the extent that a
Unitholder returns funds to the Company, it has no claim against any other
Unitholder for those funds.
12.3 DEFERMENT; DISTRIBUTION IN KIND. Notwithstanding the provisions
of Section 12.2, but subject to the order of priorities set forth therein, if
upon dissolution of the Company the liquidators determine that an immediate sale
of part or all of the Company's assets would be impractical or would cause undue
loss (or would otherwise not be beneficial) to the Unitholders, the liquidators
may, in their sole discretion, defer for a reasonable time the liquidation of
any assets except those necessary to satisfy Company liabilities (other than
loans to the Company by Unitholders) and reserves. Subject to the order of
priorities set forth in Section 12.2, the liquidators may, in their sole
discretion, distribute to the Unitholders, in lieu of cash, either (i) all or
any portion of such remaining Company assets in-kind in accordance with the
provisions of Section 12.2(d), (ii) as tenants in common and in accordance with
the provisions of Section 12.2(d), undivided interests in all or any portion of
such Company assets or (iii) a combination of the foregoing. Any such
Distributions in kind shall be subject to (x) such conditions relating to the
disposition and management of such assets as the liquidators deem reasonable and
equitable and (y)
29
<PAGE>
the terms and conditions of any agreements governing the such assets (or the
operation thereof or the holders thereof) at such time. Any Company assets
distributed in kind will first be written up or down to their Fair Market Value,
thus creating Profit or Loss (if any), which shall be allocated in accordance
with Sections 4.2 and 4.3. The liquidators shall determine the Fair Market Value
of any property distributed in accordance with the valuation procedures set
forth in Article XIII.
12.4 CANCELLATION OF CERTIFICATE. On completion of the distribution
of Company assets as provided herein, the Company is terminated (and the Company
shall not be terminated prior to such time), and the Board (or such other Person
or Persons as the Delaware Act may require or permit) shall file a certificate
of cancellation with the Secretary of State of Delaware, cancel any other
filings made pursuant to this Agreement that are or should be canceled and take
such other actions as may be necessary to terminate the Company. The Company
shall be deemed to continue in existence for all purposes of this Agreement
until it is terminated pursuant to this Section 12.4.
12.5 REASONABLE TIME FOR WINDING UP. A reasonable time shall be
allowed for the orderly winding up of the business and affairs of the Company
and the liquidation of its assets pursuant to Sections 12.2 and 12.3 in order to
minimize any losses otherwise attendant upon such winding up.
12.6 RETURN OF CAPITAL. The liquidators shall not be personally
liable for the return of Capital Contributions or any portion thereof to the
Unitholders (it being understood that any such return shall be made solely from
Company assets).
12.7 LIQUIDITY EVENT OR IPO.
(a) In the event that the Majority Holder (as defined in the
Securityholders Agreement), or in the case of any such event which requires the
approval of the Board, the Board approves a Liquidity Event or IPO, the Company
and each of its Unitholders will work with Bain to structure such Liquidity
Event or IPO to maximize Bain's after-tax return to Bain's direct or indirect
members in connection therewith, but only to the extent that such structure is
not materially detrimental to the Company or any other Unitholder.
(b) Subject to the Securityholders Agreement, it is understood and
agreed that the following structures of a Liquidity Event or IPO are not
materially detrimental to the Company or any Member and shall be utilized by the
Company and approved by the Board and each Unitholder if so requested by Bain:
(i) Private Transaction. A Liquidity Event in which the person
-------------------
or persons purchasing the Company (the "Buyer") acquires separately
-----
each of the following:
(A) all Units other than Units held by Bain;
(B) all debt instruments issued by Bain;
30
<PAGE>
(C) all options to acquire equity interests in Bain (which
options the Buyer will then exercise); and
(D) all other equity interests in Bain (i.e., all interests not
acquired in clause (C) above).
(ii) Public Offering. An IPO under the following terms and in the
---------------
following order:
(A) The Company will be incorporated; and
(B) Bain will distribute its interests (i.e., shares) in the
Company to its securityholders. Any options to acquire such
interests (i.e., shares) will be exercised.
ARTICLE XII
VALUATION
13.1 DETERMINATION. The Fair Market Value of the assets of the
Company or of a Company Interest in the Company will be determined by the Board
(or, if pursuant to Section 12.3, the liquidators) in its good faith judgement
in such manner as its deems reasonable and using all factors, information and
data deemed to be pertinent.
13.2 DETERMINATION OF FAIR MARKET VALUE. "Fair Market Value" of
-----------------
(i) a specific Company asset will mean the amount which the Company would
receive in an all-cash sale of such asset in an arms-length transaction with an
unaffiliated third party consummated on the day immediately preceding the date
on which the event occurred which necessitated the determination of the Fair
Market Value (and after giving effect to any transfer taxes payable in
connection with such sale); and (ii) of the Company will mean the amount which
the Company would receive in an all-cash sale of all of its assets and
businesses as a going concern in an arms-length transaction with an unaffiliated
third party consummated on the day immediately preceding the date on which the
event occurred which necessitated the determination of the Fair Market Value
(assuming that such sale were accomplished pursuant to a Liquidity Event of the
type referred to in Section 12.7(b)(i) above and all of the proceeds from such
sale were paid directly to the Company other than an amount of such proceeds
necessary to pay transfer taxes payable in connection with such sale, which
amount will not be received or deemed received by the Company). After a
determination of the Fair Market Value of the Company is made as provided above,
the Fair Market Value of a Company Interest will be determined by making a
calculation reflecting the cash distributions which would be made to the
Unitholders in accordance with this Agreement if the Company were deemed to have
received such Fair Market Value in cash and then distributed the same to the
Unitholders in accordance with the terms of this Agreement incident to the
liquidation of the Company after payment to all of the Company's creditors from
such cash receipts and assuming that all of the convertible debt and other
convertible securities were repaid or converted (whichever yields more cash to
the holders of such convertible securities). Except as otherwise provided herein
or in any
31
<PAGE>
agreement, document or instrument contemplated hereby, any amount to be paid
under this Agreement by reference to the Fair Market Value shall be paid in full
in cash, and any Company Interest being transferred in exchange therefor will be
transferred free and clear of all Liens.
ARTICLE XIV
GENERAL PROVISIONS
14.1 POWER OF ATTORNEY.
(a) Each Unitholder hereby constitutes and appoints each member of
the Board and the liquidators, with full power of substitution, as his true and
lawful agent and attorney-in-fact, with full power and authority in his or its
name, place and stead, to: (i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (A) this Agreement, all certificates
and other instruments and all amendments thereof which the Board deems
appropriate or necessary to form, qualify, or continue the qualification of, the
Company as a limited liability company in the State of Delaware and in all other
jurisdictions in which the Company may conduct business or own property; (B) all
instruments which the Board deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in accordance
with its terms; (C) all conveyances and other instruments or documents which the
Board deems appropriate or necessary to reflect the dissolution and liquidation
of the Company pursuant to the terms of this Agreement, including a certificate
of cancellation; and (D) all instruments relating to the admission, withdrawal
or substitution of any Unitholder pursuant to Article X or XI; and (ii) sign,
execute, swear to and acknowledge all ballots, consents, approvals, waivers,
certificates and other instruments appropriate or necessary, in the reasonable
judgment of the Board, to evidence, confirm or ratify any vote, consent,
approval, agreement or other action which is made or given by the Members
hereunder or is consistent with the terms of this Agreement and/or appropriate
or necessary (and not inconsistent with the terms of this Agreement), in the
reasonable judgment of the Board, to effectuate the terms of this Agreement;
provided, that the powers of attorney granted herein shall not be deemed to
- --------
constitute a written consent of any Unitholder required pursuant to Section
14.2(b).
(b) The foregoing power of attorney is irrevocable and coupled with an
interest, and shall survive the death, disability, incapacity, dissolution,
bankruptcy, insolvency or termination of any Unitholder and the transfer of all
or any portion of his or its Company Interest and shall extend to such
Unitholder's heirs, successors, assigns and personal representatives.
14.2 AMENDMENTS.
(a) The Board members holding a majority of the votes of all members
of the Board (pursuant to its powers of attorney from the Unitholders as
provided in Section 14.1), without the consent of any Unitholder, may amend any
provision of this Agreement, and execute, swear to, acknowledge, deliver, file
and record whatever documents may be required in connection therewith, to
reflect:
32
<PAGE>
(i) a change in the name of the Company or the location of the
principal place of business of the Company;
(ii) admission, substitution, removal or withdrawal of Members or
Assignees in accordance with this Agreement;
(iii) a change that in the Board's reasonable judgment does not
adversely affect any Unitholder in any material respect in its
capacity as an owner of Units, and is either (A) necessary or
desirable to satisfy any requirements, conditions or guidelines
contained in any opinion, directive, order, ruling or
regulation of any United States federal or state agency or
judicial authority or contained in any United States federal or
state statute, or (B) required by this Agreement; or
(iv) a change that does not adversely affect any Unitholder in any
material respect in its capacity as an owner of Units, and (A)
cures any ambiguity, or (B) corrects or supplements any
provisions in this Agreement.
(b) In all other cases this Agreement may be amended or modified upon
the consent of the Board and, except for amendments and modifications in
connection with actions by the Board permitted by the second sentence of Section
5.1, the Bain Members; provided that no amendment or modification pursuant to
-------- ----
this Section 14.2(b) that would adversely affect holders of one class of Units
in a manner different than holders of any other class of Units (other than
amendments and modifications in connection with the actions of the Board
permitted by Section 5.1), shall be effective against the holders of such class
of Units without the prior written consent of holders of at least a majority of
Units of such class adversely affected thereby; provided further that so long as
-------- ------- ----
BRS or Raytheon holds any Units, no amendment or modification that will
adversely alter BRS' or Raytheon's respective rights granted pursuant to this
Agreement shall be effective against BRS or Raytheon, respectively, without its
consent (it being understood that the issuance or creation of new (in accordance
with Section 6 of the Securityholders Agreement) or additional Units, or other
equity securities of the Company or the addition of new parties to this
Agreement shall not be deemed to alter such rights).
14.3 TITLE TO COMPANY ASSETS. Company assets shall be deemed to be
owned by the Company as an entity, and no Unitholder, individually or
collectively, shall have any ownership interest in such Company assets or any
portion thereof. Legal title to any or all Company assets may be held in the
name of the Company, the Board or one or more nominees, as the Board may
determine. The Board hereby declares and warrants that any Company assets for
which legal title is held in its name or the name of any nominee shall be held
in trust by the Board or such nominee for the use and benefit of the Company in
accordance with the provisions of this Agreement. All Company assets shall be
recorded as the property of the Company on its books and records, irrespective
of the name in which legal title to such Company assets is held.
14.4 ADDRESSES AND NOTICES. Any notice, demand, request or report
required or permitted to be given or made to any Person under this Agreement
shall be in writing and shall be
33
<PAGE>
deemed given or made when delivered in person or when sent by first class mail
or by other commercially reasonable means of written communication to the Person
at his address as shown on the Company's books and records. An affidavit or
certificate of mailing executed by the Board shall be conclusive (but not
exclusive) evidence of the date and fact of mailing of any such notice, demand,
request or report. Any notice to the Board or the Company shall be deemed given
if received by the Board at the principal office of the Company designated
pursuant to Section 2.5.
14.5 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, executors, administrators,
successors, legal representa tives and permitted assigns.
14.6 CREDITORS. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any creditors of the Company or any of its
Affiliates, and no creditor who makes a loan to the Company or any of its
Affiliates may have or acquire (except pursuant to the terms of a separate
agreement executed by the Company in favor of such creditor) at any time as a
result of making the loan any direct or indirect interest in Company Profits,
Losses, Distributions, capital or property other than as a creditor.
14.7 WAIVER. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or any other covenant, duty, agreement or
condition.
14.8 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which will be an original and all of which together shall
constitute one and the same agree ment binding on all the parties hereto.
14.9 APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF
THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
ANY DISPUTE RELATING HERETO SHALL BE HEARD IN THE STATE OR FEDERAL COURTS OF
DELAWARE, AND THE PARTIES AGREE TO JURISDICTION AND VENUE THEREIN.
14.10 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein
14.11 FURTHER ACTION. The parties shall execute and deliver all
documents, provide all information and take or refrain from taking such actions
as may be necessary or appropriate to achieve the purposes of this Agreement.
34
<PAGE>
14.12 EXPENSES. The Company shall pay, and hold the Investors and
their respective Affiliates harmless against liability for the payment of (i)
their out-of-pocket fees and expenses incurred in connection with this Agreement
and the transactions related hereto and contemplated hereby (including legal
expenses relating to this Agreement and the documents related hereto); (ii) the
reasonable fees and expenses incurred in connection with an investment or
acquisition by the Company or any of its Subsidiaries; (iii) the fees and
expenses incurred with respect to any amendments or waivers (whether or not the
same become effective) under or in respect of any of this Agreement or the
agreements referred to herein or contemplated hereby or thereby (including,
without limitation, in connection with any proposed merger, sale or
recapitalization of the Company or any of its Subsidiaries); (iv) stamp and
other taxes which may be payable in respect of the execution and delivery of
this Agreement or the issuance, delivery or acquisition of any Units; (v) the
fees and expenses incurred with respect to the enforcement of the rights granted
under any of this Agreement, the Units, and the other agreements referred to
herein or contemplated hereby or thereby; and (vi) the reasonable fees and
expenses incurred by each such Person in any filing with any Governmental Entity
with respect to its investment in the Company which mentions such Person. So
long as Raytheon or BRS holds any Units, the Company shall pay and hold
Raytheon, BRS and their respective Affiliates harmless against liability for the
payment of the fees and expenses incurred with respect to the successful
enforcement of the rights granted under any of this Agreement, the Units, the
Securityholders Agreement and the Registration Rights Agreement.
14.13 OFFSET. Whenever the Company is to pay any sum to any
Unitholder or any Affiliate or related person thereof, any amounts that such
Unitholder or such Affiliate or related person owes to the Company may be
deducted from that sum before payment.
14.14 ENTIRE AGREEMENT. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
14.15 REMEDIES. Each Unitholder shall have all rights and
remedies set forth in this Agreement and all rights and remedies which such
Person has been granted at any time under any other agreement or contract and
all of the rights which such Person has under any law. Any Person having any
rights under any provision of this Agreement or any other agreements
contemplated hereby shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law.
14.16 OPT-IN TO ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE. The
Unitholders hereby agree that the Units shall be securities governed by Article
8 of the Uniform Commercial Code of the State of Delaware (and the Uniform
Commercial Code of any other applicable jurisdiction).
35
<PAGE>
14.17 DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Whenever required by the context, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation. Reference
to any agreement, document or instrument means such agreement, document or
instrument as amended or otherwise modified from time to time in accordance with
the terms thereof, and if applicable hereof. Without limiting the generality of
the immediately preceding sentence, no amendment or other modification to any
agreement, document or instrument that requires the consent of any Person
pursuant to the terms of this Agreement or any other agreement will be given
effect hereunder unless such Person has consented in writing to such amendment
or modification. Wherever required by the context, references to a Fiscal Year
shall refer to a portion thereof. The use of the words "or," "either" and "any"
shall not be exclusive. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. Wherever a conflict exists between
this Agreement and any other agreement, this Agreement shall control but solely
to the extent of such conflict.
* * * * *
36
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed or caused to be
executed on their behalf this Amended and Restated Limited Liability Company
Agreement of Alliance Laundry Holdings LLC as of the date first written above.
BAIN/RCL, L.L.C.
By:_______________________________________
Its:_______________________________________
RAYTHEON COMPANY
By:_______________________________________
Its:_______________________________________
<PAGE>
THOMAS F. L'ESPERANCE
____________________________________
HERMAN W. BEACH
____________________________________
JEFFREY J. BROTHERS
____________________________________
R. SCOTT GASTER
____________________________________
BRUCE P. ROUNDS
____________________________________
ROBERT T. WALLACE
____________________________________
SCOTT L. SPILLER
____________________________________
DAVID A. DOCKERY
____________________________________
DARWIN K. GILMORE
____________________________________
<PAGE>
CHARLES O. REIFF
____________________________________
LEE E. WILSON
____________________________________
RICHARD J. CASEY
____________________________________
JAY B. MCDONALD
____________________________________
KIM M. SHADY
____________________________________
D. MARK FREESMAN
____________________________________
AL RIOS
____________________________________
PAT ANDERSEN-SHEW
____________________________________
STIFEL, NICOLAUS CUSTODIAN FOR
PAULA K. L'ESPERANCE IRA
____________________________________
STIFEL, NICOLAUS CUSTODIAN FOR
THOMAS F. L'ESPERANCE IRA
____________________________________
<PAGE>
STIFEL, NICOLAUS CUSTODIAN FOR
SCOTT L. SPILLER IRA
____________________________________
STIFEL, NICOLAUS CUSTODIAN FOR
BRUCE P. ROUNDS IRA
____________________________________
ROBERT W. BAIRD & CO INC. TTEE FBO
R SCOTT GASTER IRA
____________________________________
EDWARD JONES CUST FBO ROBERT T.
WALLACE, IRA
____________________________________
DELAWARE CHARTER GUARANTEE AND
TRUST COMPANY, TTEE FOR JEFFREY J.
BROTHERS, IRA
____________________________________
<PAGE>
BCB FAMILY PARTNERS, L.P.
By: * *
---------------------------- -------------------------------
Name: STEPHEN C. SHERRILL
Title:
NAZ FAMILY PARTNERS, L.P.
By: * *
---------------------------- -------------------------------
Name: H. VIRGIL SHERRILL
Title:
* *
- ------------------------------- -------------------------------
PAUL D. KAMINSKI NANCY A. ZWENG
* *
- ------------------------------- -------------------------------
BRUCE C. BRUCKMANN JOHN RICE EDMONDS
* *
- ------------------------------- -------------------------------
DONALD J. BRUCKMANN SUSAN KAIDER
* *
- ------------------------------- -------------------------------
HAROLD O. ROSSER MARILENA TIBREA
<PAGE>
*
- -------------------------------
WALKER C. SIMMONS
MLPF&S CUSTODIAN FBO PAUL KAMINSKI
By: *
---------------------------
BRS/RCL INVESTMENT CORP.
By:________________________________
Its:________________________________
* By: _________________________________
Name: Stephen Sherrill
Title: Attorney-in-fact
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Capital
Contributions
pursuant to Class L Class A Class B Class C
Name and Address Section 3.1(a) Preferred Units Units Units Units Units
- ---------------- ---------------- --------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Bain/RCL, L.L.C.
Two Copley Place
Boston, MA 02116
Raytheon Company
141 Spring Street
Lexington, MA 02173
BRS/RCL Investment Corp.
c/o Bruckmann Rosser Sherrill &
Co., Inc.
126 East 56th Street
New York, NY 10022
Bruce C. Bruckmann
125 East 84th Street, Apt. 5A
New York, NY 10028
Harold O. Rosser
499 Silvermine Road
New Canaan, CT 06840
Stephen C. Sherrill
765 Park Avenue
New York, NY 10028
BCB Family Partners, L.P.
125 East 84th Street, Apt. 5A
New York, NY 10028
NAZ Family Partners, L.P.
125 East 84th Street, Apt. 5A
New York, NY 10028
Nancy A. Zweng
125 East 84th Street, Apt. 5A
New York, NY 10028
Donald J. Bruckmann
68 East 79th Street
New York, NY 10021
H. Virgil Sherrill
c/o Prudential Securities
One Seaport Plaza, 34th Flr.
New York, NY 10292
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital
Contributions
pursuant to Class L Class A Class B Class C
Name and Address Section 3.1(a) Preferred Units Units Units Units Units
- ---------------- ---------------- --------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
MLPF&S Custodian FBO Paul
Kaminski
59 Fourth Avenue, #5A
New York, NY 10003
John Rice Edmonds
170 West 74th Street, #515
New York, NY 10023
Walker C. Simmons
424 West End Avenue, #18C
New York, NY 10024
Marilena Tibrea
4812 14th Avenue, Apt. 6C
Brooklyn, NY 11219
Susan Kaider
16 West 76th Street, #1RE
New York, NY 10023
Thomas F. L'Esperance
1945 Cliffview Court
Oshkosh, WI 54901
Herman W. Beach
4663 Meadowview Road
Mariann, FL 32446
Jeffrey J. Brothers
1614 River Mill Road
Oshkosh, WI 54901
R. Scott Gaster
906 Wylde Oak Drive
Oshkosh, WI 54904
Bruce P. Rounds
1510 Maricopa Drive
Oshkosh, WI 54904
Robert T. Wallace
1798 Hunters Glen Road
Oshkosh, WI 54901
Scott L. Spiller
341 Overland Trail
Oshkosh, WI 54904
David A. Dockrey
716 Lakeside
Madisonville, KY 42431
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital
Contributions
pursuant to Class L Class A Class B Class C
Name and Address Section 3.1(a) Preferred Units Units Units Units Units
- ---------------- ---------------- --------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Darwin K. Gilmore
5092 Creek Path
Marianna, FL 32446
Charles O. Reiff
4390 Kelson Avenue
Marianna, FL 32446
Robert J. Baudhuin
2854 Westmoor Drive
Oshkosh, WI 54904
Lee E. Wilson
3896 Leonard Point Road
Oshkosh, WI 54904
Richard J. Casey
1520 Villa Park Drive
Oshkosh, WI 54904
Jay B. McDonald
738 Ransom Street
Ripon, WI 54971
Kim M. Shady
W13239 Penny lane
Ripon, WI 54971
D. Mark Freesman
1340 Candlelight Court
Oshkosh, WI 54904
Al Rios
5140 Menawa Trail
Marianna, FL 32446
Pat Andersen-Shew
1788 West Breeze
Oshkosh, WI 54904
Stifel, Nicolaus Custodian for
Paula K. L'Esperance IRA
500 N. Broadway
St. Louis, MO 63102
Stifel, Nicolaus Custodian for
Thomas F. L'Esperance IRA
500 N. Broadway
St. Louis, MO 63102
Stifel, Nicolaus Custodian for
Scott L. Spiller IRA
500 N. Broadway
St. Louis, MO 63102
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Capital
Contributions
pursuant to Class L Class A Class B Class C
Name and Address Section 3.1(a) Preferred Units Units Units Units Units
- ---------------- ---------------- --------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Stifel, Nicolaus Custodian for
Bruce P. Rounds IRA
500 N. Broadway
St. Louis, MO 63102
Robert W. Baird & Co Inc.
TTEE FBO R Scott Gaster IRA
Account #3611-3785
P.O. Box 672
Milwaukee, WI 53201
Edward Jones, Cust FBO
Robert T. Wallace, IRA
931-90090-1-6
201 Progress Pkwy
Maryland Heights, MO 63043
Londolt Securities
Delaware Charter Guarantee and
Trust Company, TTEE for
Jeffrey J. Brothers, IRA
701 Oregon Street
Oshkosh, WI 54901
</TABLE>
<PAGE>
SCHEDULE II
Initial Board of Managers
-------------------------
Thomas F. L'Esperance
Edward W. Conard
Robert C. Gay
Stephen M. Zide
Stephen Sherrill
<PAGE>
EXHIBIT 10.6
ALLIANCE LAUNDRY HOLDINGS LLC
SECURITYHOLDERS AGREEMENT
-------------------------
THIS SECURITYHOLDERS AGREEMENT (this "Agreement") is made as of May
---------
5, 1998, between Alliance Laundry Holdings LLC, a Delaware limited liability
company (the "Company"), each of the securityholders listed on Schedule A
------- ----------
attached hereto and each of the other Persons who becomes a party to this
Agreement after the date hereof pursuant to Section 3 hereof (the
"Securityholders"). Capitalized terms used herein but not otherwise defined
- ----------------
herein are defined in Section 8 hereof.
WHEREAS, the Company and the Securityholders desire to enter into this
Agreement for the purposes of, among others, inducing certain of the
Securityholders to enter into the Amended and Restated Limited Liability Company
Agreement of even date herewith, as amended or modified from time to time (the
"LLC Agreement"), and to restrict the sale, assignment, transfer, encumbrance or
- --------------
other disposition of the Securities.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
1. RESTRICTIONS ON TRANSFER OF SECURITIES.
---------------------------------------
(a) Transfer of Securities. No holder of Other Securities shall sell,
----------------------
transfer, assign, pledge or otherwise dispose of (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
any interest in (a "Transfer") such holder's Securities, except pursuant to (i)
--------
Section 1(b) or 1(d) hereof, (ii) a Public Sale, (iii) a Liquidity Event
pursuant to Section 5, (iv) a repurchase pursuant to the Executive Agreements or
(v) the consent of the Board; provided that the applicable requirements of
--------
Sections 2 and 3 (if any) are also satisfied.
(b) Participation Rights.
--------------------
(i) If one or more of the Bain Group (the "Transferring
------------
Securityholders") desires to Transfer all or any portion of any class
---------------
of its Securities (or any direct or indirect interest therein) to any
Person(s) or to the Company, they must first deliver to all of the
other holders of such class of Securities (the "Other
-----
Securityholders") a written notice (the "Sale Notice") in which the
-----------
prospective Transferring Securityholders state the price and other
material terms and conditions on which they propose to effect such
Transfer of such class of (or interest in) their Securities, or
portion thereof, and the identity of the proposed Transferee(s). For
purposes of this Section 1(b), a Transfer by the Bain Group shall
include a transfer, direct or indirect,
<PAGE>
by the holders of the Equity Securities of the Bain Group (or any
direct or indirect interest therein) and such Transfer will be deemed
to be a Transfer by the Bain Group for purposes of determining the
rights of Other Securityholders under this Section 1(b). Each Other
Securityholder to whom such a Sale Notice is given may within 15 days
following receipt of the Sale Notice, give to the Company and the
Transferring Securityholders a written notice ("Tag-Along Notice")
----------------
indicating that it desires to participate in such Transfer. If any
Other Securityholders have elected to participate in such Transfer,
each of the Transferring Securityholders and such Other
Securityholders will be entitled to sell in the contemplated Transfer,
at the same price and on the same terms and conditions, a number of
units of such class of Securities equal to the product of (A) the
quotient determined by dividing the number of units of such class of
Securities owned by such person by the aggregate number of units of
such class of Securities owned by the Transferring Securityholders and
the Other Securityholders participating in such Transfer and (B) the
number of units of such class of Securities to be sold in the
contemplated Transfer (the "Pro Rata Share"). Notwithstanding the
--- ----------
foregoing, (x) in the event that the Transferring Securityholders
intend to Transfer units of more than one class of Securities, the
Other Securityholders participating in such Transfer shall be required
to sell in the contemplated Transfer a pro rata portion of units of
all such classes of Securities (to the extent such Other
Securityholders own any units of such other classes of Securities),
which portion shall be determined in the manner set forth immediately
above, (y) Units which are not Vested Common Units pursuant to the LLC
Agreement may not be transferred by an Other Securityholder in any
event and (z) Vested Common Units shall be treated as Class A Units
for purposes of this Paragraph 1(b)(i) except that the price to be
paid for such Vested Common Units will be the amount such holder of
such Vested Common Units would have received if a Liquidity Event
occurred at the value which the proposed transferee is acquiring the
Securities and such consideration was paid directly to the Company and
then distributed by the Company in a complete liquidation pursuant to
the terms of the LLC Agreement as in effect immediately prior to such
Transfer.
For example (by way of illustration only), if the Sale Notice
-----------------------------------------
contemplated a sale of 100 Class A Units by the Transferring
Securityholders, and if the Transferring Securityholders at such
time owns 30% of the Class A Units and if one Other
Securityholder elects to participate and owns 20% of the Class A
Units, the Transferring Securityholders would be entitled to sell
60 Class A Units (30% / 50% x 100 units) and the Other
Securityholder would be entitled to sell 40 Class A Units (20% /
50% x 100 units).
(ii) The Transferring Securityholders will use reasonable efforts
to obtain the agreement of the prospective Transferee(s) to the
participation of the Other Securityholders in any contemplated
Transfer, and the Transferring Securityholders will not Transfer any
of their units of Securities to the prospective Transferee(s) unless
(A) simultaneously with such transfer, the prospective Transferee or
Transferees purchase from the Other Securityholders the units of
Securities which
2
<PAGE>
the Other Securityholders are entitled to sell to such prospective
Transferee(s) pursuant to paragraph 1(b)(i) above or (B)
simultaneously with such transfer, the Transferring Securityholders
purchase (on the same terms and conditions on which such units were
sold to the transferee(s)) the number of units of such class of
Securities from the Other Securityholders which the Other
Securityholders would have been entitled to sell pursuant to paragraph
1(b)(i) above.
(c) Transfers by Certain Indirect Owners. Each holder of Other
------------------------------------
Securities that is not a BRS entity, an individual or Raytheon shall not permit
(i) the issuance of additional interests in such holder or (ii) any Transfer of
any interest of any Indirect Owner in such holder. Notwithstanding the
foregoing, any Indirect Owner of such holder or of another Indirect Owner may
Transfer its interest in such holder or other Indirect Owner to another Indirect
Owner of a holder or to a Permitted Transferee; provided, that the restrictions
--------
contained in this Section 1(c) will continue to apply to such securities
following such Transfer and the Permitted Transferees thereof will be required
prior to the effectiveness of such Transfer, to execute a written agreement in
form and substance satisfactory to the Board pursuant to which such Permitted
Transferees acknowledge and agree to be bound by the Transfer restrictions
contained in this Agreement (including, without limitation, this Section 1(c)).
To the extent such Securities are certificated, the certificates evidencing the
Equity Securities of such holder and each Indirect Owner will be stamped or
otherwise imprinted with a legend referencing the restrictions on transfer
contained in this Section 1(c). With respect to any BRS entity, no BRS entity
shall permit an issuance of additional interests or a Transfer of interest in
such entity (other than a distribution to its partners, members or shareholders)
which would cause or result in more than 50% of the voting control of such
entity to be Transferred to any Person other than an Affiliate of such BRS
entity; provided, however, that BRS/RCL Investment Corp. shall not transfer its
-------- -------
interest in the Company to any Independent Third Party except as otherwise
permitted pursuant to this Agreement.
(d) Permitted Transfers. The restrictions contained in this Section 1
-------------------
shall not apply with respect to any Transfer of Securities (i) in the case of
any natural Person, pursuant to applicable laws of descent and distribution or
among such Person's Family Group (as defined below), (ii) in the case of any
other Person, among its Affiliates, (iii) which are Preferred Units with the
consent of the Board, which consent shall not be unreasonably withheld, or (iv)
which are Common Units Transferred as part of a sale of Preferred Units or
Subordinated Note (transferees permitted pursuant to clauses (i), (ii), (iii)
and (iv) above are collectively referred to herein as "Permitted Transferees");
---------------------
provided, that the restrictions contained in this Section 1 shall continue to be
- --------
applicable to such Securities after any such Transfer; and provided, further,
-------- -------
that Units which are not deemed to be Preferred Units or Common Units pursuant
to the LLC Agreement may not be transferred in any event; and provided, further,
-------- -------
that the applicable requirements specified in Sections 2 and 3 in connection
with such Transfer shall have been satisfied. A Person's "Family Group" means
------------
such Person's (or if such Person is not an individual then such Person shall
refer to the ultimate individual beneficial owners of such Person), spouse,
parents, siblings and descendants (whether natural or adopted) and any trust or
other vehicle formed solely for the benefit of such Person and/or any of such
Person's spouse, parents, siblings and/or descendants. Notwithstanding the
foregoing, no party hereto shall avoid the provisions of this Agreement by
making one or more
3
<PAGE>
transfers to one or more Permitted Transferees and then disposing of all or any
portion of such party's interest in any such Permitted Transferee.
(e) Termination of Restrictions. The restrictions set forth in this
---------------------------
Section 1 shall continue with respect to each Securityholder Security until the
earlier of (i) the consummation of a Liquidity Event pursuant to Section 5 or
(ii) the consummation of an IPO. If the consummation of a Transfer pursuant to
this Section 1 would cause a Liquidity Event to occur, the provisions of Section
5 (as opposed to this Section 1) shall control such Transfer.
2. ADDITIONAL RESTRICTIONS ON TRANSFER.
-----------------------------------
(a) Restricted Securities Legend. The Securities have not been
----------------------------
registered under the Securities Act and, therefore, in addition to the other
restrictions on Transfer contained in this Agreement, cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is then available. To the extent such Securities have been
certificated, each certificate evidencing Securities and each certificate issued
in exchange for or upon the Transfer of any Securities (if such securities
remain Securities as defined herein after such Transfer) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
MAY 5, 1998 AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE
SECURITYHOLDERS AGREEMENT, DATED AS OF MAY 5, 1998, AS AMENDED AND MODIFIED
FROM TIME TO TIME, AMONG THE ISSUER (THE "COMPANY") AND CERTAIN INVESTORS,
AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH
SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY
TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE."
The Company shall imprint such legend on certificates (if any) evidencing
Securities. The legend set forth above shall be removed from the certificates
(if any) evidencing any units which cease to be Securities in accordance with
the definition thereof. Notwithstanding the foregoing, to the extent the
Securities are not certificated, the LLC Agreement will contain a legend in
substantially the form stated above.
(b) Opinion of Counsel. No holder of Securities may Transfer any
------------------
Securities (except pursuant to an effective registration statement under the
Securities Act or, in the case of a member of the Bain Group or a BRS entity, to
an Affiliate or pursuant to Section 4 or 5 hereof)
4
<PAGE>
without first delivering to the Company an opinion of counsel (reasonably
acceptable in form and substance to the Board) that neither registration nor
qualification under the Securities Act and applicable state securities laws is
required in connection with such Transfer. Raytheon may deliver the opinion of
its in-house corporate counsel in satisfaction of the requirements of this
section.
3. TRANSFER REQUIREMENTS. Prior to Transferring any Securities
---------------------
(other than pursuant to a Liquidity Event pursuant to Section 5, Section 1(b), a
Public Sale or an IPO), the Transferring holder of Securities shall cause the
prospective Transferee to be bound by this Agreement, the LLC Agreement (if the
prospective Transferee is admitted as a substituted member pursuant to the LLC
Agreement), the Registration Rights Agreement, and any other agreements executed
by holders of Units relating to such Units in the aggregate (collectively, the
"Other Agreements") and if the prospective Transferee is acquiring Securities
- -----------------
subject to an Executive Agreement, the provisions of such Executive Agreement
relating to Equity Securities, including the repurchase thereof, and to execute
and deliver to the Company and the other holders of Securities counterparts of
this Agreement, the LLC Agreement (if the prospective Transferee is admitted as
a substituted member pursuant to the LLC Agreement), the Registration Rights
Agreement, the applicable Other Agreements and if applicable an acknowledgment
as to the provisions of such Executive Agreement relating to Equity Securities.
Any Transfer or attempted Transfer of any Securities in violation of any
provision of this Agreement shall be void, and the Company shall not record such
Transfer on its books or treat any purported Transferee of such Securities as
the owner of such securities for any purpose.
4. PUBLIC OFFERING.
---------------
(a) If at any time the Board approves a public offering of any of the
Equity Securities of the Company to be registered under the Securities Act or
the requisite percentage of holders (the "Requisite Holders") otherwise request
-----------------
the Company to make a public offering of Equity Securities of the Company
pursuant to the Registration Rights Agreement, the holders of Securities and the
Company will take all necessary or desirable actions in connection with the
consummation of such registered offering approved by the Board and, to the
extent not inconsistent therewith, the Requisite Holders. It is the intent that
immediately prior to the initial registered offering of Equity Securities of the
Company, whether or not pursuant to the immediately preceding sentence and
whether pursuant to a sale by the Company or by any Securityholder, (i) a
Delaware corporation will be incorporated (the "Entity") and (ii) the Equity
------
Securities of the Company will be recapitalized or reorganized (whether by
merger, exchange, contribution, a combination of the foregoing or otherwise)
into a single class of common stock of the Entity, where all holders will
receive such common stock. Such recapitalization, reorganization or exchange
will be effected in such a manner so that, immediately thereafter, the
Securityholders hold only securities of the same class as the securities that
are to be offered to the public in such offering. The securities to be so held
by the Securityholders will be allocated, to the extent practicable, among the
Securityholders (or additional securities will be issued to one or more
Securityholders) so that, immediately after such recapitalization,
reorganization or exchange, each Securityholder holds securities having an
aggregate value equal to the amount which such Securityholder would have
received if, immediately prior to such recapitalization, reorganization or
exchange, the Company had distributed to its Securityholders an aggregate amount
equal to the aggregate value of the securities which are to be
5
<PAGE>
held by all Securityholders immediately after such recapitalization,
reorganization or exchange in a complete liquidation pursuant to the rights and
preferences set forth in the Company's constituent documents immediately prior
to such recapitalization, reorganization or exchange, with each share of such
securities having a "value" for such purposes equal to the price per share of
sales to the public as part of such offering. In addition, in the event that
upon such public offering any of the Company's outstanding Class B Common Units
or Class C Common Units are not allocated any "value" as described above,
whether due to vesting pursuant to the Executive Agreements or the failure to
achieve the appropriate Target Multiple pursuant to the LLC Agreement, the
holders of such Class B Common Units and Class C Common Units will be granted
options to acquire the Company's common stock in an amount which would be, to
the extent practicable, economically equivalent to the future value of such
Class B Common Units and Class C Common Units. Securityholder hereby agrees that
(if so requested by the Board or the Requisite Holders) it will consent to and
vote for a recapitalization, reorganization or exchange of the existing Equity
Securities of the Company into a single class of common stock of the Entity that
the Board and the Requisite Holders find acceptable and will take all necessary
or desirable actions in connection with the consummation of the
recapitalization, reorganization or exchange. Without limiting the generality of
the foregoing, each holder of Securities hereby waives any dissenters rights,
appraisal rights or similar rights in connection with such recapitalization,
reorganization or exchange.
(b) Notwithstanding the foregoing, unless the Bain Group otherwise
agrees, any such recapitalization, reorganization or exchange will be structured
and implemented in the manner contemplated by Section 12.7(b)(ii) of the LLC
Agreement. Notwithstanding anything else contained in this Agreement to the
contrary, this Section 4(b) may not be amended without the prior written consent
of the Bain Group, Raytheon or BRS (so long as they are Securityholders).
5. LIQUIDITY EVENT.
---------------
(a) The Company shall seek to effectuate a Liquidity Event upon the
request of a majority of the Bain Group (the "Majority Holder").
---------------
(b) From and after the time (if any) when the Company has informed
each of the Securityholders that it desires to effectuate a Liquidity Event, the
Company and each holder of Securities shall (i) cooperate in good faith to
effectuate such Liquidity Event, and (ii) consent to and raise no objections
against, and take all necessary or desirable actions in connection with, the
consummation of such Liquidity Event, including those reasonably requested by
the Seller (as defined below). Without limiting the generality of the
foregoing, subject to the terms set forth in this Section 5, (i) each holder of
Securities hereby waives any dissenters rights, appraisal rights or similar
rights in connection with such Liquidity Event and (ii) if all or any portion of
any such Liquidity Event is structured as a sale of securities, each holder of
Securities shall agree to sell any or all of his or its securities and rights to
acquire securities on the terms and conditions approved by the Board, if such
Liquidity Event is being effectuated by the Board, or the Majority Holder, if
such Liquidity Event is being effectuated by the Majority Holder. The Person
seeking to effectuate such Liquidity Event is referred to herein as the
"Seller".
------
6
<PAGE>
(c) In connection with any Liquidity Event (whether by sale, merger,
recapitalization, reorganization, consolidation, combination or otherwise)
pursuant to this Section 5, each holder of Securities immediately prior to such
Liquidity Event shall receive (on behalf of itself and, where applicable (e.g.,
the structure contemplated by Section 12.7(b)(i) of the LLC Agreement is
implemented), its direct and indirect securityholders) the same form of
consideration and the same portion of the aggregate consideration that such
holder of Securities would have received if the aggregate consideration paid by
the Buyer in connection with such Liquidity Event (the "Aggregate
---------
Consideration") had been paid directly to the Company and then distributed by
the Company in a complete liquidation pursuant to the terms of the LLC Agreement
as in effect immediately prior to such Liquidity Event (and after giving effect
to any transfer taxes payable in connection with such Liquidity Event, the
amount of which will be paid directly to the persons owing such taxes). In
furtherance thereof, each holder of then currently exercisable rights to acquire
any class of Securities will be given an opportunity to either (A) exercise such
rights prior to the consummation of such Liquidity Event and participate in such
sale as holders of such class of Securities or (B) upon the consummation of such
Liquidity Event, or at such other time agreed to by such holder, receive in
exchange for (or, if applicable, upon the exercise of) such rights, the
consideration contemplated to be received by such holder as a result of such
Liquidity Event in the agreement or instrument pursuant to which such holder
acquired such rights from the Company or, if no such consideration is
contemplated thereby, the consideration such holder would have received if such
holder exercised such rights prior to the consummation of such Liquidity Event
less the amount such holder would have paid to the Company to exercise such
rights. Each holder of Securities shall take all necessary or desirable actions
in connection with the receipt of the Aggregate Consideration from such
Liquidity Event as is requested by the Majority Holder to effectuate the
foregoing.
(d) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities and Exchange Commission may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), each holder of Securities which is not
an accredited investor (as that term is defined in Rule 501 or any similar rule
then in effect ("Rule 501") promulgated by the Securities and Exchange
--------
Commission) will, at the request of the Seller, appoint a purchaser
representative (as such term is defined in Rule 501) reasonably acceptable to
the Seller. If any holder of Securities appoints a purchaser representative
designated by the Seller, the Company will be responsible for the fees of the
purchaser representative so appointed. If any holder of Securities declines to
appoint the purchaser representative designated by the Seller, such holder will
appoint another purchaser representative (reasonably acceptable to the Seller),
and such holder will be responsible for the fees of the purchaser representative
so appointed.
(e) The Company will pay the costs of any sale of Securities pursuant
to a Liquidity Event to the extent such costs are incurred for the benefit of
all holders of Securities and are not otherwise paid by the acquiring party, but
including in any event the reasonable fees and disbursements of one counsel
chosen by a majority of the Bain Group. Costs incurred by any holder of
Securities on its own behalf will not be considered costs of the transaction
hereunder.
7
<PAGE>
(f) The provisions of this Section 5 shall terminate upon the
consummation of an IPO or a Liquidity Event.
(g) Notwithstanding the foregoing, unless Bain Group otherwise agrees,
any such Liquidity Event will be structured and implemented in the manner
contemplated by Section 12.7(b)(i) of the LLC Agreement. Notwithstanding
anything else contained in this Agreement to the contrary, this Section 5(g) may
not be amended without the prior written consent of Bain Group, BRS or Raytheon
(so long as they are Securityholders)
6. PREEMPTIVE RIGHTS.
-----------------
(a) Except as set forth in subparagraph (b) below, the Company and its
Subsidiaries will not issue, sell or otherwise transfer for consideration to the
Bain Group (an "Issuance") at any time prior to an IPO, any Equity Securities
--------
(the "Preemptive Units") unless, at least 30 days and not more than 60 days
----------------
prior to such issuance, the Company notifies each Securityholder in writing of
the Issuance (including the price, the purchasers thereof and the other terms
thereof) and grants to each Securityholder, the right (the "Right") to subscribe
-----
for and purchase such Preemptive Units so issued at the same price and on the
same terms as issued in the Issuance such that, after giving effect to the
Issuance and exercise of the Right, the Preemptive Units owned by such holder
shall represent the same percentage of the outstanding Class A Units and Class L
Units as were owned by such holder prior to the Issuance on a fully diluted
basis, or such lesser amount designated by such holder. The Right may be
exercised by such holder at any time by written notice to the Company received
by the Company within 15 days after receipt by such holder of the notice from
the Company referred to above. The closing of the purchase and sale pursuant to
the exercise of the Right shall occur at least 10 days after the Company
receives notice of the exercise of the Right and concurrently with the closing
of the Issuance. In the event that the consideration received by the Company in
connection with an Issuance is property other than cash, each Securityholder
may, at its election, pay the purchase price for such additional securities in
such property or solely in cash. In the event that any such holder elects to
pay cash, the amount thereof shall be determined based on the fair value of the
consideration received or receivable by the Company in connection with the
Issuance.
(b) Notwithstanding the foregoing, the Right shall not apply to
issuances of Equity Securities (or securities convertible into or exchangeable
for, or options to purchase, such units), pro rata to all holders of Common
Units, as a dividend on, subdivision of or other distribution in respect of, the
Common Units in accordance with the Company's LLC Agreement.
(c) The provisions of this Section 6 will terminate upon the
consummation of an IPO (as defined in Section 8).
7. TRANSACTIONS WITH CERTAIN AFFILIATES. So long as BRS or Raytheon
------------------------------------
is a Securityholder, the Company shall not and it shall cause its Subsidiaries
to not, without the prior written consent of BRS or Raytheon, authorize any
transaction by the Company or any of its Subsidiaries with any unitholder,
officer or member of the Company or its Subsidiaries, or any Affiliates of such
persons, involving the payment by the Company or a Subsidiary, or the issuance
8
<PAGE>
of Equity Securities or the sale or giving of property or services by the
Company or a Subsidiary ("Affiliated Transaction"), except for any Affiliate
----------------------
Transaction which is on terms comparable to those that could be obtained at
arms' length from a Person that is not an Affiliate of the Company or is
otherwise fair to the Company; provided, however, that the following shall be
-------- -------
deemed not to be Affiliate Transactions: (i) payment of customary and reasonable
fees to members of the Board (so long as the same fees are paid to all non-
management Board members), (ii) the performance by the Company or its
Subsidiaries for each other of cash management, accounting, administrative and
similar intercompany services, (iii) any of the transactions contemplated by (A)
this Agreement, (B) the Merger Agreement, (C) the financing documents related to
the Merger Agreement (including payment of fees to the Bain Group and its
affiliates in amounts permitted by such agreements, and all agreements and
documents contemplated thereby, in each case as the same shall be amended,
modified, supplemented or restated and in effect from time to time), (D) the
Registration Rights Agreement, or (E) any agreements entered into with the
management of the Company and (iv) payment of salary and bonus compensation or
any issuance of Equity Securities or options to acquire Equity Securities to
officers of the Company or its Subsidiaries in amounts and on such terms as are
approved by the Board or the board of directors or managers of the applicable
Subsidiary.
8. BOARD OF MANAGERS. The Bain Members (as defined in the LLC
-----------------
Agreement) hereby agree that, so long as BRS owns Equity Securities equal to or
greater than 50% of the amount owned on the date hereof, pursuant to their power
under Section 5.2(b) of the LLC Agreement, the Bain Members will (i) appoint a
designee of BRS to the Board of Managers of the Company, which such designee
shall initially be Stephen Sherrill, (ii) cause the Company, as the sole member
of Alliance Laundry Systems LLC ("Systems"), to appoint a designee of BRS to the
-------
Board of Managers of Systems, which such designee shall initially be Stephen
Sherrill, and (iii) appoint a designee of BRS to any committee of the Board of
Managers of the Company or Systems which has the power to act on behalf of the
Board of Managers regarding general corporate matters. The Company shall not
permit the amendment of Section 4.2 of the Systems Amended and Restated Limited
Liabilities Company Agreement without the prior written consent of BRS/RCL
Investment Corp.
9. CERTAIN DEFINITIONS.
-------------------
"Affiliate" is defined in the LLC Agreement as it exists on the date
---------
hereof.
"Bain Group" is defined in the LLC Agreement as it exists on the date
----------
hereof.
"Board" is defined in the LLC Agreement as it exists on the date
-----
hereof.
"BRS"shall mean BRS/RCL Investment Corp., BCB Family Partners, L.P.,
---
Stephen C. Sherrill, NAZ Family Partners, L.P., H. Virgil Sherrill, Paul D.
Kaminski, Nancy A. Zweng, Bruce C. Bruckmann, John Rice Edmonds, Donald J.
Bruckmann, Susan Kaider, Harold O. Rosser, Marilena Tibrea, Walker C. Simmons,
MLPF&S Custodian FBO Paul Kaminski and their Affiliates, Permitted Transferees
and successors.
"Class A Units" means (i) any Class A Units (as defined in the LLC
-------------
Agreement as it exists on the date hereof) purchased or otherwise acquired by
any Securityholder, and (ii) any
9
<PAGE>
Equity Securities issued or issuable directly or indirectly with respect to any
of the Class A Units referred to in clause (i) above, by way of a dividend or
split or exchange or in connection with a combination of units,
recapitalization, merger, consolidation or other reorganization.
"Class B Units" means (i) any Class B Units (as defined in the LLC
-------------
Agreement as it exists on the date hereof) purchased or otherwise acquired by
any Securityholder, and (ii) any Equity Securities issued or issuable directly
or indirectly with respect to any of the Class B Units referred to in clause (i)
above, by way of a dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
"Class C Units" means (i) any Class C Units (as defined in the LLC
-------------
Agreement as it exists on the date hereof) purchased or otherwise acquired by
any Securityholder, and (ii) any Equity Securities issued or issuable directly
or indirectly with respect to any of the Class C Units referred to in clause (i)
above, by way of a dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
"Class L Units" means (i) any Class L Units (as defined in the LLC
-------------
Agreement as it exists on the date hereof) purchased or otherwise acquired by
any Securityholder, and (ii) any Equity Securities issued or issuable directly
or indirectly with respect to any of the Class L Units referred to in clause (i)
above, by way of a dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
"Common Units" is defined in the LLC Agreement as it exists on the
------------
date hereof.
"Equity Securities" is defined in the LLC Agreement as it exists on
-----------------
the date hereof.
"Executive Agreement" is defined in the LLC Agreement as it exists on
-------------------
the date hereof.
"Independent Third Party" is defined in the LLC Agreement as it exists
-----------------------
on the date hereof.
"Indirect Owner" means with respect to each Person which is (i) a
--------------
corporation or any similar entity, each shareholder and each Indirect Owner of
such shareholder; (ii) a limited liability company or any similar entity, each
member and each Indirect Owner of such member; (iii) a partnership (whether
limited or general) or similar entity, each partner and each Indirect Owner of
such partner; and (iv) a trust or any similar entity, each beneficiary who has
the legal right (or whose spouse has the present legal right) to demand a
distribution of the trust's interest and each Indirect Owner of such beneficiary
or such beneficiary's spouse (whether in such beneficiary's capacity as a
beneficiary, trustee or otherwise and whether by revocation or amendment of such
trust or otherwise).
10
<PAGE>
"IPO" means a public offering either (a) where the Company has
---
received net proceeds of at least $75 million (measured as of the time of
issuance) or (b) which constitute at least 15% of the Company's outstanding
Units (measured as of the date of determination).
"Liquidity Event" is defined in the LLC Agreement as it exists on the
---------------
date hereof.
"Majority Holder" is defined in Section 5 hereof.
---------------
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated as of February 21, 1998, by and among Bain/RCL, L.L.C., RCL Acquisitions,
L.L.C., Raytheon and Raytheon Commercial Laundry LLC, as amended and modified
from time to time.
"Other Securities" means Securities owned by Securityholders that are
----------------
not a part of the Bain Group.
"Person" is defined in the LLC Agreement.
------
"Preferred Units" means (i) any Preferred Units (as defined in the LLC
---------------
Agreement) purchased or otherwise acquired by any Securityholder, and (ii) any
Equity Securities issued or issuable directly or indirectly with respect to any
of the Preferred Units referred to in clause (i) above, by way of a dividend or
split or exchange or in connection with a combination of units,
recapitalization, merger, consolidation or other reorganization.
"Public Sale" means any sale of Securities to the public pursuant to
-----------
an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 adopted
under the Securities Act.
"Raytheon" means Raytheon Company, a Delaware corporation.
--------
"Registration Rights Agreement" means that certain Registration Rights
-----------------------------
Agreement, dated as of the date hereof, between the Company and the
securityholders a party thereto, as amended or modified from time to time.
"Securities" means, collectively, Class A Units, Class B Units, Class
----------
C Units, Class L Units, Preferred Units and any other equity interests of the
Company, but explicitly excluding rights to acquire equity interests of the
Company. As to any particular Securities, such units shall cease to be
Securities when they have been disposed of in a Public Sale or repurchased by
the Company or any Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended, and
--------------
applicable rules and regulations thereunder, and any successor to such statute,
rules or regulations. Any reference herein to a specific section, rule or
regulation of the Securities Act shall be deemed to include any corresponding
provisions of future law.
11
<PAGE>
"Securities and Exchange Commission" includes any governmental body
----------------------------------
or agency succeeding to the functions thereof.
"Subordinated Note" means that certain Junior Subordinated Note, dated
-----------------
as of the date hereof, in the original principal amount of $9,000,000 issued by
the Company to Raytheon.
"Subsidiary" is defined in the LLC Agreement.
----------
"Units" is defined in the LLC Agreement.
-----
"Vested Common Units" is defined in the LLC Agreement.
-------------------
10. AMENDMENT AND WAIVER. Except as otherwise provided herein, no
--------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the holders of Securities unless such
modification, amendment or waiver is approved in writing by the holders of at
least a majority of the Bain Group; provided, that no amendment or modification
--------
that would adversely affect holders of one class or group of Securities in a
manner different than holders of any other class or group of Securities (other
than amendments and modifications in connection with the issuances of Equity
Securities permitted by Section 5.1(b) of the LLC Agreement) shall be effective
against the holders of such class or group of Securities without the prior
written consent of holders of at least a majority of Securities of such class or
group adversely affected thereby; provided, further, that so long as BRS or
-------- -------
Raytheon holds any Securities, no amendment or modification that will adversely
alter BRS' or Raytheon's respective rights granted pursuant to this Agreement
shall be effective against BRS or Raytheon, respectively, without their consent
(it being understood that the creation of new (in accordance with Section 6 of
this Agreement) or additional Securities, or new (in accordance with Section 6
of this Agreement) or additional Equity Securities of the Company which will
constitute Securities, or the addition of new parties to this Agreement shall
not in and of itself be deemed to alter such rights). No failure by any party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute a waiver of any such breach or any other covenant,
duty, agreement or condition.
11. SEVERABILITY. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. ENTIRE AGREEMENT. This Agreement, those documents expressly
----------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
12
<PAGE>
13. SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
----------------------
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and permitted assigns and the Securityholders and any
subsequent holders of Securities and the respective successors and permitted
assigns of each of them, so long as they hold Securities. The Company may not
assign any of its obligations under this Agreement (other than in connection
with a merger, consolidation or other form of reorganization permitted by other
sections of this Agreement) without the prior written consent of a majority of
the Bain Group.
14. COUNTERPARTS. This Agreement may be executed in separate
------------
counterparts each of which will be an original and all of which taken together
will constitute one and the same agreement.
15. REMEDIES. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement. Nothing contained in this Agreement will be construed to confer upon
any Person who is not a signatory hereto any rights or benefits, as a third
party beneficiary or otherwise.
16. NOTICES. Any notice provided for in this Agreement will be in
-------
writing and will be either personally delivered, or received by certified mail,
return receipt requested, or sent by reputable overnight courier service
(charges prepaid) to the Company at the address set forth below and to any other
recipient and to any subsequent holder of Securities subject to this Agreement
at such address as indicated by the Company's records, or at such address or to
the attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices will be deemed to have been given
hereunder when delivered personally, three days after deposit in the U.S. mail
and one day after deposit with a reputable overnight courier service. The
Company's address is:
To the Company:
--------------
Alliance Laundry Holdings LLC
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
13
<PAGE>
Kirkland & Ellis
200 East Randolph Street
Chicago, Il 60601
Attention: James L. Learner
17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
-------------
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO
ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE
OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. ANY DISPUTE RELATING
HERETO SHALL BE HEARD IN THE STATE OR FEDERAL COURTS OF DELAWARE, AND THE
PARTIES AGREE TO JURISDICTION AND VENUE THEREIN.
18. DESCRIPTIVE HEADINGS; INTERPRETATION. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Whenever required by the context, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation. Reference
to any agreement, document or instrument means such agreement, document or
instrument as amended or otherwise modified from time to time in accordance with
the terms thereof, and if applicable hereof. Without limiting the generality of
the immediately preceding sentence, no amendment or other modification to any
agreement, document or instrument that requires the consent of any Person
pursuant to the terms of this Agreement or any other agreement (including the
LLC Agreement) will be given effect hereunder unless such Person has consented
in writing to such amendment or modification. The use of the words "or,"
"either" and "any" shall not be exclusive.
19. NO STRICT CONSTRUCTION. The parties hereto have participated
-----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
20. ISSUANCES OF ADDITIONAL SECURITIES. Notwithstanding anything
----------------------------------
contained herein to the contrary, the Company shall not issue any securities of
the same type as any Securities held by any Securityholder to any recipient that
is not a party hereto (other than in connection with a public offering of the
Company's Equity Securities registered under the Securities Act) unless the
recipient thereof executes the agreements that such recipient would be required
to execute pursuant to Section 3 if such recipient were a transferee of such
securities, thereby becoming a party hereto and thereto, prior to, or
concurrently with, receiving securities of the Company. Any issuance or
attempted issuance in violation of any provision of this Agreement shall be
void, and the Company
14
<PAGE>
shall not record such issuance on its books or treat any purported recipient of
such securities as the owner of such securities for any purpose.
* * * * *
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Securityholders
Agreement on the day and year first above written.
ALLIANCE LAUNDRY HOLDINGS LLC
By:
_______________________________________
Its:
______________________________________
BAIN/RCL, L.L.C.
By:
_______________________________________
Its:
______________________________________
RAYTHEON COMPANY
By:
_______________________________________
Its:
______________________________________
16
<PAGE>
__________________________________________
THOMAS F. L'ESPERANCE
__________________________________________
HERMAN W. BEACH
__________________________________________
JEFFREY J. BROTHERS
__________________________________________
R. SCOTT GASTER
__________________________________________
BRUCE P. ROUNDS
__________________________________________
ROBERT T. WALLACE
__________________________________________
SCOTT L. SPILLER
__________________________________________
DAVID A. DOCKREY
__________________________________________
DARWIN K. GILMORE
__________________________________________
CHARLES O. REIFF
__________________________________________
LEE E. WILSON
17
<PAGE>
__________________________________________
RICHARD J. CASEY
__________________________________________
JAY B. MCDONALD
__________________________________________
KIM M. SHADY
__________________________________________
D. MARK FREESMAN
__________________________________________
AL RIOS
__________________________________________
PAT ANDERSEN-SHEW
STIFEL, NICOLAUS CUSTODIAN FOR
PAULA K. L'ESPERANCE IRA
__________________________________________
STIFEL, NICOLAUS CUSTODIAN FOR
THOMAS F. L'ESPERANCE IRA
__________________________________________
STIFEL, NICOLAUS CUSTODIAN FOR
SCOTT L. SPILLER IRA
__________________________________________
18
<PAGE>
STIFEL, NICOLAUS CUSTODIAN FOR
BRUCE P. ROUNDS IRA
__________________________________________
ROBERT W. BAIRD & CO INC. TTEE
FBO R SCOTT GASTER IRA
__________________________________________
EDWARD JONES, CUST FBO
ROBERT T. WALLACE, IRA
__________________________________________
DELAWARE CHARTER GUARANTEE AND
TRUST COMPANY, TTEE FOR
JEFFREY J. BROTHERS, IRA
__________________________________________
19
<PAGE>
BCB FAMILY PARTNERS, L.P.
By: * *
------------------------- -------------------------
Name: STEPHEN C. SHERRILL
Title:
NAZ FAMILY PARTNERS, L.P.
By: * *
------------------------- -------------------------
Name: H. VIRGIL SHERRILL
Title:
* *
- ------------------------- ------------------------
PAUL D. KAMINSKI NANCY A. ZWENG
* *
- ------------------------- ------------------------
BRUCE C. BRUCKMANN JOHN RICE EDMONDS
* *
- ------------------------- ------------------------
DONALD J. BRUCKMANN SUSAN KAIDER
* *
- ------------------------- ------------------------
HAROLD O. ROSSER MARILENA TIBREA
*
- -------------------------
WALKER C. SIMMONS
MLPF&S CUSTODIAN FBO PAUL KAMINSKI
*
By:
----------------------
*By:
------------------------------
Name: Stephen M. Sherrill
---------------------------
Title: Attorney-in-fact
20
<PAGE>
BRS/RCL INVESTMENT CORP.
By:
-----------------------------
Its:
-----------------------------
21
<PAGE>
SCHEDULE A
----------
SECURITYHOLDERS
Bain/RCL, L.L.C.
Raytheon Company
Thomas F. L'Esperance
Herman W. Beach
Jeffrey J. Brothers
R. Scott Gaster
Bruce P. Rounds
Robert T. Wallace
Scott L. Spiller
David A. Dockrey
Darwin K. Gilmore
Charles O. Reiff
Lee E. Wilson
Richard J. Casey
Jay B. McDonald
Kim M. Shady
D. Mark Freesman
Al Rios
Pat Andresen-Shew
BRS/RCL Investment Corp.
BCB Family Partners, L.P.
Stephen C. Sherrill
NAZ Family Partners, L.P.
H. Virgil Sherrill
Paul D. Kaminski
Nancy A. Zweng
Bruce C. Bruckmann
John Rice Edmonds
Donald J. Bruckmann
Susan Kaider
Harold O. Rosser
Marilena Tibrea
Walker C. Simmons
Stifel, Nicolaus Custodian for Paula K. L'Esperance IRA
Stifel, Nicolaus Custodian for Thomas F. L'Esperance IRA
Stifel, Nicolaus Custodian for Scott L. Spiller IRA
Stifel, Nicolaus Custodian for Bruce P. Rounds IRA
Robert W. Baird & Co Inc. TTEE FBO R Scott Gaster IRA
Edward Jones, Cust FBO Robert T. Wallace, IRA
Delaware Charter Guarantee and Trust Company, TTEE for Jeffrey J. Brothers, IRA
<PAGE>
EXHIBIT 10.7
ALLIANCE LAUNDRY HOLDINGS LLC
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
---------
May 5, 1998, by and among Alliance Laundry Holdings LLC, a Delaware limited
liability company (together with its successors and permitted assigns, the
"Company"), Raytheon Company, a Delaware corporation ("Raytheon"), Bain/RCL,
- -------- --------
L.L.C., a Delaware limited liability company ("Bain"), each of the
----
Securityholders listed on Schedule A attached hereto and each of the other
----------
Persons who becomes a party to this Agreement after the date hereof pursuant to
paragraphs 10(e) or 10(f) below. Capitalized terms used herein but not
otherwise defined are defined in Section 9 hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
1. DEMAND REGISTRATIONS.
--------------------
(a) Requests for Registration. At any time, the holders of a
-------------------------
majority of the Bain Registrable Securities may request registration under the
Securities Act of 1933, as amended (the "Securities Act"), of (x) all or any
--------------
portion of their Registrable Securities on Form S-1 or any similar long-form
registration ("Long-Form Registrations"), and (y) all or any portion of their
-----------------------
Registrable Securities on Form S-2 or S-3 (including pursuant to Rule 415 under
the Securities Act) or any similar short-form registration ("Short-Form
----------
Registrations"), if available. All registrations requested pursuant to this
- -------------
paragraph 1(a) are referred to herein as "Demand Registrations." Each request
--------------------
for a Demand Registration shall specify the approximate number of Registrable
Securities requested to be registered and the anticipated per share price range
for such offering. Within 10 days after receipt of any such request, the
Company shall give written notice of such requested registration to all other
holders of Registrable Securities and, subject to paragraph 1(d) below, shall
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15 days
after the receipt of the Company's notice.
(b) Long-Form Registrations. The holders of a majority of the Bain
-----------------------
Registrable Securities shall be entitled to request unlimited Long-Form
Registrations in which the Company shall pay all Registration Expenses. The
Company shall pay all Registration Expenses in connection with any registration
initiated as a Long-Form Registration whether or not it has become effective.
All Long-Form Registrations shall be underwritten registrations.
<PAGE>
(c) Short-Form Registrations. In addition to the Long-Form
------------------------
Registrations provided pursuant to paragraph 1(b), the holders of a majority of
the Bain Registrable Securities shall be entitled to request an unlimited
number of Short-Form Registrations in which the Company shall pay all
Registration Expenses. Notwithstanding anything contained herein to the
contrary, Demand Registrations shall be Short-Form Registrations whenever the
Company is permitted to use any applicable short form. After the Company has
become subject to the reporting requirements of the Securities Exchange Act of
1934, as amended from time to time (the "Exchange Act"), the Company shall use
------------
its best efforts to make Short-Form Registrations on Form S-3 available for the
sale of Registrable Securities. If the Company, pursuant to the request of the
holders of a majority of the Bain Registrable Securities, is qualified to and
has filed with the Securities and Exchange Commission a registration statement
under the Securities Act on Form S-3 pursuant to Rule 415 under the Securities
Act (the "Required Registration"), the Company shall use its best efforts to
---------------------
cause the Required Registration to be declared effective under the Securities
Act as soon as practical after filing, and once effective, the Company shall
cause such Required Registration to remain effective for a period ending on the
earlier of (i) the date on which all Registrable Securities have been sold
pursuant to the Required Registration or (ii) the date as of which the holders
of Bain Registrable Securities (assuming such holders are affiliates of the
Company) are able to sell all of the Bain Registrable Securities then held by
them within a ninety-day period in compliance with Rule 144 under the Securities
Act (the "Effective Period").
----------------
(d) Priority on Demand Registrations. The Company shall not include
--------------------------------
in any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the Bain
Registrable Securities. If a Demand Registration is an underwritten offering
and the managing underwriters advise the Company in writing (with a copy to each
party hereto requesting registration of Registrable Securities) that in their
opinion the number of Registrable Securities and, if permitted hereunder, other
securities requested to be included in such offering exceeds the number of
Registrable Securities and other securities, if any, which can be sold without
adversely affecting the marketability of the offering, the Company will include
in such registration prior to the inclusion of any securities which are not
Registrable Securities the number of Registrable Securities requested to be
included which in the opinion of such underwriters can be sold without adversely
affecting the marketability of the offering, pro rata among the respective
holders thereof on the basis of the number of shares of Registrable Securities
owned by each such holder. Any Persons other than holders of Registrable
Securities who participate in Demand Registrations which are not at the
Company's expense must pay their share of the Registration Expenses as provided
in Section 5 hereof.
(e) Restrictions on Demand Registrations. The Company shall not be
------------------------------------
obligated to effect any Demand Registration within 180 days after the effective
date of a previous Demand Registration. The Company shall be entitled to
postpone, for up to 180 days the filing or the effectiveness of a registration
statement for a Demand Registration if the Company and the holders of at least a
majority of the Bain Registrable Securities agree that such Demand Registration
would be reasonably expected to have an adverse effect on any proposal or plan
by the Company or any of its subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer or similar transaction; provided that in such
--------
-2-
<PAGE>
event, the holders of a majority of Bain Registrable Securities requesting such
Demand Registration will be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration will not count as one of the
permitted Demand Registrations hereunder and the Company will pay all
Registration Expenses in connection with such registration.
(f) Selection of Underwriters. The holders of a majority of the Bain
-------------------------
Registrable Securities included in any Demand Registration will have the right
to select the investment banker(s) and manager(s) to administer the offering,
subject to the Company's approval, which will not be unreasonably withheld.
(g) Other Registration Rights. Except as provided in this Agreement,
-------------------------
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the Bain Registrable Securities.
2. PIGGYBACK REGISTRATIONS.
-----------------------
(a) Right to Piggyback. Whenever the Company proposes to register any
------------------
of its equity securities (including any proposed registration of the Company's
securities by any third party) under the Securities Act (other than pursuant to
a Demand Registration or a registration on Form S-4 or S-8 or any successor or
similar forms) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), whether or
----------------------
not for sale for its own account, the Company shall give prompt written notice
to all holders of Registrable Securities of its intention to effect such a
registration and shall include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within 30 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration is
---------------------------------
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing (with a copy to each party hereto
requesting registration of Registrable Securities) that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of such offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder and (iii) third, other securities requested to
be included in such registration
(d) Priority on Secondary Registrations. If a Piggyback Registration
-----------------------------------
is an underwritten secondary registration on behalf of holders of the Company's
securities (and is not a Demand Registration), and the managing underwriters
advise the Company in writing (with a copy
-3-
<PAGE>
to each party hereto requesting registration of Registrable Securities) that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold without adversely affecting
the marketability of the offering, the Company shall include in such
registration (i) first, the securities requested to be included therein by the
holders requesting such registration and the Registrable Securities requested to
be included in such registration, pro rata among the holders of such securities
on the basis of the number of shares owned by each such holder and (ii) second,
other securities requested to be included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration is an
-------------------------
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Bain
Registrable Securities included in such Piggyback Registration. Such approval
shall not be unreasonably withheld or delayed.
(f) Other Registrations. If the Company has previously filed a
-------------------
registration statement with respect to Registrable Securities pursuant to
Section 1 or pursuant to this Section 2, and if such previous registration has
not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-4 or S-8 or any successor form), whether on
its own behalf or at the request of any holder or holders of such securities,
until a period of at least 180 days has elapsed from the effective date of such
previous registration.
3. HOLDBACK AGREEMENTS.
-------------------
(a) To the extent not inconsistent with applicable law, each holder of
Registrable Securities shall not effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or
any securities, options or rights convertible into or exchangeable or
exercisable for such securities, during the 10 days prior to and the 180-day
period beginning on the effective date of any underwritten Demand Registration
or any underwritten Piggyback Registration in which Registrable Securities are
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to and
during the 180-day period beginning on the effective date of any (x)
underwritten Demand Registration, (y) underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-4 or Form S-8 or any successor form) or (z) post-effective amendment
of a Required Registration pursuant to which an underwritten offering is to be
effected, unless (in any such case) the underwriter managing the registered
public offering otherwise agrees, and (ii) to cause each holder of its equity
securities, or any securities convertible into or exchangeable or exercisable
for equity securities purchased from the Company at any time after the date of
this Agreement (other than in a registered public offering) to agree not to
effect any public sale or distribution (including sales pursuant to Rule 144) of
any
-4-
<PAGE>
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
-----------------------
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) prepare and (within 60 days after the end of the period within
which requests for registration may be given to the Company) file with the
Securities and Exchange Commission a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration
statement to become effective; provided, that before filing a registration
--------
statement or prospectus or any amendments or supplements thereto, the Company
shall furnish to the counsel selected by the holders of a majority of the Bain
Registrable Securities covered by such registration statement copies of all such
documents proposed to be filed, which documents shall be subject to the review
and comment of such counsel;
(b) notify in writing each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of either (i) not less than 180 days (subject to extension pursuant to paragraph
7(b)) or, if such registration statement relates to an underwritten offering,
such longer period as in the opinion of counsel for the underwriters a
prospectus is required by law to be delivered in connection with sales of
Registrable Securities by an underwriter or dealer or (ii) such shorter period
as will terminate when all of the securities covered by such registration
statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
-5-
<PAGE>
seller; provided, that the Company shall not be required to (i) qualify
--------
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the discovery of the happening of
any event as a result of which, the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any fact
necessary to make the statements therein not misleading in the light of the
circumstances under which they were made, and, at the request of any such
seller, the Company shall prepare and furnish to such seller a reasonable number
of copies of a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading in the light of the
circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
-6-
<PAGE>
(k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such registration statement for sale in any
jurisdiction, use its best efforts promptly to obtain the withdrawal of such
order;
(m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities;
(n) obtain one or more comfort letters, dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), from the Company's independent public accountants in customary form
and covering such matters of the type customarily covered by comfort letters as
the holders of a majority of the Registrable Securities being sold reasonably
request; provided, that such Registrable Securities constitute at least 10% of
--------
the securities covered by such registration statement;
(o) provide a legal opinion of the Company's outside counsel, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, dated the date of the closing under
the underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature; and
(p) use reasonable efforts to cause certificates for the Registrable
Securities covered by such registration statement to be delivered by the holders
thereof to the underwriters in such denominations and registered in such names
as the underwriters may request.
5. REGISTRATION EXPENSES.
---------------------
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, travel expenses, filing expenses, messenger and
delivery expenses, fees and disbursements of custodians, fees and disbursements
of counsel for the Company and fees and disbursements of all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by the Company
-7-
<PAGE>
or the holders of Bain Registrable Securities (all such expenses being herein
called "Registration Expenses"), shall be borne by the Company, except as
---------------------
otherwise expressly provided in this Agreement, except that the Company shall,
in any event, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system (or any successor or similar system).
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel (in addition to local counsel) chosen by the holders of a majority of
the Bain Registrable Securities included in such registration and for the
reasonable fees and disbursements of each additional counsel retained by any
holder of Registrable Securities for the purpose of rendering a legal opinion on
behalf of such holder in connection with any underwritten Demand Registration or
Piggyback Registration.
(c) To the extent Registration Expenses are not required to be paid by
the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
6. INDEMNIFICATION.
---------------
(a) The Company agrees to indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities, its officers,
directors, agents, and employees and each Person who controls such holder
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities, joint or several, together with reasonable costs and expenses
(including reasonable attorney's fees), to which such indemnified party may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) any untrue or
alleged untrue statement of material fact contained (A) in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or (B) in any application or other document or communication
(in this Section 6 collectively called an "application") executed by or on
behalf of the Company or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify any
securities covered by such registration statement under the "blue sky" or
securities laws thereof, or (ii) any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company will reimburse such holder and each such
director, officer and controlling Person for any legal or any other expenses
incurred by them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided, however, that the Company
-------- -------
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or
-8-
<PAGE>
is based upon an untrue statement or alleged untrue statement, or omission or
alleged omission, made in such registration statement, any such prospectus or
preliminary prospectus or any amendment or supplement thereto, or in any
application, in reliance upon, and in conformity with, written information
prepared and furnished to the Company by such holder expressly for use therein
or by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, the Company will indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests (and is customarily provided by selling stockholders) for use in
connection with any such registration statement or prospectus and, to the
fullest extent permitted by law, will indemnify and hold harmless the Company,
and its respective directors, officers, agents and employees and each other
Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities, joint or several, together
with reasonable costs and expenses (including reasonable attorney's fees), to
which such indemnified party may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon (i) any untrue or alleged untrue statement of material fact
contained in the registration statement, prospectus or preliminary prospectus or
any amendment thereof or supplement thereto or in any application or (ii) any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is made in such registration statement,
any such prospectus or preliminary prospectus or any amendment or supplement
thereto, or in any application, in reliance upon and in conformity with written
information prepared and furnished to the Company by such holder expressly for
use therein, and such holder will reimburse the Company and each such other
indemnified party for any legal or any other expenses incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; provided, however, that the obligation to indemnify will
-------- -------
be individual to each holder and will be limited to the net amount of proceeds
received by such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any person entitled to indemnification under this Agreement shall
notify promptly the indemnifying party in writing of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Section 6, but the failure of any indemnified party to
provide such notice shall not relieve the indemnifying party of its obligations
under the preceding subparagraphs of this Section 6, except to the extent the
indemnifying party is materially prejudiced thereby and shall not relieve the
indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 6. In case any action or proceeding is
brought against an indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
-9-
<PAGE>
participate therein and, unless in the reasonable opinion of outside counsel to
the indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in of such claim, to assume the defense thereof
jointly with any other indemnifying party similarly notified, to the extent that
it chooses, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party that it so
chooses, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the indemnifying party fails to
-------- -------
take reasonable steps necessary to defend diligently the action or proceeding
within 20 days after receiving notice from such indemnified party that the
indemnified party believes it has failed to do so; or (ii) if such indemnified
party who is a defendant in any action or proceeding which is also brought
against the indemnifying party reasonably shall have concluded that there may be
one or more legal defenses available to such indemnified party which are not
available to the indemnifying party; or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, then, in any such case, the indemnified party shall have
the right to assume or continue its own defense as set forth above (but with no
more than one firm of counsel for all indemnified parties in each jurisdiction,
except to the extent any indemnified party or parties reasonably shall have
concluded that there may be legal defenses available to such party or parties
which are not available to the other indemnified parties or to the extent
representation of all indemnified parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct) and the
indemnifying party shall be liable for any expenses therefor.
(d) No indemnifying party shall, without the written consent of each
indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (A) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim without any payment or consideration provided or obligation
incurred by any indemnified party and (B) does not include a statement as to or
an admission of fault, culpability or a failure to act, by or on behalf of any
indemnified party.
(e) If the indemnification provided for in this Section 6 is
unavailable to or is insufficient to hold harmless an indemnified party under
the provisions above in respect to any losses, claims, damages or liabilities
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the sellers of Registrable
Securities and any other sellers participating in the registration statement on
the other hand or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative fault referred to in clause (i) above but also the relative
benefit of the Company on the one hand and of the sellers of Registrable
Securities and any other sellers participating in the registration statement on
the other in connection with the registration statement on the other in
connection with the statement or omissions which resulted in such losses,
claims, damages or liabilities, as well as any
-10-
<PAGE>
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the sellers of Registrable Securities and any other
sellers participating in the registration statement on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) to the Company bear to the total net proceeds from the
offering (before deducting expenses) to the sellers of Registrable Securities
and any other sellers participating in the registration statement. The relative
fault of the Company on the one hand and of the sellers of Registrable
Securities and any other sellers participating in the registration statement on
the other shall be determined by reference to, among other things, whether the
untrue or alleged omission to state a material fact relates to information
supplied by the Company or by the sellers of Registrable Securities or other
sellers participating in the registration statement and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the sellers of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation (even if the sellers of Registrable Securities
were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, no seller of Registrable Securities shall be required to contribute
pursuant to this Section 6 any amount in excess of the net proceeds received by
such Seller from the sale of Registrable Securities covered by the registration
statement filed pursuant hereto. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnification and contribution by any such party provided
for under this Agreement shall be in addition to any other rights to
indemnification or contribution which any indemnified party may have pursuant to
law or contract and will remain in full force and effect regardless of any
investigation made or omitted by or on behalf of the indemnified party or any
officer, director or controlling Person of such indemnified party and will
survive the transfer of securities.
(g) The indemnification and contribution required by this Section 6
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or expense, loss,
damage or liability is incurred.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
-------------------------------------------
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such
-11-
<PAGE>
arrangements (including, without limitation, pursuant to the terms of any over-
allotment or "green shoe" option requested by the managing underwriter(s);
provided, that no holder of Registrable Securities will be required to sell more
- --------
than the number of Registrable Securities that such holder has requested the
Company to include in any registration) and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements;
provided, that no holder of Registrable Securities included in any underwritten
- --------
registration shall be required to make any representations or warranties to the
Company or the underwriters (other than representations and warranties regarding
such holder and such holder's intended method of distribution) or to undertake
any indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Section 6 hereof.
(b) Each Person that is participating in any registration hereunder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 4(e). In the
event the Company shall give any such notice, the applicable time period
mentioned in Section 4(b) during which a Registration Statement is to remain
effective shall be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this paragraph to
and including the date when each seller of a Registrable Security covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 4(e).
8. RULE 144 REPORTING. With a view to making available the benefits
------------------
of certain rules and regulations of the Securities and Exchange Commission that
may permit the sale of Registrable Securities to the public without
registration, the Company agrees at all times after the Company has filed a
registration statement with the Securities and Exchange Commission pursuant to
the requirements of either the Securities Act or the Exchange Act to use its
best efforts to:
(a) make and keep public information regarding the Company available
as those terms are understood and defined in Rule 144 under the Securities Act;
(b) file with the Securities and Exchange Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become subject to
such reporting requirements; and
(c) so long as a holder owns any Registrable Securities, furnish to
the holder forthwith upon written request a written statement by the Company as
to its compliance with the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as a holder may reasonably request in availing itself of any rule or regulation
of the Securities and Exchange Commission allowing a holder to sell any such
securities without registration.
-12-
<PAGE>
9. DEFINITIONS.
-----------
"Affiliate" is defined in the LLC Agreement as it exists on the date
---------
hereof.
"Bain Group" is defined in the LLC Agreement as it exists on the date
----------
hereof.
"Bain Registrable Securities" means (i) any Units issued to members of
---------------------------
the Bain Group pursuant to the Merger Agreement or otherwise acquired by members
of the Bain Group, (ii) any securities issued or issuable directly or indirectly
with respect to the securities referred to in clause (i) above by way of
dividend or split or in connection with a combination of securities,
recapitalization, merger, consolidation, or other reorganization, including a
recapitalization or exchange; provided, however, that in the event that any
-------- -------
equity securities are issued which do not participate in the residual equity of
the Company ("Non-Participating Securities"), such Non-Participating Securities
----------------------------
will not be Bain Registrable Securities.
"BRS" means BRS/RCL Investment Corp., BCB Family Partners, L.P.,
---
Stephen C. Sherrill, NAZ Family Partners, L.P., H. Virgil Sherrill, Paul D.
Kaminski, Nancy A. Zweng, Bruce C. Bruckmann, John Rice Edmonds, Donald J.
Bruckmann, Susan Kaider, Harold O. Rosser, Marilena Tibrea, Walker C. Simmons,
MLPF&S Custodian FBO Paul Kaminski and their Affiliates, Permitted Transferees
(as defined in the Securityholders Agreement) and successors.
"Common Units" is defined in the LLC Agreement as it exists on the
------------
date hereof.
"LLC Agreement" means the Company's Amended and Restated Limited
-------------
Liability Company Agreement, dated as of the date hereof, as amended or modified
from time to time.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated as of February 21, 1998, by and among Bain/RCL, L.L.C., RCL Acquisitions,
L.L.C., Raytheon Company and Raytheon Commercial Laundry LLC, as amended or
modified from time to time.
"Other Registrable Securities" means (i) any Common Units of the
-----------------------------
Company held by a Person who is a party to this Agreement that do not constitute
Bain Registrable Securities and (ii) any securities of the Company issued or
issuable directly or indirectly with respect to the securities referred to in
clause (i) above by way of dividend or split or in connection with a combination
of securities, recapitalization, merger, consolidation or other reorganization,
including a recapitalization or exchange; provided, however, that in the event
-------- -------
that any such securities are Non-Participating Securities, such Non-
Participating Securities will not be Other Registrable Securities.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Registrable Securities" means collectively the Bain Registrable
----------------------
Securities and the Other Registrable Securities. For purposes of this
Agreement, a Person shall be deemed to be a
-13-
<PAGE>
holder of Registrable Securities whenever such Person has the right to acquire
such Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected, and such Person shall be entitled to exercise the
rights of a holder of Registrable Securities hereunder.
"Registration Expenses" is defined in Section 5 hereof.
---------------------
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement, dated as of the date hereof, by and among the Company and the
Securityholders a party thereto, as amended or modified from time to time.
"Units" is defined in the LLC Agreement as it exists on the date
-----
hereof.
10. MISCELLANEOUS.
-------------
(a) No Inconsistent Agreements. The Company shall not hereafter enter
--------------------------
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) Adjustments Affecting Registrable Securities. Except as otherwise
--------------------------------------------
permitted herein or by the LLC Agreement or Securityholders Agreement, the
Company shall not take any action, or permit any change to occur, with respect
to its securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Remedies. Any Person having rights under any provision of this
--------
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement. Nothing contained in this Agreement will be construed to confer upon
any Person who is not a signatory hereto any rights or benefits, as a third
party beneficiary or otherwise.
(d) Amendments and Waivers. Except as otherwise provided herein, no
----------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the holders of Registrable Securities unless
such modification, amendment or waiver is approved in writing by the Company and
the holders of at least a majority of the Bain Registrable Securities then in
existence; provided, that no such amendment or modification that
--------
-14-
<PAGE>
would adversely affect holders of one class or group of Registrable Securities
in a manner different than holders of any other class or group of Registrable
Securities (other than amendment and modifications required to implement the
provisions of Section 10(e)), shall be effective against the holders of such
class or group of Registrable Securities without the prior written consent of
holders of at least a majority of Registrable Securities of such class or group
adversely affected thereby; provided, further, that, so long as BRS or
-------- -------
Raytheon holds any Registrable Securities, no such amendment or modification
that will adversely alter BRS' or Raytheon's respective rights granted pursuant
to this Agreement shall be effective against BRS or Raytheon, respectively,
without their consent (it being understood that the issuance or creation of new
(in accordance with Section 7 of the Securityholders Agreement) or additional
Registrable Securities, or new (in accordance with Section 7 of the
Securityholders Agreement) or additional equity securities of the Company which
will constitute Registrable Securities, or the addition of new parties to this
Agreement, shall not be deemed to alter such rights). No failure by any party to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute a waiver of any such breach or any other covenant,
duty, agreement or condition.
(e) Additional Parties. The governing body of the Company shall be
------------------
entitled, but not obligated, with the consent of Persons holding at least a
majority of the Bain Registrable Securities, to allow any purchaser of equity
securities (or securities or rights convertible or exercisable into equity
securities), of the same type and class of the Registrable Securities, to
execute a counterpart to this Agreement and become a party hereto (each, an
"Additional Party"), in which case the equity securities issued or issuable to
- -----------------
any such Additional Party shall be deemed "Other Registrable Securities."
----------------------------
Except as set forth in this Section 10(e) and in Section 1(g), the Company will
not grant to any other Persons any registration rights.
(f) Successors and Assigns. All covenants and agreements in this
----------------------
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of the
purchasers or holders of any type of Registrable Securities are, except as
otherwise described herein, also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities. Notwithstanding the foregoing, in
order to obtain the benefit of this Agreement, any subsequent holder of
Registrable Securities must execute a counterpart to this Agreement, thereby
agreeing to be bound the terms hereof and, in connection with any such
assignment described in this Section 10(f) (whether by operation of law or
otherwise), such subsequent holder of Registrable Securities must also first
comply with the terms and conditions (if any) contained in the LLC Agreement and
the Securityholders Agreement in effect at the time of such assignment.
(g) Determinations. At all such times that the interest of holders of
--------------
Registrable Securities in the Company are represented by Units or is otherwise
represented by a percentage interest in the Company, each holder of Registrable
Securities shall be deemed to hold one share of Registrable Securities for each
dollar of Capital Contribution (as such term is defined in the LLC Agreement)
made by such holder or its predecessor in interest.
-15-
<PAGE>
(h) Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
(i) Counterparts. This Agreement may be executed in separate
------------
counterparts each of which will be an original and all of which taken together
will constitute one and the same agreement.
(j) Descriptive Headings; Interpretation. The descriptive headings of
------------------------------------
this Agreement are inserted for convenience only and do not constitute a
substantive part of this Agreement. Whenever required by the context, any
pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. The use of the word "including" in
this Agreement shall be by way of example rather than by limitation. Reference
to any agreement, document or instrument means such agreement, document or
instrument as amended or otherwise modified from time to time in accordance with
the terms thereof, and if applicable hereof. Without limiting the generality of
the immediately preceding sentence, no amendment or other modification to any
agreement, document or instrument that requires the consent of any Person
pursuant to the terms of this Agreement or any other agreement (including the
LLC Agreement) will be given effect hereunder unless such Person has consented
in writing to such amendment or modification. The use of the words "or,"
"either" and "any" shall not be exclusive.
(K) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF
THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
ANY DISPUTE RELATING HERETO SHALL BE HEARD IN THE STATE OR FEDERAL COURTS OF
DELAWARE, AND THE PARTIES AGREE TO JURISDICTION AND VENUE THEREIN.
(l) Notices. Any notice provided for in this Agreement will be in
-------
writing and will be either personally delivered, or received by certified mail,
return receipt requested, or sent by reputable overnight courier service
(charges prepaid) to the Company at the address set forth below and to any other
recipient and to any subsequent holder of Registrable Securities subject to this
Agreement at such address as indicated by the Company's records, or at such
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices will be deemed
to have been given hereunder when delivered personally, three days after deposit
in the U.S. mail and one day after deposit with a reputable overnight courier
service. The Company's address is:
-16-
<PAGE>
To the Company:
--------------
Alliance Laundry Holdings LLC
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Street
Chicago, Il 60601
Attention: James L. Learner
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
(m) No Strict Construction. The parties hereto have participated
----------------------
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
* * * * *
-17-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the day and year first above written.
ALLIANCE LAUNDRY HOLDINGS LLC
By:
________________________________________
Its:
_______________________________________
BAIN/RCL, L.L.C.
By:
________________________________________
Its:
_______________________________________
RAYTHEON COMPANY
By:
________________________________________
Its:
_______________________________________
<PAGE>
__________________________________________
THOMAS F. L'ESPERANCE
__________________________________________
HERMAN W. BEACH
__________________________________________
JEFFREY J. BROTHERS
__________________________________________
R. SCOTT GASTER
__________________________________________
BRUCE P. ROUNDS
__________________________________________
ROBERT T. WALLACE
__________________________________________
SCOTT L. SPILLER
__________________________________________
DAVID A. DOCKREY
__________________________________________
DARWIN K. GILMORE
__________________________________________
CHARLES O. REIFF
__________________________________________
LEE E. WILSON
<PAGE>
__________________________________________
RICHARD J. CASEY
__________________________________________
JAY B. MCDONALD
__________________________________________
KIM M. SHADY
__________________________________________
D. MARK FREESMAN
__________________________________________
AL RIOS
__________________________________________
PAT ANDERSEN-SHEW
STIFEL, NICOLAUS CUSTODIAN FOR
PAULA K. L'ESPERANCE IRA
_______________________________
STIFEL, NICOLAUS CUSTODIAN FOR
THOMAS F. L'ESPERANCE IRA
_______________________________
STIFEL, NICOLAUS CUSTODIAN FOR
SCOTT L. SPILLER IRA
_______________________________
STIFEL, NICOLAUS CUSTODIAN FOR
BRUCE P. ROUNDS IRA
_______________________________
<PAGE>
ROBERT W. BAIRD & CO INC. TTEE
FBO R SCOTT GASTER IRA
_______________________________
EDWARD JONES, CUST FBO
ROBERT T. WALLACE, IRA
_______________________________
DELAWARE CHARTER GUARANTEE AND
TRUST COMPANY, TTEE FOR
JEFFREY J. BROTHERS, IRA
_______________________________
<PAGE>
BCB FAMILY PARTNERS, L.P.
By: * *
----------------------- -----------------------
Name: STEPHEN C. SHERRILL
Title:
NAZ FAMILY PARTNERS, L.P.
By: * *
----------------------- -----------------------
Name: H. VIRGIL SHERRILL
Title:
* *
- ----------------------------- -----------------------
PAUL D. KAMINSKI NANCY A. ZWENG
* *
- ----------------------------- -----------------------
BRUCE C. BRUCKMANN JOHN RICE EDMONDS
* *
- ----------------------------- -----------------------
DONALD J. BRUCKMANN SUSAN KAIDER
* *
- ----------------------------- -----------------------
HAROLD O. ROSSER MARILENA TIBREA
*
- -----------------------------
WALKER C. SIMMONS
MLPF&S CUSTODIAN FBO PAUL KAMINSKI
By: *
-------------------------
*By:
---------------------------
Name: Stephen M. Sherrill
-----------------------
Title: Attorney-in-fact
<PAGE>
BRS/RCL INVESTMENT CORP.
By:
_______________________________
Its:
_______________________________
<PAGE>
SCHEDULE A
----------
SECURITYHOLDERS
Thomas F. L'Esperance
Herman W. Beach
Jeffrey J. Brothers
R. Scott Gaster
Bruce P. Rounds
Robert T. Wallace
Scott L. Spiller
David A. Dockrey
Darwin K. Gilmore
Charles O. Reiff
Lee E. Wilson
Richard J. Casey
Jay B. McDonald
Kim M. Shady
D. Mark Freesman
Al Rios
Pat Andresen-Shew
BRS/RCL Investment Corp.
BCB Family Partners, L.P.
Stephen C. Sherrill
NAZ Family Partners, L.P.
H. Virgil Sherrill
Paul D. Kaminski
Nancy A. Zweng
Bruce C. Bruckmann
John Rice Edmonds
Donald J. Bruckmann
Susan Kaider
Harold O. Rosser
Marilena Tibrea
Walker C. Simmons
Stifel, Nicolaus Custodian for Paula K. L'Esperance IRA
Stifel, Nicolaus Custodian for Thomas F. L'Esperance IRA
Stifel, Nicolaus Custodian for Scott L. Spiller IRA
Stifel, Nicolaus Custodian for Bruce P. Rounds IRA
Robert W. Baird & Co Inc. TTEE FBO R Scott Gaster IRA
Edward Jones, Cust FBO Robert T. Wallace, IRA
Delaware Charter Guarantee and Trust Company, TTEE for Jeffrey J. Brothers, IRA
<PAGE>
EXHIBIT 10.8
ALLIANCE LAUNDRY SYSTEMS LLC
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT (this "Agreement") is made as of May 5, 1998, by and
---------
between Alliance Laundry Systems LLC, a Delaware limited liability company (the
"Company"), and Thomas F. L'Esperance ("Executive"). Any capitalized terms used
------- ---------
herein and otherwise not defined shall have the meanings assigned to them in
Section 10 hereof.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive
----------
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 4 hereof (the "Employment Period").
-----------------
2. Position and Duties.
-------------------
(a) During the Employment Period, Executive shall serve as the Chief
Executive Officer of the Company and shall have duties substantially consistent
with those Executive held while President of Raytheon Commercial Laundry, and
otherwise shall have the normal duties, responsibilities and authority of a
Chief Executive Officer, subject to the overall discretion and authority of the
Board.
(b) Executive shall report to the Board, and Executive shall devote
his best efforts and his full business time and attention (except for permitted
vacation periods and reasonable periods of illness or other incapacity) to the
business and civic affairs of the Company and its Subsidiaries. Executive shall
perform his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner.
3. Base Salary and Benefits.
------------------------
(a) During the Employment Period, Executive shall receive an initial
base salary of Two Hundred Sixty-Five Thousand Dollars ($265,000) per annum, or
such other higher rate as the Board may designate from time to time (the "Base
----
Salary"), which shall be payable in regular
- ------
<PAGE>
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. In addition, during the Employment
Period, Executive shall be entitled to participate in all of the Company's
employee benefit programs for which senior executive employees of the Company
and its Subsidiaries are generally eligible, and Executive shall be entitled to
five (5) weeks of paid vacation each year, of which not more than two (2) weeks
may be carried forward for use in any given subsequent year.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, the Board shall award a bonus to
Executive following the end of each fiscal year during the Employment Period
(the "Bonus"). The Bonus for 1998 and 1999 will be conditioned upon the
-----
Company's EBITDA (as defined on Schedule A) exceeding 80% of the Target EBITDA
(as defined in Schedule A) for such year and will be a percentage of the Base
----------
Salary as listed on Schedule A attached hereto and incorporated herein by
----------
reference. The "Target EBITDA" for each fiscal year of the Employment Period
-------------
past 1999 will be an EBITDA (as defined in Schedule A) for the Company which is
----------
to be mutually agreed upon by Executive and the Board.
4. Term.
----
(a) The Initial Employment Period shall be for a period of five (5)
years. Notwithstanding the preceding sentence, (i) the Employment Period shall
terminate prior to such date upon Executive's resignation, death or permanent
disability or permanent incapacity (as determined by the Board in its good faith
judgment) and (ii) the Employment Period may be terminated by the Company at any
time prior to such date for Cause (as defined below) or without Cause.
(b) If the Employment Period is terminated by the Company for any
reason (such termination shall include but not be limited to be construed to
mean termination due to the death, permanent disability, permanent incapacity of
Executive and/or the lapsing of the Initial Employment Period by the passage of
time) other than for Cause, Executive shall be entitled to receive (i) his Base
Salary during the Severance Period at the rate in effect immediately prior to
his termination and (ii) his Bonus for the fiscal year in which Executive is
terminated, pro rated according to the number of days which passed in such
fiscal year prior to Executive's termination under this paragraph 4(b), payable
in the customary manner of the Company and (iii) Company paid continuation of
Executive's (and the [surviving] spouse and unemancipated children of Executive)
medical, dental and health benefits for the Severance Period. As a condition to
the Company's obligations (if any) to make severance payments pursuant to this
paragraph 4(b), Executive will execute and deliver a general release in form and
substance satisfactory to the Company.
-2-
<PAGE>
Notwithstanding anything in this Agreement to the contrary, the Company shall
have no obligation to pay any amounts payable under this paragraph 4(b) during
such times as Executive is in breach of Sections 5, 6 or 7 hereof or the
Executive Purchase Agreement.
(c) If the Employment Period is (A) terminated by the Company for
Cause or (B) voluntarily terminated by the Executive, Executive shall be
entitled to receive his Base Salary through the date of termination, such Base
Salary being payable in the same manner as if Executive had not been terminated.
Executive's right to fringe benefits and bonuses hereunder (if any) shall cease
upon such termination for Cause.
(d) In the event of a termination of Executive's employment for any
reason, Executive shall not be required to seek other employment; in addition,
subject to the last sentence of paragraph 4(b), no amount payable under Section
4 of this Agreement shall be reduced by any compensation earned by Executive as
a result of employment by another employer after such termination of employment
with the Company.
5. Confidential Information. Executive acknowledges that the
------------------------
information, observations and data obtained by him while employed by the Company
and its Subsidiaries (including those obtained while employed by Raytheon and
Raytheon Commercial Laundry prior to the date of this Agreement and the merger
of RCL with and into Raytheon Commercial Laundry pursuant to the Merger
Agreement) concerning the business or affairs of the Company, or its
predecessor, or any other Subsidiary ("Confidential Information") are the
------------------------
property of the Company or such Subsidiary. Therefore, Executive agrees that he
shall not disclose to any unauthorized person or use for his own purposes any
Confidential Information without the prior written consent of the Board, unless
and to the extent that the aforementioned matters become generally known to and
available for use by the public other than as a result of Executive's acts or
omissions. Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all
----------------------
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its Subsidiaries' actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by Executive while employed
by the Company or its predecessor and its Subsidiaries ("Work Product") belong
------------
to the Company or such Subsidiary. Executive shall promptly disclose such Work
Product to the Board and perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
-3-
<PAGE>
7. Non-Compete, Non-Solicitation.
-----------------------------
(a) In further consideration of the compensation to be paid to
Executive under Sections 3 and 4 hereunder, Executive acknowledges that in the
course of his employment with the Company he shall become familiar, and during
his employment with Raytheon and Raytheon Commercial Laundry he has become
familiar, with the Company's trade secrets and with other Confidential
Information concerning the Company and its predecessors and its Subsidiaries and
that his services have been and shall be of special, unique and extraordinary
value to Raytheon, Raytheon Commercial Laundry, the Company and its
Subsidiaries. Therefore, Executive agrees that, during the Employment Period
and for two (2) years thereafter (the "Noncompete Period"), he shall not
-----------------
directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries, as such
businesses exist or are in process on the date of the termination of Executive's
employment, within any geographical area in which the Company or its
Subsidiaries engage or plan to engage in such businesses. Nothing herein shall
prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company or
any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any Subsidiary
to cease doing business with the Company or such Subsidiary, or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary (including, without
limitation, making any negative statements or communications about the Company
or its Subsidiaries).
(c) Notwithstanding anything in this Agreement to the contrary, the
Executive's obligations under Section 7(a) shall be suspended if the Company's
obligations under paragraph 4(b) are past due by 10 business days; provided,
--------
however, that if the Company pays any delinquent obligations owed under
- -------
paragraph 4(b), the Executive shall once again be subject to this Section 7 as
if his obligations hereunder had never been suspended.
8. Enforcement. If, at the time of enforcement of Sections 5, 6 or
-----------
7 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope of geographical area reason able under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the parties hereto agree that money
damages would not be an adequate remedy for any breach of this Agreement.
Therefore, in the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies
-4-
<PAGE>
existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation by
Executive of Section 7, the Noncompete Period shall be tolled until such breach
or violation has been duly cured. Executive agrees that the restrictions
contained in Section 7 are reasonable, but are subject to the provisions of
Section 12 herein.
9. Representations.
---------------
(a) Executive hereby represents and warrants to the Company that (i)
the execution, delivery and performance of this Agreement by Executive do not
and shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which Executive is
a party or by which he is bound, (ii) Executive is not a party to or bound by
any employment agreement, noncompete agreement or confidentiality agreement with
any other person or entity and (iii) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms. Executive
hereby acknowledges and represents that he has consulted with independent legal
counsel regarding his rights and obligations under this Agreement and that he
fully understands the terms and conditions contained herein.
(b) Company hereby represents and warrants to Executive that the
Agreement shall have no adverse effect upon the consideration of Executive set
forth within his Retention Agreement dated September 30, 1997, as amended, and
shall in no manner be construed as limiting or voiding the viability and
effectivity of such Retention Agreement.
10. Definitions.
-----------
"Board" shall mean the Company's board of directors.
-----
"Cause" shall mean (i) the commission of a felony or the commission of
-----
any act or omission involving moral turpitude, dishonesty, disloyalty or fraud,
(ii) conduct tending to bring the Company or any of its Subsidiaries into public
disgrace or disrepute, (iii) gross negligence or willful misconduct with respect
to the Company or any of its Subsidiaries, (iv) failure to accept and cooperate
with actions and initiatives assigned to the Executive by the Board or (v) any
breach of this Agreement or the Executive Purchase Agreement.
"Executive Purchase Agreement" shall mean that certain Executive Unit
----------------------------
Purchase Agreement, dated as of the date hereof, by and between the Company and
the Executive.
"Holdings" shall mean Alliance Laundry Holdings LLC, the parent and
--------
Manager of the Company.
-5-
<PAGE>
"Merger Agreement" shall mean that certain Agreement and Plan of
----------------
Merger, dated February 21, 1998, by and among RCL, Bain/RCL, L.L.C., Raytheon
Commercial Laundry and Raytheon.
"Operating Agreement" shall mean the Amended and Restated Limited
-------------------
Liability Company Agreement of Holdings.
"Person" means an individual or a corporation, partnership, limited
------
liability company, trust, unincorporated organization, association or other
entity.
"Raytheon" shall mean Raytheon Company.
--------
"Raytheon Commercial Laundry" shall mean Raytheon Commercial Laundry
---------------------------
L.L.C..
"RCL" shall mean RCL Acquisitions, L.L.C.
---
"Severance Period" shall mean the greater of (i) twenty-four (24)
----------------
months or (ii) the remainder of the Employment Period.
"Subsidiaries" shall mean any entity of which the securities having a
------------
majority of the voting power in electing directors are, at the time of
determination, owned by the Company, directly or through one of more
Subsidiaries.
11. Survival. Sections 3 through 20 shall survive and continue in
--------
full in accordance with their terms notwithstanding any termination of the
Employment Period.
12. Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
--------------------
Thomas F. L'Esperance
1945 Cliffview Court
Oshkosh, WI 54901
Notices to the Company:
----------------------
Alliance Laundry Systems LLC
c/o Bain Capital, Inc.
Two Copley Plaza
Boston, MA 02116
-6-
<PAGE>
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
13. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
Any rights of Executive hereunder shall be in addition to any rights Executive
may otherwise have under benefit plans or agreements of the Company to which he
is a party or in which he is a participant, including, but not limited to, any
Company sponsored employee benefit plans. Provisions of this Agreement shall
not in any way abrogate Executive's rights under such other plans and
agreements.
15. No Strict Construction. The language used in this Agreement
----------------------
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
16. Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind and
----------------------
inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and
-7-
<PAGE>
assigns, except that Executive may not assign his rights or delegate his
obligations hereunder without the prior written consent of the Company.
18. Choice of Law/Disputes/Resolution.
---------------------------------
(a) All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of Wisconsin, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of Wisconsin or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Wisconsin. Resolution of any and all disputes arising
from or in connection with this Agreement, whether based on contract, tort, or
otherwise (collectively, "Disputes"), shall be exclusively governed by and
--------
settled in accordance with the provisions of this Section.
(b) The parties hereto shall use all reasonable efforts to settle all
Disputes without resorting to arbitration. If any Dispute remains unsettled, a
party hereto may commence proceedings hereunder by delivering a written notice
from one to the other such party (the "Demand") providing reasonable description
------
of the Dispute to the others and expressly requesting arbitration hereunder,
which arbitration shall be final, conclusive and binding upon the parties, their
successors and assigns.
(c) The arbitration shall be conducted in Chicago, Illinois by three
arbitrators acting by majority vote (the "Panel") appointed pursuant to the
-----
commercial arbitration rules of the American Arbitration Association, as amended
from time to time (the "AAA Rules"). If an arbitrator so selected becomes
---------
unable to serve, his or her successors shall be similarly selected or appointed.
The arbitration shall be conducted pursuant to the AAA Rules. Notwithstanding
the foregoing: (i) each party shall provide to the other, reasonably in advance
of any hearing, copies of all documents which a party intends to present in such
earing; and (ii) each party shall be allowed to conduct reasonable discovery
through written requests for information, document requests, requests for
stipulation of fact and depositions, the nature and extent of which discovery
shall be determined by the parties; provided that if the parties cannot agree on
--------
the terms of such discovery, the nature and extent thereof shall be determined
by the Panel which shall taken into account the needs of the parties and the
desirability of making discovery expeditious and cost effective. The award
shall be in writing and shall specify the factual and legal basis for the award.
The parties hereto agree that monetary damages may be inadequate and that any
party by whom this Agreement is enforceable shall be entitled to seek specific
performance of the arbitrators' decision from a court of competent jurisdiction,
in addition to any other appropriate relief or remedy; provided that no claimed
--------
or actual breach of any provision of this Agreement that survives the execution
hereof shall be cause for rescission of this Agreement, the only remedies shall
be claims for damages that were approximately caused by the breach, or specific
performance. Any arbitration award shall be binding and enforceable against the
parties hereto and judgment may be entered thereon in any court of competent
jurisdiction.
-8-
<PAGE>
19. Expenses. Each party will pay their own costs and expenses
--------
(including court costs, fees of arbitration proceedings, and reasonable
attorneys' fees) incurred as a result of any claim, action or proceeding arising
out of, or challenging the validity or enforceability of, this Agreement or any
provision hereof; provided, however, that if the Executive prevails in any such
-------- -------
claim, action or proceeding, the Company shall pay the Executive's cost and
expenses related thereto and provided, further, that the non-prevailing party in
-------- -------
any such claim, action or proceeding shall be responsible for the Panel's (if
any) fees and expenses.
20. Amendment and Waiver. The provisions of this Agreement may be
--------------------
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
* * * * *
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:______________________________________
__________________________________________
THOMAS F. L'ESPERANCE
-10-
<PAGE>
SCHEDULE A
----------
Base Pay
- --------
1998 Base Pay $265,000 (Annual Basis)
Target EBITDA Levels
- ----------------------
1998 $62,750,000
1999 $67,500,000
Bonus
- -----
Target EBITDA Attainment Levels Percentage 80% 100% 120%
Percentage of Base Salary in Bonus 0% 80% 200%
Notes:
- -----
1. Bonus $ are linear between Target EBITDA Attainment Levels percentages
displayed above.
2. For attainment in excess of 120%, Bonus increases at the rate established for
movement between the 100% and 200% categories.
Definitions:
- -----------
"EBITDA" for any fiscal period, means consolidated EBITDA as set forth
------
in the Compliance Certificate furnished to the Administrative Agent pursuant to
Section 6.2(b) of the Credit Agreement:
(a) less, an amount equal to all contributions to Alliance Laundry
----
S.A. (f/k/a Raytheon Appliances, S.A.) ("RASA") from the Company or any of its
----
subsidiaries (whether direct or indirect, including without limitation capital
contributions, loans, advances, investments and intercompany payables);
provided, that this clause (a) shall not apply (1) with respect to any such
- --------
contributions made during fiscal 1998 (subsequent to the Effective Time (as
defined in the Merger Agreement)) to the extent that such amounts do not exceed
$1,000,000 in the aggregate and (2) with respect to any such contributions made
during fiscal 1999 to the extent that such amounts do not exceed $500,000 in the
aggregate; and
(b) less, the aggregate of all payments received pursuant to the
----
Supply Agreement as a result of Goodman not purchasing the Target Volume, to the
extent that such payments exceed $20 per unit not so purchased.
-11-
<PAGE>
Terms used in this definition of EBITDA that are not otherwise defined in this
agreement shall have the meanings given such terms in the Credit Agreement.
"Credit Agreement" means that certain Credit Agreement dated, as of
----------------
the date hereof, by and among the Company, Holdings, the several banks and other
financial institutions or entities from time to time that are parties thereto,
Lehman Brothers, as Arranger, Lehman Commercial Paper Inc., a Syndication Agent
and General Electric Capital Corporation, as Administrative Agent.
"Goodman" means Goodman Manufacturing Company, L.P. and its subsidiary
-------
Amana Company, L.P.
"Net Sales" means, for any fiscal year, net sales as reflected on the
---------
audited financial statements for such year, less (to the extent included
therein) revenues from financing activities, royalty income, rental income and
other such revenues not arising directly from sales of equipment.
"Supply Agreement" means that certain Supply Agreement, dated as of
----------------
September 10, 1997, by and between Amana Company, L.P. and the Company.
"Target Volume" means, for any fiscal year, the number of units
-------------
specified to be purchased by Goodman in such fiscal year pursuant to the Supply
Agreement.
-12-
<PAGE>
EXHIBIT 10.9
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
-----------------------------------------
THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
---------
made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware
limited liability company (the "Company"), Thomas F. L'Esperance ("Executive")
------- ---------
and Stifel, Nicolaus Custodian for Thomas F. L'Esperance IRA and Stifel,
Nicolaus Custodian for Paula K. L'Esperance IRA (the "IRAs"). Any capitalized
----
terms used herein and not otherwise defined shall have the meanings assigned to
them in Section 5 hereof.
---------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneously with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company, the IRAs and Executive desire to enter into this Agreement
(i) to provide for the sale to Executive by the Company of 999.123 of the
Company's Class A Common Units (the "Class A Units"), 191.015 of the Company's
-------------
Class L Common Units (the "Class L Units," and collectively with the Class A
-------------
Units, the "Purchased Units"), 937.474 of the Company's Class B Common Units
---------------
(the "Class B Units") and 997.313 of the Company's Class C Common Units (the
-------------
"Class C Units," and collectively with the Class B Units, the "Incentive
- -------------- ---------
Units"), (ii) to provide for the sale to the trustee or custodian of the IRAs
(the "Trustee"), for the benefit of the IRAs, by the Company of an aggregate of
--------
720.010 of the Class A Units and 0 of the Class L Units (the "IRA Purchased
-------------
Units," and collectively with the Purchased Units and the Incentive Units, the
- -----
"Executive Units") and (iii) to provide for certain rights and obligations of
- ----------------
the parties with respect to the Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRAs
will become a unitholder of the Surviving Entity and will receive his, her or
its pro rata share of the common units of the Surviving Entity in exchange for
the Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company, Executive and the Trustee for the
benefit of the IRAs hereto agree as follows:
<PAGE>
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
(a) Upon execution of this Agreement, Executive shall (i) purchase,
and the Company shall sell, 999.123 Class A Units at a price of $100 per unit,
191.015 Class L Units at a price of $8,100 per unit, 937.474 Class B Units at a
price of $0.01 per unit and 997.313 Class C Units at a price of $0.01 per unit
and (ii) cause the Trustee for the benefit of the IRAs to purchase, and the
Company shall sell an aggregate of, 720.010 Class A Units at a price of $100 per
unit, 0 Class L Units at a price of $8,100 per unit, 0 Class B Units at a price
of $0.01 per unit and 0 Class C Units at a price of $0.01 per unit. The Company
shall deliver to each of Executive and the Trustee for the benefit of the IRAs
an executed copy of the Company's limited liability company agreement (the
"Operating Agreement") indicating each of Executive's and the IRAs' ownership of
- --------------------
such Class A Units, Class L Units, Class B Units and Class C Units, and
Executive shall (y) deliver to the Company a cashier's or certified check, or by
wire transfer of immediately available funds, an aggregate principal amount of
$927,999 and a promissory note in the form of Annex A attached hereto in an
-------
aggregate principal amount of $719,133 (the "Executive Note") and (z) cause the
--------------
Trustee for the benefit of the IRAs to deliver to the Company a cashier's or
certified check, or by wire transfer of immediately available funds, an
aggregate principal amount of $72,001. Executive's obligations under the
Executive Note shall be secured by a pledge of all of the Executive Units to the
Company, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex B attached hereto (the "Pledge Agreement").
------- ----------------
(b) Within 30 days after Executive and/or the Trustee for the benefit
of the IRAs purchase any Executive Units from the Company, Executive, shall, and
shall cause the Trustee on behalf of the IRAs to, make an effective election
with the Internal Revenue Service under Section 83(b) of the Internal Revenue
Code and the regulations promulgated thereunder in the form of Annex C attached
-------
hereto.
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRAs pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
2
<PAGE>
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement by
each of Executive and the Trustee for the benefit of the IRAs do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRAs, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to each of Executive and the IRAs, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRAs nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRAs, and
neither Executive or the Trustee for the benefit of the IRAs shall
have the right to be advised of, any material information regarding
the Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
3
<PAGE>
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued hereunder, in connection with and as a part of the compensation
and incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive, the Trustee for the benefit of the IRAs or one or more Permitted
Transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this Section 3 (the
---------
"Repurchase Option").
- ------------------
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market Value thereof (x) as determined on the Termination Date, if the
Repurchase Notice (as defined in paragraph (d) below) has been delivered within
three months after the Termination Date, or (y) as determined as of a date
determined by the Board within thirty (30) days prior to the delivery of the
Repurchase Notice, if the Repurchase Notice is delivered after the third month
following the Termination Date and (2) the Unvested Incentive Units at a price
per unit equal to the lower of their Original Value or the Fair Market Value
thereof determined as described in clause (1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause (b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase
4
<PAGE>
Notice (determined as nearly as practicable to the nearest unit). If both
Unvested Units and Vested Units are to be purchased by the Company and Executive
Units are held by Permitted Transferees of Executive, the number of Unvested
Units and Vested Units to be purchased will be allocated among such holders pro
rata according to the total number of Executive Units to be purchased from such
person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Units pursuant to the Repurchase Option prior to the 180th
day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5) days
after the expiration of the Investor Election Period, the Company will, if
necessary, notify the Investors electing to purchase Available Units of any
Available Units which Investors have not elected to purchase and each of
the electing Investors will be entitled to purchase any number of the
remaining Available Units (the "Second Option Notice"); provided, that if
--------------------
in the aggregate such Investors elect to purchase more than the remaining
Available Units, such remaining Available Units purchased by each such
Investor will be reduced on a pro rata basis based upon the number of Class
L Units and Class A Units then held by such Investors. Each Investor may
elect to purchase any of the remaining Available Units available to such
Investor by delivering written notice to the Company within five (5) days
after the delivery of the Second Option Notice (such 5-day period being
referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
5
<PAGE>
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
- ---------
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the delivery of such
notice. The Company and/or the Investors, as the case may be, will pay for the
Executive Units to be purchased pursuant to the Repurchase Option by delivery
of, in the case of each Investor, a check payable to the holder of Executive
Units, and in the case of the Company (i) a check payable to the holder of such
Executive Units, (ii) a note or notes payable in three equal annual installments
beginning on the first anniversary of the Termination Date and bearing interest
(payable quarterly) at a rate per annum equal to 8% or (iii) both (i) and (ii)
in the aggregate amount of the purchase price for such units. In addition, the
Company may pay the purchase price for such Units by offsetting amounts
outstanding under the Executive Note issued to the Company hereunder. Any notes
issued by the Company pursuant to this paragraph (f) shall be subject to any
restrictive covenants to which the Company is subject at the time of such
purchase. The Company and/or the Investors, as the case may be, will receive
customary representations and warranties from each seller regarding the sale of
the Executive Units, including but not limited to the representation that such
seller has good and marketable title to the Executive Units to be transferred
free and clear of all liens, claims and other encumbrances, other than liens
pursuant to the Pledge Agreement.
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
---------
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
board of directors of Alliance, (iv) gross negligence or willful misconduct with
respect to Alliance or any of its Subsidiaries or (v) any breach of this
Agreement or the Employment Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any
6
<PAGE>
dividend or split or exchange or in connection with a combination of units,
recapitalization, merger, consolidation or other reorganization.
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Employment Agreement" means that certain Employment Agreement dated
--------------------
the date hereof between the Company and Executive.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive and the Trustee
for the benefit of the IRAs (except for the Company, the Investors and
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall include both vested and unvested Executive Units and shall include
interests in the Company issued with respect to Executive Units by way of any
recapitalization.
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day, and with respect to any Unit which
is not, as of the date of determination, listed on any stock exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value
thereof shall be the amount which each such Unit would receive upon a complete
liquidation of the Company following a sale of the Company at its market value
as determined in good faith by the Board and Executive. If the Board and
Executive are unable to agree upon such market value, it shall be determined in
good faith by a nationally recognized investment banking institution selected by
the Board, who will consider in such determination, among other things, (i) the
Company's EBITDA (as defined in the Credit Agreement) for the previous twelve
months, (ii) EBITDA multiples paid in recent acquisitions of comparable
companies and (iii) current trends in the industry and the Company's
performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
7
<PAGE>
"Operating Agreement" shall have the meaning assigned to it in Section
------------------- -------
1(a) hereof.
- ----
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement dated the date hereof to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
8
<PAGE>
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
- ---- --------------------------
Date of this Agreement 0%
May 5, 1999 20%
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
- --------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
Notices to Executive:
--------------------
Thomas F. L'Esperance
1945 Cliffview Court
Oshkosh, WI 54901
Notices to the Trustee:
----------------------
Stifel, Nicolaus Custodian for
Paula K. L'Esperance
IRA and Thomas F. L'Esperance
IRA
500 North Broadway
St. Louis, MO 63102
Attention: Kent Fulton
9
<PAGE>
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
10
<PAGE>
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Trustee for the benefit of the IRA, the Company, the Investors
and their respective successors and assigns (including subsequent holders of
Executive Units); provided, that the rights and obligations of Executive and the
--------
Trustee for the benefit of the IRAs under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
unitholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
---------
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this IRAs and
Executive Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its:______________________________________
__________________________________________
THOMAS F. L'ESPERANCE
STIFEL, NICOLAUS CUSTODIAN
FOR PAULA K. L'ESPERANCE IRA
By: ______________________________________
Its:______________________________________
STIFEL, NICOLAUS CUSTODIAN
FOR THOMAS F. L'ESPERANCE IRA
By: ______________________________________
Its:______________________________________
12
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
13
<PAGE>
EXHIBIT 10.10
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
-----------------------------------------
THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
---------
made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware
limited liability company (the "Company"), R. Scott Gaster ("Executive") and
------- ---------
Robert W. Baird & Co. Inc. TTEE FBO R. Scott Gaster IRA (the "IRA"). Any
---
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in Section 5 hereof.
---------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneously with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company, the IRA and Executive desire to enter into this Agreement
(i) to provide for the sale to Executive by the Company of 131.7 of the
Company's Class A Common Units (the "Class A Units"), 28.584 of the Company's
-------------
Class L Common Units (the "Class L Units," and collectively with the Class A
-------------
Units, the "Purchased Units"), 387.92 of the Company's Class B Common Units (the
---------------
"Class B Units") and 412.681 of the Company's Class C Common Units (the "Class C
------------- -------
Units," and collectively with the Class B Units, the "Incentive Units" ), (ii)
- ----- ---------------
to provide for the sale to the trustee or custodian of the IRA (the "Trustee"),
-------
for the benefit of the IRA, by the Company of 197 of the Class A Units and 7.938
of the Class L Units (the "IRA Purchased Units," and collectively with the
-------------------
Purchased Units and the Incentive Units, the "Executive Units") and (iii) to
---------------
provide for certain rights and obligations of the parties with respect to the
Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRA will
become a unitholder of the Surviving Entity and will receive his, her or its pro
rata share of the common units of the Surviving Entity in exchange for the
Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company, Executive and the Trustee for the
benefit of the IRA hereto agree as follows:
<PAGE>
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
(a) Upon execution of this Agreement, Executive shall (i) purchase,
and the Company shall sell, 131.7 Class A Units at a price of $100 per unit,
28.584 Class L Units at a price of $8,100 per unit, 387.92 Class B Units at a
price of $0.01 per unit and 412.681 Class C Units at a price of $0.01 per unit
and (ii) cause the Trustee for the benefit of the IRA to purchase, and the
Company shall sell, 197 Class A Units at a price of $100 per unit, 7.938 Class L
Units at a price of $8,100 per unit, 0 Class B Units at a price of $0.01 per
unit and 0 Class C Units at a price of $0.01 per unit. The Company shall
deliver to each of Executive and the Trustee for the benefit of the IRA an
executed copy of the Company's limited liability company agreement (the
"Operating Agreement") indicating each of Executive's and the IRA's ownership of
- --------------------
such Class A Units, Class L Units, Class B Units and Class C Units, and
Executive shall (y) deliver to the Company a cashier's or certified check, or by
wire transfer of immediately available funds, in an aggregate principal amount
of $113,078 and a promissory note in the form of Annex A attached hereto in an
-------
aggregate principal amount of $131,700 (the "Executive Note") and (z) cause the
--------------
Trustee for the benefit of the IRA to deliver to the Company a cashier's or
certified check, or by wire transfer of immediately available funds, in an
aggregate principal amount of $83,922. Executive's obligations under the
Executive Note shall be secured by a pledge of all of the Executive Units to the
Company, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex B attached hereto (the "Pledge Agreement").
------- ----------------
(b) Within 30 days after Executive and/or Trustee for the benefit of
the IRA purchases any Executive Units from the Company, Executive shall, and
shall cause the Trustee on behalf of the IRA to, make an effective election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue Code
and the regulations promulgated thereunder in the form of Annex C attached
-------
hereto.
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRA pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not
2
<PAGE>
been registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an exemption
from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement by
each of Executive and the Trustee for the benefit of the IRA do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRA, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to each of Executive and the IRA, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRA nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRA, and
neither Executive or the Trustee for the benefit of the IRA shall have
the right to be advised of, any material information regarding the
Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued
3
<PAGE>
hereunder, in connection with and as a part of the compensation and
incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive, the Trustee for the benefit of the IRA or one or more Permitted
Transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this Section 3 (the
---------
"Repurchase Option").
- ------------------
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market Value thereof (x) as determined on the Termination Date, if the
Repurchase Notice (as defined in paragraph (d) below) has been delivered within
three months after the Termination Date, or (y) as determined as of a date
determined by the Board within thirty (30) days prior to the delivery of the
Repurchase Notice, if the Repurchase Notice is delivered after the third month
following the Termination Date and (2) the Unvested Incentive Units at a price
per unit equal to the lower of their Original Value or the Fair Market Value
thereof determined as described in clause (b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause (b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest unit). If both Unvested Units and Vested Units are to be
purchased by the Company and Executive Units are held by Permitted Transferees
4
<PAGE>
of Executive, the number of Unvested Units and Vested Units to be purchased will
be allocated among such holders pro rata according to the total number of
Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase
all of the Executive Units pursuant to the Repurchase Option prior to the
180th day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5)
days after the expiration of the Investor Election Period, the Company
will, if necessary, notify the Investors electing to purchase Available
Units of any Available Units which Investors have not elected to purchase
and each of the electing Investors will be entitled to purchase any number
of the remaining Available Units (the "Second Option Notice"); provided,
--------------------
that if in the aggregate such Investors elect to purchase more than the
remaining Available Units, such remaining Available Units purchased by each
such Investor will be reduced on a pro rata basis based upon the number of
Class L Units and Class A Units then held by such Investors. Each Investor
may elect to purchase any of the remaining Available Units available to
such Investor by delivering written notice to the Company within five (5)
days after the delivery of the Second Option Notice (such 5-day period
being referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
- ---------
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the
5
<PAGE>
delivery of such notice. The Company and/or the Investors, as the case may be,
will pay for the Executive Units to be purchased pursuant to the Repurchase
Option by delivery of, in the case of each Investor, a check payable to the
holder of Executive Units, and in the case of the Company (i) a check payable to
the holder of such Executive Units, (ii) a note or notes payable in three equal
annual installments beginning on the first anniversary of the Termination Date
and bearing interest (payable quarterly) at a rate per annum equal to 8% or
(iii) both (i) and (ii) in the aggregate amount of the purchase price for such
units. In addition, the Company may pay the purchase price for such Units by
offsetting amounts outstanding under the Executive Note issued to the Company
hereunder. Any notes issued by the Company pursuant to this paragraph (f) shall
be subject to any restrictive covenants to which the Company is subject at the
time of such purchase. The Company and/or the Investors, as the case may be,
will receive customary representations and warranties from each seller regarding
the sale of the Executive Units, including but not limited to the representation
that such seller has good and marketable title to the Executive Units to be
transferred free and clear of all liens, claims and other encumbrances, other
than liens pursuant to the Pledge Agreement.
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
---------
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
board of directors or Chief Executive Officer of Alliance, (iv) gross negligence
or willful misconduct with respect to Alliance or any of its Subsidiaries or (v)
any breach of this Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
6
<PAGE>
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive and the Trustee
for the benefit of the IRA (except for the Company, the Investors and
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall include both vested and unvested Executive Units and shall include
interests in the Company issued with respect to Executive Units by way of any
recapitalization.
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day, and with respect to any Unit which
is not, as of the date of determination, listed on any stock exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value
thereof shall be the amount which each such Unit would receive upon a complete
liquidation of the Company following a sale of the Company at its market value
as determined in good faith by the Board and Executive. If the Board and
Executive are unable to agree upon such market value, it shall be determined in
good faith by a nationally recognized investment banking institution selected by
the Board, who will consider in such determination, among other things, (i) the
Company's EBITDA (as defined in the Credit Agreement) for the previous twelve
months, (ii) EBITDA multiples paid in recent acquisitions of comparable
companies and (iii) current trends in the industry and the Company's
performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
"Operating Agreement" shall have the meaning assigned to it in Section
------------------- -------
1(a) hereof.
- ----
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
7
<PAGE>
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement dated the date hereof to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
---- --------------------------
Date of this Agreement 0%
May 5, 1999 20%
8
<PAGE>
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
- --------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
Notices to Executive:
--------------------
R. Scott Gaster
906 Wylde Oak Drive
Oshkosh, WI 54904
Notices to the Trustee:
----------------------
Robert W. Baird & Co. Inc.
TTEE FBO R. Scott Gaster
IRA
Act. # 3611-3785
P.O. Box 672
Milwaukee, WI 53201
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
9
<PAGE>
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Trustee for the benefit of the IRA, the Company, the Investors
and their respective successors and assigns (including subsequent holders of
Executive Units); provided, that the rights and obligations of Executive and the
--------
Trustee for the benefit of the IRA under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
unitholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's
10
<PAGE>
choice of law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily apply.
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
---------
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this IRA and
Executive Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its: ______________________________________
_________________________________________
R. SCOTT GASTER
ROBERT W. BAIRD & CO. INC.
TTEE FBO R. SCOTT GASTER
IRA
ACCT. # 3611-3785
By: ______________________________________
Its: ______________________________________
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
<PAGE>
EXHIBIT 10.11
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
-----------------------------------------
THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
---------
made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware
limited liability company (the "Company"), Jeffrey J. Brothers ("Executive") and
------- ---------
Delaware Charter Guarantee and Trust Company, TTEE for Jeffrey J. Brothers, IRA
(the "IRA"). Any capitalized terms used herein and not otherwise defined shall
---
have the meanings assigned to them in Section 5 hereof.
---------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneously with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company, the IRA and Executive desire to enter into this Agreement
(i) to provide for the sale to Executive by the Company of 335 of the Company's
Class A Common Units (the "Class A Units"), 39.445 of the Company's Class L
-------------
Common Units (the "Class L Units," and collectively with the Class A Units, the
-------------
"Purchased Units"), 420.247 of the Company's Class B Common Units (the "Class B
--------------- -------
Units") and 447.071 of the Company's Class C Common Units (the "Class C Units,"
- ----- -------------
and collectively with the Class B Units, the "Incentive Units" ), (ii) to
---------------
provide for the sale to the trustee or custodian of the IRA (the "Trustee"), for
-------
the benefit of the IRA, by the Company of 53 of the Class A Units and 3.667 of
the Class L Units (the "IRA Purchased Units," and collectively with the
-------------------
Purchased Units and the Incentive Units, the "Executive Units") and (iii) to
---------------
provide for certain rights and obligations of the parties with respect to the
Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRA will
become a unitholder of the Surviving Entity and will receive his, her or its pro
rata share of the common units of the Surviving Entity in exchange for the
Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company, Executive and the Trustee for the
benefit of the IRA hereto agree as follows:
<PAGE>
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
(a) Upon execution of this Agreement, Executive shall (i) purchase,
and the Company shall sell, 335 Class A Units at a price of $100 per unit,
39.445 Class L Units at a price of $8,100 per unit, 420.247 Class B Units at a
price of $0.01 per unit and 447.071 Class C Units at a price of $0.01 per unit
and (ii) cause the Trustee for the benefit of the IRA to purchase, and the
Company shall sell, 53 Class A Units at a price of $100 per unit, 3.667 Class L
Units at a price of $8,100 per unit, 0 Class B Units at a price of $0.01 per
unit and 0 Class C Units at a price of $0.01 per unit. The Company shall
deliver to each of Executive and the Trustee for the benefit of the IRA an
executed copy of the Company's limited liability company agreement (the
"Operating Agreement") indicating each of Executive's and the IRA's ownership of
- --------------------
such Class A Units, Class L Units, Class B Units and Class C Units, and
Executive shall (y) deliver to the Company a cashier's or certified check, or by
wire transfer of immediately available funds, an aggregate principal amount of
$230,000 and a promissory note in the form of Annex A attached hereto in an
-------
aggregate principal amount of $123,000 (the "Executive Note") and (z) cause the
--------------
Trustee for the benefit of the IRA to deliver to the Company a cashier's or
certified check, or by wire transfer of immediately available funds, an
aggregate principal amount of $35,000. Executive's obligations under the
Executive Note shall be secured by a pledge of all of the Executive Units to the
Company, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex B attached hereto (the "Pledge Agreement").
------- ----------------
(b) Within 30 days after Executive and/or Trustee on behalf of the IRA
purchases any Executive Units from the Company, Executive shall, and shall cause
the Trustee for the benefit of the IRA to, make an effective election with the
Internal Revenue Service under Section 83(b) of the Internal Revenue Code and
the regulations promulgated thereunder in the form of Annex C attached hereto.
-------
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRA pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not
2
<PAGE>
been registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an exemption
from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement
by each of Executive and the Trustee for the benefit of the IRA do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRA, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive
Units to each of Executive and the IRA, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRA nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRA, and
neither Executive or the Trustee for the benefit of the IRA shall have
the right to be advised of, any material information regarding the
Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued
3
<PAGE>
hereunder, in connection with and as a part of the compensation and
incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive, the Trustee for the benefit of the IRA or one or more Permitted
Transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this Section 3 (the
---------
"Repurchase Option").
- ------------------
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market Value thereof (x) as determined on the Termination Date, if the
Repurchase Notice (as defined in paragraph (d) below) has been delivered within
three months after the Termination Date, or (y) as determined as of a date
determined by the Board within thirty (30) days prior to the delivery of the
Repurchase Notice, if the Repurchase Notice is delivered after the third month
following the Termination Date and (2) the Unvested Incentive Units at a price
per unit equal to the lower of their Original Value or the Fair Market Value
thereof determined as described in clause (b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause (b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest unit). If both Unvested Units and Vested Units are to be
purchased by the Company and Executive Units are held by Permitted Transferees
4
<PAGE>
of Executive, the number of Unvested Units and Vested Units to be purchased will
be allocated among such holders pro rata according to the total number of
Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Units pursuant to the Repurchase Option prior to the 180th
day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5) days
after the expiration of the Investor Election Period, the Company will, if
necessary, notify the Investors electing to purchase Available Units of any
Available Units which Investors have not elected to purchase and each of
the electing Investors will be entitled to purchase any number of the
remaining Available Units (the "Second Option Notice"); provided, that if
--------------------
in the aggregate such Investors elect to purchase more than the remaining
Available Units, such remaining Available Units purchased by each such
Investor will be reduced on a pro rata basis based upon the number of Class
L Units and Class A Units then held by such Investors. Each Investor may
elect to purchase any of the remaining Available Units available to such
Investor by delivering written notice to the Company within five (5) days
after the delivery of the Second Option Notice (such 5-day period being
referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
- ---------
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the
5
<PAGE>
delivery of such notice. The Company and/or the Investors, as the case may be,
will pay for the Executive Units to be purchased pursuant to the Repurchase
Option by delivery of, in the case of each Investor, a check payable to the
holder of Executive Units, and in the case of the Company (i) a check payable to
the holder of such Executive Units, (ii) a note or notes payable in three equal
annual installments beginning on the first anniversary of the Termination Date
and bearing interest (payable quarterly) at a rate per annum equal to 8% or
(iii) both (i) and (ii) in the aggregate amount of the purchase price for such
units. In addition, the Company may pay the purchase price for such Units by
offsetting amounts outstanding under the Executive Note issued to the Company
hereunder. Any notes issued by the Company pursuant to this paragraph (f) shall
be subject to any restrictive covenants to which the Company is subject at the
time of such purchase. The Company and/or the Investors, as the case may be,
will receive customary representations and warranties from each seller regarding
the sale of the Executive Units, including but not limited to the representation
that such seller has good and marketable title to the Executive Units to be
transferred free and clear of all liens, claims and other encumbrances, other
than liens pursuant to the Pledge Agreement.
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
---------
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
board of directors or Chief Executive Officer of Alliance, (iv) gross negligence
or willful misconduct with respect to Alliance or any of its Subsidiaries or (v)
any breach of this Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
6
<PAGE>
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive and the Trustee
for the benefit of the IRA (except for the Company, the Investors and
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall include both vested and unvested Executive Units and shall include
interests in the Company issued with respect to Executive Units by way of any
recapitalization.
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day, and with respect to any Unit which
is not, as of the date of determination, listed on any stock exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value
thereof shall be the amount which each such Unit would receive upon a complete
liquidation of the Company following a sale of the Company at its market value
as determined in good faith by the Board and Executive. If the Board and
Executive are unable to agree upon such market value, it shall be determined in
good faith by a nationally recognized investment banking institution selected by
the Board, who will consider in such determination, among other things, (i) the
Company's EBITDA (as defined in the Credit Agreement) for the previous twelve
months, (ii) EBITDA multiples paid in recent acquisitions of comparable
companies and (iii) current trends in the industry and the Company's
performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
"Operating Agreement" shall have the meaning assigned to it in Section
------------------- -------
1(a) hereof.
- ----
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
7
<PAGE>
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement dated the date hereof to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
---- --------------------------
Date of this Agreement 0%
May 5, 1999 20%
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
8
<PAGE>
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
--------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
Notices to Executive:
--------------------
Jeffrey J. Brothers
1614 River Mill Road
Oshkosh, WI 54901
Notices to the Trustee:
----------------------
Delaware Charter Guarantee and
Trust Company, TTEE for
Jeffrey Brothers, IRA
Londolt Securities
701 Oregon Street
Oshkosh, WI 54901
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be
9
<PAGE>
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Trustee for the benefit of the IRA, the Company, the Investors
and their respective successors and assigns (including subsequent holders of
Executive Units); provided, that the rights and obligations of Executive and the
Trustee for the benefit of the IRA under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
unitholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10
<PAGE>
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
---------
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this IRA and
Executive Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its: ______________________________________
_________________________________________
Jeffrey J. Brothers
Delaware Charter Guarantee and Trust Company,
TTEE for Jeffrey J. Brothers, IRA
By: ______________________________________
Its: ______________________________________
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
<PAGE>
EXHIBIT 10.12
RCL ACQUISITIONS, L.L.C.
EXECUTIVE UNIT PURCHASE AGREEMENT
---------------------------------
THIS EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is made as
---------
of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware limited
liability company (the "Company"), and Herman Beach ("Executive"). Any
------- ---------
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneous with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company and Executive desire to enter into this Agreement (i) to
provide for the sale to Executive by the Company of 465.30 the Company's Class A
Common Units (the "Class A Units"), 51.70 of the Company's Class L Common Units
-------------
(the "Class L Units", and collectively with any Class A Units, the "Purchased
------------- ---------
Units"), 171.09 of the Company's Class B Common Units (the "Class B Units") and
- ----- -------------
182.01 of the Company's Class C Common Units (the "Class C Units", and
-------------
collectively with such Class B Units, the "Incentive Units" ), and (ii) to
---------------
provide for certain rights and obligations of the parties with respect to the
Purchased Units and the Incentive Units (collectively, the "Executive Units");
---------------
and
WHEREAS, as a result of the Merger, the Executive will become a
unitholder of the Surviving Entity and will receive his or her pro rata share of
the common units of the Surviving Entity in exchange for the Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Executive hereto agree as
follows:
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
(a) Upon execution of this Agreement, Executive shall purchase, and
the Company shall sell, 465.30 Class A Units at a price of $100 per unit, 51.70
Class L Units at a price of $8,100 per unit, 171.09 Class B Units at a price of
$0.01 per unit and 182.01 Class C Units at a price of $0.01 per unit. The
Company shall deliver to Executive an executed copy of the Company's
<PAGE>
limited liability company agreement (the "Operating Agreement") indicating
-------------------
Executive's ownership of such Class A Units, Class L Units, Class B Units and
Class C Units and Executive shall deliver to the Company a cashier's check or
wire transfer of funds in the aggregate amount of $344,600 and a promissory note
in the form of Annex A attached hereto in an aggregate principal amount of
-------
$120,700 (the "Executive Note"). Executive's obligations under the Executive
---------------
Note shall be secured by a pledge of all of the Executive Units to the Company,
and in connection therewith, Executive shall enter into a pledge agreement in
the form of Annex B attached hereto (the "Pledge Agreement").
------- ----------------
(b) Within 30 days after Executive purchases any Executive Units from
the Company, Executive shall make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder in the form of Annex C attached hereto.
-------
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by Executive pursuant to
this Agreement shall be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the Executive
Units shall not be disposed of in contravention of the Securities Act or
any applicable state securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Execu tive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement
by Executive do not and shall not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or
2
<PAGE>
by which he or she is bound and upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the legal, valid and
binding obligation of Executive, enforceable in accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to Executive, as a condition thereto, Executive acknowledges and agrees
that:
(A) neither the issuance of the Executive Units to Executive
nor any provision contained herein shall entitle Executive to remain
in the employment of Alliance or affect the right of Alliance to
terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive, and Executive shall have no right to be advised
of, any material information regarding the Company and its
Subsidiaries at any time prior to, upon or in connection with the
repurchase of Executive Units upon the termination of Executive's
employment with Alliance or as otherwise provided hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued hereunder, in connection with and as a part of the compensation
and incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive or one or more Permitted Transferees, will be subject to repurchase by
the Company and the Investors pursuant to the terms and conditions set forth in
this Section 3 (the "Repurchase Option").
-----------------
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market
3
<PAGE>
Value thereof (x) as determined on the Termination Date, if the Repurchase
Notice (as defined in paragraph (d) below) has been delivered within three
months after the Termination Date, or (y) as determined as of a date determined
by the Board within thirty (30) days prior to the delivery of the Repurchase
Notice, if the Repurchase Notice is delivered after the third month following
the Termination Date and (2) the Unvested Incentive Units at a price per unit
equal to the lower of their Original Value or the Fair Market Value thereof
determined as described in clause 3(b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause 3(b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half year anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(i) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest unit). If both Unvested Units and Vested Units are to be
purchased by the Company and Executive Units are held by Permitted Transferees
of Executive, the number of Unvested Units and Vested Units to be purchased will
be allocated among such holders pro rata according to the total number of
Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Units pursuant to the Repurchase Option prior to the 180th
day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
4
<PAGE>
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5)
days after the expiration of the Investor Election Period, the Company
will, if necessary, notify the Investors electing to purchase Available
Units of any Available Units which Investors have elected not to purchase
and each of the electing Investors will be entitled to purchase any number
of the remaining Available Units (the "Second Option Notice"); provided,
-------------------- --------
that if in the aggregate such Investors elect to purchase more than the
remaining Available Units, such remaining Available Units purchased by each
such Investor will be reduced on a pro rata basis based upon the number of
Class L Units and Class A Units then held by such Investors. Each Investor
may elect to purchase any of the remaining Available Units available to
such Investor by delivering written notice to the Company within five (5)
days after the delivery of the Second Option Notice (such 5-day period
being referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the delivery of such
notice. The Company and/or the Investors, as the case may be, will pay for the
Executive Units to be purchased pursuant to the Repurchase Option by delivery
of, in the case of each Investor, a check payable to the holder of Executive
Units, and in the case of the Company (i) a check payable to the holder of such
Executive Units, (ii) a note or notes payable in three equal annual installments
beginning on the first anniversary of the Termination Date and bearing interest
(payable quarterly) at a rate per annum equal to 8% or (iii) both (i) and (ii)
in the aggregate amount of the purchase price for such units. In addition, the
Company may pay the purchase price for such Units by offsetting amounts
outstanding under the Executive Note issued to the Company hereunder. Any notes
issued by the Company pursuant to this paragraph 3(f) shall be subject to any
restrictive covenants to which the Company is subject at the time of such
purchase. The Company and/or the Investors, as the case may be, will receive
customary representations and warranties from each seller regarding the sale of
the Executive Units, including but not limited to the representation that such
seller has good and marketable title to the Executive Units to be transferred
free and clear of all liens, claims and other encumbrances, other than liens
pursuant to the Pledge Agreement.
5
<PAGE>
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
Board of Directors or Chief Executive Officer of Alliance, (iv) gross negligence
or willful misconduct with respect to Alliance or any of its Subsidiaries or (v)
any breach of this Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive (except for the
Company, the Investors and transferees in a Public Sale), and except as
otherwise provided herein, each such other holder of Executive Units shall
succeed to all rights and obligations attributable to Executive as a holder of
Executive Units hereunder. Executive Units shall include both vested and
unvested Executive Units and shall include interests in the Company issued with
respect to Executive Units by way of any recapitalization.
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System
6
<PAGE>
as of 4:00 P.M., New York time, or, if on any day such security is not quoted in
the NASDAQ System, the average of the highest bid and lowest asked prices on
such day in the domestic over-the-counter market as reported by the National
Quotation Bureau Incorporated, or any similar successor organization, in each
such case averaged over a period of 21 days consisting of the day as of which
the Fair Market Value is being determined and the 20 consecutive business days
prior to such day, and with respect to any Unit which is not, as of the date of
determination, listed on any stock exchange or quoted in the NASDAQ System or
the over-the-counter market, the Fair Market Value thereof shall be the amount
which each such Unit would receive upon a complete liquidation of the Company
following a sale of the Company at its market value as determined in good faith
by the Board and Executive. If Board and Executive are unable to agree upon such
market value, it shall be determined in good faith by a nationally recognized
investment banking institution selected by the Board, who will consider in such
determination, among other things, (i) the Company's EBITDA (as defined in the
Credit Agreement) for the previous twelve months, (ii) EBITDA multiples paid in
recent acquisitions of comparable companies and (iii) current trends in the
industry and the Company's performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
"Operating Agreement" shall have the meaning assigned to it in Section
-------------------
1(a) hereof.
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
7
<PAGE>
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement, dated the date hereof, to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
---- --------------------------
Date of this Agreement 0%
May 5, 1999 20%
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
- --------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
8
<PAGE>
Notices to Executive:
--------------------
Herman W. Beach
3410 Parkwood Drive
Marianna, FL 32446
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
9
<PAGE>
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Units); provided, that the
--------
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
stockholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Executive
Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its: ______________________________________
_________________________________________
Herman W. Beach
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
<PAGE>
EXHIBIT 10.13
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
-----------------------------------------
THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
---------
made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware
limited liability company (the "Company"), Bruce P. Rounds ("Executive") and
------- ---------
Stifel, Nicolaus Custodian for Bruce P. Rounds IRA (the "IRA"). Any capitalized
---
terms used herein and not otherwise defined shall have the meanings assigned to
them in Section 5 hereof.
---------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneously with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company, the IRA and Executive desire to enter into this Agreement
(i) to provide for the sale to Executive by the Company of 174.7 of the
Company's Class A Common Units (the "Class A Units"), 36.078 of the Company's
-------------
Class L Common Units (the "Class L Units," and collectively with the Class A
-------------
Units, the "Purchased Units"), 387.92 of the Company's Class B Common Units (the
---------------
"Class B Units") and 412.681 of the Company's Class C Common Units (the "Class C
------------- -------
Units," and collectively with the Class B Units, the "Incentive Units" ), (ii)
- ----- ---------------
to provide for the sale to the trustee or custodian of the IRA (the "Trustee"),
-------
for the benefit of the IRA, by the Company of 200 of the Class A Units and 5.556
of the Class L Units (the "IRA Purchased Units," and collectively with the
-------------------
Purchased Units and the Incentive Units, the "Executive Units") and (iii) to
---------------
provide for certain rights and obligations of the parties with respect to the
Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRA will
become a unitholder of the Surviving Entity and will receive his, her or its pro
rata share of the common units of the Surviving Entity in exchange for the
Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company, Executive and the Trustee for the
benefit of the IRA hereto agree as follows:
<PAGE>
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
(a) Upon execution of this Agreement, Executive shall (i) purchase,
and the Company shall sell, 174.7 Class A Units at a price of $100 per unit,
36.078 Class L Units at a price of $8,100 per unit, 387.92 Class B Units at a
price of $0.01 per unit and 412.681 Class C Units at a price of $0.01 per unit
and (ii) cause the Trustee for the benefit of the IRA to purchase, and the
Company shall sell, 200 Class A Units at a price of $100 per unit, 5.556 Class L
Units at a price of $8,100 per unit, 0 Class B Units at a price of $0.01 per
unit and 0 Class C Units at a price of $0.01 per unit. The Company shall
deliver to each of Executive and the Trustee for the benefit of the IRA an
executed copy of the Company's limited liability company agreement (the
"Operating Agreement") indicating each of Executive's and the IRA's ownership of
- --------------------
such Class A Units, Class L Units, Class B Units and Class C Units, and
Executive shall (y) deliver to the Company a cashier's or certified check, or by
wire transfer of immediately available funds, an aggregate principal amount of
$190,000 and a promissory note in the form of Annex A attached hereto in an
-------
aggregate principal amount of $119,700 (the "Executive Note") and (z) cause the
--------------
Trustee for the benefit of the IRA to deliver to the Company a cashier's or
certified check, or by wire transfer of immediately available funds, an
aggregate principal amount of $65,000. Executive's obligations under the
Executive Note shall be secured by a pledge of all of the Executive Units to the
Company, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex B attached hereto (the "Pledge Agreement").
------- ----------------
(b) Within 30 days after Executive and/or the Trustee for the benefit
of the IRA purchases any Executive Units from the Company, Executive shall, and
shall cause the Trustee on behalf of the IRA to, make an effective election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue Code
and the regulations promulgated thereunder in the form of Annex C attached
-------
hereto.
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRA pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not
2
<PAGE>
been registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an exemption
from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement
by each of Executive and the Trustee for the benefit of the IRA do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRA, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to each of Executive and the IRA, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRA nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRA, and
neither Executive or the Trustee for the benefit of the IRA shall have
the right to be advised of, any material information regarding the
Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued
3
<PAGE>
hereunder, in connection with and as a part of the compensation and
incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive, the Trustee for the benefit of the IRA or one or more Permitted
Transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this Section 3 (the
---------
"Repurchase Option").
- ------------------
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market Value thereof (x) as determined on the Termination Date, if the
Repurchase Notice (as defined in paragraph (d) below) has been delivered within
three months after the Termination Date, or (y) as determined as of a date
determined by the Board within thirty (30) days prior to the delivery of the
Repurchase Notice, if the Repurchase Notice is delivered after the third month
following the Termination Date and (2) the Unvested Incentive Units at a price
per unit equal to the lower of their Original Value or the Fair Market Value
thereof determined as described in clause (b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause (b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest unit). If both Unvested Units and Vested Units are to be
purchased by the Company and Executive Units are held by Permitted Transferees
4
<PAGE>
of Executive, the number of Unvested Units and Vested Units to be purchased will
be allocated among such holders pro rata according to the total number of
Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Units pursuant to the Repurchase Option prior to the 180th
day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5) days
after the expiration of the Investor Election Period, the Company will, if
necessary, notify the Investors electing to purchase Available Units of any
Available Units which Investors have not elected to purchase and each of
the electing Investors will be entitled to purchase any number of the
remaining Available Units (the "Second Option Notice"); provided, that if
--------------------
in the aggregate such Investors elect to purchase more than the remaining
Available Units, such remaining Available Units purchased by each such
Investor will be reduced on a pro rata basis based upon the number of Class
L Units and Class A Units then held by such Investors. Each Investor may
elect to purchase any of the remaining Available Units available to such
Investor by delivering written notice to the Company within five (5) days
after the delivery of the Second Option Notice (such 5-day period being
referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
- ---------
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the
5
<PAGE>
delivery of such notice. The Company and/or the Investors, as the case may be,
will pay for the Executive Units to be purchased pursuant to the Repurchase
Option by delivery of, in the case of each Investor, a check payable to the
holder of Executive Units, and in the case of the Company (i) a check payable to
the holder of such Executive Units, (ii) a note or notes payable in three equal
annual installments beginning on the first anniversary of the Termination Date
and bearing interest (payable quarterly) at a rate per annum equal to 8% or
(iii) both (i) and (ii) in the aggregate amount of the purchase price for such
units. In addition, the Company may pay the purchase price for such Units by
offsetting amounts outstanding under the Executive Note issued to the Company
hereunder. Any notes issued by the Company pursuant to this paragraph (f) shall
be subject to any restrictive covenants to which the Company is subject at the
time of such purchase. The Company and/or the Investors, as the case may be,
will receive customary representations and warranties from each seller regarding
the sale of the Executive Units, including but not limited to the representation
that such seller has good and marketable title to the Executive Units to be
transferred free and clear of all liens, claims and other encumbrances, other
than liens pursuant to the Pledge Agreement.
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
---------
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
board of directors or Chief Executive Officer of Alliance, (iv) gross negligence
or willful misconduct with respect to Alliance or any of its Subsidiaries or (v)
any breach of this Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
6
<PAGE>
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive and the Trustee
for the benefit of the IRA (except for the Company, the Investors and
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall include both vested and unvested Executive Units and shall include
interests in the Company issued with respect to Executive Units by way of any
recapitalization.
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day, and with respect to any Unit which
is not, as of the date of determination, listed on any stock exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value
thereof shall be the amount which each such Unit would receive upon a complete
liquidation of the Company following a sale of the Company at its market value
as determined in good faith by the Board and Executive. If the Board and
Executive are unable to agree upon such market value, it shall be determined in
good faith by a nationally recognized investment banking institution selected by
the Board, who will consider in such determination, among other things, (i) the
Company's EBITDA (as defined in the Credit Agreement) for the previous twelve
months, (ii) EBITDA multiples paid in recent acquisitions of comparable
companies and (iii) current trends in the industry and the Company's
performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
"Operating Agreement" shall have the meaning assigned to it in Section
------------------- -------
1(a) hereof.
- ----
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
7
<PAGE>
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement dated the date hereof to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
---- -------------------------
Date of this Agreement 0%
May 5, 1999 20%
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
8
<PAGE>
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
--------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
Notices to Executive:
--------------------
Bruce P. Rounds
1510 Maricopa Drive
Oshkosh, WI 54904
Notices to the Trustee:
----------------------
Stifel, Nicolaus Custodian
for Bruce Rounds IRA
500 North Broadway
St. Louis, MO 63102
FEIN #: 43-0538770
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be
9
<PAGE>
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Trustee for the benefit of the IRA, the Company, the Investors
and their respective successors and assigns (including subsequent holders of
Executive Units); provided, that the rights and obligations of Executive and the
Trustee for the benefit of the IRA under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
unitholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10
<PAGE>
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
---------
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this IRA and
Executive Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its: ______________________________________
_________________________________________
BRUCE P. ROUNDS
STIFEL, NICOLAUS AS CUSTODIAN FOR
BRUCE ROUNDS IRA
______________________, AS TRUSTEE
By: ______________________________________
Its: ______________________________________
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
<PAGE>
EXHIBIT 10.14
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
-----------------------------------------
THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
---------
made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware
limited liability company (the "Company"), Scott L. Spiller ("Executive") and
------- ---------
Stifel, Nicolaus Custodian for Scott Spiller IRA (the "IRA"). Any capitalized
---
terms used herein and not otherwise defined shall have the meanings assigned to
them in Section 5 hereof.
---------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneously with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company, the IRA and Executive desire to enter into this Agreement
(i) to provide for the sale to Executive by the Company of 0 of the Company's
Class A Common Units (the "Class A Units"), 0 of the Company's Class L Common
-------------
Units (the "Class L Units," and collectively with the Class A Units, the
-------------
"Purchased Units"), 355.594 of the Company's Class B Common Units (the "Class B
- ---------------- -------
Units") and 378.291 of the Company's Class C Common Units (the "Class C Units,"
- ----- -------------
and collectively with the Class B Units, the "Incentive Units" ), (ii) to
---------------
provide for the sale to the trustee or custodian of the IRA (the "Trustee"), for
-------
the benefit of the IRA, by the Company of 213.4 of the Class A Units and 23.711
of the Class L Units (the "IRA Purchased Units," and collectively with the
-------------------
Purchased Units and the Incentive Units, the "Executive Units") and (iii) to
---------------
provide for certain rights and obligations of the parties with respect to the
Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRA will
become a unitholder of the Surviving Entity and will receive his, her or its pro
rata share of the common units of the Surviving Entity in exchange for the
Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company, Executive and the Trustee for the
benefit of the IRA hereto agree as follows:
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
<PAGE>
(a) Upon execution of this Agreement, Executive shall purchase 355.594
Class B Units at a price of $0.01 per unit and 378.291 Class C Units at a price
of $0.01 per unit, and shall cause the Trustee for the benefit of the IRA to
purchase, and the Company shall sell, 213.4 Class A Units at a price of $100 per
unit, 23.711 Class L Units at a price of $8,100 per unit. The Company shall
deliver to each of Executive and the Trustee for the benefit of the IRA an
executed copy of the Company's limited liability company agreement (the
"Operating Agreement") indicating Executive's and the IRA's ownership of such
- --------------------
Class A Units, Class L Units, Class B Units and Class C Units, and Executive
shall cause the Trustee for the benefit of the IRA to deliver to the Company a
cashier's or certified check, or by wire transfer of immediately available
funds, an aggregate principal amount of $ 213,400.
(b) Within 30 days after Executive and/or the Trustee for the benefit
for the IRA purchases any Executive Units from the Company, Executive shall, and
shall cause the Trustee on behalf of the IRA to, make an effective election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue Code
and the regulations promulgated thereunder in the form of Annex A attached
-------
hereto.
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRA pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(ii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
2
<PAGE>
(v) The execution, delivery and performance of this Agreement
by each of Executive and the Trustee for the benefit of the IRA do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRA, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to each of Executive and the IRA, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRA nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRA, and
neither Executive or the Trustee for the benefit of the IRA shall have
the right to be advised of, any material information regarding the
Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued hereunder, in connection with and as a part of the compensation
and incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive, the Trustee for the benefit of the IRA or one or more Permitted
Transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this Section 3 (the
---------
"Repurchase Option").
- ------------------
3
<PAGE>
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market Value thereof (x) as determined on the Termination Date, if the
Repurchase Notice (as defined in paragraph (d) below) has been delivered within
three months after the Termination Date, or (y) as determined as of a date
determined by the Board within thirty (30) days prior to the delivery of the
Repurchase Notice, if the Repurchase Notice is delivered after the third month
following the Termination Date and (2) the Unvested Incentive Units at a price
per unit equal to the lower of their Original Value or the Fair Market Value
thereof determined as described in clause (b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause (b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest unit). If both Unvested Units and Vested Units are to be
purchased by the Company and Executive Units are held by Permitted Transferees
of Executive, the number of Unvested Units and Vested Units to be purchased will
be allocated among such holders pro rata according to the total number of
Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Units pursuant to the Repurchase Option prior to the 180th
day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30)
4
<PAGE>
days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5)
days after the expiration of the Investor Election Period, the Company
will, if necessary, notify the Investors electing to purchase Available
Units of any Available Units which Investors have not elected to purchase
and each of the electing Inv estors will be entitled to purchase any
number of the remaining Available Units (the "Second Option Notice");
--------------------
provided, that if in the aggregate such Investors elect to purchase more
than the remaining Available Units, such remaining Available Units
purchased by each such Investor will be reduced on a pro rata basis based
upon the number of Class L Units and Class A Units then held by such
Investors. Each Investor may elect to purchase any of the remaining
Available Units available to such Investor by delivering written notice to
the Company within five (5) days after the delivery of the Second Option
Notice (such 5-day period being referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
- ---------
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the delivery of such
notice. The Company and/or the Investors, as the case may be, will pay for the
Executive Units to be purchased pursuant to the Repurchase Option by delivery
of, in the case of each Investor, a check payable to the holder of Executive
Units, and in the case of the Company (i) a check payable to the holder of such
Executive Units, (ii) a note or notes payable in three equal annual installments
beginning on the first anniversary of the Termination Date and bearing interest
(payable quarterly) at a rate per annum equal to 8% or (iii) both (i) and (ii)
in the aggregate amount of the purchase price for such units. In addition, the
Company may pay the purchase price for such Units by offsetting amounts
outstanding under the Executive Note issued to the Company hereunder. Any notes
issued by the Company pursuant to this paragraph (f) shall be subject to any
restrictive covenants to which the Company is subject at the time of such
purchase. The Company and/or the Investors, as the case may be, will receive
customary representations and warranties from each seller
5
<PAGE>
regarding the sale of the Executive Units, including but not limited to the
representation that such seller has good and marketable title to the Executive
Units to be transferred free and clear of all liens, claims and other
encumbrances, other than liens pursuant to the Pledge Agreement.
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
---------
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
board of directors or Chief Executive Officer of Alliance, (iv) gross negligence
or willful misconduct with respect to Alliance or any of its Subsidiaries or (v)
any breach of this Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive and the Trustee
for the benefit of the IRA (except for the Company, the Investors and
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall include both vested and unvested Executive Units and shall include
interests in the Company issued with respect to Executive Units by way of any
recapitalization.
6
<PAGE>
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day, and with respect to any Unit which
is not, as of the date of determination, listed on any stock exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value
thereof shall be the amount which each such Unit would receive upon a complete
liquidation of the Company following a sale of the Company at its market value
as determined in good faith by the Board and Executive. If the Board and
Executive are unable to agree upon such market value, it shall be determined in
good faith by a nationally recognized investment banking institution selected by
the Board, who will consider in such determination, among other things, (i) the
Company's EBITDA (as defined in the Credit Agreement) for the previous twelve
months, (ii) EBITDA multiples paid in recent acquisitions of comparable
companies and (iii) current trends in the industry and the Company's
performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
"Operating Agreement" shall have the meaning assigned to it in Section
------------------- -------
1(a) hereof.
- ----
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding
7
<PAGE>
any sales of Common Units in a Public Sale or (iii) a merger or consolidation
which accomplishes one of the foregoing; provided that the transactions
--------
contemplated by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement dated the date hereof to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
---- -------------------------
Date of this Agreement 0%
May 5, 1999 20%
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
- --------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
8
<PAGE>
Notices to Executive:
--------------------
Scott L. Spiller
341 Overland Trail
Oshkosh, WI 54904
Notices to the Trustee:
----------------------
Stifel, Nicolaus Custodian
for Scott L. Spiller IRA
500 North Broadway
St. Louis, MO 63102
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other
9
<PAGE>
provision or any other jurisdiction, but this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Trustee for the benefit of the IRA, the Company, the Investors
and their respective successors and assigns (including subsequent holders of
Executive Units); provided, that the rights and obligations of Executive and the
--------
Trustee for the benefit of the IRA under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
unitholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
---------
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
10
<PAGE>
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this IRA and
Executive Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its: ______________________________________
_________________________________________
SCOTT L. SPILLER
STIFEL, NICHOLAUS CUSTODIAN
FOR SCOTT L. SPILLER IRA
By: ______________________________________
Its: ______________________________________
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
<PAGE>
EXHIBIT 10.15
RCL ACQUISITIONS, L.L.C.
IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT
-----------------------------------------
THIS IRA AND EXECUTIVE UNIT PURCHASE AGREEMENT (this "Agreement") is
---------
made as of May 5, 1998, by and between RCL Acquisitions, L.L.C., a Delaware
limited liability company (the "Company"), Robert T. Wallace ("Executive") and
------- ---------
Edward Jones, Cust FBO Robert T. Wallace, IRA (the "IRA"). Any capitalized
---
terms used herein and not otherwise defined shall have the meanings assigned to
them in Section 5 hereof.
---------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company ("Bain"), the Company, Raytheon
----
Commercial Laundry LLC, a Delaware limited liability company ("RCL") and
---
Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as of
--------
the date hereof and simultaneously with the execution of this Agreement, the
Company has merged with and into RCL (such merger, the "Merger") with RCL as the
------
surviving entity (as such, the "Surviving Entity");
----------------
WHEREAS, in connection with the Merger and the transactions related
thereto, the Company, the IRA and Executive desire to enter into this Agreement
(i) to provide for the sale to Executive by the Company of 251.5 of the
Company's Class A Common Units (the "Class A Units"), 50.167 of the Company's
-------------
Class L Common Units (the "Class L Units," and collectively with the Class A
-------------
Units, the "Purchased Units"), 355.594 of the Company's Class B Common Units
---------------
(the "Class B Units") and 378.291 of the Company's Class C Common Units (the
-------------
"Class C Units," and collectively with the Class B Units, the "Incentive Units"
- -------------- ---------------
), (ii) to provide for the sale to the trustee or custodian of the IRA (the
"Trustee"), for the benefit of the IRA, by the Company of 200 of the Class A
- --------
Units and 0 of the Class L Units (the "IRA Purchased Units," and collectively
-------------------
with the Purchased Units and the Incentive Units, the "Executive Units") and
---------------
(iii) to provide for certain rights and obligations of the parties with respect
to the Executive Units; and
WHEREAS, as a result of the Merger, each of Executive and the IRA will
become a unitholder of the Surviving Entity and will receive his, her or its pro
rata share of the common units of the Surviving Entity in exchange for the
Executive Units.
NOW THEREFORE, in consideration for the premises contained herein and
the mutual obligations of the parties hereto, the receipt and sufficiency of
which are hereby acknowledged, the Company, Executive and the Trustee for the
benefit of the IRA hereto agree as follows:
<PAGE>
1. PURCHASE AND SALE OF EXECUTIVE UNITS.
------------------------------------
(a) Upon execution of this Agreement, Executive shall (i) purchase,
and the Company shall sell, 251.5 Class A Units at a price of $100 per unit,
50.167 Class L Units at a price of $8,100 per unit, 355.594 Class B Units at a
price of $0.01 per unit and 378.291 Class C Units at a price of $0.01 per unit
and (ii) cause the Trustee for the benefit of the IRA to purchase, and the
Company shall sell, 200 Class A Units at a price of $100 per unit, 0 Class L
Units at a price of $8,100 per unit, 0 Class B Units at a price of $0.01 per
unit and 0 Class C Units at a price of $0.01 per unit. The Company shall
deliver to each of Executive and the Trustee for the benefit of the IRA an
executed copy of the Company's limited liability company agreement (the
"Operating Agreement") indicating each of Executive's and the IRA's ownership of
- --------------------
such Class A Units, Class L Units, Class B Units and Class C Units, and
Executive shall (y) deliver to the Company a cashier's or certified check, or by
wire transfer of immediately available funds, an aggregate principal amount of
$330,000 and a promissory note in the form of Annex A attached hereto in an
-------
aggregate principal amount of $101,500 (the "Executive Note")] and (z) cause
--------------
the Trustee for the benefit of the IRA to deliver to the Company a cashier's or
certified check, or by wire transfer of immediately available funds, an
aggregate principal amount of $20,000. Executive's obligations under the
Executive Note shall be secured by a pledge of all of the Executive Units to the
Company, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex B attached hereto (the "Pledge Agreement").
------- ----------------
(b) Within 30 days after Executive purchases any Executive Units from
the Company, Executive shall make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder in the form of Annex C attached hereto.
-------
2. REPRESENTATIONS AND WARRANTIES; ACKNOWLEDGMENTS.
-----------------------------------------------
(a) Representations and Warranties by Executive. In connection with
-------------------------------------------
the purchase and sale of the Executive Units hereunder, Executive represents and
warrants to the Company that:
(i) The Executive Units to be acquired by each of Executive and
the Trustee for the benefit of the IRA pursuant to this Agreement shall be
acquired for Executive's own account and not with a view to, or intention
of, distribution thereof in violation of the Securities Act, or any
applicable state securities laws, and the Executive Units shall not be
disposed of in contravention of the Securities Act or any applicable state
securities laws.
(ii) Executive is an executive officer of Alliance, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Units.
(iii) Executive is able to bear the economic risk of his or her
investment in the Executive Units for an indefinite period of time because
the Executive Units have not
2
<PAGE>
been registered under the Securities Act and, therefore, cannot be sold
unless subsequently registered under the Securities Act or an exemption
from such registration is available.
(iv) Executive has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Executive Units and has had full access to such other information
concerning the Company as he or she has requested. Executive has also
reviewed, or has had an opportunity to review, the following documents: (A)
the Operating Agreement; (B) the loan agreements, notes and related
documents with the senior and subordinated lenders of the Company; and (C)
the Company's audited and unaudited financial statements.
(v) The execution, delivery and performance of this Agreement
by each of Executive and the Trustee for the benefit of the IRA do not and
shall not conflict with, breach, violate or cause a default under any
contract, agreement, instrument, order, judgment or decree to which either
Executive or the Trustee is a party or by which he, she or it is bound and
upon the execution and delivery of this Agreement by the Company, this
Agreement shall be the legal, valid and binding obligation of each of
Executive and the Trustee for the benefit of the IRA, enforceable in
accordance with its terms.
(vi) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
person or entity other than Alliance.
(vii) Executive has consulted with independent legal counsel
regarding his or her rights and obligations under this Agreement and that
he or she fully understands the terms and conditions contained herein.
(b) Acknowledgments.
---------------
(i) As an inducement to the Company to issue the Executive Units
to each of Executive and the IRA, as a condition thereto, Executive
acknowledges and agrees that:
(A) neither the issuance of the Executive Units to either of
Executive or the IRA nor any provision contained herein shall entitle
Executive to remain in the employment of Alliance or affect the right
of Alliance to terminate Executive's employment at any time; and
(B) the Company shall not have any duty or obligation to
disclose to Executive or the Trustee for the benefit of the IRA, and
neither Executive or the Trustee for the benefit of the IRA shall have
the right to be advised of, any material information regarding the
Company and its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Units upon the termination
of Executive's employment with Alliance or as otherwise provided
hereunder.
(ii) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Units have
been issued
3
<PAGE>
hereunder, in connection with and as a part of the compensation and
incentive arrangements between Alliance and Executive.
3. RIGHT TO PURCHASE EXECUTIVE UNITS UPON TERMINATION OF EMPLOYMENT.
----------------------------------------------------------------
(a) Repurchase Option. In the event that Executive is no longer
-----------------
employed by Alliance for any reason (the date of such termination being referred
to herein as the "Termination Date"), the Executive Units, whether held by
----------------
Executive, the Trustee for the benefit of the IRA or one or more Permitted
Transferees, will be subject to repurchase by the Company and the Investors
pursuant to the terms and conditions set forth in this Section 3 (the
---------
"Repurchase Option").
- ------------------
(b) Termination Other than for Cause or Voluntary Termination. If
---------------------------------------------------------
Executive is no longer employed by Alliance as a result of Executive's death or
permanent disability (as determined by the Board in its good faith judgment) or
Executive's termination by Alliance without Cause, then on or after the
Termination Date, the Company may elect to purchase all or any portion of (1)
the Purchased Units and the Vested Incentive Units at a price per unit equal to
the Fair Market Value thereof (x) as determined on the Termination Date, if the
Repurchase Notice (as defined in paragraph (d) below) has been delivered within
three months after the Termination Date, or (y) as determined as of a date
determined by the Board within thirty (30) days prior to the delivery of the
Repurchase Notice, if the Repurchase Notice is delivered after the third month
following the Termination Date and (2) the Unvested Incentive Units at a price
per unit equal to the lower of their Original Value or the Fair Market Value
thereof determined as described in clause (b)(1) above.
(c) Voluntary Termination or Termination for Cause. If Executive is
----------------------------------------------
no longer employed by Alliance as a result of Executive's termination for Cause
or voluntary termination, then on or after the Termination Date, the Company may
elect to purchase all or any portion of the Executive Units at a price per unit
equal to the lower of the Original Value thereof or the Fair Market Value
thereof determined as described in clause (b)(1) above; provided, however, that
-------- -------
on and after the seven and one-half anniversary of the date hereof, if the
Executive is no longer employed by Alliance as a result of Executive's voluntary
termination, then on or after such Termination Date, the Company may elect to
purchase all or any portion of the Executive Units at a price per unit equal to
the Fair Market Value thereof determined as described in clause 3(b)(1) above.
(d) Repurchase Procedures. The Company may elect to exercise the
---------------------
right to purchase all or any portion of the Executive Units pursuant to the
Repurchase Option by delivering written notice (the "Repurchase Notice") to the
-----------------
holder or holders of Executive Units within 180 days after Executive's
Termination Date. The Repurchase Notice will set forth the number of Executive
Units to be acquired from such holder(s), the aggregate consideration to be paid
for such units and the time and place for the closing of the transaction. The
Company may elect to purchase all or any portion of the Unvested Incentive Units
without or before purchasing any Vested Incentive Units. If any of the Executive
Units are held by Permitted Transferees of Executive, the Company shall purchase
the units elected to be purchased from such holder(s) of Executive Units pro
rata according to the number of Executive Units held by such holder(s) at the
time of delivery of such Repurchase Notice (determined as nearly as practicable
to the nearest unit). If both Unvested Units and Vested Units are to be
purchased by the Company and Executive Units are held by Permitted Transferees
4
<PAGE>
of Executive, the number of Unvested Units and Vested Units to be purchased will
be allocated among such holders pro rata according to the total number of
Executive Units to be purchased from such person.
(e) Investors' Rights.
-----------------
(i) If for any reason the Company does not elect to purchase all
of the Executive Units pursuant to the Repurchase Option prior to the 180th
day following the Termination Date, the Investors will be entitled to
exercise the Repurchase Option, in the manner set forth in this Section 3,
---------
for the Executive Units the Company has not elected to purchase (the
"Available Units"). As soon as practicable, but in any event within thirty
----------------
(30) days after the Company determines that there will be any Available
Units, the Company will deliver written notice (the "Option Notice") to the
-------------
Investors setting forth the number of Available Units and the price for
each Available Unit.
(ii) Each of the Investors will initially be permitted to
purchase up to its pro rata share (based upon the number of Class L Units
and Class A Units then held by such Investors) of the Available Units by
delivering written notice to the Company within twenty (20) days after
receipt of the Option Notice from the Company (such 20-day period being
referred to herein as the "Investor Election Period").
------------------------
(iii) As soon as practicable but in any event within five (5)
days after the expiration of the Investor Election Period, the Company
will, if necessary, notify the Investors electing to purchase Available
Units of any Available Units which Investors have not elected to purchase
and each of the electing Inv estors will be entitled to purchase any number
of the remaining Available Units (the "Second Option Notice"); provided,
--------------------
that if in the aggregate such Investors elect to purchase more than the
remaining Available Units, such remaining Available Units purchased by each
such Investor will be reduced on a pro rata basis based upon the number of
Class L Units and Class A Units then held by such Investors. Each Investor
may elect to purchase any of the remaining Available Units available to
such Investor by delivering written notice to the Company within five (5)
days after the delivery of the Second Option Notice (such 5-day period
being referred to herein as the "Second Period").
-------------
(iv) As soon as practicable but in any event within five (5)
business days after the expiration of the Investor Election Period or the
Second Period (if any), the Company will, if necessary, notify the
holder(s) of Executive Units as to the number of Executive Units being
purchased from the holder(s) by the Investors (the "Supplemental Repurchase
-----------------------
Notice"). The Supplemental Repurchase Notice will set forth the number of
------
Executive Units the Company and each Investor will acquire from such
holder(s), the aggregate consideration to be paid for such units and the
time and place of the closing of the transaction.
(f) Closing. The closing of the transactions contemplated by this
-------
Section 3 will take place on the date designated by the Company in the
- ---------
Repurchase Notice or the Supplemental Repurchase Notice, as the case may be,
which date will not be more than ninety (90) days after the
5
<PAGE>
delivery of such notice. The Company and/or the Investors, as the case may be,
will pay for the Executive Units to be purchased pursuant to the Repurchase
Option by delivery of, in the case of each Investor, a check payable to the
holder of Executive Units, and in the case of the Company (i) a check payable to
the holder of such Executive Units, (ii) a note or notes payable in three equal
annual installments beginning on the first anniversary of the Termination Date
and bearing interest (payable quarterly) at a rate per annum equal to 8% or
(iii) both (i) and (ii) in the aggregate amount of the purchase price for such
units. In addition, the Company may pay the purchase price for such Units by
offsetting amounts outstanding under the Executive Note issued to the Company
hereunder. Any notes issued by the Company pursuant to this paragraph (f) shall
be subject to any restrictive covenants to which the Company is subject at the
time of such purchase. The Company and/or the Investors, as the case may be,
will receive customary representations and warranties from each seller regarding
the sale of the Executive Units, including but not limited to the representation
that such seller has good and marketable title to the Executive Units to be
transferred free and clear of all liens, claims and other encumbrances, other
than liens pursuant to the Pledge Agreement.
(g) Termination of Repurchase Right. The rights of the Company and the
-------------------------------
Investors to repurchase Executive Units pursuant to this Section 3 shall
---------
terminate upon a Sale of the Company.
4. RESTRICTIONS ON TRANSFER. The parties hereby agree that (i) prior
------------------------
to the Merger, the Executive Units cannot be transferred and (ii) after the
consummation of the Merger, the Executive Units will be subject to the
Securityholders Agreement.
5. DEFINITIONS.
-----------
"Affiliate" shall have the meaning assigned to it in the Operating
---------
Agreement.
"Alliance" means Alliance Laundry Systems LLC, a Delaware limited
--------
liability company and wholly-owned subsidiary of RCL.
"Board" shall have the meaning assigned to it in the Operating
-----
Agreement.
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring Alliance or any
of its Subsidiaries into public disgrace or disrepute, (iii) failure to accept
and cooperate with actions and initiatives assigned to the Executive by the
board of directors or Chief Executive Officer of Alliance, (iv) gross negligence
or willful misconduct with respect to Alliance or any of its Subsidiaries or (v)
any breach of this Agreement.
"Common Units" is defined in the Operating Agreement and includes any
------------
equity securities issued or issuable directly or indirectly with respect to such
Common Units by way of any dividend or split or exchange or in connection with a
combination of units, recapitalization, merger, consolidation or other
reorganization.
6
<PAGE>
"Credit Agreement" means that certain Credit Agreement, dated as of
----------------
the date hereof, by and among the Company, Alliance, Lehman Brothers Inc.,
Lehman Commercial Paper Inc. and GE Capital Corporation as Administrative Agent.
"Executive Units" means collectively the Class A Units, Class L
---------------
Units, the Class B Units and the Class C Units. Such Units shall continue to be
Executive Units in the hands of any holder other than Executive and the Trustee
for the benefit of the IRA (except for the Company, the Investors and
transferees in a Public Sale), and except as otherwise provided herein, each
such other holder of Executive Units shall succeed to all rights and obligations
attributable to Executive as a holder of Executive Units hereunder. Executive
Units shall include both vested and unvested Executive Units and shall include
interests in the Company issued with respect to Executive Units by way of any
recapitalization.
"Fair Market Value" of each Executive Unit means the average of the
-----------------
closing prices of the sale of any such Unit on all stock exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar successor
organization, in each such case averaged over a period of 21 days consisting of
the day as of which the Fair Market Value is being determined and the 20
consecutive business days prior to such day, and with respect to any Unit which
is not, as of the date of determination, listed on any stock exchange or quoted
in the NASDAQ System or the over-the-counter market, the Fair Market Value
thereof shall be the amount which each such Unit would receive upon a complete
liquidation of the Company following a sale of the Company at its market value
as determined in good faith by the Board and Executive. If the Board and
Executive are unable to agree upon such market value, it shall be determined in
good faith by a nationally recognized investment banking institution selected by
the Board, who will consider in such determination, among other things, (i) the
Company's EBITDA (as defined in the Credit Agreement) for the previous twelve
months, (ii) EBITDA multiples paid in recent acquisitions of comparable
companies and (iii) current trends in the industry and the Company's
performance.
"Investors" means the persons listed on Schedule A hereto.
--------- ----------
"Original Value" $8,100 for each Class L Unit, $100 for each Class A
--------------
Unit, $0.01 for each Class B Unit and $0.01 for each Class C Unit.
"Operating Agreement" shall have the meaning assigned to it in Section
------------------- -------
1(a) hereof.
- ----
"Other Investors" means the Members (as defined in the Operating
---------------
Agreement) of the Surviving Entity, as of the date hereof, other than Bain/RCL,
L.L.C. and Raytheon Company.
"Permitted Transferee" shall have the meaning assigned to it in the
--------------------
Securityholders Agreement.
7
<PAGE>
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency, or political subdivision thereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its Subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Securityholders Agreement" means that certain Securityholders
-------------------------
Agreement dated the date hereof to be entered into by and among the Surviving
Entity and its members.
"Subsidiary" shall have the meaning assigned to it in the Operating
----------
Agreement.
"Transfer" shall have the meaning assigned to it in the
--------
Securityholders Agreement.
"Units" means collectively the Class L Units, the Class A Units, the
-----
Class B Units and the Class C Units.
"Unvested Units" means any Executive Units which are not Vested Units.
--------------
"Unvested Incentive Units" means any Incentive Units which have not
------------------------
become Vested Incentive Units.
"Vested Units" means any Purchased Units and any Vested Incentive
------------
Units.
"Vested Incentive Units" means any Incentive Units which have become
----------------------
vested on a monthly basis in accordance with the following schedule, if as of
each such date Executive is employed by Alliance:
Cumulative Percentage
Date of Incentive Units Vested
---- --------------------------
Date of this Agreement 0%
May 5, 1999 20%
May 5, 2000 40%
May 5, 2001 60%
May 5, 2002 80%
8
<PAGE>
May 5, 2003 100%;
provided, that upon the occurrence of a Sale of the Company, so long as
- --------
Executive is employed by Alliance as of the date on which such Sale of the
Company occurs, all Incentive Units which have not yet become vested shall
immediately become vested.
6. NOTICES. Any notice provided for in this Agreement must be in
-------
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the Investors at the addresses indicated in
the Company's records and to the other recipients at the address indicated
below:
Notices to Executive:
--------------------
Robert T. Wallace
1798 Hunters Glen Road
Oshkosh, WI 54901
Notices to the Trustee:
----------------------
Edward Jones, Cust FBO
Robert T. Wallace, IRA
#931-90090-1-6
201 Progress Parkway
Maryland Heights, MO 63043
Notices to the Company:
----------------------
RCL Acquisitions, L.L.C.
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Robert C. Gay
Edward Conard
Stephen Zide
with a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn: James L. Learner
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be
9
<PAGE>
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.
7. GENERAL PROVISIONS.
------------------
(a) Transfers in Violation of Agreement. Any Transfer or
-----------------------------------
attempted Transfer of any Executive Units in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Units as the owner of
such membership Units for any purpose.
(b) Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
------------------
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Trustee for the benefit of the IRA, the Company, the Investors
and their respective successors and assigns (including subsequent holders of
Executive Units); provided, that the rights and obligations of Executive and the
Trustee for the benefit of the IRA under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Units hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
-------------
shall govern all questions concerning the relative rights of the Company and its
unitholders. All issues and questions concerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits and schedules
hereto shall be governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York. In furtherance of the foregoing, the internal law of the
State of New York shall control the interpretation and construction of this
Agreement (and all schedules and exhibits hereto), even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10
<PAGE>
(g) Remedies. Each of the parties to this Agreement (including
--------
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
--------------------
be amended and waived only with the prior written consent of the Company and
Executive. The provisions of Section 3 may be amended and waived only with the
---------
prior written consent of the Investors owning 60% of the Units on a fully-
diluted basis held by all Investors.
(i) Third-Party Beneficiaries. The parties hereto acknowledge
-------------------------
and agree that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable by the Investors
and their respective successors and assigns.
* * * *
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this IRA and
Executive Unit Purchase Agreement on the date first written above.
RCL ACQUISITIONS, L.L.C.
By: ______________________________________
Its: ______________________________________
_________________________________________
Robert T. Wallace
Edward Jones, Cust. FBO
Robert T. Wallace IRA
By: ______________________________________
Its: ______________________________________
<PAGE>
SCHEDULE A
INVESTORS
---------
Bain/RCL, L.L.C.
Other Investors
<PAGE>
EXHIBIT 10.16
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
---------
entered into as of May 5, 1998, by and among Thomas F. L'Esperance (the
"Executive"), Raytheon Company, a Delaware corporation ( "Raytheon"), Alliance
- ---------- --------
Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry LLC), a Delaware limited
liability company ("Holdings") and Alliance Laundry Systems LLC, a wholly-owned
--------
subsidiary of Holdings and a Delaware limited liability company (the "Company").
-------
Any capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
----------------
Raytheon, Bain/RCL, L.L.C., a Delaware limited liability company, and RCL
Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"), pursuant
-------
to which MergeCo merged with and into Holdings (the "Merger") with Holdings
------
being the surviving entity;
WHEREAS, in connection with the Merger and transactions related
thereto, Executive and the Company will enter into an Employment Agreement,
dated as of the date hereof (the "Employment Agreement");
--------------------
WHEREAS, (i) Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
----------------
which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments and (ii) Executive and Raytheon are parties to a
Voluntary-Deferment Bonus Plan, dated November 20, 1963, as amended on November
21, 1988 (the "Deferment Bonus Plan"), pursuant which Raytheon agreed to pay
--------------------
Executive certain deferred bonus payments; and
WHEREAS, Executive, Raytheon, Holdings and the Company wish to declare
null and void (i) paragraph 2 of the Letter Agreement, and all other provisions
of the Letter Agreement relating to such paragraph 2, and (ii) all provisions of
the Deferment Bonus Plan, and replace the provisions thereto in their entirety
with the terms and provisions described herein, which such provisions are
intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
-----------------------------
paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
-------------
the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
--------------
Amount plus (ii) the Deferred Compensation Amount plus (iii) an interest factor
---- ----
of 5.94% per annum, compounding annually, from the date hereof until payment
hereunder, regardless of whether the Executive is employed by the Company as of
such date; provided that, with respect to the Bonus Amount, the interest factor
-------- ----
shall accrue regarding the amounts in clauses (ii) and (iii) of the definition
thereof only as of the date such amounts are earned.
<PAGE>
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
--------------------------------------------------------
there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
3. Termination of Employment. If prior to the Deferred Date
-------------------------
Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
----------------------------
(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
-----------
"Board" means the Board of Directors of the Company.
-----
"Bonus Amount" shall equal (i) $94,571, plus (ii) $94,571 upon the
------------ ----
earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $529,991
----
upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
-------------
"Class B Units" means the Class B Common Units of Holdings.
-------------
"Class C Units" means the Class C Common Units of Holdings.
-------------
"Class L Units" means the Class L Common Units of Holdings.
-------------
"Cause" shall have the meaning assigned to it in the Employment
-----
Agreement.
-2-
<PAGE>
"Common Units" means, collectively, Class A Units, Class L Units, the
------------
Class B Units, the Class C Units and any other common units authorized by
Holdings.
"Deferred Compensation Amount" shall equal $340,849.
----------------------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
---------
"Operating Agreement" means the limited liability company agreement of
-------------------
Holdings.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
----------------
defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
--------
transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
-3-
<PAGE>
"Termination Date" means the date that Executive ceases to be employed
----------------
by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
--------------------------------------------------------
deferred compensation arrangement set forth under this Agreement shall be
administered by the Company. The Company's duties and authority under this
arrangement shall include (i) the interpretation of the provisions of this
Agreement, (ii) the adoption of any rules and regulations which may become
necessary or advisable in the operation of this arrangement, (iii) the making of
such determinations as may be permitted or required pursuant to this
arrangement, and (iv) the taking of such other actions as may be required for
the proper administration of this arrangement in accordance with its terms. Any
decision of the Company with respect to any matter within the authority of the
Company shall be final, binding and conclusive upon the Executive, beneficiary,
and each Person claiming under or through the Executive, and no additional
authorization or ratification by the unitholders or the Executive shall be
required. Any action by the Company with respect to any one or more other
executives under similar agreements shall not be binding on the Company as to
any action to be taken with respect to the Executive. Each determination
required or permitted under this Agreement shall be made by the Company in the
sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
-----------------
Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
---------
modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Raytheon, Holdings, the Company and Executive. A provision of this
Agreement may be waived only by a written instrument signed by the party against
whom or which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Raytheon, Holdings, the
---------
Company or Executive to require the performance by the other of any provision of
this Agreement shall in no way affect the full right of such party to require
such performance at any time thereafter, nor shall the waiver by Raytheon,
Holdings, the Company or Executive of any breach of any provision of this
Agreement be taken or held to constitute a waiver of any succeeding breach of
such or any other provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
----------
Raytheon, Holdings, the Company and Executive and their respective successors,
heirs, executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Raytheon, Holdings, the Company or by the Executive
without the prior written consent of the other parties hereto.
-4-
<PAGE>
12. Interpretation and Severability. In the event any provision of
-------------------------------
this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Raytheon, Holdings, the
Company and Executive with the same effect as though the void provision or
portion thereof had never been set forth therein.
13. No Conflict. The Executive represents and warrants that the
-----------
Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
-----------------------
affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
---------
are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
---------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
--------
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
RAYTHEON COMPANY
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
__________________________________________
THOMAS F. L'ESPERANCE
<PAGE>
EXHIBIT 10.17
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
---------
entered into as of May 5, 1998, by and among R. Scott Gaster (the "Executive"),
---------
Alliance Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry LLC), a
Delaware limited liability company ("Holdings") and Alliance Laundry Systems
--------
LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability
company (the "Company"). Any capitalized terms used herein and not otherwise
-------
defined shall have the meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
----------------
Raytheon Company, Bain/RCL, L.L.C., a Delaware limited liability company, and
RCL Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"),
-------
pursuant to which MergeCo merged with and into Holdings (the "Merger") with
------
Holdings being the surviving entity;
WHEREAS, Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
----------------
which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments; and
WHEREAS, Executive, Holdings and the Company wish to declare null and
void paragraph 2 of the Letter Agreement, and all other provisions of the Letter
Agreement relating to such paragraph 2, and replace the provisions thereto in
their entirety with the terms and provisions described herein, which such
provisions are intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
-----------------------------
paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
-------------
the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
--------------
Amount plus (ii) an interest factor of 5.94% per annum, compounding annually,
----
from the date hereof until payment hereunder, regardless of whether the
Executive is employed by the Company as of such date; provided that, with
-------- ----
respect to the Bonus Amount, the interest factor shall accrue regarding the
amounts in clauses (ii) and (iii) of the definition thereof only as of the date
such amounts are earned.
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
--------------------------------------------------------
there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
<PAGE>
3. Termination of Employment. If prior to the Deferred Date
-------------------------
Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
----------------------------
(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
-----------
"Board" means the Board of Directors of the Company.
-----
"Bonus Amount" shall equal (i) $32,925, plus (ii) $32,925 upon the
------------ ----
earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $65,850
----
upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
-------------
"Class B Units" means the Class B Common Units of Holdings.
-------------
"Class C Units" means the Class C Common Units of Holdings.
-------------
"Class L Units" means the Class L Common Units of Holdings.
-------------
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company
or any of its Subsidiaries into public disgrace or disrepute, (iii) failure
to accept and cooperate with actions and initiatives assigned to the
Executive by the Board or Chief Executive Officer of the Company, (iv)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any breach of this Agreement.
"Common Units" means, collectively, Class A Units, Class L Units, the
------------
Class B Units, the Class C Units and any other common units authorized by
Holdings.
-2-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
---------
"Operating Agreement" means the limited liability company agreement of
-------------------
Holdings.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
----------------
defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
--------
transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
"Termination Date" means the date that Executive ceases to be employed
----------------
by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
--------------------------------------------------------
deferred compensation arrangement set forth under this Agreement shall be
administered by the Company.
-3-
<PAGE>
The Company's duties and authority under this arrangement shall include (i) the
interpretation of the provisions of this Agreement, (ii) the adoption of any
rules and regulations which may become necessary or advisable in the operation
of this arrangement, (iii) the making of such determinations as may be permitted
or required pursuant to this arrangement, and (iv) the taking of such other
actions as may be required for the proper administration of this arrangement in
accordance with its terms. Any decision of the Company with respect to any
matter within the authority of the Company shall be final, binding and
conclusive upon the Executive, beneficiary, and each Person claiming under or
through the Executive, and no additional authorization or ratification by the
unitholders or the Executive shall be required. Any action by the Company with
respect to any one or more other executives under similar agreements shall not
be binding on the Company as to any action to be taken with respect to the
Executive. Each determination required or permitted under this Agreement shall
be made by the Company in the sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
-----------------
Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
---------
modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Holdings, the Company and Executive. A provision of this Agreement
may be waived only by a written instrument signed by the party against whom or
which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Holdings, the Company or
---------
Executive to require the performance by the other of any provision of this
Agreement shall in no way affect the full right of such party to require such
performance at any time thereafter, nor shall the waiver by Holdings, the
Company or Executive of any breach of any provision of this Agreement be taken
or held to constitute a waiver of any succeeding breach of such or any other
provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
----------
Holdings, the Company and Executive and their respective successors, heirs,
executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Holdings, the Company or by the Executive without the
prior written consent of the other parties hereto.
12. Interpretation and Severability. In the event any provision of
-------------------------------
this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Holdings, the Company and
Executive with the same effect as though the void provision or portion thereof
had never been set forth therein.
-4-
<PAGE>
13. No Conflict. The Executive represents and warrants that the
-----------
Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
-----------------------
affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
---------
are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
---------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
--------
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
__________________________________________
R. SCOTT GASTER
<PAGE>
EXHIBIT 10.18
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
---------
entered into as of May 5, 1998, by and among Jeffrey J. Brothers (the
"Executive"), Alliance Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry
---------
LLC), a Delaware limited liability company ("Holdings") and Alliance Laundry
--------
Systems LLC, a wholly-owned subsidiary of Holdings and a Delaware limited
liability company (the "Company"). Any capitalized terms used herein and not
-------
otherwise defined shall have the meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
----------------
Raytheon Company, Bain/RCL, L.L.C., a Delaware limited liability company, and
RCL Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"),
-------
pursuant to which MergeCo merged with and into Holdings (the "Merger") with
------
Holdings being the surviving entity;
WHEREAS, Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
----------------
which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments; and
WHEREAS, Executive, Holdings and the Company wish to declare null and
void paragraph 2 of the Letter Agreement, and all other provisions of the Letter
Agreement relating to such paragraph 2, and replace the provisions thereto in
their entirety with the terms and provisions described herein, which such
provisions are intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
-----------------------------
paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
-------------
the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
--------------
Amount plus (ii) an interest factor of 5.94% per annum, compounding annually,
----
from the date hereof until payment hereunder, regardless of whether the
Executive is employed by the Company as of such date; provided that, with
-------- ----
respect to the Bonus Amount, the interest factor shall accrue regarding the
amounts in clauses (ii) and (iii) of the definition thereof only as of the date
such amounts are earned.
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
--------------------------------------------------------
there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
<PAGE>
3. Termination of Employment. If prior to the Deferred Date
-------------------------
Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
----------------------------
(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
-----------
"Board" means the Board of Directors of the Company.
-----
"Bonus Amount" shall equal (i) $30,750, plus (ii) $30,750 upon the
------------ ----
earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $61,500
----
upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
-------------
"Class B Units" means the Class B Common Units of Holdings.
-------------
"Class C Units" means the Class C Common Units of Holdings.
-------------
"Class L Units" means the Class L Common Units of Holdings.
-------------
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company
or any of its Subsidiaries into public disgrace or disrepute, (iii) failure
to accept and cooperate with actions and initiatives assigned to the
Executive by the Board or Chief Executive Officer of the Company, (iv)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any breach of this Agreement.
"Common Units" means, collectively, Class A Units, Class L Units, the
------------
Class B Units, the Class C Units and any other common units authorized by
Holdings.
-2-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
---------
"Operating Agreement" means the limited liability company agreement of
-------------------
Holdings.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
----------------
defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
--------
transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
"Termination Date" means the date that Executive ceases to be employed
----------------
by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
--------------------------------------------------------
deferred compensation arrangement set forth under this Agreement shall be
administered by the Company.
-3-
<PAGE>
The Company's duties and authority under this arrangement shall include (i) the
interpretation of the provisions of this Agreement, (ii) the adoption of any
rules and regulations which may become necessary or advisable in the operation
of this arrangement, (iii) the making of such determinations as may be permitted
or required pursuant to this arrangement, and (iv) the taking of such other
actions as may be required for the proper administration of this arrangement in
accordance with its terms. Any decision of the Company with respect to any
matter within the authority of the Company shall be final, binding and
conclusive upon the Executive, beneficiary, and each Person claiming under or
through the Executive, and no additional authorization or ratification by the
unitholders or the Executive shall be required. Any action by the Company with
respect to any one or more other executives under similar agreements shall not
be binding on the Company as to any action to be taken with respect to the
Executive. Each determination required or permitted under this Agreement shall
be made by the Company in the sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
-----------------
Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
---------
modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Holdings, the Company and Executive. A provision of this Agreement
may be waived only by a written instrument signed by the party against whom or
which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Holdings, the Company or
---------
Executive to require the performance by the other of any provision of this
Agreement shall in no way affect the full right of such party to require such
performance at any time thereafter, nor shall the waiver by Holdings, the
Company or Executive of any breach of any provision of this Agreement be taken
or held to constitute a waiver of any succeeding breach of such or any other
provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
----------
Holdings, the Company and Executive and their respective successors, heirs,
executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Holdings, the Company or by the Executive without the
prior written consent of the other parties hereto.
12. Interpretation and Severability. In the event any provision of
-------------------------------
this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Holdings, the Company and
Executive with the same effect as though the void provision or portion thereof
had never been set forth therein.
-4-
<PAGE>
13. No Conflict. The Executive represents and warrants that the
-----------
Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
-----------------------
affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
---------
are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
---------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
--------
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
__________________________________________
JEFFREY J. BROTHERS
<PAGE>
EXHIBIT 10.19
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
---------
entered into as of May 5, 1998, by and among Herman W. Beach (the "Executive"),
---------
Alliance Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry LLC), a
Delaware limited liability company ("Holdings") and Alliance Laundry Systems
--------
LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability
company (the "Company"). Any capitalized terms used herein and not otherwise
-------
defined shall have the meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
----------------
Raytheon Company, Bain/RCL, L.L.C., a Delaware limited liability company, and
RCL Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"),
-------
pursuant to which MergeCo merged with and into Holdings (the "Merger") with
------
Holdings being the surviving entity;
WHEREAS, Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
----------------
which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments; and
WHEREAS, Executive, Holdings and the Company wish to declare null and
void paragraph 2 of the Letter Agreement, and all other provisions of the Letter
Agreement relating to such paragraph 2, and replace the provisions thereto in
their entirety with the terms and provisions described herein, which such
provisions are intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
-----------------------------
paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
-------------
the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
--------------
Amount plus (ii) an interest factor of 5.94% per annum, compounding annually,
----
from the date hereof until payment hereunder, regardless of whether the
Executive is employed by the Company as of such date; provided that, with
-------- ----
respect to the Bonus Amount, the interest factor shall accrue regarding the
amounts in clauses (ii) and (iii) of the definition thereof only as of the date
such amounts are earned.
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
--------------------------------------------------------
there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
<PAGE>
3. Termination of Employment. If prior to the Deferred Date
-------------------------
Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
----------------------------
(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
-----------
"Board" means the Board of Directors of the Company.
-----
"Bonus Amount" shall equal (i) $30,000, plus (ii) $30,000 upon the
------------ ----
earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $60,000
----
upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
-------------
"Class B Units" means the Class B Common Units of Holdings.
-------------
"Class C Units" means the Class C Common Units of Holdings.
-------------
"Class L Units" means the Class L Common Units of Holdings.
-------------
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company
or any of its Subsidiaries into public disgrace or disrepute, (iii) failure
to accept and cooperate with actions and initiatives assigned to the
Executive by the Board or Chief Executive Officer of the Company, (iv)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any breach of this Agreement.
"Common Units" means, collectively, Class A Units, Class L Units, the
------------
Class B Units, the Class C Units and any other common units authorized by
Holdings.
-2-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
---------
"Operating Agreement" means the limited liability company agreement of
-------------------
Holdings.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
----------------
defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
--------
transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
"Termination Date" means the date that Executive ceases to be employed
----------------
by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
--------------------------------------------------------
deferred compensation arrangement set forth under this Agreement shall be
administered by the Company.
-3-
<PAGE>
The Company's duties and authority under this arrangement shall include (i) the
interpretation of the provisions of this Agreement, (ii) the adoption of any
rules and regulations which may become necessary or advisable in the operation
of this arrangement, (iii) the making of such determinations as may be permitted
or required pursuant to this arrangement, and (iv) the taking of such other
actions as may be required for the proper administration of this arrangement in
accordance with its terms. Any decision of the Company with respect to any
matter within the authority of the Company shall be final, binding and
conclusive upon the Executive, beneficiary, and each Person claiming under or
through the Executive, and no additional authorization or ratification by the
unitholders or the Executive shall be required. Any action by the Company with
respect to any one or more other executives under similar agreements shall not
be binding on the Company as to any action to be taken with respect to the
Executive. Each determination required or permitted under this Agreement shall
be made by the Company in the sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
-----------------
Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
---------
modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Holdings, the Company and Executive. A provision of this Agreement
may be waived only by a written instrument signed by the party against whom or
which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Holdings, the Company or
---------
Executive to require the performance by the other of any provision of this
Agreement shall in no way affect the full right of such party to require such
performance at any time thereafter, nor shall the waiver by Holdings, the
Company or Executive of any breach of any provision of this Agreement be taken
or held to constitute a waiver of any succeeding breach of such or any other
provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
----------
Holdings, the Company and Executive and their respective successors, heirs,
executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Holdings, the Company or by the Executive without the
prior written consent of the other parties hereto.
12. Interpretation and Severability. In the event any provision of
-------------------------------
this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Holdings, the Company and
Executive with the same effect as though the void provision or portion thereof
had never been set forth therein.
-4-
<PAGE>
13. No Conflict. The Executive represents and warrants that the
-----------
Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
-----------------------
affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
---------
are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
---------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
--------
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
__________________________________________
HERMAN W. BEACH
<PAGE>
EXHIBIT 10.20
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
---------
entered into as of May 5, 1998, by and among Bruce P. Rounds (the "Executive"),
---------
Alliance Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry LLC), a
Delaware limited liability company ("Holdings") and Alliance Laundry Systems
--------
LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability
company (the "Company"). Any capitalized terms used herein and not otherwise
-------
defined shall have the meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
----------------
Raytheon Company, Bain/RCL, L.L.C., a Delaware limited liability company, and
RCL Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"),
-------
pursuant to which MergeCo merged with and into Holdings (the "Merger") with
------
Holdings being the surviving entity;
WHEREAS, Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
----------------
which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments; and
WHEREAS, Executive, Holdings and the Company wish to declare null and
void paragraph 2 of the Letter Agreement, and all other provisions of the Letter
Agreement relating to such paragraph 2, and replace the provisions thereto in
their entirety with the terms and provisions described herein, which such
provisions are intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
-----------------------------
paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
-------------
the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
--------------
Amount plus (ii) an interest factor of 5.94% per annum, compounding annually,
----
from the date hereof until payment hereunder, regardless of whether the
Executive is employed by the Company as of such date; provided that, with
-------- ----
respect to the Bonus Amount, the interest factor shall accrue regarding the
amounts in clauses (ii) and (iii) of the definition thereof only as of the date
such amounts are earned.
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
--------------------------------------------------------
there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
<PAGE>
3. Termination of Employment. If prior to the Deferred Date
-------------------------
Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
----------------------------
(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
-----------
"Board" means the Board of Directors of the Company.
-----
"Bonus Amount" shall equal (i) $29,925, plus (ii) $29,925 upon the
------------ ----
earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $59,850
----
upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
-------------
"Class B Units" means the Class B Common Units of Holdings.
-------------
"Class C Units" means the Class C Common Units of Holdings.
-------------
"Class L Units" means the Class L Common Units of Holdings.
-------------
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company
or any of its Subsidiaries into public disgrace or disrepute, (iii) failure
to accept and cooperate with actions and initiatives assigned to the
Executive by the Board or Chief Executive Officer of the Company, (iv)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any breach of this Agreement.
"Common Units" means, collectively, Class A Units, Class L Units, the
------------
Class B Units, the Class C Units and any other common units authorized by
Holdings.
-2-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
---------
"Operating Agreement" means the limited liability company agreement of
-------------------
Holdings.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
----------------
defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
--------
transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
"Termination Date" means the date that Executive ceases to be employed
----------------
by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
--------------------------------------------------------
deferred compensation arrangement set forth under this Agreement shall be
administered by the Company.
-3-
<PAGE>
The Company's duties and authority under this arrangement shall include (i) the
interpretation of the provisions of this Agreement, (ii) the adoption of any
rules and regulations which may become necessary or advisable in the operation
of this arrangement, (iii) the making of such determinations as may be permitted
or required pursuant to this arrangement, and (iv) the taking of such other
actions as may be required for the proper administration of this arrangement in
accordance with its terms. Any decision of the Company with respect to any
matter within the authority of the Company shall be final, binding and
conclusive upon the Executive, beneficiary, and each Person claiming under or
through the Executive, and no additional authorization or ratification by the
unitholders or the Executive shall be required. Any action by the Company with
respect to any one or more other executives under similar agreements shall not
be binding on the Company as to any action to be taken with respect to the
Executive. Each determination required or permitted under this Agreement shall
be made by the Company in the sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
-----------------
Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
---------
modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Holdings, the Company and Executive. A provision of this Agreement
may be waived only by a written instrument signed by the party against whom or
which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Holdings, the Company or
---------
Executive to require the performance by the other of any provision of this
Agreement shall in no way affect the full right of such party to require such
performance at any time thereafter, nor shall the waiver by Holdings, the
Company or Executive of any breach of any provision of this Agreement be taken
or held to constitute a waiver of any succeeding breach of such or any other
provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
----------
Holdings, the Company and Executive and their respective successors, heirs,
executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Holdings, the Company or by the Executive without the
prior written consent of the other parties hereto.
12. Interpretation and Severability. In the event any provision of
-------------------------------
this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Holdings, the Company and
Executive with the same effect as though the void provision or portion thereof
had never been set forth therein.
-4-
<PAGE>
13. No Conflict. The Executive represents and warrants that the
-----------
Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
-----------------------
affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
---------
are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
---------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
--------
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
__________________________________________
BRUCE P. ROUNDS
<PAGE>
EXHIBIT 10.21
DEFERRED COMPENSATION AGREEMENT
-------------------------------
THIS DEFERRED COMPENSATION AGREEMENT (this "Agreement") is made and
---------
entered into as of May 5, 1998, by and among Robert T. Wallace (the
"Executive"), Alliance Laundry Holdings LLC (f/k/a Raytheon Commercial Laundry
---------
LLC), a Delaware limited liability company ("Holdings") and Alliance Laundry
--------
Systems LLC, a wholly-owned subsidiary of Holdings and a Delaware limited
liability company (the "Company"). Any capitalized terms used herein and not
-------
otherwise defined shall have the meaning assigned to them in Section 5 hereof.
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Holdings,
----------------
Raytheon Company, Bain/RCL, L.L.C., a Delaware limited liability company, and
RCL Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"),
-------
pursuant to which MergeCo merged with and into Holdings (the "Merger") with
------
Holdings being the surviving entity;
WHEREAS, Executive and Holdings are parties to a certain Letter
Agreement (the "Letter Agreement"), dated as of September 30, 1997, pursuant to
----------------
which Holdings agreed to pay Executive, upon certain terms and conditions,
various bonus payments; and
WHEREAS, Executive, Holdings and the Company wish to declare null and
void paragraph 2 of the Letter Agreement, and all other provisions of the Letter
Agreement relating to such paragraph 2, and replace the provisions thereto in
their entirety with the terms and provisions described herein, which such
provisions are intended to provide deferred compensation to the Executive.
NOW THEREFORE, in consideration for the continued employment of the
Executive by the Company on and after the date hereof and other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Deferred Compensation Benefit. Subject to the provisions in
-----------------------------
paragraphs 2 and 3 hereof, as of the date ten (10) years after the date hereof
(the "Deferred Date"), the Company will pay the Executive (or his beneficiary in
-------------
the event of his death) a lump sum (the "Benefit Amount") equal to (i) the Bonus
--------------
Amount plus (ii) an interest factor of 5.94% per annum, compounding annually,
----
from the date hereof until payment hereunder, regardless of whether the
Executive is employed by the Company as of such date; provided that, with
-------- ----
respect to the Bonus Amount, the interest factor shall accrue regarding the
amounts in clauses (ii) and (iii) of the definition thereof only as of the date
such amounts are earned.
2. Sale of Holdings or Death or Total Permanent Disability. If (i)
--------------------------------------------------------
there is a consummation of a Sale of Holdings or (ii) the Executive dies or
becomes totally and permanently disabled (certified to the satisfaction of the
Company) at such time that the Executive is employed by the Company, then the
Benefit Amount otherwise payable under paragraph 1 above shall become
immediately due and payable as of the date of the consummation of a Sale of
Holdings or such Executive's death or total disability.
<PAGE>
3. Termination of Employment. If prior to the Deferred Date
-------------------------
Executive ceases to be employed by the Company for any reason, then the Benefit
Amount otherwise payable under paragraph 1 above shall become due and payable on
the 45th day after the Termination Date.
4. Designation of Beneficiaries. The Executive may name any Person
----------------------------
(who may be named concurrently, contingently or successively) to whom the
Benefit Amount under this Agreement is to be paid if the Executive dies before
the Benefit Amount is fully distributed. Each such beneficiary designation will
revoke all prior designations by the Executive, shall not require the consent of
any previously named beneficiary, shall be in a form prescribed by the Company
and will be effective only when filed with the Company during the Executive's
lifetime. If the Executive fails to designate a beneficiary before his death,
as provided in this paragraph, or if the beneficiary designated by the Executive
dies before the date of the Executive's death or before complete payment of the
Benefit Amount, the Company, in its discretion, may pay the Benefit Amount to
either (i) one or more of the Executive's relatives by blood, adoption or
marriage and in such proportions as the Company determines, or (ii) the legal
representative or representatives of the estate of the last to die of the
Executive and his designated beneficiary. Notwithstanding the foregoing, if the
Executive is married, the Executive's spouse must consent in writing to the
designation of any Person as beneficiary other than the spouse.
5. Definitions.
-----------
"Board" means the Board of Directors of the Company.
-----
"Bonus Amount" shall equal (i) $25,375, plus (ii) $25,375 upon the
------------ ----
earlier of the occurrence of a Sale of Holdings, the death or total and
permanent disability of Executive or October 20, 1998, if the Executive is
still employed by the Company on any such date, and plus (iii) $50,750
----
upon the earlier of the occurrence of a Sale of Holdings, the death or
total and permanent disability of Executive or October 20, 1999, if
Executive is still employed by the Company on any such date.
"Class A Units" means the Class A Common Units of Holdings.
-------------
"Class B Units" means the Class B Common Units of Holdings.
-------------
"Class C Units" means the Class C Common Units of Holdings.
-------------
"Class L Units" means the Class L Common Units of Holdings.
-------------
"Cause" means (i) the commission of a felony or a crime involving
-----
moral turpitude or the commission of any other act or omission involving
dishonesty, disloyalty or fraud, (ii) conduct tending to bring the Company
or any of its Subsidiaries into public disgrace or disrepute, (iii) failure
to accept and cooperate with actions and initiatives assigned to the
Executive by the Board or Chief Executive Officer of the Company, (iv)
gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any breach of this Agreement.
"Common Units" means, collectively, Class A Units, Class L Units, the
------------
Class B Units, the Class C Units and any other common units authorized by
Holdings.
-2-
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"Investors" means Bain/RCL, L.L.C.
---------
"Operating Agreement" means the limited liability company agreement of
-------------------
Holdings.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of Holdings" means (i) any sale of all or substantially all (as
----------------
defined in the Model Business Corporation Act) of the assets of Holdings
and its subsidiaries on a consolidated basis in one transaction or series
of related transactions, (ii) any sale of all or substantially all of the
Common Units in one transaction or series of related transactions,
excluding any sales of Common Units in a Public Sale or (iii) a merger or
consolidation which accomplishes one of the foregoing; provided that the
--------
transactions contemplated by the Merger Agreement do not constitute a Sale
of Holdings.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company, association or other business
entity of which (i) if a corporation, a majority of the total voting power
of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more
of the other Subsidiaries of that Person or a combination thereof, or (ii)
if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association
or other business entity if such Person or Persons shall be allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or shall be or control the managing
director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business
entity.
"Termination Date" means the date that Executive ceases to be employed
----------------
by the Company for any reason.
6. Administration of this Deferred Compensation Arrangement. The
--------------------------------------------------------
deferred compensation arrangement set forth under this Agreement shall be
administered by the Company.
-3-
<PAGE>
The Company's duties and authority under this arrangement shall include (i) the
interpretation of the provisions of this Agreement, (ii) the adoption of any
rules and regulations which may become necessary or advisable in the operation
of this arrangement, (iii) the making of such determinations as may be permitted
or required pursuant to this arrangement, and (iv) the taking of such other
actions as may be required for the proper administration of this arrangement in
accordance with its terms. Any decision of the Company with respect to any
matter within the authority of the Company shall be final, binding and
conclusive upon the Executive, beneficiary, and each Person claiming under or
through the Executive, and no additional authorization or ratification by the
unitholders or the Executive shall be required. Any action by the Company with
respect to any one or more other executives under similar agreements shall not
be binding on the Company as to any action to be taken with respect to the
Executive. Each determination required or permitted under this Agreement shall
be made by the Company in the sole and absolute discretion of the Company.
7. Action by Company. Any action required or permitted by the
-----------------
Company under this Agreement shall be by resolution of the Board or by a duly
authorized committee of the Board, or by a person or persons authorized by
resolution of the Board or such committee.
8. Amendment. This Agreement may not be canceled, changed,
---------
modified, or amended orally, and no cancellation, change, modification or
amendment hereof shall be effective or binding unless in a written instrument
signed by Holdings, the Company and Executive. A provision of this Agreement
may be waived only by a written instrument signed by the party against whom or
which enforcement of such waiver is sought.
9. No Waiver. The failure at any time of Holdings, the Company or
---------
Executive to require the performance by the other of any provision of this
Agreement shall in no way affect the full right of such party to require such
performance at any time thereafter, nor shall the waiver by Holdings, the
Company or Executive of any breach of any provision of this Agreement be taken
or held to constitute a waiver of any succeeding breach of such or any other
provision of this Agreement.
10. Withholding for Taxes. Notwithstanding anything contained in
---------------------
this Agreement to the contrary, the Company shall withhold from any distribution
made pursuant to this Agreement such amount or amounts as may be required for
purposes of the Company complying with the tax withholding provisions of the
Internal Revenue Code of 1986, as amended, or any state tax act for purposes of
paying any income, estate, inheritance or other tax attributable to any amounts
distributable under this Agreement.
11. Assignment. This Agreement is binding on and for the benefit of
----------
Holdings, the Company and Executive and their respective successors, heirs,
executors, administrators, and other legal representatives. Neither this
Agreement nor any right or obligation hereunder may be sold, transferred,
assigned, or pledged by Holdings, the Company or by the Executive without the
prior written consent of the other parties hereto.
12. Interpretation and Severability. In the event any provision of
-------------------------------
this Agreement, or any portion thereof, is determined by any or court of
competent jurisdiction to be unenforceable or void, the remaining provisions of
this Agreement shall nevertheless be binding upon Holdings, the Company and
Executive with the same effect as though the void provision or portion thereof
had never been set forth therein.
-4-
<PAGE>
13. No Conflict. The Executive represents and warrants that the
-----------
Executive is not subject to any agreement, order, judgment or decree of any kind
which would prevent the Executive from entering into this Agreement.
14. Employment Relationship. This Agreement shall not in any way
-----------------------
affect the right and power of the Company to dismiss or otherwise terminate the
employment or change the terms of the employment or amount of compensation of
the Executive at any time for any reason with or without cause or in accordance
with any applicable employment contract.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF WISCONSIN, WITHOUT
APPLICATION OF ITS CONFLICT OR CHOICE OF LAW PROVISIONS. THE COMPANY AND THE
EXECUTIVE AGREE THAT THIS IS NOT AN ERISA PLAN OR PART OF AN ERISA PLAN.
16. No Setoff. There shall be no right to setoff any amounts which
---------
are owed by the Company to the Executive hereunder with any amounts that are
owed by the Executive to Holdings under that certain Promissory Note, dated as
of the date hereof, issued by the Executive to Holdings.
17. Execution. This Agreement may be executed in counterparts, each
---------
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Headings. The headings contained in this Agreement are for
--------
reference purposes only, and shall not affect the meaning or interpretation of
this Agreement.
* * * * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Deferred
Compensation Agreement to be executed as of the date first written above.
ALLIANCE LAUNDRY HOLDINGS LLC
By:_______________________________________
Its:_______________________________________
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________________________
Its:_______________________________________
__________________________________________
ROBERT T. WALLACE
<PAGE>
EXHIBIT 10.22
Raytheon Commercial Laundry LLC
Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Tel 920.748.3121
Fax 920.748.4429
Raytheon Commercial Laundry
September 30, 1997
Mr. Thomas F. L'Esperance
S.S. ####-##-####
Dear Mr. L'Esperance:
Raytheon Company is exploring various alternatives with respect to Raytheon
Commercial Laundry LLC (hereinafter "RCL"), including its sale to a third party.
This letter sets forth the understanding and agreement between you and RCL with
respect to our respective rights and obligations in connection with your
continued employment and cooperation in a potential sale of RCL.
1. You agree to assist and cooperate fully with RCL in all matters
related to its efforts to sell and to do and perform all tasks reasonably
requested of you to support and help bring about such sale. Furthermore, in
recognition of RCL's desire that you make yourself available for employment with
the eventual buyer should the buyer desire to retain your services, you agree to
review and consider in good faith employment offers, if any, made by the buyer.
2. Retention Bonus. As consideration of your agreement to the terms set
----------------
forth in this letter, you shall be entitled, subject to the conditions set forth
below, to a bonus (the "Retention Bonus") from RCL in an amount equal to
eighteen (18) months of your current monthly base salary in effect as of the
date of the execution of this agreement. Base salary does not include any
normally awarded performance bonuses, any other discretionary bonuses or any
bonuses provided under this agreement.
The Retention Bonus shall be paid pursuant to the following schedule and
subject to the below-listed terms and conditions:
Schedule of Payments. The Retention Bonus shall be paid in three parts.
--------------------
Part One: Part One is twenty-five percent (25%) of the Retention Bonus and
--------
shall be payable within twenty (20) days of the first day of the month following
the sixth month of the execution date of this Agreement (for example, if this
Agreement is executed on October 20, 1997, Part One of the Retention Bonus will
be paid not later than May 20, 1998).
<PAGE>
Page 2
September 30, 1997
Part Two: Part Two is twenty-five percent (25%) of the Retention Bonus and
--------
is payable twelve (12) months after the execution of this Agreement in
accordance with the payment mechanism set forth for payment of Part One.
Part Three: Part Three is fifty percent (50%) of the Retention Bonus and
----------
is payable twenty-four (24) months after the execution of the Agreement in
accordance with the payment mechanism set forth for payment of Parts One and
Two.
Any portion of the Retention Bonus that has not already been received shall be
subject to the following terms and conditions:
(a) You must accept an offer of employment from the buyer (i) if such offer
includes a base salary at least equal to the base salary received from RCL as of
the time of the offer, and that provides you with benefits reasonably comparable
in the aggregate to your current benefits ("Comparable Compensation"); and (ii)
the primary place of your employment would not entail an additional commute from
your current residence of more than thirty-five (35) miles, and (iii) you must
remain in the buyer's employ as of the dates of payment of the part or parts of
the Retention Bonus, except that, in the event of your death or total and
permanent disability (certified to the satisfaction of the Company) between the
execution date and the date of payment of the part or parts of the Retention
Bonus, such part or parts shall be paid to you (or in the event of your death to
your estate).
(b) The foregoing notwithstanding, if during your employment with the buyer
(i) you are terminated without cause; (ii) your base salary is substantially
reduced; or (iii) your primary place of employment is moved to a location beyond
that set forth in 2(a)(ii) above, and as a result you leave the buyer's employ,
you shall retain all rights to any Retention Bonus earned pursuant to the terms
of this agreement, including the part or parts which would not otherwise be
payable pursuant to the mechanism and time periods set forth in this paragraph.
(c) If you do not receive an offer of employment from the buyer which
provides for Comparable Compensation or is for employment at a location not
within the commuting distance described in (a)(ii) above, the entire Retention
Bonus will be payable within twenty (20) days of Closing.
3. 1997 Management Performance Incentive Plan. You may be eligible for a
------------------------------------------
prorated Management Performance Incentive Bonus for the period from September
10, 1997, through December 30, 1997.
4. 1998 Management Performance Incentive Plan. If the Closing of the sale
-------------------------------------------
of RCL occurs during calendar year 1998, you shall be entitled to a prorated
Management Performance Incentive Bonus for 1998 ("Incentive Bonus: 1998") as
set forth below. The Incentive Bonus: 1998 is conditioned on achievement of the
Operating Profit agreed to in the 1998 Five-Year Plan
<PAGE>
Page 3
September 30, 1997
("Operating Profit"). If the sale does not close during calendar year 1998, you
shall be entitled to the full amount of the Incentive Bonus: 1998 as set forth
below based on Operating Profit levels.
(a) Less than 90% of the Operating Profit: No Incentive Bonus;
(b) Greater than or equal to 90% but less than 100% of the Operating
Profit: Minimum Incentive Bonus of twenty-five percent (25%) of base salary,
increasing as Operating Profit reaches 100%, at which point the Incentive Bonus
is 50% of base salary;
(c) Greater than 100% but less than 120% of the Operating Profit: Minimum
Incentive Bonus of fifty percent (50%) of base salary, increasing as Operating
Profit reaches 120%, at which point the Incentive Bonus is 100% of base
salary/1/.
5. 1999 Management Performance Incentive Plan. If the Closing of the sale
------------------------------------------
of RCL occurs during calendar year 1999, you shall be entitled to participate in
a 1999 Management Performance Incentive Plan based on Operating Profit as set
forth in the 1999 Five-Year Plan.
6. Severance.
---------
(a) In connection with the sale, RCL will provide you with severance
(including medical and dental benefits) at your monthly base salary according to
the schedule set forth in (b) below if:
(i) you are terminated without cause as set forth in paragraph 11
prior to Closing;
- ---------------------
/1/ Examples of calculation of 1998 Management Incentive Bonus:
Example 1: Base salary: $100,000
Sale closes on March 31, 1998 (90/365)
Operating Profit determined to be at 97% of the amount set forth in
the 1998 Five-year Plan ($100,000 x 90/365) x {50% - [(100-97) x
2.5]} Bonus: $10,479.45
Example 2: Base salary: $100,000
Sale closes on June 30, 1998 (181/365)
Operating Profit: 115%
($100,000 x 181/365) x {100% - [(120-115) x 2.5]}
Bonus: $43,390.41
<PAGE>
Page 4
September 30, 1997
(ii) you do not receive an offer of employment from the buyer at
Comparable Compensation; or
(iii) you receive but do not accept an offer of employment from the
buyer at Comparable Compensation because the commute to the location of the
employment offered entailed an additional commute from your current residence of
more than thirty-five (35) miles; or
(iv) you accept a position with buyer and are subsequently
terminated without cause as defined in paragraph 12 prior to the completion of
365 calendar days of employment.
(b) The period of entitlement for severance is set forth below:
(i) if you do not receive an offer of employment at or about the
time of Closing at Comparable Compensation or an offer of a position within the
commuting distance set forth in paragraph 6(a)(iii), you shall receive twelve
(12) months of base salary;
(ii) if, within 365 calendar days of employment with the buyer, you
are terminated without cause; subjected to a substantial reduction of your base
salary; or if you are required to relocate beyond thirty-five (35) miles of your
commuting distance when employed by RCL, you shall receive twelve (12) months of
base salary;
(iii) if you are terminated by the buyer after one (1) year of
employment with the buyer, you may be eligible for severance provided by the
buyer but will no longer be covered by an RCL-sponsored severance program.
(c) Severance shall be paid in a lump sum in the first month of eligibility
measured by the periods set forth in (b)(i)-(iii) above.
7. Benefits During Severance. You and your eligible dependents shall be
--------------------------
eligible during the severance measuring period to participate in medical and
dental plans with no required contribution from you.
8. Prior to any public announcement concerning the sale of RCL, you agree
that without the prior consent of RCL you will not disclose to any person or
entity (other than those individuals identified to you in writing as being
active participants in the sale process) either the fact that discussions or
negotiations are taking place or have taken place regarding the possible sale of
RCL or any of the terms, conditions or other facts relating to the possible
sale, including the status thereof.
<PAGE>
Page 5
September 30, 1997
9. Raytheon will decide in its sole discretion if and when to proceed with
the sale of RCL and the terms and conditions upon which any such sale shall be
effected. Nothing contained herein shall obligate the sale of RCL at this or
any other time.
10. Nothing contained herein shall obligate RCL or any buyer to offer you
continued employment or to provide you with any minimum level of compensation or
benefits.
11. Termination Prior to Closing. RCL retains the right to terminate your
----------------------------
employment prior to the Closing. Unless terminated for the reasons set forth
below prior to Closing and/or prior to the expiration of 24 months of this
agreement, you shall receive the benefits and bonuses referenced in paragraphs
2, 3, 4, 5, 6 and 7. In the event of termination for cause as defined in
Sections 11(a) - (c) below, you shall not be entitled to the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7. Reasons for termination
for cause are:
(a) failure to perform any of the material duties of your position,
including special projects and assignments; or
(b) breach of any material provision of Raytheon's Standards of Business
Behavior and Ethics; or
(c) breach of Raytheon Company Rules and Regulations.
If you are terminated prior to Closing for a reason other than those specified
in subparagraphs (a), (b) and (c) above, including termination as a result of a
reduction in force, you will be eligible for the bonuses and benefits referenced
in paragraphs 2, 3, 4, 5, 6 and 7.
12. Termination for Cause After Closing. The following conduct shall
------------------------------------
constitute "cause" for termination after Closing:
(a) repeated failure to perform any of the material duties of your
position, including special projects and assignments, provided reasonable
written notice and an opportunity to cure performance deficiencies has been
provided;
(b) serious breach of any material provision of the buyer's standards of
business behavior and ethics; or
(c) serious misconduct in willful disregard of the buyer's interests.
13. Entire Agreement. This letter constitutes the entire agreement between
-----------------
the parties and supersedes any prior communications, agreements or
understandings, whether oral or written, with respect to the terms of your
continued employment.
14. General Release. As a condition of participation in the benefits set
---------------
forth in this letter, you agree to execute the General Release contained in
Attachment A.
<PAGE>
Page 6
September 30, 1997
15. Arbitration of Claims. The parties agree that any disputes arising
----------------------
during the term of your employment with Raytheon, including but not limited to
any claims arising under the terms of this retention agreement, shall be subject
to final and binding arbitration as the sole and exclusive forum for dispute
resolution. Arbitration under this section shall be conducted pursuant to the
rules of the American Arbitration Association applicable to employment disputes.
Either party may request arbitration in writing pursuant to this section within
six (6) months of the event(s) giving rise to the dispute. Failure to request
arbitration within the time period shall forever bar any action in court or
before any administrative agency and shall be construed as an explicit waiver
and release of all claims as enumerated herein. Claims covered by this section
include, but are not limited to, claims for breach of contract, breach of the
covenant of good faith and fair dealing, tort claims, claims arising under
common law, claims for discrimination and claims for compensation or benefits
under the terms of this agreement. Any arbitration award issued under this
section shall extinguish all other rights of the parties with respect to the
subject matter of the dispute, whether grounded in contract, federal or state
statutes, or common law, and otherwise will be final and binding on the parties.
Claims not covered by this section are claims regarding your compensation,
including but not limited to modification in compensation, the amount and award
of discretionary company bonuses and stock options, eligibility for benefits
under any company benefit plan covered by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the amount of benefits provided
under a company benefit plan covered by ERISA, any claim cognizable under ERISA,
or any claims for workers' compensation or unemployment compensation under a
state workers' compensation or unemployment compensation law.
16. Confidentiality. You agree to keep confidential this agreement and not
----------------
to disclose either the fact of the agreement or the terms thereof, except where
necessary to members of your immediate family, tax or legal advisors, and as
required in response to a valid subpoena or court order. Failure to comply with
the provisions of this paragraph 16 will be deemed a material breach of the
agreement and may result in forfeiture of the bonuses and benefits provided
herein.
17. Stock Options. Only those stock options which are vested can be
--------------
exercised. Vesting accrual terminates as of the Closing. Options vested as of
the Closing can only be exercised within one (1) year following the Closing.
<PAGE>
Page 7
September 30, 1997
If you are in agreement with the foregoing, please sign, date and return the
enclosed copy of this letter to the undersigned, whereupon it shall become a
binding agreement between us.
Very truly yours,
RAYTHEON COMPANY
By
(signature)
AGREED AND ACCEPTED:
Date:
Name
<PAGE>
EXHIBIT 10.23
AMENDMENT NO. 1 TO RETENTION AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 1 TO RETENTION AGREEMENT (this "Amendment"), dated
---------
as of April __, 1998, amends that certain Letter Agreement (the "Retention
---------
Agreement"), dated as of September 30, 1997, by and between Thomas F.
- ---------
L'Esperance("Executive") and Raytheon Commercial Laundry LLC, a Delaware limited
---------
liability company (the "Company"). Capitalized terms used herein and not
-------
defined shall have the meanings assigned to them in the Retention Agreement.
WHEREAS, pursuant to the terms of the Retention Agreement, the Company
agreed to pay Executive, upon certain terms and conditions, a Retention Bonus;
WHEREAS, the Retention Bonus is currently due and payable in three
parts: Part One being due and payable as of April 20, 1998 or May 20, 1998, as
the case may be (the "First Bonus Payment"), Part Two being due and payable as
-------------------
of October 20, 1998 (the "Second Bonus Payment") and Part Three being due and
--------------------
payable as of October 20, 1999 (the "Third Bonus Payment");
-------------------
WHEREAS, the Company is a party to a certain Agreement and Plan of
Merger (the "Merger Agreement"), dated February 21, 1998, by and among the
----------------
Company, Raytheon Company, a Delaware corporation, Bain/RCL, L.L.C., a Delaware
limited liability company, and RCL Acquisitions, L.L.C., a Delaware limited
liability company ("MergeCo"), pursuant to which MergeCo will merge with and
-------
into the Company (the "Merger") with the Company being the surviving entity;
------
WHEREAS, the Executive has no current right to receive or draw upon
any portion of the Retention Bonus and would forfeit his or her right to receive
payment thereof if he or she resigned from the Company prior to the dates on
which the Retention Bonus is payable; and
WHEREAS, in contemplation of the Merger and transactions related
thereto, the Executive and the Company wish to amend the Retention Agreement to
defer the payment of the First Bonus Payment until the date of the Second Bonus
Payment.
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the parties do hereby agree as follows:
1. Deferment of the First Bonus Payment. The paragraph entitled
------------------------------------
"Schedule of Payments" under Paragraph 2 of the Retention Agreement shall be
- ---------------------
amended in its entirety to read as follows:
<PAGE>
"Schedule of Payments. The Retention Bonus shall be paid in
---------------------
two parts.
Part One: Part One is fifty percent (50%) of the Retention
--------
Bonus and shall be payable on October 20, 1998.
Part Two: Part Two is fifty percent (50%) of the Retention
--------
Bonus and shall payable on October 20, 1999."
2. Effect of this Amendment. The Retention Agreement, as amended
------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Retention Agreement to be executed as of the day and year first written
above.
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_______________________________________
Its:_______________________________________
________________________________________
THOMAS F. L'ESPERANCE
<PAGE>
EXHIBIT 10.24
Raytheon Commercial Laundry LLC
Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Tel 920.748.3121
Fax 920.748.4429
RAYTHEON COMMERCIAL LAUNDRY
September 30, 1997
Mr. R. Scott Gaster
S.S. ####-##-####
Dear Mr. Gaster:
Raytheon Company is exploring various alternatives with respect to Raytheon
Commercial Laundry LLC (hereinafter "RCL"), including its sale to a third party.
This letter sets forth the understanding and agreement between you and RCL with
respect to our respective rights and obligations in connection with your
continued employment and cooperation in a potential sale of RCL.
1. You agree to assist and cooperate fully with RCL in all matters
related to its efforts to sell and to do and perform all tasks reasonably
requested of you to support and help bring about such sale. Furthermore, in
recognition of RCL's desire that you make yourself available for employment with
the eventual buyer should the buyer desire to retain your services, you agree to
review and consider in good faith employment offers, if any, made by the buyer.
2. Retention Bonus. As consideration of your agreement to the terms set
----------------
forth in this letter, you shall be entitled, subject to the conditions set forth
below, to a bonus (the "Retention Bonus") from RCL in an amount equal to twelve
(12) months of your current monthly base salary in effect as of the date of the
execution of this agreement. Base salary does not include any normally awarded
performance bonuses, any other discretionary bonuses or any bonuses provided
under this agreement.
The Retention Bonus shall be paid pursuant to the following schedule and
subject to the below-listed terms and conditions:
Schedule of Payments. The Retention Bonus shall be paid in three parts.
--------------------
Part One: Part One is twenty-five percent (25%) of the Retention Bonus and
--------
shall be payable within twenty (20) days of the first day of the month following
the sixth month of the execution date of this Agreement (for example, if this
Agreement is executed on October 20, 1997, Part One of the Retention Bonus will
be paid not later than May 20, 1998).
Part Two: Part Two is twenty-five percent (25%) of the Retention Bonus and
--------
is payable twelve (12) months after the execution of this Agreement in
accordance with the payment mechanism set forth for payment of Part One.
<PAGE>
Page 2
September 30, 1997
Part Three: Part Three is fifty percent (50%) of the Retention Bonus and
----------
is payable twenty-four (24) months after the execution of the Agreement in
accordance with the payment mechanism set forth for payment of Parts One and
Two.
Any portion of the Retention Bonus that has not already been received shall
be subject to the following terms and conditions:
(a) You must accept an offer of employment from the buyer (i) if such offer
includes a base salary at least equal to the base salary received from RCL as of
the time of the offer, and that provides you with benefits reasonably comparable
in the aggregate to your current benefits ("Comparable Compensation"); and (ii)
the primary place of your employment would not entail an additional commute from
your current residence of more than thirty-five (35) miles, and (iii) you must
remain in the buyer's employ as of the dates of payment of the part or parts of
the Retention Bonus, except that, in the event of your death or total and
permanent disability (certified to the satisfaction of the Company) between the
execution date and the date of payment of the part or parts of the Retention
Bonus, such part or parts shall be paid to you (or in the event of your death to
your estate).
(b) The foregoing notwithstanding, if during your employment with the buyer
(i) you are terminated without cause; (ii) your base salary is substantially
reduced; or (iii) your primary place of employment is moved to a location beyond
that set forth in 2(a)(ii) above, and as a result you leave the buyer's employ,
you shall retain all rights to any Retention Bonus earned pursuant to the terms
of this agreement, including the part or parts which would not otherwise be
payable pursuant to the mechanism and time periods set forth in this paragraph.
(c) If you do not receive an offer of employment from the buyer which
provides for Comparable Compensation or is for employment at a location not
within the commuting distance described in (a)(ii) above, the entire Retention
Bonus will be payable within twenty (20) days of Closing.
3. 1997 Management Performance Incentive Plan. You may be eligible for a
------------------------------------------
prorated Management Performance Incentive Bonus for the period from
SeptemberE10, 1997, through December 30, 1997.
4. 1998 Management Performance Incentive Plan. If the Closing of the
-------------------------------------------
sale of RCL occurs during calendar year 1998, you shall be entitled to a
prorated Management Performance Incentive Bonus for 1998 ("Incentive Bonus:
1998") as set forth below. The Incentive Bonus: 1998 is conditioned on
achievement of the Operating Profit agreed to in the 1998 Five-Year Plan
("Operating Profit"). If the sale does not close during calendar year 1998, you
shall be entitled to the full amount of the Incentive Bonus: 1998 as set forth
below based on Operating Profit levels.
<PAGE>
Page 3
September 30, 1997
(a) Less than 90% of the Operating Profit: No Incentive Bonus;
(b) Greater than or equal to 90% but less than 100% of the Operating
Profit: Minimum Incentive Bonus of fifteen percent (15%) of base salary,
increasing as Operating Profit reaches 100%, at which point the Incentive Bonus
is 30% of base salary;
(c) Greater than 100% but less than 120% of the Operating Profit: Minimum
Incentive Bonus of thirty percent (30%) of base salary, increasing as Operating
Profit reaches 120%, at which point the Incentive Bonus is 50% of base salary;
(d) Greater than 120% of the Operating Profit: Incentive Bonus of fifty
percent (50%) of base salary/1/.
5. 1999 Management Performance Incentive Plan. If the Closing of the
------------------------------------------
sale of RCL occurs during calendar year 1999, you shall be entitled to
participate in a 1999 Management Performance Incentive Plan based on Operating
Profit as set forth in the 1999 Five-Year Plan.
6. Severance.
---------
(a) In connection with the sale, RCL will provide you with severance
(including medical and dental benefits) at your monthly base salary according to
the schedule set forth in (b) below if:
(i) you are terminated without cause as set forth in paragraph 11 prior to
Closing;
- -----------------------
/1/ Examples of calculation of 1998 Management Incentive Bonus:
Example 1: Base salary: $50,000
Sale closes on March 31, 1998 (90/365)
Operating Profit determined to be at 97% of the amount set forth in
the 1998 Five-Year Plan
($50,000 x 90/365) x {30% - [(100-97) x 1.5]}
Bonus: $3,143.84
Example 2: Base salary: $50,000
Sale closes on June 30, 1998 (181/365)
Operating Profit: 115%
($50,000 x 181/365) x {50% - [120-115]}
Bonus: $11,157.53
<PAGE>
Page 4
September 30, 1997
(ii) you do not receive an offer of employment from the buyer at
Comparable Compensation; or
(iii) you receive but do not accept an offer of employment from the buyer
at Comparable Compensation because the commute to the location of the employment
offered entailed an additional commute from your current residence of more than
thirty-five (35) miles; or
(iv) you accept a position with buyer and are subsequently terminated
without cause as defined in paragraph 12 prior to the completion of 365 calendar
days of employment.
(b) The period of entitlement for severance is set forth below:
(i) if you do not receive an offer of employment at or about the time of
Closing at Comparable Compensation or an offer of a position within the
commuting distance set forth in paragraph 6(a)(iii), you shall receive six (6)
months of base salary;
(ii) if, within 365 calendar days of employment with the buyer, you are
terminated without cause; subjected to a substantial reduction of your base
salary; or if you are required to relocate beyond thirty-five (35) miles of your
commuting distance when employed by RCL, you shall receive six (6) months of
base salary;
(iii) if you are terminated by the buyer after one (1) year of
employment with the buyer, you may be eligible for severance provided by the
buyer but will no longer be covered by an RCL-sponsored severance program.
(c) Severance shall be paid in a lump sum in the first month of
eligibility measured by the periods set forth in (b)(i)-(iii) above.
7. Benefits During Severance. You and your eligible dependents shall be
-------------------------
eligible during the severance measuring period to participate in medical and
dental plans with no required contribution from you.
8. Prior to any public announcement concerning the sale of RCL, you
agree that without the prior consent of RCL you will not disclose to any person
or entity (other than those individuals identified to you in writing as being
active participants in the sale process) either the fact that discussions or
negotiations are taking place or have taken place regarding the possible sale of
RCL or any of the terms, conditions or other facts relating to the possible
sale, including the status thereof.
<PAGE>
Page 5
September 30, 1997
9. Raytheon will decide in its sole discretion if and when to proceed
with the sale of RCL and the terms and conditions upon which any such sale shall
be effected. Nothing contained herein shall obligate the sale of RCL at this or
any other time.
10. Nothing contained herein shall obligate RCL or any buyer to offer you
continued employment or to provide you with any minimum level of compensation or
benefits.
11. Termination Prior to Closing. RCL retains the right to terminate your
----------------------------
employment prior to the Closing. Unless terminated for the reasons set forth
below prior to Closing and/or prior to the expiration of 24 months of this
agreement, you shall receive the benefits and bonuses referenced in paragraphs
2, 3, 4, 5, 6 and 7. In the event of termination for cause as defined in
Sections 11(a) - (c) below, you shall not be entitled to the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7. Reasons for termination
for cause are:
(a) failure to perform any of the material duties of your position,
including special projects and assignments; or
(b) breach of any material provision of Raytheon's Standards of Business
Behavior and Ethics; or
(c) breach of Raytheon Company Rules and Regulations.
If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (a), (b) and (c) above, including termination as a
result of a reduction in force, you will be eligible for the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7.
12. Termination for Cause After Closing. The following conduct shall
------------------------------------
constitute "cause" for termination after Closing:
(a) repeated failure to perform any of the material duties of your
position, including special projects and assignments, provided reasonable
written notice and an opportunity to cure performance deficiencies has been
provided;
(b) serious breach of any material provision of the buyer's standards of
business behavior and ethics; or
(c) serious misconduct in willful disregard of the buyer's interests.
13. Entire Agreement. This letter constitutes the entire agreement
-----------------
between the parties and supersedes any prior communications, agreements or
understandings, whether oral or written, with respect to the terms of your
continued employment.
<PAGE>
Page 6
September 30, 1997
14. General Release. As a condition of participation in the benefits set
---------------
forth in this letter, you agree to execute the General Release contained in
Attachment A.
15. Arbitration of Claims. The parties agree that any disputes arising
----------------------
during the term of your employment with Raytheon, including but not limited to
any claims arising under the terms of this retention agreement, shall be subject
to final and binding arbitration as the sole and exclusive forum for dispute
resolution. Arbitration under this section shall be conducted pursuant to the
rules of the American Arbitration Association applicable to employment disputes.
Either party may request arbitration in writing pursuant to this section within
six (6) months of the event(s) giving rise to the dispute. Failure to request
arbitration within the time period shall forever bar any action in court or
before any administrative agency and shall be construed as an explicit waiver
and release of all claims as enumerated herein. Claims covered by this section
include, but are not limited to, claims for breach of contract, breach of the
covenant of good faith and fair dealing, tort claims, claims arising under
common law, claims for discrimination and claims for compensation or benefits
under the terms of this agreement. Any arbitration award issued under this
section shall extinguish all other rights of the parties with respect to the
subject matter of the dispute, whether grounded in contract, federal or state
statutes, or common law, and otherwise will be final and binding on the parties.
Claims not covered by this section are claims regarding your compensation,
including but not limited to modification in compensation, the amount and award
of discretionary company bonuses and stock options, eligibility for benefits
under any company benefit plan covered by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the amount of benefits provided
under a company benefit plan covered by ERISA, any claim cognizable under ERISA,
or any claims for workers' compensation or unemployment compensation under a
state workers' compensation or unemployment compensation law.
16. Confidentiality. You agree to keep confidential this agreement and
----------------
not to disclose either the fact of the agreement or the terms thereof, except
where necessary to members of your immediate family, tax or legal advisors, and
as required in response to a valid subpoena or court order. Failure to comply
with the provisions of this paragraph 16 will be deemed a material breach of the
agreement and may result in forfeiture of the bonuses and benefits provided
herein.
17. Stock Options. Only those stock options which are vested can be
--------------
exercised. Vesting accrual terminates as of the Closing. Options vested as of
the Closing can only be exercised within one (1) year following the Closing.
<PAGE>
Page 7
September 30, 1997
If you are in agreement with the foregoing, please sign, date and return
the enclosed copy of this letter to the undersigned, whereupon it shall become a
binding agreement between us.
Very truly yours,
RAYTHEON COMMERCIAL LAUNDRY LLC
By
(signature)
AGREED AND ACCEPTED:
Date:
-----
Name
<PAGE>
EXHIBIT 10.25
AMENDMENT NO. 1 TO RETENTION AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 1 TO RETENTION AGREEMENT (this "Amendment"), dated
---------
as of April __, 1998, amends that certain Letter Agreement (the "Retention
---------
Agreement"), dated as of September 30, 1997, by and between R. Scott Gaster
- ---------
("Executive") and Raytheon Commercial Laundry LLC, a Delaware limited liability
- -----------
company (the "Company"). Capitalized terms used herein and not defined shall
-------
have the meanings assigned to them in the Retention Agreement.
WHEREAS, pursuant to the terms of the Retention Agreement, the Company
agreed to pay Executive, upon certain terms and conditions, a Retention Bonus;
WHEREAS, the Retention Bonus is currently due and payable in three
parts: Part One being due and payable as of April 20, 1998 or May 20, 1998, as
the case may be (the "First Bonus Payment"), Part Two being due and payable as
-------------------
of October 20, 1998 (the "Second Bonus Payment") and Part Three being due and
--------------------
payable as of October 20, 1999 (the "Third Bonus Payment");
-------------------
WHEREAS, the Company is a party to a certain Agreement and Plan of
Merger (the "Merger Agreement"), dated February 21, 1998, by and among the
----------------
Company, Raytheon Company, a Delaware corporation, Bain/RCL, L.L.C., a Delaware
limited liability company, and RCL Acquisitions, L.L.C., a Delaware limited
liability company ("MergeCo"), pursuant to which MergeCo will merge with and
-------
into the Company (the "Merger") with the Company being the surviving entity;
------
WHEREAS, the Executive has no current right to receive or draw upon
any portion of the Retention Bonus and would forfeit his or her right to receive
payment thereof if he or she resigned from the Company prior to the dates on
which the Retention Bonus is payable; and
WHEREAS, in contemplation of the Merger and transactions related
thereto, the Executive and the Company wish to amend the Retention Agreement to
defer the payment of the First Bonus Payment until the date of the Second Bonus
Payment.
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the parties do hereby agree as follows:
1. Deferment of the First Bonus Payment. The paragraph entitled
------------------------------------
"Schedule of Payments" under Paragraph 2 of the Retention Agreement shall be
- ---------------------
amended in its entirety to read as follows:
<PAGE>
"Schedule of Payments. The Retention Bonus shall be paid in
---------------------
two parts.
Part One: Part One is fifty percent (50%) of the Retention
--------
Bonus and shall be payable on October 20, 1998.
Part Two: Part Two is fifty percent (50%) of the Retention
--------
Bonus and shall payable on October 20, 1999."
2. Effect of this Amendment. The Retention Agreement, as amended
------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Retention Agreement to be executed as of the day and year first written
above.
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_______________________________________
Its:_______________________________________
________________________________________
R. SCOTT GASTER
-3-
<PAGE>
EXHIBIT 10.26
Raytheon Commercial Laundry LLC
Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Tel 920.748.3121
Fax 920.748.4429
RAYTHEON COMMERCIAL LAUNDRY
September 30, 1997
Mr. Jeffrey J. Brothers
S.S. ####-##-####
Dear Mr. Brothers:
Raytheon Company is exploring various alternatives with respect to Raytheon
Commercial Laundry LLC (hereinafter "RCL"), including its sale to a third party.
This letter sets forth the understanding and agreement between you and RCL with
respect to our respective rights and obligations in connection with your
continued employment and cooperation in a potential sale of RCL.
1. You agree to assist and cooperate fully with RCL in all matters
related to its efforts to sell and to do and perform all tasks reasonably
requested of you to support and help bring about such sale. Furthermore, in
recognition of RCL's desire that you make yourself available for employment with
the eventual buyer should the buyer desire to retain your services, you agree to
review and consider in good faith employment offers, if any, made by the buyer.
2. Retention Bonus. As consideration of your agreement to the terms set
----------------
forth in this letter, you shall be entitled, subject to the conditions set forth
below, to a bonus (the "Retention Bonus") from RCL in an amount equal to twelve
(12) months of your current monthly base salary in effect as of the date of the
execution of this agreement. Base salary does not include any normally awarded
performance bonuses, any other discretionary bonuses or any bonuses provided
under this agreement.
The Retention Bonus shall be paid pursuant to the following schedule and
subject to the below-listed terms and conditions:
Schedule of Payments. The Retention Bonus shall be paid in three parts.
--------------------
Part One: Part One is twenty-five percent (25%) of the Retention Bonus and
--------
shall be payable within twenty (20) days of the first day of the month following
the sixth month of the execution date of this Agreement (for example, if this
Agreement is executed on October 20, 1997, Part One of the Retention Bonus will
be paid not later than May 20, 1998).
Part Two: Part Two is twenty-five percent (25%) of the Retention Bonus and
--------
is payable twelve (12) months after the execution of this Agreement in
accordance with the payment mechanism set forth for payment of Part One.
<PAGE>
Part 2
September 30, 1997
Part Three: Part Three is fifty percent (50%) of the Retention Bonus and
----------
is payable twenty-four (24) months after the execution of the Agreement in
accordance with the payment mechanism set forth for payment of Parts One and
Two.
Any portion of the Retention Bonus that has not already been received shall
be subject to the following terms and conditions:
(a) You must accept an offer of employment from the buyer (i) if such offer
includes a base salary at least equal to the base salary received from RCL as of
the time of the offer, and that provides you with benefits reasonably comparable
in the aggregate to your current benefits ("Comparable Compensation"); and (ii)
the primary place of your employment would not entail an additional commute from
your current residence of more than thirty-five (35) miles, and (iii) you must
remain in the buyer's employ as of the dates of payment of the part or parts of
the Retention Bonus, except that, in the event of your death or total and
permanent disability (certified to the satisfaction of the Company) between the
execution date and the date of payment of the part or parts of the Retention
Bonus, such part or parts shall be paid to you (or in the event of your death to
your estate).
(b) The foregoing notwithstanding, if during your employment with the buyer
(i) you are terminated without cause; (ii) your base salary is substantially
reduced; or (iii) your primary place of employment is moved to a location beyond
that set forth in 2(a)(ii) above, and as a result you leave the buyer's employ,
you shall retain all rights to any Retention Bonus earned pursuant to the terms
of this agreement, including the part or parts which would not otherwise be
payable pursuant to the mechanism and time periods set forth in this paragraph.
(c) If you do not receive an offer of employment from the buyer which
provides for Comparable Compensation or is for employment at a location not
within the commuting distance described in (a)(ii) above, the entire Retention
Bonus will be payable within twenty (20) days of Closing.
3. 1997 Management Performance Incentive Plan. You may be eligible for a
------------------------------------------
prorated Management Performance Incentive Bonus for the period from
SeptemberE10, 1997, through December 30, 1997.
4. 1998 Management Performance Incentive Plan. If the Closing of the
-------------------------------------------
sale of RCL occurs during calendar year 1998, you shall be entitled to a
prorated Management Performance Incentive Bonus for 1998 ("Incentive Bonus:
1998") as set forth below. The Incentive Bonus: 1998 is conditioned on
achievement of the Operating Profit agreed to in the 1998 Five-Year Plan
("Operating Profit"). If the sale does not close during calendar year 1998, you
shall be entitled to the full amount of the Incentive Bonus: 1998 as set forth
below based on Operating Profit levels.
<PAGE>
Page 3
September 30, 1997
(a) Less than 90% of the Operating Profit: No Incentive Bonus;
(b) Greater than or equal to 90% but less than 100% of the Operating
Profit: Minimum Incentive Bonus of fifteen percent (15%) of base salary,
increasing as Operating Profit reaches 100%, at which point the Incentive Bonus
is 30% of base salary;
(c) Greater than 100% but less than 120% of the Operating Profit: Minimum
Incentive Bonus of thirty percent (30%) of base salary, increasing as Operating
Profit reaches 120%, at which point the Incentive Bonus is 50% of base salary;
(d) Greater than 120% of the Operating Profit: Incentive Bonus of fifty
percent (50%) of base salary/1/.
5. 1999 Management Performance Incentive Plan. If the Closing of the
------------------------------------------
sale of RCL occurs during calendar year 1999, you shall be entitled to
participate in a 1999 Management Performance Incentive Plan based on Operating
Profit as set forth in the 1999 Five-Year Plan.
6. Severance.
---------
(a) In connection with the sale, RCL will provide you with severance
(including medical and dental benefits) at your monthly base salary according to
the schedule set forth in (b) below if:
(i) you are terminated without cause as set forth in paragraph 11 prior to
Closing;
- ---------------------------
/1/ Examples of calculation of 1998 Management Incentive Bonus:
Example 1: Base salary: $50,000
Sale closes on March 31, 1998 (90/365)
Operating Profit determined to be at 97% of the amount set forth in
the 1998 Five-Year Plan
($50,000 x 90/365) x {30% - [(100-97) x 1.5]}
Bonus: $3,143.84
Example 2: Base salary: $50,000
Sale closes on June 30, 1998 (181/365)
Operating Profit: 115%
($50,000 x 181/365) x {50% - [120-115]}
Bonus: $11,157.53
<PAGE>
Page 4
September 30, 1997
(ii) you do not receive an offer of employment from the buyer at
Comparable Compensation; or
(iii) you receive but do not accept an offer of employment from the
buyer at Comparable Compensation because the commute to the location of the
employment offered entailed an additional commute from your current residence of
more than thirty-five (35) miles; or
(iv) you accept a position with buyer and are subsequently terminated
without cause as defined in paragraph 12 prior to the completion of 365 calendar
days of employment.
(b) The period of entitlement for severance is set forth below:
(i) if you do not receive an offer of employment at or about the time
of Closing at Comparable Compensation or an offer of a position within the
commuting distance set forth in paragraph 6(a)(iii), you shall receive six (6)
months of base salary;
(ii) if, within 365 calendar days of employment with the buyer, you
are terminated without cause; subjected to a substantial reduction of your base
salary; or if you are required to relocate beyond thirty-five (35) miles of your
commuting distance when employed by RCL, you shall receive six (6) months of
base salary;
(iii) if you are terminated by the buyer after one (1) year of
employment with the buyer, you may be eligible for severance provided by the
buyer but will no longer be covered by an RCL-sponsored severance program.
(c) Severance shall be paid in a lump sum in the first month of
eligibility measured by the periods set forth in (b)(i)-(iii) above.
7. Benefits During Severance. You and your eligible dependents shall
-------------------------
be eligible during the severance measuring period to participate in medical and
dental plans with no required contribution from you.
8. Prior to any public announcement concerning the sale of RCL, you
agree that without the prior consent of RCL you will not disclose to any person
or entity (other than those individuals identified to you in writing as being
active participants in the sale process) either the fact that discussions or
negotiations are taking place or have taken place regarding the possible sale of
RCL or any of the terms, conditions or other facts relating to the possible
sale, including the status thereof.
<PAGE>
Page 5
September 30, 1997
9. Raytheon will decide in its sole discretion if and when to proceed
with the sale of RCL and the terms and conditions upon which any such sale shall
be effected. Nothing contained herein shall obligate the sale of RCL at this or
any other time.
10. Nothing contained herein shall obligate RCL or any buyer to offer you
continued employment or to provide you with any minimum level of compensation or
benefits.
11. Termination Prior to Closing. RCL retains the right to terminate your
----------------------------
employment prior to the Closing. Unless terminated for the reasons set forth
below prior to Closing and/or prior to the expiration of 24 months of this
agreement, you shall receive the benefits and bonuses referenced in paragraphs
2, 3, 4, 5, 6 and 7. In the event of termination for cause as defined in
Sections 11(a) - (c) below, you shall not be entitled to the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7. Reasons for termination
for cause are:
(a) failure to perform any of the material duties of your position,
including special projects and assignments; or
(b) breach of any material provision of Raytheon's Standards of Business
Behavior and Ethics; or
(c) breach of Raytheon Company Rules and Regulations.
If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (a), (b) and (c) above, including termination as a
result of a reduction in force, you will be eligible for the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7.
12. Termination for Cause After Closing. The following conduct shall
------------------------------------
constitute "cause" for termination after Closing:
(a) repeated failure to perform any of the material duties of your
position, including special projects and assignments, provided reasonable
written notice and an opportunity to cure performance deficiencies has been
provided;
(b) serious breach of any material provision of the buyer's standards of
business behavior and ethics; or
(c) serious misconduct in willful disregard of the buyer's interests.
13. Entire Agreement. This letter constitutes the entire agreement
-----------------
between the parties and supersedes any prior communications, agreements or
understandings, whether oral or written, with respect to the terms of your
continued employment.
<PAGE>
Page 6
September 30, 1997
14. General Release. As a condition of participation in the benefits set
---------------
forth in this letter, you agree to execute the General Release contained in
Attachment A.
15. Arbitration of Claims. The parties agree that any disputes arising
----------------------
during the term of your employment with Raytheon, including but not limited to
any claims arising under the terms of this retention agreement, shall be subject
to final and binding arbitration as the sole and exclusive forum for dispute
resolution. Arbitration under this section shall be conducted pursuant to the
rules of the American Arbitration Association applicable to employment disputes.
Either party may request arbitration in writing pursuant to this section within
six (6) months of the event(s) giving rise to the dispute. Failure to request
arbitration within the time period shall forever bar any action in court or
before any administrative agency and shall be construed as an explicit waiver
and release of all claims as enumerated herein. Claims covered by this section
include, but are not limited to, claims for breach of contract, breach of the
covenant of good faith and fair dealing, tort claims, claims arising under
common law, claims for discrimination and claims for compensation or benefits
under the terms of this agreement. Any arbitration award issued under this
section shall extinguish all other rights of the parties with respect to the
subject matter of the dispute, whether grounded in contract, federal or state
statutes, or common law, and otherwise will be final and binding on the parties.
Claims not covered by this section are claims regarding your compensation,
including but not limited to modification in compensation, the amount and award
of discretionary company bonuses and stock options, eligibility for benefits
under any company benefit plan covered by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the amount of benefits provided
under a company benefit plan covered by ERISA, any claim cognizable under ERISA,
or any claims for workers' compensation or unemployment compensation under a
state workers' compensation or unemployment compensation law.
16. Confidentiality. You agree to keep confidential this agreement and
----------------
not to disclose either the fact of the agreement or the terms thereof, except
where necessary to members of your immediate family, tax or legal advisors, and
as required in response to a valid subpoena or court order. Failure to comply
with the provisions of this paragraph 16 will be deemed a material breach of the
agreement and may result in forfeiture of the bonuses and benefits provided
herein.
17. Stock Options. Only those stock options which are vested can be
--------------
exercised. Vesting accrual terminates as of the Closing. Options vested as of
the Closing can only be exercised within one (1) year following the Closing.
<PAGE>
Page 7
September 30, 1997
If you are in agreement with the foregoing, please sign, date and return
the enclosed copy of this letter to the undersigned, whereupon it shall become a
binding agreement between us.
Very truly yours,
RAYTHEON COMMERCIAL LAUNDRY LLC
By
(signature)
AGREED AND ACCEPTED:
Date:
-----
Name
<PAGE>
EXHIBIT 10.27
AMENDMENT NO. 1 TO RETENTION AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 1 TO RETENTION AGREEMENT (this "Amendment"), dated
---------
as of April __, 1998, amends that certain Letter Agreement (the "Retention
---------
Agreement"), dated as of September 30, 1997, by and between Jeffrey J. Brothers
- --------- ---------
("Executive") and Raytheon Commercial Laundry LLC, a Delaware limited liability
---------
company (the "Company"). Capitalized terms used herein and not defined shall
-------
have the meanings assigned to them in the Retention Agreement.
WHEREAS, pursuant to the terms of the Retention Agreement, the Company
agreed to pay Executive, upon certain terms and conditions, a Retention Bonus;
WHEREAS, the Retention Bonus is currently due and payable in three
parts: Part One being due and payable as of April 20, 1998 or May 20, 1998, as
the case may be (the "First Bonus Payment"), Part Two being due and payable as
-------------------
of October 20, 1998 (the "Second Bonus Payment") and Part Three being due and
--------------------
payable as of October 20, 1999 (the "Third Bonus Payment");
-------------------
WHEREAS, the Company is a party to a certain Agreement and Plan of
Merger (the "Merger Agreement"), dated February 21, 1998, by and among the
----------------
Company, Raytheon Company, a Delaware corporation, Bain/RCL, L.L.C., a Delaware
limited liability company, and RCL Acquisitions, L.L.C., a Delaware limited
liability company ("MergeCo"), pursuant to which MergeCo will merge with and
-------
into the Company (the "Merger") with the Company being the surviving entity;
------
WHEREAS, the Executive has no current right to receive or draw upon
any portion of the Retention Bonus and would forfeit his or her right to receive
payment thereof if he or she resigned from the Company prior to the dates on
which the Retention Bonus is payable; and
WHEREAS, in contemplation of the Merger and transactions related
thereto, the Executive and the Company wish to amend the Retention Agreement to
defer the payment of the First Bonus Payment until the date of the Second Bonus
Payment.
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the parties do hereby agree as follows:
1. Deferment of the First Bonus Payment. The paragraph entitled
------------------------------------
"Schedule of Payments" under Paragraph 2 of the Retention Agreement shall be
- ---------------------
amended in its entirety to read as follows:
<PAGE>
"Schedule of Payments. The Retention Bonus shall be paid in
---------------------
two parts.
Part One: Part One is fifty percent (50%) of the Retention
--------
Bonus and shall be payable on October 20, 1998.
Part Two: Part Two is fifty percent (50%) of the Retention Bonus
--------
and shall payable on October 20, 1999."
2. Effect of this Amendment. The Retention Agreement, as amended
------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Retention Agreement to be executed as of the day and year first written
above.
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_______________________________________
Its:_______________________________________
________________________________________
JEFFREY J. BROTHERS
<PAGE>
EXHIBIT 10.28
Raytheon Commercial Laundry LLC
Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Tel 920.748.3121
Fax 920.748.4429
RAYTHEON COMMERCIAL LAUNDRY
September 30, 1997
Mr. Herman W. Beach
S.S. ####-##-####
Dear Mr. Beach:
Raytheon Company is exploring various alternatives with respect to Raytheon
Commercial Laundry LLC (hereinafter "RCL"), including its sale to a third party.
This letter sets forth the understanding and agreement between you and RCL with
respect to our respective rights and obligations in connection with your
continued employment and cooperation in a potential sale of RCL.
1. You agree to assist and cooperate fully with RCL in all matters
related to its efforts to sell and to do and perform all tasks reasonably
requested of you to support and help bring about such sale. Furthermore, in
recognition of RCL's desire that you make yourself available for employment with
the eventual buyer should the buyer desire to retain your services, you agree to
review and consider in good faith employment offers, if any, made by the buyer.
2. Retention Bonus. As consideration of your agreement to the terms set
----------------
forth in this letter, you shall be entitled, subject to the conditions set forth
below, to a bonus (the "Retention Bonus") from RCL in an amount equal to twelve
(12) months of your current monthly base salary in effect as of the date of the
execution of this agreement. Base salary does not include any normally awarded
performance bonuses, any other discretionary bonuses or any bonuses provided
under this agreement.
The Retention Bonus shall be paid pursuant to the following schedule and
subject to the below-listed terms and conditions:
Schedule of Payments. The Retention Bonus shall be paid in three parts.
--------------------
Part One: Part One is twenty-five percent (25%) of the Retention Bonus and
--------
shall be payable within twenty (20) days of the first day of the month following
the sixth month of the execution date of this Agreement (for example, if this
Agreement is executed on October 20, 1997, Part One of the Retention Bonus will
be paid not later than May 20, 1998).
Part Two: Part Two is twenty-five percent (25%) of the Retention Bonus and
--------
is payable twelve (12) months after the execution of this Agreement in
accordance with the payment mechanism set forth for payment of Part One.
<PAGE>
Page 2
September 30, 1997
Part Three: Part Three is fifty percent (50%) of the Retention Bonus and
----------
is payable twenty-four (24) months after the execution of the Agreement in
accordance with the payment mechanism set forth for payment of Parts One and
Two.
Any portion of the Retention Bonus that has not already been received shall
be subject to the following terms and conditions:
(a) You must accept an offer of employment from the buyer (i) if such offer
includes a base salary at least equal to the base salary received from RCL as of
the time of the offer, and that provides you with benefits reasonably comparable
in the aggregate to your current benefits ("Comparable Compensation"); and (ii)
the primary place of your employment would not entail an additional commute from
your current residence of more than thirty-five (35) miles, and (iii) you must
remain in the buyer's employ as of the dates of payment of the part or parts of
the Retention Bonus, except that, in the event of your death or total and
permanent disability (certified to the satisfaction of the Company) between the
execution date and the date of payment of the part or parts of the Retention
Bonus, such part or parts shall be paid to you (or in the event of your death to
your estate).
(b) The foregoing notwithstanding, if during your employment with the buyer
(i) you are terminated without cause; (ii) your base salary is substantially
reduced; or (iii) your primary place of employment is moved to a location beyond
that set forth in 2(a)(ii) above, and as a result you leave the buyer's employ,
you shall retain all rights to any Retention Bonus earned pursuant to the terms
of this agreement, including the part or parts which would not otherwise be
payable pursuant to the mechanism and time periods set forth in this paragraph.
(c) If you do not receive an offer of employment from the buyer which
provides for Comparable Compensation or is for employment at a location not
within the commuting distance described in (a)(ii) above, the entire Retention
Bonus will be payable within twenty (20) days of Closing.
3. 1997 Management Performance Incentive Plan. You may be eligible for a
------------------------------------------
prorated Management Performance Incentive Bonus for the period from
SeptemberE10, 1997, through December 30, 1997.
4. 1998 Management Performance Incentive Plan. If the Closing of the
-------------------------------------------
sale of RCL occurs during calendar year 1998, you shall be entitled to a
prorated Management Performance Incentive Bonus for 1998 ("Incentive Bonus:
1998") as set forth below. The Incentive Bonus: 1998 is conditioned on
achievement of the Operating Profit agreed to in the 1998 Five-Year Plan
("Operating Profit"). If the sale does not close during calendar year 1998, you
shall be entitled to the full amount of the Incentive Bonus: 1998 as set forth
below based on Operating Profit levels.
<PAGE>
Page 3
September 30, 1997
(a) Less than 90% of the Operating Profit: No Incentive Bonus;
(b) Greater than or equal to 90% but less than 100% of the Operating
Profit: Minimum Incentive Bonus of fifteen percent (15%) of base salary,
increasing as Operating Profit reaches 100%, at which point the Incentive Bonus
is 30% of base salary;
(c) Greater than 100% but less than 120% of the Operating Profit: Minimum
Incentive Bonus of thirty percent (30%) of base salary, increasing as Operating
Profit reaches 120%, at which point the Incentive Bonus is 50% of base salary;
(d) Greater than 120% of the Operating Profit: Incentive Bonus of fifty
percent (50%) of base salary/1/.
5. 1999 Management Performance Incentive Plan. If the Closing of the
------------------------------------------
sale of RCL occurs during calendar year 1999, you shall be entitled to
participate in a 1999 Management Performance Incentive Plan based on Operating
Profit as set forth in the 1999 Five-Year Plan.
6. Severance.
---------
(a) In connection with the sale, RCL will provide you with severance
(including medical and dental benefits) at your monthly base salary according to
the schedule set forth in (b) below if:
(i) you are terminated without cause as set forth in paragraph 11 prior to
Closing;
- --------------------------
/1/ Examples of calculation of 1998 Management Incentive Bonus:
Example 1: Base salary: $50,000
Sale closes on March 31, 1998 (90/365)
Operating Profit determined to be at 97% of the amount set forth in
the 1998 Five-Year Plan
($50,000 x 90/365) x {30% - [(100-97) x 1.5]}
Bonus: $3,143.84
Example 2: Base salary: $50,000
Sale closes on June 30, 1998 (181/365)
Operating Profit: 115%
($50,000 x 181/365) x {50% - [120-115]}
Bonus: $11,157.53
<PAGE>
Page 4
September 30, 1997
(ii) you do not receive an offer of employment from the buyer at
Comparable Compensation; or
(iii) you receive but do not accept an offer of employment from the
buyer at Comparable Compensation because the commute to the location of the
employment offered entailed an additional commute from your current residence of
more than thirty-five (35) miles; or
(iv) you accept a position with buyer and are subsequently terminated
without cause as defined in paragraph 12 prior to the completion of 365 calendar
days of employment.
(b) The period of entitlement for severance is set forth below:
(i) if you do not receive an offer of employment at or about the time of
Closing at Comparable Compensation or an offer of a position within the
commuting distance set forth in paragraph 6(a)(iii), you shall receive six (6)
months of base salary;
(ii) if, within 365 calendar days of employment with the buyer, you are
terminated without cause; subjected to a substantial reduction of your base
salary; or if you are required to relocate beyond thirty-five (35) miles of your
commuting distance when employed by RCL, you shall receive six (6) months of
base salary;
(iii) if you are terminated by the buyer after one (1) year of
employment with the buyer, you may be eligible for severance provided by the
buyer but will no longer be covered by an RCL-sponsored severance program.
(c) Severance shall be paid in a lump sum in the first month of
eligibility measured by the periods set forth in (b)(i)-(iii) above.
7. Benefits During Severance. You and your eligible dependents shall be
-------------------------
eligible during the severance measuring period to participate in medical and
dental plans with no required contribution from you.
8. Prior to any public announcement concerning the sale of RCL, you
agree that without the prior consent of RCL you will not disclose to any person
or entity (other than those individuals identified to you in writing as being
active participants in the sale process) either the fact that discussions or
negotiations are taking place or have taken place regarding the possible sale of
RCL or any of the terms, conditions or other facts relating to the possible
sale, including the status thereof.
<PAGE>
Page 5
September 30, 1997
9. Raytheon will decide in its sole discretion if and when to proceed
with the sale of RCL and the terms and conditions upon which any such sale shall
be effected. Nothing contained herein shall obligate the sale of RCL at this or
any other time.
10. Nothing contained herein shall obligate RCL or any buyer to offer you
continued employment or to provide you with any minimum level of compensation or
benefits.
11. Termination Prior to Closing. RCL retains the right to terminate your
----------------------------
employment prior to the Closing. Unless terminated for the reasons set forth
below prior to Closing and/or prior to the expiration of 24 months of this
agreement, you shall receive the benefits and bonuses referenced in paragraphs
2, 3, 4, 5, 6 and 7. In the event of termination for cause as defined in
Sections 11(a) - (c) below, you shall not be entitled to the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7. Reasons for termination
for cause are:
(a) failure to perform any of the material duties of your position,
including special projects and assignments; or
(b) breach of any material provision of Raytheon's Standards of Business
Behavior and Ethics; or
(c) breach of Raytheon Company Rules and Regulations.
If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (a), (b) and (c) above, including termination as a
result of a reduction in force, you will be eligible for the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7.
12. Termination for Cause After Closing. The following conduct shall
------------------------------------
constitute "cause" for termination after Closing:
(a) repeated failure to perform any of the material duties of your
position, including special projects and assignments, provided reasonable
written notice and an opportunity to cure performance deficiencies has been
provided;
(b) serious breach of any material provision of the buyer's standards of
business behavior and ethics; or
(c) serious misconduct in willful disregard of the buyer's interests.
13. Entire Agreement. This letter constitutes the entire agreement
-----------------
between the parties and supersedes any prior communications, agreements or
understandings, whether oral or written, with respect to the terms of your
continued employment.
<PAGE>
Page 6
September 30, 1997
14. General Release. As a condition of participation in the benefits set
---------------
forth in this letter, you agree to execute the General Release contained in
Attachment A.
15. Arbitration of Claims. The parties agree that any disputes arising
----------------------
during the term of your employment with Raytheon, including but not limited to
any claims arising under the terms of this retention agreement, shall be subject
to final and binding arbitration as the sole and exclusive forum for dispute
resolution. Arbitration under this section shall be conducted pursuant to the
rules of the American Arbitration Association applicable to employment disputes.
Either party may request arbitration in writing pursuant to this section within
six (6) months of the event(s) giving rise to the dispute. Failure to request
arbitration within the time period shall forever bar any action in court or
before any administrative agency and shall be construed as an explicit waiver
and release of all claims as enumerated herein. Claims covered by this section
include, but are not limited to, claims for breach of contract, breach of the
covenant of good faith and fair dealing, tort claims, claims arising under
common law, claims for discrimination and claims for compensation or benefits
under the terms of this agreement. Any arbitration award issued under this
section shall extinguish all other rights of the parties with respect to the
subject matter of the dispute, whether grounded in contract, federal or state
statutes, or common law, and otherwise will be final and binding on the parties.
Claims not covered by this section are claims regarding your compensation,
including but not limited to modification in compensation, the amount and award
of discretionary company bonuses and stock options, eligibility for benefits
under any company benefit plan covered by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the amount of benefits provided
under a company benefit plan covered by ERISA, any claim cognizable under ERISA,
or any claims for workers' compensation or unemployment compensation under a
state workers' compensation or unemployment compensation law.
16. Confidentiality. You agree to keep confidential this agreement and
----------------
not to disclose either the fact of the agreement or the terms thereof, except
where necessary to members of your immediate family, tax or legal advisors, and
as required in response to a valid subpoena or court order. Failure to comply
with the provisions of this paragraph 16 will be deemed a material breach of the
agreement and may result in forfeiture of the bonuses and benefits provided
herein.
17. Stock Options. Only those stock options which are vested can be
--------------
exercised. Vesting accrual terminates as of the Closing. Options vested as of
the Closing can only be exercised within one (1) year following the Closing.
<PAGE>
Page 7
September 30, 1997
If you are in agreement with the foregoing, please sign, date and return
the enclosed copy of this letter to the undersigned, whereupon it shall become a
binding agreement between us.
Very truly yours,
RAYTHEON COMMERCIAL LAUNDRY LLC
By
(signature)
AGREED AND ACCEPTED:
Date:
Name
<PAGE>
EXHIBIT 10.29
AMENDMENT NO. 1 TO RETENTION AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 1 TO RETENTION AGREEMENT (this "Amendment"), dated
---------
as of April __, 1998, amends that certain Letter Agreement (the "Retention
---------
Agreement"), dated as of September 30, 1997, by and between Herman W. Beach
- ---------
("Executive") and Raytheon Commercial Laundry LLC, a Delaware limited liability
- -----------
company (the "Company"). Capitalized terms used herein and not defined shall
-------
have the meanings assigned to them in the Retention Agreement.
WHEREAS, pursuant to the terms of the Retention Agreement, the Company
agreed to pay Executive, upon certain terms and conditions, a Retention Bonus;
WHEREAS, the Retention Bonus is currently due and payable in three
parts: Part One being due and payable as of April 20, 1998 or May 20, 1998, as
the case may be (the "First Bonus Payment"), Part Two being due and payable as
-------------------
of October 20, 1998 (the "Second Bonus Payment") and Part Three being due and
--------------------
payable as of October 20, 1999 (the "Third Bonus Payment");
-------------------
WHEREAS, the Company is a party to a certain Agreement and Plan of
Merger (the "Merger Agreement"), dated February 21, 1998, by and among the
----------------
Company, Raytheon Company, a Delaware corporation, Bain/RCL, L.L.C., a Delaware
limited liability company, and RCL Acquisitions, L.L.C., a Delaware limited
liability company ("MergeCo"), pursuant to which MergeCo will merge with and
-------
into the Company (the "Merger") with the Company being the surviving entity;
------
WHEREAS, the Executive has no current right to receive or draw upon
any portion of the Retention Bonus and would forfeit his or her right to receive
payment thereof if he or she resigned from the Company prior to the dates on
which the Retention Bonus is payable; and
WHEREAS, in contemplation of the Merger and transactions related
thereto, the Executive and the Company wish to amend the Retention Agreement to
defer the payment of the First Bonus Payment until the date of the Second Bonus
Payment.
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the parties do hereby agree as follows:
1. Deferment of the First Bonus Payment. The paragraph entitled
------------------------------------
"Schedule of Payments" under Paragraph 2 of the Retention Agreement shall be
- ---------------------
amended in its entirety to read as follows:
<PAGE>
"Schedule of Payments. The Retention Bonus shall be paid in
---------------------
two parts.
Part One: Part One is fifty percent (50%) of the Retention
--------
Bonus and shall be payable on October 20, 1998.
Part Two: Part Two is fifty percent (50%) of the Retention Bonus
--------
and shall payable on October 20, 1999."
2. Effect of this Amendment. The Retention Agreement, as amended
------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Retention Agreement to be executed as of the day and year first written
above.
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_______________________________________
Its:_______________________________________
________________________________________
HERMAN W. BEACH
<PAGE>
EXHIBIT 10.30
Raytheon Commercial Laundry LLC
Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Tel 920.748.3121
Fax 920.748.4429
[Raytheon Commercial Laundry]
September 30, 1997
Mr. Bruce P. Rounds
S.S. ####-##-####
Dear Mr. Rounds:
Raytheon Company is exploring various alternatives with respect to
Raytheon Commercial Laundry LLC (hereinafter "RCL"), including its sale to a
third party. This letter sets forth the understanding and agreement between
you and RCL with respect to our respective rights and obligations in
connection with your continued employment and cooperation in a potential sale
of RCL.
1. You agree to assist and cooperate fully with RCL in all matters
related to its efforts to sell and to do and perform all tasks reasonably
requested of you to support and help bring about such sale. Furthermore, in
recognition of RCL's desire that you make yourself available for employment
with the eventual buyer should the buyer desire to retain your services, you
agree to review and consider in good faith employment offers, if any, made by
the buyer.
2. Retention Bonus. As consideration of your agreement to the terms
---------------
set forth in this letter, you shall be entitled, subject to the conditions set
forth below, to a bonus (the "Retention Bonus") from RCL in an amount equal to
twelve (12) months of your current monthly base salary in effect as of the
date of the execution of this agreement. Base salary does not include any
normally awarded performance bonuses, any other discretionary bonuses or any
bonuses provided under this agreement.
The Retention Bonus shall be paid pursuant to the following schedule
and subject to the below-listed terms and conditions:
Schedule of Payments. The Retention Bonus shall be paid in three
--------------------
parts.
Part One: Part One is twenty-five percent (25%) of the Retention
--------
Bonus and shall be payable within twenty (20) days of the first day of the
month following the sixth month of the execution date of this Agreement (for
example, if this Agreement is executed on October 20, 1997, Part One of the
Retention Bonus will be paid not later than May 20, 1998).
Part Two: Part Two is twenty-five percent (25%) of the Retention
--------
Bonus and is payable twelve (12) months after the execution of this Agreement
in accordance with the payment mechanism set forth for payment of Part One.
<PAGE>
Page 2
September 30, 1997
Part Three: Part Three is fifty percent (50%) of the Retention Bonus
----------
and is payable twenty-four (24) months after the execution of the Agreement in
accordance with the payment mechanism set forth for payment of Parts One and
Two.
Any portion of the Retention Bonus that has not already been received
shall be subject to the following terms and conditions:
(a) You must accept an offer of employment from the buyer (i) if such
offer includes a base salary at least equal to the base salary received from
RCL as of the time of the offer, and that provides you with benefits
reasonably comparable in the aggregate to your current benefits ("Comparable
Compensation"); and (ii) the primary place of your employment would not entail
an additional commute from your current residence of more than thirty-five
(35) miles, and (iii) you must remain in the buyer's employ as of the dates of
payment of the part or parts of the Retention Bonus, except that, in the event
of your death or total and permanent disability (certified to the satisfaction
of the Company) between the execution date and the date of payment of the part
or parts of the Retention Bonus, such part or parts shall be paid to you (or
in the event of your death to your estate).
(b) The foregoing notwithstanding, if during your employment with the
buyer (i) you are terminated without cause; (ii) your base salary is
substantially reduced; or (iii) your primary place of employment is moved to a
location beyond that set forth in 2(a)(ii) above, and as a result you leave
the buyer's employ, you shall retain all rights to any Retention Bonus earned
pursuant to the terms of this agreement, including the part or parts which
would not otherwise be payable pursuant to the mechanism and time periods set
forth in this paragraph.
(c) If you do not receive an offer of employment from the buyer which
provides for Comparable Compensation or is for employment at a location not
within the commuting distance described in (a)(ii) above, the entire Retention
Bonus will be payable within twenty (20) days of Closing.
3. 1997 Management Performance Incentive Plan. You may be eligible
------------------------------------------
for a prorated Management Performance Incentive Bonus for the period from
September 10, 1997, through December 30, 1997.
4. 1998 Management Performance Incentive Plan. If the Closing of the
------------------------------------------
sale of RCL occurs during calendar year 1998, you shall be entitled to a
prorated Management Performance Incentive Bonus for 1998 ("Incentive Bonus:
1998") as set forth below. The Incentive Bonus: 1998 is conditioned on
achievement of the Operating Profit agreed to in the 1998 Five-Year Plan
("Operating Profit"). If the sale does not close during calendar year 1998,
you shall be entitled to the full amount of the Incentive Bonus: 1998 as set
forth below based on Operating Profit levels.
<PAGE>
Page 3
September 30, 1997
(a) Less than 90% of the Operating Profit: No Incentive Bonus;
(b) Greater than or equal to 90% but less than 100% of the Operating
Profit: Minimum Incentive Bonus of fifteen percent (15%) of base salary,
increasing as Operating Profit reaches 100%, at which point the Incentive
Bonus is 30% of base salary;
(c) Greater than 100% but less than 120% of the Operating Profit:
Minimum Incentive Bonus of thirty percent (30%) of base salary, increasing as
Operating Profit reaches 120%, at which point the Incentive Bonus is 50% of
base salary;
(d) Greater than 120% of the Operating Profit: Incentive Bonus of
fifty percent (50%) of base salary/1/.
5. 1999 Management Performance Incentive Plan. If the Closing of the
------------------------------------------
sale of RCL occurs during calendar year 1999, you shall be entitled to
participate in a 1999 Management Performance Incentive Plan based on Operating
Profit as set forth in the 1999 Five-Year Plan.
6. Severance.
---------
(a) In connection with the sale, RCL will provide you with severance
(including medical and dental benefits) at your monthly base salary according
to the schedule set forth in (b) below if:
(i) you are terminated without cause as set forth in paragraph 11
prior to Closing;
- -----------------------------
/1/ Examples of calculation of 1998 Management Incentive Bonus:
Example 1: Base salary: $50,000
Sale closes on March 31, 1998 (90/365)
Operating Profit determined to be at 97% of the amount set
forth in the 1998 Five-Year Plan
($50,000 x 90/365) x {30% - [(100-97) x 1.5]}
Bonus: $3,143.84
Example 2: Base salary: $50,000
Sale closes on June 30, 1998 (181/365)
Operating Profit: 115%
($50,000 x 181/365) x {50% - [120-115]}
Bonus: $11,157.53
<PAGE>
Page 4
September 30, 1997
(ii) you do not receive an offer of employment from the buyer at
Comparable Compensation; or
(iii) you receive but do not accept an offer of employment from the
buyer at Comparable Compensation because the commute to the location of the
employment offered entailed an additional commute from your current residence
of more than thirty-five (35) miles; or
(iv) you accept a position with buyer and are subsequently terminated
without cause as defined in paragraph 12 prior to the completion of 365
calendar days of employment.
(b) The period of entitlement for severance is set forth below:
(i) if you do not receive an offer of employment at or about the time
of Closing at Comparable Compensation or an offer of a position within the
commuting distance set forth in paragraph 6(a)(iii), you shall receive six (6)
months of base salary;
(ii) if, within 365 calendar days of employment with the buyer, you
are terminated without cause; subjected to a substantial reduction of your
base salary; or if you are required to relocate beyond thirty-five (35) miles
of your commuting distance when employed by RCL, you shall receive six (6)
months of base salary;
(iii) if you are terminated by the buyer after one (1) year of
employment with the buyer, you may be eligible for severance provided by the
buyer but will no longer be covered by an RCL-sponsored severance program.
(c) Severance shall be paid in a lump sum in the first month of
eligibility measured by the periods set forth in (b)(i)-(iii) above.
7. Benefits During Severance. You and your eligible dependents shall
-------------------------
be eligible during the severance measuring period to participate in medical
and dental plans with no required contribution from you.
8. Prior to any public announcement concerning the sale of RCL, you
agree that without the prior consent of RCL you will not disclose to any
person or entity (other than those individuals identified to you in writing as
being active participants in the sale process) either the fact that
discussions or negotiations are taking place or have taken place regarding the
possible sale of RCL or any of the terms, conditions or other facts relating
to the possible sale, including the status thereof.
<PAGE>
Page 5
September 30, 1997
9. Raytheon will decide in its sole discretion if and when to proceed
with the sale of RCL and the terms and conditions upon which any such sale
shall be effected. Nothing contained herein shall obligate the sale of RCL at
this or any other time.
10. Nothing contained herein shall obligate RCL or any buyer to offer
you continued employment or to provide you with any minimum level of
compensation or benefits.
11. Termination Prior to Closing. RCL retains the right to terminate
----------------------------
your employment prior to the Closing. Unless terminated for the reasons set
forth below prior to Closing and/or prior to the expiration of 24 months of
this agreement, you shall receive the benefits and bonuses referenced in
paragraphs 2, 3, 4, 5, 6 and 7. In the event of termination for cause as
defined in Sections ll(a) - (c) below, you shall not be entitled to the
bonuses and benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7. Reasons for
termination for cause are:
(a) failure to perform any of the material duties of your position,
including special projects and assignments; or
(b) breach of any material provision of Raytheon's Standards of
Business Behavior and Ethics; or
(c) breach of Raytheon Company Rules and Regulations.
If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (a), (b) and (c) above, including termination as a
result of a reduction in force, you will be eligible for the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7.
12. Termination for Cause After Closing. The following conduct shall
-----------------------------------
constitute "cause" for termination after Closing:
(a) repeated failure to perform any of the material duties of your
position, including special projects and assignments, provided reasonable
written notice and an opportunity to cure performance deficiencies has been
provided;
(b) serious breach of any material provision of the buyer's standards
of business behavior and ethics; or
(c) serious misconduct in willful disregard of the buyer's interests.
13. Entire Agreement. This letter constitutes the entire agreement
----------------
between the parties and supersedes any prior communications, agreements or
understandings, whether oral or written, with respect to the terms of your
continued employment.
<PAGE>
Page 6
September 30, 1997
14. General Release. As a condition of participation in the benefits
---------------
set forth in this letter, you agree to execute the General Release contained
in Attachment A.
15. Arbitration of Claims. The parties agree that any disputes
---------------------
arising during the term of your employment with Raytheon, including but not
limited to any claims arising under the terms of this retention agreement,
shall be subject to final and binding arbitration as the sole and exclusive
forum for dispute resolution. Arbitration under this section shall be
conducted pursuant to the rules of the American Arbitration Association
applicable to employment disputes. Either party may request arbitration in
writing pursuant to this section within six (6) months of the event(s) giving
rise to the dispute. Failure to request arbitration within the time period
shall forever bar any action in court or before any administrative agency and
shall be construed as an explicit waiver and release of all claims as
enumerated herein. Claims covered by this section include, but are not limited
to, claims for breach of contract, breach of the covenant of good faith and
fair dealing, tort claims, claims arising under common law, claims for
discrimination and claims for compensation or benefits under the terms of this
agreement. Any arbitration award issued under this section shall extinguish
all other rights of the parties with respect to the subject matter of the
dispute, whether grounded in contract, federal or state statutes, or common
law, and otherwise will be final and binding on the parties. Claims not
covered by this section are claims regarding your compensation, including but
not limited to modification in compensation, the amount and award of
discretionary company bonuses and stock options, eligibility for benefits
under any company benefit plan covered by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the amount of benefits provided
under a company benefit plan covered by ERISA, any claim cognizable under
ERISA, or any claims for workers' compensation or unemployment compensation
under a state workers' compensation or unemployment compensation law.
16. Confidentiality. You agree to keep confidential this agreement
---------------
and not to disclose either the fact of the agreement or the terms thereof,
except where necessary to members of your immediate family, tax or legal
advisors, and as required in response to a valid subpoena or court order.
Failure to comply with the provisions of this paragraph 16 will be deemed a
material breach of the agreement and may result in forfeiture of the bonuses
and benefits provided herein.
17. Stock Options. Only those stock options which are vested can be
-------------
exercised. Vesting accrual terminates as of the Closing. Options vested as of
the Closing can only be exercised within one (1) year following the Closing.
<PAGE>
Page 7
September 30, 1997
If you are in agreement with the foregoing, please sign, date and
return the enclosed copy of this letter to the undersigned, whereupon it shall
become a binding agreement between us.
Very truly yours,
Raytheon Commercial Laundry LLC
By
(signature)
AGREED AND ACCEPTED:
Date:
Name
<PAGE>
EXHIBIT 10.31
AMENDMENT NO. 1 TO RETENTION AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 1 TO RETENTION AGREEMENT (this "Amendment"), dated
---------
as of April __, 1998, amends that certain Letter Agreement (the "Retention
---------
Agreement"), dated as of September 30, 1997, by and between Bruce P. Rounds
- ---------
("Executive") and Raytheon Commercial Laundry LLC, a Delaware limited liability
- -----------
company (the "Company"). Capitalized terms used herein and not defined shall
-------
have the meanings assigned to them in the Retention Agreement.
WHEREAS, pursuant to the terms of the Retention Agreement, the Company
agreed to pay Executive, upon certain terms and conditions, a Retention Bonus;
WHEREAS, the Retention Bonus is currently due and payable in three
parts: Part One being due and payable as of April 20, 1998 or May 20, 1998, as
the case may be (the "First Bonus Payment"), Part Two being due and payable as
-------------------
of October 20, 1998 (the "Second Bonus Payment") and Part Three being due and
--------------------
payable as of October 20, 1999 (the "Third Bonus Payment");
-------------------
WHEREAS, the Company is a party to a certain Agreement and Plan of
Merger (the "Merger Agreement"), dated February 21, 1998, by and among the
----------------
Company, Raytheon Company, a Delaware corporation, Bain/RCL, L.L.C., a Delaware
limited liability company, and RCL Acquisitions, L.L.C., a Delaware limited
liability company ("MergeCo"), pursuant to which MergeCo will merge with and
-------
into the Company (the "Merger") with the Company being the surviving entity;
------
WHEREAS, the Executive has no current right to receive or draw upon
any portion of the Retention Bonus and would forfeit his or her right to receive
payment thereof if he or she resigned from the Company prior to the dates on
which the Retention Bonus is payable; and
WHEREAS, in contemplation of the Merger and transactions related
thereto, the Executive and the Company wish to amend the Retention Agreement to
defer the payment of the First Bonus Payment until the date of the Second Bonus
Payment.
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the parties do hereby agree as follows:
1. Deferment of the First Bonus Payment. The paragraph entitled
------------------------------------
"Schedule of Payments" under Paragraph 2 of the Retention Agreement shall be
- ---------------------
amended in its entirety to read as follows:
<PAGE>
"Schedule of Payments. The Retention Bonus shall be paid in
--------------------
two parts.
Part One: Part One is fifty percent (50%) of the Retention
--------
Bonus and shall be payable on October 20, 1998.
Part Two: Part Two is fifty percent (50%) of the Retention Bonus
--------
and shall payable on October 20, 1999."
2. Effect of this Amendment. The Retention Agreement, as amended
------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Retention Agreement to be executed as of the day and year first written
above.
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_______________________________________
Its:_______________________________________
________________________________________
BRUCE P. ROUNDS
<PAGE>
EXHIBIT 10.32
Raytheon Commercial Laundry LLC
Shepard Street
P.O. Box 990
Ripon, WI 54971-0990
Tel 920.748.3121
Fax 920.748.4429
Raytheon Commercial Laundry
September 30, 1997
Mr. Robert T. Wallace
S.S. ####-##-####
Dear Mr. Wallace:
Raytheon Company is exploring various alternatives with respect to Raytheon
Commercial Laundry LLC (hereinafter "RCL"), including its sale to a third party.
This letter sets forth the understanding and agreement between you and RCL with
respect to our respective rights and obligations in connection with your
continued employment and cooperation in a potential sale of RCL.
1. You agree to assist and cooperate fully with RCL in all matters
related to its efforts to sell and to do and perform all tasks reasonably
requested of you to support and help bring about such sale. Furthermore, in
recognition of RCL's desire that you make yourself available for employment with
the eventual buyer should the buyer desire to retain your services, you agree to
review and consider in good faith employment offers, if any, made by the buyer.
2. Retention Bonus. As consideration of your agreement to the terms set
----------------
forth in this letter, you shall be entitled, subject to the conditions set forth
below, to a bonus (the "Retention Bonus") from RCL in an amount equal to twelve
(12) months of your current monthly base salary in effect as of the date of the
execution of this agreement. Base salary does not include any normally awarded
performance bonuses, any other discretionary bonuses or any bonuses provided
under this agreement.
The Retention Bonus shall be paid pursuant to the following schedule and
subject to the below-listed terms and conditions:
Schedule of Payments. The Retention Bonus shall be paid in three parts.
--------------------
Part One: Part One is twenty-five percent (25%) of the Retention Bonus and
--------
shall be payable within twenty (20) days of the first day of the month following
the sixth month of the execution date of this Agreement (for example, if this
Agreement is executed on October 20, 1997, Part One of the Retention Bonus will
be paid not later than May 20, 1998).
Part Two: Part Two is twenty-five percent (25%) of the Retention Bonus and
--------
is payable twelve (12) months after the execution of this Agreement in
accordance with the payment mechanism set forth for payment of Part One.
<PAGE>
Page 2
September 30, 1997
Part Three: Part Three is fifty percent (50%) of the Retention Bonus and
----------
is payable twenty-four (24) months after the execution of the Agreement in
accordance with the payment mechanism set forth for payment of Parts One and
Two.
Any portion of the Retention Bonus that has not already been received shall
be subject to the following terms and conditions:
(a) You must accept an offer of employment from the buyer (i) if such offer
includes a base salary at least equal to the base salary received from RCL as of
the time of the offer, and that provides you with benefits reasonably comparable
in the aggregate to your current benefits ("Comparable Compensation"); and (ii)
the primary place of your employment would not entail an additional commute from
your current residence of more than thirty-five (35) miles, and (iii) you must
remain in the buyer's employ as of the dates of payment of the part or parts of
the Retention Bonus, except that, in the event of your death or total and
permanent disability (certified to the satisfaction of the Company) between the
execution date and the date of payment of the part or parts of the Retention
Bonus, such part or parts shall be paid to you (or in the event of your death to
your estate).
(b) The foregoing notwithstanding, if during your employment with the buyer
(i) you are terminated without cause; (ii) your base salary is substantially
reduced; or (iii) your primary place of employment is moved to a location beyond
that set forth in 2(a)(ii) above, and as a result you leave the buyer's employ,
you shall retain all rights to any Retention Bonus earned pursuant to the terms
of this agreement, including the part or parts which would not otherwise be
payable pursuant to the mechanism and time periods set forth in this paragraph.
(c) If you do not receive an offer of employment from the buyer which
provides for Comparable Compensation or is for employment at a location not
within the commuting distance described in (a)(ii) above, the entire Retention
Bonus will be payable within twenty (20) days of Closing.
3. 1997 Management Performance Incentive Plan. You may be eligible for a
------------------------------------------
prorated Management Performance Incentive Bonus for the period from
September 10, 1997, through December 30, 1997.
4. 1998 Management Performance Incentive Plan. If the Closing of the
-------------------------------------------
sale of RCL occurs during calendar year 1998, you shall be entitled to a
prorated Management Performance Incentive Bonus for 1998 ("Incentive Bonus:
1998") as set forth below. The Incentive Bonus: 1998 is conditioned on
achievement of the Operating Profit agreed to in the 1998 Five-Year Plan
("Operating Profit"). If the sale does not close during calendar year 1998, you
shall be entitled to the full amount of the Incentive Bonus: 1998 as set forth
below based on Operating Profit levels.
<PAGE>
Page 3
September 30, 1997
(a) Less than 90% of the Operating Profit: No Incentive Bonus;
(b) Greater than or equal to 90% but less than 100% of the Operating
Profit: Minimum Incentive Bonus of fifteen percent (15%) of base salary,
increasing as Operating Profit reaches 100%, at which point the Incentive Bonus
is 30% of base salary;
(c) Greater than 100% but less than 120% of the Operating Profit: Minimum
Incentive Bonus of thirty percent (30%) of base salary, increasing as Operating
Profit reaches 120%, at which point the Incentive Bonus is 50% of base salary;
(d) Greater than 120% of the Operating Profit: Incentive Bonus of fifty
percent (50%) of base salary/1/.
5. 1999 Management Performance Incentive Plan. If the Closing of the
------------------------------------------
sale of RCL occurs during calendar year 1999, you shall be entitled to
participate in a 1999 Management Performance Incentive Plan based on Operating
Profit as set forth in the 1999 Five-Year Plan.
6. Severance.
---------
(a) In connection with the sale, RCL will provide you with severance
(including medical and dental benefits) at your monthly base salary according to
the schedule set forth in (b) below if:
(i) you are terminated without cause as set forth in paragraph 11 prior to
Closing;
- --------------------------------------
/1/ Examples of calculation of 1998 Management Incentive Bonus:
Example 1: Base salary: $50,000
Sale closes on March 31, 1998 (90/365)
Operating Profit determined to be at 97% of the amount set forth in the 1998
Five-Year Plan
($50,000 x 90/365) x {30% - [(100-97) x 1.5]}
Bonus: $3,143.84
Example 2: Base salary: $50,000
Sale closes on June 30, 1998 (181/365)
Operating Profit: 115%
($50,000 x 181/365) x {50% - [120-115]}
Bonus: $11,157.53
<PAGE>
Page 4
September 30, 1997
(ii) you do not receive an offer of employment from the buyer at Comparable
Compensation; or
(iii) you receive but do not accept an offer of employment from the
buyer at Comparable Compensation because the commute to the location of the
employment offered entailed an additional commute from your current residence of
more than thirty-five (35) miles; or
(iv) you accept a position with buyer and are subsequently terminated
without cause as defined in paragraph 12 prior to the completion of 365 calendar
days of employment.
(b) The period of entitlement for severance is set forth below:
(i) if you do not receive an offer of employment at or about the time of
Closing at Comparable Compensation or an offer of a position within the
commuting distance set forth in paragraph 6(a)(iii), you shall receive six (6)
months of base salary;
(ii) if, within 365 calendar days of employment with the buyer, you are
terminated without cause; subjected to a substantial reduction of your base
salary; or if you are required to relocate beyond thirty-five (35) miles of your
commuting distance when employed by RCL, you shall receive six (6) months of
base salary;
(iii) if you are terminated by the buyer after one (1) year of
employment with the buyer, you may be eligible for severance provided by the
buyer but will no longer be covered by an RCL-sponsored severance program.
(c) Severance shall be paid in a lump sum in the first month of eligibility
measured by the periods set forth in (b)(i)-(iii) above.
7. Benefits During Severance. You and your eligible dependents shall be
--------------------------
eligible during the severance measuring period to participate in medical and
dental plans with no required contribution from you.
8. Prior to any public announcement concerning the sale of RCL, you agree
that without the prior consent of RCL you will not disclose to any person or
entity (other than those individuals identified to you in writing as being
active participants in the sale process) either the fact that discussions or
negotiations are taking place or have taken place regarding the possible sale of
RCL or any of the terms, conditions or other facts relating to the possible
sale, including the status thereof.
<PAGE>
Page 5
September 30, 1997
9. Raytheon will decide in its sole discretion if and when to proceed
with the sale of RCL and the terms and conditions upon which any such sale shall
be effected. Nothing contained herein shall obligate the sale of RCL at this or
any other time.
10. Nothing contained herein shall obligate RCL or any buyer to offer you
continued employment or to provide you with any minimum level of compensation or
benefits.
11. Termination Prior to Closing. RCL retains the right to terminate your
----------------------------
employment prior to the Closing. Unless terminated for the reasons set forth
below prior to Closing and/or prior to the expiration of 24 months of this
agreement, you shall receive the benefits and bonuses referenced in paragraphs
2, 3, 4, 5, 6 and 7. In the event of termination for cause as defined in
Sections 11(a) - (c) below, you shall not be entitled to the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7. Reasons for termination
for cause are:
(a) failure to perform any of the material duties of your position,
including special projects and assignments; or
(b) breach of any material provision of Raytheon's Standards of Business
Behavior and Ethics; or
(c) breach of Raytheon Company Rules and Regulations.
If you are terminated prior to Closing for a reason other than those
specified in subparagraphs (a), (b) and (c) above, including termination as a
result of a reduction in force, you will be eligible for the bonuses and
benefits referenced in paragraphs 2, 3, 4, 5, 6 and 7.
12. Termination for Cause After Closing. The following conduct shall
------------------------------------
constitute "cause" for termination after Closing:
(a) repeated failure to perform any of the material duties of your
position, including special projects and assignments, provided reasonable
written notice and an opportunity to cure performance deficiencies has been
provided;
(b) serious breach of any material provision of the buyer's standards of
business behavior and ethics; or
(c) serious misconduct in willful disregard of the buyer's interests.
13. Entire Agreement. This letter constitutes the entire agreement
-----------------
between the parties and supersedes any prior communications, agreements or
understandings, whether oral or written, with respect to the terms of your
continued employment.
<PAGE>
Page 6
September 30, 1997
14. General Release. As a condition of participation in the benefits set
---------------
forth in this letter, you agree to execute the General Release contained in
Attachment A.
15. Arbitration of Claims. The parties agree that any disputes arising
----------------------
during the term of your employment with Raytheon, including but not limited to
any claims arising under the terms of this retention agreement, shall be subject
to final and binding arbitration as the sole and exclusive forum for dispute
resolution. Arbitration under this section shall be conducted pursuant to the
rules of the American Arbitration Association applicable to employment disputes.
Either party may request arbitration in writing pursuant to this section within
six (6) months of the event(s) giving rise to the dispute. Failure to request
arbitration within the time period shall forever bar any action in court or
before any administrative agency and shall be construed as an explicit waiver
and release of all claims as enumerated herein. Claims covered by this section
include, but are not limited to, claims for breach of contract, breach of the
covenant of good faith and fair dealing, tort claims, claims arising under
common law, claims for discrimination and claims for compensation or benefits
under the terms of this agreement. Any arbitration award issued under this
section shall extinguish all other rights of the parties with respect to the
subject matter of the dispute, whether grounded in contract, federal or state
statutes, or common law, and otherwise will be final and binding on the parties.
Claims not covered by this section are claims regarding your compensation,
including but not limited to modification in compensation, the amount and award
of discretionary company bonuses and stock options, eligibility for benefits
under any company benefit plan covered by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), the amount of benefits provided
under a company benefit plan covered by ERISA, any claim cognizable under ERISA,
or any claims for workers' compensation or unemployment compensation under a
state workers' compensation or unemployment compensation law.
16. Confidentiality. You agree to keep confidential this agreement and
----------------
not to disclose either the fact of the agreement or the terms thereof, except
where necessary to members of your immediate family, tax or legal advisors, and
as required in response to a valid subpoena or court order. Failure to comply
with the provisions of this paragraph 16 will be deemed a material breach of the
agreement and may result in forfeiture of the bonuses and benefits provided
herein.
17. Stock Options. Only those stock options which are vested can be
--------------
exercised. Vesting accrual terminates as of the Closing. Options vested as of
the Closing can only be exercised within one (1) year following the Closing.
<PAGE>
Page 7
September 30, 1997
If you are in agreement with the foregoing, please sign, date and return
the enclosed copy of this letter to the undersigned, whereupon it shall become a
binding agreement between us.
Very truly yours,
RAYTHEON COMMERCIAL LAUNDRY LLC
By
(signature)
AGREED AND ACCEPTED:
Date:
Name
<PAGE>
EXHIBIT 10.33
AMENDMENT NO. 1 TO RETENTION AGREEMENT
--------------------------------------
THIS AMENDMENT NO. 1 TO RETENTION AGREEMENT (this "Amendment"), dated
---------
as of April __, 1998, amends that certain Letter Agreement (the "Retention
---------
Agreement"), dated as of September 30, 1997, by and between Robert T. Wallace
- ---------
("Executive") and Raytheon Commercial Laundry LLC, a Delaware limited liability
- -----------
company (the "Company"). Capitalized terms used herein and not defined shall
-------
have the meanings assigned to them in the Retention Agreement.
WHEREAS, pursuant to the terms of the Retention Agreement, the Company
agreed to pay Executive, upon certain terms and conditions, a Retention Bonus;
WHEREAS, the Retention Bonus is currently due and payable in three
parts: Part One being due and payable as of April 20, 1998 or May 20, 1998, as
the case may be (the "First Bonus Payment"), Part Two being due and payable as
-------------------
of October 20, 1998 (the "Second Bonus Payment") and Part Three being due and
--------------------
payable as of October 20, 1999 (the "Third Bonus Payment");
-------------------
WHEREAS, the Company is a party to a certain Agreement and Plan of
Merger (the "Merger Agreement"), dated February 21, 1998, by and among the
----------------
Company, Raytheon Company, a Delaware corporation, Bain/RCL, L.L.C., a Delaware
limited liability company, and RCL Acquisitions, L.L.C., a Delaware limited
liability company ("MergeCo"), pursuant to which MergeCo will merge with and
-------
into the Company (the "Merger") with the Company being the surviving entity;
------
WHEREAS, the Executive has no current right to receive or draw upon
any portion of the Retention Bonus and would forfeit his or her right to receive
payment thereof if he or she resigned from the Company prior to the dates on
which the Retention Bonus is payable; and
WHEREAS, in contemplation of the Merger and transactions related
thereto, the Executive and the Company wish to amend the Retention Agreement to
defer the payment of the First Bonus Payment until the date of the Second Bonus
Payment.
NOW THEREFORE, in consideration of the premises and the mutual
obligations of the parties hereto, the parties do hereby agree as follows:
1. Deferment of the First Bonus Payment. The paragraph entitled
------------------------------------
"Schedule of Payments" under Paragraph 2 of the Retention Agreement shall be
- ---------------------
amended in its entirety to read as follows:
<PAGE>
"Schedule of Payments. The Retention Bonus shall be paid in
---------------------
two parts.
Part One: Part One is fifty percent (50%) of the Retention
--------
Bonus and shall be payable on October 20, 1998.
Part Two: Part Two is fifty percent (50%) of the Retention
--------
Bonus and shall payable on October 20, 1999."
2. Effect of this Amendment. The Retention Agreement, as amended
------------------------
pursuant to the terms of this Amendment, shall continue in full force and effect
after the time of this Amendment.
* * * * *
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Retention Agreement to be executed as of the day and year first written
above.
RAYTHEON COMMERCIAL LAUNDRY LLC
By:_______________________________________
Its:_______________________________________
________________________________________
ROBERT T. WALLACE
<PAGE>
EXHIBIT 10.34
RCL ACQUISITIONS, L.L.C.
PROMISSORY NOTE
---------------
$719,133 May 5, 1998
For value received, Thomas F. L'Esperance ("Executive") promises to
---------
pay to RCL Acquisitions, L.L.C., a Delaware limited liability company (the
"Company"), the aggregate principal sum of $719,133, together with interest
- --------
thereon calculated from the date hereof (the "Date of Issuance") in accordance
----------------
with the provisions of this Promissory Note (this "Note"). This Note was issued
----
pursuant to and is subject to the terms of that certain Executive Unit Purchase
Agreement (the "Executive Agreement"), dated as of the date hereof, by and
-------------------
between the Company and Executive. Any capitalized terms used herein and not
defined shall have the meaning assigned to them in Section 4 hereof.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 5.94% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on June 5, 2008 (the "Maturity
--------
Date").
- ----
<PAGE>
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with his or her ownership of the Executive Units
(other than distributions made for the payment of taxes), Executive shall
prepay an amount of this Note equivalent to the amount of all such cash
proceeds received.
(ii) If there is a consummation of a Sale of the Company prior to
the Maturity Date, Executive shall prepay all of the outstanding principal
amount of this Note as of the date of the consummation of a Sale of the
Company.
(iii) If prior to the Maturity Date Executive ceases to be
employed by Alliance for any reason (including by reason of death or total
and permanent disability of the Executive), then this Note shall become due
and payable on the 45th day after the Termination Date.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of 1,719.133 of the Company's Class A Units, 191.015 of the Company's
Class L Units, 937.474 of the Company's Class B Units and 997.313 of the
Company's Class C Units, pursuant to a certain Unit Pledge Agreement, dated as
of the date hereof, by and between Executive and Company (the "Pledge
------
Agreement").
- ---------
4. Definitions.
------------
"Alliance" means Alliance Laundry Systems LLC.
--------
"Cause" shall have the meaning assigned to it in the Executive
-----
Agreement.
"Class A Units" means the Class A Common Units of the Company.
-------------
"Class B Units" means the Class B Common Units of the Company.
-------------
"Class C Units" means the Class C Common Units of the Company.
-------------
"Class L Units" means the Class L Common Units of the Company.
-------------
-2-
<PAGE>
"Common Units" means, collectively, Class A Units, Class L Units,
------------
Class B Units, Class C Units and any other common units authorized by the
Company.
"Executive Units" shall have the meaning assigned to it in the
---------------
Executive Agreement.
"Investors" shall have the meaning assigned to it in the Executive
---------
Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain/RCL, L.L.C., a Delaware limited
liability company, the Company, Raytheon Commercial Laundry LLC, a Delaware
limited liability company and Raytheon Company, a Delaware corporation.
"Operating Agreement" means the limited liability company agreement of
-------------------
the Company, dated as of the date hereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Termination Date" means the date that Executive ceases to be employed
----------------
by Alliance for any reason.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this
-3-
<PAGE>
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the holder hereof may accept security for
this Note or release security for this Note, all without in any way affecting
the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, Executive has executed and delivered this Promissory Note
as of the date first written above.
______________________________
THOMAS F. L'ESPERANCE
<PAGE>
EXHIBIT 10.35
RCL ACQUISITIONS, L.L.C.
PROMISSORY NOTE
---------------
$131,700 May 5, 1998
For value received, R. Scott Gaster ("Executive") promises to pay to
---------
RCL Acquisitions, L.L.C., a Delaware limited liability company (the "Company"),
-------
the aggregate principal sum of $131,700, together with interest thereon
calculated from the date hereof (the "Date of Issuance") in accordance with the
----------------
provisions of this Promissory Note (this "Note"). This Note was issued pursuant
----
to and is subject to the terms of that certain Executive Unit Purchase Agreement
(the "Executive Agreement"), dated as of the date hereof, by and between the
-------------------
Company and Executive. Any capitalized terms used herein and not defined shall
have the meaning assigned to them in Section 4 hereof.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 5.94% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on June 5, 2008 (the "Maturity
--------
Date").
- ----
<PAGE>
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with his or her ownership of the Executive Units
(other than distributions made for the payment of taxes), Executive shall
prepay an amount of this Note equivalent to the amount of all such cash
proceeds received.
(ii) If there is a consummation of a Sale of the Company prior to
the Maturity Date, Executive shall prepay all of the outstanding principal
amount of this Note as of the date of the consummation of a Sale of the
Company.
(iii) If prior to the Maturity Date Executive ceases to be
employed by Alliance for any reason (including by reason of death or total
and permanent disability of the Executive), then this Note shall become due
and payable on the 45th day after the Termination Date.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of 328.7 of the Company's Class A Units, 36.522 of the Company's Class L
Units, 387.92 of the Company's Class B Units and 412.681 of the Company's Class
C Units, pursuant to a certain Unit Pledge Agreement, dated as of the date
hereof, by and between Executive and Company (the "Pledge Agreement").
----------------
4. Definitions.
------------
"Alliance" means Alliance Laundry Systems LLC.
--------
"Cause" shall have the meaning assigned to it in the Executive
-----
Agreement.
"Class A Units" means the Class A Common Units of the Company.
-------------
"Class B Units" means the Class B Common Units of the Company.
-------------
"Class C Units" means the Class C Common Units of the Company.
-------------
"Class L Units" means the Class L Common Units of the Company.
-------------
-2-
<PAGE>
"Common Units" means, collectively, Class A Units, Class L Units,
------------
Class B Units, Class C Units and any other common units authorized by the
Company.
"Executive Units" shall have the meaning assigned to it in the
---------------
Executive Agreement.
"Investors" shall have the meaning assigned to it in the Executive
---------
Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain/RCL, L.L.C., a Delaware limited
liability company, the Company, Raytheon Commercial Laundry LLC, a Delaware
limited liability company and Raytheon Company, a Delaware corporation.
"Operating Agreement" means the limited liability company agreement of
-------------------
the Company, dated as of the date hereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Termination Date" means the date that Executive ceases to be employed
----------------
by Alliance for any reason.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this
-3-
<PAGE>
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the holder hereof may accept security for
this Note or release security for this Note, all without in any way affecting
the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, Executive has executed and delivered this Promissory Note
as of the date first written above.
______________________________
R. SCOTT GASTER
-5-
<PAGE>
EXHIBIT 10.36
RCL ACQUISITIONS, L.L.C.
PROMISSORY NOTE
---------------
$123,000 May 5, 1998
For value received, Jeffrey J. Brothers ("Executive") promises to pay
---------
to RCL Acquisitions, L.L.C., a Delaware limited liability company (the
"Company"), the aggregate principal sum of $123,000, together with interest
-------
thereon calculated from the date hereof (the "Date of Issuance") in accordance
----------------
with the provisions of this Promissory Note (this "Note"). This Note was issued
----
pursuant to and is subject to the terms of that certain Executive Unit Purchase
Agreement (the "Executive Agreement"), dated as of the date hereof, by and
-------------------
between the Company and Executive. Any capitalized terms used herein and not
defined shall have the meaning assigned to them in Section 4 hereof.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 5.94% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on June 5, 2008 (the "Maturity
--------
Date").
- ----
<PAGE>
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with his or her ownership of the Executive Units
(other than distributions made for the payment of taxes), Executive shall
prepay an amount of this Note equivalent to the amount of all such cash
proceeds received.
(ii) If there is a consummation of a Sale of the Company prior to
the Maturity Date, Executive shall prepay all of the outstanding principal
amount of this Note as of the date of the consummation of a Sale of the
Company.
(iii) If prior to the Maturity Date Executive ceases to be
employed by Alliance for any reason (including by reason of death or total
and permanent disability of the Executive), then this Note shall become due
and payable on the 45th day after the Termination Date.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of 388 of the Company's Class A Units, 43.111 of the Company's Class L
Units, 420.247 of the Company's Class B Units and 447.071 of the Company's Class
C Units, pursuant to a certain Unit Pledge Agreement, dated as of the date
hereof, by and between Executive and Company (the "Pledge Agreement").
----------------
4. Definitions.
------------
"Alliance" means Alliance Laundry Systems LLC.
--------
"Cause" shall have the meaning assigned to it in the Executive
-----
Agreement.
"Class A Units" means the Class A Common Units of the Company.
-------------
"Class B Units" means the Class B Common Units of the Company.
-------------
"Class C Units" means the Class C Common Units of the Company.
-------------
"Class L Units" means the Class L Common Units of the Company.
-------------
-2-
<PAGE>
"Common Units" means, collectively, Class A Units, Class L Units,
------------
Class B Units, Class C Units and any other common units authorized by the
Company.
"Executive Units" shall have the meaning assigned to it in the
---------------
Executive Agreement.
"Investors" shall have the meaning assigned to it in the Executive
---------
Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain/RCL, L.L.C., a Delaware limited
liability company, the Company, Raytheon Commercial Laundry LLC, a Delaware
limited liability company and Raytheon Company, a Delaware corporation.
"Operating Agreement" means the limited liability company agreement of
-------------------
the Company, dated as of the date hereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Termination Date" means the date that Executive ceases to be employed
----------------
by Alliance for any reason.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
-3-
<PAGE>
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, Executive has executed and delivered this Promissory Note
as of the date first written above.
______________________________
Jeffrey J. Brothers
<PAGE>
EXHIBIT 10.37
RCL ACQUISITIONS, L.L.C.
PROMISSORY NOTE
---------------
$120,700 May 5, 1998
For value received, Herman W. Beach ("Executive") promises to pay to
---------
RCL Acquisitions, L.L.C., a Delaware limited liability company (the "Company"),
-------
the aggregate principal sum of $120,700, together with interest thereon
calculated from the date hereof (the "Date of Issuance") in accordance with the
----------------
provisions of this Promissory Note (this "Note"). This Note was issued pursuant
----
to and is subject to the terms of that certain Executive Unit Purchase Agreement
(the "Executive Agreement"), dated as of the date hereof, by and between the
-------------------
Company and Executive. Any capitalized terms used herein and not defined shall
have the meaning assigned to them in Section 4 hereof.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 5.94% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on June 2, 2008 (the "Maturity
--------
Date").
- ----
<PAGE>
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with his or her ownership of the Executive Units
(other than distributions made for the payment of taxes), Executive shall
prepay an amount of this Note equivalent to the amount of all such cash
proceeds received.
(ii) If there is a consummation of a Sale of the Company prior to
the Maturity Date, Executive shall prepay all of the outstanding principal
amount of this Note as of the date of the consummation of a Sale of the
Company.
(iii) If prior to the Maturity Date Executive ceases to be
employed by Alliance for any reason (including by reason of death or total
and permanent disability of the Executive), then this Note shall become due
and payable on the 45th day after the Termination Date.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of 465.30 of the Company's Class A Units, 51.70 of the Company's Class L
Units, 387.92 of the Company's Class B Units and 412.681 the Company's Class C
Units, pursuant to a certain Unit Pledge Agreement, dated as of the date hereof,
by and between Executive and Company (the "Pledge Agreement").
----------------
4. Definitions.
------------
"Alliance" means Alliance Laundry Systems LLC.
--------
"Cause" shall have the meaning assigned to it in the Executive
-----
Agreement.
"Class A Units" means the Class A Common Units of the Company.
-------------
"Class B Units" means the Class B Common Units of the Company.
-------------
"Class C Units" means the Class C Common Units of the Company.
-------------
"Class L Units" means the Class L Common Units of the Company.
-------------
-2-
<PAGE>
"Common Units" means, collectively, Class A Units, Class L Units,
------------
Class B Units, Class C Units and any other common units authorized by the
Company.
"Executive Units" shall have the meaning assigned to it in the
---------------
Executive Agreement.
"Investors" shall have the meaning assigned to it in the Executive
---------
Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain/RCL, L.L.C., a Delaware limited
liability company, the Company, Raytheon Commercial Laundry LLC, a Delaware
limited liability company and Raytheon Company, a Delaware corporation.
"Operating Agreement" means the limited liability company agreement of
-------------------
the Company, dated as of the date hereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Termination Date" means the date that Executive ceases to be employed
----------------
by Alliance for any reason.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this
-3-
<PAGE>
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the holder hereof may accept security for
this Note or release security for this Note, all without in any way affecting
the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, Executive has executed and delivered this Promissory Note
as of the date first written above.
______________________________
HERMAN W. BEACH
<PAGE>
EXHIBIT 10.38
RCL ACQUISITIONS, L.L.C.
PROMISSORY NOTE
---------------
$119,700 May 5, 1998
For value received, Bruce P. Rounds ("Executive") promises to pay to
---------
RCL Acquisitions, L.L.C., a Delaware limited liability company (the "Company"),
-------
the aggregate principal sum of $119,700, together with interest thereon
calculated from the date hereof (the "Date of Issuance") in accordance with the
----------------
provisions of this Promissory Note (this "Note"). This Note was issued pursuant
----
to and is subject to the terms of that certain Executive Unit Purchase Agreement
(the "Executive Agreement"), dated as of the date hereof, by and between the
-------------------
Company and Executive. Any capitalized terms used herein and not defined shall
have the meaning assigned to them in Section 4 hereof.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 5.94% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on June 5, 2008 (the "Maturity
--------
Date").
- ----
<PAGE>
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note.
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with his or her ownership of the Executive Units
(other than distributions made for the payment of taxes), Executive shall
prepay an amount of this Note equivalent to the amount of all such cash
proceeds received.
(ii) If there is a consummation of a Sale of the Company prior to
the Maturity Date, Executive shall prepay all of the outstanding principal
amount of this Note as of the date of the consummation of a Sale of the
Company.
(iii) If prior to the Maturity Date Executive ceases to be
employed by Alliance for any reason (including by reason of death or total
and permanent disability of the Executive), then this Note shall become due
and payable on the 45th day after the Termination Date.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of 374.700 of the Company's Class A Units, 41.633 of the Company's Class
L Units, 387.92 of the Company's Class B Units and 412.681 of the Company's
Class C Units, pursuant to a certain Unit Pledge Agreement, dated as of the date
hereof, by and between Executive and Company (the "Pledge Agreement").
----------------
4. Definitions.
------------
"Alliance" means Alliance Laundry Systems LLC.
--------
"Cause" shall have the meaning assigned to it in the Executive
-----
Agreement.
"Class A Units" means the Class A Common Units of the Company.
-------------
"Class B Units" means the Class B Common Units of the Company.
-------------
"Class C Units" means the Class C Common Units of the Company.
-------------
"Class L Units" means the Class L Common Units of the Company.
-------------
-2-
<PAGE>
"Common Units" means, collectively, Class A Units, Class L Units,
------------
Class B Units, Class C Units and any other common units authorized by the
Company.
"Executive Units" shall have the meaning assigned to it in the
---------------
Executive Agreement.
"Investors" shall have the meaning assigned to it in the Executive
---------
Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain/RCL, L.L.C., a Delaware limited
liability company, the Company, Raytheon Commercial Laundry LLC, a Delaware
limited liability company and Raytheon Company, a Delaware corporation.
"Operating Agreement" means the limited liability company agreement of
-------------------
the Company, dated as of the date hereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Termination Date" means the date that Executive ceases to be employed
----------------
by Alliance for any reason.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this
-3-
<PAGE>
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the holder hereof may accept security for
this Note or release security for this Note, all without in any way affecting
the liability of Executive hereunder.
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, Executive has executed and delivered this Promissory Note
as of the date first written above.
______________________________
BRUCE P. ROUNDS
<PAGE>
EXHIBIT 10.39
RCL ACQUISITIONS, L.L.C.
PROMISSORY NOTE
---------------
$101,500 May 5, 1998
For value received, Robert T. Wallace ("Executive") promises to pay to
---------
RCL Acquisitions, L.L.C., a Delaware limited liability company (the "Company"),
-------
the aggregate principal sum of $101,500, together with interest thereon
calculated from the date hereof (the "Date of Issuance") in accordance with the
----------------
provisions of this Promissory Note (this "Note"). This Note was issued pursuant
----
to and is subject to the terms of that certain Executive Unit Purchase Agreement
(the "Executive Agreement"), dated as of the date hereof, by and between the
-------------------
Company and Executive. Any capitalized terms used herein and not defined shall
have the meaning assigned to them in Section 4 hereof.
1. Payment and Capitalization of Interest.
--------------------------------------
(a) Interest shall accrue on the outstanding principal amount of this
Note (including any portion thereof which is Capitalized Interest) at a rate
equal to the lesser of (i) a rate which shall equal 5.94% per annum or (ii) the
highest rate permitted by applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note remains outstanding, all accrued interest as of such date
shall be capitalized and made part of the unpaid principal amount hereunder as
of such date (the "Capitalized Interest"). Interest shall be computed on the
--------------------
basis of a 365-day year and the actual number of days elapsed. Any accrued
interest (including Capitalized Interest) which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is paid.
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. Executive shall pay the entire principal
------------------
amount of this Note (including any portion thereof which is Capitalized
Interest), plus all accrued and unpaid interest, on June 5, 2008 (the "Maturity
--------
Date").
- ----
(b) Voluntary Prepayment. Executive may prepay, at any time and from
--------------------
time to time, without premium or penalty, all or any portion of the outstanding
principal amount of this Note.
<PAGE>
(c) Mandatory Prepayment. Executive shall prepay, without premium or
--------------------
penalty, amounts due under this Note as follows:
(i) Immediately upon receipt of any cash proceeds Executive
receives in connection with his or her ownership of the Executive Units
(other than distributions made for the payment of taxes), Executive shall
prepay an amount of this Note equivalent to the amount of all such cash
proceeds received.
(ii) If there is a consummation of a Sale of the Company prior to
the Maturity Date, Executive shall prepay all of the outstanding principal
amount of this Note as of the date of the consummation of a Sale of the
Company.
(iii) If prior to the Maturity Date Executive ceases to be
employed by Alliance for any reason (including by reason of death or total
and permanent disability of the Executive), then this Note shall become due
and payable on the 45th day after the Termination Date.
3. Collateral. The amounts due under this Note are secured by a
----------
pledge of 451.500 of the Company's Class A Units, 50.167 of the Company's Class
L Units, 355.594 of the Company's Class B Units and 378.291 of the Company's
Class C Units, pursuant to a certain Unit Pledge Agreement, dated as of the date
hereof, by and between Executive and Company (the "Pledge Agreement").
----------------
4. Definitions.
------------
"Alliance" means Alliance Laundry Systems LLC.
--------
"Cause" shall have the meaning assigned to it in the Executive
-----
Agreement.
"Class A Units" means the Class A Common Units of the Company.
-------------
"Class B Units" means the Class B Common Units of the Company.
-------------
"Class C Units" means the Class C Common Units of the Company.
-------------
"Class L Units" means the Class L Common Units of the Company.
-------------
"Common Units" means, collectively, Class A Units, Class L Units,
------------
Class B Units, Class C Units and any other common units authorized by the
Company.
-2-
<PAGE>
"Executive Units" shall have the meaning assigned to it in the
---------------
Executive Agreement.
"Investors" shall have the meaning assigned to it in the Executive
---------
Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger,
----------------
dated February 21, 1998, by and among Bain/RCL, L.L.C., a Delaware limited
liability company, the Company, Raytheon Commercial Laundry LLC, a Delaware
limited liability company and Raytheon Company, a Delaware corporation.
"Operating Agreement" means the limited liability company agreement of
-------------------
the Company, dated as of the date hereof.
"Public Sale" means any sale pursuant to a registered public offering
-----------
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or market
maker.
"Sale of the Company" means (i) any sale of all or substantially all
-------------------
(as defined in the Model Business Corporation Act) of the assets of the Company
and its subsidiaries on a consolidated basis in one transaction or series of
related transactions, (ii) any sale of all or substantially all of the Common
Units in one transaction or series of related transactions, excluding any sales
of Common Units in a Public Sale or (iii) a merger or consolidation which
accomplishes one of the foregoing; provided that the transactions contemplated
--------
by the Merger Agreement do not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Termination Date" means the date that Executive ceases to be employed
----------------
by Alliance for any reason.
5. Miscellaneous.
-------------
(a) In the event Executive fails to pay any amounts due hereunder when
due, Executive shall pay to the holder hereof, in addition to such amounts due,
all costs of collection, including reasonable attorneys fees.
(b) Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of Executive hereunder.
-3-
<PAGE>
(c) This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, Executive has executed and delivered this Promissory Note
as of the date first written above.
______________________________
ROBERT T. WALLACE
<PAGE>
EXHIBIT 10.40
ADVISORY AGREEMENT
------------------
THIS ADVISORY AGREEMENT (this "Agreement") is made and entered into as
---------
of ______ __, 1998, by and between Alliance Laundry Systems LLC, a Delaware
limited liability company (the "Company"), and Bain Capital, Inc., a Delaware
-------
corporation (the "Management Company").
------------------
WHEREAS, reference is made to a certain Agreement and Plan of Merger
(the "Merger Agreement"), dated February 21, 1998, by and among Bain/RCL,
----------------
L.L.C., a Delaware limited liability company formed by the Management Company
and its affiliates ("Bain"), RCL Acquisitions, L.L.C., a Delaware limited
----
liability company and a transitory merger subsidiary formed by Bain ("MergeCo"),
-------
Raytheon Commercial Laundry LLC, a Delaware limited liability company ("RCL")
---
and Raytheon Company, a Delaware corporation ("Raytheon"), pursuant to which, as
--------
of the date hereof, MergeCo has merged with and into RCL (such merger, the
"Merger") with the Company as the surviving entity; and
- -------
WHEREAS, in connection with and pursuant to the Merger, the Company
desires to retain the Management Company to perform, and the Management Company
desires to perform, certain services for the Company and its subsidiaries, if
any.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties to this Agreement agree as follows:
1. Term. This Agreement shall be in effect for an initial term of
----
ten years commencing on the date hereof (the "Term"), and shall be automatically
----
extended thereafter on a year to year basis unless the Company or the Management
Company provides written notice of its desire to terminate this Agreement to the
other party 90 days prior to the expiration of the Term or any extension
thereof.
2. Services. The Management Company shall perform or cause to be
--------
performed such services for the Company and its subsidiaries, if any, as
directed by the Company's Board of Managers which may include, without
limitation, the following:
a. general executive and management services, including without
limitation, recommending appropriate persons to serve on (and being available to
serve on) advisory boards and committees of portfolio companies of the Company
and its subsidiaries, if any;
b. monitoring, analyzing, acquiring and disposing of the Company's
investments, including, without limitation, its investment in portfolio
companies;
c. negotiating, entering into, modifying and terminating contracts
and agreements to which the Company and any of its subsidiaries are (or are to
become) a party;
<PAGE>
d. support, negotiation and analysis of financing alternatives,
including, without limitation, in connection with acquisitions, capital
expenditures and refinancing of existing indebtedness;
e. finance functions, including assistance in the preparation of
financial projections, and monitoring of compliance with financing agreements;
f. marketing functions, including monitoring of marketing plans and
strategies;
g. human resource functions, including searching and hiring of
executives; and
h. other services for the Company and its subsidiaries, if any, upon
which the Company's Board of Managers and the Management Company agree.
3. Advisory Fee. Payment for services rendered by the Management
------------
Company and/or its affiliates under this Agreement (the "Advisory Fee") shall be
------------
paid by the Company to the Management Company or its assignees and shall
initially be set at an annual amount equal to $1,000,000. Payments shall be
made quarterly in arrears commencing on June 30, 1998. If at any time when a
payment is due under this Agreement the Company (i) does not have sufficient
available cash to make such payment or (ii) is prohibited from making such
payment pursuant to the terms of the Company's loan agreements, part or all of
such payment, as the case may be, shall be deferred. Any amount so deferred
shall be added to the amount due under this Agreement in the quarter following
the quarter in which the amount was deferred.
4. Transaction Fees. Upon the closing of the Merger, the Company
----------------
shall pay to the Management Company or its designees a fee in an amount of
$5,400,000. Thereafter, during the term of this Agreement, the Company shall
pay to the Management Company or its designees a transaction fee in connection
with the consummation of each acquisition, divestiture or financing by such
Company or any of its subsidiaries in an amount equal to 1% of the aggregate
value of such transaction; provided, that such 1% transaction fee may be
--------
increased from time to time by the Management Company in accordance with and to
reflect industry practice with respect to such fees.
5. Personnel. The Management Company shall provide and devote to
---------
the performance of this Agreement such partners, members, employees and agents
of the Management Company as the Management Company shall deem appropriate to
the furnishing of the services required.
6. Liability. Neither the Management Company nor any of its
---------
affiliates, partners, employees or agents shall be liable to the Company or its
subsidiaries, if any, or affiliates for any loss, liability, damage or expense
arising out of or in connection with the performance of services contemplated by
this Agreement, unless such loss, liability, damage or expense shall be proven
to result directly from gross negligence, willful misconduct or bad faith on the
part of the Management Company, its affiliates, partners, members, employees or
agents acting within the scope of its employment or authority.
7. Indemnity. The Company and its subsidiaries, if any, shall
---------
defend, indemnify and hold harmless the Management Company and its affiliates,
members, partners, employees and
2
<PAGE>
agents from and against any and all loss, liability, damage or expenses arising
from any claim (a "Claim") by any person with respect to, or in any way related
-----
to, the performance of services contemplated by this Agreement or otherwise in
connection with the Merger (including attorneys' fees) (collectively, "Claims")
------
resulting from any act or omission of the Management Company, its affiliates,
members, partners, employees or agents, other than for Claims which shall be
proven to be the direct result of gross negligence, bad faith or willful
misconduct by the Management Company, its affiliates, members, partners,
employees or agents. The Company and its subsidiaries, if any, shall defend at
its own cost and expense any and all suits or actions (just or unjust) which may
be brought against the Company, its subsidiaries, if any, and the Management
Company, its officers, directors, members, affiliates, partners, employees or
agents or in which the Management Company, its affiliates, members, partners,
employees or agents may be impleaded with others upon any Claim or Claims, or
upon any matter, directly or indirectly, related to or arising out of this
Agreement or the performance hereof by the Management Company, its affiliates,
members, partners, employees or agents, except that if such damage shall be
proven to be the direct result of gross negligence, bad faith or willful
misconduct by the Management Company, its affiliates, members, partners,
employees or agents, then the Management Company shall reimburse the Company and
its subsidiaries, if any, for the costs of defense and other costs incurred by
the Company and its subsidiaries, if any.
8. Notices. All notices hereunder shall be in writing and shall be
-------
delivered personally or mailed by United States mail, postage prepaid, addressed
to the parties as follows:
To the Company:
--------------
Alliance Laundry Systems LLC
P.O. Box 990
Ripon, WI 54971-0990
Attention: Thomas F. L'Esperance
To the Management Company:
-------------------------
Bain Capital, Inc.
c/o Bain Capital Inc.
Two Copley Place
Boston, Massachusetts 02116
Attention: Robert C. Gay
Edward Conard
Stephen Zide
9. Assignment. Neither party may assign any obligations hereunder to
----------
any other party without the prior written consent of the other party (which
consent shall not be unreasonably withheld); provided that the Management
--------
Company may, without consent of the Company, assign its rights and obligations
under this Agreement to any of its affiliates (but only if such affiliate is a
person or entity controlled by the Management Company, or in the case of an
affiliate which is a partnership, the Management Company is the ultimate general
partner of such partnership). The assignor shall remain liable for the
performance of any assignee.
10. Successors. This Agreement and all the obligations and benefits
----------
hereunder shall inure to the successors and assigns of the parties.
3
<PAGE>
11. Counterparts. This Agreement may be executed and delivered by
------------
each party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and all of which taken together shall
constitute but one and the same agreement.
12. Entire Agreement; Modification; Governing Law. The terms and
---------------------------------------------
conditions hereof constitute the entire agreement between the parties hereto
with respect to the subject matter of this Agreement and supersede all previous
communications, either oral or written, representations or warranties of any
kind whatsoever, except as expressly set forth herein. No modifications of this
Agreement nor waiver of the terms or conditions thereof shall be binding upon
either party unless approved in writing by an authorized representative of such
party. All issues concerning this agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than the State of Delaware.
4
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Advisory Agreement
as of the date first written above.
ALLIANCE LAUNDRY SYSTEMS LLC
By: ________________________________
Its: _________________________________
BAIN CAPITAL, INC.
By: ________________________________
Its: _________________________________
<PAGE>
EXHIBIT 10.41
RAYTHEON COMPANY
141 SPRING STREET
LEXINGTON, MASSACHUSETTS 02173
May __, 1998
Alliance Laundry Systems LLC
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attention: Mr. Robert Gay
Re: Transition Services
-------------------
Dear Sirs:
Reference is hereby made to that Agreement and Plan of Merger by and among
Bain/RCL, L.L.C., a Delaware limited liability company ("Buyer"), RCL
-----
Acquisitions, L.L.C., a Delaware limited liability company ("MergeCo"), Raytheon
-------
Company, a Delaware corporation ("Raytheon"), and Raytheon Commercial Laundry
--------
LLC, a Delaware limited liability company (the "Company"), dated as of February
-------
21, 1998 (the "Merger Agreement") pursuant to which MergeCo will merge with and
----------------
into the Company with the Company as the Surviving Entity (as such, the
"Surviving Entity"). Each capitalized term used herein without definition shall
- -----------------
have the meaning given such term in the Merger Agreement.
Raytheon and the Surviving Entity hereby agree, subject to and effective
upon the consummation of the transactions contemplated by the Merger Agreement,
as follows:
1. Services Provided. Upon a reasonable request from the Surviving Entity for
-----------------
the transition support services described in Schedule A attached hereto
----------
(the "Raytheon Services"), Raytheon agrees to use reasonable efforts to
-----------------
provide, directly or by means of its vendors, the Raytheon Services to the
Surviving Entity (it being understood by the parties that "reasonable
efforts" means those efforts consistent with the level at which Raytheon
provided services to the Company prior to the Closing Date). In addition,
the Surviving Entity agrees to provide to Raytheon access to Theresa Weeks,
for twenty-four months from the date hereof, in connection with claims
pending on the date hereof regarding environmental issues at the Omro,
Wisconsin facility (the "RCL Services" and, together, with the Raytheon
------------
Services, the "Services") so long as (i) such access does not unreasonably
--------
disrupt her employment obligations with the Surviving Entity or its
subsidiaries and (ii) any obligation of the Surviving Entity in connection
herewith ceases
<PAGE>
at such time Theresa Weeks is no longer an employee of the Surviving Entity
or one of its subsidiaries. The parties agree to exercise reasonable
commercial efforts to minimize the period for the provision of the
Services.
2. Compensation. The recipient of Services agrees to compensate the provider
------------
in accordance with the provider's internal cost accounting or, with respect
to third-party vendors, to reimburse the provider for the Services charged
by such vendors and to provide the recipient with a detailed summary of
such costs. The recipient also agrees to reimburse the provider for any
reasonable out-of-pocket expenses incurred by the provider in connection
with its provision of the Services. The recipient shall pay the provider's
invoice with respect to the foregoing in full within thirty (30) days after
receipt.
3. Indemnification. Upon the occurrence of a breach of this agreement, such
---------------
breach shall be treated as a breach of a representation and warranty under
the Merger Agreement and the breaching party agrees to indemnify and hold
harmless the other party hereto from and against any and all Covered
Liabilities in accordance with the provisions of the Merger Agreement
(including with respect to thresholds and caps upon liability). The remedy
set forth in this paragraph 3 shall be the sole and exclusive remedy with
respect to any breaches of this agreement.
4. Relationship of Parties. Each of the parties hereto is entering into this
-----------------------
Agreement and will render the Services as an independent contractor.
Neither party shall be considered the employer or joint employer of the
other party's employees. Each party shall be solely responsible for
determining and enforcing labor policies concerning its work force,
including without limitation the hiring, firing, discipline and supervision
of all its employees. Each party shall be solely responsible for any
obligations relating to its employees, including without limitation
compensation, benefits, taxes, severance pay and notification obligations,
worker's compensation, unemployment compensation, retiree and pension fund
obligations.
5. Notices. All notices shall be given, and deemed to be received, in the
-------
manner set forth in Section 12.5 of the Merger Agreement.
6. Termination. The recipient of Services may terminate the Services in whole
-----------
or in part at any time upon thirty (30) days notice to the provider of
Services. Except (i) for the provisions of Paragraph 3 above and (ii) with
respect to the provision of those Services described herein whose duration
is explicitly longer than 90 days, this Agreement will otherwise terminate
ninety (90) days from the date hereof.
7. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the internal laws of the Commonwealth of Massachusetts
applicable to agreements made and to be performed entirely within such
state, without regard to the conflicts of the law principles of such state.
<PAGE>
8. Waiver. The waiver by a party hereto of any right hereunder or the failure
------
to perform or of a breach by another party shall not be deemed a waiver of
any other right hereunder or of any other breach or failure by said other
party whether of a similar nature or otherwise.
9. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed an original, but which together shall constitute one
and the same instrument.
[The remainder of this page has been intentionally left blank.]
<PAGE>
Please evidence your agreement to the foregoing by countersigning this letter in
the appropriate space below.
Very truly yours,
RAYTHEON COMPANY
By:_______________________
Title:
Agreed to as of the date
first set forth above:
ALLIANCE LAUNDRY SYSTEMS LLC
By:_______________________
<PAGE>
SCHEDULE A
Services to be provided by Raytheon to the Surviving Entity:
Computer Systems
- ----------------
A. Access to E-Mail and the Firewall
---------------------------------
. Raytheon will reconfigure the Surviving Entity's connection point to
Raytheon's internal data network to provide the Surviving Entity with
access to only the e-mail server and firewall server.
. Raytheon will permit the Surviving Entity access to the e-mail server
and firewall server for a three (3) month period commencing as of the
Effective Date.
. Raytheon will use reasonable commercial efforts to assist the
Surviving Entity in transferring the appropriate domain names through
the internet.
. The Surviving Entity will work with their Internet Service Provider
to establish web connectivity, mail connectivity and firewall
connectivity. Further, the Surviving Entity will work with its
Internet Service Provider to redirect the appropriate domain names to
"point" to the new web server and firewall server.
B. Wider Area Network Connections Between Locations
------------------------------------------------
. The circuits which connect the locations of the Company are presently
under Raytheon's contract with AT&T.
. Raytheon will permit the Surviving Entity to use the carrier services
associated with the above circuits until the Surviving Entity has an
agreement in place with AT&T (or a service provider of its choice) or
December 31, 1998, whichever is earlier.
C. Voice Network (RayComNet)
-------------------------
. Raytheon will assist the Surviving Entity in transferring the Local
Exchange company lines, the AT&T Inbound (800) numbers, the calling
cards, etc.
. Raytheon will permit the Surviving Entity to continue using the
RayComNet in the same manner and to the same extent as it was used by
the Closing prior to the Effective Time until the Surviving Entity
has retained its own service provider for these services or December
31, 1998, whichever is earlier.
<PAGE>
Employee Benefits
- -----------------
. Administrative support related to (i) the transition of the pension
plans and RAYSIP and RAYSOP to new plans and (ii) the exercise of
Raytheon stock options owned by Commercial Laundry Employees for so
long as any such Raytheon stock options are exercisable.
. Employee access to Raytheon Benefits Center through April 15, 1999
for questions regarding benefits earned up through and including the
Closing Date.
. Access to (i) detailed payroll data for all Commercial Laundry
Employees for 1997 and (ii) solely as it relates to the Company, the
Raytheon Company 1997 Compensation Survey data for compensation
planning.
. Administrative support related to the accumulation and submission of
Forms 5500 for 1997.
Others
- ------
. Access to status reports regarding Actions against the Company
pending as of the date hereof, previous litigation strategy and
historical information and current data in connection therewith,
including but not limited to environmental, product liability,
employee benefit and patent matters. Assistance with transferring
such matters to attorneys retained by Surviving Entity and the
processing of all insurance claims submitted prior to the Effective
Date.
. Assistance regarding customers and international duties for export
sales and imported raw materials.
. Assistance related to the transition to a stand-alone taxpayer for
payroll related taxes, sales taxes, property and income taxes.
. Assistance with the continuing operation of off balance sheet
financing programs.
. Usage of Raytheon pricing and vendors for aircraft storage, parts and
services and all travel related services, including but not limited to
airline, hotel and car rental reservations.
. Provide the Company with data relating to taxes, insurance, treasury
and environmental services previously provided to the Company.
. Assistance with the processing of workers compensation and other
employee-related insurance claims submitted prior to the Effective
Date, and establishing stand-alone workers compensation and other
insurance programs.
. Notwithstanding anything to the contrary implied by this Schedule A,
the services to be provided to the Surviving Entity hereunder are in
addition to, and not in lieu of, any and all obligations of Raytheon
under the Merger Agreement.
Transition Services Agreement
<PAGE>
EXHIBIT 10.42
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
---
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. PRIOR TO ANY
SALE OR TRANSFER OF THIS INSTRUMENT, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SALE OR TRANSFER, THE
HOLDER HEREOF SHALL HAVE DELIVERED TO THE ISSUER HEREOF (THE "COMPANY") AN
-------
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT.
ALLIANCE LAUNDRY HOLDINGS
JUNIOR SUBORDINATED PROMISSORY NOTE
-----------------------------------
________, 1998 $9,000,000
Alliance Laundry Holdings LLC (the "Company"), hereby promises to pay
-------
to the order of Raytheon Company ("Raytheon") or its permitted transferees
--------
pursuant to Section 6 below (the "Holder"), the principal amount of nine million
------
dollars ($9,000,000), together with interest thereon calculated from the date
hereof (the "Date of Issuance") in accordance with the provisions of this Junior
----------------
Subordinated Promissory Note (this "Note").
----
This Note was issued pursuant to the Merger Agreement, dated as of
February 21, 1998, by and among the Company, Raytheon and RCL Acquisitions,
L.L.C. (the "Merger Agreement"). Except as defined in Section 9 hereof or
----------------
unless otherwise indicated herein, capitalized terms used in this Note shall
have the same meanings as set forth in the Merger Agreement.
1. Payment and Capitalization of Interest. Interest shall accrue at
--------------------------------------
the rate of nineteen percent (19%) per annum until the eighth anniversary of the
Date of Issuance and at a rate of thirteen percent (13%) per annum thereafter on
the unpaid principal amount of this Note (including any portion thereof which is
Capitalized Interest) outstanding from time to time, or (if less) at the highest
rate then permitted under applicable law. On each anniversary of the Date of
Issuance (a "Capitalization Date") on which any portion of the unpaid principal
-------------------
amount of this Note
<PAGE>
remains outstanding, all accrued interest as of such date shall be capitalized
and made part of the unpaid principal amount hereunder as of such date (the
"Capitalized Interest"). Interest shall be computed on the basis of a 365-day
--------------------
year and the actual number of days elapsed. Any accrued interest which for any
reason has not theretofore been paid shall be paid in full on the Maturity Date
(as defined below).
2. Payment of Principal on Note.
----------------------------
(a) Scheduled Payments. The Company shall pay the principal amount
------------------
then outstanding (including any portion thereof which is Capitalized Interest),
together with all unpaid interest accrued hereon and any other amounts payable
hereunder, to the holder of this Note on August 21, 2009 (the "Maturity Date").
-------------
(b) Prepayments. The Company may, at any time and from time to time
-----------
without premium or penalty, respectively, prepay all or any portion of the
outstanding principal amount of this Note (including any portion thereof which
is Capitalized Interest). In addition, upon the earlier to occur of (i) a
Change of Control or (ii) the consummation of an IPO, the Company shall prepay,
without premium or penalty, all of the outstanding principal amount of the Note
(including any portion thereof which is Capitalized Interest). Any prepayment
pursuant to this Section 2(b) will be accompanied by a payment of accrued
interest on the portion being prepaid. A prepayment of less than all of the
outstanding principal amount of this Note shall not relieve the Company of its
obligation to make the scheduled payment on this Note on the Maturity Date
pursuant to Section 2(a) above.
3. Pro Rata Payment. In the event that this Note is subdivided and
----------------
transferred to two or more holders in accordance with Section 6 hereof, then,
except as otherwise expressly provided in this Note, all payments to the holders
of this Note (whether for principal, interest or otherwise) shall be made pro
rata among such holders based upon the aggregate unpaid principal amount of this
Note held by each such holder. If any holder of this Note obtains any payment
(whether voluntary, involuntary, by application of offset or otherwise) of
principal, interest or other amount with respect to this Note in excess of such
holder's pro rata share of such payments obtained by all holders of this Note
(other than as expressly provided herein), by acceptance of this Note each such
holder agrees to purchase from the other holders of this Note a participation in
this Note held by them as is necessary to cause such holders to share the excess
payment ratably among each of them as provided in this Section 3.
4. Subordination.
-------------
(a) Note Subordinated to Senior Indebtedness. The Company covenants
----------------------------------------
and agrees, and the Holder by its acceptance hereof likewise covenants and
agrees, that to the extent and in the manner expressly set forth in this Section
4, all amounts payable with respect to this Note are expressly made subordinate
in priority and subject in right and priority of payment to the prior
performance and final payment in full, in cash or cash equivalents acceptable to
the holders of Senior Indebtedness, of all Senior Indebtedness. The provisions
of this Section 4 are intended to be
-2-
<PAGE>
for the benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness. Each of the Company on the one hand and the Holder, by its
acceptance hereof, on the other hand, acknowledges that certain holders of
Senior Indebtedness are relying upon the provisions of this Section 4, in
extending certain Senior Indebtedness to the Company.
(b) Subordination. No direct or indirect payment (in cash, property
-------------
or securities or by set-off or otherwise) by or on behalf of the Company of any
amounts payable with respect to this Note, whether pursuant to the terms hereof
(including upon an acceleration) or otherwise, shall be made prior to the
payment in full, in cash or cash equivalents acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness. Notwithstanding the foregoing, unless
the Senior Indebtedness is in default and payment hereunder prohibited thereby,
amounts required to be paid pursuant to paragraph 2 hereof shall be permitted to
be paid by the Company to the holders of this Note.
(c) Priority and Payment Over of Proceeds Upon Bankruptcy or
--------------------------------------------------------
Dissolution. In the event of any dissolution or winding up or total or partial
- -----------
liquidation or reorganization of the Company, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings or upon any
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of the Company (collectively, a "Reorganization"), then, and
--------------
irrespective of the treatment, validity or priority of any Senior Indebtedness
or this Note:
(i) all Senior Indebtedness shall first be paid in full, in cash or
cash equivalents acceptable to the holders of Senior Indebtedness, before
any direct or indirect payments or distributions (in cash, property or
securities or by set-off or otherwise) on or in respect of this Note,
except for payments or distributions on or in respect of this Note pursuant
to a plan of reorganization approved by the holders of Senior Indebtedness;
(ii) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holder would be entitled (including any payment or
distribution in respect of this Note by reason of any other indebtedness of
the Company being subordinated to this Note), but for the provisions of
this Section 4(c), shall be paid by the Company or any other person making
such payment or distribution, whether a debtor in possession, trustee in
bankruptcy, a receiver, custodian, conservator, or otherwise, directly to
the holders of Senior Indebtedness to the extent necessary to make payment
in full, in cash or cash equivalents acceptable to the holders of Senior
Indebtedness, of the Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to or for the holders of
Senior Indebtedness, and the holders of Senior Indebtedness shall be
entitled to demand, sue for, collect, and receive every such payment or
distribution. The Holder irrevocably authorizes, empowers and directs all
trustees, receivers, custodians, conservators or any other persons having
authority over the property of the Company to effect all such payments and
deliveries to the holders of Senior Indebtedness; and
-3-
<PAGE>
(iii) The holders of Senior Indebtedness are hereby authorized, until
payment in full in cash of all Senior Indebtedness (A) to file an
appropriate claim for and on behalf of the Holder if the Holder does not
file, and there is not otherwise filed on behalf of the Holder, a proper
claim or proof of claim in the form required in any such Reorganization
prior to 30 days before the expiration of the time to file such claim, and
(B) to vote all claims in respect of this Note in any Reorganization for
and on behalf of the Holder if the Holder does not vote prior to 10 days
before the expiration of the time to vote such claims.
(d) Rights and Obligations of the Holder.
-------------------------------------
(i) In the event that, notwithstanding the foregoing provisions
prohibiting such payment or distribution, the Holder shall have received
any payment or distribution of assets of the Company of any kind or
character in respect of this Note then, and in such event, (A) such payment
or distribution shall be segregated, and in any event, shall be deemed to
have been received by the Holder in trust for the benefit of, and as the
property of, the holders of Senior Indebtedness, until all Senior
Indebtedness is paid in full, in cash or cash equivalents acceptable to the
holders of Senior Indebtedness, and (B) promptly upon receipt of any such
payment (and in any event immediately upon demand by or any holder of
Senior Indebtedness), the Holder shall deliver the same in the form
received, together with any necessary endorsements to the holders of Senior
Indebtedness to the extent necessary to satisfy in full, in cash or cash
equivalents acceptable to the holders of Senior Indebtedness, the Senior
Indebtedness.
(ii) Notwithstanding any provision to the contrary contained herein or
in any agreement or instrument relating hereto, the Holder shall not,
without the prior written consent of the holders of Senior Indebtedness,
ask for, demand, accelerate the maturity of, sue for, take, receive, or
possess from the Company, by set-off, recoupment, foreclosure, or any other
manner, all or any payment of this Note, whether by the institution or
commencement of a bankruptcy case or other judicial action or any other
exercise or attempt to exercise any rights or remedies with respect to this
Note, whether hereunder or under any other agreement, document or
instrument executed in connection herewith.
(e) Rights of Holders of Senior Indebtedness Not To Be Impaired.
-----------------------------------------------------------
(i) No right of any present or future holder of Senior Indebtedness to
enforce the subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act by the Holder or by
the Company, by any act or failure to act by any holder of Senior
Indebtedness, or by any noncompliance by the Company or by the Holder, with
the terms and provisions and covenants herein contained regardless of any
knowledge thereof such holder of Senior Indebtedness may have or otherwise
be charged with.
(ii) Without in any way limiting the generality of Section 4(e)(i)
above, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Holder, without incurring
responsibility to the Holder, and without
-4-
<PAGE>
impairing or releasing the subordination provided in this Note or the
obligations hereunder of the Holder to the holders of Senior Indebtedness,
do any one or more of the following: (A) change the manner, place, or terms
of payment or extend the time of payment of, or renew, restate or amend the
terms of, any Senior Indebtedness or any instrument evidencing Senior
Indebtedness or any agreement under which any Senior Indebtedness is
outstanding; (B) sell, exchange, release, or otherwise deal with any
collateral, or take additional property to secure any additional guaranties
of Senior Indebtedness; (C) release any person or entity liable in any
manner for the payment, performance or collection of Senior Indebtedness;
(D) exercise or refrain from exercising any right or waive any right or
claim against the Company or any other person or entity; or (E) sell,
assign or transfer all or any portion of, or grant participation interests
in, Senior Indebtedness.
(f) Subrogation. Until the payment in full, in cash or cash
-----------
equivalents acceptable to the holders of Senior Indebtedness, of all Senior
Indebtedness, the Holder shall not assert any claim of subrogation with respect
to any Senior Indebtedness or the holders of Senior Indebtedness. Upon the
payment in full, in cash or cash equivalents acceptable to the holders of Senior
Indebtedness, of all Senior Indebtedness, the Holder shall be subrogated to the
rights of the holders of Senior Indebtedness to receive and retain payments and
distributions of cash and property on account of Senior Indebtedness, to the
extent of any payments or distributions on account of this Note that were
received and applied by the holders of Senior Indebtedness to the Senior
Indebtedness as a result of the provisions of this Section 4, until this Note
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness by the Company, or payments
received by the Holder and paid over to the holders of Senior Indebtedness of
any cash or property which the Holder would have been entitled to receive and
apply on account of this Note but for the subordination provisions of this
Section 4, shall, as among the Company and its creditors other than the holders
of Senior Indebtedness and the Holder, be deemed to be a payment or distribution
by the Company to or on account of Senior Indebtedness.
(g) Obligations of the Company Unconditional. The provisions of
----------------------------------------
Sections 4(a) through 4(f) above are solely for the purpose of defining the
relative rights of the holders of Senior Indebtedness, on the one hand, and the
Holder, on the other hand. Subject to the terms and conditions of this Section
4, (i) the obligations of the Company are absolute and unconditional to pay
amounts outstanding under this Note to the Holder, as and when the same shall
become due and payable in accordance with the terms hereof (other than an
acceleration or prepayment), (ii) nothing contained herein affects the relative
rights against the Company of the Holder and creditors of the Company other than
the holders of the Senior Indebtedness, and (iii) nothing contained herein
prevents the Holder from exercising all remedies hereunder or otherwise
permitted by applicable law.
(h) Notice to the Holder. The Company shall give prompt written
--------------------
notice to the Holder of any fact known to the Company which would prohibit the
making of any payment hereunder, but failure to give such notice shall not
affect the subordination provided for in this Section 4. Nothing contained in
this Section 4(h) shall limit the rights of the holders of Senior Indebtedness
to recover payments as contemplated by this Section 4.
-5-
<PAGE>
(i) Rights of Holders of the Senior Indebtedness. Any holder of the
--------------------------------------------
Senior Indebtedness in its capacity as such shall be entitled to all the rights
set forth in this Section 4, subject to the limitations set forth herein, with
respect to any Senior Indebtedness which may at any time be held by it, to the
same extent as any other holders of Senior Indebtedness, and nothing in this
Agreement shall deprive such holder of Senior Indebtedness of any of its rights
as a holder of Senior Indebtedness.
(j) Reinstatement. The provisions of this Section 4 shall continue to
-------------
be effective or be reinstated and the Senior Indebtedness shall not be deemed to
be paid in full, if at any time any payment of any of the Senior Indebtedness is
rescinded or must otherwise be returned by the holders of Senior Indebtedness
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
all as though such payment had not been made.
(k) Attorney-in-Fact. Until the payment in full, in cash or cash
----------------
equivalents acceptable to the holders of the Senior Indebtedness, of all Senior
Indebtedness, the Holder hereby irrevocably authorizes and empowers any agent of
the holders of Senior Indebtedness, at any time after the occurrence and during
the continuation of a default or an event of default under the documents
relating to such Senior Indebtedness or the circumstances set forth in Section
4(c), to collect and receive the proceeds of this Note and, subject to the
provisions of Section 4(c)(iii), to do any and all things relating thereto with
the same power and authority that the Holder might or could have done but for
the provisions of this Section 4. In connection therewith, the Holder hereby
irrevocably appoints any such agent as its lawful attorney-in-fact with full
power and authority for it and in its name to make, execute, and acknowledge,
publish, file, record, and swear to the execution, acknowledgment, filing,
and/or recordation, as applicable, of any and all documents as any such agent or
the other holders of Senior Indebtedness, in their sole discretion, shall deem
necessary, appropriate, or advisable with respect to the collection of the
Senior Indebtedness, this Note and the enforcement and administration of the
rights of holders of Senior Indebtedness under this Section 4. The Holder
hereby ratifies and confirms any and all acts or omissions which any such agent
may take or fail to take with respect to the administration, collection and
enforcement of this Note, and hereby remises, releases, and forever discharges
any such agent and the holders of Senior Indebtedness from any and all claims in
connection therewith, except those claims which arise as a result of the willful
misconduct of any such agent or any other holder of Senior Indebtedness. The
foregoing power of attorney is coupled with an interest and is irrevocable. The
net amount received by the holders of Senior Indebtedness (after deducting the
costs and expenses of collection and the exercise of any of their respective
rights under this Section 4), as proceeds of the payment or collection of this
Note shall be applied to the Senior Indebtedness then due, or thereafter to
become due, and the excess, if any, shall be remitted to the Holder.
5. Events of Default.
-----------------
(a) Definition. For purposes of this Note, an Event of Default shall
----------
be deemed to have occurred if:
-6-
<PAGE>
(i) The Company fails to pay when due the full amount of any principal
payment (including any portion thereof which is Capitalized Interest) or
accrued and unpaid interest; or
(ii) The Company makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts generally as they become
due; or an order, judgment or decree is entered adjudicating the Company
bankrupt or insolvent; or any order for relief with respect to the Company
is entered under the Federal Bankruptcy Code; or the Company petitions or
applies to any tribunal for the appointment of a custodian, trustee,
receiver or liquidator of the Company, or of any substantial part of the
assets of the Company, or commences any proceeding (other than a proceeding
for the voluntary liquidation and dissolution of any Subsidiary of the
Company) relating to the Company under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation
law of any jurisdiction; or any such petition or application is filed, or
any such proceeding is commenced, against the Company and either (A) the
Company by any act indicates its approval thereof, consent thereto or
acquiescence therein or (B) such petition, application or proceeding is not
dismissed within 60 days.
(b) Consequences of Events of Default.
---------------------------------
(i) If an Event of Default of the type described in Section 5(a)(i)
has occurred and continued for 5 days after written notice thereof is
delivered by the holder or holders of this Note to the Company, the
interest rate on this Note shall increase immediately by an increment of
two (2) percentage points to the extent permitted by law; provided however,
--------
that any increase of the interest rate resulting from the operation of this
subparagraph shall terminate and be readjusted to the original interest
rate as of the close of business on the date on which no Event of Default
exists.
(ii) If any Event of Default of the type described in Section 5(a)(i)
has occurred and continued for 5 days after written notice thereof is
delivered by the holder or holders of this Note to the Company, the holder
or holders of this Note representing a majority of the aggregate principal
amount of this Note then outstanding may, subject to Section 4, declare all
or any portion of the outstanding principal amount (including any portion
thereof which is Capitalized Interest) of this Note (together with all
accrued interest thereon and all other amounts due and payable with respect
thereto) to be immediately due and payable and may demand immediate payment
of all or any portion of the outstanding principal amount (including any
portion thereof which is Capitalized Interest) of this Note (together with
all such other amounts then due and payable) owned by such Holder.
(iii) If an Event of Default of the type described in Section 5(a)(ii)
has occurred, the aggregate principal amount (including any portion thereof
which is Capitalized Interest) of this Note (together with all accrued
interest thereon and all other amounts due and payable with respect
thereto) shall become immediately due and payable without any action on the
-7-
<PAGE>
part of the Holder, and the Company shall immediately pay to the Holder all
amounts due and payable with respect to this Note.
(iv) Subject to Section 4 hereof, each Holder shall also have any
other rights which such Holder may have been afforded under any contract or
agreement at any time and any other rights which such Holder may have
pursuant to applicable law.
(v) The Company hereby waives diligence, presentment, protest and
demand and notice of protest and demand, dishonor and nonpayment of this
Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the Holder hereof may accept security
for this Note or release security for this Note, all without in any way
affecting the liability of the Company hereunder.
6. Transfer Restrictions. The Holder agrees not to sell, transfer,
---------------------
assign, pledge or otherwise dispose of any interest in this Note without the
prior written consent of the Company, which consent will not be unreasonably
withheld. Any transfer or attempted transfer of any interest in this Note in
violation of the preceding sentence shall be void, and the Company shall not
record such transfer on its books and records or treat any purported transferee
of such interest as the owner of such interest for any purpose.
7. Distributions. Except for Distributions (as defined in the LLC
-------------
Agreement) pursuant to Section 4.1(c) of the LLC Agreement, the Company shall
not make any Distributions without the consent of the Holder.
8. Amendment and Waiver. Except as otherwise expressly provided
--------------------
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holder or holders of a majority of the aggregate principal amount (plus all
accrued but unpaid interest) of this Note then outstanding.
9. Definitions. For purposes of this Note, the following
-----------
capitalized terms have the following meaning.
"Affiliate" of any Person means any Person that directly or indirectly
---------
controls, is controlled by, or is under common control with the Person in
question.
"Bain Group" means Bain/RCL, L.L.C., and each of its respective
----------
Affiliates and successors.
"Business Day" means any day other than Saturday or Sunday or a public
------------
holiday under the laws of the State of New York or other day on which banking
institutions are authorized or obligated to close in the State of New York as of
the date of determination.
-8-
<PAGE>
"Change in Control" shall mean the first to occur of (i) the
-----------------
occurrence of a Liquidity Event or (ii) (a) the Company (or its successor as a
result of merger, consolidation, reorganization or sale) becoming a reporting
company under the Securities Exchange Act of 1934 as a result of the
registration of its common equity securities thereunder and (B) the members of
the Bain Group and their affiliates collectively ceasing to own at least 50% of
the aggregate number of Common Units that they own on the date hereof (as
adjusted for a dividend or split or exchange or in connection with a combination
of units, recapitalization, merger, consolidation or other reorganization).
"Common Units" shall have the meaning assigned to it in the LLC
------------
Agreement.
"Independent Third Party" shall have the meaning assigned to it in the
-----------------------
LLC Agreement.
"IPO" shall have the meaning assigned to it in the LLC Agreement.
---
"Liquidity Event" means (a) any sale to an Independent Third Party of
---------------
all or substantially all (as defined in the Model Business Corporation Act) of
the assets of the Company and its Subsidiaries on a consolidated basis in one
transaction or series of related transactions, (b) any sale to an Independent
Third Party of all or substantially all of the Common Units held directly or
indirectly by the Bain Group (or a transaction having a similar effect as
contemplated by Section 12.7 of the LLC Agreement) in one transaction or series
of related transactions but excluding any sales of Common Units in a Public Sale
(as defined in the Securityholders Agreement) or (c) a merger or consolidation
or other transaction which accomplishes one of the foregoing.
"LLC Agreement" means that certain Amended and Restated Limited
-------------
Liability Company Agreement of the Company, dated as of the date hereof.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Senior Indebtedness" means all indebtedness of the Company and/or any
-------------------
of its Subsidiaries (other than the indebtedness evidenced by this Note);
provided that any indebtedness which by its terms is expressly junior to this
- -------- ----
Note shall not have the rights extended to holders of Senior Indebtedness.
"Subsidiaries" shall mean, with respect to any Person, any
------------
corporation, partnership, limited liability company, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (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) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a partnership,
limited liability company, association or other business entity, a majority of
the partnership or other similar
-9-
<PAGE>
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof.
10. Cancellation. After all principal (including any portion thereof
------------
which is Capitalized Interest) and accrued interest at any time owed on this
Note has been paid in full, this Note shall be surrendered to the Company for
cancellation and shall not be reissued.
11. Payment Procedures.
------------------
(a) Place of Payment. Payments of principal and interest are to be
----------------
delivered to the Holder at such address or to the attention of such other person
as specified by the Holder by prior written notice to the Company.
(b) Form of Payment. Unless otherwise indicated herein, any payment
---------------
made hereunder shall be made by cashier's or certified check or wire transfer of
funds to the Holder.
(c) Expenses. The Company shall pay and hold the Holder harmless
--------
against liability for the payment of fees and expenses incurred with respect to
the successful enforcement of rights.
(d) Business Day. If any payment on this Note shall become due on a
------------
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in computing interest in connection with payment.
12. Replacement. Upon receipt of evidence reasonably satisfactory to
-----------
the Company of the mutilation, destruction, loss or theft of this Note and the
ownership thereof, and, in the case of any such mutilation, upon surrender and
cancellation of this Note, the Company shall, upon the written request of the
Holder, execute and deliver in replacement thereof a new Note in the same form,
in the same original principal amount and dated the same date as the Note so
mutilated, destroyed, lost or stolen, and such Note so mutilated, destroyed,
lost or stolen shall then be deemed no longer outstanding hereunder.
13. Usury Laws. It is the intention of the Company and the Holder to
----------
conform strictly to all applicable usury laws now or hereafter in force, and any
interest payable under this Note shall be subject to reduction to the amount not
in excess of the maximum legal amount allowed under the applicable usury laws as
now or hereafter construed by the courts having jurisdiction over such matters.
If the maturity of this Note is accelerated by reason of an election by the
Holder resulting from an Event of Default, voluntary prepayment by the Company
or otherwise, then earned interest may never include more than the maximum
amount permitted by law, computed from the date hereof until payment, and any
interest in excess of the maximum amount permitted by law shall be cancelled
automatically and, if theretofore paid, shall at the option of the Holder either
be rebated to the Company or credited on the principal amount of this Note, or
if this Note has been paid, then the excess shall be rebated to the Company.
The aggregate of all interest (whether designated as interest, service charges,
points or otherwise) contracted for, chargeable, or receivable under this
-10-
<PAGE>
Note shall under no circumstances exceed the maximum legal rate upon the unpaid
principal balance of this Note remaining unpaid from time to time. If such
interest does exceed the maximum legal rate, it shall be deemed a mistake and
such excess shall be cancelled automatically and, if theretofore paid, rebated
to the Company or credited on the principal amount of this Note, or if this Note
has been repaid, then such excess shall be rebated to the Company.
14. Governing Law. This Note shall be governed by and construed in
-------------
accordance with the domestic laws of the State of Massachusetts, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Massachusetts or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
Massachusetts.
* * * * *
-11-
<PAGE>
IN WITNESS WHEREOF, Alliance Laundry Holdings LLC has executed and
deliv ered this Junior Subordinated Promissory Note as of the date above.
ALLIANCE LAUNDRY HOLDINGS LLC
By: __________________________________
Its: _________________________________
-12-
<PAGE>
EXHIBIT 12.1
Computation of Ratio of Earnings to Fixed Charges
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
Quarters ended Quarter ended
--------------------
Years ended December 31, March 30, March 29, March 29,
----------------------------------------------
1993 1994 1995 1996 1997 1997 1998 1998
---- ---- ---- ---- ---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Income before taxes $ 25,788 $ 29,432 $ 30,101 $ 34,763 $ 42,707 $ 9,466 $ 8,770 $ 407
Fixed Charges:
Interest expense - - - - - - - 7,662
Rentals 198 198 198 363 396 100 100 100
------ ------ ------ ------ ------ ------ ------ ------
198 198 198 363 396 100 100 7,762
Income before taxes and
fixed charges $ 25,986 $ 29,630 $ 30,299 $ 35,126 $ 43,103 $ 9,566 $ 8,870 $ 8,169
Ratio of earnings to
fixed charges 131.24 149.65 153.03 96.77 108.85 95.66 88.70 1.05
</TABLE>
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I. R. S. Employer
if not a U. S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
ALLIANCE LAUNDRY SYSTEMS LLC
(Exact name of OBLIGOR as specified in its charter)
Delaware 39-1927923
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
P. O. Box 990 54971-0990
Ripon, Wisconsin Zip Code
(Address of principal executive offices)
__________________________
9-5/8% Senior Subordinated Notes Due 2008
(Title of the indenture securities)
<PAGE>
- 2 -
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
Alliance Laundry Systems LLC is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and
15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE>
- 3 -
16. LIST OF EXHIBITS
----------------
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form T-
1 filed on September 15, 1995 with the Commission pursuant to the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
====
As of June 22, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
__________________
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 22nd day
of June, 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ M.Ciesmelewski
-----------------------
Margaret Ciesmelewski
Assistant Vice President
MC/pg
<PAGE>
Exhibit T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/Gerard F. Ganey
------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
--------------
($ IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
----------
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
----------
Total Assets $3,159,978
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
----------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
----------
Total Liabilities $2,987,921
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
----------
Total Stockholder's Equity 172,057
----------
Total Liabilities and
Stockholder's Equity $3,159,978
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001063699
<NAME> ALLIANCE LAUNDRY SYSTEMS LLC
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-END> DEC-31-1997 MAR-30-1998
<CASH> 1,208 1,607
<SECURITIES> 0 0
<RECEIVABLES> 14,314 10,584
<ALLOWANCES> 4,495 4,712
<INVENTORY> 33,714 36,350
<CURRENT-ASSETS> 54,333 53,974
<PP&E> 168,256 167,054
<DEPRECIATION> 98,555 100,244
<TOTAL-ASSETS> 193,257 182,982
<CURRENT-LIABILITIES> 38,899 40,769
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 148,573 135,824
<TOTAL-LIABILITY-AND-EQUITY> 193,257 182,982
<SALES> 347,709 83,295
<TOTAL-REVENUES> 347,709 83,295
<CGS> 263,932 63,945
<TOTAL-COSTS> 263,932 63,945
<OTHER-EXPENSES> 41,070 10,580
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 42,707 8,770
<INCOME-TAX> 16,431 3,385
<INCOME-CONTINUING> 26,276 5,385
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 26,276 5,385
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
