<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER 33-49830
COINMACH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 53-0188589
(State of incorporation) (I.R.S. Employer Identification No.)
55 LUMBER ROAD, ROSLYN, NEW YORK 11576
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 484-2300
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of May 26, 1997, the registrant had outstanding 100 shares of common
stock, par value $.01 per share (the "Common Stock").
No market value can be determined for the Common Stock. See Item 5 of this
Form 10-K Report.
================================================================================
<PAGE>
PART I
ITEM 1. BUSINESS.
Unless otherwise expressly indicated herein, the descriptions of the
Company contained herein are as of March 28, 1997 and do not give effect to the
acquisition of Reliable Holding Corp. (the "Reliable Acquisition"), completed on
April 23, 1997, or the amendment to the Company's New Credit Facility (defined
herein), completed on June 2, 1997. For a description of such acquisition and
amendment to the New Credit Facility, see "Business - General Development of
Business - Recent Developments" and "Business - General Development of Business
- - Credit Facility."
GENERAL DEVELOPMENT OF BUSINESS
Coinmach Corporation, a Delaware corporation (the "Company" or the
"Registrant"), is a leading national supplier of coin-operated laundry equipment
services for multi-family housing properties. Prior to giving effect to the
Reliable Acquisition, the Company owns and operates approximately 337,000 coin-
operated washers and dryers (sometimes hereinafter referred to as "machines") in
over 30,000 multi-family housing properties on routes located in 30 states and
the District of Columbia and in 150 retail laundromats located throughout Texas.
The Company's routes are located throughout the Northeast, Mid-Atlantic,
Southeast, South-Central and Midwest regions of the United States. The Company,
through its wholly-owned subsidiary, Super Laundry Equipment Corp. ("Super
Laundry"), is also a construction and laundromat equipment distribution company.
The Company is a wholly-owned subsidiary of Coinmach Laundry Corporation, a
Delaware corporation ("CLC"). Unless otherwise specified herein, references to
the Company shall mean Coinmach Corporation and its subsidiaries.
The Company's executive offices are located at 55 Lumber Road, Roslyn, New
York 11576, and its telephone number is (516) 484-2300. The Company's mailing
address is the same as that of its executive offices. In September 1996, the
Company opened a corporate development office in Charlotte, North Carolina.
SIGNIFICANT ACQUISITIONS
On April 1, 1996, the Company acquired substantially all of the assets of
Allied Laundry Equipment Company, a regional route operator located in St.
Louis, Missouri for $15.5 million in cash (the "Allied Acquisition"). The
Allied Acquisition adds approximately 24,000 machines to the Company's base and
provides the Company with a larger market presence in the Mid-West.
On January 8, 1997, the Company acquired 100% of the outstanding voting
securities of each of KWL, Inc., a Nevada corporation ("KWL"), and Kwik-Wash
Laundries, Inc., a Nevada corporation ("Kwik Wash"), for $125 million in cash
and a $15 million promissory note (the "Kwik Wash Note") issued by CLC (the
"Kwik Wash Acquisition"). KWL and Kwik Wash are the sole partners of Kwik Wash
Laundries, L.P. (the "Kwik Wash Partnership"), a Texas limited partnership. The
Kwik Wash Acquisition increases the Company's presence in the South-Central
region by adding approximately 74,000 machines to the Company's base and enables
the Company to provide coin-operated laundry equipment services to multi-family
housing properties in Texas, Louisiana, Arkansas and Oklahoma and to operate 150
retail laundromats throughout Texas. Upon consummation of the Kwik Wash
Acquisition, KWL, Kwik Wash and the Kwik Wash Partnership were merged with and
into the Company.
-2-
<PAGE>
On March 14, 1997, the Company acquired substantially all of the assets of
Atlanta Washer & Dryer Leasing, Inc. (d/b/a Appliance Warehouse) for
approximately $6.3 million in cash and promissory notes (the "AW Notes") issued
by CLC aggregating $1.2 million (the "Appliance Warehouse Acquisition"). The
Appliance Warehouse Acquisition increases the Company's presence in the South by
adding approximately 14,000 machines to the Company's base and expands the
Company's core operations into the related machine rental market, creating
valuable operating synergies for the Company. At any time after March 14, 1998,
the holders of the AW Notes may convert such notes, subject to terms and
conditions therein, into a specified number of shares of CLC's Class A Common
Stock, par value $.01 per share (the "CLC Common Stock").
CREDIT FACILITY
Concurrent with the Kwik Wash Acquisition, the Company entered into a
credit agreement (the "Credit Agreement") with Bankers Trust Company, First
Union National Bank of North Carolina, Lehman Commercial Paper, Inc. and certain
other lending institutions named therein providing for, among other things, a
$130 million term loan facility and a $70 million revolving credit facility (the
"New Credit Facility"). The New Credit Facility, which replaced the Company's
then existing credit facility, funded the Kwik Wash Acquisition and provides
financing to support the Company's acquisition strategy. Effective June 2,
1997, the Credit Agreement was amended to, among other things, increase the term
loan facility by $60.0 million, of which $50.0 million was used to repay
outstanding revolver borrowings under the New Credit Facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources - New Credit Facility."
RECENT DEVELOPMENTS
On April 23, 1997, the Company acquired the route business of Reliable
Holding Corp. ("Reliable") through a series of merger transactions for a cash
purchase price of approximately $44.0 million funded by revolver borrowings
under the New Credit Facility. The Reliable Acquisition provides the Company
with a strong foothold into the California market and adds approximately 49,000
machines to the Company's base.
Effective June 2, 1997, the New Credit Facility was amended to, among other
things, increase the term loan facility by $60.0 million. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources - New Credit Facility."
DESCRIPTION OF THE BUSINESS
OVERVIEW
The coin-operated laundry equipment services industry provides coin-
operated washer and dryer services to individuals living in multi-family housing
properties. The Company's core business involves leasing laundry rooms from
building owners and management companies, installing and servicing laundry
equipment and collecting revenues generated from laundry machines. The Company
typically sets pricing for the use of laundry machines on location, and the
owner or property manager maintains the premises and provides utilities such as
gas, electricity and water.
The Company's existing customer base for its core business is comprised of
landlords, property management companies, and owners of rental apartment
buildings, condominiums and cooperatives, university and institutional housing
and other multi-family housing properties. Prior to giving effect to
-3-
<PAGE>
the Reliable Acquisition, the Company owns and operates approximately 337,000
coin-operated washers and dryers in over 30,000 multi-family housing properties
on routes located in 30 states and the District of Columbia and in 150 retail
laundromats located throughout Texas. The Company's routes are located
throughout the Northeast, Mid-Atlantic, Southeast, South-Central and Mid-West
regions of the United States. Management believes, based on its knowledge of
the industry and after giving effect to the Reliable Acquisition, that the
Company is the largest supplier of coin-operated laundry equipment services for
multi-family housing properties throughout the United States.
As a result of its strategy to acquire route operators that contribute to
the Company's core operations, the Company has also selectively acquired certain
related businesses which expand and diversify the types of services provided by
the Company. Through Super Laundry, the Company constructs and finances turnkey
laundromat operations, and sells and distributes coin-operated washers, dryers
and laundry equipment. With the Kwik Wash Acquisition, the Company now operates
150 retail laundromats throughout Texas and provides laundromat services at all
such locations. As a result of the Appliance Warehouse Acquisition, the Company
leases laundry equipment and other household appliances to corporate relocation
entities, individuals, property owners and managers of multi-family housing
properties. The Company believes that these non-core businesses, although not
material to the Company's operations, provide a significant platform for
expansion and diversification of the Company's services. See "Business -
Description of Business - Super Laundry" and "Business - Description of Business
- - Laundromat Operations".
The Company maintains its executive offices in Roslyn, New York, a
corporate development office in Charlotte, North Carolina and regional offices
in each of the major regions in which it conducts operating activities,
including sales, service and collections. The following table sets forth
certain information relating to the Company's regional operations as of March
28, 1997:
<TABLE>
<CAPTION>
MID-
NORTHEAST ATLANTIC SOUTHEAST SOUTH-CENTRAL MID-WEST TOTAL
-------------- ------------- ------------------- ---------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
States....................... NY, NJ, CT D.C., MD, VA, WV, NC, SC, TX, LA, FL, IL, IA, SD, 31
PA, DE GA, KY, AL, TN AK, MS, OK NE MO, KS,
IN, MI, WI,
OH
Approximate Revenue (in $ 79.6 $29.3 $ 25.1 $62.4/5/ $10.5 $206.9
millions).................
Employees.................... 255/1/ 81 145/2,3/ 657/4/ 42 1,180
</TABLE>
____________________
1 Includes 36 executive, financial and administrative personnel at the
Company's headquarters located in Roslyn, New York.
2 Includes five executive, financial and administrative personnel at the
Company's corporate development office located in Charlotte, North
Carolina.
3 Includes 24 contract employees employed by the Company through a lease
arrangement with an independent employment company in connection with the
Appliance Warehouse Acquisition.
4 Includes 280 laundromat attendants in the Company's retail laundromats in
Texas.
5 Includes revenue resulting from the Kwik Wash Acquisition for the period
subsequent to January 8, 1997.
BUSINESS STRATEGY
The Company's business strategy is to increase operating cash flow and
profitability through a combination of internal expansion and selective
acquisitions. Internal expansion is comprised of: (i) increasing the installed
machine base by adding new customers, (ii) converting owner-operated facilities
to Company-managed facilities; and (iii) implementing selective price increases
within the Company's operating regions. The Company's acquisition strategy is
to acquire additional local, regional and multi-regional route businesses from
independent operators. Management believes that by pursuing its business
-4-
<PAGE>
strategy the Company will be positioned to realize: (i) additional operating
leverage and economies of scale associated with expanding its installed base of
machines, including without limitation, reduced equipment and parts costs on a
per unit basis due to increased purchasing requirements and (ii) reduced
operating expenses through consolidation of overhead functions and facilities.
In January 1995, management, with its equity sponsor, Golder, Thoma,
Cressey, Rauner Fund IV, L.P., acquired Coinmach Industries Co., L.P. and Super
Laundry Co., L.P. and initiated a strategy of growth through acquisitions. On
April 5, 1995, CLC (formerly SAS Acquisitions Inc.) acquired (the "Solon
Acquisition") all of the voting capital stock of Solon Automated Services, Inc.
("Solon"). On November 30, 1995, The Coinmach Corporation ("TCC") merged with
and into Solon (the "Merger"), whereby Solon was the surviving corporation and
changed its name to Coinmach Corporation.
This acquisition strategy was designed to increase the installed machine
base of the Company in its existing operating regions (initially throughout the
Northeast region) and to provide the Company with a strong market presence in
new regions. Since January 1995, the Company has expanded into the Mid-
Atlantic, Southeast, South-Central and Midwest regions of the United States and
grown its installed base from approximately 54,000 machines to approximately
337,000 machines as of March 28, 1997. Revenues and EBITDA/1/ have grown from
approximately $72.9 million and approximately $13.6 million, respectively, for
the twelve months ended March 31, 1995, to approximately $206.9 million and
approximately $62.8 million (before deducting non-cash stock based compensation
charges), respectively, for the twelve months ended March 28, 1997. These
acquisitions have enabled the Company to improve its operating margins and to
expand internally by competing more aggressively for new business.
Internal Expansion
New Locations. The Company's aggressive sales and marketing efforts focus
-------------
on two areas of expansion within its existing operating regions. The Company's
primary means of internal expansion is by marketing the Company's products and
services to building managers and property owners whose leases with other
laundry equipment services providers are near expiration. Many large customers
require competitive bids for expiring lease contracts. The Company's
proprietary, fully-automated management information and control systems (the
"Integrated Computer Systems") track information on the lease expirations of its
competitors. The Company secures leases with new customers through aggressive
bidding for new contracts and its long standing industry reputation for prompt
and reliable service, effective data management on competition, and its ability
in coordinating and targeting its marketing efforts.
Conversions. Management believes, based on industry estimates, that there
-----------
are approximately 1.0 million machines installed in locations that are managed
by owner-operators. Building owners or managers can forgo significant cash
outlays by contracting with the Company to purchase, service and maintain
laundry equipment. Accordingly, the Company aggressively pursues building
owners and managers to convert from owner-operated laundry facilities. The
Company offers a full range of services
- -------------------------
/1/ EBITDA represents earnings from continuing operations before deductions for
interest, income taxes, depreciation and amortization. EBITDA for the period
ending March 28, 1997 is before the deduction for stock based compensation
charges. EBITDA is used by management and certain investors as an indicator of
a company's historical ability to service debt. Management believes that an
increase in EBITDA is an indication of a company's improved ability to service
existing debt, to sustain potential future increases in debt and to satisfy
capital requirements. However, EBITDA is not intended to represent cash flows
for the period, nor has it been presented as an alternative to either (a)
operating income (as determined by generally accepted accounting principles) as
an indicator of operating performance or (b) cash flows from operating,
investing and financing activities (as determined by generally accepted
accounting principles) as a measure of liquidity. Given that EBITDA is not a
measurement determined in accordance with generally accepted accounting
principles and is thus susceptible to varying calculations, EBITDA as presented
may not be comparable to other similarly titled measures of other companies.
-5-
<PAGE>
from the design, construction and installation of new laundry facilities to the
refurbishment of existing facilities. Management believes these services
provide a competitive advantage in securing new customers.
Price Increases. In addition to growing the Company's installed base of
---------------
machines, management regularly reviews its pricing policies and procedures under
existing leases. Management expects that the Company should realize increases
in revenue and cash flow from operations through selective price increases and
other pricing procedures in the forthcoming year.
Management believes that its strategy of growth within its existing
operating regions will result in additional economies of scale and operating
efficiencies associated with an expanded machine base. Such growth, however,
will be dependent upon a number of factors beyond the Company's control, such as
the Company's ability to secure new contracts from owner-operators on
commercially favorable terms and competitive forces that may reduce the number
of opportunities to secure new locations or to effect price increases.
Selective Acquisitions
The Company intends to continue to capitalize on opportunities within the
fragmented laundry services industry through selective acquisitions of local,
regional and multi-regional route businesses. In particular, there are numerous
private, family-owned businesses that may lack the financial resources to
provide advance rental payments, install new equipment, make laundry room
improvements or otherwise compete effectively with larger independent operators
such as the Company to secure new or renewal locations. Consequently, such
independent operators, many of which are undergoing generational ownership
changes, may represent potential acquisition opportunities for the Company
within its operating regions.
Management believes the Company is well positioned to continue to
capitalize on such opportunities for growth and expansion due to its operating
efficiencies, its access to capital resources, and senior management's extensive
experience and relationships in the industry. The Company evaluates potential
acquisitions based on certain criteria, including the size of the business (in
terms of revenues and machine base), the geographic concentration of the
business, market penetration, service history, customer relations, existing
contract terms and potential operating efficiencies and cost savings. The
Company considers three types of acquisition candidates: (i) small, local route
operators; (ii) regional route operators; and (iii) large, multi-regional route
operators.
Local route operators. The acquisition of small, local operators
---------------------
(businesses operating within one of the Company's existing regions) results in a
reduction of the target's existing cost structure through the complete
absorption of the machine base into the Company's operations. The Company
evaluates opportunities to acquire route businesses from independent operators
to further increase operating leverage within its operating regions. In many
regions, the Company may be able to acquire routes adjacent to its existing
areas of operation without incurring significant incremental operating,
collection, security, service and maintenance costs. During the past fiscal
year, the Company acquired several local route operators.
Regional route operators. The Company's acquisition of regional route
------------------------
operators provides opportunities to improve its cash flow by eliminating
duplicative corporate and administrative functions, reducing capital
expenditures through improved purchasing power and implementing the Company's
Integrated Computer Systems. One such regional acquisition, the Allied
Acquisition, was part of the
-6-
<PAGE>
Company's plan to establish a larger market presence in the Mid-West. See
"Business - General Development of Business - Selective Acquisitions."
Multi-regional route operators. The acquisition of a large, multi-regional
------------------------------
route operator may result in a number of operating efficiencies, including
significant cost savings through the elimination of duplicative financial and
administrative functions and related fixed costs. In addition, the increased
volume of equipment purchases may result in reduced per unit capital
expenditures. Moreover, as is the case with all types of acquisitions, the
Company's Integrated Computer Systems would be utilized to provide further
operating efficiencies and related cost savings. On January 8, 1997, the
Company completed the Kwik Wash Acquisition. Management expects to integrate
substantially all of the operations formerly conducted by the Kwik Wash
Partnership into the Company's operations during 1997 and to achieve significant
targeted cost savings as a result of such integration. The combination of the
Company with the Kwik Wash Partnership for the twelve months ended March 28,
1997, assuming no cost savings, results in combined pro forma revenues of
approximately $255.7 million and pro forma EBITDA of approximately $78.8 million
(before deducting non-cash stock based compensation charges). See "Business -
General Development of Business - Selective Acquisitions." On April 23, 1997,
the Company also completed the Reliable Acquisition. See "Business - General
Development of Business -Recent Developments."
INDUSTRY
The coin-operated laundry services industry is fragmented nationally with
many small, private and family-owned route businesses continuing to operate
throughout all major metropolitan areas. According to information provided by
the Multi-housing Laundry Association, the industry is comprised of over 280
independent operators. Based upon industry estimates, management believes there
are approximately 3.5 million machines installed throughout the United States,
approximately 2.5 million of which are managed by independent operators such as
the Company and approximately 1.0 million of which are managed by owner-
operators. Despite the overall fragmentation of the industry, there are
currently three companies including the Company with significant operations in
multiple regions throughout the United States. Management believes that its two
major multi-regional competitors are strongest in California and Chicago,
Illinois. See "Business - Description of Business - Competition."
The industry is highly capital intensive, and customers require prompt and
reliable service. The majority of capital costs are incurred upon procurement
of new leases. Such initial costs include replacing or repairing existing
washers and dryers, refurbishing laundry rooms and making advance rental
payments to secure long-term, renewable leases. After the initial expenditures,
ongoing working capital requirements are minimal, since machines operate for
many years if serviced properly, and variable costs are paid out of revenues
collected from the machines.
Historically, the industry has been characterized by stable demand and has
proven to be resistant to changing market conditions and general economic
cycles. Management believes that this is due to the consistent demand for
laundry services by building occupants.
Management believes that the industry's consistent and predictable revenue
and cash flow from operations are primarily due to: (i) the long-term nature of
location leases; (ii) the stable demand for laundry services; and (iii) minimal
ongoing working capital requirements.
-7-
<PAGE>
DESCRIPTION OF PRINCIPAL OPERATIONS
The principal aspects of the Company's operations include: (i) location
leasing; (ii) service; (iii) remanufacturing; (iv) security; (v) information
management; and (vi) sales and marketing.
Location Leasing
The Company's leases provide the Company the exclusive right to operate and
service the laundry equipment, including repairs and maintenance. The Company
typically sets pricing for the use of the machines on location, and the property
owner or manager maintains the premises and provides utilities such as gas,
electricity and water.
In return for the exclusive right to provide laundry equipment services,
most of the Company's leases provide for monthly commission payments to the
location owners. Under the majority of leases, these commissions are based on a
percentage of the cash collected from the laundry machines. Many of the
Company's leases require the Company to make advance rental payments to the
location owner in addition to commissions. The Company's leases typically
include provisions that allow for unrestricted price increases, a right of first
refusal (an opportunity to match competitive bids at the expiration of the lease
term) and termination rights if the Company does not receive minimum net
revenues from a lease. The Company has some flexibility in negotiating its
leases and, subject to regional competitive factors, may vary the terms and
conditions of a lease, including commission rates and advance rental payments.
The Company evaluates each lease opportunity through its Integrated Computer
Systems, which are designed to achieve certain targeted levels of profitability.
Management estimates that approximately 90% of its locations are subject to
long-term leases with initial terms of three to ten years. Of the remaining
locations not subject to long term leases, the Company believes that it has
retained a majority of such customers through long-standing relationships and
intends to continue to service such customers. Approximately 75% of the
Company's leases renew automatically, and the Company has a right of first
refusal on termination in approximately 45% of its leases. The Company's
automatic renewal clause typically provides that, if the building owner fails to
take any action prior to the end of the original lease term or any renewal term,
the lease will automatically renew on substantially similar terms. As of March
28, 1997, the Company's leases have an average remaining life to maturity of
approximately 40 months (without giving effect to automatic renewals).
Service
The Company's employees deliver, install, service and collect from coin-
operated washers and dryers in laundry facilities at its leased locations.
The Company's fleet of 314 radio-equipped service vehicles allows the quick
dispatch of service technicians in response to both computer-generated (for
preventive maintenance) and customer-generated service calls. On a daily basis,
the Company receives and responds to approximately 2,200 service calls.
Management estimates that less than 1% of the Company's machines are out of
service on any given day. The ability to reduce machine down time, especially
during peak usage, serves to enhance revenue and improve the Company's
reputation with its customers.
In a business that emphasizes prompt and efficient service, management
believes that the Company's Integrated Computer Systems provide a significant
competitive advantage in terms of
-8-
<PAGE>
responding promptly to customer needs. Computer-generated service calls for
preventive maintenance are based on previous service history, repeat service
call analysis and monitoring of service areas. These operations coordinate the
Company's radio-equipped service vehicles that allow the Company to address
customer needs quickly and efficiently.
Remanufacturing
The Company's remanufacturing operations provide approximately one-third of
its anticipated annual machine installation requirements. The Company rebuilds
and reinstalls a portion of its machines at approximately one-third the cost of
acquiring new machines, providing significant cost savings. Remanufactured
machines are restored to virtually new condition with the same estimated average
life and service requirements as new machines. Machines that can no longer be
remanufactured are stripped and added to the Company's inventory of spare parts,
generating additional cost savings.
The Company maintains three regional remanufacturing facilities which
provide for consistent machine quality and efficient operations and are
strategically located to service each of its operating regions.
Security
Management believes that it provides the highest level of security control
in the laundry equipment services industry. The Company utilizes numerous
precautionary procedures with respect to cash collection, including frequent
alteration of collection patterns, extensive monitoring of collections and other
control mechanisms. The Company enforces stringent employee standards and
screening procedures with prospective employees. Employees responsible for or
who have access to the collection of funds are tested randomly and frequently.
Additionally, the Company's security department performs trend and variance
analyses of daily collections by location. Security personnel monitor
locations, conduct investigations, and implement additional security procedures
as necessary.
Information Management
Management believes that the Company's Integrated Computer Systems
significantly enhance its operating efficiencies, its ability to successfully
integrate acquired businesses into its existing operations as well as its sales
and marketing efforts. The Integrated Computer Systems provide speed and
accuracy throughout the entire service cycle by integrating the functions of
service call entry, dispatching service personnel, parts and equipment
purchasing, installation, distribution and collection. Management is able to
obtain daily, monthly, quarterly and annual reports on location performance,
coin collection, service and sales activity by salesperson.
In addition to coordinating all aspects of the service cycle, the Company's
Integrated Computer Systems track contract performance which indicate unreported
machine failure or pilferage and provide data to forecast future equipment
problems. Data on machine performance are used by the sales staff to forecast
revenue by location. The purchasing department tracks bids on the Company's
equipment requirements to support an aggressive competitive bidding process.
The Integrated Computer Systems also provide the sales staff with an extensive
database essential to the Company's marketing strategy to obtain new business
through competitive bidding or owner-operator conversion opportunities.
-9-
<PAGE>
Sales and Marketing
The Company markets its products and services through a sales staff with an
average industry experience of over ten years. The principal responsibility of
the sales staff is to solicit and negotiate lease arrangements with building
owners and managers. All sales personnel are paid commissions that comprise 50%
or more of their annual compensation. Selling commissions are based on a
percentage of a location's annualized earnings before interest and taxes. Sales
personnel must be proficient with the application of sophisticated financial
analyses to achieve their targeted goals in securing location contracts and
renewals. Management believes that its sales staff is among the most competent
and effective in the industry.
The Company's marketing strategy emphasizes service excellence offered by
its experienced, highly skilled personnel and its quality equipment that
maximizes efficiency and revenue and minimizes machine down-time. Additionally,
the Integrated Computer Systems monitor performance, repairs and maintenance, as
well as the profitability of locations on a daily basis. The Company's sales
staff targets potential new and renewal lease locations by utilizing its
Integrated Computer Systems' extensive database that provides information on the
Company's, as well as its competitors' locations. All sales activity, from sale
entries to data on service and installation is recorded and monitored daily on a
custom-designed, computerized sales planner.
No single customer represents more than 2% of the Company's revenues or
installed machine base. In addition, the Company's ten largest customers taken
together account for less than 10% of the Company's revenues.
LAUNDROMAT OPERATIONS
In connection with the Kwik Wash Acquisition, the Company acquired 150
retail laundromats located throughout Texas. The operation of the retail
laundromats involves leasing store locations in desired geographic areas,
maintaining an appropriate mix of washers and dryers at each store location and
servicing such washers and dryers at such locations. The Company is also
responsible for maintaining the premises at each laundromat and paying for
utilities and related expenses.
SUPER LAUNDRY
Super Laundry, a wholly-owned subsidiary of the Company, is a construction
and laundromat equipment distribution company. Super Laundry's business
consists of constructing complete turnkey retail laundromats, retrofitting
existing retail laundromats, distributing exclusive lines of commercial coin and
non-coin machines and parts, and selling service contracts. The construction of
laundromats and related equipment sales constitute approximately 90% of the
revenues of Super Laundry. Super Laundry's customers generally enter into sales
contracts pursuant to which Super Laundry constructs and equips a complete
laundromat operation, including location identification, construction, plumbing,
electrical wiring and all required permits.
COMPETITION
The coin-operated laundry equipment services industry is highly
competitive, capital intensive and requires reliable, quality service. Despite
the overall fragmentation of the industry, there are currently three companies
including the Company with significant operations in multiple regions throughout
the United States. Management believes that the Company's two major multi-
regional competitors, Web
-10-
<PAGE>
Service Company, Inc. and Macke Laundry Service, L.P., are strongest in
California and Chicago, Illinois, respectively. The Company has a minimal
presence in Chicago, Illinois and after consummation of the Reliable
Acquisition, competes with Web Service Company, Inc. in California.
EMPLOYEES
As of March 28, 1997, the Company employed 1,180 full time employees
(including 24 contract employees employed by the Company through a lease
arrangement with an independent employment company in connection with the
Appliance Warehouse Acquisition and 280 laundromat attendants in the Company's
retail laundromats in Texas). Approximately 140 hourly workers in the Northeast
region are represented by Local 966, affiliated with the International
Brotherhood of Teamsters (the "Union"). Management believes that the Company
has maintained a good relationship with the Union employees and has never
experienced a work stoppage since its inception.
SEASONALITY
The Company's business is generally not seasonal.
ITEM 2. PROPERTIES.
As of March 28, 1997, the Company leases 26 offices throughout its
operating regions serving various operational purposes, including sales and
service activities, collections and warehousing. The Company presently
maintains its headquarters in Roslyn, New York, leasing approximately 40,000
square feet pursuant to a five year lease terminating April 30, 2001. The
Company's Roslyn facility is used for general corporate purposes, as well as for
remanufacturing and warehouse space for the Northeast operating region. The
Company has an option to purchase the Roslyn facility, which it presently does
not intend to exercise. The Company also maintains a facility in Charlotte,
North Carolina as its corporate development office, leasing approximately 3,000
square feet pursuant to a five year lease.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its predecessors have been named as defendants in a number
of legal actions arising in the ordinary course of business. Although the
amount of any liability that could arise with respect to these actions cannot be
accurately predicted, management believes that any such liabilities,
individually or in the aggregate, will not have a material adverse effect on the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
-11-
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
MARKET INFORMATION
There currently exists no established public trading market for the Common
Stock, all of which is held beneficially and of record by CLC.
HOLDERS
As of March 28, 1997, there was one holder of record of the Common Stock.
DIVIDENDS
The Company has not paid any dividends on the Common Stock during the past
fiscal year and does not intend to pay dividends on the Common Stock in the
foreseeable future.
Dividend payments by the Company are subject to restrictions contained in
certain of its outstanding debt and financing agreements relating to the payment
of cash dividends on its Common Stock, and the Company may in the future enter
into loan or other agreements or issue debt securities or preferred stock that
restrict the payment of cash dividends or certain other distributions. See Item
7 - "Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Liquidity and Capital Resources."
-12-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table presents summary historical consolidated financial
information of the Company. Such table includes the combined and consolidated
financial information for the year ended March 28, 1997 ("1997 Fiscal Year"),
for the six month transition period ended March 29, 1996, the period from April
5, 1995 to September 29, 1995 and the consolidated financial information for the
period from October 1, 1994 to April 4, 1995, and for each of the fiscal years
ended the Friday closest to September 30, 1994, 1993 and 1992. All financial
data therein are in thousands. The financial data set forth below should be
read in conjunction with the Company's audited historical combined and
consolidated financial statements and the related notes thereto included in Item
8 "Financial Statements and Supplementary Data" and with the information
presented in Item 7 - "Management's Discussion and Analysis of Financial
Condition and Results of Operations" of this Form 10-K.
<TABLE>
<CAPTION>
Successor /1/ Predecessor /1/
----------------------------------------- ---------------------------------------------
SIX MONTH YEAR ENDED
TRANSITION APRIL 5, OCTOBER -----------------------------------
PERIOD 1995 1, 1994
ENDED TO TO OCTOBER
YEAR ENDED MARCH 29, SEPTEMBER APRIL 4, SEPTEMBER OCTOBER 2,
MARCH 28, 1997 1996 29, 1995 1995 30, 1994 1, 1993 1992/2/
--------------- ---- -------- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................. $ 206,852 $ 89,070 $ 89,719 $52,207 $104,553 $104,888 $104,311
Laundry operating expenses........... 139,446 60,536 62,905 33,165 66,418 67,420 67,138
General and administrative expenses.. 4,520 2,024 2,458 1,539 2,839 2,576 3,125
Depreciation and amortization........ 46,316 18,212 18,423 10,304 21,347 21,002 20,745
Stock based compensation charge...... 1,768 -- -- -- -- -- --
Restructuring expenses............... -- -- 2,200 -- -- -- --
--------- -------- -------- ------- -------- -------- --------
Operating income..................... 14,802 8,298 3,733 7,199 13,949 13,890 13,303
Interest expense..................... 27,417 11,830 11,541 8,928 18,105 17,453 15,857
Income taxes (benefits).............. (2,307) (998) (1,862) 50 2,762 (768) (416)
--------- -------- -------- ------- -------- -------- --------
Loss before extraordinary item....... (10,308) (2,534) (5,946) (1,779) (6,918) (2,795) (2,138)
Extraordinary loss (net of tax)/3/... (296) (8,925) -- (848) -- -- (833)
--------- -------- -------- ------- -------- -------- --------
Net loss............................. $ (10,604) $(11,459) $ (5,946) $(2,627) $ (6,918) $ (2,795) $ (2,971)
========= ======== ======== ======= ======== ======== ========
BALANCE SHEET DATA (AT END OF
PERIOD):
Property and equipment, net.......... $ 112,116 $ 82,699 $ 80,706 -- $ 48,727 $ 50,593 $ 50,679
Total assets......................... 467,550 248,167 239,943 -- 143,589 150,402 155,827
Total debt........................... 351,710 202,765 176,415 -- 128,487 128,299 128,737
Stockholders' equity (deficit)....... 11,973 (2,148) 13,783 -- (8,721) (1,636) 1,004
FINANCIAL INFORMATION AND OTHER DATA:
Cash flow from operating activities.. $ 34,305 $ 12,100 $ 12,639 $10,216 $ 17,914 $ 16,547 $ 11,842
Cash flow used for investing (196,698) (14,162) (13,114) (6,537) (16,763) (18,500) (16,168)
activities..........................
Cash flow from (used for) financing 152,780 12,503 (1,017) (1,068) (270) (636) 10,272
activities..........................
EBITDA/4/............................ 62,886 26,510 24,356 17,503 35,296 34,892 34,048
Capital expenditures/5/.............. 41,588 14,219 13,119 6,944 16,779 18,556 16,563
</TABLE>
____________________
1 On November 30, 1995, Solon completed the Merger with TCC, which transaction
was accounted for in a manner similar to a pooling of interests. As a result
of the common investor group control over both entities, the term "Successor"
will refer to such common control periods; that is, the period in time after
the Solon Acquisition, and includes the historical results of Solon which
have been restated to include the pooling of interests of TCC. The term
"Predecessor" refers to the period in time prior to the Solon Acquisition.
Successor is presented
-13-
<PAGE>
on a different basis of accounting and, therefore, is not comparable to the
Predecessor. Historical financial data for Solon (for periods prior to April
5, 1995) are contained in the financial statements and related notes thereto
presented elsewhere in this Form 10-K.
2 Fiscal year 1992 was a 53-week year. All other fiscal years were 52-week
years.
3 Represents extraordinary loss on the early extinguishment of debt on February
14, 1997 and November 30, 1995, on the change in control in the Solon
Acquisition on April 5, 1995, and on the early extinguishment of debt in
1992.
4 EBITDA represents earnings from continuing operations before deductions for
interest, income taxes, depreciation and amortization. EBITDA for the period
ending March 28, 1997 is before the deduction for the stock based
compensation charges, and EBITDA for the period ending September 29, 1995 is
before the deduction for restructuring costs. EBITDA is used by management
and certain investors as an indication of a company's improved ability to
service existing debt, to sustain potential future increases in debt and to
satisfy capital requirements. However, EBITDA is not intended to represent
cash flows for the period, nor has it been presented as an alternative to
either (a) operating income (as determined by generally accepted accounting
principles) as an indicator of operating performance or (b) cash flows from
operating, investing and financing activities (as determined by generally
accepted accounting principles) as a measure of liquidity. Given that EBITDA
is not a measurement determined in accordance with generally accepted
accounting principles and is thus susceptible to varying calculations, EBITDA
as presented may not be comparable to other similarly titled measures of
other companies.
5 Capital expenditures include additions to property and equipment and advance
rental payments to location owners.
-14-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Business and Sources of Revenue
The Company is principally engaged in the business of supplying coin-
operated laundry equipment services to multi-family housing properties. Prior
to giving effect to the Reliable Acquisition, the Company owns and operates
approximately 337,000 coin-operated washers and dryers in approximately 30,000
multi-family housing properties on routes located in 30 states and the District
of Columbia and in 150 retail laundromats throughout Texas. The Company's
routes are located throughout the Northeast, Mid-Atlantic, Southeast, South-
Central and Midwest regions of the United States. The Company, through Super
Laundry, its wholly-owned subsidiary, is also a construction and laundromat
equipment distribution company.
The Company's most significant revenue source is derived from its route
business. The Company provides coin-operated laundry equipment services to
locations by leasing designated laundry rooms in buildings, typically on a long-
term, renewable basis. In return for the exclusive right to provide laundry
equipment services, most of the Company's leases provide for commission payments
to the location owners. Commission expense (also referred to as rent expense),
the Company's single largest expense item, is included in laundry operating
expenses and represents payments to location owners. Commissions may be fixed
amounts or percentages of revenues and are generally paid monthly. Also
included in laundry operating expenses are the cost of servicing and collections
in the route business, including, payroll, parts, vehicles and other related
items, the cost of sales associated with Super Laundry and certain expenses
related to the operation of retail laundromats acquired in the Kwik Wash
Acquisition.
In addition to commission payments, many of the Company's leases require
the Company to make advance rental payments to the location owners. These
advance payments are capitalized and amortized over the life of the applicable
lease.
Other revenue sources for the Company include (i) leasing laundry equipment
and other household appliances and electronic items to corporate relocation
entities, individuals, property owners and managers of multi-family housing
properties; (ii) operating, maintaining and servicing retail laundromats; and
(iii) constructing complete turnkey retail laundromats, retrofitting existing
retail laundromats, distributing exclusive lines of commercial coin and non-coin
machines and parts, and selling service contracts.
Certain Other Transactions
On January 31, 1995, in connection with the acquisition of Coinmach
Industries Co., L.P. and Super Laundry Co., L.P., certain asset values,
primarily contract rights and fixed assets, were recorded at their then fair
market value, adjusted to reflect a pro rata allocation of the excess of fair
market value of net assets acquired, based on an independent appraisal, over the
purchase price.
In connection with a series of refinancing transactions on November 30,
1995, the Company issued approximately $196.7 million of Senior Notes (as
hereinafter defined) which enabled the Company to, among other things, extend
the maturity of its debt obligations, retire the remaining debt of TCC and
provide additional working capital.
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the combined and consolidated financial statements and related notes thereto
included in Item 8 and the Selected Historical Consolidated Financial Data
included in Item 6 of this Form 10-K.
-15-
<PAGE>
FISCAL YEAR ENDED MARCH 28, 1997 COMPARED TO FISCAL YEAR ENDED MARCH 29, 1996
The discussion below should be read in conjunction with the following
table, which combines the six month transition period ended March 29, 1996 and
the period from April 5, 1995 to September 29, 1995 and the combined periods to
be referred to as the prior fiscal year (in thousands):
<TABLE>
<CAPTION>
SIX MONTH
TRANSITION PERIOD
YEAR ENDED PERIOD ENDED APRIL 5, 1995 TO
MARCH 28, 1997 MARCH 29, 1996 SEPTEMBER 29, 1995 COMBINED
-------------- ---------------- ------------------- ---------
<S> <C> <C> <C> <C>
Revenues.......................................... $206,852 $ 89,070 $89,719 $178,789
Laundry operating expenses........................ 139,446 60,536 62,905 123,441
General and administrative expenses............... 4,520 2,024 2,458 4,482
Depreciation and amortization..................... 46,316 18,212 18,423 36,635
Stock based compensation charge................... 1,768 -- -- --
Restructuring expenses............................ -- -- 2,200 2,200
-------- -------- ------- --------
Operating income (loss)........................... 14,802 8,298 3,733 12,031
Interest expense, net............................. 27,417 11,830 11,541 23,371
-------- -------- ------- --------
Loss before extraordinary items and income taxes.. (12,615) (3,532) (7,808) (11,340)
Income tax (benefit) expense...................... (2,307) (998) (1,862) (2,860)
-------- -------- ------- --------
Loss before extraordinary items................... (10,308) (2,534) (5,946) (8,480)
Extraordinary items, net of tax................... (296) (8,925) -- (8,925)
-------- -------- ------- --------
Net loss.......................................... $(10,604) $(11,459) $(5,946) $(17,405)
======== ======== ======= ========
</TABLE>
Revenues increased by approximately 16% for the 1997 Fiscal Year as
compared to the prior fiscal year. The improvement in revenues was primarily
attributable to increased route revenues resulting from internal expansion, the
Allied Acquisition, the Kwik Wash Acquisition and an increase in revenues from
Super Laundry. During the 1997 Fiscal Year, the Company's installed base
increased by approximately 7,500 machines from internal growth due primarily to
the elimination of capital constraints existing at Solon prior to the Merger, as
compared to a reduction of approximately 750 machines during the twelve months
ended March 29, 1996.
Laundry operating expenses increased by approximately 13% for the 1997
Fiscal Year, as compared to the prior fiscal year. The increase was due
primarily to the Allied Acquisition and the Kwik Wash Acquisition as well as an
increase in the cost of sales related to Super Laundry's increased sales volume.
Such increase in laundry operating expenses was offset by the implementation of
cost savings programs in the Company's field operations and the consolidation of
certain operating regions.
General and administrative expenses increased slightly for the 1997 Fiscal
Year as compared to the prior fiscal year. The increase for the period was due
to expenses associated with (i) the implementation of the Company's acquisition
strategy, including legal and financial due diligence investigations of
potential targets and related costs, (ii) the development and implementation of
procedures for the management of investor relations, and (iii) systems
development, refinement and integration. This increase includes a reduction of
certain expenses resulting from the consolidation of the Company's corporate
staff into its existing facility in Roslyn, New York on September 29, 1995.
Depreciation and amortization increased by approximately 27% for the 1997
Fiscal Year, as compared to the prior fiscal year, due primarily to the Allied
Acquisition and the Kwik Wash Acquisition, as well as an increase in capital
expenditures for the installed base of machines resulting from the elimination
of capital constraints existing at Solon prior to the Merger. As a result of
the Company's acquisition activity since early 1995, the Company incurred
approximately $26.8 million in non-cash purchase accounting related depreciation
and amortization charges for the 1997 Fiscal Year as compared to $23.6 million
for the prior fiscal year.
-16-
<PAGE>
The Company incurred restructuring costs of approximately $2.2 million
during the twelve months ended March 29, 1996 to cover severance obligations to
certain personnel, costs to relocate certain corporate functions to Roslyn, New
York, systems integration costs, and expenses related to the consolidation of
certain of its regional offices, in each case, as a result of the Solon
Acquisition and the Merger.
The extraordinary items for the 1997 Fiscal Year consisted of costs related
to the extinguishment of debt in February, 1997 and the termination of the then
existing revolving credit facility. The extraordinary items for the six month
period ending March 29, 1996 consisted of costs related to the extinguishment of
debt in connection with the Company's refinancing in November 1995.
Prior to the Offering, CLC issued, in privately negotiated transactions,
79,029 shares of its Class B common stock to certain members of management. The
Company recorded a stock-based compensation charge of approximately $887,000
attributable to the issuance of such stock. In addition, approximately $83,000
of receivables relating to loans to management in connection with prior
purchases of CLC' common stock were forgiven and have been recorded as a stock-
based compensation charge.
CLC also granted options to management and certain other individuals to
purchase shares of CLC Common Stock at a 15% discount to the initial offering
price of the CLC Common Stock. With respect to such options granted to its
employees, CLC will record such discount as a stock-based compensation charge
over the applicable four year vesting period. During the 1997 Fiscal Year, CLC
recorded a stock-based compensation charge of approximately $798,000 relating to
such options.
The Company's operating income margin, approximately 7% of revenues for the
1997 Fiscal Year, was equal to that for the twelve month's ended March 29, 1996.
Interest expense, net, increased by approximately 17% for the 1997 Fiscal
Year as compared to the prior year due primarily to the Company's refinancing in
November 1995 as well as entering into the Credit Agreement in January 1997.
Partially offsetting this increase in interest expense was the decrease in the
effective interest rate applied against outstanding borrowings as the result of
such refinancing, as well as interest income earned on excess cash balances
generated from operations.
EBITDA/2/ was approximately $62.9 million (before deduction for stock-based
compensation charges) for the 1997 Fiscal Year as compared to approximately
$50.9 million (before deduction for restructuring costs) for the prior fiscal
year, representing an improvement of approximately 24%. EBITDA margins improved
to approximately 30% of revenues for the current year compared to approximately
28% of revenues for the prior year.
SIX MONTH TRANSITION PERIOD ENDED MARCH 29, 1996 COMPARED TO THE PERIOD OCTOBER
1, 1994 TO APRIL 4, 1995
Prior to the merger of Solon and TCC, Solon's fiscal year was the fifty-two
or fifty-three week period ended on the Friday nearest September 30. Effective
upon the Merger, the Company changed its fiscal year end to the Friday nearest
to March 31.
- -----------------------------
/2/ EBITDA represents earnings from continuing operations before deductions for
interest, income taxes, depreciation and amortization. EBITDA is used by
management and certain investors as an indicator of a company's historical
ability to service debt. Management believes that an increase in EBITDA is an
indication of a company's improved ability to service existing debt, to sustain
potential future increases in debt and to satisfy capital requirements.
However, EBITDA is not intended to represent cash flows for the period, nor has
it been presented as an alternative to either (a) operating income (as
determined by generally accepted accounting principles) as an indicator of
operating performance or (b) cash flows from operating, investing and financing
activities (as determined by generally accepted accounting principles) as a
measure of liquidity. Given that EBITDA is not a measurement determined in
accordance with generally accepted accounting principles and is thus susceptible
to varying calculations, EBITDA as presented may not be comparable to other
similarly titled measures of other companies.
-17-
<PAGE>
The discussion below should be read in conjunction with the following table
which combines the operating results of Solon and TCC for the period October 1,
1994 to April 4, 1995 (the predecessor period) (in thousands). The operating
results of TCC are reflected in order to present comparable data.
<TABLE>
<CAPTION>
PERIOD FROM OCTOBER 1, 1994 TO APRIL 4,
1995
SIX MONTH ---------------------------------------------
TRANSITION PERIOD (PREDECESSOR)/1,2/
ENDED
MARCH 29, 1996
(SUCCESSOR)/1/ TCC SOLON COMBINED
----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues......................................... $ 89,070 $35,789 $52,207 $87,996
Laundry operating expenses....................... 60,536 28,253 33,165 61,418
General and administrative expenses.............. 2,024 1,345 1,539 2,884
Depreciation and amortization.................... 18,212 6,009 10,304 16,313
-------- ------- ------- -------
Operating income................................. 8,298 182 7,199 7,381
Interest expense, net............................ 11,830 2,464 8,928 11,392
Other expense.................................... - 1,341 - 1,341
-------- ------- ------- -------
Loss before extraordinary item and income taxes.. (3,532) (3,623) (1,729) (5,352)
Income tax (benefit) expense..................... (998) 4 50 54
-------- ------- ------- -------
Loss before extraordinary item................... (2,534) (3,627) (1,779) (5,406)
Extraordinary item, net of tax................... (8,925) - (848) (848)
-------- ------- ------- -------
Net loss......................................... $(11,459) $(3,627) $(2,627) $(6,254)
======== ======= ======= =======
</TABLE>
____________________
1 The term "Predecessor" refers to the period in time prior to the Solon
Acquisition. The term "Successor" refers to the period in time after the
Solon Acquisition and includes the historical results of Solon which have been
restated to include the pooling of interests of TCC. Successor is presented
on a different basis of accounting and, therefore, is not comparable to the
Predecessor.
2 Certain reclassifications have been made to conform to the 1996 presentation.
Revenues for the six month transition period ended March 29, 1996 were
approximately 1.2% higher than combined revenues for the prior period. The
improvement in revenues consisted primarily of increased revenues from Super
Laundry of approximately $2.5 million. Such improvement was partially offset by
a decrease of approximately $1.4 million in revenues from the route business.
The average machine base for the six month transition period ended March 29,
1996 was approximately 1.4% lower than the prior period primarily as the result
of constraints on available capital prior to the Merger. From September 30,
1995, through March 29, 1996, the Company successfully implemented a program to
maintain its base of installed machines and eliminate any additional erosion.
The effect of the decreased number of machines was partially offset by increased
revenue per machine from price increases.
Laundry operating expenses decreased by approximately 1.4% primarily as the
result of decreased expenses of approximately $0.8 million related to
implementation of cost savings programs in the Company's field operations and a
decrease in commission expense of approximately 2.3%. These decreases were
partially offset by an increase in the cost of sales related to the increased
volume of Super Laundry.
General and administrative expenses decreased by approximately $.9 million,
or 29.8%, primarily due to the consolidation of corporate staff by closing
Solon's Philadelphia, Pennsylvania office and combining its operations into the
Company's existing facility in Roslyn, New York on September 29, 1995.
-18-
<PAGE>
Depreciation and amortization increased by approximately $1.9 million or
11.6% due primarily to purchase accounting adjustments resulting from the Solon
Acquisition.
Interest expense, net, increased by approximately 3.8%. Approximately $1.8
million of such increase was due primarily to the increased debt level that
resulted from the Company's refinancing in November 1995. Offsetting this
increase is approximately $0.8 million due to the decrease in the effective
interest rate as the result of such refinancing. The increased debt resulted in
an excess cash balance, which was contemplated to be used for working capital
purposes and for future acquisition opportunities.
The extraordinary item for the six month transition period ending March 29,
1996, consisted of costs related to the extinguishment of debt in connection
with the Company's refinancing in late 1995. The extraordinary item for the
period ended April 4, 1995, consisted of costs related to the change in control
in connection with the Solon Acquisition.
PERIOD APRIL 4, 1995 TO SEPTEMBER 29, 1995 COMPARED TO SIX MONTHS ENDED
SEPTEMBER 30, 1994
The discussion below should be read in conjunction with the following table
which combines the Predecessor period for the six months ended September 30,
1994 (in thousands):
<TABLE>
<CAPTION>
PERIOD APRIL 5, 1995 SIX MONTHS ENDED
TO
SEPTEMBER 29, 1995 SEPTEMBER 30, 1994
--------------------- ----------------------------
(SUCCESSOR)/1/ (PREDECESSOR)/1,//2/
TCC SOLON COMBINED
-------- -------- ---------
<S> <C> <C> <C> <C>
Revenues............................. $89,719 $37,154 $51,577 $88,731
Laundry operating expenses........... 62,905 28,576 32,337 60,913
General and administrative expenses.. 2,458 1,123 1,444 2,567
Depreciation and amortization........ 18,423 7,576 10,966 18,542
Restructuring costs.................. 2,200 -- -- --
------- ------- ------- --------
Operating income (loss).............. 3,733 (121) 6,830 6,709
Interest expense, net................ 11,541 2,214 9,053 11,267
------- ------- ------- -------
Loss before income taxes............. (7,808) (2,335) (2,223) (4,558)
Income tax (benefit) expense......... (1,862) 24 3,208 3,232
------- ------- ------- -------
Net Loss............................. $(5,946) $(2,359) $(5,431) $(7,790)
======= ======= ======= =======
</TABLE>
____________________
1 The term "Predecessor" refers to the period in time prior to the Solon
Acquisition. The term "Successor" refers to the period in time after the
Solon Acquisition and includes the historical results of Solon which have
been restated to include the pooling of interests of TCC. Successor is
presented on a different basis of accounting and therefore, is not comparable
to the Predecessor.
2 Certain reclassifications have been made to conform to the 1995
presentation.
Revenues for the period April 5, 1995 to September 29, 1995 were
approximately 1.1% higher than combined revenues for the prior period. The
improvement in revenues consisted primarily of increased revenues from Super
Laundry of approximately $1.3 million. Such improvement was partially offset by
a decrease of approximately $0.3 million in revenues from routes, primarily due
to a 2.0% decline in the average number of laundry machines on location, due to
constraints on capital prior to the Merger. The effect of the decreased number
of machines was partially offset by increased revenue per machine of
approximately 1.6% primarily due to price increases.
-19-
<PAGE>
Laundry operating expenses increased by approximately 3.3%, primarily due
to an increase of $1.0 million in the cost of sales related to the increase in
Super Laundry revenue. The remaining increase is primarily the result of the
method of accounting for installation costs applied in the Successor period.
This increase is the result of increased cost of sales related to the increased
volume of Super Laundry. In addition, the Company's commission expense
decreased by approximately 1.0%.
General and administrative expenses decreased by approximately $0.1
million, or 4.2% primarily due to a decrease in the corporate staff.
The Company provided for restructuring costs of approximately $2.2 million
to cover severance payments to certain of Solon's management, administrative and
regional personnel, costs to relocate Solon's financial and administrative
functions to Roslyn, New York, costs to integrate certain financial and
operating systems, and costs related to the consolidation of certain of Solon's
regional offices.
Interest expense, net, increased to approximately 2.4% primarily due to an
increase in the interest rate on TCC's revolver, which was based on the prime
lending rate.
FISCAL YEAR ENDED SEPTEMBER 29, 1995 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1994
The discussion should be read in conjunction with the following table which
combines the Predecessor and Successor periods for fiscal 1995 (in thousands).
As previously disclosed, Solon had completed a merger with TCC on November 30,
1995, whereby such transaction was accounted for in a manner similar to a
pooling of interests. As a result of the common investor group control over
both entities, the term "Successor" will refer to such common control periods.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SEPTEMBER 29, 1995
-------------------------------------------
APRIL 5, OCTOBER 1, FISCAL YEAR
1995 TO 1994 TO ENDED
SEPTEMBER 29, APRIL 4, SEPTEMBER 30,
1995 1995 TOTAL 1994
--------------- --------------- --------- -----------------
SUCCESSOR/1/ PREDECESSOR/1/ PREDECESSOR/1,2/
<S> <C> <C> <C> <C>
Revenues......................................... $89,719 $52,207 $141,926 $104,553
Laundry operating expenses....................... 62,905 33,165 96,070 66,527
Depreciation and amortization.................... 18,423 10,304 28,727 21,347
General and administrative expenses.............. 2,458 1,539 3,997 2,839
Gain on sale of equipment........................ -- -- -- (109)
Restructuring costs.............................. 2,200 -- 2,200 --
------- ------- -------- --------
Operating income................................. 3,733 7,199 10,932 13,949
Interest expense, net............................ 11,541 8,928 20,469 18,105
------- ------- -------- --------
Loss before income taxes and extraordinary item.. (7,808) (1,729) (9,537) (4,156)
Income tax (benefit) expense (1,862) 50 (1,812) 2,762
------- ------- -------- --------
Loss before extraordinary item................... (5,946) (1,779) (7,725) (6,918)
Extraordinary item, net of income taxes of $0.... -- (848) (848) --
------- ------- -------- --------
Net loss......................................... $(5,946) $(2,627) $ (8,573) $ (6,918)
======= ======= ======== ========
</TABLE>
-20-
<PAGE>
____________________
1 The term "Predecessor" refers to the period in time prior to the Solon
Acquisition. The term "Successor" refers to the period in time after the
Solon Acquisition and includes the historical results of Solon which have
been restated to include the pooling of interests of TCC. Successor is
presented on a different basis of accounting and therefore, is not comparable
to the Predecessor.
2 Certain reclassifications have been made to conform to the 1995 presentation.
Excluding revenues of TCC of approximately $38.5 million for the Successor
period, revenues of approximately $103.4 million for fiscal 1995 were
approximately $1.1 million or 1.1% lower than revenues for fiscal 1994. A
favorable change of approximately $1.8 million in revenues resulting from
increases in revenue per machine was offset by approximately $2.9 million in
losses caused by a decline in the average number of laundry machines on location
primarily due to the lack of available capital prior to the Refinancing Plan.
Revenue per machine rose slightly primarily because of price increases and
improved occupancy levels in the Southeast and South-Central regions.
Excluding laundry operating expenses of TCC of approximately $29.8 million
for the Successor period, laundry operating expenses of approximately $66.3
million for fiscal 1995 were approximately $0.2 million or 0.3% lower than
laundry operating expenses for fiscal 1994. Commission expense decreased by
approximately $1.0 million due to lower revenues and a reduction in the average
commission rate from approximately 44.7% of revenue during fiscal 1994 to
approximately 44.1% of revenues during fiscal 1995. The decrease in the
commissions rate was primarily attributable to the Company's ongoing commission
control programs and a shift away from higher commission locations primarily in
the Washington, D.C. Metropolitan area. Laundry operating expenses other than
commissions expense rose by approximately $0.8 million in fiscal 1995 compared
to fiscal 1994 primarily due to inflationary increases.
Excluding depreciation and amortization expense of TCC of approximately
$5.5 million for the Successor period, depreciation and amortization expense
increased by approximately $1.9 million or 8.6% for fiscal 1995, as compared to
the prior year due primarily to purchase accounting adjustments resulting from
the Solon Acquisition.
Excluding general and administrative expenses of TCC of approximately $0.9
million for the Successor period, general and administrative expenses of
approximately $3.1 million for fiscal 1995 were approximately $0.3 million or
10.7% higher than such expenses for fiscal 1994. For fiscal 1995, general and
administrative expenses include a charge of approximately $0.3 million for the
cost of a severance agreement with the former chief executive officer of Solon.
The Company provided for restructuring costs of approximately $2.2 million
to cover severance payments to certain of Solon's management, administrative and
regional personnel, costs to relocate Solon's financial and administrative
functions to Roslyn, New York, costs to integrate certain financial and
operating systems of Solon and TCC, and costs related to the consolidation of
certain of Solon's regional offices.
Excluding interest expense of TCC of approximately $2.7 million for the
Successor period, interest expense for fiscal 1995 decreased by approximately
$0.3 million or 1.7% as compared to the prior year, primarily due to an increase
in interest income, and to a lesser extent, a decrease in interest caused by a
repurchase and retirement of $1.0 million of the Old Senior Notes in November
1994.
-21-
<PAGE>
The Company's income tax benefit was approximately $1.8 million in fiscal
1995 compared to a tax provision of approximately $2.8 million for fiscal 1994.
As further discussed in the consolidated financial statements, the tax provision
for fiscal 1994 included a $3.7 million charge to establish a valuation
allowance for previously recorded deferred tax assets. The deferred tax asset
of $2.0 million recorded in the Successor period does not reflect a valuation
allowance because the loss can be utilized against the deferred tax liabilities
in the carryforward periods. In addition to this benefit, the Company's
effective income tax rate differs from the amount computed by applying the U.S.
federal statutory rate to loss before income taxes as a result of state taxes
and permanent book/tax differences.
The Company incurred costs aggregating approximately $0.8 million in
connection with the Solon Acquisition, including a total of $0.4 million in lump
sum payments made to fourteen management employees pursuant to certain
contractual arrangements relating to the acquisition. The total costs have been
reflected as an extraordinary item in the financial statements.
IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Effective March 30, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" ("FAS 121"), which requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. FAS
121 also addresses the accounting treatment for long-lived assets that are
expected to be disposed of. The effect of the Company's adoption of FAS 121 did
not have an effect on the Company's results of operations or financial condition
for the 1997 Fiscal Year.
In October 1995, the Financial Accounting Standards Board issued Statement
No. 123, "Accounting for Stock-Based Compensation" ("FAS 123"). FAS 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. FAS 123 is effective for transactions entered into
in fiscal years beginning after December 15, 1995. The Company has elected to
account for stock-based compensation awards pursuant to the provisions of
Accounting Principles Board Opinion No. 25, as permitted by FAS 123.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to have substantial indebtedness and debt service
requirements. At March 28, 1997, the Company had outstanding long-term debt
(excluding advances from CLC) of approximately $329.3 million and stockholders'
equity of approximately $12.0 million.
FINANCING ACTIVITIES
Senior Notes
In December 1995, the Company issued 11 3/4% Senior Notes due 2005 pursuant
to the terms of an indenture, between the Company and Fleet Bank of Connecticut
(formerly Shawmut Bank Connecticut, National Association) (as amended, the
"Indenture") in an aggregate principal amount of $196,655,000. On March 28,
1996, the Company consummated a registered exchange offer, pursuant to which all
issued and outstanding 11 3/4% Senior Notes due 2005 were exchanged for Series B
11 3/4% Senior Notes due 2005 (the "Senior Notes").
-22-
<PAGE>
The Senior Notes, which mature on November 15, 2005, are unsecured senior
obligations of the Company and are redeemable, at the Company's option, in whole
or in part at any time or from time to time, on and after November 15, 2000,
upon not less than 30 nor more than 60 days notice, at the redemption prices set
forth in the Indenture, plus, in each case, accrued and unpaid interest thereon,
if any, to the date of redemption.
The Indenture contains a number of restrictive covenants and agreements,
including covenants with respect to the following matters: (i) limitation on
indebtedness; (ii) limitation on certain payments (in the form of the
declaration or payment of certain dividends or distributions on the capital
stock of the Company or its subsidiaries, the purchase, redemption or other
acquisition of any capital stock of the Company, the voluntary prepayment of
subordinated indebtedness, or an Investment (as defined in the Indenture) in any
other person or entity); (iii) limitation on transactions with affiliates; (iv)
limitation on liens; (v) limitation on sales of assets; (vi) limitation on sale
and leaseback transactions; (vii) limitation on conduct of business; (viii)
limitation on dividends and other payment restrictions affecting subsidiaries;
and (ix) limitation on consolidations, mergers and sales of substantially all of
the assets of the Company.
The events of default under the Indenture include provisions that are
typical of senior unsecured debt financings. Upon the occurrence and
continuance of certain events of default, the trustee or the holders of not less
than 25% in aggregate principal amount of outstanding Senior Notes may declare
all unpaid principal and accrued interest on all of the Senior Notes to be
immediately due and payable.
Upon the occurrence of a Change of Control (as defined in the Indenture),
each holder of Senior Notes will have the right to require that the Company
purchase all or a portion of such holder's Senior Notes pursuant to the offer
described in the Indenture, at a purchase price equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
repurchase.
Redemption of 12 3/4% Senior Notes due 2001
On February 18, 1997, the Company redeemed its outstanding 12 3/4% Senior
Notes due 2001 at a redemption price of 106.375% of the principal amount
thereof, together with accrued interest from January 15, 1997 to February 18,
1997, in an aggregate amount of approximately $5.4 million.
New Credit Facility
On January 8, 1997, the Company entered into the Credit Agreement with
Bankers Trust Company, First Union National Bank of North Carolina, Lehman
Commercial Paper, Inc. and other lending institutions named therein
(collectively, the "Banks"), which provides for the New Credit Facility. The
New Credit Facility replaced the Company's then existing credit facility. The
New Credit Facility, as amended effective June 2, 1997, and prior to any
principal installment payments, consists of a $70 million revolving credit
facility and a $190 million term loan facility, which is comprised of a Tranche
A term loan in the amount of $30.0 million, payable quarterly commencing March
1997, and a Tranche B term loan in the amount of $160.0 million, payable semi-
annually commencing June 1997. The New Credit Facility also provides for up to
$10 million of letter of credit financings and short term borrowings under a
swing line facility of up to $5 million.
At March 28, 1997, $130 million was outstanding under the Credit Agreement.
Effective June 2, 1997, the Credit Agreement was amended to, among other things,
increase the Tranche B portion of the term loan facility to $160.0 million.
-23-
<PAGE>
Subject to the terms and conditions of the Credit Agreement, the Company
may, at its option, convert Base Rate Loans (as defined in the Credit Agreement)
into Eurodollar Loans (as defined in the Credit Agreement). Interest on the
Company's borrowings under the Credit Agreement is payable at a rate per annum
no greater than the sum of the Applicable Base Rate Margin plus the Base Rate or
the sum of the Applicable Eurodollar Margin plus the Eurodollar Rate (in each
case, as defined in the Credit Agreement).
Indebtedness under the Credit Agreement is secured by all of the Company's
real and personal property. CLC has guaranteed the indebtedness under the
Credit Agreement and pledged to Bankers Trust Company, as Collateral Agent, its
interests in all of the issued and outstanding shares of capital stock of the
Company.
The Credit Agreement contains a number of restrictive covenants and
agreements, including covenants with respect to limitations on (i) indebtedness;
(ii) certain payments (in the form of the declaration or payment of certain
dividends or distributions on the capital stock of CLC or its subsidiaries or
the purchase, redemption or other acquisition of any capital stock of CLC or its
subsidiaries); (iii) voluntary prepayments of previously existing indebtedness;
(iv) Investments (as defined in the Credit Agreement); (v) transactions with
affiliates; (vi) liens; (vii) sales or purchases of assets; (viii) conduct of
business; (ix) dividends and other payment restrictions affecting subsidiaries;
(x) consolidations and mergers; (xi) capital expenditures; (xii) issuances of
certain equity securities of the Company; and (xiii) creation of subsidiaries.
The Credit Agreement also requires that the Company satisfy certain financial
ratios, including a maximum leverage ratio and a minimum consolidated interest
coverage ratio.
The Credit Agreement contains certain events of default, including the
following: (i) the failure of the Company to pay any of its obligations under
the Credit Agreement when due; (ii) certain failures by the Company to pay
principal or interest on indebtedness or certain breaches or defaults by the
Company in respect of certain indebtedness, in each case, after the expiration
of any applicable grace periods; (iii) certain defaults by the Company in the
performance or observance of the agreements or covenants under the Credit
Agreement or related agreements, beyond any applicable cure periods; (iv) the
falsity in any material respect of certain of the Company's representations or
warranties under the Credit Agreement; (v) certain judgments against the
Company; and (vi) certain events of bankruptcy or insolvency of the Company.
OPERATING ACTIVITIES
The Company's level of indebtedness will have several important effects on
its future operations including, but not limited to, the following: (i) a
significant portion of the Company's cash flow from operations will be required
to pay interest on its indebtedness and will not be available for other
purposes; (ii) the financial covenants contained in certain of the agreements
governing the Company's indebtedness will require the Company to meet certain
financial tests and will limit its ability to borrow additional funds or to
dispose of assets; (iii) the Company's ability to obtain additional financing in
the future for working capital, capital expenditures, acquisitions or general
corporate purposes may be impaired; and (iv) the Company's ability to adapt to
changes in the coin-operated laundry equipment services industry and to economic
conditions in general could be limited.
The Company anticipates that it will continue to utilize cash flows from
operations to finance its capital expenditures and working capital needs,
including interest payments on its outstanding indebtedness. Capital
expenditures for the 1997 Fiscal Year were approximately $213.0 million
(including approximately $16.2 million of promissory notes, consisting of the
Kwik Wash Note and the
-24-
<PAGE>
AW Notes). Of such amount, the Company spent approximately $171.5 million
(including approximately $16.2 million of promissory notes, consisting of the
Kwik Wash Note and the AW Notes) in acquisition and related transaction costs,
including the Kwik Wash Acquisition and the Allied Acquisition, and
approximately $12.4 million related to a net increase in the installed base of
machines. The balance was used to maintain the existing base and for general
corporate purposes. The full impact on revenues and EBITDA generated from
capital expended on acquisitions and the net increase in the installed base are
not expected to be reflected in the Company's financial results until subsequent
reporting periods, depending on the timing of the capital expended. The Company
anticipates that capital expenditures, excluding acquisitions and internal
growth, will be approximately $38.0 million for the twelve months ending March
31, 1998. While the Company estimates that it will generate sufficient cash
flows from operations to finance anticipated capital expenditures, there can be
no assurances that it will be able to do so.
The Company's working capital requirements are, and are expected to
continue to be, minimal since a significant portion of the Company's operating
expenses are not paid until after cash is collected from the installed machines.
The Company is required to make monthly cash interest payments pursuant to the
Credit Agreement and semi-annual cash interest payments on the Senior Notes.
Management believes that the Company's future operating activities will
generate sufficient cash flow to repay borrowings under the Senior Notes, the
New Credit Facility, the Kwik Wash Note and the AW Notes and to permit any
necessary refinancings thereof. An inability of the Company, however, to comply
with covenants or other conditions contained in the Indenture or in the Credit
Agreement could result in an acceleration of all amounts due under the Senior
Notes and the New Credit Facility. If the Company is unable to meet its debt
service obligations, it could be required to take certain actions such as
reducing or delaying capital expenditures, selling assets, refinancing or
restructuring its indebtedness, selling additional equity capital or other
actions. There is no assurance that any of such actions could be effected on
commercially reasonable terms or on terms permitted under the Credit Agreement
or the Indenture.
CERTAIN ACCOUNTING TREATMENT
The Company's depreciation and amortization expenses, aggregating
approximately $46.3 million for the 1997 Fiscal Year, have the effect of
reducing net income but not operating cash flow. In accordance with generally
accepted accounting principles, a significant amount of the purchase price of
businesses acquired by the Company is allocated to "contract rights", which
costs are amortized over periods of up to 15 years. Although such accounting
treatment can have a favorable effect on operating cash flow by reducing taxes,
such treatment also reduces net income.
INFLATION AND SEASONALITY
In general, the Company's laundry operating expenses and general and
administrative expenses are affected by inflation, and the effects of inflation
may be experienced by the Company in future periods. Management believes that
such effects have not been nor will be material to the Company. The Company's
business generally is not seasonal.
-25-
<PAGE>
FORWARD LOOKING STATEMENTS
This report and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively, "SEC
Filings") contain or may contain certain forward looking statements and
information that are based on the beliefs of the Company's management as well as
estimates and assumptions made by, and information currently available to, the
Company's management. When used in SEC Filings, the words "anticipate,"
"believe," "estimate," "expect," "future," "intend," "plan" and similar
expressions, as they relate to the Company or the Company's management, identify
forward looking statements. Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions relating to the Company's operations and results
of operations, competitive factors, shifts in market demand, and other risks and
uncertainties, including, in addition to any uncertainties specifically
identified in the text surrounding such statements, uncertainties with respect
to changes or developments in social, economic, business, industry, market,
legal and regulatory circumstances and conditions and actions taken or omitted
to be taken by third parties, including the Company's stockholders, customers,
suppliers, competitors, legislative, regulatory, judicial and other governmental
authorities. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may vary
significantly from those anticipated, believed, estimated, expected, intended or
planned.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Audited consolidated financial statements and the notes thereto are
contained in pages F-1 through F-34 hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
As previously reported on the Company's Current Report on Form 8-K, dated
June 2, 1995, the Board of the Directors of the Company appointed Ernst & Young
LLP to succeed Arthur Andersen LLP as the Company's principal independent
accountants effective May 30, 1995.
There has not been any disagreements with the Company's accountants on any
matter of accounting principles or practices, financial statement disclosures or
audit scope or procedure in the last two fiscal years.
-26-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
DIRECTORS
The Directors of the Company are listed on the table below which is
followed by descriptions of all positions and offices held by such persons with
the Company, the periods during which they have served as such and certain other
information. The term of office of each Director continues until the election
of Directors to be held at the next Annual Meeting of Stockholders or until his
successor has been elected. There is no family relationship between any
Director and any other Director or Executive Officer of the Company. The
information set forth below concerning the Directors has been furnished by such
Directors of the Company.
Name Title Age
---- ----- ---
Stephen R. Kerrigan.. Chairman of the Board and Director 43
Mitchell Blatt....... Director 45
Robert M. Doyle...... Director 40
At a regular meeting of the Board held on November 1, 1996, the Board
unanimously resolved, subject to obtaining shareholder approval of CLC, to
reconstitute the Board so that the number of directors constituting the Board
would be three, consisting initially of Messrs. Kerrigan, Blatt and Doyle.
Effective November 4, 1996, upon obtaining the approval of CLC, Messrs. James N.
Chapman, David A. Donnini and Bruce V. Rauner were removed from the Board, and
Mr. Doyle was appointed to the Board. Each of Messrs. Chapman, Donnini and
Rauner are presently members of the board of directors of CLC.
Effective as of July 23, 1996, that certain stockholders' agreement,
dated July 26, 1995, as amended and restated as of November 30, 1995, which
provided, among other things, for the composition of the Board and of the board
of directors of CLC, was terminated.
Mr. Kerrigan has been Chief Executive Officer of CLC since April 1996
and of the Company since November 1995. Mr. Kerrigan was President and
Treasurer of Solon Automated Services, Inc. ("Solon") and CLC from April 1995
until April 1996, and Chief Executive Officer of TCC from January 1995 until
November 1995./3/ Mr. Kerrigan has been a director and Chairman of the Board of
CLC since April 1995 and of the Company since November 1995. Mr. Kerrigan was a
director of TCC from January 1995 to November 1995 and a director of Solon from
April 1995 to November 1995. Mr. Kerrigan served as Vice President and Chief
Financial Officer of TCC's predecessor, Coinmach Industries Co., L.P. from 1987
until 1994. Mr. Kerrigan was an executive officer of CIC I Acquisition Corp.
("CIC"), which filed a voluntary petition for reorganization under Chapter 11 of
the United States Bankruptcy Code in 1993.
- --------------------------
/3/ On November 30, 1995, TCC merged with and into Solon (the "Merger") and
entered into a series of refinancing transactions, whereupon the surviving
corporation changed its name to "Coinmach Corporation."
-27-
<PAGE>
Mr. Blatt has been President and Chief Operating Officer of CLC since April
1996 and of the Company since November 1995. Mr. Blatt was the President and
Chief Operating Officer of TCC from January 1995 to November 1995. Mr. Blatt
has been a director of CLC and the Company since November 1995. Mr. Blatt
joined TCC as Vice President-General Manager in 1982 and was Vice President and
Chief Operating Officer from January 1988 to February 1994. Mr. Blatt was an
executive officer of CIC, which filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code in 1993.
Mr. Doyle has been Chief Financial Officer, Senior Vice President, Treasurer
and Secretary of CLC since April 1996 and the Company since November 1995. Mr.
Doyle has been a director of the Company since November 1995. Mr. Doyle served
as Vice President, Treasurer and Secretary of TCC from January 1995 to November
1995. Mr. Doyle joined the Company's predecessor in 1987 as Controller. In
1988, Mr. Doyle became Director of Accounting, and was promoted in 1989 to Vice
President and Controller. Mr. Doyle was an executive officer of CIC, which
filed a voluntary petition for reorganization under Chapter 11 of the United
States Bankruptcy Code in 1993.
EXECUTIVE OFFICERS
The Executive Officers of the Company are listed on the table below which is
followed by descriptions of all positions and offices held by such persons with
the Company and the periods during which they have served as such and other
information. The term of office of each Executive Officer continues until the
election of Executive Officers to be held at the next Annual Meeting of
Directors or until his successor has been elected. There is no family
relationship between any Executive Officer and any other Executive Officer or
Director of the Company.
Name Title Age
---- ----- ---
Stephen R. Kerrigan.. Chairman of the Board and Chief
Executive Officer 43
Mitchell Blatt....... President, Chief Operating Officer 45
Robert M. Doyle...... Chief Financial Officer, Senior
Vice President, Treasurer, Secretary 40
John E. Denson....... Senior Vice President 59
Michael E. Stanky.... Senior Vice President 45
R. Daniel Osborne.... Area Vice President 41
David A. Siegel...... Area Vice President 39
For information regarding Messrs. Kerrigan, Blatt and Doyle, see "-- Directors"
above.
Mr. Denson has been Senior Vice President of CLC since April 1996 and of the
Company since November 1995. Mr. Denson was Senior Vice President, Finance of
Solon from June 1987 until November 1995. Mr. Denson has served as an officer
of Solon under various titles since 1973, and served as a director and Co-Chief
Executive Officer of Solon from November 1994 to April 1995.
-28-
<PAGE>
Mr. Stanky has been Senior Vice President of CLC since April 1996 and of the
Company since November 1995. Mr. Stanky was a Senior Vice President of Solon
from July 1995 to November 1995. Mr. Stanky served Solon in various capacities
since 1976, and in 1985 was promoted to Area Vice President responsible for
Solon's South-Central region. Mr. Stanky served as a Co-Chief Executive Officer
of Solon from November 1994 to April 1995.
Mr. Osborne has been Area Vice President of CLC since April 1996 and of the
Company since November 1995. Mr. Osborne served Solon in various capacities
from 1987 to November 1995. In July 1995, Mr. Osborne was promoted to Area Vice
President of the Company responsible for the Company's Southeast region.
Mr. Siegel has been Area Vice President of CLC since April 1996 and of the
Company since November 1995. Mr. Siegel served Solon in various capacities
since 1985, and in August 1995 was promoted to Area Vice President of the
Company responsible for the Company's Mid-Atlantic region.
-29-
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, earned by or paid
to the Chief Executive Officer and the next four most highly compensated
executive officers of the Company (the "Named Executive Officers") for all
services rendered in all capacities for the fiscal years ended March 31, 1995,
March 29, 1996 and March 28, 1997. In connection with the Merger, Solon and
Coinmach Industries Co., L.P., predecessors of the Company, changed their fiscal
years from September 30, 1995 and December 31, 1995, respectively, to the last
Friday in March 1996. Accordingly, (i) fiscal years prior to March 28, 1997
have been restated to conform such periods to fiscal years ending the last
Friday in March, and (ii) compensation for the Named Executive Officers has been
adjusted to reflect the amount of compensation awarded to, earned by or paid in
each of the fiscal periods shown.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------------------------------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS COMPEN-
OCCUPATION YEAR ($) ($) ($) (#) SATION/1/
- -------------------- -------- --------- -------- --------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Stephen R. Kerrigan 1997 330,841 400,000 40,385/2/ 308,098/3/ 60,839/4/
Chief Executive 1996 290,000 91,250 __ __ 13,024/5/
Officer 1995 200,763 -- __ __ 14,898/5/
Mitchell Blatt 1997 238,942 112,000 __ 100,000 61,548/6/
President, Chief 1996 215,000 91,250 __ __ 22,849/7/
Operating Officer 1995 197,497 -- __ __ 20,942/7/
Robert M. Doyle 1997 149,997 62,500 __ 71,890 17,825/8/
Chief Financial 1996 110,577 25,000 __ __ 2,338/9/
Officer 1995 84,281 -- __ __ 3,238/9/
John E. Denson 1997 125,859 25,000 __ 28,756 2,327/10/
Senior Vice President 1996 125,300 -- __ __ 2,233/11/
1995 124,900 35,295 __ __ 67,752/11,12/
Michael E. Stanky 1997 150,500 37,500 __ 153,521 5,462/13/
Senior Vice President 1996 141,425 -- __ __ 1,253/14/
1995 127,373 53,628 __ __ 65,183/14,15/
</TABLE>
___________________
/1/ The Company has not previously offered and presently does not have a long
term incentive program. The Company does not presently intend to offer any
such program to its executive officers or other employees.
/2/ Represents reimbursement of certain out-of-pocket relocation expenses.
/3/ Options are held by MCS, a corporation controlled by Mr. Kerrigan.
/4/ Includes $45,109 in forgiven indebtedness; $5,938 in imputed interest,
calculated at a rate of 9.5% per annum, on an interest free loan made by
the Company to Mr. Kerrigan; $4,554 in automobile allowances; $2,424 in
club membership fees; $1,875 in contributions to the Company Profit Sharing
Plan; and $939 in life insurance premiums paid for Mr. Kerrigan.
/5/ Includes club membership fees for fiscal years 1996 and 1995 of $4,600 each
year; expense allowances for fiscal years 1996 and 1995 of $3,596 and
$5,472, respectively; automobile allowances for fiscal years 1996 and 1995
of $2,688 and $2,688,
-30-
<PAGE>
respectively; and contribution by TCC to the Company Profit Sharing Plan
for fiscal years 1996 and 1995 of $2,140 and $2,138, respectively.
/6/ Includes $45,109 in forgiven indebtedness; $4,231 in automobile allowances;
$9,600 in club membership fees; $1,875 in contributions to the Company
Profit Sharing Plan; and $733 in life insurance premiums paid for Mr.
Blatt.
/7/ Includes club membership fees for fiscal years 1996 and 1995 of $10,000
each year; expense allowances for fiscal years 1996 and 1995 of $7,310 and
$7,779, respectively; automobile allowances for fiscal years 1996 and 1995
of $3,417 and $1,025, respectively; and contribution by TCC to the Company
Profit Sharing Plan for fiscal years 1996 and 1995 of $2,122 and $2,138,
respectively.
/8/ Includes $13,703 in forgiven indebtedness; $1,762 in automobile allowances;
$1,875 in contributions to the Company Profit Sharing Plan; and $485 in
life insurance premiums paid for Mr. Doyle.
/9/ Includes automobile allowances for fiscal years 1996 and 1995, of $1,004
and $2,169 respectively; and contributions by TCC to the Company Profit
Sharing Plan for fiscal years 1996 and 1995 of $1,334 and $1,069,
respectively.
/10/ Includes $104 in imputed interest, calculated at a rate of 9.5% per annum,
on an interest free loan made by the Company to Mr. Denson; $233 in
automobile allowances; and $1,149 in contributions to the Company Profit
Sharing Plan.
/11/ Includes automobile allowances for fiscal years 1996 and 1995, of $1,150
and $3,085, respectively; and contributions by Solon to the Solon
Retirement Savings Plan for fiscal years 1996 and 1995 of $1,083 and
$2,167, respectively.
/12/ Includes a $62,500 lump sum payment to Mr. Denson on April 6, 1995 due to a
change in control of Solon.
/13/ Includes $3,919 in forgiven indebtedness; $355 in automobile allowances;
and $1,188 in contributions to the Company Profit Sharing Plan.
/14/ Includes contributions by Solon to the Solon Retirement Savings Plan for
fiscal years 1996 and 1995 of $1,253 and $2,433, respectively.
/15/ Includes a $62,750 lump sum payment to Mr. Stanky on April 6, 1995 due to a
change in control of Solon.
EMPLOYMENT CONTRACTS
EMPLOYMENT AGREEMENTS OF STEPHEN R. KERRIGAN, MITCHELL BLATT AND ROBERT M.
DOYLE
On January 31, 1995, TCC and each of Stephen R. Kerrigan, Mitchell Blatt
and Robert M. Doyle (each, a "Senior Manager"), entered into Senior Management
Agreements (collectively, the "Senior Management Agreements"). In connection
with the Merger, the obligations of TCC under the Senior Management Agreements
were assumed by the Company and certain amendments to such agreements were
effected pursuant to the Omnibus Agreement, dated as of November 30, 1995 (the
"Omnibus Agreement"). The Senior Management Agreements provide for annual base
salaries of $225,000, $225,000 and $100,000 for each of Messrs. Kerrigan, Blatt
and Doyle, respectively, which amounts are reviewed annually by the Board. In
1996, the Board approved increases in annual salaries for each of Messrs.
Kerrigan, Blatt and Doyle to $350,000, $250,000 and $150,000, respectively,
which, in the case of Messrs. Kerrigan and Blatt, became effective in July 1996.
The Board, in its sole discretion, may grant each Senior Manager an annual
bonus. Each Senior Management Agreement is terminable at the will of the Senior
Managers or at the discretion of the Board. Senior Managers are entitled to
severance pay upon termination of their employment. If employment is terminated
by the Company without Cause (as defined in the Senior Management Agreements)
and no event of default has occurred under any bank credit facility to which the
Company is a party, Senior Managers are entitled to receive severance pay in an
amount equal to 1.5 times their respective annual base salaries then in effect,
payable in 18 equal monthly installments. If employment is terminated by the
Company and an event of default has occurred and is continuing under any bank
credit facility to which the Company is a party, Senior Managers are entitled to
receive severance pay in an amount equal to their respective annual base
salaries then in effect, payable in 12 equal monthly installments. Under
limited circumstances, Senior Managers are entitled to receive half of the
severance pay to which they are otherwise entitled if employment with the
Company is terminated by them.
-31-
<PAGE>
EMPLOYMENT AGREEMENT OF JOHN E. DENSON
The Company entered into an employment agreement with Mr. Denson, dated as
of September 5, 1996, for a term of one year which is automatically renewable
each year for successive one-year terms. Such agreement provides for an annual
base salary of $110,000, commencing January 1, 1997, which amount is to be
reviewed each December by the Board. The Board may, in its discretion, grant
Mr. Denson a performance-based annual bonus. The agreement is terminable at the
will of Mr. Denson or at the discretion of the Board. Under the terms of such
employment agreement, Mr. Denson is entitled to receive severance pay upon
termination of employment by the Company without Cause (as defined in such
agreement) in an amount equal to the greater of $110,000 or his annual base
salary then in effect.
EMPLOYMENT AGREEMENT OF MICHAEL E. STANKY
On July 1, 1995, the Company entered into an employment agreement with Mr.
Stanky providing for an annual base salary of $150,000. The terms and
conditions of Mr. Stanky's employment agreement are substantially similar to
those contained in the Senior Management Agreements.
PROFIT SHARING AND RETIREMENT SAVINGS PLAN
The Company offers a profit sharing and retirement savings plan (the
"Profit Sharing Plan") to all current eligible employees of the Company who have
completed one year of service. Pursuant to the Profit Sharing Plan, eligible
employees may defer from 2% up to 15% of their salaries up to a maximum level
imposed by applicable federal law ($9,500 in 1996). The percentage of
compensation contributed to the plan is deducted from each eligible employee's
salary and considered tax-deferred savings under applicable federal income tax
law. Pursuant to the Profit Sharing Plan, the Company contributes increasing
matching contribution amounts, based upon the number of years of service
completed by eligible participants, up to a maximum contribution of 1.5% of an
eligible employee's salary (subject to the Internal Revenue Code limitation on
compensation taken into account for such purpose). Matching contribution
percentages range from 5% for one to two years of service up to 25% for five or
more years of service, of the amount contributed to the Profit Sharing Plan by
the respective eligible employee. Eligible employees become vested with respect
to matching contributions made by the Company pursuant to a vesting schedule
based upon an eligible employee's years of service. After two years of service,
an eligible employee is 20% vested in all matching contributions made to the
Profit Sharing Plan. Such employee becomes vested in equal increments
thereafter through the sixth year of service, at which time such employee
becomes 100% vested. Eligible participants are always 100% vested in their own
contributions, including investment earnings on such amounts.
The Company made the following matching contributions during its fiscal
year ended March 28, 1997 to the Named Executive Officers appearing in the
Summary Compensation Table above: Mr. Kerrigan $1,875; Mr. Doyle $1,875; Mr.
Blatt $1,875; Mr. Denson $1,149; and Mr. Stanky $1,188.
COMPENSATION OF DIRECTORS
Directors receive no cash remuneration for their service as directors,
other than reimbursement of reasonable travel and related expenses for
attendance at Board meetings. The Company has granted Mr. Chapman, a director
of the Company until November 1996, options to purchase 28,756 shares of CLC
Common Stock at an exercise price of $11.90 per share, 5,752 of which are
currently exercisable and the remainder of which vest in four equal annual
installments commencing on the first anniversary of the date of grant. Mr.
Chapman has not exercised any options to date.
-32-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended March 28, 1997, Mr. Kerrigan, Chairman of the
Board and Chief Executive Officer of the Company, served on the Compensation
Committee of the board of directors of CLC from its formation in September 1996
to November 1996, together with Dr. Arthur B. Laffer and Mr. Stephen G. Cerri,
each a member of the board of directors of CLC. At the Board's direction, the
Compensation Committee was reconstituted and is presently comprised of Dr.
Laffer, Mr. Stephen G. Cerri and Mr. David A. Donnini, a member of the Board
until November 1996.
-33-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of March 28, 1997, the Company had 100 shares of Common Stock issued and
outstanding, 100% of which was owned by CLC. The information in the following
table sets forth, as of May 26, 1997, certain information with respect to the
beneficial ownership of CLC Common Stock by (a) each director, (b) each Named
Executive Officer of the Company who is a stockholder, (c) each person known to
the Company to own beneficially more than 5% of any class of voting stock of
CLC, and (d) all directors and Named Executive Officers as a group. No director
or executive officer of the Company owns any shares of CLC's Class B non-voting
common stock. To the best knowledge of the Company, unless otherwise indicated,
the beneficial holders listed below have sole voting and investment power
regarding the shares of CLC Common Stock owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS /1/
---------------- -------------------- -----------
<S> <C> <C>
Golder, Thoma, Cressey, 4,556,114 45.5%
Rauner, Fund IV, L.P.
6100 Sears Tower
Chicago, IL 60606
MCS Capital, Inc. 566,010/2/ 5.7%
c/o Coinmach Corporation
521 East Morehead, Suite 590
Charlotte, NC 28202
OFFICERS AND DIRECTORS
Stephen R. Kerrigan 566,010/3/ 5.7%
Mitchell Blatt 416,313/4/ 4.2%
Robert M. Doyle 137,964/5/ 1.4%
Michael E. Stanky 98,284/6/ *
John E. Denson 11,503/7/ *
Bruce J. Rauner 4,556,114/8/ 45.5%
David A. Donnini 4,556,114/9/ 45.5%
James N. Chapman 30,386/10/ *
Arthur B. Laffer 15,000/11/ *
Stephen G. Cerri 15,000/12/ *
All Officers and Directors 5,846,574/13/ 58.4%
as a group (10 persons)
</TABLE>
The Company believes that none of the executive officers and directors of
the Company have engaged in securities transactions for which they have failed
to file, or failed to file on a timely basis, Forms 4 or 5 with the Securities
and Exchange Commission.
-34-
<PAGE>
___________________
* Percentage of shares beneficially owned does not exceed 1% of CLC Common Stock
outstanding.
/1/ Share percentage ownership is rounded to nearest tenth of 1% and reflects
the effect of dilution as a result of outstanding options to the extent
such options are, or within 60 days will become, exercisable. Shares
underlying any option which was exercisable on May 26, 1997 or becomes
exercisable within the next 60 days are deemed outstanding only for
purposes of computing the share ownership and share ownership percentage of
the holder of such option.
/2/ Includes shares underlying options to purchase an aggregate of 123,241
shares of CLC Common Stock at an exercise price of $11.90 per share, of
which 61,622 are currently exercisable and 61,619 become exercisable within
the next 60 days. Does not include shares underlying options to purchase an
aggregate of 184,857 shares of CLC Common Stock at an exercise price of
$11.90 per share, which options are not currently exercisable nor become
exercisable within the next 60 days.
/3/ The shares are owned beneficially by MCS, a corporation controlled by Mr.
Kerrigan. Includes shares underlying options held by MCS to purchase an
aggregate of 123,241 shares of CLC Common Stock at an exercise price of
$11.90 per share, of which 61,622 are currently exercisable and 61,619
become exercisable within the next 60 days. Does not include shares
underlying options held by MCS to purchase an aggregate of 184,857 shares
of CLC Common Stock at an exercise price of $11.90 per share, which options
are not currently exercisable nor become exercisable within the next 60
days.
/4/ Includes shares underlying options to purchase an aggregate of 20,000
shares of CLC Common Stock at an exercise price of $14.00 per share. Does
not include shares underlying options to purchase an aggregate of 80,000
shares of CLC Common Stock at an exercise price of $14.00 per share, which
options are not currently exercisable nor become exercisable within the
next 60 days.
/5/ Includes shares underlying options to purchase an aggregate of 28,756
shares of CLC Common Stock at an exercise price of $11.90 per share, of
which 14,378 are currently exercisable and 14,378 become exercisable within
the next 60 days. Does not include shares underlying options to purchase an
aggregate of 43,134 shares of CLC Common Stock at an exercise price of
$11.90 per share, which options are not currently exercisable nor become
exercisable within the next 60 days.
/6/ Includes shares underlying options to purchase an aggregate of 41,409
shares of CLC Common Stock at an exercise price of $11.90 per share, of
which 20,705 are currently exercisable and 20,704 become exercisable within
the next 60 days. Does not include shares underlying options to purchase an
aggregate of 62,112 shares of CLC Common Stock at an exercise price of
$11.90 per share, which options are not currently exercisable nor become
exercisable within the next 60 days. Also includes shares underlying
options to purchase an aggregate of 10,000 shares of CLC Common Stock at an
exercise price of $14.00 per share. Does not include shares underlying
options to purchase an aggregate of 40,000 shares of CLC Common Stock at an
exercise price of $14.00 per share, which options are not currently
exercisable nor become exercisable within the next 60 days.
/7/ Represents shares underlying options to purchase an aggregate of 11,503
shares of CLC Common Stock at an exercise price of $11.90 per share, of
which 5,752 shares are currently exercisable and 5,751 shares become
exercisable within the next 60 days. Does not include shares underlying
options to purchase an aggregate of 17,253 shares of CLC Common Stock at an
exercise price of $11.90 per share, which options are not currently
exercisable nor become exercisable within the next 60 days.
/8/ All such shares are held by GTCR, of which GTCR IV, L.P. ("GTCR IV"), is
the general partner. Mr. Rauner is a principal of Golder, Thoma, Cressey,
Rauner, Inc., the general partner of GTCR IV. Mr. Rauner disclaims
beneficial ownership of such shares.
/9/ All such shares are held by GTCR, of which GTCR IV is the general partner.
Mr. Donnini is a principal of Golder, Thoma, Cressey, Rauner, Inc., the
general partner of GTCR IV. Mr. Donnini disclaims beneficial ownership of
such shares.
/10/ Includes shares underlying options to purchase an aggregate of 11,503
shares of CLC Common Stock at an exercise price of $11.90 per share. Does
not include shares underlying options to purchase an aggregate of 17,253
shares of CLC Common Stock at an exercise price of $11.90 per share, which
options are not currently exercisable nor become exercisable within the
next 60 days.
/11/ Represents shares underlying options to purchase an aggregate of 15,000
shares of CLC Common Stock at an exercise price of $14.00 per share. Does
not include shares underlying options to purchase an aggregate of 45,000
shares of CLC Common Stock at an exercise price of $14.00 per share, which
options are not currently exercisable nor become exercisable within the
next 60 days.
/12/ Represents shares underlying options to purchase an aggregate of 15,000
shares of CLC Common Stock at an exercise price of $14.00 per share. Does
not include shares underlying options to purchase an aggregate of 45,000
shares of CLC Common Stock at an exercise price of $14.00 per share, which
options are not currently exercisable nor become exercisable within the
next 60 days.
-35-
<PAGE>
/13/ In calculating the shares beneficially owned by executive officers and
directors as a group, (i) 4,556,114 shares of CLC Common Stock owned by
GTCR and included in the beneficial ownership amounts of each of Messrs.
Rauner and Donnini, and (ii) 566,010 shares of CLC Common Stock owned by
MCS and included in the beneficial ownership amount of Mr. Kerrigan, in
each case as set forth in the table above, are included only once. In
calculating the percentage of shares owned by executive officers and
directors as a group, the shares of CLC Common Stock underlying all options
which are beneficially owned by executive officers and directors and which
are currently exercisable or become exercisable within the next 60 days are
deemed outstanding.
CHANGE OF CONTROL
Pursuant to the terms of the Credit Agreement relating to the New Credit
Facility, which replaced the Company's then existing credit facility in January
1997, upon the occurrence of an Event of Default (as defined in such Credit
Agreement), the lenders under such New Credit Facility have the right to
foreclose on all of the outstanding shares of Common Stock issued in CLC's name
and pledged to such lenders by CLC pursuant to the terms and conditions of the
Credit Agreement and the Holdings Pledge Agreement (as defined in the Credit
Agreement).
-36-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
MANAGEMENT AND CONSULTING SERVICES
On July 17, 1996, the Company paid GTCR IV, L.P., the general partner of
GTCR, a $500,000 fee in connection with the termination of the Management and
Consulting Services Agreement entered into between the Company and GTCR, IV,
L.P. on July 26, 1995 (the "Management Agreement"). No other fees were paid to
GTCR, IV, L.P. pursuant to the Management Agreement during the fiscal year ended
March 28, 1997.
During the 1997 fiscal year, the Company agreed to pay Mr. Chapman, a
director of the Company until November 1996, $250,000 in 25 equal monthly
installments of $10,000 per month for general financial advisory and investment
banking services. Additionally, the Company paid Mr. Chapman a fee of $125,000
in January 1997 for services provided in arranging bank financing relating to
the Company's January 1997 acquisition of Kwik Wash Laundries, L.P.
CERTAIN LOANS TO MEMBERS OF MANAGEMENT
As of May 26, 1997, Mr. Kerrigan (directly and indirectly through MCS, an
entity controlled by Mr. Kerrigan), and Mr. Blatt owed the Company $672,620 and
$172,620, respectively, plus interest accrued thereon. During the 1997 fiscal
year, the largest aggregate amount owed to the Company by Mr. Kerrigan (directly
and indirectly through MCS) and Mr. Blatt equalled $672,620 and $214,166,
respectively, plus interest accrued thereon. The indebtedness of each of MCS
and Mr. Blatt is evidenced by promissory notes dated (i) January 31, 1995 in the
original principal amount of $140,000; (ii) July 26, 1995 in the original amount
of $52,370; and (iii) May 3, 1996 in the original amount of $21,797. Each such
note accrues interest at a rate of 8% per annum and was delivered to the Company
in connection with the purchase of Company securities by MCS and Mr. Blatt. The
promissory notes dated January 31, 1995 are payable in four equal annual
installments commencing on January 31, 1996. The promissory notes dated July
26, 1995 and May 3, 1996 are payable in eight equal annual installments
commencing on July 26, 1996 and May 3, 1997, respectively. During the 1997
fiscal year, the Company forgave the repayment of approximately $45,109 by each
of MCS and Mr. Blatt, which amounts represent the aggregate amount of the first
installment of principal and interest owed by MCS and Mr. Blatt under the notes
dated January 31, 1995 and July 26, 1995.
In connection with the Company's establishment of a corporate development
office in Charlotte, North Carolina and the relocation of Messrs. Kerrigan and
Denson to such office in September 1996 and March 1997, respectively, the
Company extended loans to each of Messrs. Kerrigan and Denson in the principal
amounts of $500,000 and $80,000, respectively. The loan to Mr. Denson (the
"Denson Loan") is an interest free demand loan that is secured by certain real
property owned by Mr. Denson. The loan to Mr. Kerrigan (the "Kerrigan Loan")
provides for the repayment of principal and interest in five equal annual
installments commencing in July 1997 (each payment date, a "Payment Date") and
accrual of interest at a rate of 7.5% per annum. The Kerrigan Loan provides
that payments of principal and interest will be forgiven on each Payment Date
provided that Mr. Kerrigan is employed by the Company on such Payment Date. If
Mr. Kerrigan ceases to be employed by the Company for a reason other than (i) a
change in control of the Company, (ii) the death or disability of Mr. Kerrigan
while employed by the Company, or (iii) cause (each, a "Termination Event"),
then all outstanding amounts due under the
-37-
<PAGE>
Kerrigan Loan will be forgiven as of the date of the Termination Event. If Mr.
Kerrigan's employment is terminated upon the occurrence of any event that is not
a Termination Event, then all outstanding amounts due under the Kerrigan Loan
will become due and payable within 30 business days following the termination of
Mr. Kerrigan's employment.
INTERCOMPANY LOAN
During the past fiscal year, the Company repaid the remaining balance on an
intercompany loan in an original principal amount of $2.0 million made by TCC to
CLC on July 26, 1995 as part of the financing for the Solon Acquisition.
-38-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
(1) Financial Statements -- see Index to Financial Statements appearing on
Page F-1.
(2) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
3.1 Restated Certificate of Incorporation of Coinmach Corporation ("Coinmach")
(incorporated by reference from exhibit 3.1 to Coinmach's Form 10-K for the
transition period from September 30, 1995 to March 29, 1996, file number
333-00620)
3.2 Bylaws of Coinmach (incorporated by reference from exhibit 3.2 to
Coinmach's Form 10-K for the transition period from September 30, 1995 to
March 29, 1996, file number 333-00620)
4.1 Indenture, dated as of November 30, 1995, by and between Coinmach, as
Issuer, and Fleet National Bank of Connecticut (formerly, Shawmut Bank
Connecticut, National Association), as Trustee (incorporated by reference
from exhibit number 4.1 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
4.2 First Supplemental Indenture, dated as of December 11, 1995, by and between
Coinmach, as Issuer, and Fleet National Bank of Connecticut (formerly,
Shawmut Bank Connecticut, National Association), as Trustee (incorporated
by reference from exhibit number 4.2 to Coinmach's Registration Statement
on Form S-1, file number 333-00620)
4.3 First Supplemental Indenture, dated as of November 28, 1995, by and
between Solon Automated Services, Inc. ("Solon") and U.S. Trust Company
of New York, as Trustee (incorporated by reference from exhibit number 4.3
to Coinmach's Registration Statement on Form S-1, file number 333-00620)
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-39-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
4.4 Registration Rights Agreement, dated as of November 30, 1995, by and
between Coinmach and Lazard Freres & Co. LLC ("Lazard"), as Initial
Purchaser (incorporated by reference from exhibit number 4.6 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
4.5 Addendum to Registration Rights Agreement, dated December 14, 1995, by
and between Coinmach and Lazard, as Initial Purchaser (incorporated by
reference from exhibit number 4.8 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
4.6 Form of Global Note (included as an exhibit to Exhibit 4.1 hereto)
(incorporated by reference from exhibit number 4.4 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
Form of Physical Note (included as an exhibit to Exhibit 4.1 hereto)
4.7 (incorporated by reference from exhibit number 4.5 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.1 Purchase Agreement, dated as of January 31, 1995, by and among The
Coinmach Corporation ("TCC"), CIC I Acquisition Corp. ("CIC"), the
stockholders of CIC and Coinmach Holding Corp. (incorporated by reference
from exhibit number 10.1 to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
10.2 Equity Purchase Agreement, dated as of January 31, 1995, by and between
TCC and Golder, Thoma, Cressey, Rauner Fund IV, L.P. ("GTCR Fund
IV"), subsequently amended by the Omnibus Agreement (as hereinafter
defined) (incorporated by reference from exhibit number 10.2 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.3 Investor Purchase Agreement, dated as January 31, 1995, by and between
TCC, GTCR Fund IV and President and Fellows of Harvard College,
subsequently amended by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.3 to the Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.4 Investor Purchase Agreement, dated as January 31, 1995, by and between
TCC, GTCR Fund IV, MCS Capital Management, Inc. and Stephen R.
Kerrigan, subsequently amended by the Omnibus Agreement (as hereinafter
defined) (incorporated by reference from exhibit number 10.4 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-40-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
10.5 Stock Pledge Agreement, dated as of January 31, 1995, by and between TCC
and MCS Capital, Inc. (incorporated by reference from exhibit number 10.5
to Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.6 Stock Pledge Agreement, dated as of January 31, 1995, by and between TCC
and Mitchell Blatt (incorporated by reference from exhibit number 10.6 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.7 Promissory Note, dated January 31, 1995, of MCS Capital, Inc. in favor of
TCC, subsequently amended by the Omnibus Agreement (as hereinafter
defined) (incorporated by reference from exhibit number 10.7 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.8 Promissory Note, dated January 31, 1995, of Mitchell Blatt in favor of TCC,
subsequently amended by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.8 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.9 Senior Management Agreement, dated as of January 31, 1995, by and
between TCC, Stephen R. Kerrigan, MCS Capital, Inc. and GTCR Fund IV,
subsequently amended by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.10 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.10 Senior Management Agreement, dated as of January 31, 1995, by and
between TCC, Coinmach Industries Co., L.P., Mitchell Blatt and GTCR Fund
IV, subsequently amended by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.11 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.11 Senior Management Agreement, dated January 31, 1995, by and between
TCC, Coinmach Industries Co., L.P., Robert M. Doyle and GTCR Fund IV,
subsequently amended by the Omnibus Agreement (as hereinafter defined)
(incorporated by reference from exhibit number 10.12 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.12 Employment Agreement, dated as of August 4, 1995, by and between Solon
and John E. Denson (incorporated by reference from exhibit number 10.13 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-41-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
10.13 Employment Agreement, dated as of July 1, 1995, by and between Solon,
Michael E. Stanky and GTCR Fund IV (incorporated by reference from
exhibit number 10.14 to Coinmach's Registration Statement on Form S-1, file
number 333-00620)
10.14 Stock Purchase Agreement, dated as of March 7, 1995, by and among Ford
Coin Laundries, Inc., Kwik Wash Laundries, Inc., Solon and the Sellers
(incorporated by reference from exhibit number 10.15 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.15 Supply Agreement, dated July 26, 1995, by and among SAS, Solon and Speed
Queen Company (incorporated by reference from exhibit number 10.16 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.16 Dealer Manager Agreement, dated October 20, 1995, by and among TCC,
Solon, Lazard and Fieldstone Private Capital Group, L.P. (incorporated by
reference from exhibit number 10.17 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.17 Purchase Agreement, dated November 15, 1995, by and among TCC, Solon
and Lazard (incorporated by reference from exhibit number 10.18 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.18 Addendum to Purchase Agreement, dated December 11, 1995, by and
between Coinmach and Lazard (incorporated by reference from exhibit
number 10.19 to Coinmach's Registration Statement on Form S-1, file number
333-00620)
10.19 Omnibus Agreement, dated as of November 30, 1995, among SAS, Solon,
TCC and each of the other parties executing a signature page thereto (the
"Omnibus Agreement") (incorporated by reference from exhibit number 10.20
to Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.20 Credit Agreement, dated as of November 30, 1995, by and between
Coinmach, as Borrower and Heller Financial, Inc. ("Heller") (incorporated by
reference from exhibit number 10.21 to Coinmach's Registration Statement on
Form S-1, file number 333-00620)
10.21 First Amendment to Credit Agreement, dated as of December 9, 1995, by and
among Coinmach, Heller, SAS, and Super Laundry Equipment Corp.
("SLEC") (incorporated by reference from exhibit number 10.22 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-42-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
10.22 Form of Note, dated November 30, 1995, of Coinmach in favor of Heller
(included as an exhibit to Exhibit 10.26 hereto) (incorporated by reference
from exhibit number 10.23 to Coinmach's Registration Statement on Form
S-1, file number 333-00620)
10.23 Pledge Agreement, dated as of November 30, 1995, by and between
Coinmach and Heller (incorporated by reference from exhibit number 10.24 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.24 Guaranty, dated as of January 31, 1995, by Super Laundry Management
Corp. in favor of Heller (incorporated by reference from exhibit number
10.25 to Coinmach's Registration Statement on Form S-1, file number
333-00620)
10.25 Guaranty, dated as of November 30, 1995, by SLEC in favor of Heller
(incorporated by reference from exhibit number 10.26 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
10.26 Security Agreement, dated as of November 30, 1995, by and between
Coinmach and Heller (incorporated by reference from exhibit number 10.27 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.27 Security Agreement, dated as of November 30, 1995, by and between SLEC
and Heller (incorporated by reference from exhibit number 10.28 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.28 Collateral Assignment of Leases of Coinmach to Heller, dated as of
November 30, 1995 (incorporated by reference from exhibit number 10.29 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.29 Collateral Assignment of Leases of SLEC to Heller, dated as of November
30, 1995 (incorporated by reference from exhibit number 10.30 to
Coinmach's Registration Statement on Form S-1, file number 333-00620)
10.30 Commitment Letter, dated November 22, 1996, from Bankers Trust Company
("Bankers Trust"), First Union Bank of North Carolina ("First Union") and
Lehman Commercial Paper, Inc. ("Lehman"), addressed to CLC (incorporated
by reference from exhibit 10.1 to Coinmach's Form 10-Q for the quarterly
period ended December 27, 1996, file number 333-00620)
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-43-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
10.31 Stock Purchase Agreement, dated November 25, 1996, by and among Tamara
Lynn Ford, Robert Kyle Ford, Traci Lea Ford, Tucker F. Enthoven, Richard
F. Enthoven, Richard Franklin Ford, Jr., Trustee u/d/t February 4, 1994,
KWL, Inc., Kwik-Wash Laundries, Inc., Kwik Wash Laundries, L.P. and
Coinmach (the "Stock Purchase Agreement") (incorporated by reference from
exhibit 10.2 to Coinmach's Form 10-Q for the quarterly period ended
December 27, 1996, file number 333-00620)
10.32 First Amendment to Stock Purchase Agreement, dated as of January 8, 1997
(incorporated by reference from exhibit 10.3 to Coinmach's Form 10-Q for
the quarterly period ended December 27, 1996, file number 333-00620)
10.33 Registration Rights Agreement, dated as of March 14, 1997, between
Coinmach and Atlanta Washer & Dryer Leasing, Inc.
10.34 Amended and Restated Employment Agreement, dated as of June 1, 1996, by
and between Coinmach and John E. Denson
10.35 Promissory Note, dated February 11, 1997, of Stephen R. Kerrigan in favor
of Coinmach
10.36 Underwriting Agreement, dated July 17, 1996, by and among CLC and
Lehman Brothers, Inc., Dillon, Read & Co., Inc., Lazard and Fieldstone
FPCG Services, L.P. (collectively, the "Representatives")
10.37 Lock-Up Agreements, dated July 23, 1996, among CLC and the
Representatives
10.38 Promissory Note, dated January 8, 1997, of CLC in favor of Richard F.
Enthoven, as agent for Tamara Lynn Ford, Richard Kyle Ford, Traci Lea
Ford, Tucker F. Enthoven, Richard F. Enthoven, and Richard Franklin Ford,
Jr., Trustee u/d/t February 4, 1994
10.39 Tax Cooperation Agreement, dated as of January 8, 1997, by and among
Kwik Wash Laundries, L.P., KWL, Inc., Kwik-Wash Laundries, Inc.,
Coinmach and the Sellers
10.40 Consulting Services Agreement, dated as of January 8, 1997, by and between
Richard F. Enthoven and Coinmach
10.41 Credit Agreement dated January 8, 1997, among Coinmach, the Lending
Institutions listed therein, Bankers Trust Company ("Bankers Trust"), First
Union National Bank of North Carolina ("First Union") and Lehman
Commercial Paper, Inc. ("Lehman")
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-44-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
10.42 Tranche A Term Notes, each dated January 8, 1997, by Coinmach in favor of
each of Bankers Trust, First Union, Lehman, Heller, The Nippon Credit
Bank, Ltd., Credit Lyonnais New York Branch, Bank of Scotland and Bank of
Boston
10.43 Tranche B Term Notes, each dated January 8, 1997, by Coinmach in favor of
each of Bankers Trust, First Union, Lehman, Fleet National Bank, Heller,
The Nippon Credit Bank, Ltd., Bank of Scotland, Bank of Boston,
Massachusetts Mutual Life Insurance Company, Pilgrim America Prime Rate
Trust, Prime Income Trust, The Ing Capital Senior Secured High Income
Fund, L.P., and Merrill Lynch Senior Floating Rate Fund, Inc.
10.44 Revolving Notes, each dated January 8, 1997, by Coinmach in favor of each
of Bank of Boston, Bankers Trust, First Union, Lehman, Fleet National Bank,
Heller, The Nippon Credit Bank, Ltd., Credit Lyonnais New York Branch,
and Bank of Scotland
10.45 Swing Line Note, dated January 8, 1997, in the principal amount of
$5,000,000 in favor of Bankers Trust
10.46 Holdings Pledge Agreement, dated January 8, 1997, made by CLC to Bankers
Trust and Richard F. Enthoven, as Seller Agent
10.47 Borrower Pledge Agreement, dated January 8, 1997, made by Coinmach to
Bankers Trust
10.48 Security Agreement, dated January 8, 1997, between Coinmach and Bankers
Trust and the Assignment of Security Interest in United States Trademarks and
Patents
10.49 Collateral Assignment of Leases, dated January 8, 1997, by Coinmach in
favor of Bankers Trust
10.50 Collateral Assignment of Location Leases, dated January 8, 1997, by
Coinmach in favor of Bankers Trust
10.51 Amendment to Investor Purchase Agreements, dated January 8, 1997, by and
among CLC, GTCR Fund IV, Coinmach, Heller Jackson National Life
Insurance Company, individually and as successor by merger with Jackson
National Life Insurance Company of Michigan (collectively, "JNL"), Harvard,
James N. Chapman and Michael E. Marrus
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-45-
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER/1/ DESCRIPTION
- --------- -----------
<C> <S>
10.52 Amendment to Investor Purchase Agreement, dated January 8, 1997, by and
among CLC, GTCR Fund IV, Heller, JNL, Harvard, MCS Capital, Inc.,
James N. Chapman, Michael E. Marrus, Mitchell Blatt and Michael Stanky
10.53 Promissory Note, dated March 24, 1997, of John E. Denson in favor of
Coinmach
10.54 Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits,
Financing Statement and Fixture Filing, made by Coinmach to Bankers Trust,
as executed on March 27, 1997 and recorded with the County Clerk of Dallas
County, Texas on April 7, 1997
16.1 Letter, dated June 29, 1995, from Arthur Andersen LLP to the Securities and
Exchange Commission regarding change in certifying accountants
(incorporated by reference from exhibit number 16.1 to Coinmach's
Registration Statement on Form S-1, file number 333-00620)
21.1 Subsidiaries of Coinmach Corporation
27.1 Financial Data Schedule
</TABLE>
- --------------------------
/1/ Exhibit numbers are referenced to Item 601 of Regulation S-K under the
Securities Exchange Act of 1934, as amended.
-46-
<PAGE>
(b) Reports on Form 8-K:
Registrant filed a report on Form 8-K, dated January 8, 1997, as
amended by a Form 8-K/A and Form 8-K/A Amendment No. 2, reporting the Kwik Wash
Acquisition and New Credit Facility. Such Form 8-K, as amended, also included
the following financial statements:
1. Financial Statements.
The audited combined financial statements of Kwik Wash Laundries, Inc.
and KWL, Inc. for the years ended December 31, 1996, 1995 and 1994,
together with auditors' report thereon.
2. Pro forma financial information.
The unaudited pro forma combined financial statements of Coinmach
Laundry Corporation for the nine-month period ended December 27, 1996
and for the year ended March 29, 1996.
-47-
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROSLYN,
STATE OF NEW YORK ON JUNE 25, 1997.
COINMACH CORPORATION
/s/ STEPHEN R. KERRIGAN
By:
-----------------------------------
Stephen R. Kerrigan
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
Date: June 25, 1997
By: /s/ STEPHEN R. KERRIGAN
---------------------------------------
Stephen R. Kerrigan
Chairman of the Board of Directors and
Chief Executive Officer (Principal Executive Officer)
Date: June 25, 1997
By: /s/ MITCHELL BLATT
---------------------------------------
Mitchell Blatt
Director, President and Chief Operating Officer
Date: June 25, 1997
By: /s/ ROBERT M. DOYLE
---------------------------------------
Robert M. Doyle
Chief Financial Officer, Senior Vice President
Secretary and Treasurer
(Principal Financial and Accounting Officer)
Date: June 25, 1997
By: /s/ JOHN E. DENSON
---------------------------------------
John E. Denson
Senior Vice President - Corporate Development
Date: June 25, 1997
By: /s/ MICHAEL STANKY
---------------------------------------
Michael Stanky
Senior Vice President
<PAGE>
COINMACH CORPORATION AND SUBSIDIARIES
Index of Financial Statements
The following combined and consolidated financial statements of Coinmach
Corporation and Subsidiaries are included in Item 8 of this Form 10-K:
Reports of Independent Auditors............................................F- 2
Consolidated Balance Sheets--March 28, 1997 and March 29, 1996.............F- 5
Combined and Consolidated Statements of Operations--Year ending March 28,
1997, six month transition period ended March 29, 1996, the periods from
April 5, 1995 to September 29, 1995, and from October 1, 1994 to April 4,
1995, and the year ended September 30, 1994................................F- 7
Combined and Consolidated Statements of Stockholders Equity (Deficit)--
Year ending March 28, 1997, six month transition period ended March 29,
1996, the periods from April 5, 1995 to September 29, 1995, and from
October 1, 1994 to April 4, 1995, and the year ended September 30, 1994....F- 8
Combined and Consolidated Statements of Cash Flows--Year ending March 28,
1997, six month transition period ended March 29, 1996, the periods from
April 5, 1995 to September 29, 1995, and from October 1, 1994 to April 4,
1995, and the year ended September 30, 1994................................F- 9
Notes to Combined and Consolidated Financial Statements....................F-11
All schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.
F-1
<PAGE>
Report of Independent Auditors
To the Board of Directors of
Coinmach Corporation
We have audited the accompanying consolidated balance sheets of Coinmach
Corporation and Subsidiaries (the "Company") as of March 28, 1997 and March 29,
1996, and the related combined and consolidated statements of operations,
stockholder's equity (deficit), and cash flows for the year ending March 28,
1997, the six-month transition period ended March 29, 1996, and the period from
April 5, 1995 to September 29, 1995 ("Successor period") and the related
consolidated statements of operations, stockholder's equity (deficit) and cash
flows for the period from October 1, 1994 to April 4, 1995 ("Predecessor
period"). These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Coinmach
Corporation and Subsidiaries at March 28, 1997 and March 29, 1996, and the
combined and consolidated results of their operations and their cash flows for
years ending March 28, 1997, the six-month transition period ended March 29,
1996 and for the Successor period from April 5, 1995 to September 29, 1995 and
the consolidated results of their operations and their cash flows for the
Predecessor period from October 1, 1994 to April 4, 1995, in conformity with
generally accepted accounting principles.
F-2
<PAGE>
As more fully described in Note 2 to the combined and consolidated financial
statements, Coinmach Laundry Corporation purchased Solon Automated Services,
Inc. ("Solon") as of April 5, 1995 in a business combination accounted for as a
purchase. Subsequent thereto, on November 30, 1995, The Coinmach Corporation, a
company under common control with Solon, was merged into Solon, who thereupon
changed its name to Coinmach Corporation, in a business combination accounted
for as though it were a pooling of interests. As a result, the combined and
consolidated financial statements for the periods subsequent to April 5, 1995
are presented on a different basis of accounting than that of the Predecessor
periods and, therefore, are not comparable.
ERNST & YOUNG LLP
Melville, NY
May 13, 1997, except for Note 7b., as
to which the date is June 2, 1997
F-3
<PAGE>
LETTERHEAD OF ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Solon Automated Services, Inc.:
We have audited the consolidated balance sheet of Solon Automated Services, Inc.
(a Delaware corporation) and subsidiaries as of September 30, 1994 and the
related consolidated statements of operations, shareholders' equity (deficit)
and cash flows for the fiscal year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Solon Automated Services, Inc.
and subsidiaries as of September 30, 1994, and the results of their operations
and their cash flows for the fiscal year then ended, in conformity with
generally accepted accounting principles.
As further discussed in Note 1 to the consolidated financial statements,
effective October 2, 1993, the Company implemented the provisions of Statement
of Financial Accounting standards No. 109, "Accounting for Income Taxes."
/s/ Arthur Andersen LLP
Philadelphia, PA.,
December 19, 1994
F-4
<PAGE>
Coinmach Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands of dollars)
<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1997 1996
-----------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 10,110 $ 19,723
Receivables, less allowance of $555 and
$454 6,894 5,260
Inventories 7,959 4,443
Prepaid expenses 3,170 2,641
Advance rental payments 38,472 20,320
Property and equipment:
Laundry equipment and fixtures 135,656 89,394
Land, building and improvements 14,266 10,965
Trucks and other vehicles 4,211 1,849
-----------------------
154,133 102,208
Less accumulated depreciation (42,017) (19,509)
-----------------------
Net property and equipment 112,116 82,699
Contract rights, net of accumulated
amortization of $19,815 and $8,925 180,557 59,745
Goodwill, net of accumulated
amortization of $5,574 and $2,386 95,771 44,071
Other assets 12,501 9,265
-----------------------
Total assets $467,550 $248,167
=======================
</TABLE>
See accompanying notes.
F-5
<PAGE>
Coinmach Corporation and Subsidiaries
Combined and Consolidated Balance Sheets
(In thousand of dollars, except par value and share data)
<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1997 1996
-----------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
(DEFICIT)
<S> <C> <C>
Accounts payable $ 8,946 $ 5,944
Accrued commissions 10,573 7,380
Accrued interest 9,712 7,745
Other accrued expenses 8,986 7,557
Due to parent 22,432 --
Deferred income taxes 65,650 18,924
11 3/4% senior notes 196,655 196,655
Credit facility 130,000 --
12 3/4% senior notes -- 5,000
Other long-term debt 2,623 1,110
Stockholder's equity (deficit):
Common stock, par value $.01:
1,000 shares authorized, 100 shares
issued at March 28, 1997 and
March 29, 1996 -- --
Capital in excess of par value 41,391 18,104
Accumulated deficit (29,164) (18,560)
-----------------------
12,227 (456)
Notes receivable from management (254) (1,692)
-----------------------
Total stockholder's equity (deficit) 11,973 (2,148)
-----------------------
Total liabilities and stockholder's
equity (deficit) $467,550 $248,167
=======================
</TABLE>
See accompanying notes.
F-6
<PAGE>
Coinmach Corporation and Subsidiaries
Combined and Consolidated Statements of Operations
(In thousands of dollars, except per share data)
<TABLE>
<CAPTION>
SIX-MONTH
TRANSITION
YEAR PERIOD APRIL 5, OCTOBER 1, YEAR
ENDED ENDED 1995 TO 1994 TO ENDED
MARCH 28, MARCH 29, SEPTEMBER 29, APRIL 4, SEPTEMBER 30,
1997 1996 1995 1995 1994
------------------------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR PREDECESSOR
<S> <C> <C> <C> <C> <C>
Revenues $206,852 $ 89,070 $89,719 $52,207 $104,553
Costs and expenses:
Laundry operating expenses 139,446 60,536 62,905 33,165 66,527
General and administrative 4,520 2,024 2,458 1,539 2,839
Depreciation and
amortization 46,316 18,212 18,423 10,304 21,347
Gain on sale of equipment -- -- -- -- (109)
Stock based compensation
charge 1,768 -- -- -- --
Restructuring expenses -- -- 2,200 -- --
------------------------------------------------------------------------------------------------------
192,050 80,772 85,986 45,008 90,604
------------------------------------------------------------------------------------------------------
Operating income 14,802 8,298 3,733 7,199 13,949
Interest expense, net 27,417 11,830 11,541 8,928 18,105
------------------------------------------------------------------------------------------------------
Loss before income taxes and
extraordinary items (12,615) (3,532) (7,808) (1,729) (4,156)
------------------------------------------------------------------------------------------------------
Provision (benefit) for
income taxes:
Currently payable 200 50 420 270 200
Deferred (2,507) (1,048) (2,282) (220) 2,562
------------------------------------------------------------------------------------------------------
(2,307) (998) (1,862) 50 2,762
------------------------------------------------------------------------------------------------------
Loss before extraordinary
items (10,308) (2,534) (5,946) (1,779) (6,918)
Extraordinary items, net of
income tax benefits of
$206 and $5,305 for the
year ended March 28, 1997
and for the six-month
transition period
ended March 29, 1996 (296) (8,925) -- 848 --
------------------------------------------------------------------------------------------------------
Net loss $(10,604) $(11,459) $(5,946) $(2,627) $ (6,918)
======================================================================================================
Loss per share:
Before extraordinary item $ (.12) $ (.44)
Extraordinary item (.05) --
-----------------------------------
Net loss per share $ (.17) $(.44)
===================================
See accompanying notes.
</TABLE>
F-7
<PAGE>
Coinmach Corporation and Subsidiaries
Combined and Consolidated Statements of Stockholder's Equity (Deficit)
(In thousands of dollars, except par value and shares)
<TABLE>
<CAPTION>
CLASS A CAPITAL IN RECEIVABLES TOTAL
COMMON COMMON EXCESS OF ACCUMULATED FROM STOCKHOLDER'S
STOCK STOCK PAR VALUE DEFICIT MANAGEMENT EQUITY (DEFICIT)
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1993 $ 124 $ 33 $14,386 $(16,179) $ -- $ (1,636)
Net loss -- -- -- (6,918) -- (6,918)
Repurchase of 270,000
shares of common stock (3) -- (267) -- -- (270)
Contribution to
retirement savings plan 1 -- 102 -- -- 103
-------------------------------------------------------------------------------------------------------
Balance, September 30, 1994 122 33 14,221 (23,097) -- (8,721)
Net loss--Predecessor
period -- -- -- (2,627) -- (2,627)
Repurchase of 45,459
shares of common stock -- -- (68) -- -- (68)
Purchase accounting
adjustments -- -- (2,308) 25,724 -- 23,416
Recapitalization of
common stock (122) (33) 155 -- -- --
Merger of TCC -- -- 11,222 (1,155) (338) 9,729
Advance to Coinmach
Laundry Corporation -- -- -- -- (2,000) (2,000)
Net loss--Successor period -- -- -- (5,946) -- (5,946)
-------------------------------------------------------------------------------------------------------
Balance, September 29, 1995 -- -- 23,222 (7,101) (2,338) 13,783
Dividend to Coinmach
Laundry Corporation -- -- (5,118) -- -- (5,118)
Repayment of receivables
from stockholder -- -- -- -- 646 646
Net loss -- -- -- (11,459) -- (11,459)
-------------------------------------------------------------------------------------------------------
Balance, March 29, 1996 -- -- 18,104 (18,560) (1,692) (2,148)
Net loss -- -- -- (10,604) -- (10,604)
Investment by Coinmach
Laundry Corporation -- -- 23,287 -- -- 23,287
Repayment of receivables
from stockholder -- -- -- -- 1,355 1,355
Forgiveness of
stockholder's receivables -- -- -- -- 83 83
-------------------------------------------------------------------------------------------------------
Balance, March 28, 1997 $ -- $ -- $41,391 $(29,164) $ (254) $ 11,973
=======================================================================================================
</TABLE>
See accompanying notes.
F-8
<PAGE>
Coinmach Corporation and Subsidiaries
Combined and Consolidated Statements of Cash Flows
(In thousands of dollars)
<TABLE>
<CAPTION>
SIX-MONTH
TRANSITION
YEAR PERIOD APRIL 5, OCTOBER 1, YEAR
ENDED ENDED 1995 TO 1994 TO ENDED
MARCH 28, MARCH 29, SEPTEMBER 29, APRIL 4, SEPTEMBER 30,
1997 1996 1995 1995 1994
-------------------------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR PREDECESSOR
OPERATING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Net loss $ (10,604) $(11,459) $ (5,946) $(2,627) $ (6,918)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Depreciation and
amortization 46,316 18,212 18,423 10,304 21,347
Deferred income taxes (2,507) (1,048) (2,000) (220) 2,649
Amortization of debt
discount and
deferred issue costs 533 414 735 440 878
Stock based compensation 1,768 -- -- -- --
Extraordinary charges
for early extinguishment of
debt, net of taxes 296 8,925 -- -- --
Increase or decrease in
operating assets and
liabilities, net of
businesses acquired:
(Increase) decrease
in other assets (2,462) 24 (717) 106 (233)
(Increase) decrease
in receivables, net (1,100) (1,489) (73) 164 78
(Increase) decrease
in inventories and
prepayments (3,008) (1,100) 930 (676) 2,074
Increase (decrease)
in accounts payable 2,144 (272) (668) 1,725 (2,173)
Increase (decrease)
in accrued interest 1,956 3,193 (25) (81) (24)
Increase (decrease)
in other accrued
expenses, net 973 (3,300) 1,980 1,081 236
-------------------------------------------------------------------------------------------------------
Net cash provided by
operating activities 34,305 12,100 12,639 10,216 17,914
-------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to property and
equipment (29,779) (10,757) (9,550) (4,815) (11,224)
Advance rental payments to
location owners (11,809) (3,462) (3,569) (2,129) (5,555)
Additions to net assets
related to acquisitions
of businesses (155,247) -- -- -- --
Sales of property and
equipment 137 57 5 407 16
-------------------------------------------------------------------------------------------------------
Net cash used in investing
activities (196,698) (14,162) (13,114) (6,537) (16,763)
-------------------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE>
Coinmach Corporation and Subsidiaries
Combined and Consolidated Statements of Cash Flows (continued)
(In thousands of dollars)
<TABLE>
<CAPTION>
SIX-MONTH
TRANSITION
YEAR PERIOD APRIL 5, OCTOBER 1, YEAR
ENDED ENDED 1995 TO 1994 TO ENDED
MARCH 28, MARCH 29, SEPTEMBER 29, APRIL 4, SEPTEMBER 30,
1997 1996 1995 1995 1994
------------------------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR PREDECESSOR
FINANCING ACTIVITIES
<S> <C> <C> <C> <C> <C>
Proceeds from issuance of
11 3/4% senior notes $ -- $ 72,655 $ -- $ -- $ --
Proceeds from issuance of
term loans from
credit facility 130,000 -- -- -- --
Deferred debt issuance
costs (178) (4,794) -- -- --
Debt extinguishment costs (319) (6,909) -- -- --
Net advances from (to)
parent 29,609 646 (2,000) -- --
Dividends to Coinmach
Laundry Corporation -- (5,118) -- -- --
Repurchase of 12 3/4%
senior notes (5,000) -- -- (1,000) --
Net (repayments)
borrowings of bank and
other borrowings (325) (43,715) 1,126 -- --
Principal payments of
capitalized lease
obligations (1,007) (262) (143) -- --
Repurchases of common stock -- -- -- (68) (270)
------------------------------------------------------------------------------------------------------
Net cash provided by (used
in) financing
activities 152,780 12,503 (1,017) (1,068) (270)
------------------------------------------------------------------------------------------------------
Net (decrease) increase in
cash (9,613) 10,441 (1,492) 2,611 881
Cash and cash equivalents,
beginning of period 19,723 9,282 10,774 7,241 6,360
------------------------------------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 10,110 $ 19,723 $ 9,282 $ 9,852 $ 7,241
======================================================================================================
Supplemental disclosure of
cash flow
information:
Interest paid $ 24,845 $ 8,500 $10,900 $ 8,500 $17,100
======================================================================================================
</TABLE>
See accompanying notes.
F-10
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements
March 28, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION AND CONSOLIDATION
The accompanying financial statements combine the consolidated accounts of
Coinmach Corporation and Subsidiaries, (formerly Solon Automated Services, Inc.
("Solon")) with the consolidated accounts of The Coinmach Corporation ("TCC")
(collectively, the "Company") for the periods under common control. The
Predecessor financial statements reflect the consolidated accounts of Solon
only. Solon was acquired on April 5, 1995 by Coinmach Laundry Corporation
("CLC") (the "Solon Acquisition"), a company controlled by Golder Thoma Cressey
Rauner, Inc. ("GTCR"). TCC was formed in January 1995 by an investor group,
comprised principally of the same investors who formed CLC, and acquired
Coinmach Industries Co., L.P. ("Industries") and Super Laundry Equipment Co.,
L.P. ("Super Laundry LP") on January 31, 1995 (the "TCC Acquisition"). Both the
Solon Acquisition and the TCC Acquisition were accounted for as purchases and,
accordingly, the acquired assets and liabilities were recorded at their
estimated fair values at the respective acquisition dates.
As described in Note 2e, Solon completed a merger with TCC on November 30, 1995.
This transaction was accounted for in a manner similar to a pooling of
interests. As a result of the common investor groups control over both Solon and
TCC, the accompanying financial statements have been prepared to reflect the
accounts of Solon and TCC and their wholly-owned subsidiaries on a combined
basis since the date of common control, April 5, 1995.
References to the Successor period refer to the Company during the common
control period, while references to the Predecessor period refer to Solon for
prior periods. The Predecessor period from October 1, 1994 to April 4, 1995 is
referred to as 1995P while the Successor period from April 5, 1995 to September
29, 1995 is referred to as 1995S, the transition period for the six-months ended
March 29, 1996 is referred to as 1996T and the year ended March 28, 1997 is
referred to as 1997. As a result of the acquisition of Solon by CLC and the
subsequent merger with TCC, the combined and consolidated financial statements
for the Successor are presented on a different basis of accounting than that for
the Predecessor and therefore, are not comparable.
F-11
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The Company is primarily engaged in providing coin-operated laundry equipment
services to multi-family housing properties throughout the United States. The
Company owns and operates approximately 337,000 coin-operated washers and dryers
on routes in over 30,000 multi-family housing complexes in 30 states and the
District of Columbia and in 150 retail laundromats throughout Texas. The
Company's wholly-owned subsidiary, Super Laundry Equipment Corp. ("Super
Laundry"), also is a construction and laundromat equipment distribution company.
All material intercompany accounts and transactions have been eliminated in
consolidation and combination.
FISCAL YEAR
Prior to the merger with TCC, Solon's fiscal year was the fifty-two or fifty-
three week period which ended on the Friday nearest September 30th. Effective
with the merger of Solon and TCC, the Company has changed its fiscal year end to
the last Friday in March.
RECOGNITION OF LAUNDRY REVENUES
The Company has agreements with various property owners which provide for the
Company's installation and operation of laundry machines at various locations in
return for a commission. These agreements provide for both contingent
(percentage of revenues) and fixed commission payments. The Company reports
revenues from laundry machines on the accrual basis and has accrued the cash
computed to be in the machines at the end of the fiscal period.
Super Laundry's customers generally sign sales contracts pursuant to which Super
Laundry constructs and equips complete laundromat operations, including location
identification, construction, plumbing, electrical wiring and all required
permits. Revenue is recognized on the completed contract method. A contract is
considered complete when all costs have been incurred and either the
installation is operating according to specifications or has been accepted by
the customer. The duration of such contracts is normally less than six months.
Sales of laundromats were approximately $18.8 million, $7.8 million and $7.9
million for 1997, 1996T and 1995S, respectively.
F-12
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
CASH EQUIVALENTS
The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out) or market and
consist of the following (in thousands):
<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1997 1996
----------------------
<S> <C> <C>
Laundry equipment $6,198 $3,774
Machine repair parts 1,761 669
----------------------
$7,959 $4,443
======================
</TABLE>
F-13
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
Property, equipment and leasehold improvements are carried at cost and are
depreciated on a straight-line basis over the lesser of the estimated useful
lives or lease life:
Laundry equipment and fixtures 3 to 10 years
Leasehold improvements 4 to 10 years
Trucks and other vehicles 3 to 4 years
Upon the sale or retirement of property and equipment, the cost and related
accumulated depreciation are eliminated from the respective accounts, and the
resulting gain or loss is included in income. Maintenance and repairs are
charged to operations currently, and replacements of laundry machines and
significant improvements are capitalized.
Depreciation expense was $22.6 million, $9.4 million, $9.5 million, $6.2
million, and $13.0 million for 1997, 1996T, 1995S, 1995P, and fiscal year 1994,
respectively.
On April 5, 1995, TCC revised its estimate of the useful life of its laundry
equipment from 5 to 8 years. The effect of this change in estimate was to
decrease loss before extraordinary item and net loss for the Successor period by
approximately $470,000.
GOODWILL AND CONTRACT RIGHTS
Goodwill represents the excess of cost over fair value of net assets acquired.
Goodwill as of September 30, 1994 arose primarily as a result of the purchase of
Solon in 1987 by an investor group (not affiliated with the Company) and which
was amortized over 40 years for the predecessor periods. Goodwill recorded as
the result of the Solon Acquisition on April 5, 1995 (see Note 2e) is being
amortized on a straight-line basis over 20 years. Goodwill recorded in
acquisitions subsequent thereto is being amortized on a straight-line basis over
15 years.
Contract rights represent amounts expended for location contracts arising from
the acquisition of laundry machines on location. These amounts, which arose
solely from purchase price allocations, are amortized on a straight-line basis
over the period of expected benefit of approximately 13 years for the
Predecessor, and ranging from 3 to 15 years for the Successor based on
independent appraisals or present valued future cash flows at prevailing
discount rates.
F-14
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Management periodically evaluates the realizability of the goodwill and contract
rights balances based upon the Company's expectations of undiscounted cash flows
and operating income. Based upon present operations and strategic plans,
management believes that no impairment of goodwill nor contract rights has
occurred.
ADVANCE RENTAL PAYMENTS
Advance rental payments to location owners are amortized on a straight-line
basis over the contract term, which generally ranges from 5 to 10 years.
INTEREST EXPENSE
Interest expense is reported net of interest income of approximately $966,000,
$277,000, $148,000, $112,000, and $75,000 for 1997, 1996T, 1995S, 1995P, and
fiscal year 1994, respectively.
RECLASSIFICATION
Certain 1996T balances have been reclassified to conform with the 1997
presentation.
LOSS PER SHARE
In the 1995P period and in fiscal year 1994, loss per share for the Predecessor
company was calculated based upon the weighted average number of common shares
and Class A common shares outstanding. Weighted average shares outstanding were
15,455,000 for 1995P, and 15,559,000 for fiscal 1994. Loss per share data is not
presented for the Successor as the Company is a wholly-owned subsidiary of CLC.
TRANSACTIONS WITH AFFILIATES
During 1995S, the Company reimbursed CLC $114,000 for certain restructuring
costs, incurred by CLC relating to the restructuring of Solon.
F-15
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Effective October 2, 1993, Solon implemented the provisions of Statement of
Financial Accounting Standards No. 109 ("SFAS No. 109") "Accounting for Income
Taxes." The accounting change had an immaterial effect on the consolidated
financial statements. SFAS No. 109 requires the asset and liability method of
accounting for income taxes pursuant to which deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. SFAS No. 109 requires that any
tax benefits recognized for net operating loss carryforwards and other items be
reduced by a valuation allowance where it is more likely than not that the
benefits may not be realized. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. Under
SFAS No. 109, the effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment
date.
IMPAIRMENT OF LONG-LIVED ASSETS
Effective March 30, 1996, the Company adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
SFAS No. 121 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. SFAS No. 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. The adoption of SFAS No. 121 did not
have an effect on the results of operations or financial condition of the
Company.
2. BUSINESS COMBINATIONS
a. THE KWIK WASH ACQUISITION
On January 8, 1997, pursuant to the terms and conditions of a Stock Purchase
Agreement, dated as of November 25, 1996, the Company completed the
acquisition of 100% of the outstanding voting securities of each of KWL, Inc.
("KWL"), a Nevada corporation, and Kwik-Wash Laundries, Inc. ("Kwik Wash"), a
Nevada corporation, for $125 million in cash (excluding transaction expenses)
and a $15 million promissory note issued by CLC
F-16
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
2. BUSINESS COMBINATIONS (CONTINUED)
(the "Kwik Wash Acquisition"). KWL and Kwik Wash are the sole partners of Kwik
Wash Laundries, L.P. (the "Kwik Wash Partnership"), a Texas limited
partnership. The Kwik Wash Partnership, based in Dallas, Texas, provides coin-
operated laundry equipment services to multi-family dwellings in Texas,
Louisiana, Arkansas and Oklahoma and operates approximately 150 retail
laundromats located throughout Texas. Simultaneously with the acquisition,
KWL, Kwik Wash and the Kwik Wash Partnership merged with and into the Company.
Concurrently with the Kwik Wash Acquisition, the Company entered into a new
senior financing arrangement providing up to $200 million (the "New Credit
Facility") (see Note 7). The New Credit Facility, proceeds of which were used
in part to fund the Kwik Wash Acquisition, replaced the Company's then
existing credit facility and will provide financing to support the Company's
acquisition strategy.
The Kwik Wash Acquisition has been accounted for as a purchase and
accordingly, assets and liabilities were recorded at fair value at the date of
acquisition and the results of operations are included subsequent to that
date. The excess cost over net tangible assets acquired was allocated to
contract rights of approximately $123.3 million, goodwill of $49.4 million and
deferred taxes payable of approximately $49.4 million.
The following table reflects unaudited pro forma combined results of
operations of the Company and Kwik Wash as if such acquisition had taken place
at the beginning of the fiscal year for each of the periods presented (in
thousands except per share data):
<TABLE>
<CAPTION>
SIX-MONTH
TRANSITION PERIOD
YEAR ENDED ENDED
MARCH 28, MARCH 29,
1997 1996
--------------------------------
<S> <C> <C>
Revenues $255,605 $121,687
Loss from operation before
extraordinary items (11,148) (3,190)
Net loss (11,444) (12,115)
</TABLE>
F-17
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
2. BUSINESS COMBINATIONS (CONTINUED)
These unaudited pro forma results have been prepared for comparative purposes
only and include certain adjustments, such as increased interest expense on
the related acquisition debt and additional amortization expense of intangible
assets, offset by the capitalization of installation and decorating costs to
conform to the accounting policy of the Company.
In management's opinion, the unaudited pro forma combined results of
operations are not indicative of the actual results that would have occurred
had the acquisition been consummated at the beginning of each period or of the
results of future operations of the combined companies under the ownership and
management of the Company.
b. OTHER ACQUISITIONS
During the 1997 fiscal year, the Company made acquisitions of certain small
route businesses or assets of businesses, with purchase prices aggregating
approximately $26.3 million, of which the Company paid approximately $25.2
million in cash and $1.2 million in promissory notes issued by CLC.
c. THE SOLON ACQUISITION
Solon entered into a Stock Purchase Agreement, dated as of March 7, 1995, with
Ford Coin Laundries, Inc. ("Ford"), and certain other parties named therein,
whereby Ford purchased all of Solon's outstanding Common Stock (the "Common
Stock") and substantially all of Solon's Class A Common Stock (the "Class A
Common Stock") (collectively, the "Shares"). The purchase price for the Shares
was $11.5 million. The foregoing transaction closed on April 5, 1995. The
source of funds used by Ford for the Shares was the cash proceeds from the
sales by Ford to CLC of (i) the Ford's non-voting Class A common stock (the
"Ford Non-Voting Common Stock") pursuant to a Stock Purchase Agreement, dated
April 4, 1995, and (ii) an option to purchase Ford's voting Common Stock (the
"Ford Voting Common Stock") pursuant to a Letter Agreement dated April 4,
1995. As of April 5, 1995, Ford beneficially owned, and had the sole power to
dispose of, the Shares. The Shares beneficially owned by Ford represented 100%
of the outstanding Common Stock and approximately 97% of the outstanding Class
A Common Stock.
F-18
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
2. BUSINESS COMBINATIONS (CONTINUED)
Pursuant to the Stock Purchase Agreement with Ford, CLC purchased from Ford
all of the outstanding shares of Ford Non-Voting Common Stock. The purchase
price for the Ford Non-Voting Common Stock was $11.4 million. The sources of
the funds used by CLC for the Ford Non-Voting Common Stock were certain
shareholders of TCC, including GTCR. As of April 5, 1995, CLC beneficially
owned, and had the sole power to dispose of, 1,000 shares of Ford Non-Voting
Common Stock.
Pursuant to the Letter Agreement dated April 4, 1995, Ford granted to CLC,
among other things, an option (the "Option") to purchase, subject to the terms
and conditions contained therein, all of the Ford Voting Common Stock for an
aggregate purchase price of $100,000. On April 28, 1995, CLC exercised the
Option. The sources of funds used by CLC to exercise the Option were
substantially the same sources used to purchase the Ford Non-Voting Common
Stock. As of April 28, 1995, CLC beneficially owned, and had the sole power to
vote and dispose of, ten shares of Ford Voting Common Stock.
The then current shareholders of TCC and their respective affiliates were
entitled to participate in the equity of CLC (formerly SAS Acquisitions Inc.,
and the parent of Solon) on a pro rata basis, generally in accordance with
their respective equity interests in TCC.
Solon incurred costs aggregating $848,000 in connection with the foregoing
transactions (collectively, the "Change of Control"), including a total of
$387,000 in lump sum payments made to fourteen management employees pursuant
to certain contractual arrangements relating to the Change of Control. The
total costs have been reflected as an extraordinary item in the accompanying
financial statements.
F-19
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
2. BUSINESS COMBINATIONS (CONTINUED)
The Stock Purchase Agreement was accounted for as a purchase and, according to
a practice known as "push-down" accounting, as of April 5, 1995, Solon
adjusted its consolidated assets and liabilities to their estimated fair
values, based on independent appraisals, evaluations, estimations and other
studies. Reflected below is a summary of these adjustments (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Increase in property and equipment $ 9,065
Increase in contract rights 34,063
Increase in goodwill 1,268
Increase in deferred income taxes (19,465)
Other (1,515)
----------
Increase in shareholders' equity $ 23,416
==========
</TABLE>
d. THE TCC ACQUISITION
TCC was incorporated in January 1995 and was capitalized primarily through an
equity investment by an investor group led by the majority shareholder, GTCR,
and senior management and bank financing.
TCC was a holding company formed to acquire partnership interests in
Industries and Super Laundry LP. On January 31, 1995, TCC acquired the
partnership interests in Industries and Super Laundry L.P. from CIC I
Acquisition Corp. ("CIC I"). The transaction resulted in TCC owning 100% of
all the partnership interests in Industries and Super Laundry L.P. The
aggregate purchase price for these interests was $8.57 million, paid in cash.
The acquisition was accounted for using the purchase method of accounting. The
fair value of assets acquired (based on an independent appraisal for certain
assets) less liabilities assumed exceeded the purchase price by approximately
$7.7 million. The excess was allocated to property, equipment and intangible
assets ratably based on their respective fair values.
F-20
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
2. BUSINESS COMBINATIONS (CONTINUED)
e. THE MERGER WITH TCC
On November 30, 1995, Solon completed a merger ("Merger") with TCC through an
exchange of stock pursuant to which TCC merged with and into Solon. Shares of
common stock of CLC were issued in exchange for all of the issued and
outstanding shares of common stock of TCC. CLC then contributed its stock of
TCC to Solon. Solon became the surviving corporation after the merger,
whereupon it changed its name to Coinmach Corporation. Details of the results
of operations of TCC and Solon for the period prior to the merger are as
follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER
30, 1995 TO APRIL 5, 1995
NOVEMBER TO SEPTEMBER
29, 1995 29, 1995
----------------------------------------
<S> <C> <C>
REVENUES
Solon $ 17,909 $ 51,256
TCC 13,018 38,463
----------------------------------------
Combined $ 30,927 $ 89,719
========================================
NET (LOSS) INCOME
Solon $ (525) $ (5,496)
TCC 49 (450)
----------------------------------------
Combined $ (476) $ (5,946)
========================================
</TABLE>
The combined financial results presented above include an adjustment to
decrease TCC's net loss by approximately $185,000 in 1995 and $70,000 for the
period from September 30, 1995 to November 29, 1995, to conform its
accounting policy for the capitalization of machine installation costs to
that of Solon. Intercompany transactions between the two companies for the
period presented were not material.
F-21
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
3. TRANSITION PERIOD COMPARATIVE FINANCIAL INFORMATION
Presented below is comparative financial information for the six-month
transition period ended March 29, 1996 compared to the six-month transition
period ended March 31, 1995:
<TABLE>
<CAPTION>
SIX MONTH PERIOD ENDED
MARCH 29, MARCH 31,
1996 1995
-----------------------------
<S> <C> <C>
(Unaudited)
Revenues $ 89,070 $87,996
Laundry operating expenses 60,536 61,418
-----------------------------
28,534 26,578
-----------------------------
Income taxes (benefit) expense (998) 54
-----------------------------
Loss before extraordinary item (2,534) (5,406)
Extraordinary item, net of tax (8,925) (848)
-----------------------------
Net loss $(11,459) $(6,254)
=============================
</TABLE>
4. RECEIVABLES
Receivables consist of the following
(in thousands):
<TABLE>
<CAPTION>
MARCH 28, MARCH 29,
1997 1996
-----------------------------
<S> <C> <C>
Trade receivables $ 5,551 $ 3,113
Notes receivable 1,225 1,811
Finance lease receivables 380 625
Other 293 165
-----------------------------
7,449 5,714
Allowance for doubtful accounts 555 454
-----------------------------
$ 6,894 $ 5,260
=============================
</TABLE>
F-22
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
4. RECEIVABLES (CONTINUED)
Notes receivable, which arise from the sale of laundromats, bear interest at a
weighted average rate of approximately 10% per annum and mature through 1998.
The notes are collateralized by the underlying laundry equipment. The Company
periodically sells notes receivable arising from the sale of laundromats to
third party finance companies. Included in other receivables are finance
reserves, which arise when the Company sells notes and a portion of the proceeds
are retained by the finance company. As the notes are collected, the finance
companies remit a portion of the collections to the Company. Many of the notes
receivable are sold with recourse to the Company (see Note 14). Control of the
notes sold with recourse is surrendered by the Company on the date of transfer.
The Company generally sells its receivables with recourse at cost; recognizing
no gain or loss.
5. SALE OF EQUIPMENT
Effective September 30, 1994, Solon sold approximately 600 machines for a total
of $407,000 resulting in a pretax gain of $109,000 and a related tax of $84,000.
Prior to the sale, these machines contributed revenues of $343,000 and operating
income of $78,000 for fiscal year 1994.
6. RESTRUCTURING COSTS
Restructuring charges for 1995S consist of costs aggregating approximately $2.2
million, which included approximately $1.3 million of severance payments for 55
of Solon's management, administrative and regional personnel, approximately
$300,000 of costs to relocate Solon's financial and administrative functions to
Roslyn, New York, approximately $100,000 of costs to integrate certain financial
and operating systems, and approximately $500,000 of costs related to the
consolidation of certain of Solon's regional offices. Of the total restructuring
costs of $2.2 million, approximately $300,000 was paid during the period ended
September 29, 1995, approximately $1.3 million was paid during the six months
ended March 29, 1996, and the remaining portion of approximately $600,000 was
paid during the fiscal year ended March 28, 1997. The 55 employee terminations
include 5 management employees, 17 corporate staff financial and administrative
employees and 33 regional laundry operational employees. Notifications to
employees were made on various dates through September 1995.
F-23
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
7. DEBT
<TABLE>
<CAPTION>
Debt consists of the following (in
thousands):
MARCH 28, MARCH 29,
1997 1996
-----------------------
TRANSITION
<S> <C> <C>
11-3/4% Senior Notes due 2005 $196,655 $196,655
12-3/4% Senior Notes due 2001 -- 5,000
Credit facility 130,000 --
Obligations under capital leases 1,711 686
Other long-term debt with varying terms
and maturities 912 424
-----------------------
$329,278 $202,765
=======================
</TABLE>
a. SENIOR NOTES
On November 30, 1995, the Company completed an exchange offer with
substantially all the holders of certain 12 3/4% Senior Notes due 2001 (the
"Senior Notes") and certain 13 3/4% Senior Subordinated Debentures due 2002
(the "Subordinated Debentures"). Through December 14, 1995, the Company issued
a total of $196.7 million of 11 3/4% Senior Notes due 2005 (the "Notes") which
enabled it to complete this exchange offer, consummate the merger with TCC,
retire its remaining debt, and provide additional working capital. The Company
incurred costs of approximately $4.0 million, net of income taxes, related to
a 5.5% premium paid to retire its Senior Notes and Subordinated Debentures,
wrote-off the unamortized balance of the related original issue discount and
deferred finance costs of approximately $1.3 million and $1.8 million, net of
income taxes, respectively, and also incurred costs related to the retirement
of a revolving credit facility of TCC of approximately $1.8 million, net of
income taxes. The aggregate of the foregoing items totaling $8.9 million, net
of income taxes, is shown as an extraordinary item in 1996T.
Interest on the Notes is payable semi-annually on May 15 and November 15. The
Notes are redeemable at the option of the Company at any time after November
15, 2000 at a price equal to 105 7/8% declining to par if redeemed after
November 15, 2002. The Notes contain certain financial covenants and were
exchanged for identical notes in a registered exchange offer in April 1996.
Additionally, the Notes restrict the payment of cash dividends and certain
other distributions from the Company to CLC.
F-24
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
7. DEBT (CONTINUED)
In February 1997, the Company redeemed all of its outstanding Senior Notes at
a redemption price of 106.375% of the principal amount thereof, together with
accrued interest from January 15, 1997 to February 18, 1997, in an aggregate
amount of approximately $5.4 million. As part of the premium paid to redeem
the Senior Notes, together with the writeoff of all unamortized financing
costs associated with these Senior Notes, the Company recognized an
extraordinary charge of $502,000 (net of a tax benefit of $206,000).
b. CREDIT FACILITY
On November 30, 1995, the Company entered into a revolving credit facility,
("Credit Facility"), which provided up to a maximum of $35 million and which
replaced certain credit facilities of both Solon and TCC. Availability under
the Credit Facility was limited by an amount equal to one semi-annual interest
payment on the Notes. Interest on the borrowings was payable monthly at a rate
per annum no greater than the sum of LIBOR plus 2.50%. The Company was
obligated to pay an unused line fee in an amount equal to 0.5% of the unused
availability payable monthly in arrears. Borrowings under the Credit Facility
were secured by real and personal property of the Company and also required
the Company, among other things, to maintain certain financial ratios and
restrict additional investments and indebtedness.
On January 8, 1997, the Company entered into a senior financing arrangement
under the New Credit Facility, with Bankers Trust Company, First Union
National Bank of North Carolina, Lehman Commercial Paper, Inc. and other
certain lending institutions named therein (collectively, the "Banks"),
replacing the Company's then existing credit facility. The New Credit
Facility, as amended effective June 2, 1997 and prior to giving effect to
payment of principal installments, consists of a $70 million revolving credit
facility and a $190 million term loan facility, which is comprised of a
Tranche A term loan in the amount of $30 million and a Tranche B term loan in
the amount of $160 million. The Tranche B term loan was increased by $60
million effective June 2, 1997. The New Credit Facility also provides for up
to $10 million of letter of credit financing and short term borrowings under a
swing line facility of up to $5 million.
F-25
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
7. DEBT (CONTINUED)
Interest on the Company's borrowings under the New Credit Facility is payable
quarterly in arrears with respect to Base Rate Loans and the last day of each
applicable interest period with respect to Eurodollar Loans and at a rate per
annum no greater than the sum of the Applicable Base Rate Margin plus the Base
Rate or the sum of the Applicable Eurodollar Margin plus the Eurodollar Rate
(in each case, as defined in the New Credit Facility).
Indebtedness under the New Credit Facility is secured by all of the Company's
real and personal property. CLC has guaranteed the indebtedness under the New
Credit Facility and pledged to Bankers Trust Company, as Collateral Agent,
its interests in all of the issued and outstanding shares of capital stock of
the Company. In addition to certain terms and provisions, events of default,
as defined, and customary restrictive covenants and agreements, the New Credit
Facility contains certain covenants including, but not limited to, a maximum
leverage ratio, a minimum consolidated interest coverage ratio, and
limitations on indebtedness, capital expenditures, advances, investments and
loans, mergers and acquisitions, dividends, stock issuances and transactions
with affiliates.
Debt outstanding under the New Credit Facility as of March 28, 1997, consisted
of the following (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Term loan A, quarterly payments of $750
commencing March 31, 1997, and
increasing to $1,000 March 31, 1998,
$1,250 March 31, 1999, and $2,000
March 31, 2002. (Interest rate of
7.6875% at March 28, 1997) $ 30,000
Term loan B, semi-annual payments of
$500 commencing June 30, 1997 with the
final three payments of $31,333 on
June 30, 2003, December 31, 2003 and
June 30, 2004. (Interest rate of 8.125%
at March 28, 1997) 100,000
Revolving line of credit --
-----------
$130,000
===========
</TABLE>
F-26
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
8. RETIREMENT SAVINGS PLAN
Coinmach maintains several defined contribution plans (including the "Coinmach
Plan," "Solon Plan" and "Kwik Wash Plan," collectively, the "Plans") meeting the
guidelines of Section 401(k) of the Internal Revenue Code. All of the Plans
require employees meeting certain age, employment status and minimum entry
requirements as allowed by law.
Contributions to the plans for 1997, 1996T, 1995S and 1995P amounted to
approximately $140,000, $43,000, $43,000, and $0, respectively. Contributions to
the Solon Plan during fiscal 1994, which under the terms of the Solon Plan is
matched at a percentage determined annually by the Solon Board of Directors,
amounted to $103,000. Solon issued $103,000 of its common stock to satisfy its
accrued obligation to the Plan.
The Company does not provide for any other postretirement benefits.
9. STOCK OPTION PLAN
Solon had adopted a stock option plan (the "Option Plan") in September 1987. The
Option Plan authorized the granting of incentive stock options, nonqualified
options, or a combination of the foregoing, to certain key employees and
directors.
Under the terms of the Option Plan, 1,250,000 common shares were reserved for
issuance upon exercise of options. Shares for options that had expired or had
been surrendered or canceled without having been exercised may again have been
optioned under the Option Plan.
Each option granted was exercisable into one common share of Solon. In general,
50% of stock options granted became exercisable five years after the date of
grant, with 12 1/2% of the options becoming exercisable in each of the
subsequent four years.
As of September 29, 1995 and September 30, 1994, there was a total of 212,000
and 970,000, stock options outstanding, respectively, exercisable at prices
between $.98 and $1.23 per common share. No options had been exercised since
Solon adopted the Option Plan. As a result of the merger with TCC, the Option
Plan was canceled; participants in the Option Plan received in aggregate
consideration of approximately $34,000.
F-27
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
10. INCOME TAXES
The components of the Company's net deferred tax liabilities were as follows (in
thousands):
<TABLE>
<CAPTION>
MARCH 28, 1997 MARCH 29, 1996
---------------------------------
<S> <C> <C>
Deferred tax liabilities:
Accelerated tax depreciation and
contract rights $73,809 $26,537
Other, net 1,516 1,449
---------------------------------
75,325 27,986
---------------------------------
Deferred tax assets:
Net operating loss carryforwards 9,544 8,549
Stock compensation expense 476 --
Other 115 973
Valuation allowance for deferred tax
assets (460) (460)
---------------------------------
9,675 9,062
---------------------------------
Net deferred tax liabilities $65,650 $18,924
=================================
</TABLE>
Deferred taxes arise primarily from timing differences resulting from using
accelerated depreciation for tax purposes and straight-line depreciation for
financial reporting purposes and contract rights acquired which are not
deductible for tax purposes.
As of April 5, 1995, the deferred tax asset and related valuation allowance
relating to Solon were netted and reduced to $2.6 million to reflect the net
operating loss available pursuant to limitations imposed under provisions of the
Internal Revenue Code regarding changes in ownership. In addition, as of April
5, 1995, TCC had recorded a deferred tax asset of $460,000 with a valuation
allowance of the same amount. The deferred tax asset recorded subsequently do
not reflect a valuation allowance because the loss can be utilized against the
deferred tax liabilities in the carryforward period. The net operating loss
carryforwards, which expire between fiscal years 2001 through 2008, consist of
approximately $7 million (after the limitation) relating to the Predecessor
company and approximately $16.3 million relating to the Company.
During the fourth quarter of fiscal 1994, Solon evaluated the realizability of
previously recorded deferred tax assets and concluded that due to certain
transactions which have
F-28
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
occurred subsequent to October 1, 1993, it was more likely than not that such
assets would not be fully realizable. Accordingly, Solon established a $3.7
million valuation allowance as of September 30, 1994. The charge for this
valuation allowance is included in the deferred tax provision in the
accompanying Combined and Consolidated Statement of Operations.
The (benefit) provision for income taxes consists of (in thousands):
<TABLE>
<CAPTION>
SIX-MONTH
TRANSITION
YEAR PERIOD APRIL 5, OCTOBER 1, YEAR
ENDED ENDED 1995 TO 1994 TO ENDED
MARCH 28, MARCH 29, SEPTEMBER 29, APRIL 4, SEPTEMBER 30,
1997 1996 1995 1995 1994
--------------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR PREDECESSOR
<S> <C> <C> <C> <C> <C>
Federal $(2,039) $(5,215) $(1,760) $ -- $2,517
State (474) (1,088) (102) 50 245
--------------------------------------------------------------------------------------------
$(2,513) $(6,303) $(1,862) $ 50 $2,762
============================================================================================
</TABLE>
The effective income tax rate differs from the amount computed by applying the
U.S. federal statutory rate to loss before taxes as a result of state taxes and
permanent book/tax differences as follows (in thousands):
<TABLE>
<CAPTION>
SIX-MONTH OCTOBER 1, YEAR
YEAR TRANSITION PERIOD APRIL 5, 1994 TO ENDED
ENDED ENDED 1995 TO APRIL 4, SEPTEMBER 30,
MARCH 28, 1997 MARCH 29, 1996 SEPTEMBER 29, 1995 1995 1994
---------------------------------------------------------------------------------------
SUCCESSOR PREDECESSOR PREDECESSOR
<S> <C> <C> <C> <C> <C>
Expected tax benefit $(4,563) $(1,201) $(2,655) $(588) $(1,413)
State tax benefit, net of federal taxes (308) (170) (320) (69) (55)
Permanent book/tax differences:
Goodwill 1,100 373 1,000 394 530
Stock compensation expense 311 -- -- -- --
Other 947 -- 113 -- --
Valuation allowance -- -- -- 313 3,700
---------------------------------------------------------------------------------------
Tax (benefit)/provision $(2,513) $ (998) $(1,862) $ 50 $ 2,762
=======================================================================================
</TABLE>
F-29
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
10. INCOME TAXES (CONTINUED)
The Company made cash payments for income taxes of approximately $204,000,
$36,000, $194,000, and $29,000 for 1997 1996T, 1995S and fiscal year 1994,
respectively. There were no income tax payments made in 1995P.
11. COMMON STOCK
Solon and its stockholders had entered into a Stockholders' Agreement dated as
of September 28, 1987. Pursuant to this Agreement, Solon was required to
purchase shares of its common stock from selling management stockholders or
their estates in the event of death, disability, termination of employment, and
certain other circumstances. Pursuant to the terms of the Stockholders'
Agreement, such purchases were made based on the higher of the stockholders'
cost or by an earnings related formula defined in the Agreement. During fiscal
1994, Solon acquired 270,000 shares, pursuant to this Agreement at a total cost
of $270,000, from management stockholders. Such shares have been retired and
canceled. The Stockholders' Agreement was terminated effective July 12, 1994.
On November 30, 1995, the Company effected a recapitalization, whereby it
reduced its authorized $.01 par value common stock to 1,000 shares and issued
100 of such shares to CLC. All references in the Successor periods reflect this
recapitalization.
As of September 29, 1995, receivables from stockholders reflect advances to CLC
of $2,000,000 and notes receivable from management stockholders of CLC of
$338,000. During the year ended March 28, 1997 and the six-month transition
period ending March 29, 1996, approximately $1.4 million and $.6 million,
respectively, was repaid by CLC. Such amounts have been reflected as reductions
of stockholder's equity (deficit) in the accompanying Successor periods balance
sheets.
F-30
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
12. INITIAL PUBLIC OFFERING OF COINMACH LAUNDRY CORP.
During July and August 1996, CLC completed its initial public offering (the
"Offering") (including an over-allotment option) of 4,183,642 shares of its
Class A common stock, par value $.01 per share (the "CLC Common Stock") at an
initial public offering price of $14.00 per share.
Proceeds from the Offering and over allotment option were approximately $54.5
million, after underwriting discounts and commissions and before expenses.
Proceeds from the Offering were approximately $35.3 million, before expenses.
Part of the proceeds from the Offering were invested in the Company.
13. RELATED PARTY TRANSACTIONS
Prior to the Offering, CLC issued, in privately negotiated transactions, 79,029
shares of its Class B common stock to certain members of management of the
Company. The Company recorded a stock based compensation charge in an amount of
approximately $887,000 attributable to the issuance of such stock in 1997. In
addition, approximately $83,000 of outstanding receivables relating to loans to
management in connection with prior purchases of common stock of CLC were
forgiven and have been accounted for as a stock-based compensation charge in
1997.
During July and September 1996, in connection with the Offering, CLC granted
certain nonqualified options (the "Options") to certain members of management
(collectively, the "Option Holders") to purchase up to 739,437 shares of CLC
Common Stock at 85% of the initial offering price of the CLC Common Stock. The
Options vest in equal annual installments (20% vest on the date of grant and the
remainder over a four year period) commencing on July 23, 1996, the effective
date of the Offering. With respect to Options granted to employees of the
Company, the Company will record the difference between the exercise price and
the initial offering price of CLC Common Stock as a stock-based compensation
charge over the applicable vesting period.
F-31
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
13. RELATED PARTY TRANSACTIONS (CONTINUED)
For the year ended March 28, 1997, the Company has recorded a stock-based
compensation charge of approximately $798,000 relating to the Options.
To finance certain acquisitions and provide working capital, CLC advanced to the
Company approximately $23.8 million net, during 1997. Such advances are
noninterest bearing and have no repayment terms.
14. COMMITMENTS AND CONTINGENCIES
Rental expense for all operating leases, which principally cover office
facilities, laundromats and vehicles, was approximately $2,307, $1,235, $1,139,
$807, and $1,577 for 1997, 1996T, 1995S, 1995P, and fiscal year 1994,
respectively (in thousands).
Future minimum rental commitments under all noncancelable operating leases as of
March 28, 1997 are as follows (in thousands):
<TABLE>
<CAPTION>
<S> <C>
1998 $ 4,140
1999 3,668
2000 3,056
2001 2,287
2002 1,218
2003 and future periods 1,096
----------
$15,465
==========
</TABLE>
The Company is contingently liable on receivables sold with recourse to finance
companies. The total amount of such receivables outstanding as of March 28, 1997
is approximately $1.6 million.
The Company is party to various legal proceedings incidental to its business.
Although the ultimate disposition of these proceedings is not presently
determinable, management does not believe that adverse determinations in any or
all such proceedings would have a material adverse effect upon the financial
condition or results of operations of the Company.
F-32
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
14. COMMITMENTS AND CONTINGENCIES (CONTINUED)
In connection with insurance coverages, which include workers compensation,
general liability and other coverages, annual premiums are subject to limited
retroactive adjustment based on actual loss experience.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
Under the provision of SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments," the Company is required to disclose fair value information about
financial instruments, whether or not recognized in the balance sheet, for which
it is practicable to estimate the value. In cases where quoted market prices are
not available, fair values are based on estimates using present value or other
valuation techniques.
The carrying amounts of cash equivalents, receivables, the New Credit Facility,
and other long-term debt approximates their fair value at March 28, 1997. The
carrying amount and related estimated fair value for the Company's Senior Notes
at March 28, 1997 (the carrying amount approximated the estimated fair market at
March 29, 1996) are as follows (in thousands):
<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
-----------------------------
<S> <C> <C>
11 3/4% Senior Notes $196,655 $216,320
</TABLE>
The fair value of the Senior Notes has been determined through information
obtained from quoted market prices.
16. OTHER ASSETS
In connection with the Company's establishment of a corporate development office
in Charlotte, North Carolina and the relocation of an executive officer of the
Company to such office in September 1996, the Company extended a loan to such
officer in the principal amount of $500,000 payable in five equal annual
installments commencing in July 1997, with interest accruing at a rate of 7.5%
per annum. The amount of such a loan is included in other assets as of March 28,
1997.
F-33
<PAGE>
Coinmach Corporation and Subsidiaries
Notes to Combined and Consolidated Financial Statements (continued)
17. SUBSEQUENT EVENTS
Through May 1997, the Company completed certain acquisitions of businesses or
assets of businesses, with purchase prices aggregating $46.0 million, utilizing
funds available under the New Credit Facility.
F-34
<PAGE>
EXHIBIT 10.33
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of March 14, 1997,
between Coinmach Laundry Corporation, a Delaware corporation (the "Company"),
and Atlanta Washer & Dryer Leasing, Inc., a Georgia corporation ("AWDL").
Unless otherwise provided in this Agreement, capitalized terms used herein shall
have the meanings set forth in paragraph 6 hereof.
The parties hereto agree as follows:
1. Piggyback Registrations.
------------------------
(a) Right to Piggyback. Whenever the Company proposes to register any of
------------------
its Common Stock under the Securities Act in a secondary registration on behalf
of holders of the Common Stock and the registration form to be used may be used
for the registration of Registrable Securities (a "Piggyback Registration"), the
Company shall give prompt written notice to all holders of AWDL Registrable
Securities of its intention to effect such a registration and shall include in
such registration all AWDL Registrable Securities with respect to which the
Company has received written requests for inclusion therein within 10 days after
the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of AWDL
------------------
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Piggyback Registrations. If the Company (in the case of a
------------------------------------
registered offering not involving an underwriting) or the managing underwriter
or underwriters (in the case of a registered underwritten offering) shall
reasonably determine that the number or kind of securities requested to be
included in a Piggyback Registration exceeds the number which can be sold in
such offering without adversely affecting the Company or the marketability or
success of the offering, the Company shall include in such registration (y)
first, the securities requested to be included therein by the holder or holders
initially requesting such registration (in the case of a registration undertaken
by the Company at the demand of one or more holders of Common Stock), and (z)
second, to the extent not included in the immediately preceding clause (y), the
GTCR Registrable Securities, Executive Registrable Securities, Investor
Registrable Securities, AWDL Registrable Securities and any other securities of
the Company requested to be included in such registration, in each instance,
which in the opinion of the Company or such underwriters, as the case may be,
can be sold without adversely affecting the Company or the marketability or
success of the offering, pro rata among the holders thereof on the basis of the
number of shares requested to be included in such registration by each such
holder.
<PAGE>
(d) Underwriting; Selection of Underwriters. In the event of a registered
----------------------------------------
public offering involving an underwriting with respect to which the Company has
given notice pursuant to paragraph 1(a) above, the right of any holder of AWDL
Registrable Securities to registration pursuant to this Agreement shall be
conditioned upon such holder's participation in such underwriting and the
inclusion of AWDL Registrable Securities in the underwriting to the extent
provided herein. All holders of AWDL Registrable Securities, if proposing to
distribute their securities through such underwriting, shall (together with the
Company and the other holders of Registrable Securities distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter or underwriters selected for such
underwriting. The selection of investment banker(s) and manager(s) in
connection with any Piggyback Registration that is an underwritten offering must
be approved by the holders of a majority of the GTCR Registrable Securities,
Executive Registrable Securities and Investor Registrable Securities included in
such Piggyback Registration.
(e) Other Registrations. If the Company has previously filed a
--------------------
registration statement with respect to Registrable Securities, 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-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.
2. Holdback Agreements.
--------------------
(a) 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 convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the 180-day period
beginning on the effective date of any underwritten Piggyback Registration
(except as part of such underwritten registration), unless the underwriter or
underwriters managing the registered public offering otherwise agree.
(b) The Company shall not effect any public sale or distribution of its
equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Piggyback
Registration (except as part of such underwritten registration or pursuant to
registrations on Form S-8 or any successor form), unless the underwriter or
underwriters managing the registered public offering otherwise agree.
<PAGE>
3. 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, messenger and delivery expenses, fees and disbursements of custodians,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding discounts and commissions)
and other Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne by the Company, and the Company shall
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.
(b) In connection with each Piggyback Registration, each holder of AWDL
Registrable Securities included in such registration shall be responsible for
the reasonable fees and disbursements of its counsel.
4. Indemnification.
----------------
(a) The Company agrees to indemnify, to the extent permitted by law, each
holder of AWDL Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by any
untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder 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 shall 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 AWDL
Registrable Securities.
(b) In connection with any registration statement in which a holder of AWDL
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
<PAGE>
prospectus or any amendment thereof or supplement thereto or 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 contained in any information or affidavit so
furnished in writing by such holder.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall not
impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
5. Participation in Underwritten Registrations. 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 arrangements, (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements, and (iii) completes
and executes any other documents reasonably required.
<PAGE>
6. Definitions.
------------
"AWDL Registrable Securities" means, irrespective of which Person actually
---------------------------
holds such securities, (i) any shares of Common Stock acquired as of the date
hereof by AWDL, (ii) any shares of Common Stock acquired hereafter by AWDL, and
(iii) any capital stock of the Company issued or issuable with respect to the
securities referred to in clauses (i) or (ii) above by way of a stock dividend,
stock split, conversion or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular AWDL Registrable Securities, such securities will cease to be AWDL
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 (or any similar rule
then in force) under the Securities Act. For purposes of this Agreement, a
Person will be deemed to be a holder of AWDL Registrable Securities whenever
such Person has the right to acquire such AWDL 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.
"Common Stock" means the Class A Common Stock, par value $.01 per share,
------------
and Class B Common Stock, par value $.01 per share, of the Company and any other
class of the common stock of the Company hereafter outstanding.
"Executive" means any of Mitchell Blatt, Robert M. Doyle, Michael Stanky
---------
and MCS Capital, Inc.
"Executive Registrable Securities" means, irrespective of which Person
--------------------------------
actually holds such securities, (i) any shares of Common Stock acquired as of
the date hereof by the Executives (ii) any shares of Common Stock acquired
hereafter by the Executives or any executive employee of the Company or its
Subsidiaries who becomes a party to this Agreement, and (iii) any capital stock
of the Company issued or issuable with respect to the securities referred to in
clauses (i) or (ii) above by way of a stock dividend, stock split, conversion or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular Executive
Registrable Securities, such securities will cease to be Executive Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 (or any similar rule then in
force) under the Securities Act. For purposes of this Agreement, a Person will
be deemed to be a holder of Executive Registrable Securities whenever such
Person has the right to acquire such Executive 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.
"GTCR" means Golder, Thoma, Cressey, Rauner Fund IV, L.P., a Delaware
----
limited partnership.
<PAGE>
"GTCR Registrable Securities" means, irrespective of which Person actually
---------------------------
holds such securities, (i) any shares of Common Stock acquired as of or prior to
the date hereof by GTCR, (ii) any shares of Common Stock acquired hereafter by
GTCR, and (iii) any capital stock of the Company issued or issuable with respect
to the securities referred to in clauses (i) or (ii) above by way of a stock
dividend, stock split, conversion or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular GTCR Registrable Securities, such securities will cease to be GTCR
Registrable Securities when they have been distributed to the public pursuant to
an offering registered under the Securities Act or sold to the public through a
broker, dealer or market maker in compliance with Rule 144 (or any similar rule
then in force) under the Securities Act. For purposes of this Agreement, a
Person will be deemed to be a holder of GTCR Registrable Securities whenever
such Person has the right to acquire such GTCR 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.
"Investor" means Heller Financial, Inc., Jackson National Life Insurance
--------
Company, James N. Chapman, Michael E. Marrus and President and Fellows of
Harvard College.
"Investor Registrable Securities" means, irrespective of which Person
-------------------------------
actually holds such securities, (i) any shares of Common Stock acquired as of
the date hereof by any Investor, (ii) any shares of Common Stock acquired
hereafter by any Investor, and (iii) any capital stock of the Company issued or
issuable with respect to the securities referred to in clauses (i) or (ii) above
by way of a stock dividend, stock split, conversion or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular Investor Registrable Securities, such
securities will cease to be Investor Registrable Securities when they have been
distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 (or any similar rule then in force) under the
Securities Act. For purposes of this Agreement, a Person will be deemed to be a
holder of Investor Registrable Securities whenever such Person has the right to
acquire such Investor 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.
"Person" means an individual, a partnership, a joint venture, a
------
corporation, a trust, a limited liability company, an unincorporated
organization or a government or any department or agency thereof.
"Registrable Securities" means, collectively, the Executive Registrable
----------------------
Securities, the GTCR Registrable Securities, the Investor Registrable Securities
and the AWDL Registrable Securities.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
<PAGE>
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-----------------------
amended.
8. Miscellaneous.
--------------
(a) 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.
(b) Amendments and Waivers. Except as otherwise provided herein, the
----------------------
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the AWDL Registrable
Securities; provided, however, that no such amendment or waiver shall materially
and adversely affect the rights hereunder of any of the parties hereto without
the prior written approval of such party.
(c) 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 purchasers
or holders of AWDL Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of AWDL Registrable Securities.
(d) 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 prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(e) Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
(f) Descriptive Headings. The descriptive headings of this Agreement are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
(g) Governing Law. All issues and questions concerning the construction,
-------------
validity, interpretation and enforcement of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the
<PAGE>
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.
(h) Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each holder of AWDL Registrable Securities at
the address indicated by the Company's records and to the Company at the address
indicated below:
If to the Company, to:
Coinmach Laundry Corporation
55 Lumber Road
Roslyn, NY 11576
Attention: Robert M. Doyle
Senior Vice President
with a copy, which will not constitute notice to the Company, to:
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, NY 10020
Attention: Ronald S. Brody, Esq.
If to AWDL, to:
Mr. R. Lee Pritchard
5195 Lake Forrest Drive
Atlanta, Georgia 30342
and
Mr. Angus K. Hill
615 Longwood Drive
Atlanta, Georgia 30305
<PAGE>
With a copy to:
Alston & Bird, LLP
One Atlantic Center
1201 W. Peachtree Street
Atlanta, Georgia 30309
Attention: Robert O. Ball III, Esq.
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.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COINMACH LAUNDRY CORPORATION
By: /s/ STEPHEN R. KERRIGAN
---------------------------------
Name: Stephen R. Kerrigan
Title: Chief Executive Officer
ATLANTA WASHER & DRYER
LEASING, INC.
By: /s/ R. LEE PRITCHARD
---------------------------------
Name: R. Lee Pritchard
Title: President
<PAGE>
Exhibit 10.34
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS AGREEMENT (the "Agreement") is made as of September 5, 1996,
---------
between COINMACH CORPORATION, a Delaware corporation (together with its
successors and assigns, the "Company"), and JOHN E. DENSON ("Executive").
------- ---------
Executive entered into an Employment Agreement, dated as of August 4,
1995, with Solon Automated Services, Inc. The Company and Executive desire to
terminate such Employment Agreement and entered into this Agreement.
_______________
In consideration of the mutual promises and agreements contained in
this Agreement, the receipt and adequacy of which is hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
1. Employment.
----------
(a) Term. The Company agrees to employ Executive and Executive
----
accepts such employment, for the period from the date hereof until the first
anniversary of the date hereof, unless such employment is otherwise terminated
(i) at the will of Executive, upon no less than 30 days notice to the Company;
or (ii) at the will of the Chief Executive Officer (the "CEO") or in the discre-
---
tion of the Company's Board of Directors (the "Board"), upon no less than 30
-----
days notice to Executive. At the end of such period, this Agreement shall
automatically renew for additional successive one (1) year terms, on
substantially the same terms and conditions as contained herein, unless the
Company provides Executive with written notice of its intent to terminate this
Agreement at the will of the CEO or in the discretion of the Board at least 90
days prior to termination of such one year period. The period from the
commencement of the term of this Agreement to the date of its termination, after
giving effect to any renewal, shall be considered to be the "Employment Period"
-----------------
hereunder.
(b) Duties. During the Employment Period, Executive shall serve
------
as a Senior Vice President of the Company and shall have the normal duties,
responsibilities and authority assigned to him by the Board or CEO, in their
reasonable discretion, and the Company's by-laws. Executive shall devote his
full time and effort, energies and abilities to the proper and efficient
performance of such duties and responsibilities.
(c) Salary, Bonus and Benefits.
--------------------------
(i) Salary. During the Employment Period, the Company will pay
------
Executive a base salary (the "Annual Base Salary") as the Board may designate
------------------
from time to time, for the period beginning as of the date hereof until December
31, 1996, at the
-1-
<PAGE>
rate of $125,000 per annum, and from January 1, 1997, until the termination of
the Employment Period, at the rate of $110,000 per annum, which amount shall be
reviewed each December by the Board in its sole discretion. Executive's Annual
Base Salary for any partial year will be prorated based upon the number of days
elapsed in such year.
(ii) Bonus. The Executive will be entitled to receive annual bonus
-----
compensation at the end of each calendar year, which bonus compensation shall be
based upon Executive's performance during each such calendar year and shall be
granted by the CEO or Board in their reasonable discretion.
(iii) Benefits. During the Employment Period, Executive will be
--------
entitled to benefits, including the use of an automobile, in each case
consistent with past practices as well as to such other benefits approved by the
Board and made available to the Company's senior management, in each case, as
such benefits may be adjusted by the Board from time to time in its sole
discretion.
(iv) Expenses. The Company shall reimburse Executive for all
--------
reasonable expenses actually incurred by Executive, and accounted for and
evidenced in accordance with the standard policies, practices or procedures
regarding expense reimbursement that the Company may establish from time to
time. Executive shall be reimbursed for all reasonable expenses relating to any
relocation of Executive and his family pursuant to the Company's relocation
policy as in effect on the date of such relocation.
(v) Deductions and Withholding. All amounts payable or which become
--------------------------
payable hereunder shall be subject to any deductions authorized by Executive,
any set-off or reimbursement deemed appropriate by the Company and permitted by
law, and all deductions and withholding authorized by law.
(d) Severance. If this Agreement is terminated by the Company, for
---------
any reason other than for Cause, Executive shall be entitled to receive
severance pay in an amount equal to the greater of $110,000 or his Annual Base
Salary then in effect, in either case payable in equal bi-weekly installments
over one year. If Executive is terminated for Cause, Executive shall not be
entitled to any severance pay under this Agreement. Each such severance payment
payable hereunder shall commence upon the execution by the Company and Executive
of a mutual release of the parties' respective rights, duties, privileges and
obligations hereunder other than those rights, duties, privileges and obliga-
tions which are contemplated to continue beyond the Employment Period, which
release the parties hereby agree to use their reasonable good faith efforts to
secure.
(e) Effect of Termination on Bonuses and Benefits. All of Executive's
---------------------------------------------
rights to fringe benefits and bonuses hereunder (if any) which accrue after the
termination of the Employment
-2-
<PAGE>
Period shall, except as otherwise provided by law, cease upon such termination
and except with respect to any bonus or other compensation earned but unpaid at
the time of termination; provided, however, that Executive shall continue to be
-------- -------
entitled to medical benefits consistent with those provided to Executive prior
to termination during the period that severance payments are being made to
Executive pursuant to Section 1(d) herein. The Company may offset the amounts
of any outstanding loans, advances or other disbursements made to or on behalf
of the Executive by the Company against any amounts the Company owes Executive
hereunder for severance pay, benefits, bonuses or other items.
2. Confidential Information. Executive acknowledges that the
------------------------
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company, its Subsidiaries and its Affiliates will be the property of such
entities. Therefore, Executive agrees that he will not disclose to any
unauthorized person or use for the account of any person other than the Company,
its Subsidiaries and Affiliates any such information, observations or data
including, without limitation, any business secrets or methods, policies,
manuals or instructions, reports, location lists, landlord lists, lists of names
of customers or suppliers, personnel information, pricing information or any
other confiden tial or proprietary information of the Company, its Subsidiaries
and its Affiliates (whether or not patented, copyrighted or otherwise protected
under applicable law) (collectively, "Confidential Information") without the
------------------------
Board's or CEO's prior written consent, 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 to act and except
as required by law or legal process. Executive agrees to deliver to the
Company, at the termination of the Employment Period, or at any other time the
Company may request, all Confidential Information, memoranda, notes, plans,
records, reports and other documents (and copies thereof) relating to the
business of the Company, its Subsidiaries and Affiliates, and all location
lists, landlord lists, acquisition prospects, lists and contact information
which he may then possess or have under his control.
3. Noncompetition and Nonsolicitation
----------------------------------
(a) Noncompetition. Executive acknowledges that in the course of his
--------------
employment with the Company he will become familiar with the Company's and its
Subsidiaries' and Affiliates' (collectively, the "Coinmach Group") trade
--------------
secrets and with other confidential information concerning the Coinmach Group,
and that his services will be of special, unique and extraordinary value to the
Coinmach Group. Therefore, Executive agrees that, during the Employment Period
and for one year thereafter (the "Noncompete Period"), he shall not directly or
-----------------
indirectly own, manage, control, participate in, consult with, assist, render
services for, or in any manner engage in any business competing with, or
otherwise substantially similar to, the businesses of the Coinmach Group as
-3-
<PAGE>
such businesses exist, or are in process on the date of the termination of
Executive's employment, (i) within the geographical area included in the 50-mile
radius around each location of a customer of the Coinmach Group or any similar
business which, to the knowledge of Executive, a member of the Coinmach Group is
actively considering acquiring at the time of Executive's termination or has
actively considered acquiring in the last twelve months or (ii) within any State
in the United States or any Province in Canada in which Executive has spent a
significant amount of time on behalf of the Coinmach Group at any time during
the twelve-month period prior to the date of Executive's termination. The
restrictions of this Section 3(a) shall not apply to Executive's ownership
interests in not more than three laundromats at any one time.
(b) Nonsolicitation. During the Noncompete Period, Executive shall
---------------
not directly or indirectly through another entity (i) induce or attempt to
induce any employee of the Coinmach Group to leave the employ of the Coinmach
Group, or in any way interfere with the relationship between the Coinmach Group
and any employee thereof, (ii) offer employment to or hire any person who was an
employee of the Coinmach Group at any time during the one-year period prior to
the termination of the Employment Period, or (iii) induce or attempt to induce
any customer, supplier, licensee or other business relation of the Coinmach
Group to cease doing business with the Coinmach Group, or in any way interfere
with the relationship between any such customer, supplier, licensee or business
relation and the Coinmach Group.
(c) Enforcement. If, at the time of enforcement of Sections 2 or 3 of
-----------
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope and geographical area reasonable under such
circumstances shall be substituted for the stated period, scope and area and
that the court shall be allowed to reduce the restrictions contained herein to
cover the maximum duration, scope and area permitted by law.
(d) Submission to Jurisdiction. Each of the parties (i) submits to
--------------------------
the jurisdiction of any state or federal court sitting in New York, New York in
any action or proceeding arising out of or relating to this Agreement, (ii)
agrees that all claims in respect of such action or proceeding may be heard or
determined in any such court, and (iii) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety or other
security that might be required of any other party with respect thereto. Each
party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law.
-4-
<PAGE>
4. Definitions.
-----------
"Affiliate" of any particular person or entity means any other person
---------
or entity controlling, controlled by or under common control with such
particular person or entity.
"Cause" means (i) a material breach of any agreement with the Company,
-----
its subsidiaries, affiliates or corporate parent or its stockholders by
Executive (after notice and reasonable opportunity to cure), (ii) a breach of
Executive's duty of loyalty to the Company or any of its subsidiaries,
affiliates or corporate parent or any act of dishonesty, gross negligence,
willful misconduct or fraud with respect to the Company or any of its
subsidiaries, affiliates or corporate parent or any of their respective stock-
holders, customers or suppliers, (iii) the commission by Executive of a felony,
a crime involving moral turpitude or other act or omission tending to cause harm
to the standing and reputation of, or otherwise bring public disgrace or
disrepute to, the Company or any of its subsidiaries, affiliates or corporate
parent, (iv) Executive's continued failure or refusal to perform any material
duty to the Company or any of its subsidiaries, affiliates or corporate parent
which is normally attached to his position (after notice and reasonable
opportunity to cure), or (v) Executive's gross negligence or willful misconduct
in performing those duties which are normally attached to his position (after
notice and reasonable opportunity to cure). For purposes of this Agreement,
"Executive's duty of loyalty to the Company or any of its subsidiaries,
affiliates or corporate parent" shall include Executive's fiduciary obligation
to place the interests of the Company and its subsidiaries, affiliates or
corporate parent ahead of his personal interests and thereby not knowingly
profit personally at the expense of the Company or any of its subsidiaries,
affiliates or corporate parent, and shall also include specifically the affirma-
tive obligation to disclose promptly to the Board any known conflicts of
interest Executive may have with respect to the Company and its subsidiaries,
affiliates or corporate parent, and the negative obligations not to usurp
corporate opportunities of the Company or any of its subsidiaries, affiliates or
corporate parent, not to engage in any "conflict-of-interest" transactions with
the Company or its subsidiaries, affiliates or corporate parent (without the
approval of the Board), and not to compete directly with the Company or its
subsidiaries, affiliates or corporate parent (without the approval of the
Board).
"Subsidiary" means, with respect to any person, any corporation,
----------
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 partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or
-5-
<PAGE>
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 partnership,
association or other business entity if such person or persons shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.
5. 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 each person at the address set forth below:
If to the Company:
-----------------
Coinmach Corporation
55 Lumber Road
Roslyn, New York 11576
Attention: Chief Executive Officer
With a copy (which will constitute notice to
--------------------------------------------
the Company) to:
---------------
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ronald S. Brody, Esq.
If to Executive:
---------------
John E. Denson
c/o Coinmach Corporation
55 Lumber Road
Roslyn, New York 11576
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 will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
6. General Provisions.
------------------
(a) 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 any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such
-6-
<PAGE>
invalid, illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement, those documents expressly
------------------
referred to herein and other documents of even date herewith (i) embody the
complete agreement and understanding among the parties, (ii) supersede and
preempt any prior summaries of terms and conditions, understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way, and (iii) terminate and cancel
any employment, severance, stock option, bonus or other employee benefit, loan,
tax or other indemnity agreement (except for that certain Agreement of
Resignation and Release of Trustee, dated October 1, 1994) among Executive and
his Affiliates, on one hand, and the Company and its Affiliates, on the other
hand.
(c) 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.
(d) Successors and Assigns. Except as otherwise provided herein, this
----------------------
Agreement shall bind Executive and the Company and their respective successors
and permitted assigns and inure to the benefit of and be enforceable by
Executive and the Company and their respective successors and permitted assigns.
This Agreement will not be assignable by Executive, but will be freely
assignable by the Company and will inure to the benefit of its successors and
assigns.
(e) CHOICE OF LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE WILL
-------------
GOVERN ALL QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS HERETO WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (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.
(f) Remedies. Each of the parties to this Agreement will be entitled
--------
to enforce its rights under this Agreement, specifically, to recover damages and
costs (including 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 may not be an adequate remedy
for any breach of the provisions of this Agreement, and, except as otherwise
provided in Section 3(d), 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.
-7-
<PAGE>
(g) Amendment and Waiver. Except as otherwise expressly provided
--------------------
herein, the provisions of this Agreement may be amended or modified only by
written agreement of the Company and Executive. No other course of dealing
between the parties or third-party beneficiaries hereof or any delay in
exercising any rights hereunder shall operate as a waiver of any rights of any
such holders.
(h) Survival of Representations and Warranties. All representations
------------------------------------------
and warranties contained herein or made in writing by any party 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 Executive or on his behalf or by the Company or on its
behalf.
(i) Business Days. If any time period for giving notice or taking
-------------
action hereunder expires on a day which is a Saturday, Sunday or holiday in the
State of New York, the time period shall be automatically extended to the
business day immediately following such Saturday, Sunday or holiday.
(j) Descriptive Headings; Interpretation. The descriptive headings
------------------------------------
of this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
[SIGNATURE PAGE FOLLOWS]
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By: __________________________
Name: Robert M. Doyle
Title: Senior Vice President
EXECUTIVE
/s/ JOHN E. DENSON
____________________________
John E. Denson
-9-
<PAGE>
EXHIBIT 10.35
PROMISSORY NOTE
---------------
$500,000 February 11, 1997
For value received, Stephen R. Kerrigan ("Maker") promises to pay to
the order of Coinmach Corporation, a Delaware corporation ("Holder"), at its
offices in Roslyn, New York, or such other place as is designated in writing by
Holder, the aggregate principal sum of $500,000. Maker will pay the aggregate
principal sum in five equal annual payments of $100,000, the first of which
payments shall be due on July 18, 1997, and, thereafter, payments shall be due
on each July 18 of the four next succeeding years, or, if any such date is not a
business day, on the next succeeding business day (hereinafter, "Payment
Dates"), and, on each such Payment Date, Maker will pay interest accrued through
such Payment Date at the rate specified below.
Interest will accrue on the outstanding principal amount of this Note
at a rate equal to seven and one-half percent (7-1/2%) per annum, and shall be
payable at such time as each principal payment of this Note becomes due and
payable.
Outstanding principal and accrued and unpaid interest (collectively,
"Borrowings") on this Note shall be forgiven as follows: twenty percent (20%) of
Borrowings shall be forgiven on July 18, 1997, and thereafter twenty percent
(20%) of Borrowings shall be forgiven on each of the four next succeeding
Payment Dates, provided, however, that, if Maker ceases to be employed by Holder
-------- -------
or its affiliates at any time for any reason, no further amounts hereunder shall
be forgiven for the period commencing on the Payment Date immediately preceding
such termination through the date of termination, and all Borrowings shall be
paid by Maker within thirty (30) business days after the date of termination.
Notwithstanding anything to the contrary contained in this Note, in the event of
(i) a Change of Control (as defined herein) of Holder occurring while Maker is
employed by Holder, (ii) Maker's death occurring while Maker is employed by
Holder, (iii) Maker's Disability (as defined herein) occurring while Maker is
employed by Holder, (iv) the termination of Maker's employment by Holder without
Cause (as such term is defined in that certain Senior Management Agreement,
dated as of January 31, 1995, among Maker and those other parties signatory
thereto, and as amended by the Omnibus Agreement, dated November 30, 1995 (the
"Senior Management Agreement")), or (v) the termination of Maker's employment by
Maker for Good Reason (as defined in the Senior Management Agreement), all
Borrowings shall be forgiven in full as of the occurrence of any of such events
set forth in clauses (i)-(v) above. For purposes of this Note, "Change of
Control" shall mean (a) the sale of Holder's equity securities which results in
any person or group of related persons, not affiliated with the majority equity
holder of Holder on the date hereof, owning equity securities of Holder
possessing the power to elect (without reference to any special or
<PAGE>
default voting rights) a majority of the members of the board of directors of
Holder, or (b) the sale of all or substantially all of Holder's assets. For
purposes of this Note, "Disability" shall mean the failure of Maker to perform
his duties on account of illness or other physical or mental disability or
infirmity for a continuous period of 90 days in any twelve-month period, or at
such earlier time as Maker submits to Holder medical evidence reasonably
satisfactory to the board of directors of Holder that Maker has a physical or
mental disability or infirmity that will prevent him from returning to the
performance of his duties and responsibilities for a continuous period of 90
days or longer in any twelve-month period.
In the event Maker fails to pay any Borrowings due and owing
hereunder, such amount of Borrowings shall be offset, on a dollar for dollar
basis, against (i) any vested options granted to MCS Capital, Inc. pursuant to
the terms and conditions of the Option Agreement, dated July 23, 1996, by and
between Coinmach Laundry Corporation, a Delaware corporation ("CLC"), and MCS
Capital, Inc. (the "Option Agreement"), attached hereto as Exhibit A, the value
---------
of which options shall be as set forth in Section 3 of the Option Agreement,
(ii) if the amount offset against the vested Options is not sufficient to
satisfy the full amount of the Borrowings due and owing hereunder, any shares of
CLC's common stock, par value $.01 per share (the "CLC Stock"), pledged by MCS
Capital, Inc. to CLC pursuant to those certain Stock Pledge Agreements, attached
hereto as Exhibit B and Exhibit C, the value of which CLC Stock shall be the
--------- ---------
fair market value of the CLC stock (as determined by the average closing price
per share of CLC Stock during the three business day period immediately
preceding the date Maker failed to pay any Borrowings due and owing hereunder);
or (iii) if the amount offset against the vested Options and CLC Stock are not
sufficient to satisfy the full amount of the Borrowings due and owing hereunder,
the personal assets of Maker.
In the event Maker fails to pay any amounts due hereunder when due,
Maker shall pay to Holder, in addition to such amounts due, all costs of
collection, including reasonable attorneys fees and disbursements.
Maker, 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 Holder may accept security
for this Note or release security for this Note, all without in any way
affecting the liability of Maker hereunder.
This Note shall be governed by the internal laws, not the laws of
conflicts, of the State of New York.
/S/ STEPHEN R. KERRIGAN
______________________________
Stephen R. Kerrigan
<PAGE>
EXHIBIT A
MCS OPTION AGREEMENT
(Incorporated by reference from Exhibit 10.46
to Coinmach Laundry's Form 10-Q for the
quarterly period ended June 28, 1996,
file number 1-11907)
<PAGE>
EXHIBIT B
STOCK PLEDGE AGREEMENT, DATED JANUARY 31, 1995
(Incoporated by reference from Exhibit 10.5
to Coinmach's Registration Statement on Form S-1,
file number 333-00620)
<PAGE>
EXHIBIT C
STOCK PLEDGE AGREEMENT
----------------------
THIS PLEDGE AGREEMENT is made as of July 26, 1995, between MCS Capital, Inc.
("Pledgor"), and SAS Acquisitions Inc., a Delaware corporation (the "Company").
The Company and Pledgor are parties to an Executive Stock Agreement, dated
July 26, 1995, pursuant to which Pledgor purchased 4000 shares of the Company's
Class B Common Stock, $0.01 par value (the "Pledged Shares"), for an aggregate
purchase price of $61,611.20. The Company has allowed Pledgor to purchase a
portion of the Pledged Shares by delivery to the Company of a promissory note
(the "Note") in the aggregate principal amount of $52,369.52. This Pledge
Agreement provides the terms and conditions upon which the Note is secured by a
pledge to the Company of the Pledged Shares.
NOW, THEREFORE, in consideration of the premises contained herein and other
good and valuable consideration the receipt and sufficiency of which hereby
acknowledged, and in order to induce the Company to accept the Note as partial
payment for the Pledged Shares, Pledgor and the Company hereby agree as follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants to the Company a
------
security interest in, the Pledged Shares as security for the prompt and complete
payment when due of the unpaid principal of and interest on the Note.
2. Delivery of Pledged Shares. Upon the execution of this Pledge Agreement,
--------------------------
Pledgor shall deliver to the Company the certificate(s) representing the Pledged
Shares, together with duly executed forms of assignment sufficient to transfer
title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the contrary
-----------------------------
contained herein, during the term of this Pledge Agreement until such time as
there exists a default in the payment of principal or interest on the Note,
Pledgor shall be entitled to all voting rights with respect to the Pledged
Shares.
4. Distribution, etc. If, while the Pledge Agreement is in effect, Pledgor
------------------
becomes entitled to receive or receives any securities or other property in
addition to, in substitution of, or in exchange for any of the Pledged Shares
(whether as a distribution in connection with nay recapitalization,
reorganization or reclassification or otherwise), Pledgor shall accept such
securities or other property on behalf of and for the benefit of the Company as
additional security for Pledgor's obligations under the Note and shall promptly
deliver such additional security to the Company together with duly executed
forms of assignment, and such additional security shall be deemed to be part of
the Pledged Shares hereunder.
<PAGE>
5. Default. If Pledgor defaults in the payment of the principal or interest
-------
under the Note as it becomes due (whether upon demand, acceleration or
otherwise) or upon the bankruptcy or insolvency of Pledgor, the Company may
exercise any and all the rights, powers and remedies of any owner of the Pledged
Shares (including the right to vote the shares and receive distributions with
respect to such shares) and shall have and may exercise without demand any and
all the rights and remedies granted to a secured party upon default under the
Uniform Commercial Code or otherwise available to the Company under applicable
law. Without limiting the foregoing, the Company is authorized to sell, assign
and deliver at its discretion, from time to time, all or any part of the Pledged
Shares at any private sale or public auction, on not less than ten days written
notice to Pledgor, at such price or prices and upon such terms as the Company
may deem advisable. Pledgor shall have no right to redeem the Pledged Shares
after any such sale or assignment. At any such sale or auction, the Company may
bid for, and become the purchaser of, the whole or any part of the Pledged
Shares offered for sale. In case of any such sale, after deducting the costs,
reasonable attorneys' fees and other expenses of sale and delivery, the
remaining proceeds of such sale shall be applied to the principal of and accrued
interest on the Note; provided, however, that after payment in full of the
indebtedness evidenced by the Note, the balance of the proceeds of sale then
remaining shall be paid to Pledgor and Pledgor shall be entitled to the return
of any of the Pledged Shares remaining in the hands of the Company. Pledgor
shall be liable for any deficiency if the remaining proceeds are insufficient to
pay the indebtedness under the Note in full, including the reasonable fees of
any attorneys employed by the Company to collect such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses, including reasonable
-------------------------
attorneys' fees, incurred in exercising any right, power or remedy conferred by
this Pledge Agreement or in the enforcement thereof, shall become part of the
indebtedness secured hereunder and shall be paid by Pledgor or repaid from the
proceeds of the sale of the Pledged Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon payment in full
-----------------------------------------------------
of the indebtedness evidenced by the Note, the Company shall surrender the
Pledged Shares to Pledgor together with all forms of assignment.
8. Further Assurances. Pledgor agrees that at any time and from time to time
------------------
upon the written request of the Company, Pledgor will execute and deliver such
further documents and do such further acts and things as the Company may
reasonably request in order to effect the purposes of this Pledge Agreement.
<PAGE>
9. Severability. Any provision of this Pledge 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. No Waiver; Cumulative Remedies. The Company shall not by any act, delay,
------------------------------
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by the
Company, and then only to the extent therein set forth. A waiver by the Company
of any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Company would otherwise have on any future
occasion. No failure to exercise nor any delay in exercising on the part of the
Company, any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights or remedies provided
by law.
11. Waivers, Amendments; Applicable Law. None of the terms or provisions of
------------------------------------
this Pledge Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the parties hereto. This Agreement and
all obligations of the Pledgor hereunder shall together with the rights and
remedies of the Company hereunder, inure the benefit of the Company and its
successors and assigns. This pledge Agreement shall be governed by, and be
construed and interpreted in accordance with, the laws of the State of New
York.
* * * *
IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the date
first above written.
MCS CAPITAL, INC.
By: /s/ Stephen R. Kerrigan
-----------------------
Its: President
SAS Acquisitions Inc.
By: /s/ Stephen R. Kerrigan
-----------------------
Its: President
<PAGE>
EXHIBIT 10.36
4,120,000 SHARES
COINMACH LAUNDRY CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
----------------------
July 17, 1996
LEHMAN BROTHERS INC.
DILLON, READ & CO. INC.
LAZARD FRERES & CO. LLC
FIELDSTONE FPCG SERVICES, L.P.,
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Coinmach Laundry Corporation, a Delaware corporation (the "Company"),
proposes to sell an aggregate of 4,120,000 shares (the "Firm Stock") of the
Company's Common Stock, par value $.01 per share (the "Common Stock"). In
addition, the Company proposes to grant to the Underwriters named in Schedule 1
hereto (the "Underwriters") an option to purchase up to an additional 618,000
shares of Common Stock on the terms and for the purposes set forth in Section 3
(the "Option Stock"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "Stock." This is to confirm the agreement
concerning the purchase of the Stock from the Company by the Underwriters.
1. Representations, Warranties and Agreements of the Company. The
---------------------------------------------------------
Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 and the amendments thereto
with respect to the Stock have (i) been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the Securities Act
and (iii) become
<PAGE>
-2-
effective under the Securities Act. Copies of such registration statement
and the amendments thereto have been delivered by the Company to you as the
representatives (the "Representatives") of the Underwriters. As used in
this Agreement, "Effective Time" means the date and the time as of which
such registration statement, or the most recent post-effective amendment
thereto, if any, was declared effective by the Commission; "Effective Date"
means the date of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or amendments thereof,
before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules and Regulations;
"Registration Statement" means such registration statement, including any
Rule 462(b) Registration Statement, as amended at the Effective Time,
including all information contained in the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in
accordance with Section 5 hereof and deemed to be a part of the
registration statement as of the Effective Time pursuant to paragraph (b)
of Rule 430A of the Rules and Regulations; and "Prospectus" means such
final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations. The Commission has
not issued any order preventing or suspending the use of any Preliminary
Prospectus. "Rule 462(b) Registration Statement" means a registration
statement filed pursuant to Rule 462(b) of the Rules and Regulations
relating to the offering covered by the initial registration statement (No.
333-03587).
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the
Commission, as the case may be, conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do not
and will not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing date
(as to the Prospectus and any amendment or supplement thereto) contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that no representation or warranty is
made as to information concerning any Underwriter contained in or omitted
from the Registration Statement or the
<PAGE>
-3-
Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in Section
15) have been duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing
as foreign corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their respective business
requires such qualification, except where the failure to be so qualified
would not be reasonably expected to have a material adverse effect on the
consolidated financial position, stockholders' equity, result of
operations, business or business prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect"), and have all
power and authority necessary to own or hold their respective properties
and to conduct the businesses in which they are engaged; and none of the
subsidiaries of the Company (other than Coinmach Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company) is a "significant
subsidiary," as such term is defined in Rule 405 of the Rules and
Regulations.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and non-
assessable and conform in all material respects to the description thereof
contained in the Prospectus; and all of the issued shares of capital stock
of each subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except for liens, encumbrances, equities or claims of
Heller Financial, Inc. ("Heller") pursuant to those certain Pledge
Agreements, dated November 30, 1995, between Heller and each of the Company
and Coinmach Corporation (the "Pledge Agreements").
(e) The shares of the Stock to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein will be
duly and validly
<PAGE>
-4-
issued, fully paid and non-assessable, and will conform to the description
thereof contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and delivered by
the Company.
(g) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the property
or assets of the Company or any of its subsidiaries is subject, nor will
such actions result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets; and except for the registration of the Stock
under the Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange Act
and applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby.
(h) Except as described in the Registration Statement or the exhibits
thereto or in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting such person the
right (other than rights that have been waived or satisfied) to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
<PAGE>
-5-
(i) Except as described in the Registration Statement or the
Prospectus, the Company has not sold or issued any shares of Common Stock
during the six-month period preceding the date of the Prospectus, including
any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act.
(j) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any material loss or interference with its 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 Prospectus; and, since
such date, to the actual knowledge of Stephen R. Kerrigan, Mitchell Blatt,
Robert M. Doyle or John E. Denson (the "Officers"), there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set forth
or contemplated in the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included in the Prospectus present fairly the financial condition and
results of operations of the entities purported to be shown thereby, at the
dates and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved. The pro forma financial statements and
other pro forma financial information (including the notes thereto)
included in the Registration Statement and the Prospectus (i) present
fairly the information shown therein, (ii) have been prepared in accordance
with the applicable requirements of Rule 11-02 of the Rules and
Regulations, (iii) have been prepared in accordance with the Commission's
rules and guidelines with respect to pro forma financial statements and
(iv) have been properly compiled on the basis described therein and the
assumptions used in the preparation of the pro forma financial statements
and other pro forma financial information (including the notes thereto) and
included in the Registration Statement and the Prospectus are reasonable
and the adjustments used therein are appropriate to give
<PAGE>
-6-
effect to the transactions or circumstances referred to therein.
(l) Ernst & Young, LLP ("E&Y"), who have certified certain financial
statements of the Company, whose report appears in the Prospectus and who
have delivered an initial letter referred to in Section 7(g) hereof, are
independent public accountants as required by the Securities Act and the
Rules and Regulations; and KPMG Peat Marwick, LLP ("KPMG") and Arthur
Andersen LLP ("AA"), whose reports appear in the Prospectus and who have
each delivered an initial letter referred to in Section 7(g) hereof, were
independent accountants as required by the Securities Act and the Rules and
Regulations during the periods covered by the financial statements on which
they reported contained in the Prospectus.
(m) (i) Neither the Company nor any of its subsidiaries own any real
property other than the real property located in Baltimore, Maryland; (ii)
the Company and each of its subsidiaries have marketable title to all
personal property owned by them, in each case free and clear of all liens,
encumbrances and defects, except as are described in the Propectus or such
as do not materially interfere with the use made and proposed to be made
(as described in the Prospectus) of such property by the Company and its
subsidiaries and (iii) all real property and buildings held under lease by
the Company and its subsidiaries are held by them under valid, subsisting
and enforceable leases, except (A) the Company's facility located in
Roslyn, New York, and (B) where the failure to so hold real property and
buildings under valid, subsisting and enforceable leases would not be
reasonably expected to result in a Material Adverse Effect.
(n) Except as described in the Prospectus, the Company and each of
its subsidiaries carry, or are covered by, insurance in such amounts and
covering such risks as is, in the reasonable judgment of the Company,
adequate for the conduct of their respective businesses and the value of
their respective properties.
(o) The Company and each of its subsidiaries own or possess adequate
rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of their
respective businesses and the Officers have no reason to
<PAGE>
-7-
believe that the conduct of their respective businesses will conflict with,
and have not received any notice of any claim of conflict with, any such
rights of others.
(p) Except as disclosed in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject that, if determined adversely to
the Company or any of its subsidiaries, might have a Material Adverse
Effect; and to the actual knowledge of the Officers, no such proceedings
are threatened by governmental authorities or by others.
(q) There are no contracts or other documents to which the Company or
any of its subsidiaries is a party that are required to be described in the
Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations that have not been described
in the Prospectus or filed as exhibits to the Registration Statement or
incorporated therein by reference as permitted by the Rules and
Regulations.
(r) No relationship, direct or indirect, exists between or among the
Company, on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company, on the other hand, that is required
to be described in the Prospectus that is not so described.
(s) Except as disclosed in the Prospectus, no labor disturbance by the
employees of the Company exists or, to the actual knowledge of the
Officers, is imminent that might reasonably be expected to have a Material
Adverse Effect.
(t) The Company 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 Company would have any liability; the Company has not
incurred and does not expect 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"); and each "pension plan", except for the Solon Profit Sharing and
Retirement
<PAGE>
-8-
Savings Plan, for which the Company 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.
(u) The Company has filed or properly been granted an extension for
filing 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 that has had (nor do the
Officers have any actual knowledge of any tax deficiency that might
reasonably be expected to have) a Material Adverse Effect.
(v) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary course of
business and consistent with past practice, (iii) entered into any
transaction not in the ordinary course of business and consistent with past
practice or (iv) declared or paid any dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records in all
material respects and (ii) maintains internal accounting controls that
provide reasonable assurance that (A) material transactions are executed in
accordance with management's authorization and (B) material transactions
are recorded as necessary to permit preparation of its financial statements
and to maintain accountability for its assets.
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter or by-laws, (ii) is in default in any material
respect, and, to the actual knowledge of the Officers, no event has
occurred that, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or
condition contained in any material indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties or
assets is subject or (iii) is in violation in any material respect of any
law,
<PAGE>
-9-
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any material
license, permit, certificate, franchise or other governmental authorization
or permit necessary to the ownership of its property or to the conduct of
its business.
(y) Neither the Company nor any of its subsidiaries, nor any
director or, officer, nor to the knowledge of any of the Officers any
agent, employee or other person authorized to act on behalf of the Company
or any of its subsidiaries, has 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.
(z) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of
its subsidiaries (or, to the actual knowledge of the Officers, any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or its subsidiaries in violation
of any applicable law, ordinance, rule, regulation, order, judgement,
decree or permit or that would require remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except
for any violation or remedial action that would not be reasonably likely to
have, singularly or in the aggregate with all such violations and remedial
actions, 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 Company or any of its
subsidiaries or with respect to which the Officers have actual knowledge,
except for any such spill, discharge, leak, emission, injection, escape,
dumping or release that would not be reasonably likely to have, singularly
or in the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a Material Adverse Effect; and
the terms "hazardous wastes", "toxic wastes", "hazardous substances" and
"medical wastes"
<PAGE>
-10-
shall have the meanings specified in any applicable local, state, federal
and foreign laws or regulations with respect to environmental protection.
(aa) Neither the Company nor any subsidiary is 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.
2. Purchase of the Stock by the Underwriters. On the basis of the
-----------------------------------------
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 4,120,000 shares of
the Firm Stock to the several Underwriters and each of the Underwriters,
severally and not jointly, agrees to purchase the number of shares of the Firm
Stock set opposite that Underwriter's name in Schedule 1 hereto. The respective
purchase obligations of the Underwriters with respect to the Firm Stock shall be
rounded among the Underwriters to avoid fractional shares, as the
Representatives may determine.
In addition, the Company grants to the Underwriters an option (the
"Option") to purchase up to 618,000 shares of Option Stock. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Stock and is exercisable as provided in Section 4 hereof. Shares of Option
Stock shall be purchased severally for the account of the Underwriters in
proportion to the number of shares of Firm Stock set opposite the name of such
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no Underwriter shall be obligated to purchase Option
Stock other than in 100 share amounts. The price of both the Firm Stock and any
Option Stock shall be $13.02 per share.
The Company shall not be obligated to deliver any of the Stock to be
delivered on the First Delivery Date or the Second Delivery Date (as hereinafter
defined), as the case may be, except upon payment for all the Stock to be
purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters. Upon authorization by the
-------------------------------------
Representatives of the release of the Firm Stock, the several Underwriters
propose to offer the Firm Stock for sale upon the terms and conditions set forth
in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of and payment
-------------------------------------
for the Firm Stock shall be made at the office of
<PAGE>
-11-
Cahill Gordon & Reindel, 80 Pine Street, New York, New York, at 10:00 A.M., New
York City time, on the fourth full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
between the Representatives and the Company. This date and time are sometimes
referred to as the "First Delivery Date." On the First Delivery Date, the
Company shall deliver or cause to be delivered certificates representing the
Firm Stock to the Representatives for the account of each Underwriter against
payment to or upon the order of the Company of the purchase price by wire
transfer of immediately available funds. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. Upon delivery, the
Firm Stock shall be registered in such names and in such denominations as the
Representatives shall request in writing not less than two full business days
prior to the First Delivery Date. For the purpose of expediting the checking
and packaging of the certificates for the Firm Stock, the Company shall make the
certificates representing the Firm Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement the Option may be exercised by written notice being given to the
Company by the Representatives. Such notice shall set forth the aggregate
number of shares of Option Stock as to which the Option is being exercised, the
names in which the shares of Option Stock are to be registered, the
denominations in which the shares of Option Stock are to be issued and the date
and time, as determined by the Representatives, when the shares of Option Stock
are to be delivered; provided, however, that this date and time shall not be
earlier than the First Delivery Date nor earlier than the second business day
after the date on which the Option shall have been exercised nor later than the
fifth business day after the date on which the Option shall have been exercised.
The date and time the shares of Option Stock are delivered are sometimes
referred to as the "Second Delivery Date" and the First Delivery Date and the
Second Delivery Date are sometimes each referred to as a "Delivery Date."
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on the
Second
<PAGE>
-12-
Delivery Date. On the Second Delivery Date, the Company shall deliver or cause
to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer of immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Stock shall
be registered in such names and in such denominations as the Representatives
shall request in the aforesaid written notice. For the purpose of expediting
the checking and packaging of the certificates for the Option Stock, the Company
shall make the certificates representing the Option Stock available for
inspection by the Representatives in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.
5. Further Agreements of the Company. The Company agrees:
---------------------------------
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Securities Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement
or, if applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act; to make no further amendment or any supplement to
the Registration Statement or to the Prospectus except as permitted herein;
to advise the Representatives, promptly after it receives notice thereof,
of the time when any amendment to the Registration Statement has been filed
or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with copies
thereof; to advise the Representatives, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly all commercially reasonable efforts to
obtain its withdrawal;
<PAGE>
-13-
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with
the Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits
other than this Agreement) and (ii) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus; and, if the delivery
of a prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Stock or any other securities
relating thereto and if at such time any events shall have occurred as a
result of which, in the reasonable judgment of Cahill Gordon & Reindel,
outside counsel for the Underwriters, the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to
comply with the Securities Act, to notify the Representatives and, upon
their request, to prepare and furnish without charge to each Underwriter
and to any dealer in securities as many copies as the Representatives may
from time to time reasonably request of an amended or supplemented
Prospectus that will correct such statement or omission or effect such
compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the reasonable
judgment of the Representatives, be required by the Securities Act or
requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy
thereof to the Representatives and counsel for the Underwriters a
reasonable amount of time prior to such proposed filing and
<PAGE>
-14-
will not file any such amendment or supplement to which the Representatives
or counsel for the Underwriters shall reasonably object;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's securityholders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Securities
Act and the Rules and Regulations (including, at the option of the Company,
Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering
and sale under the securities laws of such jurisdictions as the
Representatives may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may be necessary to complete the distribution of the Stock;
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, offer for sale, sell or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be
expected to, result in the disposition by any person at any time in the
future of) any shares of Common Stock (other than the Stock and shares
issued pursuant to employee benefit plans, qualified stock option plans or
other employee compensation plans existing on the date hereof), or sell or
grant options, rights or warrants with respect to any shares of Common
Stock (other than the grant of options pursuant to option plans existing
on the date hereof or the granting of options as disclosed in the
Prospectus), without the prior written consent of Lehman Brothers Inc.; and
to cause each
<PAGE>
-15-
officer, director and holder of Common Stock of the Company to furnish to
the Representatives, prior to the First Delivery Date, a letter or letters,
in form and substance satisfactory to counsel for the Underwriters,
pursuant to which each such person shall agree not to, directly or
indirectly, offer for sale, sell or otherwise dispose of (or enter into any
transaction or device that is designed to, or could be expected to, result
in the disposition by any person at any time in the future of) any shares
of Common Stock for a period of 180 days from the date of the Prospectus,
without the prior written consent of Lehman Brothers Inc.;
(j) Prior to the Effective Date, to apply for the listing of the Stock
on the Nasdaq National Market and to use all commercially reasonable
efforts to complete that listing, subject only to official notice of
issuance, prior to the First Delivery Date;
(k) Prior to filing with the Commission any reports on Form SR
pursuant to Rule 463 of the Rules and Regulations, to furnish a copy
thereof to the counsel for the Underwriters and receive and consider its
comments thereon, and to deliver promptly to the Representatives a signed
copy of each report on Form SR filed by it with the Commission;
(l) To apply the net proceeds from the sale of the Stock being sold by
the Company as set forth in the Prospectus;
(m) To take such steps as shall be reasonably necessary to ensure that
neither the Company nor any subsidiary shall become 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. The Company agrees to pay (a) the costs incident to
--------
the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and
<PAGE>
-16-
distributing this Agreement and any other related documents in connection with
the offering, purchase, sale and delivery of the Common Stock; (e) the filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Stock; (f) any applicable
listing or other fees; (g) the fees and expenses of qualifying the Stock under
the securities laws of the several jurisdictions as provided in Section 5(h) and
of preparing, printing and distributing a Blue Sky Memorandum (including related
reasonable fees and expenses of counsel to the Underwriters); (h) any fees
charged by securities rating services for rating the Stock; and (i) all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement; provided that, except as provided in this Section 6 and in
Section 11, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Stock that
they may sell and the expenses of advertising any offering of the Stock made by
the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
---------------------------------------
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a); no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by
the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company
on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact that in the reasonable opinion of Cahill Gordon &
Reindel, counsel for the Underwriters, is material or omits to state a fact
that in the reasonable opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
<PAGE>
-17-
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Stock, the
Registration Statement and the Prospectus, 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
Underwriters, and the Company shall have furnished to such counsel all
documents and information that they may reasonably request to enable them
to pass upon such matters.
(d) Anderson Kill Olick & Oshinsky, P.C., as counsel to the Company,
shall have furnished to the Representatives its written opinion, addressed
to the Underwriters and dated such Delivery Date, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in
Exhibit A hereto:
(e) The Representatives shall have received from Cahill Gordon &
Reindel, counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Stock, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as such counsel reasonably request
for the purpose of enabling it to pass upon such matters.
(f) At the time of execution of this Agreement, the Representatives
shall have received from each of E&Y, KPMG and AA a letter, in form and
substance satisfactory to the Representatives, addressed to the
Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act and
are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.
(g) With respect to the letter of each of E&Y, KPMG and AA referred to
in the preceding paragraph and delivered to the Representatives
concurrently with the execution of
<PAGE>
-18-
this Agreement (the "initial letter"), the Company shall have furnished to
the Representatives a letter (the "bring-down letter") of such accountants,
addressed to the Underwriters and dated such Delivery Date (i) confirming
that they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation
S-X of the Commission, (ii) stating, as of the date of the bring-down
letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given
in the Prospectus, as of a date not more than five 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.
(h) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board and
Chief Executive Officer and its Senior Vice President and Chief Financial
Officer stating that:
(i) The representations and warranties of the Company in Section
1 that are qualified with reference to a Material Adverse Effect or
materiality are true and correct as of such Delivery Date; and the
representations and warranties of the Company that are not so qualified
shall be true and correct in all material respects, in each case as of
such Delivery Date; the Company has complied in all material respects
with all its agreements contained herein; and the conditions set forth
in Sections 7(a) and 7(i) have been fulfilled in all material respects;
and
(ii) They have carefully examined the Registration Statement and
the Prospectus and, in their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus 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 not misleading, and (B) since the Effective no event has
occurred that should have been set forth in a supplement or amendment to
the Registration Statement or the Prospectus.
<PAGE>
-19-
(i) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its 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 Prospectus or
(ii) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in clause (i) or (ii), is, in the reasonable
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Stock being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization,"
as that term is defined by the Commission for purposes of Rule 436(g)(2) of
the Rules and Regulations 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 Company's debt securities.
(k) 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 Company
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
<PAGE>
-20-
the Untied 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 reasonable judgment of a
majority in interest of the several Underwriters, impracticable or
inadvisable to proceed with the public offering or delivery of the Stock
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(l) The Nasdaq National Market shall have approved the Stock for
inclusion, subject only to official notice of issuance and evidence of
satisfactory distribution.
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 for the Underwriters.
8. Indemnification and Contribution.
--------------------------------
(a) The Company and Coinmach Corporation, its principal operating
subsidiary (the "Principal Subsidiary"), jointly and severally, shall indemnify
and hold harmless each Underwriter, its officers and employees and each person,
if any, who controls any Underwriter 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 Stock), to which
that Underwriter, 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 (A) in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto or (B) in any blue sky application or other document prepared
or executed by the Company (or based upon any written information furnished by
the Company) specifically for the purpose of qualifying any or all of the Stock
under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a "Blue Sky
Application"), (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be
<PAGE>
-21-
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
Underwriter in connection with, or relating in any manner to, the Stock or the
offering contemplated hereby, and that 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 clause (i) or (ii) above (provided that the Company and the
--------
Principal Subsidiary 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
Underwriter through its negligence or willful misconduct), and shall reimburse
each Underwriter and each such officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by that
Underwriter, 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 Company and the Principal Subsidiary 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 Prospectus, the
Registration Statement or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of any Underwriter specifically for
inclusion therein; provided, further, that the indemnification and contribution
-------- -------
agreements contained in this Section 8 with respect to any Preliminary
Prospectus, or the Prospectus after it has been amended or supplemented, shall
not inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting such loss, claim, damage, liability
or action shall have purchased Stock that are the subject thereof it, after a
sufficient number of copies thereof have been delivered by the Company to such
Underwriter, such Underwriter shall have failed to send or give a copy of the
final Prospectus or of the Prospectus as then amended or supplemented, as the
case may be, to such person at or prior to the confirmation of such sale of such
Stock to such person, and, if such loss, claim, damage, liability or action
would not have arisen but for such failure. The foregoing indemnity agreement
is in addition to any liability that the Company or the Principal Subsidiary may
otherwise have to any Underwriter or to any officer, employee or controlling
person of that Underwriter.
<PAGE>
-22-
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its directors and
each person, if any, who controls the Company 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 Company 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 (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application 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 Underwriter furnished to the Company through the Representatives by or on
behalf of that Underwriter specifically for inclusion therein, and shall
reimburse the Company and any such director, officer, employee or controlling
person for any legal or other expenses reasonably incurred by the Company or any
such director, 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. The foregoing
indemnity agreement is in addition to any liability that any Underwriter may
otherwise have to the Company or any such director, officer, employee 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 that 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 that 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
<PAGE>
-23-
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 Representatives
-------- -------
shall have the right to employ counsel to represent jointly the Representatives
and those other Underwriters 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 Underwriters against the Company
or the Principal Subsidiary under this Section 8 if, in the reasonable judgment
of the legal counsel of the Representatives, it is advisable for the
Representatives and those Underwriters, officers, employees and controlling
persons to be jointly represented by separate counsel due to (y) the existence
of actual or potential differing interests between such Representatives,
Underwriters, officers, employees and controlling persons or (z) the
availability of different defenses among such parties, and in that event the
fees and expenses of such separate counsel shall be paid by the Company or the
Principal Subsidiary. 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 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)
<PAGE>
-24-
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 Company and the Principal
Subsidiary on the one hand and the Underwriters on the other from the offering
of the Stock 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 Company and the Principal Subsidiary on the one hand and the
Underwriters on the other with respect to the statements or omissions that
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 Company and the Principal Subsidiary on the one hand and the
Underwriters on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the Stock
purchased under this Agreement (before deducting expenses) received by the
Company and the Principal Subsidiary on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Stock purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. 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
Company, the Principal Subsidiary or the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. For purposes of the preceding two
sentences, the net proceeds deemed to be received by the Company shall be deemed
to be also for the benefit of the Principal Subsidiary and information supplied
by the Company shall also be deemed to have been supplied by the Principal
Subsidiary. The Company, the Principal Subsidiary and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section were to be determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that 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,
<PAGE>
-25-
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. Not withstanding the provisions of this Section 8(d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Stock underwritten by it and distributed to the public
was offered to the public exceeds the amount of any damages which such
Underwriter 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 8(e) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Stock by the
Underwriters set forth in the last paragraph on the cover page of, the legend
concerning over-allotments on the inside front cover page of and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
9. Defaulting Underwriters.
-----------------------
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting Underwriters shall be obligated to purchase the Stock that the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective pro portions that the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non- defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non- defaulting Underwriters shall not be
- -------- -------
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock that the defaulting Underwriter or Underwriters agreed
but failed to purchase on such date exceeds 9.09% of the total number of shares
of the Stock to be purchased
<PAGE>
-26-
on such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock that
it agreed to purchase on such Delivery Date pursuant to the terms of Section 2.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares that the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except that the Company will continue to
be liable for the payment of expenses to the extent set forth in Sections 6 and
11. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule 1 hereto who, pursuant to this Section 9, purchase Firm Stock
that a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or with drawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may
-----------
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Stock if, prior to that
time, any of the events described in Sections 7(i), 7(j) or 7(k), shall have
occurred or if the Underwriters shall decline to purchase the Stock for any
reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the Company
---------------------------------------
shall fail to tender the Stock for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part
<PAGE>
-27-
to be performed, or because any other condition of the Under writers'
obligations hereunder required to be fulfilled by the Company is not fulfilled,
the Company will reimburse the Under writers for all reasonable out-of-pocket
expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Stock, and upon demand the Company shall pay the full amount thereof to the
Representatives. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
12. Notices, etc. All statements, request, notices and agreements
------------
hereunder shall be in writing, and:
(a) if to the Underwriters, 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, in the case of any notice pursuant to Section
8(d), to the Director of Litigation, Office of the General Counsel, Lehman
Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company or the Principal Subsidiary, shall be delivered
or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: Robert M.
Doyle (Fax: (516) 484-0905);
provided, however, that any notice to an Underwriter pursuant to Section 8(d)
- -------- -------
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
----------------------------------------
inure to the benefit of and be binding upon the Underwriters, the Company and
its respective successors. This Agreement and the terms and provisions hereof
are for the sole benefit of only those persons, except that (A) the representa
tions, warranties, indemnities and agreement of the Company
<PAGE>
-28-
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 8(b) of this Agreement shall be deemed to be
for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations,
--------
warranties and agreement of the Company, the Principal Subsidiary and the
Underwriters 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 Stock and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
15. Definition of the Terms "Business Day" and "Subsidiary". For
-------------------------------------------------------
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. 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.
18. 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.
<PAGE>
-29-
If the foregoing correctly sets forth the agreement by and among the
Company, the Principal Subsidiary and the Underwriters, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
Coinmach Laundry Corporation
By: /s/ ROBERT M. DOYLE
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
and Chief Financial Officer
Coinmach Corporation,
the Principal Subsidiary
By: /s/ ROBERT M. DOYLE
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
and Chief Financial Officer
Accepted:
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By: /s/ THEODORE NEIDERMEYER
-------------------------------
Authorized Representative
<PAGE>
Exhibit A
---------
Letterhead of Anderson Kill Olick ,P.C.
(212) 278-1258
July 23, 1996
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
We have acted as special counsel to Coinmach Laundry Corporation, a
Delaware corporation (the "Company"), in connection with the preparation of a
-------
registration statement on Form S-1 (No. 333-03587) which was filed by the
Company with the Securities and Exchange Commission on May 13, 1996 (the "First
-----
Registration Statement") and a registration statement on Form S-1 (No. 333-
- ----------------------
08331) filed with the Securities and Exchange Commission on July 18, 1996 (the
"Second Registration Statement") (as the First Registration Statement and the
- ------------------------------
Second Registration Statement may be amended from time to time, and including
all documents incorporated by reference in such registration statements,
together, the "Registration Statement"). The Registration Statement relates to
----------------------
the registration by the Company under the Securities Act of 1933, as amended
(the "Securities Act"), of up to 4,120,000 shares (the "Firm Stock") of the
-------------- ----------
Company's Class A common stock, par value $.01 per share (the "Common Stock"),
------------
and the sale of up to an additional 618,000 shares of the Common Stock to cover
the exercise of an over-allotment option by the Underwriters (the "Option Stock"
------------
and, together with the Firm Stock, the "Stock"). This opinion is furnished to
-----
you pursuant to Section 7(d) of the Underwriting Agreement, dated as of July 17,
1996 (the "Underwriting Agreement"), among the Company and each of you (the
----------------------
"Underwriters"). Capitalized terms used but not otherwise specifically defined
- -------------
herein shall have the meanings ascribed to such terms in the Underwriting
Agreement.
In rendering the opinions expressed below, we have been furnished with
and, without independent investigation but with your consent have relied upon,
(i) certificates of officers, directors and representatives of the Company and
its Subsidiaries (as hereinafter defined) with respect to certain factual
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 2
defined) with respect to certain factual matters, (ii) certificates, documents,
instruments and assurances of public officials as we have deemed appropriate or
advisable, and (iii) representations and warranties made in the Underwriting
Agreement. We have also examined originals, or copies identified to our
satisfaction as being true copies, of the documents listed below, and we have
made no independent investigation of any factual information contained therein
or contained in any documents incorporated by reference or otherwise referred to
therein (collectively, the "Documents"):
---------
A. Underwriting Agreement;
B. Registration Statement;
C. Resolutions of the boards of directors of each of the Company,
Coinmach Corporation, a Delaware corporation ("Coinmach"), Super Laundry
--------
Equipment Corp., a New York corporation ("SLEC"), and Grand Wash & Dry
----
Launderette, Inc., a New York corporation ("Grand Wash," together with Coinmach
----------
and SLEC, the "Subsidiaries" or each a "Subsidiary"), in each case certified by
------------ ----------
its respective Secretary;
D. Certified copies of the certificates of incorporation, as amended
and restated, of the Company and each Subsidiary;
E. Certified copies of the bylaws, as amended and restated, of the
Company and of each Subsidiary;
F. Good standing certificates from the Secretary of State of the
state of incorporation of the Company and each of the Subsidiaries; and
G. Incumbency certificates for the officers of the Company and each
Subsidiary.
In addition, for the purposes of the opinions rendered herein, we have
assumed with your permission and without independent verification:
(a) that all signatures of all persons signing all Documents (other
than those persons signing Documents on behalf of the Company or the
Subsidiaries) in connection with which this opinion is rendered are genuine and
authorized;
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 3
(b) that all Documents submitted to us as true copies, whether
certified or not, conform to authentic original Documents;
(c) the existence, good standing, capacity and, where applicable,
qualification to do business, of all of the parties (other than the existence,
good standing and capacity of the Company and the Subsidiaries and other than
the qualification to do business of the Company and the Subsidiaries in the
State of Delaware) to the Documents;
(d) the corporate power and authority of each of the parties (other
than the Company or the Subsidiaries) to the Documents to enter into and perform
their respective obligations under the Documents;
(e) the due authorization, execution and delivery by all of the
parties (other than the Company or the Subsidiaries) to each of the Documents;
(f) that each of the Documents constitutes the legal, valid and
binding obligations of all of the parties thereto (other than the Company or the
Subsidiaries) enforceable against each of such parties in accordance with their
respective terms; and
(g) that the Documents accurately describe and contain the
understandings of the parties, and that there are no oral or written statements
or agreements that modify, amend or vary, or purport to modify, amend or vary,
any of the terms of the Documents.
In rendering the opinions expressed below, we have made no independent
investigation with respect to any matter in connection with which we did not
represent the Company and the Subsidiaries. To render these opinions, we have
relied upon the actual knowledge of the attorneys in our firm who have devoted
substantial attention to the transactions contemplated by the Underwriting
Agreement, and not to the knowledge of the firm generally. All references in
this opinion to the "knowledge" of this firm or to matters with respect to which
it is "aware" are to be construed as to the actual knowledge of such attorneys
and are subject to this limitation. Without limiting the generality of the
foregoing, we have not made any search of the dockets or other public records of
any court or administrative agency or governmental authority with respect to
pending suits, actions, claims, investigations, proceedings, judgments, orders
or decrees or with respect to assessments, mortgages, security interests or
encumbrances.
Based upon the foregoing, we are of the opinion that, subject to the
qualifications discussed herein, as of the date hereof:
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 4
(i) The Company and each of the Subsidiaries have been duly
incorporated and are validly existing and in good standing under the laws of
their respective jurisdictions of incorporation, and have the corporate power
and authority to own or hold their respective properties and to conduct the
businesses in which they are currently engaged and as described in the
Prospectus.
(ii) All of the outstanding capital stock of the Company (other than
the Stock) has been duly and validly authorized and issued, is fully paid and
non-assessable and conforms in all material respects to the description thereof
contained in the Prospectus. With respect to the shares of Stock being
delivered pursuant to the Underwriting Agreement, such Stock has been duly and
validly authorized, and upon receipt of payment therefor, shall be duly issued,
fully paid and non-assessable. The Stock conforms in all material respects to
the description thereof contained in the Prospectus. All of the outstanding
capital stock of each Subsidiary has been duly and validly authorized and issued
and is fully paid, non-assessable and, to our knowledge, is owned by the Company
free and clear of all liens, encumbrances, equities or claims, except for any
liens, encumbrances, equities or claims (a) of Heller Financial, Inc. ("Heller")
------
under the Pledge Agreements, or (b) which may be described in the Prospectus.
(iii) Except as may be described in the Prospectus, (a) there are no
preemptive or other rights in the Company's certificate of incorporation or
bylaws to subscribe for or to purchase, nor any restriction upon the voting or
transfer of, any shares of Stock and (b) to our knowledge, there are no
preemptive or other rights to subscribe for or to purchase, nor any restriction
upon the voting or transfer of, any shares of Stock in any other agreement or
instrument.
(iv) To our knowledge, neither the Company nor any of the Subsidiaries
own any real property other than the real property located in Baltimore,
Maryland. To our knowledge, the Company and each of the Subsidiaries have
marketable title to all personal property owned by them, free and clear of all
liens, encumbrances and defects, except (A) liens arising under that certain
Credit Agreement, dated as of November 30, 1995, between Coinmach and Heller,
(B) purchase money liens arising in the ordinary course of business, and (C)
such liens, encumbrances and defects that do not materially interfere with the
use made and proposed to be made, as described in the Registration Statement, of
such personal property by the Company or any Subsidiary. To our knowledge, all
real property and buildings held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases, except (A)
laundry room or location leases entered into by the Company or any of the
Subsidiaries, (B) the Company's facility located in
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 5
Roslyn, New York, (C) any real property or buildings the failure of which to so
hold would not be reasonably expected to result in a Material Adverse Effect,
and (D) to the extent that such validity or enforceability may be limited by (1)
bankruptcy, insolvency, fraudulent conveyance, preferential transfer,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights and remedies generally; (2) general
principles of equity (whether such enforceability is considered in a proceeding
in equity or at law), and by the discretion of the court before which any
proceeding therefor may be brought, including, without limitation, (x) the
possible unavailability of specific performance, injunctive relief or any other
equitable remedy, and (y) concepts of materiality, reasonableness, good faith
and fair dealing.
(v) To our knowledge and other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which the Company or
any of the Subsidiaries is a party or of which any property or assets of the
Company or any of the Subsidiaries is the subject that, if determined adversely
to the Company or any of the Subsidiaries, might reasonably be expected to have
a Material Adverse Effect; and, to our knowledge, no such proceedings are
threatened by governmental authorities or by others except as disclosed in the
Prospectus.
(vi) The First Registration Statement was declared effective under the
Securities Act as of 5:00 p.m. July 17, 1996; the Second Registration Statement
was declared effective on July 18, 1996; the Prospectus was filed with the
Securities and Exchange Commission pursuant to subparagraph (1) of Rule 424(b)
of the rules and regulations promulgated under the Securities Act (the "Rules
-----
and Regulations") on July 18, 1996; and, to our knowledge, no stop order
- ---------------
suspending the effectiveness of the Registration Statement has been issued and,
to our knowledge, no proceeding for that purpose is pending.
(vii) The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to the Delivery Date
(other than the financial statements and related schedules therein, as to which
financial statements and related schedules we express no opinion) comply as to
form in all material respects with the requirements of the Securities Act and
the Rules and Regulations.
(viii) To our knowledge, there are no contracts or other documents
that are required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
that have not been described in the Prospectus or filed as exhibits to the
Registration Statement.
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 6
(ix) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(x) The issuance and sale of the shares of Stock being delivered on
the Delivery Date by the Company and the compliance by the Company with the
provisions of the Underwriting Agreement will not conflict with or result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument, in each such case known to us and to which the Company
or any of the Subsidiaries is a party or by which any of the property or assets
of the Company or of any of the Subsidiaries is subject, except for any such
conflicts, breaches, violations or defaults that would not reasonably be
expected to result in a Material Adverse Effect, nor will such actions result in
(i) any violation of the provisions of the Second Amended and Restated
Certificate of Incorporation of the Company or the Second Amended and Restated
By-laws of the Company or the charter or by-laws of any of the Subsidiaries, or
(ii) to our knowledge, any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of the Subsidiaries or any of their properties or assets and
which could reasonably be expected to result in a Material Adverse Effect.
Except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under or by the Securities Exchange Act of 1934, as amended, the
Securities Act, the National Association of Securities Dealers, Inc., the Nasdaq
National Market and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution, delivery and
performance of the Underwriting Agreement by the Company and the consummation of
the transactions contemplated thereby.
(xi) To our knowledge and except as may be described in the
Registration Statement, there are no contracts, agreements or understandings
between the Company or any of the Subsidiaries and any person granting such
person the right (other than rights that have been waived or satisfied) to
require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
registered pursuant to the Registration Statement.
In addition, we have participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company, and representatives of you and your counsel, at
which the contents of the
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 7
Registration Statement and Prospectus and related matters were discussed and,
although we did not independently verify, we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus (except for
the statements made in the Registration Statement under the caption "Description
of Capital Stock" and "Shares Eligible for Future Resale" insofar as such
statements relate to the Stock and concern legal matters), on the basis of the
foregoing (relying as to materiality to a large extent upon the statements of
officers and other representatives of the Company) no facts have come to our
attention that cause us to believe that (i) the Registration Statement, as of
the date and time as of which the First Registration Statement is declared
effective by the Securities and Exchange Commission, 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, and
(ii) the Prospectus, as of its date and as of the date hereof, 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, in light of
the circumstances under which they were made, not misleading; it being
understood that we are not commenting on and express no opinion with respect to
the financial statements and related notes thereto, schedules or other financial
or statistical data included in or omitted from the Registration Statement, the
Prospectus or any amendments or supplements thereto.
Our opinions set forth above are subject to the following additional
qualifications:
(a) Our opinions are limited to the specific issues addressed herein
and are limited in all respects to the laws as they exist as of the date hereof
and the facts as stated herein and purport to express what a court would
conclude based on such facts. By rendering our opinions, we do not undertake to
advise you of any changes in such laws or facts which may occur on or after the
date hereof.
(b) We express no opinion as to, or the effect or applicability of,
any laws other than the laws of the State of New York, the Federal laws of the
United States of America and the General Corporation Law of the State of
Delaware. We assume no responsibility with respect to the application to the
subject transactions, or the effect thereon, of the laws of any other
jurisdiction.
<PAGE>
Lehman Brothers Inc.
Dillon, Read & Co. Inc.
Lazard Freres & Co. LLC
Fieldstone FPCG Services, L.P.
July 23, 1996
Page 8
This opinion is being rendered only to you for your exclusive benefit
and is intended to be relied upon by you in connection with the transactions
contemplated by the Underwriting Agreement. This opinion is not to be quoted in
whole or in part or otherwise referred to, nor is it to be filed with any
governmental agency or any other person, firm or entity without our prior
written consent. This opinion may not be used for any other purpose, or relied
on by any other person, firm or entity for any purpose, without our prior
written consent.
Very truly yours,
ANDERSON KILL & OLICK, P.C., a
New York Professional Corporation
By: /s/ RONALD S. BRODY
---------------------------
Ronald S. Brody,
a Member of the Firm
<PAGE>
SCHEDULE 1
Number of
Underwriters Shares
- ------------ ---------
Lehman Brothers Inc............................ 681,500
Dillon, Read & Co. Inc......................... 681,500
Lazard Freres & Co. LLC........................ 681,500
Fieldstone Private Capital Group............... 681,500
Alex. Brown & Sons Incorporated................ 103,000
Donaldson, Lufkin & Jenrette Securities
Corporation.................................. 103,000
A.G. Edwards & Sons, Inc....................... 103,000
Everen Securities, Inc......................... 103,000
Goldman, Sachs & Co............................ 103,000
Merrill Lynch, Pierce, Fenner &
Smith Incorporated........................... 103,000
Morgan Stanley & Co. Incorporated.............. 103,000
Smith Barney Inc............................... 103,000
Robert W. Baird & Co. Incorporated............. 57,000
Doft & Co., Inc................................ 57,000
Fahnestock & Co., Inc.......................... 57,000
Gilford Securities Incorporated................ 57,000
McDonald & Company Securitries, Inc............ 57,000
Nesbitt Burns Securities Inc................... 57,000
Raymond James & Associates, Inc................ 57,000
Stifel, Nicolaus & Company, Incorporated....... 57,000
Sutro & Co. Incorporated....................... 57,000
Unterberg Harris............................... 57,000
TOTAL 4,120,000
=========
<PAGE>
EXHIBIT 10.37
Coinmach Laundry Corporation
Lock-Up Agreement
July 23, 1996
Lehman Brothers Inc.
Dillon Read & Co.
Lazard Freres & Co., LLC
Fieldstone FPCG Services, Inc.
as Representatives of the
Several Underwriters
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
The undersigned, as a holder of securities of Coinmach Laundry
Corporation, a Delaware corporation (the "Company"), irrevocably agrees not to,
directly or indirectly, without the prior written approval of Lehman Brothers
Inc., offer, sell or otherwise dispose of any shares of the Company's capital
stock (the "Common Stock") (or enter into any transaction or device that is
designed to, or could be expected to, result in the disposition of any shares of
Common Stock) or sell or grant options, rights or warrants with respect to any
shares of Common Stock of the Company (the "Securities") that the undersigned
may own directly or indirectly for a period of one hundred and eighty (180) days
(the "Lock-up Period") following the day on which the Form S-1 Registration
Statement (the "Registration Statement") filed with the Securities and Exchange
Commission on May 13, 1996 on behalf of the Company in connection with the
initial public offering of the Company's Class A common stock, par value $.01
per share (the "Offering"), shall become effective by order of the Securities
and Exchange Commission.
The undersigned understands that the underwriters and the Company will
rely upon the representations set forth in this Agreement in proceeding with the
Offering. The undersigned understands that this Agreement is irrevocable and
shall be binding on the undersigned and the undersigned's successors, heirs,
personal representatives and assigns. The undersigned agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent
against the transfer of Securities of the Company held by the undersigned except
in compliance with this Agreement.
-1-
<PAGE>
Notwithstanding anything else herein, if the Offering is not
consummated on or before September 30, 1996, the terms and provisions of this
Agreement shall be of no further force or effect.
COINMACH LAUNDRY CORPORATION
By: /s/ ROBERT M. DOYLE
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
-2-
<PAGE>
EXHIBIT 10.38
PROMISSORY NOTE
$15,000,000 January 8, 1997
New York, New York
FOR VALUE RECEIVED, Coinmach Laundry Corporation, a Delaware corporation
("Maker"), hereby unconditionally promises to pay to the order of Richard F.
Enthoven, as agent for and on behalf of each of the individuals listed on
Schedule A attached hereto ("Payee"), or to the Escrow Agent (as hereinafter
- ----------
defined) as nominee for and on behalf of Payee, in each case subject to the
terms and conditions of this Promissory Note, in lawful money of the United
States of America and in immediately available funds, the principal sum of
Fifteen Million Dollars ($15,000,000) (the "Principal Amount"), in the amounts
and on the respective dates set forth on the amortization schedule attached
hereto, together with interest thereon at the rate of 9.875% per annum.
Interest shall accrue from the date hereof until this Promissory Note is paid in
full, shall be payable in arrears at the same time each installment of principal
is due and shall be computed based on a 360-day year in accordance with the
actual number of days elapsed. In no event shall interest charged hereunder, in
whatever manner such rate of interest may be characterized or computed, exceed
the highest rate permissible under applicable law.
All payments or prepayments of principal under this Promissory Note
(including any principal payments made as a result of the acceleration of any
payment obligations hereunder) shall be payable by Maker as follows: (i) an
amount equal to seventy percent (70%) of each principal payment shall be paid to
Merrill Lynch Trust Co. (the "Escrow Agent"), to be held by the Escrow Agent
subject to the terms and conditions of that certain Escrow Agreement, dated as
of even date herewith by and among the Maker, Payee and the Escrow Agent (the
"Escrow Agreement"), and (ii) an amount equal to thirty percent (30%) of each
principal payment shall be paid to Payee.
This Promissory Note is secured by a pledge of all of the capital stock of
Coinmach Corporation, a Delaware corporation and a wholly-owned subsidiary of
Maker, pursuant to that certain pledge agreement, dated as of even date
herewith, between the Maker and the Payee (the "Pledge Agreement"), the
provisions of which are incorporated herein by reference and form a part hereof.
If (a) Maker fails to make any payment of principal or interest on this
Promissory Note when due, (b) a default in the payment of principal or interest
under the Credit Agreement (as defined in the Pledge Agreement) occurs and is
continuing, which default results in the acceleration of all of the indebtedness
thereunder prior to the express maturity thereof, or (c) a court of competent
jurisdiction enters a judgement, decree or order for relief in respect of the
Maker in an involuntary case or proceeding under any federal or state bankruptcy
law, which shall (i) approve as properly filed a petition seeking
reorganization,
<PAGE>
arrangement, adjustment or composition in respect of the Maker, (ii) appoint a
custodian, receiver, trustee, liquidator or similar official for the Maker or
for substantially all of its property or assets, or (iii) order the winding-up
or liquidation of its affairs, and such judgement, decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive days, then all
unpaid principal of and all accrued and unpaid interest on this Promissory Note
shall become and be immediately due and payable.
Payment due under this Promissory Note may be offset by the Maker in the
event of any breach of or default under, or other claim by the Maker arising
under, that certain Stock Purchase Agreement, dated as of November 25, 1996, by
and among Maker, Payee and certain other parties thereto (the "Purchase
Agreement"), including, without limitation, any indemnity obligations arising
under Section 11.2(a) thereof, or any other agreement between the Maker and the
Payee executed in connection with the Purchase Agreement or contemplated
thereunder. Any such offset (each, an "Offset") shall be treated as a
prepayment of principal due on this Promissory Note and applied against the next
succeeding payment or payments of principal due hereunder. Any such Offset
hereunder shall be subject to the applicable provisions contained in the
Purchase Agreement and the Escrow Agreement.
Any notice relating to this Promissory Note shall be in writing and shall
be deemed to be effective if given and received in the manner expressly provided
in the Purchase Agreement.
This Promissory Note may be prepaid, in whole or in part, at any time
without penalty or premium, with interest to the date of such prepayment;
provided, however, that this Promissory Note shall be prepaid in part in a
- -------- -------
principal amount of not less than $7,500,000 (net of any prepayments made
hereunder) on or prior to the date on which the Maker consummates the issuance
and sale, in an underwritten public offering, of shares of any class of Maker's
voting equity securities having an aggregate offering value of at least $50
million. Any such prepayment (other than prepayments deemed to have been made
in connection with Offsets hereunder) shall be credited first against accrued
and unpaid interest and second against unpaid principal hereof.
Maker hereby waives presentment for payment, demand, protest, notice of
protest and notice of dishonor or nonpayment of this Promissory Note.
THIS PROMISSORY NOTE HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN
MADE IN NEW YORK, NEW YORK AND SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS
OF LAW PROVISIONS.
EACH OF MAKER AND PAYEE IRREVOCABLY CONSENTS AND SUBMITS TO THE NON-
EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN
<PAGE>
DISTRICT OF NEW YORK AND WAIVES ANY OBJECTION BASED ON VENUE OR FORUM NON
----- ---
CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN ARISING UNDER THIS
- ----------
PROMISSORY NOTE OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF MAKER AND PAYEE IN RESPECT OF THIS PROMISSORY NOTE OR THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE, AND AGREES THAT ANY
DISPUTE ARISING OUT OF THE RELATIONSHIP BETWEEN MAKER AND PAYEE OR THE CONDUCT
OF SUCH PERSONS IN CONNECTION WITH THIS PROMISSORY NOTE OR OTHERWISE SHALL BE
HEARD ONLY IN THE COURTS DESCRIBED ABOVE. EACH OF MAKER AND PAYEE HEREBY WAIVES
PERSONAL SERVICE OF PROCESS AND AGREES THAT A SUMMONS AND COMPLAINT COMMENCING
AN ACTION OR PROCEEDING IN ANY SUCH COURT SHALL BE PROPERLY SERVED AND SHALL
CONFER PERSONAL JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO SUCH
PARTY. EACH OF MAKER AND PAYEE CONFIRMS THAT THE FOREGOING WAIVERS ARE INFORMED
AND FREELY MADE.
Whenever possible each provision of this Promissory Note shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Promissory Note shall be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Promissory Note. All references
in this Promissory Note to Maker, Payee and Escrow Agent shall be deemed to
include, as applicable, a reference to their respective successors and assigns.
The provisions of this Promissory Note shall be binding upon and shall inure to
the benefit of the successors and assigns of Maker and the successors and
assigns of Payee.
IN WITNESS WHEREOF, Maker has executed this Promissory Note as of the day
and year first written above.
COINMACH LAUNDRY CORPORATION
By: /s/ ROBERT M. DOYLE
----------------------------
Name: Robert M. Doyle
Title: Senior Vice President
<PAGE>
AMORTIZATION SCHEDULE
<TABLE>
<CAPTION>
INSTALLMENTS PORTION OF PORTION OF
OF PRINCIPAL PRINCIPAL PRINCIPAL
TO BE PAID INSTALLMENT TO INSTALLMENT TO
ON PAYMENT BE PAID TO BE PAID TO
PAYMENT DATE DATE ESCROW AGENT SELLERS' AGENT
================================================================
<S> <C> <C> <C>
January 15, 1998 $1,000,000 $ 700,000 $ 300,000
January 15, 1999 $1,000,000 $ 700,000 $ 300,000
January 15, 2000 $2,000,000 $1,400,000 $ 600,000
January 15, 2001 $2,000,000 $1,400,000 $ 600,000
January 15, 2002 $2,000,000 $1,400,000 $ 600,000
January 15, 2003 $3,000,000 $2,100,000 $ 900,000
June 15, 2004 $4,000,000 $2,800,000 $1,200,000
================================================================
</TABLE>
<PAGE>
AMORTIZATION PAYMENT SCHEDULE
<TABLE>
<CAPTION>
OFFSET OF
PRINCIPAL PRINCIPAL PRINCIPAL PURSUANT
PAYMENT DATE PAYMENT PREPAYMENT TO ESCROW AGREEMENT
==========================================================
<S> <C> <C> <C>
==========================================================
</TABLE>
<PAGE>
SCHEDULE A
----------
LIST OF SELLERS
Tamara Lynn Ford
Robert Kyle Ford
Traci Lea Ford
Tucker F. Enthoven
Richard F. Enthoven
Richard Franklin Ford, Jr.,
Trustee U/D/T February 4, 1994
<PAGE>
EXHIBIT 10.39
TAX COOPERATION AGREEMENT
PREAMBLE
--------
This Tax Cooperation Agreement ("Agreement"), dated as of January 8, 1997,
is entered into by and among Kwik Wash Laundries, L.P., a Texas limited
partnership (the "Partnership"), KWL, Inc., a Nevada corporation and sole
general partner of the Partnership (the "GP"), Kwik-Wash Laundries, Inc., a
Nevada corporation and sole limited partner of the Partnership (the "LP" and,
together with the GP, the "Partners"), Coinmach Corporation, a Delaware
corporation (the "Buyer"), and each of the parties listed on Schedule A attached
to this Agreement (each, a "Seller" and, collectively, the "Sellers").
RECITALS
--------
A. The Sellers collectively own all of the issued and outstanding shares
of common stock, par value $.10 per share, of GP (the "GP Stock") and all of the
issued and outstanding shares of common stock, par value $1.00 per share, of LP
(the "LP Stock" and, together with the GP Stock, the "Stock"), constituting all
of the issued and outstanding capital stock of the Partners.
B. The Sellers, the Buyer, the Partners and the Partnership have entered
into a Stock Purchase Agreement, dated as of November 25, 1996 (the "Stock
Purchase Agreement"), relating to the purchase by the Buyer from the Sellers of
all of the Stock.
C. In connection with the purchase of the Stock pursuant to the Stock
Purchase Agreement, the Sellers, the Buyer, the Partners and the Partnership
wish to set forth their agreement with respect to certain tax matters as set
forth below.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used herein without definition
-----------
shall have the meanings ascribed to them in the Stock Purchase Agreement. In
the case of a conflict of meanings of such capitalized terms between the Stock
Purchase Agreement and this Agreement, this Agreement shall control.
2. Indemnity by Sellers. Except as otherwise provided in this
--------------------
Agreement, the Sellers shall be liable for, and shall indemnify and hold
harmless the Buyer's Indemnitees from and against, (i) any Taxes that may be
imposed on or incurred by the Partners and/or the Partnership with respect to
all taxable periods ending on or prior to the Closing Date; and (ii) any Taxes
allocated to the Sellers pursuant to Section 3
<PAGE>
hereof. The indemnification described in this Section 2 shall not apply to the
extent of any Taxes (other than United States federal income Taxes) that are
reflected as a current accrued tax liability on the 1996 Balance Sheet.
Anything in this Agreement to the contrary notwithstanding, the indemnification
described in this Section 2 shall be subject to and governed by the provisions
of Article 11 of the Stock Purchase Agreement, with the indemnified amount to be
treated under said Article 11 as Damages incurred by reason of breach of the
representations and warranties in Section 4.24 of the Stock Purchase Agreement.
3. Allocation of Taxes and Tax Items. The Sellers, the Partners,
---------------------------------
the Partnership and the Buyer will, to the extent permitted by applicable law,
elect with the relevant Taxing Authority (as hereinafter defined) or Taxing
Authorities to close any taxable periods of the Partners and the Partnership as
of the Tax Effective Time, as hereinafter defined, and the Parties shall take
all steps, and do all acts and things, including the filing of elections or Tax
Returns with Taxing Authorities, as are or may be reasonably necessary or
appropriate to cause any such period to end as of the Tax Effective Time. In
order to accomplish this result, the Buyer, the Partners and the Partnership
agree, to the extent allowed by applicable law, regulations and rulings, that,
unless the Partnership is dissolved and liquidated on or before March 31, 1997,
the Partnership will change its taxable year to a taxable year ending March 31,
so that the Partnership will experience a taxable year end on March 31, 1997.
For purposes of this Agreement, "Party" shall mean one of the members of the
group consisting of the Sellers, the Partners, the Partnership and the Buyer;
"Parties" shall mean all of the members of such group; "Taxing Authority" shall
mean a federal, local, municipal, state, or other governmental body; and "Tax
Effective Time" shall mean (i) the close of business on the day before the
Closing Date when used with reference to either (a) federal income Taxes, or (b)
state or local income Taxes in the case of each state or local Taxing Authority
imposing an income Tax with respect to which the taxable income or loss of the
Partners is, by reason of the sale of stock to be consummated at the Closing,
determined based on a taxable period ending as of the close of business on the
day before the Closing, or (ii) the close of business on the Closing Date when
used with reference to either (a) all Taxes other than income Taxes, or (b)
state or local income Taxes other than those described in clause (b) of part (i)
of this definition of Tax Effective Time. In any case where applicable law does
not permit the Partnership or one of the Partners to close its taxable period as
of the Tax Effective Time, then Taxes (whether based on income, capital,
ownership of property or otherwise), if any, attributable to the taxable period
of such Party, as applicable, that includes the Tax Effective Time, but does not
end as of the Tax Effective Time, shall be allocated to (i) the Sellers for the
period up to and including the Tax Effective Time (the "Pre-Closing Period"),
and (ii) the Partners and/or the Buyer for the period subsequent to the Tax
Effective Time (the "Post-Closing Period"). For purposes of applying Section
4.24 of the Stock Purchase Agreement to determine the extent to which the Taxes
for all taxable periods ending after the Closing Date are properly attributable
to the portion of any such taxable period ending on the Closing Date, the Taxes
allocated hereunder to the Pre-Closing Period shall be considered to be properly
attributable to the portion of such taxable period ending on the Closing Date,
Tax Cooperation Agreement
- -------------------------
Page 2
<PAGE>
and the Taxes allocated hereunder to the Post-Closing Period shall be considered
to be properly attributable to the portion of such taxable period occurring
after the Closing Date. For purposes of this Section 3, the allocation of Taxes
between the Pre-Closing Period and the Post-Closing Period shall be determined
as follows:
(a) In the case of property or ad valorem Taxes or franchise Taxes
(which are not measured by, or based upon, net income), such Taxes for the Pre-
Closing Period and for the Post-Closing Period shall be determined ratably on an
equal per diem basis; and
(b) In the case of (i) other Taxes, including without limitation
income Taxes, and (ii) Tax Items, as hereinafter defined, such other Taxes and
Tax Items shall be determined on the basis of an interim closing of the books of
the Partnership and each of the Partners as of the Tax Effective Time (except
that exemptions, allowances, and deductions for a taxable period that are
calculated on an annual or periodic basis, such as the deduction for
depreciation, shall be apportioned between the Pre-Closing Period and the Post-
Closing Period ratably on an equal per diem basis). For purposes of this
Agreement, "Tax Items" of an entity shall mean the taxable income or loss of
such entity, each item of income, gain, loss or deduction that is a constituent
of such taxable income or loss, and each item of income, gain, loss, deduction
and credit that is required to be separately stated for income tax purposes.
The actual Tax for a taxable period that includes the Tax Effective Time shall
be apportioned between the Pre-Closing Period and the Post-Closing Period in
proportion to the hypothetical Taxes that would result for the Pre-Closing
Period and the Post-Closing Period if each such period were a separate taxable
period, determined without adjustment for the length of the period. Except as
otherwise required by law, where the timing of an item cannot be determined from
the books and records of the Partnership or the Partners, it shall be prorated
in an equitable manner on the basis of the best available evidence. Tax
brackets, fixed statutory deductions and similar items do not require proration
for purposes of this Section 3.
(c) The Change of Control Payments, as well as the federal and state
payroll taxes incurred by the Partnership as a result of making the Change of
Control Payments (collectively, the Change of Control Payments and the described
payroll taxes hereinafter referred to as the "Special Bonus Payments"), will be
claimed as deductions (the "Special Bonus Deductions") for income tax purposes
by the Partnership in the period beginning on January 1, 1997 and ending on the
Tax Effective Time (the "1997 Pre-Closing Period"), and will be included as
deductions in determining the Tax Items of the Partnership that are allocated
among the Partners for income tax purposes for the 1997 Pre-Closing Period. In
turn, the taxable income or loss of the Partners for the 1997 Pre-Closing Period
will be determined for income tax purposes by including as a current deduction,
deductible by the Partnership during the 1997 Pre-Closing Period, the aggregate
amount of the Special Bonus Payments, so that (i) the taxable income or loss of
the Partners allocated to the Sellers with respect to the operations of the
Partnership for the 1997 Pre-Closing Period will in the aggregate be determined
based on a current deduction being claimed by the Partnership during the
Tax Cooperation Agreement
- -------------------------
Page 3
<PAGE>
1997 Pre-Closing Period equal to the aggregate of the Special Bonus Payments,
and (ii) the aggregate taxable income or loss recognized by the Sellers
resulting from the operations of the Partnership for 1997 will be determined
based on such taxable income being reduced, or if applicable such taxable loss
being increased, by an amount equal to the aggregate of the Special Bonus
Payments. The Parties agree that, anything in this Agreement to the contrary
notwithstanding, (i) the Special Bonus Deductions shall be allocated entirely
to, and claimed as deductions by the Partnership within, the 1997 Pre-Closing
Period, and (ii) neither the Partnership, the Partners nor the Buyer makes any
representations or warranties as to the deductibility to any Party of the
Special Bonus Payments or as to any tax benefits to which any Party may or may
not be entitled as a result of the Partnership making the Special Bonus
Payments. Except as provided in Section 3(d) hereof, the Buyer, the Partnership
and the Partners each agrees not to claim during the Post-Closing Period or any
taxable period occurring thereafter, and the Buyer agrees to cause the
Partnership and/or either or both of the Partners not to claim during the Post-
Closing Period or any taxable period occurring thereafter, any deductions
whatsoever for income tax purposes arising from the payment of the Special Bonus
Payments. Except as provided in Section 3(d) hereof, each of the Parties agrees
not to take a position for income tax purposes, whether on a Tax Return or as a
result of an examination or audit by any Taxing Authority or otherwise, contrary
to the provisions of this Section 3(c).
(d) If for any reason the Sellers are denied deductions for federal
income tax purposes for their respective allocable shares (based upon the
Sellers' respective indirect percentages of ownership of the Partnership) of the
Special Bonus Payments by a Final Determination, as hereinafter defined (whether
such denial occurs by reason of (i) disallowing the Special Bonus Deductions in
whole or in part as deductions to the Partnership during the 1997 Pre-Closing
Period, (ii) denying, in whole or in part, the effect of such deductions on a
pass-through basis to the Sellers, or (iii) otherwise), then subsequent to the
date of such Final Determination, but not before such date, the Partnership, the
Partners, and/or the Buyer shall, to the extent of such disallowance, be
entitled to attempt to claim all or any portion of such Special Bonus Payments
as deductions for federal income tax purposes without regard to the provisions
of Section 3(c) hereof. If for any reason the Sellers are denied deductions for
state or local income tax purposes for their respective allocable shares of the
Special Bonus Payments by a Final Determination (whether such denial occurs by
reason of (i) disallowing the Special Bonus Deductions in whole or in part as
deductions to the Partnership during the 1997 Pre-Closing Period, (ii) denying,
in whole or in part, the effect of such deductions on a pass-through basis to
the Sellers, or (iii) otherwise), then subsequent to the date of such Final
Determination, but not before such date, with respect to the particular state or
local income tax involved, the Partnership, the Partners and/or the Buyer shall,
to the extent of such disallowance, be entitled to attempt to claim all or any
portion of the Special Bonus Payments as deductions for purposes of calculating
such state or local income tax without regard to the provisions of Section 3(c)
hereof. In the event the Partnership, the Partners and/or the Buyer become
entitled to attempt to claim all or any portion of the Special Bonus Payments as
deductions as provided in this
Tax Cooperation Agreement
- -------------------------
Page 4
<PAGE>
Section 3(d), the Sellers make no representation or warranty as to whether any
such deductions will be allowable to any Party. For purposes of this Agreement,
"Final Determination" shall mean the final resolution of a Seller Tax Issue, as
hereinafter defined, by (i) a decision of the Tax Court or judgment, decree, or
other order by a court of competent jurisdiction, which has become final and
unappealable; (ii) IRS Form 870, 870-AD, 870-L, 870-L(AD), 870-P, 870-P(AD),
870-S, or 870-S(AD) (or any successor forms thereto), on the date of acceptance
by or on behalf of the IRS, or by a comparable agreement form under the laws of
other jurisdictions; except that a Form 870, 870-AD, 870-L, 870-L(AD), 870-P,
870-P(AD), 870-S, or 870-S(AD) or comparable form that reserves the right of the
taxpayer to file a claim for refund and/or the right of the Taxing Authority to
assert a further deficiency shall not constitute a final determination; (iii) a
closing agreement or offer in compromise under Sections 7121 or 7122 of the Code
or under corresponding provisions of any subsequently enacted Federal tax laws,
or comparable agreements under the laws of other jurisdictions; (iv) any
allowance of a refund or credit in respect of any overpayment of tax, including
any related interest or penalties, but only after the expiration of all periods
during which such refund may be recovered (including by way of offset) by the
Tax imposing jurisdiction; or (v) any other final disposition by reason of the
expiration of the applicable statute of limitations or the expiration of the
period during which a protest may be filed. For purposes of this Agreement, the
final resolution of a "Seller Tax Issue" shall mean the final resolution of the
Tax liability of the Sellers for 1997, the final resolution of the amount of
taxable income or loss of the Partnership allocable among the Partners for the
1997 Pre-Closing Period, or the final resolution of the amount of taxable
incomes or losses of the Partners allocable among the Sellers for 1997.
4. Indemnification by Buyer. Except as otherwise provided in this
------------------------
Agreement, the Buyer shall be liable for, and shall indemnify and hold harmless
the Sellers' Indemnitees from and against, (i) any Taxes arising from any event
occurring on the Closing Date, but after the Closing, which is outside the
ordinary course of the Business, (ii) any Taxes arising from an election or
deemed election, or election imposed by a Taxing Authority, under Section 338 of
the Code (or any comparable provision of state, local or foreign law) with
respect to the purchase of the Stock; (iii) any Taxes that may be imposed on or
incurred by the Partnership or the Partners with respect to all taxable periods
beginning after the Tax Effective Time; (iv) any sales, use, transfer, real
property transfer or gain, stamp, documentary or similar Taxes arising out of or
resulting from any transaction contemplated by the Stock Purchase Agreement; and
(v) any attorneys' fees or other costs incurred by any of Sellers' Indemnitees
thereof in collecting any payment from the Buyer under this Agreement in the
event such payment is not made by the Buyer as provided herein.
5. Tax Refunds. The Buyer agrees to pay (and to cause each of the
-----------
Partners and the Partnership to pay) to the Sellers all refunds of any Taxes for
which the Sellers are liable under Section 2 hereof, but only to the extent such
refund has not been reflected as a receivable on the 1996 Balance Sheet. The
Sellers agree to pay to the Buyer all refunds of any income Taxes imposed on
taxable income or gains allocated to
Tax Cooperation Agreement
- -------------------------
Page 5
<PAGE>
the Post-Closing Period pursuant to Section 3 hereof and any other Taxes
allocated to the Post-Closing Period pursuant to Section 3 hereof. The Parties
shall cooperate in order to take all reasonably necessary steps to claim any
such refund. Any such refund received by a Party (considering, for purposes of
this sentence, the Buyer, the Partners and the Partnership as one Party, and the
Sellers as the other Party) or the respective Affiliates of such Party for the
account of the other Party shall be paid to such other Party within thirty (30)
days after such refund is received. For purposes of this Agreement, a refund of
Tax includes the application of an amount otherwise refundable as a reduction of
amounts owed or to be owed.
6. Payment of Taxes. All Taxes with respect to the Partners and the
----------------
Partnership shall be paid to the appropriate Taxing Authority by the Party that
is responsible therefor under the applicable tax law. Except as otherwise
provided in this Agreement, any amount to which a Party is entitled under this
Agreement shall be promptly paid to such Party by the Party obligated to make
such payment following written notice to the Party so obligated stating that the
Taxes to which such amount relates are due and providing details supporting the
calculation of such amount.
7. Tax Returns.
-----------
(a) All Tax Returns that relate to any Taxes of the Partners and the
Partnership shall be prepared and filed by the Party that is legally responsible
therefor.
(b) The Buyer, the Partnership and the Partners each agree that the
Partnership and the Partners shall afford Mr. Richard F. Enthoven, on behalf of
the Sellers, a reasonable opportunity to review its calculations of Tax Items
which are included on all Seller-Affected Tax Returns (as hereinafter defined)
filed after the Closing prior to their inclusion in the applicable Tax Returns.
For purposes of this Agreement, "Seller-Affected Tax Return" shall mean any Tax
Return filed by, or on behalf of, the Partnership or either of the Partners that
includes Tax Items that are allocable, directly or indirectly, between or among
parties that include one or more of the Sellers. An indirect allocation of a
share of a Tax Item to a Seller would include, without limitation, the
allocation of a Tax Item of the Partnership among the Partners that in turn
affects the amount of one or more Tax Items of either or both Partners that is
allocable to such Seller.
(i) With respect to each Tax Return that is a Seller-Affected Tax
Return, the Partnership and each Partner, as applicable, shall provide the
Sellers and their authorized representatives with copies of such completed
Tax Return at least sixty (60) business days prior to the due date (or the
extended due date, if an extension of time for filing has been obtained)
for the filing of such Tax Return, and the Sellers and their authorized
representatives shall have the right to review such Tax Returns, and the
Sellers shall have the right to approve the
Tax Cooperation Agreement
- -------------------------
Page 6
<PAGE>
contents of each such Tax Return prior to the filing thereof with the
appropriate Taxing Authority.
(ii) Each Seller-Affected Tax Return to be filed after Closing
shall be prepared (in the absence of (i) a controlling change in law or
circumstances or (ii) consent of the Sellers) consistent with past
practices, elections, accounting methods, conventions and principles of
taxation used for the most recent taxable period for which Tax Returns
involving similar Tax Items have been filed; provided that, anything in
this Agreement to the contrary notwithstanding, each Seller-Affected Tax
Return shall be prepared and filed based on the allocations of Tax Items
between the Pre-Closing Period and the Post-Closing Period as provided in
Section 3 hereof.
(iii) Any disagreement between the Parties (considering, for
purposes of this Section 7(b)(iii), the Buyer, the Partners and the
Partnership as one Party, and the Sellers as the other Party) with respect
to any aspect of the treatment of any Tax Item on a Seller-Affected Tax
Return to be filed after Closing which is not resolved by mutual agreement
of the Parties shall be resolved by a nationally recognized independent
public accounting firm chosen by and mutually acceptable to the Parties
(the"Tax Matters Referee"). Such Tax Matters Referee shall be chosen by
the Parties within ten (10) business days from the date on which one Party
serves written notice on the other Party requesting the appointment of a
Tax Matters Referee, provided that such notice specifically describes the
matters to be considered and resolved by the Tax Matters Referee. For
purposes of the preceding sentence, notice to the Party consisting of the
Sellers may be given by giving notice to Richard F. Enthoven, and notice to
the Party consisting of the Buyer, the Partners and the Partnership may be
given by giving notice to the Buyer. In the event the Parties cannot agree
on the selection of a Tax Matters Referee, then the Tax Matters Referee
shall be the Dallas office of the public accounting firm of Arthur Andersen
LLP. Within twenty (20) days of appointment, the Tax Matters Referee shall
resolve any such disagreements that are specified in the notice; provided
that, in determining its resolution of each disagreement, the Tax Matters
Referee shall be bound by the requirements set forth in Section 7(b)(ii)
hereof for the preparation of Seller-Affected Tax Returns. Any resolution
of an issue submitted to the Tax Matters Referee shall be final and binding
on the parties to this Agreement without further recourse. The Parties
shall share the costs and fees of the Tax Matters Referee equally.
(c) The Sellers and their Affiliates will not take any action to amend
or change the manner in which any Tax Items with respect to the Partnership or
either of the Partners have been reported on any previously filed Tax Returns;
provided, however, the Sellers and their Affiliates shall be entitled to amend
- -------- -------
any such Tax Returns in a manner which does not adversely affect the Buyer or
the Affiliates of such Party, and further provided that the Sellers and their
Affiliates may amend Tax Returns to the extent
Tax Cooperation Agreement
- -------------------------
Page 7
<PAGE>
required to reflect any adjustment or adjustments made as a result of an audit
or audits by any Taxing Authority.
(d) The Buyer and its Affiliates, including the Partners and the
Partnership, shall cooperate with the Sellers and shall make available all
necessary books and records and timely take all action reasonably necessary to
allow the Sellers and their Affiliates to prepare and file the Tax Returns that
they are responsible for preparing and filing under this Section 7 and to
prepare and file the Tax Returns of the Sellers.
(e) The Buyer, the Partnership, the Partners and their respective
Affiliates will not take any action to amend or change the manner in which any
Tax Items with respect to the Partnership or either of the Partners have been
reported on any Seller-Affected Tax Return.
(f) Richard F. Enthoven is hereby designated as the tax matters person
on the Tax Returns on Form 1120S filed for the Partners for the taxable period
or periods ending on or before the Closing. In the event that Richard F.
Enthoven shall fail or refuse to serve as tax matters person, the Sellers may
designate a person to serve as tax matters person in a writing executed by a
majority of the Sellers.
8. Cooperation in Preparation of Tax Returns. The Buyer, including
-----------------------------------------
without limitation the Partners and the Partnership, and the Sellers shall
cooperate fully with each other and make available to each other such tax data
and other information as may be reasonably required for the preparation by the
Buyer or the Sellers of any Tax Returns required to be prepared and filed by the
Buyer or the Sellers hereunder, as well as Tax Returns required by law to be
filed by Sellers.
9. Tax Audits. In the event the Buyer, either or both of the
----------
Partners, the Partnership or their Affiliates receive written notice (the "Audit
Notice") of any pending Tax audit or assessment which may affect the
determination of Taxes for which the Sellers are or may be liable under Section
2 hereof or pursuant to Section 4.24 of the Stock Purchase Agreement, the Buyer
shall notify the Sellers in writing thereof (the "Buyer Notice") no later than
the earlier of (i) thirty (30) days after the receipt by the Buyer, either or
both of the Partners, the Partnership or their Affiliates of the Audit Notice,
or (ii) ten (10) days prior to the deadline for responding to the Audit Notice.
As to any Taxes covered by such Tax audit or assessment for which the Sellers
are solely liable under Section 2 hereof or Section 4.24 of the Stock Purchase
Agreement, the Sellers shall be entitled at their expense to control or settle
the contest (including the employment of counsel of its choice) of any Tax audit
or administrative or court proceeding relating thereto, provided the Sellers
notify the Buyer in writing (the "Sellers Notice") that they desire to control
such contest no later than the earlier of (a) forty-five (45) days after receipt
of the Buyer Notice, or (b) five (5) days prior to the deadline for responding
to the Audit Notice. The Parties agree that they will cooperate, and cause each
of their respective Affiliates to cooperate, fully with each other and with
their respective counsel in the defense against or compromise of any claim in
any said
Tax Cooperation Agreement
- -------------------------
Page 8
<PAGE>
proceeding. Only one Sellers Notice shall be required regarding any pending Tax
Audit or assessment.
10. Exchange of Information; Access to Records.
------------------------------------------
(a) Each Party (considering, for purposes of this sentence, the Buyer,
the Partners and the Partnership as one Party, and the Sellers as the other
Party) will provide, or cause to be provided, to the other Party copies of all
correspondence received from any Taxing Authority by such Party or any of its
Affiliates in connection with the liability of either of the Partners or the
Partnership for Taxes for any period for which such other Party is or may be
liable under Sections 2 or 4 hereof.
(b) The Buyer will, and will cause the Partners and the Partnership
to, (i) cooperate with the Sellers and permit the Sellers to have full access,
at any reasonable time and from time to time, at the business location at which
the books and records of the Partners and the Partnership are maintained, after
the Closing Date, to such Tax data relating exclusively to either or both of the
Partners or the Partnership or to the determination of the Tax liability of any
Seller or Sellers as the Sellers may from time to time reasonably request, and
(ii) gather and furnish, and request the independent accountants of the Buyer or
either or both of the Partners and the Partnership to gather and furnish, to the
Sellers such additional Tax and other information and documents in the
possession of such persons either (i) relating to the Partnership and/or either
or both of the Partners, or (ii) relating to the determination of the liability
for Taxes of any one or more of the Sellers, as the Sellers may from time to
time reasonably request in connection with (a) preparing or filing any Tax
Return or claim for refund, (b) determining a liability or a right of refund, or
(c) conducting or responding to any audit, investigation or other proceeding, in
respect of Taxes for any period for which the Sellers are or may be liable.
Similarly, the Sellers will (i) cooperate with the Buyer, the Partners and the
Partnership and permit the Buyer, the Partners, and/or the Partnership to have
full access, at any reasonable time and from time to time, at the business
location at which the appropriate books and records are maintained, after the
Closing Date, to such Tax data relating exclusively to the Partnership or to
either or both of the Partners in the possession of the Sellers as the Buyer,
the Partners and/or the Partnership may from time to time reasonably request,
and (ii) gather and furnish, and request the independent accountants of the
Sellers to gather and furnish to the Buyer, the Partners and/or the Partnership
such additional Tax and other information and documents relating to the
Partnership and/or either or both of the Partners in the possession of such
persons as the Buyer may from time to time reasonably request in connection with
preparing or filing any Tax Return or claim for refund, in determining a
liability or a right of refund or in conducting or responding to any audit,
investigation or other proceeding, in respect of Taxes for any period for which
the Sellers are or may be liable.
(c) Each Party (considering, for purposes of this sentence, the Buyer,
the Partners and the Partnership as one Party, and the Sellers as the other
Party) agrees that such information and documents relating to the Partnership
and/or either or
Tax Cooperation Agreement
- -------------------------
Page 9
<PAGE>
both of the Partners as are, pursuant to the terms of the Stock Purchase
Agreement, in its possession after the Closing, including without limitation
books, records, Tax Returns, claims for refund and all schedules, work papers
and all material records or other documents relating to any such Tax Returns,
claims, audits or other proceedings, shall be preserved and retained until the
close of the twelve (12) month period immediately following the expiration of
the applicable Tax statute of limitations (giving effect to any extension,
waiver or mitigation thereof); provided, however, that, in the event that, prior
-------- -------
to the expiration of such period, (i) a proceeding has been instituted for which
the information or documents may be requested, and (ii) the keeper of such
information or documents is given notice of such proceeding prior to the
expiration of such period, the information or documents shall be retained until
the expiration of the twelve (12) month period immediately following the later
of (a) the final determination with respect to such proceeding, and (b) the date
any obligations with respect thereto are fully satisfied. Each Party
(considering, for purposes of this sentence, the Buyer, the Partners and the
Partnership as one Party and the Sellers as the other Party) shall make such
information and documents available to the other Party or any Affiliate thereof,
and their respective officers, employees and agents, upon reasonable notice and
at reasonable times, it being understood that such representatives shall be
entitled to make copies of any such books and records relating to the Partners,
the Partnership and/or the Tax Items of either or both of the Partners or the
Partnership that affect the Sellers' respective Tax liabilities as they shall
deem necessary. Any information or documents obtained pursuant to this Section
10 shall be kept confidential, except as required by law or legal process or as
may be otherwise necessary in connection with the filing of Tax Returns or
claims for refund or in conducting or responding to any audit, investigation or
other proceeding. Each Party shall provide the cooperation and information and
documents required by this Section 10 at its own expense.
(d) If either Party (considering, for purposes of this Section 10(d),
the Buyer, the Partners and the Partnership as one Party, and the Sellers as the
other Party) fails to provide any information or documents requested pursuant to
this Section 10 within a reasonable period, as determined in good faith by the
Party requesting the information or documents, then the requesting Party shall
have the right to engage a public accounting firm to gather such information or
documents, provided that thirty (30) days prior written notice is given to the
unresponsive Party before taking such action. If the unresponsive Party fails
to provide the requested information or documents within thirty (30) days of
receipt of such notice, then such unresponsive Party shall permit the requesting
Party's public accounting firm full access to all appropriate records or other
information or documents as reasonably necessary, and shall reimburse the
requesting Party, or pay directly, all costs connected with the requesting
Party's engagement of the public accounting firm to gather the requested
information or documents.
11. Payment as Purchase Price Adjustment. The Sellers and the Buyer
------------------------------------
agree that any payment made hereunder or pursuant to Article 11 of the Stock
Purchase Agreement will be treated by the Parties on their Tax Returns as an
adjustment to the aggregate Purchase Price for the Stock.
Tax Cooperation Agreement
- -------------------------
Page 10
<PAGE>
12. Amendments; Waivers. No provision of this Agreement may be
-------------------
amended, waived or otherwise modified without the prior written consent of the
Sellers and the Buyer. No failure or delay by any Party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
13. Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of the Parties and their respective successors and permitted
assigns. No assignment of this Agreement or of any rights or obligations
hereunder may be made by any Party (by operation of law or otherwise) without
the prior written consent of the other Parties, and any attempted assignment
without the required consent shall be void; provided, however, that, in the
event the Buyer sells the Stock or one or both of the Partners sell their
interests in the Partnership to a third Party prior to the termination of this
Agreement, (i) such third Party shall be substituted for the Buyer and/or the
selling Partner or Partners hereunder, and (ii) any such sale shall be
conditioned upon such third Party agreeing to be bound by the terms of this
Agreement as applicable to the Buyer and/or the Partners hereunder.
14. Other Actions and Documents. Subject to the provisions hereof,
---------------------------
the Parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
requested by another Party in order to effectuate the purposes of this
Agreement.
15. No Third Party Rights. Except as herein otherwise specifically
---------------------
provided, nothing in this Agreement expressed or implied is intended to confer
any right or benefit upon any person, firm, partnership or corporation other
than the Parties and their respective successors and permitted assigns.
16. Changes in Law, Regulation or Interpretation. If, due to any
--------------------------------------------
change in applicable law or regulations or the interpretation thereof by any
court of law or other governing body having jurisdiction subsequent to the date
of this Agreement, performance of any provision of this Agreement or any
transaction contemplated thereby shall become impracticable or impossible, the
Parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such provision.
17. Costs and Expenses. Except as expressly set forth in this
------------------
Agreement, each Party shall bear its own costs and expenses incurred pursuant to
this Agreement.
18. Counterparts; Headings. This Agreement may be executed in one or
----------------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument. The headings in
this Agreement are for convenience of reference only and shall not be deemed a
part of this Agreement.
Tax Cooperation Agreement
- -------------------------
Page 11
<PAGE>
19. Severability. The Parties hereby agree that if any provision of
------------
this Agreement should be adjudicated to be invalid or unenforceable, such
provision shall be deemed deleted herefrom with respect, and only with respect,
to the operation of such provision in the particular jurisdiction in which such
adjudication was made, and only to the extent of the invalidity, and any such
invalidity or unenforceability in a particular jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. All other
remaining provisions of this Agreement shall remain in full force and effect for
the particular jurisdiction and all other jurisdictions.
20. Entire Agreement. This Agreement and the Stock Purchase
----------------
Agreement contain the entire agreement between the Parties with respect to the
subject matter hereof. Any tax indemnity, sharing, allocation or similar
agreements, arrangements, or practices between the Sellers and any Affiliates
thereof, on one hand, and either of the Partners and/or the Partnership, on the
other hand, are hereby terminated, and all rights and duties thereunder are
hereby extinguished, effective as of the Closing Date, and no such agreements,
arrangements or practices shall be or shall have been entered into or
implemented thereafter, except as provided in this Agreement or the Stock
Purchase Agreement. Except as provided herein, this Agreement shall not create
any rights in any person other than the Parties to this Agreement.
21. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York without giving effect to
conflicts of law principles thereof.
22. Notices. Any notices required hereunder shall be given as
-------
provided in the Stock Purchase Agreement, provided that notice given to the
Buyer shall be deemed to be notice also to each of the Partners and the
Partnership.
23. Survival of Obligations. Notwithstanding anything in this
-----------------------
Agreement or the Stock Purchase Agreement to the contrary, this Agreement shall
remain in effect and its provisions shall survive for the full period of all
applicable statutes of limitation (giving effect to any extension, waiver or
mitigation thereof), plus six (6) months; provided, however, that in the event
a claim is brought against one or more of the Sellers, the Buyer, either or both
of the Partners, or the Partnership in respect of any item of Tax within the
applicable survival period, the rights and obligations under this Agreement with
respect thereto shall survive the expiration of such period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
24. Good Faith Clause. The Parties agree to cooperate in good faith
-----------------
and to take all reasonable steps to carry out the terms and the intent of this
Agreement.
25. Buyer's Commitment Regarding Obligations of Partnership and
-----------------------------------------------------------
Partners. The Buyer agrees to cause each Partner and the Partnership to perform
- --------
all of their respective obligations under this Agreement applicable to the time
period following the Closing.
Tax Cooperation Agreement
- -------------------------
Page 12
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the date first above written.
KWL, INC.
By: /s/ RICHARD F. ENTHOVEN
------------------------------
Name: Richard F. Enthoven
Title: President
KWIK-WASH LAUNDRIES, INC.
By: /s/ RICHARD F. ENTHOVEN
------------------------------
Name: Richard F. Enthoven
Title: President
KWIK WASH LAUNDRIES, L.P.
By: /s/ RICHARD F. ENTHOVEN
------------------------------
Name: Richard F. Enthoven
Title: President of the General
Partner
COINMACH CORPORATION
By: /s/ JOHN E. DENSON
------------------------------
Name: John E. Denson
Title: Senior Vice President
SELLERS:
/s/ TAMARA LYNN FORD
------------------------------------
Tamara Lynn Ford
/s/ ROBERT KYLE FORD
------------------------------------
Robert Kyle Ford
Tax Cooperation Agreement
- -------------------------
Page 13
<PAGE>
/s/ TRACI LEA FORD
------------------------------------
Traci Lea Ford
/s/ TUCKER F. ENTHOVEN
------------------------------------
Tucker F. Enthoven
/s/ RICHARD F. ENTHOVEN
------------------------------------
Richard F. Enthoven
/s/ RICHARD FRANKLIN FORD, JR.
------------------------------------
Richard Franklin Ford, Jr.
Trustee U/D/T February 4, 1994
Tax Cooperation Agreement
- -------------------------
Page 14
<PAGE>
SCHEDULE A
TO TAX COOPERATION AGREEMENT
Shareholders in KWL, Inc.:
- -------------------------
Tamara Lynn Ford
Robert Kyle Ford
Traci Lea Ford
Tucker F. Enthoven
Richard F. Enthoven
Richard Franklin Ford, Jr., Trustee U/D/T Feb. 4, 1994
Shareholders in Kwik-Wash Laundries, Inc.:
- -----------------------------------------
Tamara Lynn Ford
Robert Kyle Ford
Traci Lea Ford
Tucker F. Enthoven
Richard F. Enthoven
Richard Franklin Ford, Jr., Trustee U/D/T Feb. 4, 1994
Schedule A Page 1 of 1
- ----------
<PAGE>
EXHIBIT 10.40
CONSULTING SERVICES AGREEMENT
-----------------------------
CONSULTING SERVICES AGREEMENT ("Agreement"), dated as of January 8,
---------
1997, by and between Richard Enthoven ("Enthoven") and Coinmach Corporation, a
--------
Delaware corporation ("Coinmach").
--------
WHEREAS, Coinmach has entered into that certain Stock Purchase
Agreement, dated as of even date herewith, pursuant to which Coinmach has
acquired all of the capital stock of each of KWL, Inc., a Nevada corporation and
sole general partner of Kwik-Wash Laundries, L.P. (the "Partnership"), and Kwik-
-----------
Wash Laundries, Inc., a Nevada corporation and sole limited partner of the
Partnership;
WHEREAS, Coinmach desires to continue the business of the Partnership
which includes, among other things, (i) providing coin-operated and non-coin
operated laundry equipment services to customers in multi-family dwellings, (ii)
operating, maintaining and servicing laundromat retail stores, and (iii) the
sale and distribution of laundry equipment parts (the foregoing, together with
all other businesses, activities, divisions and operations of the Partnership
and their respective affiliates other than the business, activities and
operations of Titlelink, the "Business");
--------
WHEREAS, Enthoven was the former President and Chief Executive Officer
of the Partnership and is generally knowledgeable about the Business;
WHEREAS, in an effort to provide for an effective and successful
transition of ownership of the Business, Coinmach desires to receive certain
advisory and management consulting services from Enthoven relating to the
Business and to obtain the benefit of Enthoven's experience in managing and
operating the Business; and
WHEREAS, subject to the compensation arrangements and other provisions
set forth in this Agreement, Enthoven is willing to provide to Coinmach certain
advisory and management consulting services related to the Business;
NOW, THEREFORE, in consideration of the foregoing promises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Enthoven and Coinmach hereby agree as
follows:
1. Engagement. Coinmach hereby engages Enthoven to provide certain
----------
advisory and management consulting services related to the Business, and
Enthoven hereby agrees to provide to Coinmach certain advisory and management
consulting services
<PAGE>
related to the Business, in each case on the terms and subject to the
conditions set forth in this Agreement.
2. Term. This Agreement shall have an initial term of six months,
----
commencing on the date hereof (the "Initial Term"). After the Initial Term, this
------------
Agreement shall automatically renew for successive one month periods (each such
renewal period and the Initial Term, collectively, the "Engagement Period") and
-----------------
shall remain in full force and effect, unless sooner terminated by either party
upon thirty (30) calendar days prior written notice.
3. Duties. Enthoven hereby agrees during the Engagement Period to
------
consult with Coinmach in such manner and on such business and financial matters
as may be reasonably requested from time to time by Coinmach, including, but not
limited to, advisory matters in connection with (i) the servicing and
maintenance of route leases pursuant to which the Partnership provides laundry
equipment services in the course of the Business; (ii) the maintenance and
operation of retail laundromat stores in the course of the Business; (iii) the
preservation and development of Coinmach's relationships with customers and
suppliers of the Partnership and other third parties involved in the operation
of the Business; and (iv) the financial condition of the Business and any tax
and accounting matters related thereto. Enthoven agrees to render services to
Coinmach conscientiously and to devote reasonable efforts and abilities thereto
at such times and in such reasonable manner as Coinmach and Enthoven shall
mutually agree, it being acknowledged and agreed among the parties that
Enthoven's services shall be on a non-exclusive basis and shall be performed at
such places and at such times as are reasonably agreed upon between Enthoven and
Coinmach; provided, however, that, notwithstanding the foregoing, Enthoven
-----------------
shall be required to devote no greater than 20 hours per week to his services
hereunder.
4. Compensation, Benefits and Expenses.
-----------------------------------
(a) CONSULTING FEE. From and after the date hereof and during
the Engagement Period, Coinmach shall pay to Enthoven a monthly consulting fee
(the "Consulting Fee") in an amount equal to the product of the number of hours
--------------
worked by Enthoven during such month multiplied by $250 (fractions of an hour to
be accounted for in tenths of an hour); provided, however, that (i) with respect
-----------------
to any given month during the Engagement Period, Enthoven shall not be entitled
to a Consulting Fee in an amount in excess of $16,000 and (ii) as a condition
precedent to the payment of a Consulting Fee hereunder, Enthoven shall provide
to Coinmach, within five calendar days after the end of each month, a written
summary (the "Summary") setting forth in reasonable detail: (i) the total
-------
number of hours (which hours shall include any hours expended in connection with
any
-2-
<PAGE>
travel time required hereunder) worked for the month and on a daily basis; and
(ii) a brief description of the nature and scope of the services performed.
Coinmach shall have the right in its reasonable discretion to dispute all or any
portion of the Summary and to adjust the amount of any Consulting Fee related
thereto. The Consulting Fee shall be payable within 30 days after the
submission by Enthoven of the Summary as herein provided; provided, however,
--------- -------
that, if this Agreement is terminated by either party, Enthoven shall be
entitled to a Consulting Fee as calculated above in respect of any services
performed during the period commencing on the first day of the month in which
this Agreement is terminated through and including the date of termination.
(b) BENEFITS. During the Engagement Period, Enthoven shall not be
entitled to any benefits of any kind presently or hereafter granted to other
employees of Coinmach, including, without limitation, any retirement, medical,
stock option, incentive compensation or disability insurance programs.
(c) EXPENSES. Except as otherwise provided in this Agreement,
Coinmach shall promptly reimburse Enthoven for such reasonable travel and other
out-of-pocket fees and expenses actually incurred by Enthoven in connection with
the rendering of services under this Agreement and accounted for and evidenced
in accordance with the standard policies, practices or procedures regarding
expense reimbursement that Coinmach may establish from time to time.
5. Engagement Representation. Enthoven represents and warrants to
-------------------------
Coinmach that he is under no contractual, fiduciary or other restriction or
obligation which is inconsistent with the execution of this Agreement, the
performance of his duties or obligations hereunder, or the rights of Coinmach
hereunder.
6. Confidential Information. Enthoven acknowledges that the
------------------------
information, observations and data obtained by Enthoven during the course of
Enthoven's performance under this Agreement concerning the Business and the
business and affairs of Coinmach or any of Coinmach's affiliates will be the
property of such entities. Therefore, Enthoven agrees that he will not disclose
to any unauthorized person or entity or use for the account of any person or
entity other than Coinmach, any such information, observations or data
including, without limitation, any business secrets or methods, policies,
manuals or instructions, reports, lists of names of customers or suppliers,
personnel information, pricing information or any other confidential or
proprietary information of Coinmach or the Partnership or any of their
respective affiliates or related parties (collectively, "Confidential
------------
Information") without Coinmach's prior written consent, unless and to the extent
- ------------
that the aforementioned matters
-3-
<PAGE>
become generally known to and available for use by the public other than as a
result of Enthoven's acts or omissions to act and except as required by law or
legal process. Additionally, the parties hereto will not, without the prior
written consent of the other party hereto, disclose to any person or entity
either the existence of this Agreement or any of the terms, conditions or
agreements contained herein.
7. Independent Contractor Status. Enthoven and Coinmach agree that
-----------------------------
Enthoven shall perform services hereunder as an independent contractor,
retaining control over and responsibility for his own operations and personnel.
Neither Enthoven nor Enthoven's affiliates, partners, agents or related parties
shall be considered employees or agents of Coinmach as a result of this
Agreement, nor shall any of them have authority to contract in the name of or
bind Coinmach, except as expressly agreed to in writing by Coinmach.
8. Notices. Any notice, report or payment required or permitted to
-------
be given or made under this Agreement by one party to the other party shall be
deemed to have been duly given or made if personally delivered (including by
courier) or, if mailed, when mailed by registered or certified mail, postage
prepaid, to the other party at the following addresses (or at such other address
as shall be given in writing by one party to the other party):
If to Enthoven:
Richard Enthoven
5538 Falls Road
Dallas, Texas 75225
Telephone: (214) 373-1708
Facsimile: (214) 373-1708
with a copy to:
Strasburger & Price, L.L.P.
Suite 4300
901 Main Street
Dallas, Texas 75202
Attention: Fred Fowler, Esq.
Telephone: (214) 651-4300
Facsimile: (214) 651-4330
If to Coinmach:
Coinmach Corporation
521 East Morehead, Suite 590
Charlotte, North Carolina 28202
Attention: Stephen R. Kerrigan
Telephone: (800) 747-9379
-4-
<PAGE>
Facsimile: (704) 375-8986
with a copy to:
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020
Attention: Ronald S. Brody, Esq.
Telephone: (212) 278-1000
Facsimile: (212) 278-1733
9. Choice of Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Texas, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Texas or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Texas.
10. Arbitration. Any controversy or claim arising out of or relating
-----------
to this Agreement, or breach thereof, shall be settled by arbitration in Dallas,
Texas or such other location agreed to by the parties and in accordance with the
rules of the American Arbitration Association. The controversy or claim shall
be submitted to three neutral arbitrators: (a) one to be chosen by Coinmach,
(b) a second to be chosen by Enthoven, and (c) a third to be selected by the two
arbitrators chosen by Coinmach and Enthoven. To the extent permitted by the
rules of the American Arbitration Association, the selected arbitrators may
grant equitable relief. Judgment upon any proper award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. Each party
shall pay the fees of the arbitrator selected by him and of his own attorneys,
and the expenses of his witnesses and all other expenses connected with the
presentation of his case. The costs of the arbitration including the cost of
the record or transcripts thereof, if any, administrative fees, and all other
fees and expenses shall be shared equally by Coinmach and Enthoven.
Notwithstanding anything to the contrary in the preceding sentence, the
arbitrators shall be permitted to order the unsuccessful party to pay the
reasonable legal fees of the successful party, if the arbitrators find that the
unsuccessful party asserted a claim or defense under this Agreement in bad
faith.
11. Survival. The covenants, agreements, representations, and
--------
warranties contained in or made pursuant to this Agreement shall survive the
termination of this Agreement, irrespective of any investigation made by or on
behalf of any party.
12. Responsibility for Taxes. It is understood that Enthoven shall
------------------------
be solely responsible for any taxes that become
-5-
<PAGE>
due, if any, in connection with any compensation or other benefits Enthoven
receives in connection with this Agreement.
13. Waiver of Breach. The waiver by either party of a breach of any
----------------
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of that provision or any other provision
hereof.
14. Amendment. This Agreement may be amended only by an instrument
---------
in writing executed by the parties hereto that expressly states that it is the
intention of each of the parties to amend this Agreement. Commencement or
continuation of any custom, course of dealing, practice or usage by Coinmach
shall not constitute an amendment hereof or otherwise give rise to enforceable
rights or create obligations of Coinmach.
15. Entire Agreement. This Agreement contains the complete and
----------------
entire understanding and agreement of Enthoven and Coinmach with respect to the
subject matter hereof and supersedes all prior and contemporaneous
understandings, conditions and agreements, oral or written, express or implied,
respecting the engagement of Enthoven in connection with the subject matter
hereof
16. No Third-Party Beneficiaries. Except as provided in Section 19
----------------------------
below, this Agreement does not create, and shall not be construed as creating,
any rights enforceable by any person not a party to this Agreement.
17. Assignment. Neither Enthoven nor Coinmach may assign its rights
----------
or obligations under this Agreement without the express written consent of the
other party.
18. Successors and Assigns. The provisions of this Agreement shall
----------------------
be binding upon and inure to the benefit of Enthoven and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of Coinmach
and its successors and assigns.
19. Severability. If any provision of this Agreement or portion
------------
thereof is held invalid, illegal, void or unenforceable by reason of any rule of
law, administrative or judicial provision or public policy, all other provisions
of this Agreement shall nevertheless remain in full force and effect.
20. Headings. The headings contained herein are for the convenience
--------
of reference only and are not intended to define, limit, expand or describe the
scope or intent of any provision of this Agreement.
21. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an
-6-
<PAGE>
original, but all of which taken together shall constitute one and the same
instrument.
* * * * *
-7-
<PAGE>
IN WITNESS WHEREOF, Enthoven and Coinmach have caused this Agreement
to be duly executed and delivered on the date and year first above written.
COINMACH CORPORATION
By: /s/ John E. Denson
-----------------------------
Name: John E. Denson
Title: Senior Vice President
/s/ Richard Enthoven
---------------------------------
Richard Enthoven
-8-
<PAGE>
EXHIBIT 10.41
================================================================================
CREDIT AGREEMENT
among
COINMACH LAUNDRY CORPORATION,
COINMACH CORPORATION,
THE LENDING INSTITUTIONS LISTED HEREIN,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT,
and
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as SYNDICATION AGENT,
and
LEHMAN COMMERCIAL PAPER, INC.,
as DOCUMENTATION AGENT
__________________________________
Dated as of January 8, 1997
__________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
SECTION 1. Amount and Terms of Credit............................. 1
1.01 The Commitments......................................... 1
1.02 Minimum Amount of Each Borrowing........................ 4
1.03 Notice of Borrowing..................................... 4
1.04 Disbursement of Funds................................... 5
1.05 Notes................................................... 6
1.06 Conversions............................................. 7
1.07 Pro Rata Borrowings..................................... 8
1.08 Interest................................................ 8
1.09 Interest Periods........................................ 9
1.10 Increased Costs, Illegality, etc........................ 10
1.11 Compensation............................................ 12
1.12 Change of Lending Office................................ 13
1.13 Replacement of Banks.................................... 13
SECTION 2. Letters of Credit...................................... 14
2.01 Letters of Credit....................................... 14
2.02 Letter of Credit Requests............................... 15
2.03 Letter of Credit Participations......................... 15
2.04 Agreement to Repay Letter of Credit Payments............ 17
2.05 Increased Costs......................................... 18
SECTION 3. Commitment Commission; Fees; Reductions of Commitment.. 19
3.01 Fees.................................................... 19
3.02 Voluntary Termination of Unutilized Commitments......... 20
3.03 Mandatory Reduction of Commitments...................... 21
SECTION 4. Prepayments; Payments; Taxes........................... 22
4.01 Voluntary Prepayments................................... 22
4.02 Mandatory Repayments and Commitment Reductions.......... 23
4.03 Method and Place of Payment............................. 31
4.04 Net Payments............................................ 31
SECTION 5. Conditions Precedent to Loans.......................... 33
5.01 Execution of Agreement; Notes........................... 34
5.02 Payment of Fees......................................... 34
5.03 Opinions of Counsel..................................... 34
5.04 Corporate Documents; Proceedings; etc................... 34
5.05 Certain Agreements...................................... 35
5.06 Acquisition............................................. 35
5.07 Officer's Certificate................................... 35
(i)
<PAGE>
PAGE
----
5.08 Approvals............................................... 35
5.09 Existing Credit Agreement............................... 36
5.10 Pledge and Security Agreements and Collateral
Assignment of Leases.................................. 36
5.11 Mortgages; Title Insurance; Surveys; etc................ 37
5.12 Adverse Change, etc..................................... 38
5.13 Litigation.............................................. 38
5.14 Evidence of Insurance................................... 38
5.15 Pro Forma Balance Sheet................................. 39
SECTION 6. Conditions Precedent to All Credit Events.............. 39
6.01 No Default; Representations and Warranties.............. 39
6.02 Notice of Borrowing; Letter of Credit Request........... 39
SECTION 7. Representations, Warranties and Agreements............. 40
7.01 Corporate Status........................................ 40
7.02 Corporate Power and Authority........................... 40
7.03 No Violation............................................ 41
7.04 Governmental Approvals.................................. 41
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc............. 41
7.06 Litigation.............................................. 44
7.07 True and Complete Disclosure............................ 44
7.08 Use of Proceeds; Margin Regulations..................... 44
7.09 Tax Returns and Payments................................ 44
7.10 Compliance with ERISA................................... 45
7.11 The Security Documents.................................. 46
7.12 Representations and Warranties in Documents............. 47
7.13 Properties.............................................. 47
7.14 Capitalization.......................................... 47
7.15 Subsidiaries............................................ 48
7.16 Compliance with Statutes, etc........................... 48
7.17 Investment Company Act.................................. 48
7.18 Public Utility Holding Company Act...................... 48
7.19 Environmental Matters................................... 48
7.20 Labor Relations......................................... 49
7.21 Patents, Licenses, Franchises and Formulas.............. 50
7.22 Indebtedness............................................ 50
7.23 Acquisition............................................. 50
SECTION 8. Affirmative Covenants.................................. 51
8.01 Information Covenants................................... 51
(ii)
<PAGE>
PAGE
----
8.02 Books, Records and Inspections.......................... 55
8.03 Maintenance of Property; Insurance...................... 55
8.04 Corporate Franchises.................................... 56
8.05 Compliance with Statutes, etc........................... 57
8.06 Compliance with Environmental Laws...................... 57
8.07 ERISA................................................... 58
8.08 End of Fiscal Years; Fiscal Quarters.................... 59
8.09 Performance of Obligations.............................. 59
8.10 Payment of Taxes........................................ 59
8.11 Additional Security; Further Assurances................. 60
SECTION 9. Negative Covenants..................................... 61
9.01 Liens................................................... 61
9.02 Consolidation, Merger, Sale or Purchase of
Assets, etc. ........................................... 64
9.03 Dividends, etc. ........................................ 67
9.04 Indebtedness............................................ 68
9.05 Advances, Investments and Loans......................... 70
9.06 Transactions with Affiliates............................ 72
9.07 Capital Expenditures.................................... 73
9.08 Leverage Ratio.......................................... 74
9.09 Consolidated Interest Coverage Ratio.................... 75
9.10 Minimum Consolidated EBITDA............................. 76
9.11 Limitation on Voluntary Payments and Modifications
of Indebtedness; Modifications of Certificate of
Incorporation, By-Laws and Certain Other
Agreements; etc. ...................................... 77
9.12 Limitation on Certain Restrictions on Subsidiaries...... 77
9.13 Limitation on Issuance of Capital Stock................. 78
9.14 Business................................................ 79
9.15 Limitation on the Creation of Subsidiaries.............. 79
9.16 Restriction on Tax Consolidation........................ 79
SECTION 10. Events of Default..................................... 80
10.01 Payments............................................... 80
10.02 Representations, etc. ................................. 80
10.03 Covenants.............................................. 80
10.04 Default Under Other Agreements......................... 80
10.05 Bankruptcy, etc. ...................................... 80
10.06 ERISA.................................................. 81
10.07 Security Documents..................................... 81
10.08 Guaranty............................................... 82
(iii)
<PAGE>
PAGE
----
10.09 Judgments.............................................. 82
10.10 Change of Control...................................... 82
SECTION 11. Definitions and Accounting Terms...................... 83
11.01 Defined Terms.......................................... 83
SECTION 12. The Administrative Agent.............................. 112
12.01 Appointment............................................ 112
12.02 Nature of Duties....................................... 113
12.03 Lack of Reliance on the Administrative Agent........... 113
12.04 Certain Rights of the Administrative Agent............. 113
12.05 Reliance............................................... 114
12.06 Indemnification........................................ 114
12.07 The Administrative Agent in Its Individual Capacity.... 114
12.08 Holders................................................ 115
12.09 Resignation by the Administrative Agent................ 115
SECTION 13. Miscellaneous......................................... 115
13.01 Payment of Expenses, etc............................... 115
13.02 Right of Set-off....................................... 117
13.03 Notices................................................ 117
13.04 Benefit of Agreement................................... 117
13.05 No Waiver; Remedies Cumulative......................... 119
13.06 Payments Pro Rata...................................... 119
13.07 Calculations; Computations............................. 120
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL............................ 121
13.09 Counterparts........................................... 122
13.10 Effectiveness.......................................... 122
13.11 Headings Descriptive................................... 123
13.12 Amendment or Waiver; etc. ............................. 123
13.13 Survival............................................... 125
13.14 Domicile of Loans...................................... 125
13.15 Register............................................... 125
13.16 Confidentiality........................................ 126
SECTION 14. Guaranty.............................................. 126
14.01 The Guaranty........................................... 126
14.02 Bankruptcy............................................. 128
14.03 Nature of Liability.................................... 129
14.04 Independent Obligation................................. 129
14.05 Authorization.......................................... 129
(iv)
<PAGE>
PAGE
----
14.06 Reliance............................................... 130
14.07 Subordination.......................................... 130
14.08 Waiver................................................. 131
ANNEX I Commitments
ANNEX II Bank Addresses
SCHEDULE 2.01 Existing Letters of Credit
SCHEDULE 5.10 Leases
SCHEDULE 5.11 Real Property
SCHEDULE 7.01 Corporate Status
SCHEDULE 7.04 Governmental Approvals
SCHEDULE 7.05 Financials
SCHEDULE 7.06 Litigation
SCHEDULE 7.07 True and Complete Disclosure
SCHEDULE 7.13 Properties
SCHEDULE 7.15 Subsidiaries
SCHEDULE 7.16 Compliance with Statutes
SCHEDULE 7.19 Environmental
SCHEDULE 7.20 Labor Relations
SCHEDULE 7.21 Patents, Licenses, Franchises and Formulas
SCHEDULE 7.22 Indebtedness
SCHEDULE 8.03 Insurance
SCHEDULE 9.01 Existing Liens
SCHEDULE 9.05 Investments
SCHEDULE 9.06 Transactions with Affiliates
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Tranche A Term Note
EXHIBIT B-2 Form of Tranche B Term Note
EXHIBIT B-3 Form of Revolving Note
EXHIBIT B-4 Form of Swingline Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E Form of Opinion of Anderson, Kill & Olick, P.C., Special
Counsel to Holdings and the Borrower
EXHIBIT F Form of Officers' Certificate
EXHIBIT G Form of Intercompany Note
EXHIBIT H Form of Assignment and Assumption Agreement
EXHIBIT I-1 Form of Borrower Pledge Agreement
EXHIBIT I-2 Form of Holdings Pledge Agreement
EXHIBIT J Form of Security Agreement
(v)
<PAGE>
EXHIBIT K Form of Mortgage
EXHIBIT L Form of Collateral Assignment of Leases
EXHIBIT M Form of Collateral Assignment of Location Leases
EXHIBIT N Form of Landlord Consent
(vi)
<PAGE>
CREDIT AGREEMENT, dated as of January 8, 1997 among COINMACH LAUNDRY
CORPORATION, a Delaware corporation ("Holdings"), COINMACH CORPORATION, a
--------
Delaware corporation (the "Borrower"), the lending institutions from time to
--------
time party hereto (each, a "Bank" and collectively, the "Banks"), BANKERS TRUST
---- -----
COMPANY, as Administrative Agent, FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
as Syndication Agent, and LEHMAN COMMERCIAL PAPER, INC., as Documentation Agent.
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 11 are used herein as therein defined).
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Borrower will incur loans from the Banks, the proceeds of
which will be used to finance the Acquisition and to provide working capital
after the Acquisition;
WHEREAS, this Agreement and the loans incurred by the Borrower
hereunder are intended to replace any and all loans made and/or credit
facilities provided under the Existing Credit Agreement;
WHEREAS, contemporaneously with the funding of the initial Loans
hereunder, the Acquisition will take place;
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Banks are willing to make available to the Borrower the respective
credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
--------------------------
1.01 The Commitments. (a) Subject to and upon the terms and
---------------
conditions set forth herein, each Bank with a Tranche A Term Loan Commitment
("Tranche A Term Loan Banks") severally agrees to make on the Effective Date a
- ---------------------------
term loan (each such term loan, a "Tranche A Term Loan" and, collectively, the
-------------------
"Tranche A Term Loans") to the Borrower, which Tranche A Term Loans (i) shall be
- ---------------------
made and initially maintained as a single Borrowing of Base Rate Loans (subject
to the option to convert such Tranche A Term Loans pursuant to Section 1.06);
provided that, except as otherwise specifically provided in Section 1.10(b), all
- --------
Tranche A Term Loans
<PAGE>
comprising the same Borrowing shall at all times be of the same Type, and (ii)
shall equal for each Bank, in initial aggregate principal amount, an amount
which equals the Tranche A Term Loan Commitment of such Bank on the Effective
Date (before giving effect to any reductions thereto on such date pursuant to
Section 3.03(a)). Once repaid, Tranche A Term Loans incurred hereunder may not
be reborrowed.
(b) Subject to and upon the terms and conditions set forth herein,
each Bank with a Tranche B Term Loan Commitment ("Tranche B Term Loan Banks")
-------------------------
severally agrees to make on the Effective Date a term loan (each such term loan,
a "Tranche B Term Loan" and, collectively, the "Tranche B Term Loans") to the
------------------- --------------------
Borrower, which Tranche B Term Loans (i) shall be made and initially maintained
as a single Borrowing of Base Rate Loans (subject to the option to convert such
Tranche B Term Loans pursuant to Section 1.06); provided that, except as
--------
otherwise specifically provided in Section 1.10(b), all Tranche B Term Loans
comprising the same Borrowing shall at all times be of the same Type, and (ii)
shall equal for each Bank, in initial aggregate principal amount, an amount
which equals the Tranche B Term Loan Commitment of such Bank on the Effective
Date (before giving effect to any reductions thereto on such date pursuant to
Section 3.03(b)). Once repaid, Tranche B Term Loans incurred hereunder may not
be reborrowed.
(c) Subject to and upon the terms and conditions set forth herein,
each Bank with a Revolving Loan Commitment ("Revolving Loan Banks") severally
--------------------
agrees, at any time and from time to time on and after the Effective Date and
prior to the Revolving Loan Maturity Date, to make a revolving loan or revolving
loans (each, a "Revolving Loan" and, collectively, the "Revolving Loans") to the
-------------- ---------------
Borrower, which Revolving Loans (i) shall, at the option of the Borrower, be
Base Rate Loans or Eurodollar Loans; provided that (A) except as otherwise
--------
specifically provided in Section 1.10(b), all Revolving Loans comprising the
same Borrowing shall at all times be of the same Type and (B) no Revolving Loans
maintained as Eurodollar Loans may be incurred prior to the earlier of (1) the
60th day after the Effective Date or (2) the Syndication Date, (ii) may be
repaid and reborrowed in accordance with the provisions hereof, (iii) shall not
exceed for any Bank at any time outstanding that aggregate principal amount
which, when added to the product of (x) such Bank's Adjusted Percentage and (y)
the aggregate amount of all Letter of Credit Outstandings plus all Swingline
Loans then outstanding (exclusive of Unpaid Drawings and Swingline Loans which
are repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) at such time, equals the Revolving
Loan Commitment of such Bank at such time and (iv) shall not exceed for all
Banks at any time outstanding that aggregate principal amount which, when added
to the amount of all Swingline Loans then outstanding and all Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) at such time the Total Revolving Loan Commitment then in
effect.
-2-
<PAGE>
(d) Subject to and upon the terms and conditions herein set forth,
BTCo agrees to make at any time and from time to time on and after the Effective
Date and prior to the Swingline Expiry Date, a loan or loans to the Borrower
(each, a "Swingline Loan" and, collectively, the "Swingline Loans"), which
-------------- ---------------
Swingline Loans (i) shall be made and maintained as Base Rate Loans, (ii) may be
repaid and reborrowed in accordance with the provisions hereof, (iii) shall not
exceed in aggregate principal amount at any time outstanding, when combined with
the aggregate principal amount of all Revolving Loans then outstanding and the
Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to Letters
of Credit which are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) at such time, an
amount equal to the Total Revolving Loan Commitment then in effect and (iv)
shall not exceed in aggregate principal amount at any time outstanding the
Maximum Swingline Amount. BTCo shall not be obligated to make any Swingline
Loans at a time when a Bank Default exists unless BTCo has entered into
arrangements satisfactory to it and the Borrower to eliminate BTCo's risk with
respect to each Bank's (including any Defaulting Bank's) participation in such
Swingline Loans, including by cash collateralizing such Defaulting Bank's or
Banks' Percentage of the outstanding Swingline Loans. BTCo will not make a
Swingline Loan after it has received written notice from the Borrower or the
Required Banks stating that a Default or an Event of Default exists until such
time as BTCo shall have received a written notice of (i) rescission of such
notice from the party or parties originally delivering the same or (ii) a waiver
of such Default or Event of Default from the Required Banks.
(e) On any Business Day, BTCo may, in its sole discretion, give
notice to the Revolving Loan Banks and the Borrower that all outstanding
Swingline Loans shall be funded with a Borrowing of Revolving Loans (provided
--------
that each such notice shall be deemed to have been automatically given upon the
occurrence of a Default or an Event of Default under Section 10.05 or upon the
exercise of any of the remedies provided in the last paragraph of Section 10),
in which case a Borrowing of Revolving Loans constituting Base Rate Loans (each
such Borrowing, a "Mandatory Borrowing") shall be made on the immediately
-------------------
succeeding Business Day by all Revolving Loan Banks pro rata based on each
--- ----
Bank's Percentage, and the proceeds thereof shall be applied directly to repay
BTCo for such outstanding Swingline Loans. Each Revolving Loan Bank hereby
irrevocably agrees to make Base Rate Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in the preceding sentence and on the date specified in writing by BTCo
notwithstanding (i) that the amount of the Mandatory Borrowing may not comply
with the Minimum Borrowing Amount otherwise required hereunder, (ii) whether any
conditions specified in Section 6 are then satisfied, (iii) whether a Default or
an Event of Default has occurred and is continuing, (iv) the date of such
Mandatory Borrowing and (v) any reduction in the Total Revolving Loan Commitment
after any such Swingline Loans were made. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise required above
(including, without limitation,
-3-
<PAGE>
as a result of the commencement of a proceeding under the Bankruptcy Code in
respect of the Borrower), each Revolving Loan Bank (other than BTCo) hereby
agrees that it shall forthwith purchase from BTCo (without recourse or warranty)
such assignment of the outstanding Swingline Loans as shall be necessary to
cause the Revolving Loan Banks to share in such Swingline Loans ratably based
upon their respective Percentages; provided that all interest payable on the
--------
Swingline Loans shall be for the account of BTCo until the date the respective
assignments is purchased and, to the extent attributable to the purchased
assignment, shall be payable to the Bank purchasing same from and after such
date of purchase.
1.02 Minimum Amount of Each Borrowing. The aggregate principal
--------------------------------
amount of each Borrowing of any Tranche of Term Loans shall not be less than
$5,000,000 and, if greater, shall be in an integral multiple of $500,000. The
aggregate principal amount of each Borrowing of Revolving Loans shall be not
less than $1,000,000 and, if greater, shall be in an integral multiple of
$100,000. More than one Borrowing may occur on the same date, but at no time
shall there be outstanding more than nine Borrowings of Eurodollar Loans. The
principal amount of each Borrowing of Swingline Loans shall not be less than
$250,000 and, if greater, shall be in an integral multiple of $50,000.
1.03 Notice of Borrowing. (a) Whenever the Borrower desires to make
-------------------
a Borrowing hereunder (excluding Borrowings of Swingline Loans and Revolving
Loans incurred pursuant to a Mandatory Borrowing), it shall give the
Administrative Agent at its Notice Office at least one Business Day's prior
written (or telephonic promptly confirmed in writing) notice of each Base Rate
Loan and at least three Business Days' prior written (or telephonic promptly
confirmed in writing) notice of each Eurodollar Loan to be made hereunder;
provided that any such notice shall be deemed to have been given on a certain
- --------
day only if given before 12:00 Noon (New York time) on such day. Each such
written notice or written confirmation of telephonic notice (each, a "Notice of
Borrowing"), except as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by the Borrower in the form of Exhibit A,
---------
appropriately completed to specify the aggregate principal amount of the Loans
to be made pursuant to such Borrowing, the date of such Borrowing (which shall
be a Business Day), whether the Loans being made pursuant to such Borrowing
shall constitute Tranche A Term Loans, Tranche B Term Loans or Revolving Loans
and whether, subject to the other terms and provisions hereof, the Loans being
made pursuant to such Borrowing are to be initially maintained as Base Rate
Loans or Eurodollar Loans and, if Eurodollar Loans, the initial Interest Period
to be applicable thereto. The Administrative Agent shall promptly give each
Bank which is required to make Loans of the Tranche specified in the respective
Notice of Borrowing, notice of such proposed Borrowing, of such Bank's
proportionate share thereof and of the other matters required by the immediately
preceding sentence to be specified in the Notice of Borrowing.
-4-
<PAGE>
(b) (i) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give BTCo not later than 12:00 noon (New York time) on the
day such Swingline Loan is to be made, written notice (or telephonic notice
promptly confirmed in writing) of each Swingline Loan to be made hereunder.
Each such notice shall be irrevocable and shall specify in each case (x) the
date of such Borrowing (which shall be a Business Day) and (y) the aggregate
principal amount of the Swingline Loan to be made pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(e), with the Borrower hereby irrevocably agreeing, by its
incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set
forth in such Section 1.01(e).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any Borrowing of Loans, the
Administrative Agent or BTCo (in the case of Swingline Loans), as the case may
be, may act without liability upon the basis of telephonic notice of such
Borrowing, reasonably believed by the Administrative Agent or BTCo, as the case
may be, in good faith to be from an Authorized Officer of the Borrower prior to
receipt of written confirmation. In each such case, the Borrower hereby waives
the right to dispute the Administrative Agent's or BTCo's, as the case may be,
record of the terms of such telephonic notice of such Borrowing of Loans.
1.04 Disbursement of Funds. No later than 12:00 Noon (New York time)
---------------------
on the date specified in each Notice of Borrowing, each Bank with a Commitment
of the respective Tranche will make available its pro rata portion of each such
--- ----
Borrowing requested to be made on such date (or in the case of Swingline Loans,
BTCo shall make available the full amount thereof). All such amounts shall be
made available in Dollars and in immediately available funds at the Payment
Office of the Administrative Agent, and the Administrative Agent will make
available to the Borrower at the Payment Office the aggregate of the amounts so
made available by the Banks. Unless the Administrative Agent shall have been
notified by any Bank prior to the date of Borrowing that such Bank does not
intend to make available to the Administrative Agent such Bank's portion of any
Borrowing to be made on such date, the Administrative Agent may assume that such
Bank has made such amount available to the Administrative Agent on such date of
Borrowing and the Administrative Agent, in reliance upon such assumption, may
(in its sole discretion and without obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Bank, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Bank. If such Bank does not pay such corresponding amount forthwith upon the
Agent's demand therefore, the Administrative Agent shall promptly notify the
Borrower and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent. The Administrative Agent shall also be entitled to
recover on
-5-
<PAGE>
demand from such Bank or the Borrower, as the case may be, interest on such
corresponding amount in respect of each day from the date such corresponding
amount was made available by the Administrative Agent to the Borrower until the
date such corresponding amount is recovered by the Administrative Agent, at a
rate per annum equal to (i) if recovered from such Bank, at the overnight
Federal Funds Rate and (ii) if recovered from the Borrower, the rate of interest
applicable to the respective Borrowing, as determined pursuant to Section 1.08.
Nothing in this Section 1.04 shall be deemed to relieve any Bank from its
obligation to make Loans hereunder or to prejudice any rights which the Borrower
may have against any Bank as a result of any failure by such Bank to make Loans
hereunder.
1.05 Notes. (a) The Borrower's obligation to pay the principal of,
-----
and interest on, the Loans made by each Bank shall be evidenced (i) if Tranche A
Term Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-1 with blanks appropriately completed in
-----------
conformity herewith (each, a "Tranche A Term Note" and, collectively, the
-------------------
"Tranche A Term Notes"), (ii) if Tranche B Term Loans, by a promissory note duly
- ---------------------
executed and delivered by the Borrower substantially in the form of Exhibit B-2
-----------
with blanks appropriately completed in conformity herewith (each, a "Tranche B
---------
Term Note" and, collectively, the "Tranche B Term Notes"), (iii) if Revolving
- --------- --------------------
Loans, by a promissory note duly executed and delivered by the Borrower
substantially in the form of Exhibit B-3, with blanks appropriately completed in
-----------
conformity herewith (each, a "Revolving Note" and, collectively, the "Revolving
-------------- ---------
Notes") and (iv) if Swingline Loans, by a promissory note duly executed and
- -----
delivered by the Borrower substantially in the form of Exhibit B-4, with blanks
appropriately completed in conformity herewith (the "Swingline Note").
--------------
(b) The Tranche A Term Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank and be dated the
Effective Date, (iii) be in a stated principal amount equal to the Tranche A
Term Loan made by such Bank on the Effective Date and be payable in the
principal amount of Tranche A Term Loans evidenced thereby, (iv) mature on the
Tranche A Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayments as provided in Section 4.01 and mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the benefits of this Agreement
and the other Credit Documents.
(c) The Tranche B Term Note issued to each Bank shall (i) be executed
by the Borrower, (ii) be payable to the order of such Bank and be dated the
Effective Date, (iii) be in a stated principal amount equal to the Tranche B
Term Loans made by such Bank on the Effective Date and be payable in the
principal amount of Tranche B Term Loans evidenced thereby, (iv) mature on the
Tranche B Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby,
-6-
<PAGE>
(vi) be subject to voluntary prepayments as provided in Section 4.01 and
mandatory repayment as provided in Section 4.02 and (vii) be entitled to the
benefits of this Agreement and the other Credit Documents.
(d) The Revolving Note issued to each Bank shall (i) be executed by
the Borrower, (ii) be payable to the order of such Bank and be dated the
Effective Date, (iii) be in a stated principal amount equal to the Revolving
Loan Commitment of such Bank and be payable in the principal amount of the
Revolving Loans evidenced thereby, (iv) mature on the Revolving Loan Maturity
Date, (v) bear interest as provided in the appropriate clause of Section 1.08 in
respect of the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to voluntary prepayments as provided in
Section 4.01 and mandatory repayment as provided in Section 4.02 and (vii) be
entitled to the benefits of this Agreement and the other Credit Documents.
(e) The Swingline Note issued to BTCo shall (i) be executed by the
Borrower, (ii) be payable to the order of BTCo and be dated the Effective Date,
(iii) be in a stated principal amount equal to the Maximum Swingline Amount and
be payable in the principal amount of the outstanding Swingline Loans evidenced
thereby, (iv) mature on the Swingline Expiry Date, (v) bear interest as provided
in Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi) be
subject to voluntary prepayments as provided in Section 4.01 and mandatory
repayment as provided in Section 4.02, and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(f) Each Bank will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
shall not affect the Borrower's obligations in respect of such Loans.
1.06 Conversions. The Borrower shall have the option to convert, on
-----------
any Business Day occurring on or after the earlier of (1) the 60th day after the
Effective Date or (2) the Syndication Date, all or a portion equal to at least
(x) in the case of a conversion of Term Loans, $5,000,000 (and, if greater, in
an integral multiple of $500,000) and (y) in the case of a conversion of
Revolving Loans, $1,000,000 (and, if greater, in an integral multiple of
$100,000), of the outstanding principal amount of Loans made pursuant to one or
more Borrowings (so long as of the same Tranche) of one or more Types of Loans
into a Borrowing (of the same Tranche) of another Type of Loan; provided that
--------
(i) except as otherwise provided in Section 1.10(b), Eurodollar Loans may be
converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Loans being converted and no such partial conversion of
Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than (x) in the
case of Term Loans, $5,000,000 and (y) in the case of Revolving Loans,
$1,000,000, (ii) Base Rate Loans may only be
-7-
<PAGE>
converted into Eurodollar Loans if no Default or Event of Default is in
existence on the date of the conversion, and (iii) no conversion pursuant to
this Section 1.06 shall result in a greater number of Eurodollar Borrowings than
is permitted under Section 1.02. Each such conversion shall be effected by the
Borrower by giving the Administrative Agent at its Notice Office prior to 12:00
Noon (New York time) at least three Business Days' prior notice (each, a "Notice
------
of Conversion") specifying the Loans to be so converted, the Borrowing(s)
- -------------
pursuant to which such Loans were made and, if to be converted into Eurodollar
Loans, the Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any such proposed
conversion affecting any of its Loans; provided that the failure of the
--------
Administrative Agent to give any such notice shall not affect the rights or
obligations of the Borrower hereunder.
1.07 Pro Rata Borrowings. All Borrowings of Tranche A Term Loans,
-------------------
Tranche B Term Loans and Revolving Loans under this Agreement shall be incurred
from the Banks pro rata on the basis of their Tranche A Term Loan Commitments,
--- ----
Tranche B Term Loan Commitments or Revolving Loan Commitments, as the case may
be. It is understood that no Bank shall be responsible for any default by any
other Bank of its obligation to make Loans hereunder and that each Bank shall be
obligated to make the Loans provided to be made by it hereunder, regardless of
the failure of any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrower agrees to pay interest in respect
--------
of the unpaid principal amount of each Base Rate Loan from the date the proceeds
thereof are made available to the Borrower until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Base Rate Loan and (ii) the
conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section 1.06,
at a rate per annum which shall be equal to the sum of the Applicable Base Rate
Margin plus the Base Rate in effect from time to time.
(b) The Borrower agrees to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrower until the earlier of (i) the maturity (whether by
acceleration or otherwise) of such Eurodollar Loan and (ii) the conversion of
such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.06, 1.09 or
1.10(b), as applicable, at a rate per annum which shall, during each Interest
Period applicable thereto, be equal to the sum of the Applicable Eurodollar
Margin plus the Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
of the respective Tranche
-8-
<PAGE>
of Loans from time to time and (y) the rate which is 2% in excess of the rate
then borne by such Loans, in each case with such interest to be payable on
demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each Eurodollar Loan, on the last day of each Interest
Period applicable thereto and, in the case of an Interest Period in excess of
three months, on each date occurring at three month intervals after the first
day of such Interest Period and (iii) in respect of each Loan, on any repayment
or prepayment (on the amount repaid or prepaid), upon conversion, at maturity
(whether by acceleration or otherwise) and, after such maturity, on demand.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for each Interest Period applicable to
Eurodollar Loans and shall promptly notify the Borrower and the applicable Banks
thereof. Each such determination shall, absent manifest error, be final and
conclusive and binding on all parties hereto.
(f) All computations of interest hereunder shall be made in
accordance with Section 13.07(b).
1.09 Interest Periods. At the time it gives any Notice of Borrowing
----------------
or Notice of Conversion in respect of the making of, or conversion into, any
Eurodollar Loan (in the case of the initial Interest Period applicable thereto)
or on the third Business Day prior to the expiration of an Interest Period
applicable to such Eurodollar Loan (in the case of any subsequent Interest
Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, the interest period (each, an "Interest
--------
Period") applicable to such Eurodollar Loan, which Interest Period shall, at the
- ------
option of the Borrower, be a one, two, three or six-month period; provided that:
--------
(i) all Eurodollar Loans comprising a Borrowing shall at all times
have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan shall
commence on the date of Borrowing of such Eurodollar Loan (including the
date of any conversion thereto from a Loan of a different Type) and each
Interest Period occurring thereafter in respect of such Eurodollar Loan
shall commence on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar Loan begins
on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
-9-
<PAGE>
(iv) if any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided, however, that if any Interest Period for
-------- -------
a Eurodollar Loan would otherwise expire on a day which is not a Business
Day but is a day of the month after which no further Business Day occurs in
such month, such Interest Period shall expire on the next preceding
Business Day;
(v) no Interest Period may be selected at any time when a Default
or Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing of any Tranche
of Loans shall be selected which extends beyond the respective Maturity
Date for such Tranche of Loans; and
(vii) no Interest Period in respect of any Borrowing of Tranche A
Term Loans or Tranche B Term Loans, as the case may be, shall be selected
which extends beyond any date upon which a mandatory repayment of such
Tranche of Term Loans will be required to be made under Section 4.02(c) or
(d), as the case may be, if the aggregate principal amount of Tranche A
Term Loans or Tranche B Term Loans, as the case may be, which have Interest
Periods which will expire after such date will be in excess of the
aggregate principal amount of Tranche A Term Loans or Tranche B Term Loans,
as the case may be, then outstanding less the aggregate amount of such
required prepayment.
If upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Loans, the Borrower has failed to elect, or is not
permitted to elect, a new Interest Period to be applicable to such Eurodollar
Loans as provided above, the Borrower shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the expiration date
of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event that any
--------------------------------
Bank shall have determined (which determination shall, absent manifest error, be
final and conclusive and binding upon all parties hereto but, with respect to
clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any
changes arising after the date of this Agreement affecting the interbank
Eurodollar market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any Change in Law since the date of this
-10-
<PAGE>
Agreement, such as, for example, but not limited to: (A) a change in
Covered Taxes resulting from the payment to any Bank of the principal of or
interest such Eurodollar Loan or any other amounts payable hereunder, but
without duplication of any amounts payable in respect of Taxes pursuant to
Section 4.04(a), or (B) a change in official reserve requirements, but, in
all events, excluding reserves required under Regulation D to the extent
included in the computation of the Eurodollar Rate and/or (y) other
circumstances since the date of this Agreement affecting such Bank or the
interbank Eurodollar market or the position of such Bank in such market; or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by any Bank in good faith
with any governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of this
Agreement which materially and adversely affects the interbank Eurodollar
market;
then, and in any such event, such Bank (or the Administrative Agent, in the case
of clause (i) above) shall promptly give notice (by telephone confirmed in
writing) to the Borrower and, except in the case of clause (i) above, to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no longer be available
until such time as the Administrative Agent notifies the Borrower and the Banks
that the circumstances giving rise to such notice by the Administrative Agent no
longer exist, and any Notice of Borrowing or Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall pay to such Bank, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Bank in its sole discretion shall determine) as shall be required to compensate
such Bank for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to such
Bank, showing the basis for the calculation thereof, submitted to the Borrower
by such Bank in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto) and (z) in the case of clause (iii)
above, the Borrower shall take one of the actions specified in Section 1.10(b)
as promptly as possible and, in any event, within the time period required by
law. Each of the Administrative Agent and each Bank agrees that if it gives
notice to the Borrower of any of the events described in clause (i) or (iii)
above, it shall promptly notify the Borrower and, in the case of any such Bank,
the Agent, if such event ceases to exist. If any such event described in clause
(iii) above ceases to exist as to a Bank, the obligations of such Bank to make
Eurodollar Loans and to convert Base Rate Loans into Eurodollar Loans on the
terms and conditions contained herein shall be reinstated.
-11-
<PAGE>
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Bank
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected Eurodollar Loan
is then outstanding, upon at least three Business Days' written notice to the
Administrative Agent, require the affected Bank to convert such Eurodollar Loan
into a Base Rate Loan; provided that, if more than one Bank is affected at any
--------
time, then all affected Banks must be treated the same pursuant to this Section
1.10(b).
(c) If at any time after the Effective Date, any Bank determines that
the introduction of or any change in any applicable law or governmental rule,
regulation, order, guideline, directive or request (whether or not having the
force of law) concerning capital adequacy, or any change in interpretation or
administration thereof by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
based on the existence of such Bank's Commitments hereunder or its obligations
hereunder, then the Borrower shall pay to such Bank, upon its written demand
therefor, such additional amounts as shall be required to compensate such Bank
or such other corporation for the increased cost to such Bank or such other
corporation or the reduction in the rate of return to such Bank or such other
corporation as a result of such increase of capital. Such Bank's reasonable
good faith determination of compensation owing under this Section 1.10(c) shall,
absent manifest error, be final and conclusive and binding on all the parties
hereto. Each Bank, upon determining that any additional amounts will be payable
pursuant to this Section 1.10(c), will give prompt written notice thereof to the
Borrower, which notice shall set forth the basis of the calculation of such
additional amounts, although the failure to give any such notice shall not
release or diminish the Borrower's obligations to pay additional amounts
pursuant to this Section 1.10(c) upon the subsequent receipt of such notice.
1.11 Compensation. The Borrower shall compensate each Bank, upon its
------------
written request (which request shall set forth the reason for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Bank to
fund its Eurodollar Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a default by such
Bank) a Borrowing of, or conversion from or into, Eurodollar Loans does not
occur on a date specified therefor in a Notice of Borrowing or Notice of
Conversion (whether or not withdrawn by the Borrower or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including any repayment
made pursuant to Section 4.02 or as a result of an acceleration of the Loans
-12-
<PAGE>
pursuant to Section 10) or conversion of any of its Eurodollar Loans occurs on a
date which is not the last day of an Interest Period with respect thereto; (iii)
if any prepayment of any of its Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrower; or (iv) as a
consequence of (x) any other default by the Borrower to repay its Loans when
required by the terms of this Agreement or any Note held by such Bank or (y) any
election made pursuant to Section 1.10(b). Calculation of all amounts payable
to a Bank under this Section 1.11 shall be made as though that Bank had actually
funded its relevant Eurodollar Loan through the purchase of a Eurodollar deposit
bearing interest at the Eurodollar Rate in an amount equal to the amount of that
Loan, having maturity comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of that Bank to a
domestic office of that Bank in the United States of America; provided, however,
-------- -------
that each Bank may fund each of its Eurodollar Loans in any manner it sees fit
and the foregoing assumption shall be utilized only for the calculation of
amounts payable under this Section 1.11.
1.12 Change of Lending Office. Each Bank agrees that on the
------------------------
occurrence of any event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.05 or Section 4.04 with respect to such Bank,
it will, if requested by the Borrower, use reasonable good faith efforts
(subject to overall policy considerations of such Bank) to designate another
lending office for any Loans or Letters of Credit affected by such event;
provided that such designation is made on such terms that such Bank and its
- --------
lending office suffer no significant economic, legal or regulatory disadvantage,
with the object of avoiding the consequence of the event giving rise to the
operation of such Section. Nothing in this Section 1.12 shall affect or
postpone any of the obligations of the Borrower or the right of any Bank
provided in Sections 1.10, 2.05 and 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a Defaulting
--------------------
Bank, (y) upon the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.05 or Section 4.04 with
respect to any Bank which results in such Bank charging to the Borrower
increased costs in excess of those being generally charged by the other Banks or
becoming incapable of making Eurodollar Loans, or (z) as provided in Section
13.12(b) in the case of certain refusals by a Bank to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the Borrower shall
have the right, if no Default or Event of Default will exist immediately after
giving effect to the respective replacement, to either replace such Bank (the
"Replaced Bank") with one or more other Eligible Transferee or Transferees, none
- --------------
of whom shall constitute a Defaulting Bank at the time of such replacement
reasonably acceptable to the Administrative Agent (collectively, the
"Replacement Bank"); provided that (i) at the time of any replacement pursuant
- ----------------- --------
to this Section 1.13, the Replacement Bank shall enter into one or more
Assignment and Assumption Agreements pursuant to Section 13.04(b) (and with all
fees payable pursuant to said
-13-
<PAGE>
Section 13.04(b) to be paid by the Replacement Bank) pursuant to which the
Replacement Bank shall acquire all of the Commitments and outstanding Loans of,
and in each case participations in Letters of Credit and Swingline Loans by, the
Replaced Bank and, in connection therewith, shall pay to (x) the Replaced Bank
in respect thereof an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Replaced
Bank, (B) an amount equal to all Unpaid Drawings and Swingline Loans that have
been funded by (and not reimbursed to) such Replaced Bank, together with all
then unpaid interest with respect thereto at such time and (C) an amount equal
to all accrued, but theretofore unpaid, Fees owing to the Replaced Bank pursuant
to Section 3.01 and (y) BTCo an amount equal to such Replaced Bank's Adjusted
Percentage (for this purpose, determined as if the adjustment described in
clause (y) of the immediately succeeding sentence had been made with respect to
such Replaced Bank) of any Unpaid Drawing (which at such time remains an Unpaid
Drawing) or Swingline Loans to the extent such amount was not theretofore funded
by such Replaced Bank, and (ii) all obligations of the Borrower owing to the
Replaced Bank (other than those specifically described in clause (i) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Bank concurrently with such
replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) above
and, if so requested by the Replacement Bank, delivery to the Replacement Bank
of the appropriate Note or Notes executed by the Borrower, (x) the Replacement
Bank shall become a Bank hereunder and, unless the respective Replaced Bank
continues to have outstanding Term Loans hereunder, the Replaced Bank shall
cease to constitute a Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without limitation, Sections 1.10,
1.11, 2.05, 4.04, 13.01 and 13.06) and the other Credit Documents, which shall
survive as to such Replaced Bank and (y) the Adjusted Percentages of the Banks
shall be automatically adjusted at such time to give effect to such replacement
(and to give effect to the replacement of a Defaulting Bank with one or more
Non-Defaulting Banks).
SECTION 2. Letters of Credit.
-----------------
2.01 Letters of Credit. (a) Subject to and upon the terms and
-----------------
conditions herein set forth, the Borrower may request that any Issuing Bank
issue, at any time and from time to time on and after the Effective Date and
prior to the Revolving Loan Maturity Date, for the account of the Borrower and
for the benefit of any holder (or any trustee, agent or other similar
representative for any such holders) of L/C Supportable Indebtedness of the
Borrower or any of its Subsidiaries that are Guarantors, an irrevocable standby
letter of credit, in a form customarily used by such Issuing Bank or in such
other form as has been approved by such Issuing Bank (each such standby letter
of credit, a "Letter of Credit") in support of such L/C Supportable
----------------
Indebtedness.
-14-
<PAGE>
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be
issued the Stated Amount of which, when added to the Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of, and
prior to the issuance of, the respective Letter of Credit) at such time would
exceed either (x) $10,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans made by Non-Defaulting Banks and then outstanding,
an amount equal to the Adjusted Total Revolving Loan Commitment at such time,
(ii) each Letter of Credit shall by its terms terminate on or before, the date
which occurs 12 months after the date of the issuance thereof but not beyond the
30th day prior to Revolving Loan Maturity Date (although any such Standby Letter
of Credit may be extendable for successive periods of up to 12 months, but not
beyond the 30th day prior to Revolving Loan Maturity Date), on terms acceptable
to the Issuing Bank thereof) and (iii) each Letter of Credit shall be
denominated in Dollars.
2.02 Letter of Credit Requests. (a) Whenever the Borrower desires
-------------------------
that a Letter of Credit be issued for its account, the Borrower shall give the
Administrative Agent and the respective Issuing Bank at least two Business Days'
(or such shorter period as is acceptable to the respective Issuing Bank) written
notice thereof. Each notice shall be in the form of Exhibit C (each, a "Letter
------
of Credit Request").
- -----------------
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that such Letter of Credit may be
issued in accordance with, and will not violate the requirements of, Section
2.01(b). Unless the respective Issuing Bank has received notice from any Bank
before it issues a Letter of Credit that one or more of the conditions specified
in Sections 5 or 6 are not then satisfied, or that the issuance of such Letter
of Credit would violate Section 2.01(b), then such Issuing Bank shall issue the
requested Letter of Credit for the account of the Borrower in accordance with
such Issuing Bank's usual and customary practices. Upon its issuance of any
Letter of Credit or any amendment thereto, such Issuing Bank shall promptly
notify each Bank of such issuance or amendment, which notice, shall be
accompanied by a copy of the amendment or Letter of Credit actually issued.
2.03 Letter of Credit Participations. (a) Immediately upon the
-------------------------------
issuance by any Issuing Bank of any Letter of Credit, such Issuing Bank shall be
deemed to have sold and transferred to each Bank with a Revolving Loan
Commitment, other than a Defaulting Bank or such Issuing Bank (each such Bank,
in its capacity under this Section 2.03, a "Participant"), and each such
-----------
Participant shall be deemed irrevocably and unconditionally to have purchased
and received from such Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Participant's Adjusted
Percentage, in such Letter of Credit, each drawing made thereunder and the
obligations of the Borrower under this Agreement with respect thereto, and any
security therefor or guaranty pertaining thereto. Upon any change in the
Revolving Loan Commitments or Adjusted Percentages of the Banks pursuant to
Section 1.13 or 13.04 or as a result of a Bank Default, it is hereby agreed
that, with
-15-
<PAGE>
respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be
an automatic adjustment to the participations pursuant to this Section 2.03 to
reflect the new Adjusted Percentages of the assignor and assignee Bank or of all
Banks with Revolving Loan Commitments (other than Defaulting Banks), as the case
may be.
(b) In determining whether to pay under any Letter of Credit, such
Issuing Bank shall have no obligation relative to the other Banks other than to
confirm that any documents required to be delivered under such Letter of Credit
appear to have been delivered and that they appear to comply on their face with
the requirements of such Letter of Credit. Any action taken or omitted to be
taken by any Issuing Bank under or in connection with any Letter of Credit if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not create for such Issuing Bank any resulting liability to the Borrower or any
Bank.
(c) In the event that any Issuing Bank makes any payment under any
Letter of Credit and the Borrower shall not have reimbursed such amount in full
to such Issuing Bank pursuant to Section 2.04(a), such Issuing Bank shall
promptly notify the Agent, which shall promptly notify each Participant, of such
failure, and each Participant shall promptly and unconditionally pay to such
Issuing Bank the amount of such Participant's Adjusted Percentage of such
unreimbursed payment in Dollars and in same day funds. If the Administrative
Agent so notifies, prior to 11:00 A.M. (New York time) on any Business Day, any
Participant required to fund a payment under a Letter of Credit, such
Participant shall make available to such Issuing Bank in Dollars such
Participant's Adjusted Percentage of the amount of such payment on such Business
Day in same day funds. If and to the extent such Participant shall not have so
made its Adjusted Percentage of the amount of such payment available to such
Issuing Bank, such Participant agrees to pay to such Issuing Bank, forthwith on
demand such amount, together with interest thereon, for each day from such date
until the date such amount is paid to such Issuing Bank at the overnight Federal
Funds Rate. The failure of any Participant to make available to such Issuing
Bank its Adjusted Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make available to
such Issuing Bank its Adjusted Percentage of any Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to such Issuing Bank such
other Participant's Adjusted Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, such Issuing Bank shall pay to each Participant
which has paid its Adjusted Percentage thereof, an amount equal to such
Participant's share (based upon the proportionate aggregate amount originally
funded by such Participant to the aggregate amount funded by all Participants)
of the principal amount of such
-16-
<PAGE>
reimbursement obligation and interest thereon accruing after the purchase of the
respective participations.
(e) Upon the request of any Participant, each Issuing Bank shall
furnish to such Participant copies of any Letter of Credit issued by it.
(f) The obligations of the Participants to make payments to each
Issuing Bank with respect to Letters of Credit issued by it shall be irrevocable
and not subject to any qualification or exception whatsoever and shall be made
in accordance with the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any
of the other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right
which the Borrower or any of its Subsidiaries may have at any time against
a beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Participant, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transaction between
the Borrower and the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of Default unless the
Issuing Bank has received written notice from the Borrower or the Required
Banks stating that a Default or an Event of Default exists prior to the
issuance of a Letter of Credit.
2.04 Agreement to Repay Letter of Credit Payments. (a) The Borrower
--------------------------------------------
hereby agrees to reimburse the respective Issuing Bank, by making payment to the
Administrative Agent in immediately available funds at the Payment Office, for
any payment or disbursement made by it under any Letter of Credit (each such
amount, so paid until reimbursed, an "Unpaid Drawing"), no later than one
--------------
Business Day after the date of such payment or disbursement, with interest on
the amount so paid or disbursed by such Issuing Bank, to the extent not
reimbursed prior to 12:00 Noon (New York time) on the date of such payment or
disbursement, from and including the date paid
-17-
<PAGE>
or disbursed to but excluding the date such Issuing Bank was reimbursed by the
Borrower therefor at a rate per annum which shall be the Base Rate in effect
from time to time plus the Applicable Margin for Base Rate Loans; provided,
--------
however, to the extent such amounts are not reimbursed prior to 12:00 Noon (New
- -------
York time) on the third Business Day following such payment or disbursement,
interest shall thereafter accrue on the amounts so paid or disbursed by such
Issuing Bank (and until reimbursed by the Borrower) at a rate per annum which
shall be the Base Rate in effect from time to time plus the Applicable Base Rate
Margin plus 2%, in each such case, with interest to be payable on demand. The
respective Issuing Bank shall give the Borrower prompt notice of each Drawing
under any Letter of Credit; provided that the failure to give any such notice
--------
shall in no way affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.04 to
reimburse the respective Issuing Bank with respect to drawings on Letters of
Credit (each, a "Drawing") (including, in each case, interest thereon) shall be
-------
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrower may have or
have had against any Bank (including in its capacity as issuer of the Letter of
Credit or as Participant), or any nonapplication or misapplication by the
beneficiary of the proceeds of such Drawing, the respective Issuing Bank's only
obligation to the Borrower being to confirm that any documents required to be
delivered under such Letter of Credit appear to have been delivered and that
they appear to comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Bank under or in
connection with any Letter of Credit if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such Issuing Bank any
resulting liability to the Borrower.
2.05 Increased Costs. If at any time after the Effective Date, any
---------------
Change in Law by any Governmental Authority charged with the interpretation or
administration thereof, or compliance by any Issuing Bank or any Participant
with any request or directive by any such authority (whether or not having the
force of law), or any change in generally acceptable accounting principles,
shall either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against letters of credit issued by any Issuing
Bank or participated in by any Participant, or (ii) impose on any Issuing Bank
or any Participant any other conditions relating, directly or indirectly, to
this Agreement or any Letter of Credit; and the result of any of the foregoing
is to increase the cost to any Issuing Bank or any Participant of issuing,
maintaining or participating in any Letter of Credit, or reduce the amount of
any sum received or receivable by any Issuing Bank or any Participant hereunder
or reduce the rate of return on its capital with respect to Letters of Credit,
but without duplication of any amounts payable in respect of taxes pursuant to
Section 4.04(a), then, upon demand to the Borrower by such Issuing Bank or any
Participant (a copy of which demand shall be sent by such Issuing Bank or such
Participant to the Administrative Agent), the
-18-
<PAGE>
Borrower shall pay to such Issuing Bank or such Participant such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction in the amount receivable or reduction on the rate of return on its
capital. Any Issuing Bank or any Participant, upon determining that any
additional amounts will be payable pursuant to this Section 2.05, will give
prompt written notice thereof to the Borrower, which notice shall include a
certificate submitted to the Borrower by such Issuing Bank or such Participant
(a copy of which certificate shall be sent by such Issuing Bank or such
Participant to the Administrative Agent), setting forth in reasonable detail the
basis for the calculation of such additional amount or amounts necessary to
compensate such Issuing Bank or such Participant. The certificate required to
be delivered pursuant to this Section 2.05 shall, if delivered in good faith and
absent manifest error, be final and conclusive and binding on the Borrower.
SECTION 3. Commitment Commission; Fees; Reductions of Commitment.
-----------------------------------------------------
3.01 Fees. (a) The Borrower agrees to pay the Administrative Agent
----
for distribution to each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment commission (the "Commitment Commission") for the period from the
---------------------
Effective Date to and including the Revolving Loan Maturity Date (or such
earlier date as the Total Revolving Loan Commitment shall have been terminated),
computed at a rate for each day equal to 1/2 of 1% per annum on the daily
Unutilized Revolving Loan Commitment of such Non-Defaulting Bank; provided that
--------
the Commitment Commission shall be computed at a rate equal to 3/8 of 1% per
annum for each day on which (i) no Default or Event of Default exists and (ii)
the Leverage Ratio of Holdings is less than 3.0 to 1.0. Accrued Commitment
Commission shall be due and payable quarterly in arrears on each Quarterly
Payment Date and on the Revolving Loan Maturity Date or such earlier date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Non-Defaulting Bank with a Revolving Loan Commitment (based
on their respective Adjusted Percentages) a fee in respect of each Letter of
Credit issued hereunder (the "Letter of Credit Fee"), for the period from and
--------------------
including the date of issuance of such Letter of Credit to and including the
termination of such Letter of Credit, computed at a rate per annum equal to the
Applicable Margin for Eurodollar Loans (other than Eurodollar Loans constituting
Tranche B Loans) as in effect from time to time on the daily Stated Amount of
such Letters of Credit. Accrued Letter of Credit Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and upon the first day on or
after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to the respective Issuing Bank, for
its own account, a facing fee in respect of each Letter of Credit issued for its
account hereunder (the "Facing Fee") for the period from and including the date
----------
of issuance of
-19-
<PAGE>
such Letter of Credit to and including the termination of such Letter of Credit,
computed at a rate equal to 1/4 of 1% per annum of the daily Stated Amount of
such Letter of Credit; provided that in no event shall the annual Facing Fee
--------
with respect to each Letter of Credit be less than $500. Accrued Facing Fees
shall be due and payable quarterly in arrears on each Quarterly Payment Date and
on the date upon which the Total Revolving Loan Commitment has been terminated
and such Letter of Credit has been terminated in accordance with its terms.
(d) The Borrower shall pay, upon each drawing under, issuance of, or
amendment to, any Letter of Credit, such amounts as shall at the time of such
event be the administrative charge and the reasonable expenses which the
respective Issuing Bank is generally imposing in connection with such occurrence
with respect to letters of credit.
(e) The Borrower shall pay to each of the Agents, for their own
respective accounts, such other fees as have been agreed to in writing by the
Borrower and such Agent, in each case, when and as due.
(f) All computations of fees hereunder shall be made in accordance
with Section 13.07(b).
3.02 Voluntary Termination of Unutilized Commitments. (a) Upon at
-----------------------------------------------
least two Business Days' prior notice to the Administrative Agent at its Notice
Office (which notice the Administrative Agent shall promptly transmit to each of
the Banks), the Borrower shall have the right, at any time or from time to time,
without premium or penalty, to terminate the Total Unutilized Revolving Loan
Commitment, in whole or in part, in integral multiples of $1,000,000 in the case
of partial reductions to the Total Unutilized Revolving Loan Commitment;
provided that (i) each such reduction shall apply proportionately to permanently
- --------
reduce the Revolving Loan Commitment of each Bank with such a Commitment and
(ii) the reduction to the Total Unutilized Revolving Loan Commitment shall in no
case be in an amount which would cause the Revolving Loan Commitment of any Bank
to be reduced (as required by preceding clause (i)) by an amount which exceeds
the Unutilized Revolving Loan Commitment of such Bank as in effect immediately
before giving effect to such reduction.
(b) In the event of certain refusals by a Bank as provided in Section
13.12(b) to consent to certain proposed changes, waivers, discharges or
terminations with respect to this Agreement which have been approved by the
Required Banks, and subject to obtaining the consents required by Section
13.12(b), the Borrower may, upon five Business Days' written notice to the
Administrative Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks) terminate all of the Revolving
Loan Commitment of such Bank so long as all Loans, together with accrued and
unpaid interest, Fees and all other amounts, owing to such Bank (other than
amounts owing in respect of either Tranche of Loans maintained by
-20-
<PAGE>
such Bank, if such Tranche of Loans are not being repaid pursuant to Section
13.12(b)) are repaid concurrently with the effectiveness of such termination (at
which time Schedule I shall be deemed modified to reflect such changed amounts),
and at such time, unless the respective Bank continues to have outstanding Loans
and/or commitments hereunder, such Bank shall no longer constitute a "Bank" for
purposes of this Agreement, except with respect to indemnification provisions
under this Agreement (including, without limitation, Sections 1.10, 1.11, 2.05,
4.04, 13.01 and 13.06) and the other Credit Documents, which shall survive as to
such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) In addition to any
----------------------------------
other mandatory commitment reductions pursuant to this Section 3.03, the Total
Tranche A Term Loan Commitment (and the Tranche A Term Loan Commitment of each
Bank) shall (i) terminate in its entirety on the Effective Date (after giving
effect to the making of the Tranche A Term Loans on such date) and (ii) prior to
the termination of the Total Tranche A Term Loan Commitment as provided in
clause (i) above, be reduced from time to time to the extent required by Section
4.02.
(b) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Tranche B Term Loan Commitment (and the Tranche
B Term Loan Commitment of each Bank) shall (i) terminate in its entirety on the
Effective Date (after giving effect to the making of the Tranche B Term Loans on
such date) and (ii) prior to the termination of the Total Tranche B Term Loan
Commitment as provided in clause (i) above, be reduced from time to time to the
extent required by Section 4.02.
(c) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Total Revolving Loan Commitment (and the Revolving
Loan Commitment of each Bank) shall terminate in its entirety on the Revolving
Loan Maturity Date.
(d) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, on each date after the Effective Date upon which a
mandatory prepayment of Term Loans pursuant to Section 4.02(g) is required (and
exceeds in amount the aggregate principal amount of Term Loans then outstanding)
or would be required if Term Loans were then outstanding, the Total Revolving
Loan Commitment shall be permanently reduced by the amount, if any, by which the
amount required to be applied pursuant to said Section (determined as if an
unlimited amount of Term Loans were actually outstanding) exceeds the aggregate
principal amount of Term Loans then outstanding.
(e) Each reduction to the Total Tranche A Term Loan Commitment, the
Total Tranche B Term Loan Commitment and the Total Revolving Loan Commitment
pursuant to this Section 3.03 (or pursuant to Section 4.02) shall be applied
proportionately to reduce the Tranche A Term Loan Commitment, the Tranche B Term
-21-
<PAGE>
Loan Commitment or the Revolving Loan Commitment, as the case may be, of each
Bank with such a Commitment.
(f) In addition to any other mandatory commitment reductions pursuant
to this Section 3.03, the Swingline Commitment shall terminate in its entirety
on the Swingline Expiry Date.
SECTION 4. Prepayments; Payments; Taxes.
----------------------------
4.01 Voluntary Prepayments. The Borrower shall have the right to
---------------------
prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) the Borrower
shall give the Administrative Agent prior to 12:00 Noon (New York time) at its
Notice Office (x) at least one Business Day prior to the date that a prepayment
of Base Rate Loans or Swingline Loans is to be made prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay Base
Rate Loans and (y) at least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of its intent to prepay
Eurodollar Loans, whether Term Loans, Revolving Loans or Swingline Loans shall
be prepaid, the amount of such prepayment and the Types of Loans to be prepaid
and, in the case of Eurodollar Loans, the specific Borrowing or Borrowings
pursuant to which made, which notice, except in the case of Swingline Loans, the
Administrative Agent shall promptly transmit to each of the Banks; (ii) each
prepayment shall be in an aggregate principal amount of at least (x) $1,000,000
(or, if less, the full amount of such outstanding Loans) in the case of Term
Loans, (y) $500,000 (or, if less, the full amount of such outstanding Loans) in
the case of Revolving Loans or (z) $100,000 (or, if less, the full amount of
Swingline Loans then outstanding) in the case of Swingline Loans; provided that
--------
if any partial prepayment of Eurodollar Loans made pursuant to any Borrowing
shall reduce the outstanding Eurodollar Loans made pursuant to such Borrowing to
an amount less than (1) in the case of Term Loans, $5,000,000 and (2) in the
case of Revolving Loans, $1,000,000, then such Borrowing may not be continued as
a Borrowing of Eurodollar Loans and any election of an Interest Period with
respect thereto given by the Borrower shall have no force or effect; (iii)
prepayments of Eurodollar Loans made pursuant to this Section 4.01 on any day
other than the last day of an Interest Period applicable thereto shall be
accompanied by the amounts required under Section 1.11; (iv) each prepayment in
respect of any Loans made pursuant to a Borrowing shall, except as set forth
below, be applied pro rata among such Loans; (v) in the event of certain
--- ----
refusals by a Bank as provided in Section 13.12(b) to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the Borrower may, upon
five (5) Business Days' written notice to the Administrative Agent at its Notice
Office (which notice, except in the case of Swingline Loans, the Administrative
Agent shall promptly transmit to each of the Banks) repay all Loans, together
with accrued and unpaid interest, Fees, and other amounts owing to such Bank (or
owing to such Bank with respect to each Tranche
-22-
<PAGE>
which gave rise to the need to obtain such Bank's individual consent) in
accordance with said Section 13.12(b) so long as (A) in the case of the
repayment of Revolving Loans for any Bank pursuant to this clause (v) the
Revolving Loan Commitment of such Bank is terminated concurrently with such
repayment, and (B) the consents required by Section 13.12(b) in connection with
the repayment pursuant to this clause (v) have been obtained; and (vi) each
voluntary prepayment of Term Loans pursuant to this Section 4.01, except
pursuant to preceding clause (v), shall be applied to the Tranche A Term Loans
and the Tranche B Term Loans, on a pro rata basis (based upon the then
--- ----
outstanding principal amount of Tranche A Term Loans and Tranche B Term Loans);
provided that at the Borrower's election (and with the consent of the
- --------
Administrative Agent, unless the Administrative Agent is the Defaulting Bank) in
connection with any prepayment of Revolving Loans pursuant to this Section 4.01,
such prepayment shall not be applied to any Revolving Loan of a Defaulting Bank.
Each prepayment of principal of Tranche A Term Loans and Tranche B Term Loans
pursuant to this Section 4.01 shall be applied to reduce, in order of maturity
for Scheduled Repayments, the next succeeding four remaining Scheduled
Repayments of each such Tranche of Term Loans and thereafter, to the then
remaining Scheduled Repayments of each such Tranche of Term Loans pro rata based
--- ----
upon the then remaining principal amount of each Scheduled Repayment.
Notwithstanding anything to the contrary contained in the immediately preceding
sentence, repayments of either Tranche of Term Loans pursuant to clause (v) of
the first sentence of Section 4.01 shall only apply to reduce the then remaining
Scheduled Repayments of such Tranche to the extent the Term Loans so repaid are
not replaced pursuant to Section 13.12(b), with any such reductions to reduce
the then remaining Scheduled Repayments in the manner set forth in the
immediately preceding sentence.
4.02 Mandatory Repayments and Commitment Reductions. (a) On any day
----------------------------------------------
on which the sum of (i) the aggregate outstanding principal amount of the
Revolving Loans and Swingline Loans (after giving effect to all other repayments
thereof on such date) made by Non-Defaulting Banks plus (ii) the Letter of
Credit Outstanding as then in effect exceeds the Adjusted Total Revolving Loan
Commitment as then in effect, the Borrower shall prepay on such date the
principal of Swingline Loans, and if no Swingline Loans are or remain
outstanding, Revolving Loans of Non-Defaulting Banks in an amount equal to such
excess. If, after giving effect to the prepayment of all outstanding Swingline
Loans and Revolving Loans of Non-Defaulting Banks, the aggregate amount of the
Letter of Credit Outstandings exceeds the Adjusted Total Revolving Loan
Commitment as then in effect, the Borrower shall pay to the Administrative Agent
at the Payment Office on such date an amount of cash or Cash Equivalents equal
to the amount of such excess (up to a maximum amount equal to the Letter of
Credit Outstandings at such time), such cash or Cash Equivalents to be held as
security for all obligations of the Borrower to Non-Defaulting Banks hereunder
in a cash collateral account to be established by the Administrative Agent.
-23-
<PAGE>
(b) On any day on which the aggregate outstanding principal amount of
the Revolving Loans made by any Defaulting Bank exceeds the Revolving Loan
Commitment of such Defaulting Bank, the Borrower shall upon prior written notice
from such Defaulting Bank prepay principal of Revolving Loans of such Defaulting
Bank in an amount equal to such excess.
(c) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Borrower shall be required to repay that principal amount of Tranche A Term
Loans, to the extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(j), a "Tranche A Scheduled Repayment," and each such date, a "Tranche A
----------------------------- ---------
Scheduled Repayment Date"):
- ------------------------
Tranche A Scheduled Repayment Date Amount
---------------------------------- ------
Quarterly Payment Date in March, 1997 $750,000
Quarterly Payment Date in June, 1997 $750,000
Quarterly Payment Date in Sept., 1997 $750,000
Quarterly Payment Date in Dec., 1997 $750,000
Quarterly Payment Date in March, 1998 $1,000,000
Quarterly Payment Date in June, 1998 $1,000,000
Quarterly Payment Date in Sept., 1998 $1,000,000
Quarterly Payment Date in Dec., 1998 $1,000,000
Quarterly Payment Date in March, 1999 $1,250,000
Quarterly Payment Date in June, 1999 $1,250,000
Quarterly Payment Date in Sept., 1999 $1,250,000
Quarterly Payment Date in Dec., 1999 $1,250,000
Quarterly Payment Date in March, 2000 $1,250,000
Quarterly Payment Date in June, 2000 $1,250,000
Quarterly Payment Date in Sept., 2000 $1,250,000
Quarterly Payment Date in Dec., 2000 $1,250,000
Quarterly Payment Date in March, 2001 $1,250,000
Quarterly Payment Date in June, 2001 $1,250,000
Quarterly Payment Date in Sept., 2001 $1,250,000
Quarterly Payment Date in Dec., 2001 $1,250,000
Quarterly Payment Date in March, 2002 $2,000,000
Quarterly Payment Date in June, 2002 $2,000,000
Quarterly Payment Date in Sept., 2002 $2,000,000
Quarterly Payment Date in Dec., 2002 $2,000,000
-24-
<PAGE>
(d) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date set forth below, the
Borrower shall be required to repay that principal amount of Tranche B Term
Loans, to the extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in Sections 4.01 and
4.02(j), a "Tranche B Term Loan Scheduled Repayment," and each such date, a
---------------------------------------
"Tranche B Scheduled Repayment Date"):
- -----------------------------------
Tranche B Scheduled Repayment Date Amount
---------------------------------- ------
Semi-Annual Payment Date in June, 1997 $500,000
Semi-Annual Payment Date in Dec., 1997 $500,000
Semi-Annual Payment Date in June, 1998 $500,000
Semi-Annual Payment Date in Dec., 1998 $500,000
Semi-Annual Payment Date in June, 1999 $500,000
Semi-Annual Payment Date in Dec., 1999 $500,000
Semi-Annual Payment Date in June, 2000 $500,000
Semi-Annual Payment Date in Dec., 2000 $500,000
Semi-Annual Payment Date in June, 2001 $500,000
Semi-Annual Payment Date in Dec., 2001 $500,000
Semi-Annual Payment Date in June, 2002 $500,000
Semi-Annual Payment Date in Dec., 2002 $500,000
Semi-Annual Payment Date in June, 2003 $31,333,333
Semi-Annual Payment Date in Dec., 2003 $31,333,333
Semi-Annual Payment Date in June, 2004 $31,333,334
(e) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
upon which Holdings or any of its Subsidiaries receives any cash proceeds from
any sale or issuance of its equity (including preferred stock) (other than (i)
proceeds received from the issuance of Holdings Common Stock on or prior to the
Effective Date, (ii) proceeds, in an amount not to exceed $15,000,000 (less any
amount of Indebtedness provided by a Strategic Investor excluded from mandatory
repayments pursuant to the proviso of 4.02(f)), received from any sale or
issuance by Holdings of equity to a Strategic Investor and (iii) proceeds
received from the issuance of Common Stock of Holdings and/or any of its
Subsidiaries to the extent such proceeds are used to (I) promptly finance all or
a portion of the purchase price and costs related to Permitted
-25-
<PAGE>
Acquisitions effected in accordance with the requirements of Section 9.02, (II)
promptly repay the CLC Notes, (III) promptly repay the 12 3/4% Notes or (IV)
redeem or repurchase within 120 days of receipt of such proceeds by Holdings up
to an aggregate of 35% of the 11 3/4% Notes at a price not to exceed the
redemption price set forth in the indenture under which such 11 3/4% Notes were
issued as in effect on the Effective Date) an amount equal to 50% of the cash
proceeds of the respective sale or issuance (net of underwriting discounts and
commissions and other direct costs associated therewith including, without
limitation, legal and other professional fees and expenses) shall be applied as
a mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Section 4.02(j) and (k).
(f) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
upon which Holdings or any of its Subsidiaries receives any proceeds from any
incurrence by Holdings or any of its Subsidiaries of Indebtedness for borrowed
money (other than Indebtedness to the extent such proceeds thereof are used to
(I) finance Permitted Acquisitions effected in accordance with the requirements
of Section 9.02, (II) repay the CLC Notes, or (III) repay the 12 3/4% Notes), an
amount equal to 50% of the cash proceeds (net of underwriting discounts and
commissions and other costs associated therewith including, without limitation,
legal and other professional fees and expenses) of the respective incurrence of
Indebtedness shall be applied as a mandatory repayment of principal of
outstanding Term Loans in accordance with the requirements of Section 4.02(j)
and (k); provided, however, if (A) the Indebtedness so incurred is subordinated
-------- -------
to the Senior Bank Financing on terms satisfactory to the Agents and no Default
or Event of Default exists or is continuing, (B) the subordinated Indebtedness
so issued matures after September 30, 2004, (C) the amortization requirements of
such subordinated Indebtedness are on terms satisfactory to the Agents and (D)
such subordinated Indebtedness is provided by a Strategic Investor, then the
proceeds of such subordinated Indebtedness in excess of an aggregate of
$15,000,000 (less any amount of equity from a Strategic Investor excluded from
mandatory repayments pursuant to Section 4.02(e)(ii)) shall be applied as a
mandatory repayment of outstanding Term Loans in accordance with the
requirements of Section 4.02(j) and (k).
(g) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, on each date after the Effective Date
upon which Holdings or any of its Subsidiaries receives proceeds from any sale
of assets (including capital stock and securities held thereby, but excluding
(i) sales or transfers of inventory or equipment in the ordinary course of
business (including, without limitation, sales or transfers of inventory or
equipment to Subsidiaries), (ii) the sale or other disposition of obsolete
equipment or inventory, (iii) the sale of overdue receivables in the ordinary
course of business, and (iv) sales of assets between the Borrower and its
Subsidiaries that are Guarantors and/or sales of assets between Subsidiaries of
the Borrower that are Guarantors, in each case to the extent permitted by
Section 9.02, an amount equal to 100% of the Net Sale Proceeds therefrom shall
be
-26-
<PAGE>
applied as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Section 4.02(j) and (k); provided that, in
--------
addition to the exceptions set forth above, so long as no Default or Event of
Default then exists, up to an aggregate of $7,500,000 of Net Sale Proceeds in
any fiscal year shall not be required to be so applied on the date of receipt
thereof to the extent that the Borrower has delivered a certificate to the
Administrative Agent within 15 days following such date stating that such Net
Sale Proceeds shall be reinvested or shall be committed to be reinvested in the
Business within 180 days following such date (and to the extent the asset sold
constituted Collateral, the assets in which such Net Sales Proceeds are
reinvested shall be pledged as Collateral pursuant to the appropriate Security
Documents); provided further, that if all or any portion of such Net Sale
-------- -------
Proceeds not required to be applied to the repayment of Term Loans pursuant to
the preceding proviso are either (a) not so used or committed to be so used
within 180 days after the date of receipt of such Net Sale Proceeds or (b) if
committed to be so used within 180 days after the date of receipt of such Net
Sale Proceeds and not so used within 270 days after the date of receipt of such
Net Sale Proceeds, then, in either such case, such remaining portion not used or
committed to be used in the case of preceding clause (a) and not used in the
case of preceding clause (b) shall be applied on the date which is 180 days
after the date of receipt of such Net Sale Proceeds in the case of clause (a)
above or the date occurring 270 days after the date of receipt of such Net Sale
Proceeds in the case of clause (b) above as a mandatory repayment of principal
of outstanding Term Loans in accordance with the requirements of Sections
4.02(j) and (k); provided further, that, in addition to the exceptions set forth
-------- -------
above, so long as no Default or Event of Default then exists, up to an aggregate
of 50% of Net Sale Proceeds of the non-route laundry business shall not be
required to be so applied on the date of receipt thereof to the extent that the
Borrower has delivered a certificate to the Administrative Agent within 15 days
following such date stating that such Net Sale Proceeds shall be reinvested or
shall be committed to be reinvested in the Business within 180 days following
such date (and to the extent the assets sold constituted Collateral, the assets
in which such Net Sales Proceeds are reinvested shall be pledged as Collateral
pursuant to the appropriate Security Documents); provided further, that if all
-------- -------
or any portion of such Net Sale Proceeds not required to be applied to the
repayment of Term Loans pursuant to the preceding proviso are either (a) not so
used or committed to be so used within 180 days after the date of receipt of
such Net Sale Proceeds or (b) if committed to be so used within 180 days after
the date of receipt of such Net Sale Proceeds and not so used within 270 days
after the date of receipt of such Net Sale Proceeds, then, in either such case,
such remaining portion not used or committed to be used in the case of preceding
clause (a) and not used in the case of preceding clause (b) shall be applied on
the date which is 180 days after the date of receipt of such Net Sale Proceeds
in the case of clause (a) above or the date occurring 270 days after the date of
receipt of such Net Sale Proceeds in the case of clause (b) above as a mandatory
repayment of principal of outstanding Term Loans in accordance with the
requirements of Sections 4.02(j) and (k).
-27-
<PAGE>
(h) In addition to any other mandatory repayments pursuant to this
Section 4.02, on each Excess Cash Payment Date, an amount, if positive, equal to
the applicable Excess Cash Flow Percentage of Excess Cash Flow for the relevant
Excess Cash Payment Period shall be applied as a mandatory repayment of
principal of outstanding Term Loans in accordance with the requirements of
Sections 4.02(j) and (k).
(i) In addition to any other mandatory repayments or commitment
reductions pursuant to this Section 4.02, within 10 days following each date
after the Effective Date on which Holdings or any of its Subsidiaries receives
any proceeds from any Recovery Event, an amount equal to 100% of the net
proceeds of such Recovery Event (net of reasonable costs and taxes incurred in
connection with such Recovery Event including any amounts paid by the Borrower
in connection with self-insurance payments or obligations) shall be applied as a
mandatory repayment of principal of outstanding Term Loans in accordance with
the requirements of Sections 4.02(j) and (k); provided that (x) so long as no
--------
Default or Event of Default then exists and such proceeds do not exceed
$5,000,000, such proceeds shall not be required to be so applied on such date to
the extent that the Borrower has delivered a certificate to the Administrative
Agent on or prior to such date stating that such proceeds shall be used to
replace or restore any properties or assets in respect of which such proceeds
were paid within 180 days following the date of such Recovery Event (which
certificate shall set forth the estimates of the proceeds to be so expended) and
(y) so long as no Default or Event of Default then exists and to the extent that
(a) the amount of such proceeds exceeds $5,000,000, (b) the amount of such
proceeds is at least equal to 90% of the cost of replacement or restoration of
the properties or assets in respect of which such proceeds were paid as
determined by the Borrower and as supported by such estimates or bids from
contractors or subcontractors or such other supporting information as the
Administrative Agent may reasonably request, and (c) the Borrower has delivered
to the Administrative Agent a certificate on or prior to the date the
application would otherwise be required pursuant to this Section 4.02(i) in the
form described in clause (x) above and also certifying its determination as
required by preceding clause (b), then the entire amount and not just the
portion in excess of $5,000,000 shall be deposited with the Administrative Agent
pursuant to a cash collateral arrangement satisfactory to the Administrative
Agent whereby such proceeds shall be disbursed to the Borrower from time to time
as needed to pay actual costs incurred by it in connection with the replacement
or restoration of the respective properties or assets (pursuant to such
certification requirements as may be established by the Administrative Agent);
provided further, that at any time while an Event of Default has occurred and is
- -------- -------
continuing (other than an Event of Default existing solely as a result of the
violation of any or all of Sections 9.08, 9.09 and 9.10, but in each case only
if, and to the extent, that the violation of said covenant has occurred as a
result of the underlying event giving rise to the Recovery Event), the Required
Banks may direct the Administrative Agent (in which case the Administrative
Agent shall, and is hereby authorized by the Borrower to, follow said
directions) to apply any or all proceeds then on deposit in such collateral
-28-
<PAGE>
account to the repayment of Obligations hereunder in the same manner as proceeds
would be applied pursuant to the Borrower Pledge Agreement; and provided
--------
further, that if all or any portion of such proceeds not required to be applied
- -------
to the repayment of Term Loans pursuant to the second preceding proviso (whether
pursuant to clause (x) or (y) thereof) are either (A) not so used or committed
to be so used within 180 days after the date of the respective Recovery Event or
(B) if committed to be used within 180 days after the date of receipt of such
proceeds and not so used within 270 days after the date of the respective
Recovery Event, then, in either such case, such remaining portion not used or
committed to be used in the case of preceding clause (A) and not used in the
case of preceding clause (B) shall be applied on the date which is 270 days
after the date of the receipt of proceeds from the respective Recovery Event in
the case of clause (A) above or the date occurring 270 days after the date of
the receipt of proceeds from the respective Recovery Event in the case of clause
(B) above as a mandatory repayment of principal of outstanding Term Loans in
accordance with the requirements of Sections 4.02(j) and (k).
(j) Each amount required to be applied to Term Loans (or to the Total
Term Loan Commitment) pursuant to Sections 4.02(e), (f), (g), (h) and (i) shall
be applied pro rata to each Tranche of Term Loans (with each Tranche of Term
--- ----
Loans to be allocated that percentage of the amount to be applied as is equal to
a fraction (expressed as a percentage) the numerator of which is the then
outstanding principal amount of such Tranche of Term Loans and the denominator
of which is equal to the then outstanding principal amount of all Term Loans).
Any amount required to be applied to either Tranche of Term Loans pursuant to
Sections 4.02(e), (f), (g), (h) and (i) shall be applied to repay the
outstanding principal amount of Term Loans of the respective Tranche then
outstanding and, if no Term Loans remain outstanding, all such amounts shall be
applied to repay outstanding borrowings under the Revolving Loan. The amount of
each principal repayment of Term Loans (and the amount of each reduction to the
Term Loan Commitments) made as required by Section 4.02(e), (f), (g), (h) and
(i) shall be applied to reduce the then remaining Scheduled Repayments of the
respective Tranche pro rata based upon the then remaining principal amount of
--- ----
each Scheduled Repayment.
(k) With respect to each repayment of Loans required by this Section
4.02, the Borrower may designate the Types of Loans of the respective Tranche
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings of the respective Tranche pursuant to which made;
provided that: (i) repayments of Eurodollar Loans pursuant to this Section 4.02
- --------
may only be made on the last day of an Interest Period applicable thereto unless
all Eurodollar Loans of the respective Tranche with Interest Periods ending on
such date of required repayment and all Base Rate Loans of the respective
Tranche have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than (x) in the case of Term
Loans, $5,000,000 and (y) in the case of Revolving Loans,
-29-
<PAGE>
$1,000,000, such Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii) each repayment of
any Loans made pursuant to a Borrowing shall be applied pro rata among such
--- ----
Loans. In the absence of a designation by the Borrower as described in the
preceding sentence, the Administrative Agent shall, subject to the above, make
such designation in its sole discretion.
(l) Notwithstanding anything to the contrary contained above in this
Section 4.02, with respect to any mandatory repayments of Tranche B Term Loans
(excluding Tranche B Scheduled Repayments) otherwise required above pursuant to
this Section 4.02, if on or prior to the date the respective mandatory repayment
is otherwise required to be made pursuant to this Section 4.02, the Borrower has
given the Administrative Agent written notification that the Borrower has
elected to give each Bank with a Tranche B Term Loan the right to waive such
Bank's rights to receive such repayment (the "Waivable Mandatory Repayment"),
----------------------------
the Administrative Agent shall notify such Banks of such receipt and the amount
of the repayment to be applied to each such Bank's Tranche B Term Loan. In the
event any such Bank with a Tranche B Term Loan desires to waive such Bank's
right to receive any such Waivable Mandatory Repayment in whole or in part,
such Bank shall so advise the Administrative Agent no later than 5:00 P.M. (New
York time) five Business Days after the date of such notice from the
Administrative Agent which notice shall also include the amount the Bank desires
to receive. If the Bank does not reply to the Administrative Agent within such
five Business Day period, it will be deemed acceptance of the total payment. If
the Bank does not specify an amount it wishes to receive, it will be deemed
acceptance of 100% of the total payment. In the event that any such Bank waives
such Bank's right to any such Waivable Mandatory Repayment, the Administrative
Agent shall apply 100% of the amount so waived by such Banks to (x) prepay the
Tranche A Term Loans in accordance with Sections 4.02(j) and (k). If the
Borrower elects to give the notice described above in Section 4.02(l) with
respect to any mandatory repayment, the amount of the respective Waivable
Mandatory Repayment shall be deposited with the Administrative Agent on the date
the mandatory repayment would otherwise be required pursuant to the relevant
provisions of this Section 4.02 (and held by the Administrative Agent as cash
collateral for the Tranche B Term Loans and, but only to the extent Banks with
Tranche B Term Loans waive their right to receive their share of the Waivable
Mandatory Repayment, for the benefit of the Tranche A Term Loans in a cash
collateral account which shall permit the investment thereof in Cash Equivalents
reasonably satisfactory to the Administrative Agent until the proceeds are
applied to the secured obligations) and the respective mandatory repayment shall
not be required to be made until the seventh Business Day occurring after the
date the respective mandatory repayment would otherwise have been required to be
made. Notwithstanding anything to the contrary contained above, if one or more
Banks waives its right to receive all or any part of any Waivable Mandatory
Repayment, but less than all the Banks holding Tranche B Term Loans waive in
full their right to receive 100% of the total payment otherwise required with
respect to the Tranche B Term Loans, then
-30-
<PAGE>
of the amount actually applied to the repayment of Tranche B Term Loans of Banks
which have waived in part, but not in full, their right to receive 100% of such
repayment, such amount shall be applied to each then outstanding Borrowing of
Tranche B Term Loans on a pro rata basis (so that each Bank holding Tranche B
Term Loans shall, after giving effect to the application of the respective
repayment, maintain the same percentage (as determined for such Bank, but not
the same percentage as the other Banks hold and not the same percentage held by
such Bank prior to repayment) of each Borrowing of Tranche B Term Loans, which
remains outstanding after giving effect to such application).
(m) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, all other then outstanding Loans shall be repaid in full on the
respective Maturity Date for such Loans.
4.03 Method and Place of Payment. Except as otherwise specifically
---------------------------
provided herein, all payments under this Agreement or any Note shall be made to
the Administrative Agent for the account of the Bank or Banks entitled thereto
not later than 1:00 P.M. (New York time) on the date when due and shall be made
in Dollars in immediately available funds at the Payment Office of the
Administrative Agent. Whenever any payment to be made hereunder or under any
Note shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be extended to the next succeeding Business Day and, with
respect to payments of principal, interest shall be payable at the applicable
rate during such extension.
4.04 Net Payments. (a) Except as provided in this Section 4.04, all
------------
payments by the Borrower to each Bank or any Agent under this Agreement and any
Note shall be made free and clear of, and without deduction or withholding for,
any Covered Taxes levied or imposed by any Governmental Authority with respect
to such payments. In addition, the Borrower agrees to pay any current or future
stamp, intangible or documentary taxes or any other excise or property taxes,
charges or similar levies (including mortgage recording taxes and similar fees
but not including any Excluded Taxes) that arise from the execution, delivery or
registration of or otherwise with respect to (other than as to any payments,
Taxes on which shall be governed by the preceding sentence) this Agreement, or
any other document in connection with this Agreement or any Note (all such
taxes, charges and levies are hereinafter referred to as, collectively, "Other
-----
Taxes").
- -----
(b) If the Borrower shall be required by law to deduct or withhold any
Covered Taxes from or in respect of any sum payable hereunder to any Bank or any
Agent, then except as provided in this Section 4.04: (i) the sum payable shall
be increased as necessary so that after making all such required deductions and
withholdings (including deductions and withholdings applicable to additional
sums payable under this Section 4.04) such Bank or such Agent, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions or
-31-
<PAGE>
withholdings been made; (ii) the Borrower shall make such deductions and
withholdings; and (iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law. Within 30 days after the date of any payment by the Borrower of
Covered Taxes or Other Taxes, the Borrower shall furnish to the Administrative
Agent the original or a certified copy of a receipt evidencing payment thereof,
or other evidence of payment reasonably satisfactory to the Administrative
Agent.
(c) The Borrower agrees to indemnify and hold harmless each Bank and
each Agent for (i) the full amount of Covered Taxes (including any Covered Taxes
imposed on amounts payable under this Section 4.04) which arise from any payment
made under this Agreement or any Note and are paid by such Bank or such Agent
and any liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Covered Taxes
were correctly or legally asserted, and (ii) any Taxes paid or payable by such
Bank or such Agent (the amount of which will be determined by such Bank or such
Agent in its sole discretion, and will be binding on all parties to this
Agreement unless manifestly unreasonable) which were levied or imposed by any
Governmental Authority on any additional amounts paid by the Borrower under this
Section 4.04. A certificate as to the amount of any such required
indemnification payment prepared with a reasonable basis by the Bank or such
Agent shall be final, conclusive and binding for all purposes. Payment under
this indemnification shall be made within 30 days after the date such Bank or
such Agent makes written demand therefor by the delivery of such certificate.
(d) If a Bank or Agent receives a refund or credit of Taxes paid by
the Borrower pursuant to paragraph (b) or (c) of this Section 4.04, then such
Bank or such Agent shall promptly repay the Borrower such refund or credit net
of all out-of-pocket expenses related thereto; provided, however, that if, due
-------- -------
to any adjustment of such Taxes, such Bank or such Agent loses the benefit of
all or any portion of such refund or credit, the Borrower will indemnify and
hold harmless such Lender or such Agent in accordance with this subsection;
provided further, however, that such Bank will determine the amount of any such
- -------- ------- -------
refund or credit, and the amount of any lost benefit in respect thereof, in its
sole discretion, and such determinations will be binding on all parties to this
Agreement unless manifestly unreasonable.
(e) If the Borrower is required to pay additional amounts to any Bank
or any Agent on behalf of any Bank pursuant to this Section 4.04, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office or take other appropriate
action so as to eliminate any such additional payment by the Borrower which may
thereafter accrue, if such change or other action in the reasonable judgment of
such Bank is not otherwise disadvantageous to such Bank.
(f) (i) Each Bank which is not a U.S. Person agrees that:
-32-
<PAGE>
(A) it shall, no later than the Closing Date (or, in the case of a
Bank which becomes a party hereto after the Closing Date, the date upon
which such Bank becomes a party hereto) deliver to the Administrative Agent
and to the Borrower through the Administrative Agent (x) two accurate and
complete signed originals of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"), or two accurate and complete signed
---------
originals of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), as appropriate, or (y) if such Bank is not a "bank" within
-----------
the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Form 1001 or Form 4224 pursuant to clause (x) above, a certificate
substantially in the form of Exhibit I (any such certificate, a "Section
--------- -------
4.04(f) Certificate") and, in the case of either (x) or (y), two accurate
-------------------
and complete original signed copies of Internal Revenue Service Form W-8 or
any successor thereto ("Form W-8") or Internal Revenue Service Form W-9 or
--------
any successor thereto ("Form W-9"), whichever is applicable; and
--------
(B) it shall, before or promptly after the occurrence of any event
(including the passing of time) requiring a change in or renewal of the
most recent Form 4224, Form 1001, Form W-8, Form W-9 or Section 4.04
Certificate previously delivered by such Bank, deliver to the
Administrative Agent and to the Borrower through the Administrative Agent
two accurate and complete original signed copies of Form 4224, Form 1001,
Form W-8, Form W-9 and a Section 4.04 Certificate, in replacement of the
forms previously delivered by such Bank.
(ii) Each Bank shall, unless unable to do so by virtue of a Change in
Law occurring after the date such Bank becomes a party hereto, certify (x) in
the case of a Form 1001 or 4224, that it is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes and (y) in the case of a Form W-8 or W-9, that it is entitled to an
exemption from United States backup withholding tax.
(iii) Notwithstanding the foregoing provisions of this subsection (f)
or any other provision of this Section 4.04, no Bank shall be required to
deliver any form pursuant to this Section 4.04 if such Bank is not legally able
to do so.
(g) The Borrower will not be required to pay any additional amount in
respect of Taxes pursuant to this Section 4.04 to any Bank or to the
Administrative Agent with respect to any Bank if the obligation to pay such
additional amount would not have arisen but for a failure by such Bank to comply
with its obligations under subsection 4.04(f).
SECTION 5. Conditions Precedent to Loans. The occurrence of the
-----------------------------
Effective Date pursuant to Section 13.10, and the obligation of each Bank to
make
-33-
<PAGE>
Loans, and the obligation of each Issuing Bank to issue Letters of Credit, on
the Effective Date, is subject at the time of the making of such Loans or the
issuance of such Letters of Credit to the satisfaction of the following
conditions:
5.01 Execution of Agreement; Notes. On or prior to the Effective
-----------------------------
Date (i) this Agreement shall have been executed and delivered as provided in
Section 13.10 and (ii) there shall have been delivered to the Administrative
Agent for the account of each of the Banks the appropriate Tranche A Term Note,
Tranche B Term Note and/or Revolving Note and to BTCo the Swingline Note
executed by the Borrower, in each case in the amount, maturity and as otherwise
provided herein.
5.02 Payment of Fees. On or before the Effective Date and thereafter
---------------
at the time of each Credit Event and after giving effect thereto, all costs,
fees and expenses, and all other compensation contemplated by this Agreement or
any other agreement with any of the Agents, due to any of the Agents, or the
Banks (including, without limitation, legal fees and expenses) shall have been
paid to the extent then due.
5.03 Opinions of Counsel. On the Effective Date, the Agents shall
-------------------
have received, with sufficient copies for each Bank (i) from Anderson Kill &
Olick, P.C., special counsel to Holdings and the Borrower, an opinion addressed
to the Agents and each of the Banks and dated the Effective Date covering the
matters set forth in Exhibit E and (ii) from local counsel satisfactory to the
Agents, opinions each of which shall be in form and substance reasonably
satisfactory to the Agents and the Required Banks and shall cover the perfection
of the security interests granted pursuant to the Security Agreement and the
Mortgages and such other matters incident to the transactions contemplated
herein as the Agents may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a) On the Effective
-------------------------------------
Date, the Agents shall have received a certificate, with sufficient copies for
each Bank, dated the Effective Date, signed by an Authorized Officer and
attested to by the Secretary or any Assistant Secretary of each Credit Party, in
the form of Exhibit F with appropriate insertions, together with copies of the
Certificate of Incorporation and By-Laws of such Credit Party and the
resolutions of such Credit Party referred to in such certificate, and the
foregoing shall be reasonably acceptable to the Agents.
(b) All corporate and legal proceedings and all instruments and
agreements in connection with the transactions contemplated by this Agreement
and the other Documents shall be reasonably satisfactory in form and substance
to the Agents and the Required Banks, and the Agents shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams, if any, which the Agents reasonably may have requested in
connection therewith, such documents and papers where appropriate to be
certified by proper corporate or governmental authorities.
-34-
<PAGE>
5.05 Certain Agreements. On the Effective Date, there shall have
------------------
been delivered to the Agents true and correct copies, certified as true and
complete by an appropriate officer of the appropriate Credit Party, of:
(i) each of the Acquisition Documents, including each of the CLC
Notes, and each other agreement or understanding relating to the
Acquisition or the CLC Notes or with the holders of the CLC Notes;
(ii) all agreements evidencing or relating to material Indebtedness
of Holdings or any Subsidiary of Holdings which is to remain outstanding
after giving effect to the incurrence of Loans on the Effective Date
(collectively, the "Debt Agreements"); and
---------------
(iii) all tax sharing, tax allocation and other similar agreements
entered into by Holdings or any Subsidiary of Holdings (collectively, the
"Tax Sharing Agreements");
-----------------------
all of which shall be (x) in form and substance reasonably satisfactory to the
Agents and the Required Banks and (y) in full force and effect on the Effective
Date.
5.06 Acquisition. (a) On or prior to the Effective Date, the
-----------
Acquisition shall have been consummated in accordance with the Acquisition
Documents (without waiver of any of the provisions thereof) and in a manner
reasonably satisfactory to the Agents.
(b) Each of the Borrower's and Holdings' and, to the best of their
knowledge, each other Person's representations and warranties in each of the
Acquisition Documents shall be true and correct in all material respects.
5.07 Officer's Certificate. On the Effective Date, the Agents shall
---------------------
have received certificates, with sufficient copies for each Bank, dated such
date signed by an appropriate officer of Holdings and the Borrower stating that
all of the applicable conditions set forth in Sections 5.02, 5.08, 5.12, 5.13,
5.09(a) and (b) (deleting the reference to the Agents therein), 5.06 (deleting
the reference to the Agents therein), exist as of such date.
5.08 Approvals. On or prior to the Effective Date, all necessary and
---------
material governmental (domestic and foreign) and third party approvals in
connection with the Acquisition, the transactions contemplated by the Documents
and otherwise referred to herein or therein shall have been obtained and remain
in effect and all applicable waiting periods shall have expired without any
action being taken by any competent authority which materially restrains,
prevents or imposes materially adverse conditions upon the consummation of the
Acquisition, the transactions contemplated by the Documents and otherwise
referred to herein or therein. Additionally, there shall
-35-
<PAGE>
not exist any judgment, order, injunction or other restraint issued or filed or
a hearing seeking injunctive relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the consummation of
the Acquisition or the making of Loans.
5.09 Existing Credit Agreement. (a) On the Effective Date, the
-------------------------
commitments under the Existing Credit Agreement shall have been terminated, all
loans thereunder shall have been repaid in full, together with all accrued and
unpaid interest thereon, all accrued and unpaid fees thereon shall have been
repaid in full, all letters of credit issued thereunder shall have been
terminated or incorporated hereunder as Letters of Credit, and all other amounts
then owing pursuant to the Existing Credit Agreement shall have been repaid in
full.
(b) On the Effective Date, all security interests and Liens created
under the Existing Credit Agreement and the related security documents on the
capital stock of, and assets (including intercompany notes) owned by, the
Borrower and its Subsidiaries shall have been terminated and released, and the
Agents shall have received all such releases as may have been requested by the
Agents, which releases shall be in the form and substance reasonably
satisfactory to the Administrative Agent.
(c) The Agents shall have received evidence from the lenders under
the Existing Credit Agreement in form, scope and substance reasonably
satisfactory to it that the matters set forth in this Section 5.09(a) and (b)
have been satisfied at such time.
5.10 Pledge and Security Agreements and Collateral Assignment of
-----------------------------------------------------------
Leases. (a) On the Effective Date, Holdings shall have duly authorized,
- ------
executed and delivered the Holdings Pledge Agreement, the Holdings Pledge
Agreement shall be in full force and effect and the Collateral Agent shall have
in its possession all the Pledged Securities referred to in the Holdings Pledge
Agreement then owned by Holdings, together with executed and undated stock
powers.
(b) On the Effective Date, the Borrower shall have duly authorized,
executed and delivered the Borrower Pledge Agreement, the Borrower Pledge
Agreement shall be in full force and effect and the Collateral Agent shall have
in its possession all the Pledged Securities referred to in the Borrower Pledge
Agreement then owned by the Borrower, together with executed and undated stock
powers.
(c) On the Effective Date, (i) the Security Agreement shall be in
full force and effect, (ii) no filings, recordings, registrations or other
actions shall be necessary or desirable to perfect the security interests
granted pursuant to the Security Agreement in the Security Agreement Collateral
covered thereby, and (iii) the Banks shall have received:
-36-
<PAGE>
(x) evidence of the completion of all recordings and filings of, or
with respect to, the Security Agreement as may be reasonably necessary or,
in the opinion of the Collateral Agent, desirable to perfect the security
interests intended to be created by the Security Agreement;
(y) evidence that all other actions necessary or, in the opinion of
the Collateral Agent, desirable to perfect and protect the security
interests purported to be created by the Security Agreement have been
taken; and
(z) the Collateral Agent shall have received judgment, tax and UCC
lien search reports listing all effective financing statements which name
Holdings, the Borrower or any Subsidiary Guarantor as debtor and which are
filed in those jurisdictions in which any of the Collateral is located and
the jurisdictions in which Holdings', the Borrower's and each Subsidiary
Guarantor's principal place of business is located, none of which, except
as set forth on Exhibit 9.01, shall encumber the Collateral covered or
intended to be covered by the Security Agreement.
(d) On the Effective Date, the Borrower shall have duly authorized,
executed and delivered to the Collateral Agent a Collateral Assignment of Leases
with respect to each office or warehouse facility leased by the Borrower and
listed on Schedule 5.10, such Collateral Assignments of Leases shall be
substantially in full force and effect and the Borrower shall endeavor in a
reasonable manner to obtain and deliver to the Collateral Agent a Landlord
Consent from each lessor under those leases so indicated on Schedule 5.10
pursuant to which the Borrower leases office or warehouse space, within 90 days
of the Effective Date.
(e) On the Effective Date, the Borrower shall have duly authorized,
executed and delivered to the Collateral Agent a Collateral Assignment of
Location Leases with respect to all premises leased by the Borrower at which
Collateral constituting personal property is located and such Collateral
Assignment of Location Leases shall be substantially in full force and effect.
5.11 Mortgages; Title Insurance; Surveys; etc. Within 15 days after
----------------------------------------
the acquisition of the Mortgaged Property, the Collateral Agent shall have
received:
(i) fully executed counterparts of Mortgages, in form attached
hereto as Exhibit K, covering such of the Real Property owned or leased by
---------
the Borrower or any of the Subsidiary Guarantors as shall be designated as
such on Schedule 5.11, together with evidence that counterparts of the
Mortgages have been delivered to the title insurance company insuring the
Lien of the Mortgages for recording in all places to the extent necessary
to create a valid and enforceable first priority mortgage lien (subject to
Permitted Encumbrances relating thereto) on each Mortgaged Property in
favor of the Collateral Agent
-37-
<PAGE>
(or such other trustee as may be required or desired under local law) for
the benefit of the Secured Creditors; and
(ii) Mortgage Policies on each Mortgaged Property issued by Chicago
Title or another national title insurer licensed to do business in Texas
and Maryland and assuring the Collateral Agent that the Mortgages are valid
and enforceable first priority mortgage Liens on the respective Mortgaged
Properties, free and clear of all defects and encumbrances except Permitted
Encumbrances and such Mortgage Policies shall otherwise be in form and
substance reasonably satisfactory to the Collateral Agent and shall
include, as appropriate, an endorsement for future advances under this
Agreement and the Notes and for any other matter that the Collateral Agent
in its discretion may reasonably request to the extent available in the
jurisdictions in which such Mortgaged Property is located.
5.12 Adverse Change, etc. At the time of each Credit Event and after
-------------------
giving effect thereto, nothing shall have occurred since March 31, 1996 (and the
Banks shall have become aware of no facts, conditions or other information not
previously available to them) which the Agents or the Required Banks reasonably
believe could have a material adverse effect on: (i) the rights or remedies of
the Agents or the Banks, (ii) the ability of Holdings or the Borrower to perform
their respective obligations to the Agents and the Banks or (iii) the business
operations, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings and its Subsidiaries taken as a whole or on the Borrower and its
Subsidiaries taken as a whole (the circumstances described in clauses (i), (ii)
and (iii) as they apply to Holdings and the Borrower and their respective
Subsidiaries being collectively referred to as a "Material Adverse Effect").
-----------------------
5.13 Litigation. On the Effective Date, no litigation by any entity
----------
(private or governmental) shall be pending or threatened with respect to the
Acquisition or this Agreement or any documentation executed in connection
therewith, or which the Agents or the Required Banks shall reasonably believe
could have a Materially Adverse Effect.
5.14 Evidence of Insurance. On the Effective Date, the Borrower
---------------------
shall cause to be delivered to the Agents evidence of insurance complying with
the requirements of Section 8.03 with respect to each of the Mortgaged
Properties and for the business and properties of Holdings and its Subsidiaries,
in scope, form and substance reasonably satisfactory to the Administrative Agent
and the Required Banks and naming the Collateral Agent, in the case of
Collateral, as an additional insured and/or loss payee, and stating that such
insurance shall not be canceled or revised without at least 30 days' prior
written notice, as of a recent date, by the respective insurer to the Collateral
Agent.
-38-
<PAGE>
5.15 Pro Forma Balance Sheet. On the Effective Date, the Banks shall
-----------------------
have received an unaudited projected pro forma consolidated balance sheet of the
--- -----
Borrower prepared on a basis substantially consistent in all material respects
with the Projections and in accordance with GAAP except as specifically set
forth in the notes to such balance sheets, both immediately before and
immediately after giving effect to the Acquisition, the related financing
thereof and the other transactions contemplated hereby and thereby, which
projected pro forma consolidated balance sheet shall be in form and substance
--- -----
reasonably satisfactory to the Agents and the Required Banks.
SECTION 6. Conditions Precedent to All Credit Events. The obligation
-----------------------------------------
of each Bank to make Loans (including Loans made on the Effective Date), and the
obligation of an Issuing Bank to issue any Letter of Credit, is subject, at the
time of each such Credit Event (except as hereinafter indicated), to the
satisfaction of the following conditions:
6.01 No Default; Representations and Warranties. At the time of each
------------------------------------------
such Credit Event and also after giving effect thereto (i) there shall exist no
Default or Event of Default, (ii) there shall not exist or become known any
facts, conditions, or circumstances which the Agents or the Required Banks
reasonably believe could have a Material Adverse Effect and (iii) all
representations and warranties contained herein or in any other Credit Document
shall be true and correct in all material respects with the same effect as
though such representations and warranties had been made on the date of the
making of such Credit Event (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material respects only as of
such specified date).
6.02 Notice of Borrowing; Letter of Credit Request. (a) Prior to
---------------------------------------------
the making of each Loan, the Agent shall have received the notice required by
Section 1.03(a).
(b) Prior to the issuance of each Letter of Credit, the Agent and the
respective Issuing Bank shall have received a Letter of Credit Request meeting
the requirements of Section 2.02(a).
The occurrence of the Effective Date and each Credit Event and the
acceptance of the proceeds of each Credit Event shall constitute a
representation and warranty by the Borrower to the Agents and each of the Banks
that all the conditions specified in Section 5 and in this Section 6 and
applicable to the occurrence of the Effective Date and such Credit Event exist
as of that time (except to the extent that any of the conditions specified in
Section 5 are required to be satisfactory to or determined by any Bank, the
Required Banks and/or the Agents). All of the Notes, certificates, legal
opinions and other documents and papers referred to in Section 5 and in this
Section 6, unless otherwise specified, shall be delivered to the Administrative
Agent at
-39-
<PAGE>
the Notice Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts for each of the Banks.
SECTION 7. Representations, Warranties and Agreements. In order to
------------------------------------------
induce the Banks to enter into this Agreement and to make the Loans, and issue
(or participate in) the Letters of Credit as provided herein, each of Holdings
and the Borrower makes the following representations, warranties and agreements,
in each case after giving effect to the Acquisition, all of which shall survive
the execution and delivery of this Agreement and the Notes and the making of the
Loans and issuance of the Letters of Credit, with the occurrence of each Credit
Event on or after the Effective Date being deemed to constitute a representation
and warranty that the matters specified in this Section 7 are true and correct
in all material respects on and as of the Effective Date and on the date of each
such Credit Event (it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date shall be required to
be true and correct only as of such specified date).
7.01 Corporate Status. Except as set forth on Schedule 7.01,
----------------
Holdings, the Borrower and each of their respective Subsidiaries (i) is a duly
organized and validly existing corporation in good standing under the laws of
the jurisdiction of its incorporation, (ii) has the corporate power and
authority to own its property and assets and to transact the business in which
it is engaged and (iii) is duly qualified and is authorized to do business and
is in good standing in each jurisdiction where the conduct of its business
requires such qualifications except for failures to be so qualified which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
7.02 Corporate Power and Authority. Each Credit Party has the
-----------------------------
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Documents to which it is party and has taken all
necessary corporate or partnership action to authorize the execution, delivery
and performance by it of each of such Documents. Each Credit Party has duly
executed and delivered each of the Documents to which it is party, and, assuming
due execution and delivery of each other party thereto, each of such Documents
constitutes its legal, valid and binding obligation of such Credit Party
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by (a) bankruptcy, insolvency, fraudulent
conveyance, preferential transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting creditors' rights and
remedies generally, (b) general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law), and by the
discretion of the court before which any proceeding therefor may be brought, or
(c) public policy considerations or court administrative, regulatory or other
governmental decisions that may limit rights to indemnification or contribution
or limit or affect any covenants or agreements relating to competition or future
employment.
-40-
<PAGE>
7.03 No Violation. Neither the execution, delivery or performance by
------------
any Credit Party of the Documents to which it is a party, nor compliance by it
with the terms and provisions thereof, (i) will contravene any provision of any
applicable law, statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumentality, in each case,
to the extent such contravention could reasonably be expected to result in a
Material Adverse Effect, (ii) will conflict with or result in any breach of any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien (except pursuant to the Security Documents) upon any of the
material properties or assets of Holdings, the Borrower or any of their
respective Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, credit agreement or loan agreement, or any other material agreement,
contract or instrument, to which Holdings, the Borrower or any of their
respective Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject, which conflict, breach or default
would not reasonably be expected to have a Material Adverse Effect or (iii) will
violate any provision of the Certificate of Incorporation or By-Laws of
Holdings, the Borrower or any of their respective Subsidiaries.
7.04 Governmental Approvals. Except as set forth on Schedule 7.04,
----------------------
no order, consent, approval, license, authorization or validation of, or filing,
recording or registration with (except as have been obtained or if failed to
obtain would not reasonably be expected to have a Material Adverse Effect or (in
the case of filings, recordings or registrations) made prior to the Effective
Date), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Document or (ii) the
legality, validity, binding effect or enforceability of any such Document.
7.05 Financial Statements; Financial Condition; Undisclosed
------------------------------------------------------
Liabilities; Projections; etc. To the best knowledge of Holdings and the
- -----------------------------
Borrower, (a) the statements of financial condition of Holdings and its
Subsidiaries at September 28, 1996 and of KWIK Wash and its Subsidiaries at
September 30, 1996 and the related statements of income and cash flow for the
last fiscal year and six-month period (or in the case of KWIK Wash, nine-month
period) ended on such date, as the case may be, and furnished to the Banks prior
to the Effective Date present fairly in all material respects the financial
condition of Holdings and its Subsidiaries and of KWIK Wash and its Subsidiaries
at the date of such statements of financial condition and the results of the
operations of Holdings and its Subsidiaries and of KWIK Wash and its
Subsidiaries for the respective last fiscal year or six-month or nine-month
period, as the case may be. To the best knowledge of Holdings and the Borrower,
all such financial statements have been prepared in accordance with GAAP
consistently applied, except as disclosed therein and subject to normal year end
audit adjustments.
-41-
<PAGE>
(b) The annual and interim financial statements included in the SEC
Reports (both as to Holdings and as to its Subsidiaries on a combined basis)
(including statements of income and cash flows and changes in shareholders'
equity), present fairly in all material respects the financial condition of the
relevant Persons at the dates of said statements and the results for the periods
covered thereby. All such financial statements have been prepared in accordance
with GAAP consistently applied and the financial statements as of and for the
fiscal years have been audited by and accompanied by the opinion of Ernst &
Young LLP, independent public accountants.
(c) Since March 31, 1996, after giving effect to the Acquisition,
nothing has occurred that has had or could reasonably be expected to have a
Material Adverse Effect.
(d) Except as fully reflected in the financial statements described
in Section 7.05(b) and the Indebtedness incurred under this Agreement and except
as set forth in Schedule 7.05, (i) there were as of the Effective Date (and
after giving effect to any Loans made on such date), no liabilities or
obligations (excluding obligations or liabilities incurred in the ordinary
course of business, which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect) with respect to
Holdings or the Borrower or any of their respective Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due), and (ii) neither Holdings nor the Borrower nor any of their respective
Subsidiaries knows of any basis for the assertion against Holdings or the
Borrower or any of their respective Subsidiaries of any such liability or
obligation which, either individually or in the aggregate, has, or could be
reasonably likely to have, a Material Adverse Effect.
(e) The pro forma information contained in the SEC Reports and the
--- -----
Projections are based on good faith estimates and assumptions made by Holdings
or Borrower, and on the Effective Date Holdings or Borrower believes that the
Projections and such pro forma information were reasonable and, in the case of
--- -----
the Projections, attainable under the facts and circumstances known to Holdings
or Borrower, it being recognized by the Banks, however, that projections as to
future events are not to be viewed as facts and that the actual results during
the period or periods covered by the Projections are likely to differ from the
projected results and that the differences could be material. There is no
material fact known to Holdings or the Borrower or any of their respective
Subsidiaries which would have a Material Adverse Effect and which is not
publicly available or has not been disclosed herein or in such other documents,
certificates and statements furnished to the Banks for use in connection with
the transactions contemplated hereby.
(f) (i) On and as of the Effective Date, after giving effect to the
Acquisition and to all Indebtedness (including the Loans) being incurred or
assumed and Liens created by the Borrower in connection therewith (assuming the
full utilization of
-42-
<PAGE>
all Commitments on the Effective Date), (a) the sum of the assets, at a going
business value (i.e., the amount that may be realized within a reasonable time,
---
considered to be six months to one year, either through collection or sale at
the regular market value, conceiving the latter as the amount that would be
obtained for such assets within such period by a capable and diligent
businessman from an interested buyer who is willing to purchase under ordinary
selling conditions), of each of Holdings, individually, and the Borrower,
individually, will exceed its debts; (b) each of Holdings, individually, and the
Borrower, individually, has not incurred and does not intend to incur, and does
not believe that it will incur, debts beyond its ability to pay such debts as
such debts mature; and (c) each of Holdings, individually, and the Borrower,
individually, will have sufficient capital with which to conduct its business.
For purposes of this Section 7.05(f), "debt" means any liability on a claim, and
----
"claim" means (i) 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 (ii) right to
an equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured; provided that to the extent any such "claim" is not fixed,
--------
liquidated and contingent, the amount thereof shall equal the Company's good
faith estimate of the maximum amount thereof.
(g) Except as fully disclosed in the financial statements delivered
pursuant to Section 7.05(a), there were as of the Effective Date no liabilities
or obligations with respect to Holdings, the Borrower or any of their respective
Subsidiaries of any nature whatsoever (whether absolute, accrued, contingent or
otherwise and whether or not due) which, either individually or in aggregate,
would be material to Holdings, the Borrower or to the Borrower and its
Subsidiaries taken as a whole. As of the Effective Date, neither Holdings nor
the Borrower knows of any basis for the assertion against it of any liability or
obligation of any nature whatsoever that is not fully disclosed in the financial
statements delivered pursuant to Section 7.05(a) which, either individually or
in the aggregate, could be material to Holdings or the Borrower.
(h) On and as of the Effective Date, the financial projections (the
"Projections") previously delivered to the Administrative Agent and the Banks
- ------------
have been prepared on a basis consistent with the financial statements referred
to in Section 7.05(a) (other than as set forth or presented in such
Projections), and there are no statements or conclusions in any of the
Projections which are based upon or include information known to the Borrower to
be misleading in any material respect or which fail to take into account
material information regarding the matters reported therein. On the Effective
Date, the Borrower believed that the Projections were reasonable and attainable;
it being recognized by the Banks, however, that projections as to future events
are not viewed as facts and that the actual results during the period or periods
-43-
<PAGE>
covered by the Projections are likely to differ from the projected results and
the differences could be material.
7.06 Litigation. Except as set forth on Schedule 7.06, there are no
----------
actions, suits or proceedings pending or, to the best knowledge of Holdings and
the Borrower, threatened that could reasonably be expected to, singly or in the
aggregate, have a Material Adverse Effect.
7.07 True and Complete Disclosure. To the best of Holdings' and the
----------------------------
Borrower's knowledge, all factual information (taken as a whole) furnished by or
on behalf of Holdings or the Borrower in writing and listed on Schedule 7.07 to
any of the Agents or any Bank for purposes of or in connection with this
Agreement, the other Credit Documents or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of Holdings or the Borrower in writing to any of the
Agents or any Bank will be, true and accurate in all material respects on the
date as of which such information is dated or certified.
7.08 Use of Proceeds; Margin Regulations. (a) All proceeds of the
-----------------------------------
Term Loans shall be used by the Borrower (x) to effect the Acquisition and (y)
to pay fees and expenses related to the Acquisition.
(b) All proceeds of Revolving Loans shall be used (subject to the
terms and conditions contained herein) for general corporate purposes of
Holdings and the Borrower and its Subsidiaries; provided that no more than
--------
$35,000,000 in aggregate amount may be used to finance the cash portion of the
consideration paid to effect Permitted Acquisitions.
(c) No part of the proceeds of any Loan will be used to purchase or
carry any Margin Stock or to extend credit for the purpose of purchasing or
carrying any Margin Stock. Neither the making of any Loan nor the use of the
proceeds thereof nor the occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. Holdings, the Borrower and each of
------------------------
their respective Subsidiaries are members of an affiliated group of corporations
filing consolidated returns for Federal income tax purposes, of which Holdings
is the "common parent" (within the meaning of Section 1504 of the Code) of such
group. Each of Holdings, the Borrower and each of their respective
Subsidiaries have timely filed or caused to be timely filed, on the due dates
thereof or within applicable grace periods, with the appropriate taxing
authority, all Federal and all material state and other returns, statements,
forms and reports for taxes (the "Returns") required to be filed by or with
-------
respect to the income, properties or operations of Holdings, the
-44-
<PAGE>
Borrower and/or any of their respective Subsidiaries. To the best knowledge of
Holdings, the Returns accurately reflect all liability for taxes of Holdings,
the Borrower and their respective Subsidiaries for the periods covered thereby.
To the best knowledge of Holdings, each of Holdings, the Borrower and each of
their respective Subsidiaries have paid all taxes payable by them other than
taxes which are not delinquent, and other than those contested in good faith and
for which adequate reserves have been established in accordance with GAAP.
Except as disclosed in the financial statements referred to in Section 7.05(a),
there is no material action, suit, proceeding, investigation, audit, or claim
now pending or, to the best knowledge of Holdings or the Borrower, threatened by
any authority regarding any taxes relating to Holdings, the Borrower or any of
their respective Subsidiaries. The charges, accruals and reserves on the books
of Holding and its Subsidiaries in respect of taxes and other governmental
charges are, in the opinion of Holdings and the Borrower, adequate. As of the
Effective Date, none of Holdings, the Borrower or any of their respective
Subsidiaries has entered into an agreement or waiver or been requested to enter
into an agreement or waiver extending any statute of limitations relating to the
payment or collection of taxes of Holdings, the Borrower or any of their
respective Subsidiaries, or is aware of any circumstances that would cause the
taxable years or other taxable periods of Holdings, the Borrower or any of their
respective Subsidiaries not to be subject to the normally applicable statute of
limitations. None of Holdings, the Borrower or any of their respective
Subsidiaries has provided, with respect to themselves or property held by them,
any consent under Section 341 of the Code. None of Holdings, the Borrower or
any of their respective Subsidiaries has incurred, or reasonably expect to
incur, any material tax liability in connection with the Acquisition and the
other transactions contemplated hereby.
7.10 Compliance with ERISA. Each Plan is in substantial compliance
---------------------
with ERISA and the Code; no Reportable Event has occurred with respect to a
Plan; no Plan is insolvent or in reorganization; no Plan has Unfunded Current
Liability; no Plan has an accumulated or waived funding deficiency, has
permitted decreases in its funding standard account or has applied for an
extension of any amortization period within the meaning of Section 412 of the
Code; all contributions required to be made with respect to a Plan have been
timely made; none of Holdings, the Borrower, or any of their respective
Subsidiaries nor any ERISA Affiliate has incurred any material liability to or
on account of a Plan pursuant to Section 409, 502(i), 502(1), 515, 4062, 4063,
4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of
the Code or expects to incur any liability under any of the foregoing Sections
with respect to any Plan; no proceedings have been instituted to terminate or
appoint a trustee to administer any Plan; no condition exists which presents a
material risk to Holdings, the Borrower or any of their respective Subsidiaries
or any ERISA Affiliate of incurring a liability to or on account of a Plan
pursuant to the foregoing provisions of ERISA and the Code; using actuarial
assumptions and computation methods consistent with Part 1 of subtitle E of
Title IV of ERISA, the aggregate liabilities of Holdings, the Borrower, their
respective Subsidiaries and their ERISA Affiliates to all
-45-
<PAGE>
Plans which are multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
in the event of a complete withdrawal therefrom, as of the close of the most
recent fiscal year of each such Plan ended prior to the date of the most recent
Credit Event, would not exceed $50,000; no lien imposed under the Code or ERISA
on the assets of Holdings, the Borrower or any of their respective Subsidiaries
or any ERISA Affiliate exists or is likely to arise on account of any Plan; and
Holdings, the Borrower and their respective Subsidiaries may cease contributions
to or terminate any Plan maintained by any of them without incurring any
material liability.
7.11 The Security Documents. (a) The provisions of the Security
----------------------
Agreement are effective to create in favor of the Collateral Agent for the
benefit of the Secured Creditors a legal, valid and enforceable security
interest in all right, title and interest of the Borrower and the Subsidiary
Guarantors in the Security Agreement Collateral described therein, and the
Security Agreement, upon the filing of Form UCC-1 financing statements or the
appropriate equivalent (which filings have been made) or other methods of
perfection (which have been completed), creates, a fully perfected first lien
on, and security interest in, all right, title and interest in all of the
Security Agreement Collateral described therein, which security interest shall
be subject to no other Liens other than Permitted Filings. The recordation of
the Assignment of Security Interest in U.S. Patents and Trademarks in the form
attached to the Security Agreement in the United States Patent and Trademark
Office together with filings on Form UCC-1 made pursuant to the Security
Agreement are effective, under applicable law, to perfect the security interest
granted to the Collateral Agent in the trademarks and patents covered by the
Security Agreement and the recordation of the Assignment of Security Interest in
U.S. Copyrights in the form attached to the Security Agreement with the United
States Copyright Office together with filings on Form UCC-1 made pursuant to the
Security Agreement are effective under federal law to perfect the security
interest granted to the Collateral Agent in the copyrights covered by the
Security Agreement. The Borrower and each Subsidiary Guarantor has good and
marketable title to all Security Agreement Collateral pledged by it under the
Security Agreement, free and clear of all Liens except those described above in
this clause (a).
(b) The security interests created in favor of the Collateral Agent,
as Pledgee, for the benefit of the Secured Creditors under the Pledge
Agreements, upon the delivery of the Pledged Securities to the Collateral Agent,
constitute first priority perfected security interests in the Pledged Securities
described in the Pledge Agreements, subject to no security interests of any
other Person. No filings or recordings are required in order to perfect the
security interests created in the Pledged Securities and the proceeds thereof
under the Pledge Agreements other than filings on Form UCC-1 deemed necessary by
the Collateral Agent.
(c) After the recording thereof, the Mortgages will create, as
security for the obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and mortgage lien on all of the
Mortgaged Properties in favor of the
-46-
<PAGE>
Collateral Agent (or such other trustee as may be required or desired under
local law) for the benefit of the Secured Creditors, superior to and prior to
the rights of all third persons (except that the security interest and mortgage
lien created in the Mortgaged Properties may be subject to the Permitted
Encumbrances related thereto) and subject to no other Liens. Schedule 5.11
contains a true and complete list of each parcel of Real Property owned or
leased by the Borrower and the Subsidiary Guarantors on the Effective Date, and
the type of interest therein held by the Borrower or such Subsidiary Guarantor.
The Borrower and each of the Subsidiary Guarantors have good and indefeasible
title to all fee owned Mortgaged Properties on the Effective Date free and clear
of all Liens except those described in the first sentence of this subsection
(c).
7.12 Representations and Warranties in Documents. All
-------------------------------------------
representations and warranties set forth in the other Documents are true and
correct in all material respects at the time as of which such representations
and warranties were made (or deemed made) and will be true and correct in all
material respects on the Effective Date.
7.13 Properties. Except as set forth on Schedule 7.13, Holdings, the
----------
Borrower and each of their respective Subsidiaries have good and valid title to
all properties owned in fee by them, including all property reflected in the
balance sheet referred to in Section 7.05(a) and in the pro forma balance sheet
--- -----
referred to in Section 5.15 (except as sold or otherwise disposed of since the
date of such balance sheet in the ordinary course of business or in accordance
with the terms of this Agreement), free and clear of all Liens, other than Liens
which are (x) in the case of Mortgaged Real Property, Prior Liens and Liens
permitted by the applicable Mortgage and (y) in the case of other Real Property,
Permitted Liens.
7.14 Capitalization. (a) On the Effective Date, the authorized
--------------
capital stock of Holdings shall consist of (i) 15,000,000 shares of Holdings
Common Stock, $.01 par value per share, of which 10,004,278 shares shall be
issued and outstanding, (ii) 1,000,000 shares of Holdings Nonvoting Common
Stock, $.01 par value per share, of which 480,648 shares shall be issued and
outstanding and (iii) 1,000,000 shares of Holdings Preferred Stock, $.01 par
value per share, none of which shall be issued and outstanding. All such
outstanding shares have been duly and validly issued, are fully paid and non-
assessable and have been issued free of preemptive rights. As of the Effective
Date, Holdings does not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any agreement providing for
the issuance (contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock, in each case other than as set
forth in the SEC Reports.
(b) The authorized capital stock of the Borrower shall consist of
1,000 shares of common stock, $.01 par value per share, 100 of which shall be
issued and
-47-
<PAGE>
outstanding. All such outstanding shares of common stock have been duly and
validly issued, are fully paid and nonassessable and are free of preemptive
rights. As of the Effective Date, the Borrower does not have outstanding any
securities convertible into or exchangeable for its capital stock or outstanding
any rights to subscribe for or to purchase, or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to, its capital
stock.
7.15 Subsidiaries. On and as of the Effective Date, the Borrower has
------------
no Subsidiaries other than those Subsidiaries listed on Schedule 7.15 and as of
the Effective Date, Holdings has no direct Subsidiary other than the Borrower
and no indirect Subsidiary other than the direct Subsidiaries of the Borrower
listed on Schedule 7.15.
7.16 Compliance with Statutes, etc. Except as set forth on Schedule
-----------------------------
7.16, each of Holdings, the Borrower and their respective Subsidiaries is in
compliance with all applicable statutes, regulations and orders of, and all
applicable restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of its business and the ownership of its
property, except such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
7.17 Investment Company Act. None of Holdings, the Borrower or any
----------------------
of their respective Subsidiaries is an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
7.18 Public Utility Holding Company Act. None of Holdings, the
----------------------------------
Borrower or any of their respective Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company" within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
7.19 Environmental Matters. Except as set forth on Schedule 7.19,
---------------------
(a) Holdings, the Borrower and each of their respective Subsidiaries have
complied in all material respects with, and on the date of each Credit Event
will be in compliance in all material respects with, all Environmental Laws and
the requirements of any permits, licenses or other authorizations issued under
such Environmental Laws. There are no pending or, to the best knowledge of
Holdings and the Borrower, past or threatened Environmental Claims against
Holdings, the Borrower or any of their respective Subsidiaries or any Real
Property now or formerly owned or operated by Holdings, the Borrower or any of
their respective Subsidiaries. There are no facts, circumstances, conditions or
occurrences on any Real Property now or formerly owned or operated by Holdings,
the Borrower or any of their respective Subsidiaries or, to the
-48-
<PAGE>
best knowledge of Holdings or the Borrower, on any property adjoining or in the
vicinity of any such Real Property that, to the best knowledge of Holdings or
the Borrower, could reasonably be expected (i) to form the basis of an
Environmental Claim against Holdings, the Borrower or any of their respective
Subsidiaries or any such Real Property, which Environmental Claim could
reasonably be expected to result in a Material Adverse Effect, individually or
in the aggregate with all other Environmental Claims, or (ii) to cause any such
Real Property to be subject to any restrictions on the ownership, occupancy, use
or transferability of such Real Property by Holdings, the Borrower or any of
their respective Subsidiaries under any Environmental Law.
(b) Hazardous Materials have not at any time been generated, used,
treated or stored on, or transported to or from, any Real Property owned or
operated by Holdings, the Borrower or any of their respective Subsidiaries where
such generation, use, treatment or storage has violated or resulted in liability
under, or could reasonably be expected to violate or to result in liability
under, any Environmental Law, which violation or liability could reasonably be
expected to result in a Material Adverse Effect, individually or in the
aggregate with all other violations of or liability under any Environmental Law.
Hazardous Materials have not at any time been Released on or from any Real
Property owned or operated by Holdings, the Borrower or any of their respective
Subsidiaries where such Release has violated or resulted in material liability
under, or could reasonably be expected to violate or to result in material
liability under, any Environmental Law. There are not now nor have there been
any underground storage tanks or related piping located on any Real Property
owned or operated by Holdings, the Borrower or any of their respective
Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 7.19,
the representations made in this Section 7.19 shall only be untrue if the
aggregate effect of all failures, noncompliances and liabilities of the types
described above could reasonably be expected to result in a Material Adverse
Effect.
7.20 Labor Relations. Except as set forth on Schedule 7.20, none of
---------------
Holdings, the Borrower or any of their respective Subsidiaries is engaged in any
unfair labor practice that could reasonably be expected to have a material
adverse effect on Holdings, the Borrower or on the Borrower and its Subsidiaries
taken as a whole. There is (i) no unfair labor practice complaint pending
against Holdings, the Borrower or any of their respective Subsidiaries or, to
the best knowledge of Holdings or the Borrower, threatened against any of them,
before the National Labor Relations Board, and no material grievance or
arbitration proceeding arising out of or under any collective bargaining
agreement is so pending against Holdings, the Borrower or any of their
respective Subsidiaries or, to the best knowledge of Holdings or the Borrower,
threatened against any of them, (ii) no strike, labor dispute, slowdown or
stoppage pending against Holdings, the Borrower or any of their respective
Subsidiaries or, to the best knowledge of the Borrower, threatened against
Holdings, the Borrower or any
-49-
<PAGE>
of their respective Subsidiaries and (iii) to the best knowledge of Holdings and
the Borrower, no union representation proceeding is pending with respect to the
employees of Holdings or the Borrower or any of their respective Subsidiaries,
except (with respect to any matter specified in clause (i), (ii) or (iii) above,
either individually or in the aggregate) such as could not reasonably be
expected to result in a Material Adverse Effect.
7.21 Patents, Licenses, Franchises and Formulas. Except as set forth
------------------------------------------
on Schedule 7.21, each of Holdings, the Borrower and their respective
Subsidiaries owns all material patents, trademarks, permits, service marks,
trade names, copyrights, licenses, franchises and formulas, or rights with
respect to the foregoing, and has obtained assignments of all leases and other
rights of whatever nature, reasonably necessary for the present conduct of its
business, without any known conflict with the rights of others which, or the
failure to obtain which, as the case may be, would reasonably be expected to
result in a Material Adverse Effect.
7.22 Indebtedness. Schedule 7.22 sets forth a true and complete list
------------
of all Indebtedness of Holdings, the Borrower and their respective Subsidiaries
as of the Effective Date and which is to remain outstanding after giving effect
to the Acquisition and the incurrence of Loans on such date (excluding the Loans
and the Letters of Credit, the "Existing Indebtedness"), in each case showing
---------------------
the aggregate principal amount thereof and the name of the respective borrower
and any other entity which directly or indirectly guaranteed such debt.
7.23 Acquisition. At the time of consummation thereof, the
-----------
Acquisition shall have been consummated in all material respects and
substantially in accordance with the terms of the respective Documents and all
applicable laws. At the time of consummation of the Acquisition, all consents
and approvals of, and filings and registrations with, and all other actions in
respect of, all governmental agencies, authorities or instrumentalities required
in order to make or consummate the Acquisition will have been obtained, given,
filed or taken and are or will be in full force and effect (or effective
judicial relief with respect thereto has been obtained), except where the
failure to so obtain, give, file or take would not have a Material Adverse
Effect. All applicable waiting periods with respect thereto have or, prior to
the time when required, will have, expired without, in all such cases, any
action being taken by any competent authority which restrains, prevents, or
imposes material adverse conditions upon the Acquisition. Additionally, to the
best of Holdings' and the Borrower's knowledge, there does not exist any
judgment, order or injunction prohibiting or imposing material adverse
conditions upon the Acquisition, or the occurrence of any Credit Event or the
performance by Holdings or the Borrower of its obligations under the respective
Documents. All actions taken by the Borrower pursuant to or in furtherance of
the Acquisition have been taken in material compliance with the respective
Documents and all applicable laws.
-50-
<PAGE>
SECTION 8. Affirmative Covenants. Holdings and the Borrower hereby
---------------------
covenant and agree that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Total Commitments have terminated, no
Letters of Credit (other than Letters of Credit, together with all Fees that
have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been cash collateralized in a cash collateral
account satisfactory to the Letter of Credit Issuer in its sole and absolute
discretion) or Notes are outstanding and the Loans, together with interest, Fees
and all other obligations (other than indemnities described in Section 13.13
which are not then due and payable) incurred hereunder are paid in full:
8.01 Information Covenants. Holdings and/or the Borrower will
---------------------
furnish to each Bank:
(a) Monthly Reports. Within 30 days after the end of each fiscal
---------------
month of Holdings, (i) the consolidated and consolidating balance sheets of
Holdings and its consolidated Subsidiaries as at the end of such month and
the related consolidated and consolidating statements of operations and
retained earnings/stockholders deficiency and statement of cash flows for
such month and for the elapsed portion of the fiscal year ended with the
last day of such month, in each case setting forth comparative figures for
the corresponding month in the prior fiscal year and the budgeted figures
for such month as set forth in the respective budget delivered pursuant to
Section 8.01(e) and (ii) management's discussion and analysis of the
important operational and financial developments during the month and year-
to-date periods, all of which shall be certified by the chief financial
officer or other Authorized Officer of the Company, subject to certain
recurring quarter-end adjustments and normal year-end audit adjustments and
the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close
------------------------------
of each of the first three quarterly accounting periods in each fiscal year
of Holdings, consolidated and consolidating balance sheet of Holdings and
its Subsidiaries as at the end of such quarterly accounting period and the
related consolidated and consolidating statements of operations, statements
of changes in stockholders equity and statements of cash flows for such
quarterly accounting period and for the elapsed portion of the fiscal year
ended with the last day of such quarterly accounting period; all of which
shall be in reasonable detail and certified by the chief financial officer
or other Authorized Officer of Holdings that they fairly present in all
material respects the financial condition of Holdings and its Subsidiaries
taken as a whole as of the dates indicated and the results of their
operations and changes in their cash flows for the periods indicated,
subject to normal year-end audit adjustments and the absence of footnotes.
-51-
<PAGE>
(c) Annual Financial Statements. Within 95 days after the close of
---------------------------
each fiscal year of Holdings, (i) the consolidated and consolidating
balance sheets of Holdings and its consolidated Subsidiaries as at the end
of such fiscal year and the related consolidated statements of operation
and retained earnings/stockholder deficiency and of cash flows for such
fiscal year setting forth comparative figures for the preceding fiscal year
and certified by Ernst & Young LLP or such other independent certified
public accountants of recognized national standing reasonably acceptable to
the Agents, together with a report of such accounting firm stating that in
the course of its regular audit of the financial statements of Holdings and
its Subsidiaries, which audit was conducted in accordance with generally
accepted auditing standards, such accounting firm obtained no knowledge of
any Default or Event of Default which has occurred and is continuing under
Sections 9.04, 9.05 or 9.07 through 9.10 inclusive or, if in the opinion of
such accounting firm such a Default or Event of Default has occurred and is
continuing, a statement as to the nature thereof and (ii) management's
discussions and analysis of the important operational and financial
developments during such fiscal year.
(d) Management Letters. Promptly after the receipt thereof by
------------------
Holdings, the Borrower or any of their respective Subsidiaries, a copy of
any final "management letter" received by any of them from its certified
public accountants and the management's responses thereto.
(e) Budgets. No later than 35 days following the commencement of the
-------
first day of each fiscal year of Holdings, a budget in form consistent with
past practices and in the form delivered to the Agents on or prior to the
Effective Date (including budgeted statements of operation and sources and
uses of cash and balance sheets) prepared by Holdings for (x) each of the
twelve months of such fiscal year prepared in detail and (y) each of the
five years immediately following such fiscal year prepared in summary form,
in each case, of Holdings and its Subsidiaries, accompanied by the
statement of the Chief Financial Officer or Treasurer of the Borrower to
the effect that, to the best of his knowledge, the budget is a reasonable
estimate for the period covered thereby, the principal assumptions upon
which such budgets are based. Together with each delivery of financial
statements pursuant to Section 7.01(b) and (c), a comparison of the current
year to date financial results (other than in respect of the balance sheets
included therein) against the budgets required to be submitted pursuant to
this clause (e) shall be presented.
(f) Officer's Certificates. At the time of the delivery of the
----------------------
financial statements provided for in Sections 8.01(a), (b) and (c),
certificates of an Authorized Officer of each of the Borrower and Holdings
to the effect that, to the best of such officer's knowledge, no Default or
Event of Default has occurred and is continuing or, if any Default or Event
of Default has occurred
-52-
<PAGE>
and is continuing, specifying the nature and extent thereof and what action
the Borrower and Holdings propose to take with respect thereto, which
certificate shall, in the case of any such financial statements delivered
in respect of a period ending on the last day of the respective fiscal
quarter or year, (x) set forth the calculations required to establish
whether there was compliance with the provisions of Sections 4.02(g) and
(h) (but with respect to Section 4.02(h) only to the extent delivered with
the financial statements required by Sections 8.01(a)), 9.04, 9.05 and 9.07
through 9.10, inclusive, at the end of such fiscal quarter or year, as the
case may be, and (y) if delivered with the financial statements required by
Section 8.01(a), set forth the amount of Excess Cash Flow for the
respective Excess Cash Payment Period.
(g) Notice of Default or Litigation. Promptly, and in any event
-------------------------------
within three Business Days after an officer of Holdings or the Borrower
obtains knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or Event of Default specifying the nature and extent
thereof and what action the Borrower and Holdings propose to take with
respect thereto and (ii) any litigation or governmental investigation or
proceeding pending (x) against Holdings, the Borrower or any of their
respective Subsidiaries which, singly or in the aggregate could reasonably
be expected to have a Materially Adverse Effect, (y) with respect to (i)
the CLC Notes or (ii) any material Indebtedness of the Borrower and its
Subsidiaries taken as a whole or (z) with respect to any Document.
(h) Other Reports and Filings. Promptly, copies of all financial
-------------------------
information, proxy materials and other information and reports ("SEC
---
Reports"), if any, which Holdings, the Borrower or any of their respective
-------
Subsidiaries shall file with the Securities and Exchange Commission or any
successor thereto (the "SEC") or sent generally to analysts or holders of
---
capital stock or other securities of Holdings, the Borrower or any of their
respective Subsidiaries (in their capacities as such) including holders of
its Indebtedness (including the CLC Notes) pursuant to the terms of the
documentation governing such Indebtedness (or any trustee, agent or other
representative therefor).
(i) Environmental Matters. Promptly upon, and in any event within
---------------------
ten Business Days after, an officer of Holdings, the Borrower or any of
their respective Subsidiaries obtains knowledge thereof, notice of one or
more of the following environmental matters, unless such environmental
matters could not, individually or when aggregated with all other such
environmental matters, be reasonably expected to materially and adversely
affect the business, operations, assets, liabilities, condition (financial
or otherwise) or prospects of Holdings, the Borrower or of the Borrower and
its Subsidiaries taken as a whole:
-53-
<PAGE>
(i) any pending or threatened Environmental Claim against
Holdings, the Borrower or any of its Subsidiaries or any Real Property
owned or operated by the Borrower or any of their respective
Subsidiaries;
(ii) any condition or occurrence on or arising from any Real
Property owned or operated by Holdings, the Borrower or any of their
respective Subsidiaries that (a) results in noncompliance by Holdings,
the Borrower or any of their respective Subsidiaries with any
applicable Environmental Law or (b) could reasonably be expected to
form the basis of an Environmental Claim against Holdings, the
Borrower or any of their respective Subsidiaries or any such Real
Property;
(iii) any condition or occurrence on any Real Property owned
or operated by Holdings, the Borrower or any of their respective
Subsidiaries that could reasonably be expected to cause such Real
Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by Holdings, the Borrower or any of
their respective Subsidiaries of such Real Property under any
Environmental Law; and
(iv) the taking of any removal or remedial action in response
to the actual or alleged presence of any Hazardous Material on any
Real Property owned or operated by Holdings, the Borrower or any of
their respective Subsidiaries as required by any Environmental Law or
any governmental or other administrative agency; provided that in any
--------
event Holdings and the Borrower shall deliver to each Bank all notices
received by it or any of their respective Subsidiaries from any
government or governmental agency under, or pursuant to, CERCLA.
All such notices shall describe in reasonable detail the nature of the
claim, investigation, condition, occurrence or removal or remedial action
and Holdings', the Borrower's or such Subsidiary's response thereto. In
addition, the Borrower will provide the Banks with copies of all material
communications with any government or governmental agency relating to
Environmental Laws, all material communications with any Person (other than
its attorneys) relating to Environmental Claims, and such detailed reports
of any Environmental Claim as may reasonably be requested by the Banks.
(j) Annual Meetings with Banks. At the request of the Administrative
--------------------------
Agent, Holdings shall within 120 days after the close of each fiscal year
of Holdings hold a meeting at a time and place selected by Holdings and
acceptable to the Agents with all of the Banks at which meeting shall be
reviewed the financial results of the previous fiscal year and the
financial condition of
-54-
<PAGE>
Holdings and the budgets presented for the current fiscal year of Holdings
and its Subsidiaries.
(k) Other Information. From time to time, such other information or
-----------------
documents (financial or otherwise) with respect to Holdings, the Borrower
or their respective Subsidiaries as any Bank may reasonably request in
writing.
(l) Promptly upon, and in any event within five Business Days after,
the closing of a Permitted Acquisition, Holdings will deliver to the
Administrative Agent a certificate of an Authorized Officer setting forth
in reasonable detail the pro forma calculation of Pro Forma Leverage Ratio
--- -----
as of the date of the Permitted Acquisition, giving effect thereto.
8.02 Books, Records and Inspections. Holdings and the Borrower will,
------------------------------
and will cause each of their respective Subsidiaries to, keep proper books of
record 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. Holdings and the Borrower will, and
will cause each of their respective Subsidiaries to, permit officers and
designated representatives of the Agents or any Bank to visit and inspect,
during regular business hours and under guidance of officers of Holdings and the
Borrower or such Subsidiary, any of the properties of Holdings and the Borrower
or such Subsidiary, and to examine the books of account of Holdings and the
Borrower or such Subsidiary and discuss the affairs, finances and accounts of
Holdings and the Borrower or such Subsidiary with, and be advised as to the same
by, its and their officers and independent accountants, all at such reasonable
times and intervals and to such reasonable extent as the Agents or such Bank may
request.
8.03 Maintenance of Property; Insurance. (a) Schedule 8.03 sets
----------------------------------
forth a true and complete listing of all insurance maintained by Holdings, the
Borrower and their respective Subsidiaries as of the Effective Date. Holdings
and the Borrower will, and will cause each of their respective Subsidiaries to,
(i) keep all property necessary in its business in good working order and
condition (ordinary wear and tear excepted), (ii) maintain insurance on all its
property in at least such amounts and against at least such risks as is
consistent and in accordance with industry practice and (iii) furnish to each
Bank, upon written request, full information as to the insurance carried. In
addition to the requirements of the immediately preceding sentence, Holdings and
the Borrower will at all times cause insurance of the types described in
Schedule 8.03 to be maintained (with the same scope of coverage as that
described in Schedule 8.03) at levels which are at least as great as the
respective amount described on Schedule 8.03 in footnotes (1) and (2) thereof.
(b) Holdings and the Borrower will, and will cause their respective
Subsidiaries to, at all times keep their respective property insured in favor of
the
-55-
<PAGE>
Collateral Agent, and all policies or certificates (or certified copies thereof)
with respect to such insurance (and any other insurance maintained by Holdings,
the Borrower or any of their respective Subsidiaries) (i) shall be endorsed to
the Collateral Agent's satisfaction for the benefit of the Collateral Agent
(including, without limitation, by naming the Collateral Agent as loss payee or
as an additional insured), (ii) shall state that such insurance policies shall
not be canceled without 30 days' prior written notice thereof by the respective
insurer to the Collateral Agent, (iii) shall provide that the respective
insurers irrevocably waive any and all rights of subrogation with respect to the
Collateral Agent and the Secured Creditors, (iv) shall contain the standard non-
contributory mortgagee clause endorsement in favor of the Collateral Agent with
respect to hazard insurance coverage, (v) shall, except in the case of public
liability insurance and workers' compensation insurance, provide that any losses
shall be payable notwithstanding (A) any act or neglect of Holdings, the
Borrower or any of their respective Subsidiaries, (B) the occupation or use of
the properties for purposes more hazardous than those permitted by the terms of
the respective policy if such coverage is obtainable at commercially reasonable
rates and is of the kind from time to time customarily insured against by
Persons owning or using similar property and in such amounts as are customary,
(C) any foreclosure or other proceeding relating to the insured properties if
such coverage is available at commercially reasonable rates or (D) any change in
the title to or ownership or possession of the insured properties and (vi) shall
be deposited with the Collateral Agent if such coverage is available at
commercially reasonable rates.
(c) If Holdings, the Borrower or any of their respective Subsidiaries
shall fail to maintain all insurance in accordance with this Section 8.03, or if
Holdings, the Borrower or any of their respective Subsidiaries shall fail to so
endorse and deposit all policies or certificates with respect thereto, the
Agents and/or the Collateral Agent shall have the right (but shall be under no
obligation) to procure such insurance and the Borrower agrees to reimburse the
Agents or the Collateral Agent, as the case may be, for all costs and expenses
of procuring such insurance.
8.04 Corporate Franchises. Holdings and the Borrower will, and will
--------------------
cause each of their respective Subsidiaries to, do or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and
its material rights, franchises, licenses and patents; provided, however, that
-------- -------
nothing in this Section 8.04 shall prevent (i) sales of assets by Holdings, the
Borrower or any of their respective Subsidiaries in accordance with Section 9.02
or (ii) the withdrawal by Holdings, the Borrower or any of their respective
Subsidiaries of their qualification as a foreign corporation in any jurisdiction
where such withdrawal could not reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, the Borrower or of
the Borrower and its Subsidiaries taken as a whole.
-56-
<PAGE>
8.05 Compliance with Statutes, etc. Holdings and the Borrower will,
-----------------------------
and will cause each of their respective Subsidiaries to, comply with all
applicable statutes, regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign, in respect of the
conduct of its business and the ownership of its property, except such
noncompliances as could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of Holdings, the Borrower or of the Borrower and its Subsidiaries taken as a
whole.
8.06 Compliance with Environmental Laws. (a) Holdings and the
----------------------------------
Borrower will comply, and will cause each of their respective Subsidiaries to
comply, in all material respects with, and not incur material liability under,
all Environmental Laws applicable to the business or operations of Holdings, the
Borrower or any of their respective Subsidiaries or to the ownership or use of
the Real Property now or hereafter owned or operated by Holdings, the Borrower
or any of their respective Subsidiaries, will promptly pay or cause to be paid
all reasonable costs and expenses incurred in connection with such compliance
and liability, and will keep or cause to be kept all such Real Property free and
clear of any material Liens imposed pursuant to such Environmental Laws. None
of Holdings, the Borrower nor any of their respective Subsidiaries will
generate, use, treat, store, release or dispose of, or permit the generation,
use, treatment, storage, release or disposal of Hazardous Materials on any Real
Property now or hereafter owned or operated by Holdings, the Borrower or any of
their respective Subsidiaries, or transport or knowingly permit the
transportation of Hazardous Materials to or from any such Real Property except
for Hazardous Materials used or stored at any such Real Properties in compliance
in all material respects with all Environmental Laws and reasonably required in
connection with the operation, use and maintenance of any such Real Property.
(b) The Borrower will promptly give notice to the Administrative
Agent upon determining the existence of (i) any material violation of any
Environmental Law or (ii) any Environmental Claim, in each of clause (i) or
(ii), related to the business or operations of Holdings, the Borrower or any of
their respective Subsidiaries or to the ownership or use of any Real Property
now or hereafter owned or operated by Holdings, the Borrower or any of their
respective Subsidiaries, or (iii) any release or threatened release of Hazardous
Materials at, on, upon, under or from any Real Property now or hereafter owned
or operated by Holdings, the Borrower or any of their respective Subsidiaries,
or any facility or equipment thereat, in excess of a reportable quantity or
allowable standard or level under any Environmental Laws, or in a manner and/or
amount which could reasonably be expected to result in liability under any
Environmental Law, in each of clause (i), (ii) or (iii), in excess of $500,000
individually or in the aggregate with any other liability under any
Environmental Laws. In each of the aforementioned circumstances, immediately
following discovery thereof, Holdings and the Borrower will, and will cause each
of their respective Subsidiaries to,
-57-
<PAGE>
take appropriate steps to initiate and expeditiously complete all investigation,
compliance, response, corrective and other action required under any
Environmental Law to mitigate and eliminate any such violation or liability and
shall keep the Administrative Agent apprised of such action.
(c) At the written request of the Administrative Agent or the
Required Banks, which request shall specify in reasonable detail the basis
therefor, at any time and from time to time, the Borrower will provide, at the
Borrower's sole cost and expense, an environmental site assessment report
concerning any Real Property now or hereafter owned or operated by Holdings, the
Borrower or any of their respective Subsidiaries, prepared by an environmental
consulting firm approved by the Administrative Agent which approval shall not be
unreasonably withheld or delayed, indicating status of compliance with
Environmental Laws and the presence or absence of Hazardous Materials and the
estimated cost of any compliance, investigation, removal or remedial action in
connection with any Hazardous Materials on, at, under or emanating from such
Real Property; provided that such request may be made only if (i) there has
--------
occurred and is continuing an Event of Default, (ii) the Administrative Agent
reasonably believes that Holdings, the Borrower or any such Real Property is not
in material compliance with any material Environmental Law, or (iii)
circumstances exist that reasonably could be expected to form the basis of a
material Environmental Claim against Holdings, the Borrower or any of their
respective Subsidiaries or any such Real Property. If the Borrower fails to
provide the same within 30 days after such request was made (or within such
longer period as the Administrative Agent may approve in writing, such approval
not to be unreasonably withheld), the Administrative Agent may order the same,
and the Borrower shall grant and hereby grants to the Administrative Agent and
the Banks and their agents access to such Real Property and specifically grants
the Administrative Agent and the Banks an irrevocable non-exclusive license,
subject to the rights of tenants, to undertake such an assessment, all at the
Borrower's expense.
8.07 ERISA. As soon as possible and, in any event, within 20 days
-----
after Holdings, the Borrower or any of their respective Subsidiaries or any
ERISA Affiliate knows or has reason to know of the occurrence of any of the
following, Holdings or the Borrower will deliver to each of the Banks a
certificate of the Chief Financial Officer or Treasurer of Holdings or the
Borrower setting forth details as to such occurrence and the action, if any,
that Holdings, the Borrower, such Subsidiary or such ERISA Affiliate is required
or proposes to take, together with any notices required or proposed to be given
to or filed with or by Holdings, the Borrower, such Subsidiary, the ERISA
Affiliate, the PBGC, or a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an accumulated
funding deficiency has been incurred or an application may be or has been made
to the Secretary of the Treasury for a waiver or modification of the minimum
funding standard (including any required installment payments) or an extension
of any amortization period under Section 412 of the Code with respect to a Plan;
that a
-58-
<PAGE>
contribution required to be made to a Plan has not been timely made; that a Plan
has been or may be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that a Plan has an Unfunded Current Liability giving
rise to a lien under ERISA or the Code; that proceedings may be or have been
instituted to terminate or appoint a trustee to administer a Plan, that a
proceeding has been instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan; that Holdings, the Borrower, any of their
respective Subsidiaries or any ERISA Affiliate will or may incur any liability
(including any contingent or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971 or 4975 of the Code or Section 409 or 502(i) or 502(l) of ERISA; or that
Holdings, the Borrower or any Subsidiary may incur any material liability
pursuant to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) that provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any Plan. The Borrower will
deliver to each of the Banks a complete copy of the annual report (Form 5500) of
each Plan required to be filed with the Internal Revenue Service. In addition
to any certificates or notices delivered to the Banks pursuant to the first
sentence hereof, copies of annual reports and any material notices received by
Holdings, the Borrower or any of their respective Subsidiaries or any ERISA
Affiliate with respect to any Plan shall be delivered to the Banks no later than
20 days after the date such report has been filed with the Internal Revenue
Service or such notice has been received by Holdings, the Borrower, the
Subsidiary or the ERISA Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters. Each of Holdings and the
------------------------------------
Borrower shall cause (i) each of its, and each of its Subsidiaries', fiscal
years to end on the Friday closest to March 31 and (ii) each of its, and each of
its Subsidiaries', fiscal quarters to end on a date consistent with the date of
its fiscal year end; provided that Holdings and the Borrower may change such
--------
fiscal year to any other fiscal year period of twelve consecutive months with
the consent of the Agents, which consent shall not be unreasonably withheld.
8.09 Performance of Obligations. Each of Holdings and the Borrower
--------------------------
will, and will cause each of its Subsidiaries to, perform all of its obligations
under the terms of each mortgage, indenture, security agreement and other debt
instrument by which it is bound, except such non-performances as could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of Holdings, the Borrower or of
the Borrower and its Subsidiaries taken as a whole.
8.10 Payment of Taxes. Each of Holdings and the Borrower will pay
----------------
and discharge or cause to be paid and discharged, and will cause each of their
respective Subsidiaries to pay and discharge, all material Taxes imposed upon it
or upon its income or profits, or upon any material properties belonging to it,
in each case
-59-
<PAGE>
on a timely basis, and all lawful claims which, if unpaid, might become a lien
or charge upon any properties of Holdings, the Borrower or any of their
respective Subsidiaries; provided that none of Holdings, the Borrower or any of
--------
their respective Subsidiaries shall be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with respect thereto in
accordance with GAAP.
8.11. Additional Security; Further Assurances. (a) Pledge of
--------------------------------------- ---------
Additional Collateral. Promptly, and in any event within 90 days after the
- ---------------------
acquisition of assets of the type that would have constituted Collateral (if the
person acquiring such assets had executed an appropriate Security Document on
the Effective Date) at the Effective Date (the "Additional Collateral"),
---------------------
Holdings and the Borrower will, and will cause each of the Guarantors to, at the
request of the Collateral Agent following consultation with the Company as to
the value of any such Additional Collateral, take all necessary action,
including entering into the appropriate security documents and filing the
appropriate financing statements under the provisions of the UCC or applicable
foreign, domestic or local laws, rules or regulations in each of the offices
where such filing is necessary or appropriate to grant the Collateral Agent a
perfected Lien in such Collateral (or comparable interest under foreign law in
the case of foreign Collateral) pursuant to and to the full extent required by
the Security Documents and this Agreement, subject to Permitted Liens and Prior
Liens; provided that no such action will be required by the Borrower or any
--------
Guarantor to the extent that any such Additional Collateral is subject to a
preexisting agreement which prohibits the granting of any additional liens;
provided further that such preexisting agreement was not entered into in
- -------- -------
connection with, or in anticipation of or contemplation of, the acquisition of
such assets by the Borrower or any of its Subsidiaries. In the event that the
Borrower or a Guarantor acquires an interest in additional real property, the
Borrower or such Guarantor, as the case may be, will take such actions and
execute such documents as the Administrative Agent shall require to confirm the
Lien of a Mortgage, if applicable, or to create a new Mortgage (including,
without limitation, satisfaction of the conditions set forth in Sections 5.03
and 5.11) or leasehold mortgage in the event a fee interest is not acquired.
All actions taken by the parties in connection with the pledge of Additional
Collateral, including, without limitation, reasonable costs of counsel for the
Collateral Agent, shall be for the account of the Company, which shall pay all
reasonable sums due on demand.
(b) Holdings and the Borrower will, and will cause each of the
Guarantors to, at the expense of Holdings and the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral Agent from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
real property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require upon reasonable notice.
Furthermore, the Company shall cause to
-60-
<PAGE>
be delivered to the Collateral Agent such opinions of counsel, title insurance
surveys and other related documents as may be reasonably requested by the
Collateral Agent to assure themselves that this Section 8.11 has been complied
with.
(c) If the Administrative Agent or the Required Banks reasonably
determine (and so advise Holdings and the Borrower) that they are required by
law or regulation to have appraisals prepared in respect of the Real Property of
the Company and its Subsidiaries constituting Collateral, the Company shall
provide to the Collateral Agent appraisals which satisfy the applicable
requirements of the Real Estate Appraisal Reform Amendments of the Financial
Institution Reform, Recovery and Enforcement Act of 1989 and which shall be in
form and substance reasonably satisfactory to the Collateral Agent[; provided
--------
however, that no Guarantor, Borrower or Subsidiary, collectively, shall be
- -------
required to obtain any such appraisal for any such location more frequently than
once in any 36 consecutive month period.]
(d) Holdings and the Borrower agree that each action required above by
this Section 8.11 shall be completed within 90 days after such action is either
requested to be taken by the Administrative Agent or the Required Banks or
required to be taken by Holdings or the Borrower or any Subsidiary Guarantor
pursuant to the terms of this Section 8.11 or, if such action is not capable of
completion within such 90 day period, Holdings or the Borrower or any Subsidiary
Guarantor, as the case may be, shall use their reasonable efforts to complete
such action within the reasonable period in which it can be expected to be
completed; provided that in no event shall Holdings or the Borrower or any of
--------
their Subsidiaries be required to take any action, other than using its
reasonable efforts, to obtain consents from third parties with respect to its
compliance with this Section 8.11.
SECTION 9. Negative Covenants. Holdings and the Borrower hereby
------------------
covenant and agree that as of the Effective Date and thereafter for so long as
this Agreement is in effect and until the Total Commitments have terminated, no
Letters of Credit (other than Letters of Credit, together with all Fees that
have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been cash collateralized in a cash collateral
account in a manner satisfactory to the Letter of Credit Issuer in its sole and
absolute discretion) or Notes are outstanding and the Loans, together with
interest, Fees and all other Obligations (other than any indemnities described
in Section 13.13 which are not then due and payable) incurred hereunder, are
paid in full:
9.01 Liens. Holdings and the Borrower will not, and will not permit
-----
any of their respective Subsidiaries to, create, incur, assume or suffer to
exist any Lien upon or with respect to any property or assets (real or personal,
tangible or intangible) of Holdings or the Borrower or any of their respective
Subsidiaries, whether now owned or hereafter acquired, or sell any such property
or assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or
-61-
<PAGE>
assets, or assign any right to receive income or permit the filing of any
financing statement under the UCC or any other similar notice of Lien under any
similar recording or notice statute; provided that the provisions of this
--------
Section 9.01 shall not prevent the creation, incurrence, assumption or existence
of the following (Liens described below are herein referred to as "Permitted
---------
Liens"):
- -----
(a) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due and payable or Liens for taxes, assessments or
governmental charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves have been established
in accordance with generally accepted accounting principles in the United
States;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law, which were incurred in the ordinary course
of business and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's, vendor's and mechanics' liens and
other similar Liens arising in the ordinary course of business, and (x)
which do not in the aggregate materially detract from the value of the
Borrower's or such Subsidiary's property or assets or materially impair the
use thereof in the operation of the business of the Borrower or such
Subsidiary or (y) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture
or sale of the property or assets subject to any such Lien;
(c) Liens in existence on the Effective Date which are listed, and the
property subject thereto described, in Schedule 9.01, but only to the
respective date, if any, set forth in such Schedule 9.01 for the removal
and termination of any such Liens, plus renewals, replacements and
extensions of such Liens to the extent set forth on Schedule 9.01; provided
--------
that (x) the aggregate principal amount of the Indebtedness, if any,
secured by such Liens does not increase from that amount outstanding at the
time of any such renewal or extension and (y) any such renewal or extension
does not encumber any additional assets or properties of Holdings or any of
its Subsidiaries;
(d) Permitted Encumbrances;
(e) Liens created pursuant to the Security Documents or in favor of
the Agents or the Banks;
(f) licenses, leases or subleases granted to other Persons in the
ordinary course of business not materially interfering with the conduct of
the business of Holdings and its Subsidiaries taken as a whole or any
interest or title of a lessor or sublessor under any lease permitted by
Section 9.04(d);
-62-
<PAGE>
(g) easements, rights-of-way, restrictions (including zoning
restrictions), encroachments, protrusions and other similar charges or
encumbrances, and minor title deficiencies, in each case whether now or
hereafter in existence, not securing Indebtedness and not materially
interfering with the conduct of the business of the Borrower or any of its
Subsidiaries;
(h) Liens arising from precautionary UCC financing statement filings
regarding operating leases entered into by the Borrower or any of its
Subsidiaries in the ordinary course of business;
(i) Liens arising out of the existence of judgments or awards not
constituting an Event of Default under Section 10.09; provided that no cash
--------
or property is deposited or delivered to secure the respective judgment or
award (or any appeal bond in respect thereof, except as permitted by
following clause (k));
(j) statutory and common law landlords' liens under leases to which
Holdings or any of its Subsidiaries is a party;
(k) Liens (other than any Lien imposed by ERISA) (x) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or (y) to secure the performance of tenders, statutory
obligations, surety, stay, customs and appeal bonds, statutory bonds, bids,
leases, government contracts, trade contracts, performance and return of
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(l) Liens (which may be pari passu with Liens securing Obligations)
---- -----
granted in favor of a Bank to secure Obligations of the Borrower and its
Subsidiaries in respect of Interest Rate Protection Agreements;
(m) Liens in favor of a banking institution arising as a matter of law
encumbering deposits (including the right of set-off) held by such banking
institutions incurred in the ordinary course of business and which are
within the general parameters customary in the banking industry;
(n) Liens in favor of customs and revenue authorities arising as a
matter of law to secure the payment of customs duties in connection with
the importation of goods;
(o) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into by
the Borrower or any of its Subsidiaries in the ordinary course of business
in accordance with the past practices of the Borrower and its Subsidiaries
prior to the Effective Date;
-63-
<PAGE>
(p) Deposits made to secure statutory, regulatory, contractual or
warranty requirements or obligations, including rights of offset and set-
off;
(q) Liens arising pursuant to Capitalized Lease Obligations and
purchase money obligations or security interests securing Indebtedness
representing the purchase price (or financing of the purchase price within
90 days after the respective purchase) of assets acquired after the
Effective Date; provided that (i) any such Liens attach only to the assets
--------
so purchased and does not encumber any other asset of Holdings or any of
its Subsidiaries, (ii) the Indebtedness secured by any such Lien (including
refinancings thereof) does not exceed 100% of the lesser of the fair market
value or the purchase price of the property being purchased at the time of
the incurrence of such Indebtedness and (iii) the Indebtedness secured
thereby is permitted to be incurred pursuant to Section 9.04(d);
(r) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Borrower in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition; provided that (i) any Indebtedness that is secured by such
--------
Liens is permitted to exist under Section 9.04(g), and (ii) such Liens are
not incurred in connection with, or in contemplation or anticipation of,
such Permitted Acquisition and do not attach to any other asset of the
Borrower or any of its Subsidiaries;
(s) Deposits made in the ordinary course of business to secure
liability to insurance carriers in an amount not to exceed $500,000 in the
aggregate at any time outstanding;
(t) Liens arising out of or created by motor vehicle leases in an
amount not to exceed $12,500,000 in the aggregate at any time outstanding;
(u) Liens securing reimbursement obligations with respect to
commercial letters of credit not issued under this Agreement; and
(v) Liens not otherwise permitted by the foregoing clauses (a) through
(u) to the extent attaching to properties and assets with an aggregate fair
value not in excess of and securing liabilities not in excess of $500,000
in the aggregate at any time outstanding.
9.02 Consolidation, Merger, Sale or Purchase of Assets, etc.
------------------------------------------------------
Holdings and the Borrower will not, and will not permit any of their respective
Subsidiaries to, wind up, liquidate or dissolve its affairs or enter into any
transaction of merger or consolidation, or convey, sell, lease or otherwise
dispose of (or agree to do any of the foregoing at any future time) all or any
part of its property or assets (other than
-64-
<PAGE>
inventory in the ordinary course of business, including sales of inventory on
consignment in the ordinary course of business), or enter into any partnerships,
joint ventures or sale-leaseback transactions, or purchase or otherwise acquire
(in one or a series of related transactions) any part of the property or assets
(other than purchases or other acquisitions of inventory, materials and
equipment in the ordinary course of business) of any Person, except that the
following shall be permitted:
(a) Holdings and its Subsidiaries may, as lessee or lessor, enter
into operating leases in the ordinary course of business with respect to
real or personal property;
(b) Capital Expenditures by Holdings and its Subsidiaries to the
extent not in violation of Section 9.07;
(c) the advances, investments and loans permitted pursuant to Section
9.05;
(d) Holdings and its Subsidiaries may sell or discount, in each case
without recourse, accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof;
(e) Holdings and its Subsidiaries may sell or exchange specific items
of machinery or equipment, so long as the proceeds of each such sale or
exchange is used to acquire (and results within 180 days of such sale or
exchange in the acquisition of) replacement items of machinery or equipment
which are the functional equivalent of the item of equipment so sold or
exchanged;
(f) Holdings and its Subsidiaries may, in the ordinary course of
business, license, as licensor or licensee, patents, trademarks, copyrights
and know-how to third Persons and to one another, so long as any such
license by Holdings or its Subsidiaries in its capacity as licensor is
permitted to be assigned pursuant to the Security Agreement (to the extent
that a security interest in such patents, trademarks, copyrights and know-
how is granted thereunder) and does not otherwise prohibit the granting of
a Lien by Holdings or any of its Subsidiaries pursuant to the Security
Agreement in the intellectual property covered by such license;
(g) any Wholly Owned Subsidiary of the Borrower may transfer assets
to the Borrower or to any other Wholly Owned Subsidiary of the Borrower, so
long as (i) if the transferee is a Subsidiary, such Subsidiary is a
Guarantor and (ii) the security interests granted to the Collateral Agent
for the benefit of the Secured Creditors pursuant to the Security Documents
in the assets so transferred shall remain in full force and effect and
perfected (to at least the same extent as in effect immediately prior to
such transfer);
-65-
<PAGE>
(h) any Wholly Owned Subsidiary of the Borrower may merge with and into,
or be dissolved or liquidated into, the Borrower so long as (i) the
Borrower is the surviving corporation of any such merger, dissolution or
liquidation and (ii) the security interests granted to the Collateral Agent
for the benefit of the Secured Creditors pursuant to the Security
Documents in the assets of such Wholly Owned Subsidiary shall remain in
full force and effect and perfected (to at least the same extent as in
effect immediately prior to such merger, dissolution or liquidation);
(i) any Wholly Owned Subsidiary of the Borrower may merge with and
into, or be dissolved or liquidated into, any Wholly Owned Subsidiary of
the Borrower so long as (i) such Wholly Owned Subsidiary is a Guarantor and
is the surviving corporation of any such merger, dissolution or liquidation
and (ii) the security interests granted to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Security Documents in the
assets of such Wholly Owned Subsidiary shall remain in full force and
effect and perfected (to at least the same extent as in effect immediately
prior to such merger, dissolution or liquidation);
(j) so long as no Default or Event of Default then exists or would
result therefrom (including giving pro forma effect to such acquisition and
--- -----
any additional Indebtedness resulting therefrom or incurred or assumed in
connection therewith as if such acquisition had occurred and such
Indebtedness had been incurred as of the first day of the most recently
completed Test Period (including any other Permitted Acquisition that
occurred, and related Indebtedness that was incurred, during or subsequent
to such Test Period)), Holdings or any of its Wholly Owned Subsidiaries may
consummate a Permitted Acquisition; provided that (i) Holdings shall have
--------
delivered to the Administrative Agent, at the time of delivery of the
Permitted Acquisition Notice, a certificate of the Chief Financial Officer
of Holdings showing compliance (in reasonable detail as to pro forma
calculations) with all of the provisions of this paragraph (j), and (ii)
Holdings or the Borrower shall have given the Agents and the Banks at least
30 days prior notice of any Permitted Acquisition (each such notice a
"Permitted Acquisition Notice");
-----------------------------
(k) leases or subleases granted by Holdings or any of its
Subsidiaries to third Persons not interfering in any material respect with
the business of Holdings or any of its Subsidiaries;
(l) "inactive" or "shell" Subsidiaries may be dissolved or otherwise
liquidated;
(m) other sales or dispositions of assets in the ordinary course of
business (other than assets disposed of in connection with a Recovery
Event);
-66-
<PAGE>
provided that (x) the aggregate Net Sale Proceeds received from all such
--------
sales and dispositions shall not exceed $5,000,000 in any fiscal year of
the Borrower, (y) each such sale shall be in an amount at least equal to
the fair market value thereof (as determined in good faith by the Borrower)
and for proceeds consisting solely of not less than (A) 85% cash and (B)
seller indebtedness evidenced by promissory notes, which promissory notes
shall be pledged and delivered to the Collateral Agent pursuant to the
Pledge Agreement, and (z) the Net Cash Proceeds of any such sale are
applied to repay the Loans to the extent required by Section 4.02(g); and
provided further, that the sale or disposition of the capital stock of (i)
-------- -------
any Subsidiary Guarantor shall be prohibited and (ii) any other Subsidiary
of the Borrower shall be prohibited unless it is for all of the outstanding
capital stock of such Subsidiary owned by the Borrower and its
Subsidiaries; and
(n) Holdings and its Subsidiaries may (i) purchase or sell inventory,
equipment and/or other assets in the ordinary course of business in
connection with transactions contemplated by Section 9.05(b) and (ii)
dispose of obsolete inventory or equipment not used or useful in the
business of Holdings or such Subsidiaries.
To the extent the Required Banks waive the provisions of this Section 9.02 with
respect to the sale or other disposition of any Collateral, or any Collateral is
sold or otherwise disposed of as permitted by this Section 9.02, such Collateral
in each case shall be sold or otherwise disposed of free and clear of the Liens
created by the Security Documents and the Administrative Agent shall take such
actions (including, without limitation, directing the Collateral Agent to take
such actions) as are appropriate in connection therewith.
9.03 Dividends, etc. Holdings and the Borrower will not, and will
--------------
not permit any of their respective Subsidiaries to, declare or pay any dividends
(other than dividends payable solely in common stock or preferred stock
(provided such preferred stock meets the requirements of Section 9.13(c)(ii),
- ---------
(iii), (iv) and (v)) of Holdings or any such Subsidiary, as the case may be) or
return any capital to, its stockholders or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders as
such, or redeem, retire, purchase or otherwise acquire, directly or indirectly,
for any consideration, any shares of any class of its capital stock, now or
hereafter outstanding (or any warrants for or options or stock appreciation
rights in respect of any of such shares), or set aside any funds for any of the
foregoing purposes, and the Borrower will not permit any of its Subsidiaries to
purchase or otherwise acquire for consideration any shares of any class of the
capital stock of the Borrower or any Subsidiary of the Borrower now or hereafter
outstanding (or any options or warrants or such stock appreciation rights issued
by such Person with respect to its capital stock) (all of the foregoing
"Dividends", it being understood that the payments
- ----------
-67-
<PAGE>
made in accordance with the clauses contained in the proviso of Section 9.06
shall not be deemed to be Dividends), except that:
(a) any Subsidiary of the Borrower may pay Dividends to the Borrower
or any Wholly-Owned Subsidiary of the Borrower; and
(b) as long as no Default or Event of Default shall then exist or
result therefrom, the Borrower may declare and pay a Dividend on the
Borrower's Common Stock in an amount not to exceed the amount required for
payment of principal and interest under the terms of the CLC Notes
provided, that such Dividend is not declared earlier than thirty days prior
--------
to such required payment;
(c) Borrower or any Subsidiary of Borrower may make payments to
Holdings in an amount not in excess of the federal and state (in such
states that permit consolidated or combined tax returns) income tax
liability that Holdings, the Borrower and its Subsidiaries would have been
liable for if Holdings, the Borrower and its Subsidiaries had filed their
taxes on a stand-alone basis; provided that such payments shall be made by
--------
Holdings no earlier than five days prior to the date on which Holdings is
required to make its payments to the Internal Revenue Service or the
applicable taxing authority, as applicable;
(d) if no Default or Event of Default shall have occurred and be
continuing, Borrower may declare and pay dividends to Holdings so that
Holdings may repurchase Holdings Common Stock (or rights to acquire
Holdings Common Stock) from members of Holdings' or the Borrower's
management in connection with certain executive employment agreements in an
aggregate amount not to exceed $750,000 in any fiscal year;
(e) if no Default or Event of Default shall have occurred and be
continuing, Borrower may declare and pay dividends to Holdings to pay
reasonable accounting fees and other support services provided to the
Borrower and to pay Holdings' operating expenses, in an aggregate amount
not to exceed $500,000 in any fiscal year; and
(f) Borrower may declare and pay dividends to Holdings in connection
with any payment obligations (including administration costs and expenses)
under (i) Holdings' stock purchase program offered to employees of Holdings
and/or subsidiaries of Holdings; (ii) the Employee Stock Option Plan; or
(iii) options to purchase Holdings Common Stock in an aggregate amount not
to exceed $500,000 in any fiscal year.
9.04 Indebtedness. The Holdings and the Borrower will not, and will
------------
not permit any of their respective Subsidiaries to, contract, create, incur,
assume or suffer to exist any Indebtedness, except:
-68-
<PAGE>
(a) Indebtedness incurred pursuant to this Agreement and the other Credit
Documents;
(b) Existing Indebtedness outstanding on the Effective Date and listed
on Schedule 7.22, including any extensions, refinancings, replacements or
restructurings thereof; provided that the then outstanding principal amount
--------
thereof is not increased; provided, however, the Borrower shall not extend,
-------- -------
refinance, replace or restructure the 11 3/4% Notes;
(c) Indebtedness under Interest Rate Protection Agreements relating
to Indebtedness under this Agreement;
(d) Capitalized Lease Obligations and Indebtedness of Holdings and its
Subsidiaries incurred pursuant to purchase money Liens permitted under
Section 9.01(q); provided that all such Capitalized Lease Obligations are
--------
permitted under Section 9.02, and (ii) the sum of (x) the aggregate
Capitalized Lease Obligations outstanding at any time plus (y) the
aggregate principal amount of such purchase money Indebtedness outstanding
at such time shall not exceed $15,000,000 (including Capital Lease
Obligations referred to on Schedule 7.22);
(e) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 9.05(g);
(f) Indebtedness consisting of guaranties by the Borrower of
Indebtedness, leases and other contractual obligations permitted to be
incurred by Subsidiaries of the Borrower that are Guarantors;
(g) Indebtedness acquired as a result of a Permitted Acquisition (or
Indebtedness assumed at the time of a Permitted Acquisition of an asset
securing such Indebtedness); provided that (i) such Indebtedness was not
--------
incurred in connection with, or in anticipation or contemplation of, such
Permitted Acquisition, (ii) at the time of such Permitted Acquisition such
Indebtedness does not exceed $10,000,000 in the aggregate, and (iii) so
long as, before and after giving effect to such Permitted Acquisition, no
Default or Event of Default shall have occurred or would result therefrom;
(h) additional Indebtedness (on terms reasonably satisfactory to the
Agents) of the Borrower and its Subsidiaries to effect a Permitted
Acquisition in an amount not to exceed $200,000,000 in an aggregate
principal amount at any time outstanding so long as such Indebtedness is
incurred within one year of the Effective Date;
-69-
<PAGE>
(i) additional Indebtedness of Holdings and its Subsidiaries not
otherwise permitted hereunder not exceeding $15,000,000 in aggregate
principal amount at any time outstanding; provided that no more than
--------
$10,000,000 shall be Indebtedness not satisfying the requirements of the
proviso to Section 4.02(f);
(j) Indebtedness of Holdings and its Subsidiaries represented by
letters of credit not issued under this Agreement for the account of
Holdings or such Subsidiaries, as the case may be, in an aggregate amount
not to exceed $3,000,000;
(k) Indebtedness resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(l) Indebtedness arising with respect to customary indemnification and
purchase price adjustment obligations incurred in connection with any sale
of assets of Holdings or any of its Subsidiaries permitted under Section
9.02; and
(m) Indebtedness incurred in the ordinary course of business with
respect to surety and appeal bonds, performance and return-of-money bonds
and other similar obligations.
9.05 Advances, Investments and Loans. Holdings and the Borrower
-------------------------------
will not, and will not permit any of their respective Subsidiaries to, lend
money or credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any
capital contribution to, any Person, or purchase or own a futures contract or
otherwise become liable for the purchase or sale of currency or other
commodities at a future date in the nature of a futures contract, or hold any
cash, Cash Equivalents (collectively, "Investments"), except:
-----------
(a) Holdings and the Borrower and their Subsidiaries may invest in
cash and Cash Equivalents;
(b) the Borrower and its Subsidiaries may acquire and hold receivables
owing to it (and, in the case of Super Laundry, notes receivable created in
the ordinary course of business consistent with past practice), if created
or acquired in the ordinary course of business and payable or dischargeable
in accordance with customary trade terms (including the dating of
receivables) of the Borrower or such Subsidiary (or in the case of Super
Laundry, having payment and other terms consistent with past practice);
(c) the Borrower and its Subsidiaries may acquire and own investments
(including debt obligations) received in connection with the
-70-
<PAGE>
bankruptcy or reorganization of suppliers and customers and in settlement
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into to protect
Borrower against fluctuations in interest rates in respect of the
Obligations;
(e) advances, loans and investments in existence on the Effective Date
and listed on Schedule 9.05 shall be permitted, without giving effect to
any additions thereto or replacements thereof (except those additions or
replacements which are existing obligations as of the Effective Date but
only to the extent such further obligations are described on such Schedule
9.05);
(f) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases or other contractual
arrangements shall be permitted;
(g) Holdings and the Borrower may make intercompany loans and advances
to any of their Subsidiaries that are Guarantors and any Subsidiary of
Holdings and the Borrower may make intercompany loans and advances to the
Borrower or any other Subsidiary of Holdings and the Borrower that is a
Guarantor (collectively, "Intercompany Loans"); provided that (x) each
------------------ --------
Intercompany Loan shall contain subordination provisions satisfactory to
the Administrative Agent, (y) each Intercompany Loan shall be evidenced by
an Intercompany Note and (z) each such Intercompany Note shall be pledged
to the Collateral Agent pursuant to the Pledge Agreement;
(h) loans and advances by the Borrower and its Subsidiaries to
employees of the Borrower and its Subsidiaries in the ordinary course of
business and consistent with past practices shall be permitted in an
aggregate principal amount not to exceed $500,000 at any one time
outstanding; provided, however, that the foregoing limitation shall not
-------- -------
apply to loans and advances for moving and travel expenses or relocation
expenses incurred in connection with a Permitted Acquisition, which loans,
advances and expenses shall be permitted;
(i) Permitted Acquisitions shall be permitted;
(j) the Borrower and its Subsidiaries may acquire and hold promissory
notes and/or equity securities issued by the purchaser or purchasers in
connection with the sale of assets to the extent permitted under Section
9.02;
(k) Holdings and the Borrower may contribute cash to one or more of
their Subsidiaries that are or become Guarantors formed after the Effective
-71-
<PAGE>
Date in accordance with Section 9.15 (including in connection with a
Permitted Acquisition) so long as such Subsidiary remains a Guarantor;
(l) Holdings and the Borrower may make capital contributions to any of
their respective Subsidiaries that are Guarantors;
(m) Holdings may acquire Holdings Common Stock issuable to holders of
Holdings Common Stock Options granted by Holdings or pursuant to the
Employee Stock Option Plan, in each case by means of cashless transactions;
and
(n) Holdings and its Subsidiaries may make cash Investments not
otherwise permitted by clauses (a) through (m) above, in an amount not to
exceed $10,000,000 outstanding at any one time; provided such Investment is
--------
made with the cash proceeds of equity after giving effect to the
application of cash proceeds in accordance with Section 4.02(e); provided
--------
further, that before and after giving effect to each such Investment, no
-------
Default or Event of Default shall have occurred or result therefrom.
9.06 Transactions with Affiliates. Except as set forth on Schedule
----------------------------
9.06, Holdings and the Borrower will not, and will not permit any of their
respective Subsidiaries to, enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with any
Affiliate, other than in the ordinary course of business and on terms and
conditions substantially as favorable to Holdings, the Borrower or such
Subsidiary as would reasonably be obtained by Holdings, the Borrower or such
Subsidiary at that time in a comparable arm's-length transaction with a Person
other than an Affiliate, except that:
(a) Dividends may be paid to the extent provided in Section 9.03;
(b) loans may be made and other transactions may be entered into by
the Borrower and its Subsidiaries to the extent permitted by Sections 9.02,
9.04 and 9.05;
(c) customary fees may be paid to non-officer directors of Holdings;
(d) Holdings and its Subsidiaries may enter into employment
arrangements with their respective officers and employees in the ordinary
course of business;
(e) payments under Tax Sharing Agreements may be paid to the extent
permitted by Section 9.03(c); and
-72-
<PAGE>
(f) reasonable fees and compensation may be paid to and indemnity
provided on behalf of officers, directors, employees or consultants of
Holdings or any of its Subsidiaries.
Except as specifically provided above, no management or similar fees
shall be paid or payable by Holdings or any of its Subsidiaries to any Person
other than the Borrower.
9.07 Capital Expenditures. (a) Holdings will not, and will not
--------------------
permit any of its Subsidiaries to, make any Capital Expenditures, except that
during any period set forth below (taken as one accounting period) the Borrower
and its Subsidiaries may make Capital Expenditures so long as the aggregate
amount of such Capital Expenditures made under this Section 9.07(a) does not
exceed in any period set forth below the amount set forth opposite such period
below:
Period Amount
------ ------
Effective Date through last day
of Fiscal Year ending
closest to March 31, 1998 $50,000,000
Fiscal Year ending closest to
March 31, 1999 $50,000,000
Fiscal Year ending closest to
March 31, 2000 $50,000,000
Fiscal Year ending closest to
March 31, 2001 $55,000,000
Fiscal Year ending closest to
March 31, 2002 $55,000,000
Fiscal Year ending closest to
March 31, 2003 $55,000,000
Fiscal Year ending closest to
March 31, 2004 and each
Fiscal Year ending thereafter $60,000,000
(b) Notwithstanding anything to the contrary contained in clause (a)
above, to the extent that the Capital Expenditures made by Holdings and its
Subsidiaries in any period set forth in clause (a) above are less than the
amount permitted to be made in such period (without giving effect to any
additional amount available as a result
-73-
<PAGE>
of this clause (b) or clause (c) below), the amount of such difference (the
"Rollover Amount") may be carried forward and used to make Capital Expenditures
- ----------------
in the immediately succeeding fiscal year of the Borrower; provided that in no
--------
event shall the Rollover Amount be greater than $5,000,000.
(c) In addition to the Capital Expenditures permitted pursuant to
preceding clauses (a) and (b), Holdings and its Subsidiaries may make additional
Capital Expenditures as follows: (i) Capital Expenditures consisting of the
reinvestment of Net Sale Proceeds of asset sales not required to be applied to
prepay the Loans pursuant to Section 4.02(g) as a result of clause (iv) of the
parenthetical phrase contained therein or the proviso thereto, (ii) the
reinvestment of proceeds of Recovery Events not required to be applied to prepay
the Loans pursuant to Section 4.02(i), (iii) Permitted Acquisitions made in
accordance with Section 9.02(k) and (iv) Permitted Acquisition Capital
Expenditures.
9.08 Leverage Ratio. Holdings and its Subsidiaries will not permit
--------------
the Consolidated Adjusted Leverage Ratio for any Test Period (taken as one
accounting period) ending on the last day of any fiscal quarter described below
to be greater than the ratio set forth opposite such fiscal quarter below:
Fiscal Quarter Ended
Closest to Ratio
-------------------- -----
March 31, 1997 5.00
June 30, 1997 5.00
September 30, 1997 4.75
December 31, 1997 4.75
March 31, 1998 4.60
June 30, 1998 4.50
September 30, 1998 4.45
December 31, 1998 4.35
March 31, 1999 4.25
June 30, 1999 4.15
September 30, 1999 4.05
December 31, 1999 3.95
March 31, 2000 3.90
June 30, 2000 3.80
September 30, 2000 3.70
December 31, 2000 3.60
March 31, 2001 3.50
-74-
<PAGE>
June 30, 2001 3.40
September 30, 2001 3.30
December 31, 2001 3.20
March 31, 2002 3.10
June 30, 2002 3.05
September 30, 2002 3.00
December 31, 2002 2.95
March 31, 2003 and each Fiscal 2.90
Quarter thereafter
9.09 Consolidated Interest Coverage Ratio. Holdings and its
------------------------------------
Subsidiaries will not permit the Consolidated Interest Coverage Ratio for any
Test Period ended on the last day of a fiscal quarter of Holdings described
below to be less than the amount set forth opposite such fiscal quarter below:
Fiscal Quarter Ended
Closest to Ratio
-------------------- -----
March 31, 1997 2.00
June 30, 1997 2.00
September 30, 1997 2.00
December 31, 1997 2.00
March 31, 1998 2.00
June 30, 1998 2.00
September 30, 1998 2.05
December 31, 1998 2.10
March 31, 1999 2.15
June 30, 1999 2.20
September 30, 1999 2.25
December 31, 1999 2.30
March 31, 2000 2.35
June 30, 2000 2.40
September 30, 2000 2.45
December 31, 2000 2.50
March 31, 2001 2.55
June 30, 2001 2.60
September 30, 2001 2.65
-75-
<PAGE>
December 31, 2001 2.75
March 31, 2002 2.85
June 30, 2002 2.90
September 30, 2002 2.95
December 31, 2002 3.00
March 31, 2003 and each Fiscal 3.10
Quarter thereafter
9.10 Minimum Consolidated EBITDA. Holdings and its Subsidiaries will
---------------------------
not permit Consolidated EBITDA for any Test Period, in each case taken as one
accounting period, ended on the last day of a fiscal quarter of Holdings
described below to be less than the amount set forth opposite such fiscal
quarter below:
Fiscal Quarter Ended Amount
Closest to (in millions)
-------------------- -------------
March 31, 1997 $ 75.0
June 30, 1997 75.0
September 30, 1997 75.0
December 31, 1997 75.0
March 31, 1998 75.0
June 30, 1998 75.0
September 30, 1998 77.5
December 31, 1998 77.5
March 31, 1999 80.0
June 30, 1999 80.0
September 30, 1999 82.5
December 31, 1999 82.5
March 31, 2000 85.0
June 30, 2000 85.0
September 30, 2000 87.5
December 31, 2000 87.5
March 31, 2001 90.0
June 30, 2001 90.0
September 30, 2001 92.5
December 31, 2001 92.5
March 31, 2002 95.0
-76-
<PAGE>
Fiscal Quarter Ended Amount
Closest to (in millions)
-------------------- -------------
June 30, 2002 95.0
September 30, 2002 97.5
December 31, 2002 97.5
March 31, 2003 and each 100.0
Fiscal Quarter thereafter
9.11 Limitation on Voluntary Payments and Modifications of
-----------------------------------------------------
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
- --------------------------------------------------------------------------------
Other Agreements; etc. Holdings and the Borrower will not, and will not permit
- ---------------------
any of their respective Subsidiaries to:
(a) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee with
respect thereto or any other Person money or securities before due for the
purpose of paying when due) any Existing Indebtedness (other than, as long
as no Default or Event of Default exists, (i) the prepayment of the 12 3/4%
Notes, (ii) the prepayment of the CLC Notes with the net cash proceeds from
the issuance of debt or equity securities by Holdings or any of its
Subsidiaries or (iii) prepayment of up to an aggregate of 35% of the 11
3/4% Notes made with the net cash proceeds of equity securities by Holdings
to the extent invested by Holdings in the Borrower in the form of a common
equity investment by redemption or repurchase within 120 days of receipt of
such proceeds by Holdings at a price not to exceed the redemption price set
forth in the indenture under which such 11 3/4% Notes were issued as in
effect on the Effective Date);
(b) amend or modify in any material respect or in any manner adverse
to the Borrower or the Banks, or permit such an amendment or modification
of, any provision of the Existing Indebtedness; and
(c) amend, modify or change in any way adverse to the interests of
the Banks, any Tax Sharing Agreement, its Certificate of Incorporation
(including, without limitation, by the filing or modification of any
certificate of designation) or By-Laws.
9.12 Limitation on Certain Restrictions on Subsidiaries. Holdings
--------------------------------------------------
will not, and will not permit any of its 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 such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits
-77-
<PAGE>
owned by Holdings or any Subsidiary of Holdings, or pay any Indebtedness owed to
Holdings or a Subsidiary of Holdings, (b) make loans or advances to Holdings or
any of Holdings' Subsidiaries or (c) transfer any of its properties or assets to
Holdings, except for such encumbrances or restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the other Credit
Documents, (iii) customary provisions restricting subletting or assignment of
any lease governing a leasehold interest of the Borrower or a Subsidiary of the
Borrower, (iv) customary provisions restricting assignment of any licensing
agreement entered into by the Borrower or a Subsidiary of the Borrower in the
ordinary course of business, (v) any instrument governing any Indebtedness
permitted under Section 9.04(g), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the properties or assets of the Person so acquired; (vi)
agreements existing on the Effective Date to the extent and in the manner such
agreements are in effect on the Effective Date; and (vii) an agreement governing
Indebtedness incurred to refinance the Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clauses (ii), (v) or (vi).
9.13 Limitation on Issuance of Capital Stock. Except as provided
---------------------------------------
otherwise herein (a) Holdings and the Borrower and their respective Subsidiaries
shall not issue (i) any preferred stock or (ii) any redeemable common stock.
(b) The Borrower shall not issue, or permit any of its Subsidiaries
to issue, any capital stock (including by way of sales of treasury stock) or any
options or warrants to purchase, or securities convertible into, capital stock,
except (i) for transfers and replacements of then outstanding shares of capital
stock, (ii) for stock splits, stock dividends and similar issuances which do not
decrease the percentage ownership of Holdings or any of its Subsidiaries in any
class of the capital stock of the Borrower or such Subsidiary, (iii) to qualify
directors to the extent required by applicable law, (iv) Subsidiaries formed
after the Effective Date pursuant to Section 9.15 may issue capital stock to the
Borrower or its Wholly-Owned Subsidiaries, in accordance with the other
requirements of this Agreement, (v) under or in connection with the Employee
Stock Option Plan or options to purchase Holdings Common Stock and (vi) Borrower
may issue equity securities to Holdings so long as such equity securities are
pledged to the Agents and the Banks as security for Borrower's obligations under
this Agreement on substantially the same terms and conditions as the pledge by
Holdings of the capital stock of Borrower on the Effective Date and the cash
proceeds of such equities will be applied in accordance with Section 4.02(e).
(c) Notwithstanding the above, Holdings may issue preferred stock so
long as (i) cash proceeds are applied in accordance with Section 4.02(e); (ii)
no dividends are payable in cash; (iii) it is not redeemable at the option of
the holder thereof in whole or in part; (iv) it is not convertible into
Indebtedness of Holdings; and (v) it matures after September 30, 2004 and
provides for no mandatory prepayment or mandatory offers to purchase prior to
such date.
-78-
<PAGE>
9.14 Business. (a) Holdings shall engage in no business activities
--------
and shall have no assets or liabilities, other than its ownership of the capital
stock of the Borrower and liabilities incident thereto and except as otherwise
permitted by this Agreement.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage (directly or indirectly) in any business other than the
business in which the Borrower and its Subsidiaries are engaged on the Effective
Date and reasonable extensions thereof or businesses complementary to their
respective businesses.
9.15 Limitation on the Creation of Subsidiaries. Notwithstanding
------------------------------------------
anything to the contrary contained in this Agreement, Holdings will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Effective Date any Subsidiary; provided that Holdings and its Wholly Owned
--------
Subsidiaries shall be permitted to establish or create Subsidiaries as a result
of investments made pursuant to Section 9.05(i), (k), (l) or (n) so long as (i)
at least 15 days' prior written notice thereof is given to the Administrative
Agent (or such shorter period of time as is acceptable to the Administrative
Agent), (ii) the capital stock of such new Subsidiary is promptly pledged
pursuant to, and to the extent required by, this Agreement and the Pledge
Agreement and the certificates, if any, representing such stock, together with
stock powers duly executed in blank, are delivered to the Collateral Agent,
(iii) such new Subsidiary promptly executes a counterpart of the Guaranty, the
Pledge Agreement and the Security Agreement, and (iv) to the extent requested by
the Administrative Agent or the Required Banks, takes all actions required
pursuant to Section 8.11; provided that no such action will be required by any
--------
new Subsidiary (that is not a Wholly Owned Subsidiary) to the extent such new
Subsidiary is a party to a pre-existing agreement which prohibits such new
Subsidiary from executing a Guaranty; provided further, such pre-existing
-------- -------
agreement was not entered into for the purpose of avoiding the requirements of
Section 9.14 and the restrictions contained therein are no more adverse to
Holdings and its Subsidiaries than to the other equity owners in such new
Subsidiary. In addition, each new Subsidiary that is required to execute any
Credit Document shall execute and deliver, or cause to be executed and
delivered, all other relevant documentation of the type described in Section 5
as such new Subsidiary would have had to deliver if such new Subsidiary were a
Credit Party on the Effective Date.
9.16 Restriction on Tax Consolidation. Holdings will not, and will
--------------------------------
not permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person other than Holdings and its
Subsidiaries except for tax periods beginning prior to such entity's having
become a Subsidiary of Holdings; provided, however, that if Holdings disposes of
-------- -------
more than 50% of the outstanding stock of any Subsidiary (by both voting power
and value), this Section 9.16 will not apply with respect to such Subsidiary.
-79-
<PAGE>
SECTION 10. Events of Default. Upon the occurrence of any of the
-----------------
following specified events (each, an "Event of Default"):
----------------
10.01 Payments. The Borrower shall (i) default in the payment when
--------
due of any principal of any Loan or any Note or (ii) default, and such default
shall continue unremedied for three or more Business Days, in the payment when
due of any Unpaid Drawings or interest on any Loan or Note, or any Fees or any
other amounts owing hereunder or thereunder; or
10.02 Representations, etc. Any representation, warranty or
--------------------
statement made by any Credit Party herein or in any other Credit Document or in
any certificate delivered pursuant hereto or thereto shall prove to be untrue in
any material respect on the date as of which made or deemed made; or
10.03 Covenants. Holdings or the Borrower shall (i) default in the
---------
due performance or observance by it of any term, covenant or agreement contained
in Section 8.01(g) or (i) or 8.08 or Section 9 or (ii) default in the due
performance or observance by it of any other term, covenant or agreement
contained in this Agreement and such default shall continue unremedied for a
period of 30 days after written notice to the Borrower by the Agents or any
Bank; or
10.04 Default Under Other Agreements. Holdings, the Borrower or any
------------------------------
of their respective Subsidiaries shall (i) default in any payment of any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement or
condition relating to any Indebtedness (other than the Obligations) 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 holders of such
Indebtedness (or a trustee or agent on behalf of such holder or holders) to
cause (determined without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or (iii) any
Indebtedness (other than the Obligations) of Holdings, the Borrower or any of
their respective Subsidiaries shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled required prepayment,
prior to the stated maturity thereof, provided that (x) it shall not be a
Default or Event of Default under this Section 10.04 unless the aggregate
principal amount of all Indebtedness as described in preceding clauses (i)
through (iii), inclusive, is at least $2,500,000; or
10.05 Bankruptcy, etc. Holdings, the Borrower or any of their
---------------
respective Subsidiaries shall commence a voluntary case concerning itself under
Title 11 of the United States Code entitled "Bankruptcy," as now or hereafter in
----------
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary case
---------------
is commenced against Holdings, the Borrower or any of their respective
Subsidiaries and the petition
-80-
<PAGE>
is not controverted within 10 days, or is not dismissed within 60 days, after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the property of
Holdings, the Borrower or any of their respective Subsidiaries, or Holdings, the
Borrower or any of their respective Subsidiaries commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Holdings, the Borrower or any of
their respective Subsidiaries, or there is commenced against Holdings, the
Borrower or any of their respective Subsidiaries any such proceeding which
remains undismissed for a period of 60 days, or Holdings, the Borrower or any of
their respective Subsidiaries is adjudicated insolvent or bankrupt; or any order
of relief or other order approving any such case or proceeding is entered; or
Holdings, the Borrower or any of their respective Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or
Holdings, the Borrower or any of their respective Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by
Holdings, the Borrower or any of their respective Subsidiaries for the purpose
of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan shall fail to satisfy the minimum funding
-----
standard required for any plan year or part thereof or a waiver of such standard
or extension of any amortization period is sought or granted under Section 412
of the Code, any Plan shall have had or, in the reasonable opinion of the
Required Banks, is likely to have a trustee appointed to administer such Plan,
any Plan is, shall have been or is likely to be terminated or to be the subject
of termination proceedings under ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made to a Plan has not been made,
Holdings, the Borrower or any their respective Subsidiaries or any ERISA
Affiliate has incurred or is likely to incur a liability to or on account of a
Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204
or 4212 of ERISA or Section 401(a)(29), 4971 or 4975 of the Code, or Holdings,
the Borrower or any of their respective Subsidiaries has incurred or is likely
to incur liabilities pursuant to one or more employee welfare benefit plans (as
defined in Section 3(1) of ERISA) which provide benefits to retired employees or
other former employees (other than as required by Section 601 of ERISA) or
employee pension benefit plans (as defined in Section 3(2) of ERISA); (b) there
shall result from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a material risk of incurring
a liability; and in each case in clauses (a) and (b) above, such lien, security
interest or liability, individually and/or in the aggregate in the reasonable
opinion of the Required Banks, will have a material adverse effect upon the
business, operations, property, assets, liabilities or condition (financial or
otherwise) of Holdings, the Borrower or of the Borrower and its Subsidiaries
taken as a whole; or
10.07 Security Documents. At any time after the execution and
------------------
delivery thereof, any of the Security Documents shall cease to be in full force
and effect, or
-81-
<PAGE>
shall cease in any material respect to give the Collateral Agent for the benefit
of the Secured Creditors the Liens, rights, powers and privileges purported to
be created thereby (including, without limitation, except with respect to the
Collateral Assignments of Leases and the Collateral Assignment of Location
Leases, a perfected security interest in, and Lien on, all of the Collateral),
in favor of the Collateral Agent, superior to and prior to the rights of all
third Persons, and subject to no other Liens except as permitted pursuant to
this Agreement or the Security Documents, or any Credit Party shall default in
the due performance or observance of any term, covenant or agreement on its part
to be performed or observed pursuant to any of the Security Documents and such
default shall continue beyond any grace period specifically applicable thereto
pursuant to the terms of such Security Document; or
10.08 Guaranty. Any Guaranty or any material provision thereof shall
--------
cease to be in full force or effect as to the relevant Guarantor, or any
Guarantor or Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under the relevant Guaranty, or any
Guarantor shall default in the due performance or observance of any material
term, covenant or agreement on its part to be performed or observed pursuant to
the Guaranty; or
10.09 Judgments. One or more judgments or decrees shall be entered
---------
against Holdings, the Borrower or any of their respective Subsidiaries involving
in the aggregate for Holdings, the Borrower and their respective Subsidiaries a
liability (not paid or fully covered by a reputable and solvent insurance
company) and such judgments and decrees either shall be final and non-appealable
or shall not be vacated, discharged or stayed or bonded pending appeal for any
period of 60 consecutive days, and the aggregate amount of all such judgments
exceeds $2,500,000; or
10.10 Change of Control. A Change of Control shall occur;
-----------------
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agents may, and upon the written request of the
Required Banks, shall, by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of any Agents, any Bank or
the holder of any Note to enforce its claims against any Credit Party (provided
--------
that, if an Event of Default specified in Section 10.05 shall occur with respect
to the Borrower or Holdings, the result which would occur upon the giving of
written notice by the Agent to the Borrower as specified in clauses (i) and (ii)
below shall occur automatically without the giving of any such notice and the
Agent may exercise the rights specified in clause (v) below without the giving
of any such notice): (i) declare the Total Commitments terminated, whereupon
all Commitments of each Bank shall forthwith terminate immediately and any
Commitment Commission shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued interest in
respect of all Loans and the Notes and all Obligations owing hereunder and
thereunder to be, whereupon the same shall become, forthwith due and payable
without
-82-
<PAGE>
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Credit Party; (iii) terminate any Letter of Credit, which
may be terminated, in accordance with its terms; (iv) direct the Borrower to pay
(and the Borrower agrees that upon receipt of such notice, or upon the
occurrence of an Event of Default specified in Section 10.05 with respect to the
Borrower or Holdings, it will pay) to the Collateral Agent at the Payment Office
such additional amount of cash, to be held as security by the Collateral Agent,
as is equal to the aggregate Stated Amount of all Letters of Credit issued for
the account of the Borrower and then outstanding; (v) enforce, as Collateral
Agent, any or all of the Liens, security interests and rights created pursuant
to the Security Documents; and (vi) apply any cash collateral as provided in
Section 4.02.
SECTION 11. Definitions and Accounting Terms.
--------------------------------
11.01 Defined Terms. As used in this Agreement, the following terms
-------------
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Acquisition" shall mean the acquisition of all of the outstanding
capital stock of the partners of KWIK Wash pursuant to the Acquisition Documents
and the merger of KWIK Wash into the Borrower.
"Acquisition Documents" shall mean the Stock Purchase Agreement and
the partnership agreement and related organizational documents of KWIK Wash.
"Additional Mortgage" shall have the meaning provided in Section
8.11(a).
"Additional Mortgaged Property" shall have the meaning provided in
Section 8.11(a).
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the sum
(rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing (x)
the most recent weekly average dealer offering rate for negotiable certificates
of deposit with a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Agent on the basis of quotations for such
certificates received by it from three certificate of deposit dealers in New
York of recognized standing or, if such quotations are unavailable, then on the
basis of other sources reasonably selected by the Agent, by (y) a percentage
equal to 100% minus the stated maximum rate of all reserve requirements as
specified in Regulation D applicable on such day to a three-month certificate of
deposit of a member
-83-
<PAGE>
bank of the Federal Reserve System in excess of $100,000 (including, without
limitation, any marginal, emergency, supplemental, special or other reserves),
plus (2) the then daily net annual assessment rate as estimated by the Agent for
determining the current annual assessment payable by BTCo to the Federal Deposit
Insurance Corporation for insuring three month certificates of deposit.
"Adjusted Percentage" shall mean (x) at a time when no Bank Default
exists, for each Bank, such Bank's Percentage and (y) at a time when a Bank
Default exists (i) for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage determined by dividing
such Bank's Revolving Loan Commitment at such time by the Adjusted Total
Revolving Loan Commitment at such time, it being understood that all references
herein to Revolving Loan Commitments and the Adjusted Total Revolving Loan
Commitment at a time when the Total Revolving Loan Commitment or Adjusted Total
Revolving Loan Commitment, as the case may be, has been terminated shall be
references to the Revolving Loan Commitments or Adjusted Total Revolving Loan
Commitment, as the case may be, in effect immediately prior to such termination;
provided that (A) no Bank's Adjusted Percentage shall change upon the occurrence
- --------
of a Bank Default from that in effect immediately prior to such Bank Default if
after giving effect to such Bank Default, and any repayment of Revolving Loans
at such time pursuant to Section 4.02(a) or otherwise, the sum of (i) the
aggregate outstanding principal amount of Revolving Loans of all Non-Defaulting
Banks plus (ii) the Letter of Credit Outstandings plus (iii) the outstanding
principal amount of Swingline Loans exceed the Adjusted Total Revolving Loan
Commitment; (B) the changes to the Adjusted Percentage that would have become
effective upon the occurrence of a Bank Default but that did not become
effective as a result of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank Default on which the sum of
(i) the aggregate outstanding principal amount of the Revolving Loans of all
Non-Defaulting Banks plus (ii) the Letter of Credit Outstandings plus (iii) the
outstanding principal amount of Swingline Loans is equal to or less than the
Adjusted Total Revolving Loan Commitment; and (C) if (i) a Non-Defaulting Bank's
Adjusted Percentage is changed pursuant to the preceding clause (B) and (ii) any
repayment of such Bank's Revolving Loans, or of Unpaid Drawings with respect to
Letters of Credit, that were made during the period commencing after the date of
the relevant Bank Default and ending on the date of such change to its Adjusted
Percentage must be returned to the Borrower as a preferential or similar payment
in any bankruptcy or similar proceeding of the Borrower, then the change to such
Non-Defaulting Bank's Adjusted Percentage effected pursuant to said clause (B)
shall be reduced to that positive change, if any, as would have been made to its
Adjusted Percentage if (x) such repayments had not been made and (y) the maximum
change to its Adjusted Percentage would have resulted in the sum of the
outstanding principal of Revolving Loans made by such Bank plus such Bank's new
Adjusted Percentage of the outstanding principal amount of Letter of Credit
Outstandings equalling such Bank's Revolving Loan Commitment at such time.
-84-
<PAGE>
"Adjusted Total Revolving Loan Commitment" shall mean at any time the
Total Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
all Defaulting Banks.
"Administrative Agent" shall mean Bankers Trust Company, in its
capacity as Agent for the Banks hereunder, and shall include any successor to
the Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, however, that for purposes of
-------- -------
Section 9.06, an Affiliate of Holdings shall include any Person that directly or
indirectly owns more than 5% of any class of the capital stock of Holdings and
any officer or director of Holdings or any such Person. A Person shall be
deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agents" shall mean, collectively, the Administrative Agent, the
Syndication Agent and the Documentation Agent.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented or amended from time to time.
"Applicable Base Rate Margin" shall mean a percentage per annum equal
to (i) in the case of Loans other than Tranche B Term Loans, 1.25% and (ii) in
the case of Tranche B Term Loans, 1.75%; provided that each of the percentages
--------
set forth above shall be adjusted by the applicable Leverage Pricing Adjustment.
"Applicable Eurodollar Margin" shall mean a percentage per annum equal
to (i) in the case of Loans other than Tranche B Term Loans, 2.25% and (ii) in
the case of Tranche B Term Loans, 2.75%; provided that each of the percentages
--------
set forth above shall be adjusted by the applicable Leverage Pricing Adjustment,
if any.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit H hereto
---------
(appropriately completed).
"Authorized Officer" of any Credit Party shall mean any of the
Chairman of the Board, the President, any Vice President, the Treasurer, the
Secretary, any Assistant Secretary, any Assistant Treasurer or the Controller of
such Credit Party or any other officer of such Credit Party which is designated
in writing to the Agent by any of the foregoing officers of such Credit Party as
being authorized to give such notices under this Agreement.
-85-
<PAGE>
"Bank" shall mean each financial institution listed on Schedule I, as
well as any Person which becomes a "Bank" hereunder pursuant to 13.04(b).
"Bank Default" shall mean (i) the refusal (which has not been
retracted) of a Bank to make available its portion of any Borrowing or to fund
its portion of any unreimbursed payment under Section 2.03(c) or (ii) a Bank
having notified in writing the Borrower and/or the Agent that it does not intend
to comply with its obligations under Section 1.01 or Section 2, in the case of
either clause (i) or (ii) as a result of any takeover of such Bank by any
regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided in Section 10.05.
"Base Rate" at any time shall mean the highest of (x) the rate which
is 1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate, (y) the
Prime Lending Rate and (z) the rate which is 1/2 of 1% in excess of the Federal
Funds Rate.
"Base Rate Loan" shall mean each Loan designated or deemed designated
as such by the Borrower at the time of the incurrence thereof or conversion
thereto.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower's Common Stock" shall mean the common stock of Coinmach
Corporation.
"Borrower Pledge Agreement" shall mean the Borrower Pledge Agreement,
substantially in the form of Exhibit I-1 hereto, made by the Borrower in favor
-----------
of the Collateral Agent, as such agreement may be amended, modified or
supplemented from time to time.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Banks having Commitments of the respective Tranche on a
given date (or resulting from a conversion or conversions on such date) having
in the case of Eurodollar Loans the same Interest Period; provided that Base
--------
Rate Loans incurred pursuant to Section 1.10(b) shall be considered part of the
related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual capacity.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day except Saturday, Sunday and any day which shall be
in New York City a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and payments of
principal and interest on,
-86-
<PAGE>
Eurodollar Loans, any day which is a Business Day described in clause (i) above
and which is also a day for trading by and between banks in the New York
interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be added to the fixed assets account on
the consolidated balance sheet of such Person in accordance with GAAP (which
shall not include (i) interest capitalized during construction but only to the
extent included in Consolidated Interest Expense and (ii) increases to property
and equipment that are reflected (or under the accounting policies and
presentation of the Borrower as in effect on the Effective Date, would have been
reflected) in "Additions to net assets from acquired businesses" on the
Borrower's Condensed Consolidated Statements of Cash Flows), including all such
expenditures with respect to plant, property or equipment (including, without
limitation, expenditures for maintenance and repairs which should be capitalized
in accordance with GAAP and the amount reflected (or under the accounting
policies and presentation of the Borrower as in effect on the Effective Date,
would have been reflected) in "Advance rental payments to location owners" on
the Borrower's Condensed Consolidated Statements of Cash Flows) and the amount
of all Capitalized Lease Obligations incurred by such Person.
"Capital Lease," as applied to any Person, shall mean any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, should be accounted for as a capital lease on the balance
sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of Holdings or any of its Subsidiaries in each case taken at the
amount thereof that should be accounted for as liabilities in accordance with
GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
--------
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (ii) U.S. dollar denominated
time deposits, certificates of deposit and banker acceptances of (x) any Bank or
(y) any bank whose short-term commercial paper rating from S&P is at least A-1
or the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank or Bank, an "Approved Bank"), in each case with
maturities of not more than twelve months from the date of acquisition, (iii)
commercial paper issued by any Approved Bank or by the parent company of any
Approved Bank and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, as the case may be, and in each case maturing within twelve months
after the date of acquisition, (iv) marketable direct obligations issued by any
state of the United States
-87-
<PAGE>
of America or any political subdivision of any such state or any public
instrumentality thereof maturing within twelve months from the date of
acquisition thereof and, at the time of acquisition having one of the two
highest ratings obtainable from either S&P or Moody's, (v) any repurchase
agreement entered into with any Approved Bank which is secured by any obligation
of the type described in any of clauses (i) through (iii) and (vi) investments
in money market funds substantially all the assets of which are comprised of
securities of the types described in clauses (i) through (iv) above.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. (S) 9601 et. seq., as the
same may be amended from time to time.
"Change in Law" shall mean the introduction of any law or governmental
rule, regulation, order, guideline or request (whether or not having the force
of law), or any change in law or governmental rule, regulation, order, guideline
or request (whether or not having the force of law), or the interpretation or
administration thereof.
"Change of Control" shall mean (i) Holdings shall at any time cease to
own directly 100% of the capital stock of the Borrower; (ii) any "Person" or
"group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), excluding GTCR, is or shall 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 common stock of Holdings than is owned by GTCR at such
time; or (iii) the Board of Directors of Holdings shall cease to consist of a
majority of Continuing Directors.
"CLC Notes" shall mean the $15,000,000 principal amount of senior
promissory notes issued by Holdings in connection with the Acquisition as in
effect on the Effective Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and the rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement, and to any subsequent provision of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or personal) with
respect to which any security interests have been granted (or purported to be
granted) pursuant to any Security Document, including, without limitation, all
Pledge Agreement Collateral, all Security Agreement Collateral, all Mortgaged
Properties and all cash and Cash Equivalents delivered as collateral pursuant to
Section 4.02 or 10.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors pursuant to the Security Documents.
-88-
<PAGE>
"Collateral Assignment of Leases" shall mean the Collateral Assignment
of Leases, substantially in the form of Exhibit L hereto, made by the Borrower
---------
and the Subsidiary Guarantors in favor of the Collateral Agent relating to
certain warehouse and office facilities, as such agreement may be amended,
modified or supplemented from time to time.
"Collateral Assignment of Location Leases" shall mean the Collateral
Assignment of Location Leases, substantially in the form of Exhibit M hereto,
---------
made by the Borrower and the Subsidiary Guarantors in favor of the Collateral
Agent relating to leased premises at which Collateral constituting personal
property is located, as such agreement may be amended, modified or supplemented
from time to time.
"Collective Bargaining Agreements" shall have the meaning provided in
Section 5.05.
"Commitment" shall mean any of the commitments of any Bank; i.e.,
---
whether the Tranche A Term Loan Commitment, Tranche B Term Loan Commitment or
Revolving Loan Commitment or the commitment of BTCo to make Swingline Loans.
"Commitment Commission" shall have the meaning provided in Section
3.01(a).
"Consolidated Adjusted Leverage Ratio" shall mean the ratio of
Holdings' Consolidated Indebtedness to Holdings' Consolidated EBITDA, measured
on a trailing 12 months basis, including any Permitted Acquisition Cost-Savings.
"Consolidated Adjusted Senior Leverage Ratio" shall mean the ratio of
Holdings' Consolidated Secured Senior Indebtedness to Holdings' Consolidated
EBITDA, measured on a trailing 12 months basis, including any Permitted
Acquisition Cost-Savings.
"Consolidated Current Assets" shall mean, at any time, the
consolidated current assets of Holdings and its Consolidated Subsidiaries
excluding cash and Cash Equivalents.
"Consolidated Current Liabilities" shall mean, at any time, the
consolidated current liabilities of Holdings and its Consolidated Subsidiaries
at such time, but excluding (i) the current portion of any Indebtedness under
this Agreement and any other long-term Indebtedness which would otherwise be
included therein and (ii) the current portion of Indebtedness.
"Consolidated EBIT" shall mean, for any period, (A) the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for cash
taxes based on income, (iii) Consolidated Net Cash Interest Expense, (iv)
amortization or
-89-
<PAGE>
write-off of deferred financing costs to the extent deducted in determining
Consolidated Net Income and (v) losses on sales of assets (excluding sales in
the ordinary course of business) and other extraordinary or nonrecurring losses
less (B) the amount for such period of gains on sales of assets (excluding sales
- ----
in the ordinary course of business) and other extraordinary or nonrecurring
gains, all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of (i) Consolidated EBIT, (ii) depreciation expense,
(iii) amortization expense and (iv) without duplication, all other non-cash
charges (including non-cash compensation expenses relating to employee stock
options) included in determining Consolidated Net Income during such period, all
as determined on a consolidated basis in accordance with GAAP.
"Consolidated Indebtedness" shall mean an amount equal to the
principal amount of all Indebtedness of Holdings and its Subsidiaries,
determined in accordance with GAAP.
"Consolidated Interest Coverage Ratio" for any period shall mean the
ratio of Consolidated EBITDA to Consolidated Net Cash Interest Expense for such
period.
"Consolidated Net Cash Interest Expense" shall mean, for any period,
without duplication, the total consolidated cash interest expense of Holdings
and its Consolidated Subsidiaries on a consolidated basis for such period plus,
without duplication, that portion of Capitalized Lease Obligations of Holdings
and its Consolidated Subsidiaries representing the interest factor for such
period, in each case net of the total consolidated cash interest income of
Holdings and its Consolidated Subsidiaries for such period, but excluding the
amortization of any deferred financing costs.
"Consolidated Net Income" shall mean, for any period, the consolidated
net after tax income of Holdings and its Consolidated Subsidiaries determined in
accordance with GAAP.
"Consolidated Secured Senior Indebtedness" shall mean an amount equal
to the principal amount of all funded secured Senior Indebtedness of Holdings
and its Subsidiaries determined in accordance with GAAP.
"Consolidated Subsidiaries" shall mean, as to any Person, all
Subsidiaries of such Person which are consolidated with such Person for
financial reporting purposes in accordance with GAAP.
-90-
<PAGE>
"Consolidated Working Capital" shall mean Consolidated Current Assets
minus Consolidated Current Liabilities.
"Contingent Obligation" shall mean, as to any Person, any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such 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 (x) for the
purchase or payment of any such primary obligation or (y) 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 holder
of such primary obligation against loss in respect thereof; provided, however,
-------- -------
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection in the ordinary course of business. The
amount of any Contingent Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
Contingent Obligation is made (or, if less, the maximum amount of such primary
obligation for which such Person may be liable pursuant to the terms of the
instrument evidencing such Contingent Obligation) or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Continuing Directors" shall mean the directors of Holdings on the
Effective Date and each other director, if such Director's nomination for
election to the Board of Directors of Holdings is recommended by a majority of
the then Continuing Directors.
"Covered Taxes" shall mean any and all Taxes, other than Excluded
Taxes.
"Credit Documents" shall mean (i) this Agreement, (ii) each Note,
(iii) each Security Document and (iv) each Mortgage.
"Credit Event" shall mean the making of any Loan or the issuance of
any Letter of Credit.
"Credit Party" shall mean Holdings, the Borrower and each Subsidiary
Guarantor.
"Debt Agreements" shall have the meaning provided in Section 5.05.
-91-
<PAGE>
"Default" shall mean any event, act or condition which with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulting Bank" shall mean any Bank with respect to which a Bank
Default is in effect.
"Direct Wholly-Owned Subsidiary" shall mean, as to any Person, any
other Person which would constitute a Wholly-Owned Subsidiary of such Person
even if the phrase "and/or one or more Wholly-Owned Subsidiaries of such Person"
appearing in the definition of the term "Wholly-Owned Subsidiary" were deleted.
"Dividend" with respect to any Person shall mean that such Person has
declared or paid a dividend or returned any equity capital to its stockholders
or authorized or made any other distribution, payment or delivery of property
(other than common stock of such Person) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or indirectly, for
a consideration any shares of any class of its capital stock outstanding on or
after the Effective Date (or any options or warrants issued by such Person with
respect to its capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to purchase or
otherwise acquire for a consideration any shares of any class of the capital
stock of such Person outstanding on or after the Effective Date (or any options
or warrants issued by such Person with respect to its capital stock). Without
limiting the foregoing, "Dividends" with respect to any Person shall also
include all payments made or required to be made by such Person with respect to
any stock appreciation rights, plans, equity incentive or achievement plans or
any similar plans or setting aside of any funds for the foregoing purposes.
"Documentation Agent" shall mean Lehman Commercial Paper, Inc. in its
capacity as Documentation Agent for the Banks hereunder, and shall include any
successor to the Documentation Agent.
"Documents" shall mean the Credit Documents and the Acquisition
Documents.
"Dollars" and the sign "$" shall each mean freely transferable lawful
money of the United States.
"Drawing" shall have the meaning provided in Section 2.04(b).
"Effective Date" shall have the meaning provided in Section 13.10.
"11 3/4% Notes" shall mean the 11 3/4% Notes due 2005 issued pursuant
to an indenture between the Borrower and Fleet Bank of Connecticut as in effect
on the Effective Date.
-92-
<PAGE>
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or other institutional "accredited investor" (as defined
in Regulation D of the Securities Act).
"Employee Benefit Plans" shall mean all employee benefit plans (other
than multiemployer plans as defined in Section 4001(a)(3) of ERISA), or any
other similar plans or arrangements for the benefit of employees of Holdings or
any Subsidiary of Holdings and any profit sharing plans and deferred
compensation plans of Holdings or any Subsidiary of Holdings (collectively, the
"Employee Benefit Plans").
----------------------
"Employee Stock Option Plan" shall mean the Seconded Amended and
Restated 1996 Employee Stock Option Plan of Holdings existing on the Effective
Date as such plan may be amended from time to time.
"Employment Agreements" shall mean any employment agreement entered
into by Holdings or any Subsidiary of Holdings.
"End Date" shall have the meaning provided in the definition of
Leverage Pricing Adjustment contained herein.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law or any permit issued, or any approval given,
under any such Environmental Law (hereafter, "Claims"), including, without
------
limitation, (a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, investigation, removal, response, remedial or other
actions or damages pursuant to any Environmental Law, and (b) any and all Claims
by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief in connection with alleged injury or
threat of injury to health, safety or the environment due to the presence of
Hazardous Materials.
"Environmental Law" means any applicable Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, legally binding guideline
or written policy and any rule of common law now or hereafter in effect and in
each case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent decree or judgment, to
the extent binding on Holdings, the Borrower or any of their respective
Subsidiaries, relating to the environment, employee health and safety or
Hazardous Materials, including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C. (S) 1251 et seq.; the Toxic Substances
-- ---
Control Act, 15 U.S.C. (S) 2601 et seq.; the Clean Air Act, 42 U.S.C. (S) 7401
-- ---
et seq.; the Safe Drinking Water Act, 42 U.S.C. (S) 3803 et seq.; the Oil
- -- --- -- ---
Pollution Act of 1990, 33 U.S.C. (S) 2701 et seq.; the Emergency Planning and
-- ---
the Community Right-to-Know Act of 1986, 42 U.S.C. (S) 11001 et seq., the
-- ---
Hazardous
-93-
<PAGE>
Material Transportation Act, 49 U.S.C. (S) 1801 et seq. and the Occupational
-- ---
Safety and Health Act, 29 U.S.C. (S) 651 et seq. (to the extent it regulates
-- ---
occupational exposure to Hazardous Materials); and any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the applicable regulations promulgated
thereunder. Section references to ERISA are to ERISA, as in effect at the date
of this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with Holdings or any Subsidiary of Holdings would be
deemed to be a "single employer" within the meaning of Section 414(b), (c), (m)
or (o) of the Code.
"Eurodollar Loan" shall mean each Loan designated as such by the
Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean with respect a Eurodollar Loan (a) the
offered quotation to first-class banks in the New York interbank Eurodollar
market by BTCo for Dollar deposits of amounts in immediately available funds
comparable to the outstanding principal amount of the Eurodollar Loan for which
an interest rate is then being determined with maturities (comparable to the
Interest Period applicable to such Eurodollar Loan commencing two Business Days
thereafter as of 10:00 A.M. (New York time) on the date which is two Business
Days prior to the commencement of such Interest Period, divided (and rounded off
to the nearest 1/16 of 1%) by (b) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves required by
applicable law) applicable to any member bank of the Federal Reserve System in
respect of Eurocurrency funding or liabilities as defined in Regulation D (or
any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in Section 10.
"Excess Cash Flow" shall mean, for any fiscal year of Holdings,
Consolidated EBITDA for such period minus Consolidated Net Cash Interest Expense
-----
for such period minus the provision for income taxes for such period (to the
-----
extent paid in cash) minus the amount of Capital Expenditures made by Holdings
-----
and its Subsidiaries during such period minus (plus) additions (reductions) to
-----
Consolidated Working Capital for such period minus scheduled repayments of
-----
principal of outstanding Indebtedness to the extent actually paid (including any
voluntary payments of principal of Indebtedness but excluding voluntary payments
---
of Revolving Loans).
-94-
<PAGE>
"Excess Cash Flow Percentage" shall mean 75% unless and so long as the
Consolidated Adjusted Leverage Ratio is less than 3.00:1.00, in which case it
shall mean 50%.
"Excess Cash Payment Date" shall mean the date occurring 95 days after
the last day of each fiscal year of the Borrower (beginning with its fiscal year
ended closest to March 31, 1998).
"Excess Cash Payment Period" shall mean with respect to the repayment
required on each Excess Cash Payment Date, the immediately preceding fiscal year
of the Borrower.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Taxes" shall mean Taxes (including income or franchise
Taxes) imposed upon or determined by reference to any Bank's net income or net
profits but only to the extent such Taxes are imposed
(i) by the United States of America (or any State or local
jurisdiction or any agency thereof) including, without limitation, branch
profits Taxes; or
(ii) by any jurisdiction in which an applicable Bank is organized or
has its principal office or applicable lending office.
"Existing Credit Agreement" shall mean the revolving credit facility
provided to the Borrower pursuant to the Revolving Credit Agreement dated as of
November 30, 1995 between the Borrower and Heller Financial Inc.
"Existing Indebtedness" shall have the meaning provided in Section
7.22.
"Existing Letters of Credit" shall have the meaning provided in
Section 2.01(a).
"Facing Fee" shall have the meaning provided in Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating interest
rate equal for each day during such period to 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 for such day (or, if such
day is not a Business Day, for the next preceding 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 such day on such
transactions received by the
-95-
<PAGE>
Administrative Agent from three Federal Funds brokers of recognized standing
selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred to in
Section 3.01.
"Final Scheduled Maturity Dates" shall mean, collectively, the
Revolving Loan Maturity Date, the Tranche A Term Loan Maturity Date and the
Tranche B Term Loan Maturity Date.
"Form 1001" shall have the meaning set forth in Section 4.04(f).
"Form 4224" shall have the meaning set forth in Section 4.04(f).
"Form W-8" shall have the meaning set forth in Section 4.04(f).
"Form W-9" shall have the meaning set forth in Section 4.04(f).
"GAAP" shall have the meaning provided in Section 13.07(a).
"GTCR" shall mean, collectively, Golder, Thoma, Cressey, Rauner Inc.,
or any entity controlled thereby.
"Governmental Authority" shall mean any government or political
subdivision or any agency, authority, board, bureau, central bank, commission,
department or instrumentality of either, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guaranteed Obligations" shall mean the irrevocable and unconditional
guaranty made by Holdings and each Subsidiary Guarantor (i) to each Bank for the
full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of the principal and interest on each Note issued by
the Borrower to such Bank, and Loans made, under the Credit Agreement and all
reimbursement obligations and Unpaid Drawings with respect to Letters of Credit,
together with all the other obligations and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrower to such Bank
now existing or hereafter incurred under, arising out of or in connection with
the Credit Agreement or any other Credit Document and the due performance and
compliance with all the terms, conditions and agreements contained in the Credit
Documents by the Borrower and (ii) to each Bank and each Affiliate of a Bank
which enters into an Interest Rate Protection Agreement with the Borrower, which
by its express terms are entitled to the benefit of the Guaranty pursuant to
Section 14 with the written consent of the Borrower, the full and prompt payment
when due (whether by acceleration or otherwise) of all obligations of the
-96-
<PAGE>
Borrower owing under any such Interest Rate Protection Agreement, whether now in
existence or hereafter arising, and the due performance and compliance with all
terms, conditions and agreements contained therein.
"Guarantor" shall mean Holdings and each Subsidiary Guarantor.
"Guaranty" shall mean the guaranty issued pursuant to Section 14.
"Hazardous Materials" means (a) any petroleum or petroleum products or
constituents thereof, radioactive materials, asbestos that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls in excess of 50
ppm, and radon gas; (b) any chemicals, materials or substances defined as or
included in the definition of "hazardous substances," "hazardous waste,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
waste," "toxic substances," "toxic pollutants," "contaminants," or "pollutants,"
or words of similar import, under any applicable Environmental Law; and (c) any
other chemical, material or substance, exposure to which is prohibited, limited
or regulated by any governmental authority under Environmental Laws.
"Holdings" shall have the meaning provided in the first paragraph of
this Agreement.
"Holdings Common Stock" shall mean the common stock of Holdings.
"Holdings Pledge Agreement" shall mean the Holdings Pledge Agreement,
substantially in the form of Exhibit I-2 hereto, made by Holdings in favor of
-----------
the Collateral Agent, as such agreement may be amended, modified or supplemented
from time to time.
"Holdings Preferred Stock" shall mean the Preferred Stock, par value
$0.01 per share, of Holdings.
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money (ii) the deferred purchase
price of assets or services payable to the sellers thereof or any of such
seller's assignees which in accordance with GAAP would be shown on the liability
side of the balance sheet of such Person but excluding deferred rent as
determined in accordance with GAAP, or for the deferred purchase price of
property or services, (iii) the maximum amount available to be drawn under all
letters of credit issued for the account of such Person and all unpaid drawings
in respect of such letters of credit, (iv) all Indebtedness of the types
described in clause (i), (ii), (iii), (iv), (v), (vi), (vii) or (viii) of this
definition secured by any Lien on any property owned by such Person, whether or
not such Indebtedness has been assumed by such Person (to the extent of the
value of the
-97-
<PAGE>
respective property), (v) the aggregate amount required to be capitalized under
leases under which such Person is the lessee, (vi) all obligations of such
person to pay a specified purchase price for goods or services, whether or not
delivered or accepted; i.e., take-or-pay and similar obligations, (vii) all
---
Contingent Obligations of such Person and (viii) all obligations under any
Interest Rate Protection Agreement or Other Hedging Agreement or under any
similar type of agreement.
"Intercompany Loans" shall have the meaning provided in Section
9.05(g).
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit G, evidencing an Intercompany Loan.
- ---------
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section 1.09.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.
"Issuing Bank" shall mean BTCo and any Bank which at the request of
the Borrower and with the consent of the Agent agrees, in such Bank's sole
discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 2. The sole Issuing Bank on the Effective Date is
BTCo.
"KWIK Wash" shall mean KWIK Wash Laundries L.P., a Texas limited
partnership.
"Landlord Consent" shall mean a Landlord Consent substantially in the
form of Exhibit N hereto.
---------
"L/C Supportable Indebtedness" shall mean (i) obligations of Holdings,
the Borrower or the Borrower's Subsidiaries incurred in the ordinary course of
business with respect to insurance obligations and workers' compensation, surety
bonds and other similar statutory obligations and (ii) such other obligations of
Holdings, the Borrower or any of the Borrower's Subsidiaries as are reasonably
acceptable to the respective Issuing Bank and otherwise permitted to exist
pursuant to the terms of this Agreement.
-98-
<PAGE>
"Leaseholds" of any Person means all the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in Section 2.01(a).
"Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the sum of
(i) the aggregate Stated Amount of all outstanding Letters of Credit and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in Section
2.02(a).
"Letter of Credit Sublimit" shall mean $10,000,000.
"Leverage Pricing Adjustment" shall mean zero; provided that from and
--------
after the first day of any Margin Adjustment Period (the "Start Date") to and
----------
including the last day of such Margin Adjustment Period (the "End Date"), the
--------
Leverage Pricing Adjustment shall be the respective percentage per annum set
forth in clause (A), (B), (C), or (D) below if, but only if, as of the last day
of the most recent fiscal quarter or year, as the case may be, ended immediately
prior to such Start Date (the "Test Date"), the applicable conditions set forth
---------
in clause (A), (B), (C), or (D) below, as the case may be, are met:
(A) in the case of all Loans, +.25% if, but only if, as of the Test
Date for such Start Date the Pro Forma Leverage Ratio for the Test Period
ended on such Test Date shall be greater than 4.25:1.00;
(B) in the case of Loans other than Tranche B Term Loans, -.25% if,
but only if, as of the Test Date for such Start Date the Pro Forma Leverage
Ratio for the Test Period ended on such Test Date shall be less than
4.00:1.00 and none of the conditions set forth in clause (C) or (D) below,
as the case may be, are satisfied;
(C) in the case of Loans other than Tranche B Term Loans, -.50% if,
but only if, as of the Test Date for such Start Date the Pro Forma Leverage
Ratio for the Test Period ended on such Test Date shall be less than
3.50:1.00 and neither of the conditions set forth in clause (D) below, is
satisfied; or
(D) in the case of Loans other than Tranche B Term Loans, -.75% if,
but only if, as of the Test Date for such Start Date the Pro Forma Leverage
-99-
<PAGE>
Ratio for the Test Period ended on such Test Date shall be less than
3.00:1.00. Notwithstanding anything to the contrary contained above in
this definition, the Leverage Pricing Adjustment shall be +.25% at all
times during which there shall exist a Default or an Event of Default.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), preference,
priority or other security agreement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing) including any agreement
to give any of the foregoing.
"Loan" shall mean each Tranche A Term Loan, each Tranche B Term Loan,
each Revolving Loan and each Swingline Loan.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(e).
"Margin Adjustment Period" shall mean each period which shall commence
on a date on which the financial statements (or certificate in the case of
Section 8.01(l)) are delivered pursuant to Section 8.01(b), (c) or (l), as the
case may be, and which shall end on the earlier of (i) the date of actual
delivery of the next financial statements (or certificate in the case of Section
8.01(l)) pursuant to Section 8.01(b), (c) or (l), as the case may be, and (ii)
the latest date on which the next financial statements (or certificate in the
case of Section 8.01(l)) are required to be delivered pursuant to Section
8.01(b), (c) or (l), as the case may be; provided that the first Margin
--------
Adjustment Period shall commence on the date that the financial statements are
delivered for the Company's first fiscal quarter ending after the Effective Date
(other than in the case of a consummation of a Permitted Acquisition, in which
case the Margin Adjustment Period shall commence on the consummation of such
Permitted Acquisition).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall have the meaning provided in Section
5.12.
"Maturity Date" shall mean, with respect to any Tranche of Loans, the
Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date, the
Revolving Loan Maturity Date or the Swingline Maturity Date, as the case may be.
"Maximum Swingline Amount" shall mean $5,000,000.
-100-
<PAGE>
"Mortgage" shall mean fully executed counterparts of mortgages,
leasehold mortgages, deeds of trust and leasehold deeds of trust to secure debt
executed and delivered on the Effective Date with respect to a Mortgaged
Property, in each case in form and substance reasonably satisfactory to the
Agent.
"Mortgage Policies" shall mean the mortgage title insurance policies
issued on the Effective Date in respect of each Mortgage Property.
"Mortgaged Properties" shall mean, collectively, each Mortgaged
Property and each Additional Mortgaged Property.
"Mortgaged Property" shall mean each Real Property owned or leased by
the Borrower or a Subsidiary Guarantor and listed on Schedule 5.11 hereto and
any Additional Mortgaged Property.
"Net Sale Proceeds" shall mean for any sale of assets, the gross cash
proceeds (including any cash received by way of deferred payment pursuant to a
promissory note, receivable or otherwise, but only as and when received)
received from any sale of assets, net of reasonable transaction costs
(including, without limitation, any underwriting, brokerage or other customary
selling commissions and reasonable legal, advisory and other fees and expenses,
including title and recording expenses, associated therewith) and payments of
unassumed liabilities relating to the assets sold at the time of, or within 30
days after, the date of such sale, the amount of such gross cash proceeds
required to be used to repay any Indebtedness (other than Indebtedness of the
Banks pursuant to this Agreement) which is secured by the respective assets
which were sold, and the estimated marginal increase in income taxes which will
be payable by Holdings' consolidated group with respect to the fiscal year in
which the sale occurs as a result of such sale; but excluding any portion of any
such gross cash proceeds which Holdings determines in good faith should be
reserved for post-closing adjustments (to the extent Holdings delivers to the
Banks a certificate signed by its chief financial officer, controller or chief
accounting officer as to such determination), it being understood and agreed
that on the day that all such post-closing adjustments have been determined,
(which shall not be later than six months following the date of the respective
asset sale), the amount (if any) by which the reserved amount in respect of such
sale or disposition exceeds the actual post-closing adjustments payable by
Holdings or any of its Subsidiaries shall constitute Net Sale Proceeds on such
date) received by Holdings and/or any of its Subsidiaries from such sale, lease,
transfer or other disposition.
"Non-Defaulting Bank" shall mean and include each Bank other than a
Defaulting Bank.
"Note" shall mean each Tranche A Term Note, each Tranche B Term Note,
each Revolving Note and the Swingline Note.
-101-
<PAGE>
"Notice of Borrowing" shall have the meaning provided in Section 1.03.
"Notice of Conversion" shall have the meaning provided in Section
1.06.
"Notice Office" shall mean the office of the Agent located at 130
Liberty Street, New York, New York 10006, Attention: Thomas P. Prior, or such
other office as the Agent may hereafter designate in writing as such to the
other parties hereto.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Agent, the Collateral Agent or any Bank pursuant to the terms of any Credit
Document.
"Other Taxes" shall have the meaning set forth in Section 4.04(a).
"Participant" shall have the meaning provided in Section 2.03(a).
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006, or such other
office as the Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" of any Bank at any time shall mean a fraction (expressed
as a percentage) the numerator of which is the Revolving Loan Commitment of such
Bank at such time and the denominator of which is the Total Revolving Loan
Commitment at such time; provided that if the Percentage of any Bank is to be
--------
determined after the Total Revolving Loan Commitment has been terminated, then
the Percentages of the Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Permitted Acquisition" shall mean the acquisition by Holdings or its
Subsidiaries of all or substantially all of the assets of any Person (or all or
substantially all of the assets of a product line or division of any Person) not
already a Subsidiary of Holdings or 100% of the capital stock of any such
Person; provided that any such acquisition shall only be a Permitted Acquisition
--------
so long as (A) no Default or Event of Default exists (or will result from such
acquisitions) and pro forma for such acquisitions and the financings incurred
--- -----
and conforming accounting adjustments made in connection therewith, (B) (x) the
Consolidated Adjusted Senior Leverage Ratio of Holdings is less than 2.25:1.00;
and (y) the Consolidated Adjusted Leverage Ratio of Holdings is less than
4.50:1.00; and (C) such Permitted Acquisition is funded with (i) cash and Cash
Equivalents as reflected on the consolidated balance sheet of Holdings as of the
date of such Permitted Acquisition, (ii) Revolving Loans not to exceed
$35,000,000 in the aggregate or (iii) as to any Permitted Acquisition
consummated within one year of the
-102-
<PAGE>
Effective Date, proceeds of either Indebtedness incurred pursuant to Section
9.04(h) or equity (subject to the provisions of 4.02(e)); provided, however,
-------- -------
that for any Permitted Acquisition funded in accordance with either subclause
(i) and/or (ii) of this clause (C), the total consideration, after the first
anniversary of the Effective Date, shall be limited to $20,000,000 unless
otherwise agreed to by the Agents; and provided further, that to the extent any
-------- -------
such Permitted Acquisition or series of Permitted Acquisitions funded under
subclause (iii) of this clause (C) is not made by the Borrower or any of its
Subsidiaries or is not contributed by Holdings to either the Borrower or any of
its Subsidiaries, neither the Borrower nor any of its Subsidiaries shall incur
any Indebtedness (including Guarantees) with respect thereto. Notwithstanding
anything to the contrary contained in the immediately preceding sentence, an
acquisition shall be a Permitted Acquisition only if all requirements of Section
9.02(j) with respect to Permitted Acquisitions are met with respect thereto.
"Permitted Acquisition Capital Expenditures" shall be an amount equal
to 115% of the Capital Expenditures made by the Person (or in the case of an
asset acquisition, the Capital Expenditures relating to the assets) being
acquired as a part of a Permitted Acquisition prior to the time of such
Permitted Acquisition measured by the amount reported in the quarterly
financials for the four immediately preceding fiscal quarters. Such full 115%
amount shall be available for Capital Expenditures in each succeeding fiscal
year, beginning the next full fiscal year after the date of such Permitted
Acquisition, and a pro rata amount for the year in which such Permitted
--- ----
Acquisition is consummated shall be available.
"Permitted Acquisition Cost-Savings" shall mean certain cost-savings
adjustments reasonably anticipated by the Borrower to be achieved in connection
with Permitted Acquisitions and upon the Agents' request shall be (i) made in
accordance with Regulation S-X; (ii) verified by Ernst & Young L.L.P., or
another nationally recognized accounting firm or as otherwise agreed to by the
Agents; and (iii) not in excess of 10% of pro forma actual Consolidated EBITDA
--- -----
without regard to such cost-savings; provided, however, that all such Permitted
-------- -------
Acquisition Cost-Savings shall be estimated on a good-faith basis by the
Borrower and shall be reduced by (i) one half, six months following each such
Permitted Acquisition, (ii) an additional one quarter, nine months following
each such Permitted Acquisition and (iii) an additional one quarter, twelve
months following each such Permitted Acquisition.
"Permitted Acquisition Notice" shall mean a notice which notice shall
contain (I) the date such Permitted Acquisition is scheduled to be consummated,
(II) the estimated purchase price of such Permitted Acquisition, (III) a
description of the stock and/or assets to be acquired in connection with such
Permitted Acquisition, (IV) the sources of cash to be paid in respect of such
Permitted Acquisition and (V) in the case of Holdings Common Stock issued as
consideration to the seller in connection with a Permitted Acquisition, a
description of the Holdings Common Stock to be issued in
-103-
<PAGE>
connection with the consummation of such Permitted Acquisition and the estimated
fair market value thereof.
"Permitted Encumbrance" shall mean, with respect to any Mortgaged
Property, such exceptions to title as are set forth in the title insurance
policy or title commitment delivered with respect thereto, all of which
exceptions must be acceptable to the Administrative Agent in its reasonable
discretion.
"Permitted Liens" shall have the meaning provided in Section 9.01.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivision or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-employer plan, as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of), the Borrower or a Subsidiary
of the Borrower or an ERISA Affiliate, and each such plan for the five year
period immediately following the latest date on which the Borrower, a Subsidiary
of the Borrower or an ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan.
"Pledge Agreements" shall mean the Holdings Pledge Agreement and the
Borrower Pledge Agreement.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined
in each of the Pledge Agreements.
"Pledged Securities" shall mean "Pledged Securities" as defined in
each of the Holdings Pledge Agreement and the Borrower Pledge Agreement.
"Pledged Stock" shall mean "Pledged Stock" as defined in each of the
Holdings Pledge Agreement and the Borrower Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Prior Liens" shall have the meaning provided in the Security
Agreement.
-104-
<PAGE>
"Pro Forma Leverage Ratio" shall mean, at any time for the
determination thereof, the ratio of (x) Consolidated Indebtedness at such time
to (y) Consolidated EBITDA for the Test Period then last ended, with such Pro
Forma Leverage Ratio to be determined on a pro forma basis as if any Permitted
--- -----
Acquisition that occurred during or subsequent to such Test Period (and the
incurrence, assumption and/or repayment of any Indebtedness in connection with
any such Permitted Acquisition), as the case may be, had occurred on the first
day of such Test Period (and such Indebtedness, if any, had remained outstanding
(or had not been outstanding, as the case may be) throughout such Test Period)
it being understood that in calculating the Pro Forma Leverage Ratio in
connection with each and every Permitted Acquisition, Consolidated EBITDA shall
include the results of operations of the Person or assets acquired pursuant to
each such Permitted Acquisition on a pro forma basis as if such acquisition had
--- -----
occurred on the first day of the respective Test Period and shall include any
conforming accounting adjustments made in connection therewith. On the date of
any Permitted Acquisition pursuant to which the Pro Forma Leverage Ratio is to
be calculated and on each date of calculation of Pro Forma Leverage Ratio,
Holdings shall deliver to the Agent a certificate of an Authorized Officer of
Holdings setting forth in reasonable detail the pro forma calculations required
--- -----
to establish the Pro Forma Leverage Ratio (with such pro forma calculations to
--- -----
be made on a basis reasonably satisfactory to the Agent and to assume that the
interest expense attributable to any Indebtedness (whether existing or being
incurred) bearing a floating interest rate shall be computed as if the rate in
effect on the date of such Permitted Acquisition (taking into account any
Interest Rate Protection Agreement applicable to such Indebtedness if such
Interest Rate Protection Agreement has a remaining term in excess of 12 months)
had been the applicable rate for the entire period).
"Projections" shall have the meaning provided in Section 7.05(h).
"Quarterly Payment Date" shall mean the last Business Day of each
March, June, September and December, occurring after the Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act, as the
same may be amended from time to time, 42 U.S.C. (S) 6901 et seq.
-- ---
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower or any
Subsidiary Guarantor of any cash insurance proceeds or condemnation award
payable (i) by reason of theft, loss, physical destruction or damage or any
other similar event with respect to any property or assets of the Borrower or
any Subsidiary Guarantor and (ii) under any policy of insurance required to be
maintained under Section 8.03.
"Register" shall have the meaning provided in Section 13.16.
-105-
<PAGE>
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation S-X" shall mean Regulation S-X, Title 17, Code of Federal
Regulations as from time to time in effect and any successor to all or a portion
thereof.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing or
migration into the environment.
"Replaced Bank" shall have the meaning provided in Section 1.13.
"Replacement Bank" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of
ERISA with respect to a Plan as to which the 30-day notice requirement has not
been waived by the PBGC.
"Required Banks" means (i) at any time prior to the Effective Date,
Non-Defaulting Banks holding at least a majority of the Total Commitments held
by Non-Defaulting Banks and (ii) after the Effective Date, Non-Defaulting Banks
holding at least a majority of the outstanding Loans (after giving effect to
each Non-Defaulting Bank's Percentage of Swingline Loans), Letter of Credit
Outstandings (after giving effect to each Participant's Adjusted Percentage) and
Total Unutilized Revolving Loan Commitments held by Non-Defaulting Banks.
"Returns" shall have the meaning provided in Section 7.09.
-106-
<PAGE>
"Revolving Loan" shall have the meaning provided in Section 1.01(c).
"Revolving Loan Banks" shall have the meaning provided in Section
1.01(c).
"Revolving Loan Commitment" shall mean, for each Bank, the amount set
forth opposite such Bank's name in Schedule I hereto directly below the column
entitled "Revolving Loan Commitment," as same may be (x) reduced from time to
time pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted from time
to time as a result of assignments to or from such Bank pursuant to Section 1.13
or 13.04(b).
"Revolving Loan Maturity Date" shall mean December 31, 2002.
"Revolving Loan Percentage" of any Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which is the Revolving
Loan Commitment of such Bank at such time and the denominator of which is the
Total Revolving Loan Commitment at such time.
"Revolving Note" shall have the meaning provided in Section 1.05(a).
"Rollover Amount" shall have the meaning provided in Section 9.07(b).
"Scheduled Repayments" shall mean Tranche A Scheduled Repayments and
Tranche B Scheduled Repayments.
"SEC" shall have the meaning provided in Section 8.01(h).
"SEC Reports" shall have the meaning provided in Section 8.01(h).
"Section 4.04(f) Certificate" shall have the meaning provided in
Section 4.04(f).
"Secured Creditors" shall have the meaning assigned that term in the
Security Documents.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit J hereto, made by the Borrower and the Subsidiary
---------
Guarantors in favor of the Collateral Agent, as such agreement may be amended,
modified or supplemented from time to time.
"Security Agreement Collateral" shall mean all "Collateral" as defined
in the Security Agreement.
-107-
<PAGE>
"Security Document" shall mean each Pledge Agreement, the Security
Agreement, each Mortgage, each Collateral Assignment of Leases, each Collateral
Assignment of Location Leases and, after the execution and delivery thereof,
each Additional Mortgage and each Subsidiary Security Document.
"Semi-Annual Payment Date" shall mean the last day of each June and
December occurring after the Effective Date.
"Senior Indebtedness" shall mean, as to any Person, at any date all
Indebtedness that would be required to be reflected on a consolidated balance
sheet of such Person at such date (including, without limitation, all Capital
Leases) exclusive of subordinated Indebtedness.
"Start Date" shall have the meaning provided in the definition of
Leverage Pricing Adjustment.
"Stated Amount" of each Letter of Credit shall, at any time, mean the
maximum amount available to be drawn thereunder (in each case determined without
regard to whether any conditions to drawing could then be met).
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement
dated as of November 25, 1996, among the Borrower, KWIK Wash and the selling
shareholders named therein, pursuant to which the Borrower shall purchase all
the capital stock of the partners of KWIK Wash.
"Strategic Investor" shall mean a person engaged in a business which
supplies service or equipment to Holdings or its subsidiaries or is otherwise
engaged in a related or complementary business.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Subsidiary Guarantor" shall mean (i) each Subsidiary of the Borrower
which is a party hereto or (ii) each Subsidiary of Holdings which is a party
hereto.
"Super Laundry" shall mean Super Laundry Equipment Corp., a New York
corporation and a Wholly-Owned Subsidiary of the Borrower.
-108-
<PAGE>
"Supermajority Banks" means (i) at any time prior to the Initial
Funding Date, Non-Defaulting Banks holding at least 66 2/3% of the Total
Commitments held by the Non-Defaulting Banks and (ii) after the Effective Date,
shall mean (x) in the case of Tranche A Term Loans, shall mean Non-Defaulting
Banks holding at least 66 2/3% of the outstanding Tranche A Term Loans, (y) in
the case of Tranche B Term Loans, shall mean Non-Defaulting Banks holding at
least 66 2/3% of the outstanding Tranche B Term Loans, and (z) in the case of
Revolving Loans, Non-Defaulting Banks holding at least 66 2/3% of the
outstanding Revolving Loans (after giving effect to each Non-Defaulting Bank's
Percentage of Swingline Loans), Letter of Credit Outstanding (after giving
effect to each Participant's Adjusted Percentage) and Total Unutilized Revolving
Loan Commitments held by the Non-Defaulting Banks.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(d).
"Swingline Note" shall have the meaning provided in Section 1.05(a).
"Syndication Agent" shall mean First Union National Bank of North
Carolina, in its capacity as Syndication Agent for the Banks hereunder, and
shall include any successor to the Syndication Agent.
"Syndication Date" shall mean that date upon which the Agents
determine in their collective sole discretion (and notify the Borrower) that the
primary syndication (and resultant addition of institutions as Banks pursuant to
Section 13.04) has been completed.
"Tax Sharing Agreements" shall have the meaning provided in Section
5.05.
"Taxes" shall mean any present or future tax, levy, stamp, impost,
duty, deduction, assessment or other charge or withholding (including any
intangible, documentary or excise tax), and all liabilities with respect thereto
(including penalties, interest and expenses) imposed, levied, collected,
withheld or assessed by or on behalf of any Governmental Authority.
"Term Loan" shall mean the Tranche A Term Loan and the Tranche B Term
Loan.
"Term Loan Commitment" shall mean each Tranche A Term Loan Commitment
and each Tranche B Term Loan Commitment, with the Term Loan Commitment of any
Bank at any time to equal the sum of its Tranche A Term Loan Commitment and
Tranche B Term Loan Commitment as then in effect.
-109-
<PAGE>
"Term Note" shall have the meaning provided in Section 1.05(a).
"Test Date" shall have the meaning provided in the definition of
Leverage Pricing Adjustment.
"Test Period" shall mean for any determination the four consecutive
fiscal quarters of Holdings (taken as one accounting period), ended, in the case
of any determination of Leverage Pricing Adjustment on the applicable Test Date
and, in all other cases, ended on the date indicated in the applicable Section
hereof.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any time, the sum of
the then Revolving Loan Commitments of each of the Banks.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Total Tranche A Term Loan Commitment and Total Tranche B Term Loan Commitment.
"Total Tranche A Term Loan Commitment" shall mean, at any time, the
sum of the Tranche A Term Loan Commitments of each of the Banks.
"Total Tranche B Term Loan Commitment" shall mean, at any time, the
sum of the Tranche B Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time,
an amount equal to the remainder of (x) the then Total Revolving Loan
Commitment, less (y) the sum of the aggregate principal amount of Revolving
Loans and Swingline Loan then outstanding plus the then aggregate amount of
Letter of Credit Outstandings.
"Tranche" shall mean the respective facility and commitments utilized
in making Loans hereunder, with there being four separate Tranches; i.e.,
---
Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and Swingline Loans.
"Tranche A Scheduled Repayment" shall have the meaning provided in
Section 4.02(c).
"Tranche A Scheduled Repayment Date" shall have the meaning provided
in Section 4.02(c).
"Tranche A Term Loan" shall have the meaning provided in Section
1.01(a).
-110-
<PAGE>
"Tranche A Term Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I hereto directly below the
column entitled "Tranche A Term Loan Commitment", as same may be (x) reduced
from time to time pursuant to Sections 3.03, 4.02 and/or 10 or (y) adjusted from
time to time as a result of assignments to or from such Bank pursuant to Section
1.13 or 13.04.
"Tranche A Term Loan Maturity Date" shall mean December 31, 2002.
"Tranche A Term Note" shall have the meaning provided in Section
1.05(a).
"Tranche B Scheduled Repayment" shall have the meaning provided in
Section 4.02(d).
"Tranche B Scheduled Repayment Date" shall have the meaning provided
in Section 4.02(d).
"Tranche B Term Loan" shall have the meaning provided in Section
1.01(b).
"Tranche B Term Loan Commitment" shall mean, for each Bank, the amount
set forth opposite such Bank's name in Schedule I hereto directly below the
column entitled "Tranche B Term Loan Commitment", as same may be (x) reduced
from time to time pursuant to Sections 3.03, 4.02 and/or 10 or (y) adjusted from
time to time as a result of assignments to or from such Bank pursuant to Section
1.13 or 13.04(b).
"Tranche B Term Loan Maturity Date" shall mean June 30, 2004.
"Tranche B Term Note" shall have the meaning provided in Section
1.05(a).
"12 3/4% Notes" shall mean the 12 3/4% Senior Notes due 2001 issued
pursuant to an indenture between the Borrower and Shawmut Bank Connecticut as in
effect on the Effective Date.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto; i.e., whether a Base Rate Loan or a
---
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the relevant jurisdiction.
-111-
<PAGE>
"Unfunded Current Liability" of any Plan means the amount, if any, by
which the actuarial present value of the accumulated benefits under the Plan as
of the close of its most recent plan year exceeds the fair market value of the
assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unpaid Drawing" shall have the meaning provided for in Section
2.04(a).
"Unutilized Revolving Loan Commitment" with respect to any Bank, at
any time, shall mean such Bank's Revolving Loan Commitment at such time less the
sum of (i) the aggregate outstanding principal amount of Revolving Loans made by
such Bank (plus, in the case of BTCo, the aggregate outstanding principal amount
of Swingline Loans made by BTCo, and (ii) such Bank's Adjusted Percentage of the
Letter of Credit Outstandings in respect of Letters of Credit issued under this
Agreement.
"Voting Stock" means any class or classes of capital stock of Holdings
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to elect at least a majority of the Board of Directors of
Holdings.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying
shares) is at the time owned by such Person and/or one or more Wholly-Owned
Subsidiaries of such Person and (ii) any partnership, association, joint venture
or other entity in which such Person and/or one or more Wholly-Owned
Subsidiaries of such Person has a 100% equity interest at such time.
SECTION 12. The Administrative Agent.
------------------------
12.01 Appointment. The Banks hereby designate Bankers Trust Company
-----------
as Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" shall include BTCo in its capacity as Collateral Agent
pursuant to the Security Documents) to act as specified herein and in the other
Credit Documents. Each Bank hereby irrevocably authorizes, and each holder of
any Note by the acceptance of such Note shall be deemed irrevocably to
authorize, the Administrative Agent to take such action on its behalf under the
provisions of this Agreement, the other Credit Documents and any other
instruments and agreements referred to herein or therein and to exercise such
powers and to perform such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent by the terms hereof and
thereof and such other powers as are
-112-
<PAGE>
reasonably incidental thereto. The Administrative Agent may perform any of its
duties hereunder by or through its respective officers, directors, agents,
employees or affiliates.
12.02 Nature of Duties. The Administrative Agent shall not have any
----------------
duties or responsibilities except those expressly set forth in this Agreement
and the Security Documents. Neither the Administrative Agent nor any of its
respective officers, directors, agents, employees or affiliates shall be liable
for any action taken or omitted by it or them hereunder or under any other
Credit Document or in connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The duties of the Administrative
Agent shall be mechanical and administrative in nature; the Administrative Agent
shall not have by reason of this Agreement or any other Credit Document a
fiduciary relationship in respect of any Bank or the holder of any Note; and
nothing in this Agreement or any other Credit Document, expressed or implied, is
intended to or shall be so construed as to impose upon the Administrative Agent
any obligations in respect of this Agreement or any other Credit Document except
as expressly set forth herein or therein.
12.03 Lack of Reliance on the Administrative Agent. Independently
--------------------------------------------
and without reliance upon the Administrative Agent, each Bank and the holder of
each Note, to the extent it deems appropriate, has made and shall continue to
make (i) its own independent investigation of the financial condition and
affairs of Holdings and its Subsidiaries in connection with the making and the
continuance of the Loans and the taking or not taking of any action in
connection herewith and (ii) its own appraisal of the creditworthiness of
Holdings and its Subsidiaries and, except as expressly provided in this
Agreement, the Administrative Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Bank or the holder of
any Note with any credit or other information with respect thereto, whether
coming into its possession before the making of the Loans or at any time or
times thereafter. The Administrative Agent shall not be responsible to any Bank
or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of Holdings and its Subsidiaries or be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions
or conditions of this Agreement or any other Credit Document, or the financial
condition of Holdings and its Subsidiaries or the existence or possible
existence of any Default or Event of Default.
12.04 Certain Rights of the Administrative Agent. If the Agent shall
------------------------------------------
request instructions from the Required Banks with respect to any act or action
(including failure to act) in connection with this Agreement or any other Credit
Document, the Administrative Agent shall be entitled to refrain from such act or
taking
-113-
<PAGE>
such action unless and until the Administrative Agent shall have received
instructions from the Required Banks; and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Bank or the holder of any Note shall have any right of action
whatsoever against the Administrative Agent as a result of the Administrative
Agent acting or refraining from acting hereunder or under any other Credit
Document in accordance with the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent shall be entitled to rely,
--------
and shall be fully protected in relying, upon any note, writing, resolution,
notice, statement, certificate, telex, teletype or telecopier message,
cablegram, radiogram, order or other document or telephone message signed, sent
or made by any Person that the Administrative Agent believed to be the proper
Person, and, with respect to all legal matters pertaining to this Agreement and
any other Credit Document and its duties hereunder and thereunder, upon advice
of counsel selected by the Administrative Agent.
12.06 Indemnification. To the extent the Administrative Agent is not
---------------
reimbursed and indemnified by the Borrower, the Banks will reimburse and
indemnify the Administrative Agent, in proportion to their respective
"percentages" as used in determining the Required Banks (with such "percentages"
to be determined as if there are no Defaulting Banks), for and against any and
all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by the Administrative Agent in
performing its respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any other Credit
Document, except to the extent such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements are
finally judicially determined to have resulted from the Administrative Agent's
gross negligence or willful misconduct.
12.07 The Administrative Agent in Its Individual Capacity. With
---------------------------------------------------
respect to its obligation to make Loans under this Agreement, the Administrative
Agent shall have the rights and powers specified herein for a "Bank" and may
exercise the same rights and powers as though it were not performing the duties
specified herein; and the term "Banks," "Required Banks," "holders of Notes" or
any similar terms shall, unless the context clearly otherwise indicates, include
the Administrative Agent in its individual capacity. The Administrative Agent
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust or other business with any Credit Party or any Affiliate of any
Credit Party as if they were not performing the duties specified herein, and may
accept fees and other consideration from the Borrower or any other Credit Party
for services in connection with this Agreement and otherwise without having to
account for the same to the Banks.
-114-
<PAGE>
12.08 Holders. The Administrative Agent may deem and treat the payee
-------
of any Note as the owner thereof for all purposes hereof unless and until a
written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Administrative Agent. (a) The
---------------------------------------
Administrative Agent may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at any time by giving
15 Business Days' prior written notice to the Borrower and the Banks. Such
resignation shall take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Banks shall appoint a
successor Administrative Agent hereunder or thereunder who shall be a commercial
bank or trust company reasonably acceptable to the Borrower, except after an
Event of Default.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower, except after an Event of Default, shall then appoint a
successor Administrative Agent who shall serve as Administrative Agent hereunder
or thereunder until such time, if any, as the Banks appoint a successor
Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed pursuant
to clause (b) or (c) above by the 20th Business Day after the date such notice
of resignation was given by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Banks shall thereafter perform all
the duties of the Administrative Agent hereunder and/or under any other Credit
Document until such time, if any, as the Banks appoint a successor
Administrative Agent as provided above.
SECTION 13. Miscellaneous.
-------------
13.01 Payment of Expenses, etc. The Borrower shall: (i) whether or
------------------------
not the transactions herein contemplated are consummated, pay all reasonable
out-of-pocket costs and expenses of the Agents (including, without limitation,
the reasonable fees and disbursements of Cahill Gordon & Reindel and local
counsel) in connection with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents and instruments
referred to herein and therein and any
-115-
<PAGE>
amendment, waiver or consent relating hereto or thereto, and in connection with
the initial syndication efforts with respect to this Agreement and of the Agents
and, following an Event of Default, each of the Banks in connection with the
enforcement of this Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein (including, without limitation,
the reasonable fees and disbursements of counsel for the Agents and, following
an Event of Default, for each of the Banks); (ii) pay and hold each of the Banks
harmless from and against any and all present and future stamp, excise and other
similar taxes with respect to the foregoing matters and save each of the Banks
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes; and (iii) indemnify each of the
Agents and each Bank, and each of their Affiliates and each of them and their
respective officers, directors, trustees, employees, representatives and agents
from and hold each of them harmless against any and all liabilities, obligations
(including removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not any Agent or any Bank is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the use of any Letter of Credit or the proceeds of any Loans
hereunder or the consummation of any transactions contemplated herein
(including, without limitation, the Acquisition) or in any other Credit Document
or the exercise of any of their rights or remedies provided herein or in the
other Credit Documents, or (b) the actual or alleged presence of Hazardous
Materials in the air, surface water or groundwater or on the surface or
subsurface of any Real Property owned or at any time operated by Holdings or any
of its Subsidiaries, the generation, storage, transportation, handling or
disposal of Hazardous Materials at any location, whether or not owned or
operated by Holdings or any of its Subsidiaries, the non-compliance of any Real
Property with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to any Real
Property, or any Environmental Claim asserted against Holdings, any of its
Subsidiaries or any Real Property owned or at any time operated by Holdings or
any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
finally judicially determined to have been incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified). To the
extent that the undertaking to indemnify, pay or hold harmless any Agent or any
Bank set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall make the maximum
contribution to the payment and satisfaction of each of the indemnified
liabilities which is permissible under applicable law.
-116-
<PAGE>
13.02 Right of Set-off. In addition to any rights now or hereafter
----------------
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, each Agent, each Letter
of Credit Issuer and each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to
Holdings or the Borrower or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Agent, such Letter of Credit Issuer and such Bank (including, without
limitation, by branches and agencies of such Agent, such Letter of Credit Issuer
and such Bank wherever located) to or for the credit or the account of Holdings
or the Borrower or any other Guarantor against and on account of the Obligations
and liabilities of Holdings or the Borrower or any other Guarantor to such
Agent, such Letter of Credit Issuer and such Bank under this Agreement or under
any of the other Credit Documents, including, without limitation, all interests
in Obligations purchased by such Bank pursuant to Section 13.06(b), and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether or not such
Agent, such Letter of Credit Issuer and such Bank shall have made any demand
hereunder and although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to Holdings, at
Holdings' address specified opposite its signature below; if to the Borrower, at
the Borrower's address specified opposite its signature below; if to any Bank
and any Agent (other than the Administrative Agent), at its address specified
opposite its name on Schedule II below; and if to the Administrative Agent, at
its Notice Office; or, as to any Credit Party or the Administrative Agent, at
such other address as shall be designated by such party in a written notice to
the other parties hereto and, as to each Bank or any other Agent, at such other
address as shall be designated by such Bank in a written notice to the Borrower
and the Administrative Agent. All such notices and communications shall, when
mailed, telegraphed, telexed, telecopied, or cabled or sent by overnight
courier, be effective when deposited in the mails, delivered to the telegraph
company, cable company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to the
Administrative Agent and the Borrower shall not be effective until received by
the Administrative Agent or the Borrower, as the case may be.
13.04 Benefit of Agreement. (a) This Agreement shall be binding
--------------------
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, no Credit Party may assign
-------- -------
or transfer any of its rights, obligations or interest hereunder or under any
other Credit Document without the prior written consent of the Banks; and
provided further, that, although any
- -------- -------
-117-
<PAGE>
Bank may transfer, assign or grant participations in its rights hereunder, such
Bank shall remain a "Bank" for all purposes hereunder (and may not transfer or
assign all or any portion of its Commitments hereunder except as provided in
Section 13.04(b)) and the transferee, assignee or participant, as the case may
be, shall not constitute a "Bank" hereunder; and provided further, that no Bank
-------- -------
shall transfer or grant any participation under which the participant shall have
rights to approve any amendment to or waiver of this Agreement or any other
Credit Document except to the extent such amendment or waiver would (i) extend
the Final Scheduled Maturity of the Facility or Tranche in which such
participant is participating, or reduce the rate or extend the time of payment
of interest or Fees thereon (except in connection with a waiver of applicability
of any post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant's participation over the
amount thereof then in effect (it being understood that a waiver of any Default
or Event of Default or of a mandatory reduction in the Total Commitment shall
not constitute a change in the terms of such participation, and that an increase
in any Commitment or Loan shall be permitted without the consent of any
participant if the participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by the Borrower of any of
its rights and obligations under this Agreement or (iii) release (x) the
Guarantee of Holdings or (y) all or substantially all of the Collateral under
all of the Security Documents (except as expressly provided in the Security
Documents) or in connection with a sale otherwise permitted hereby), supporting
the Loans hereunder in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under this
Agreement or any of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant relating thereto)
and all amounts payable by the Borrower hereunder shall be determined as if such
Bank had not sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any Bank together
with one or more other Banks) may (x) assign all or a portion of its Revolving
Loan Commitment (and related outstanding Obligations hereunder) and/or its
outstanding Term Loans to its parent company and/or any affiliate of such Bank
which is at least 50% owned by such Bank or its parent company or to one or more
Banks or (y) assign all, or if less than all, a portion equal to at least
$5,000,000 in the aggregate for the assigning Bank or assigning Banks, of such
Revolving Loan Commitments and/or outstanding principal amount of Term Loans
hereunder to one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Bank by execution of an Assignment and
Assumption Agreement; provided that, (i) at such time Schedule I shall be deemed
--------
modified to reflect the Commitments (and/or outstanding Term Loans, as the case
may be) of such new Bank and of the existing Banks, (ii) new Notes will be
issued, at the Borrower's expense, to such new Bank and to the assigning Bank
upon the request of such new Bank or assigning Bank, such new Notes to be in
conformity with the requirements of Section 1.05 (with appropriate
modifications) to the extent needed to reflect the revised Commitments (and/or
-118-
<PAGE>
outstanding Term Loans, as the case may be), (iii) the consent of BTCo shall be
required in connection with any such assignment (which consent shall not be
unreasonably withheld) and (iv) the Administrative Agent shall receive at the
time of each such assignment, from the assigning or assignee Bank, the payment
of a non-refundable assignment fee of $3,500. To the extent of any assignment
pursuant to this Section 13.04(b), the assigning Bank shall be relieved of its
obligations hereunder with respect to its assigned Commitments. At the time of
each assignment pursuant to this Section 13.04(b) to a Person which is not
already a Bank hereunder and which is not a United States person (as such term
is defined in Section 7701(a)(30) of the Code) for Federal income tax purposes,
the respective assignee Bank shall, to the extent legally entitled to do so,
provide to the Borrower in the case of a Bank described in clause (ii) or (iv)
of Section 4.04(b), the forms described in such clause (ii) or (iv), as the
case may be. To the extent that an assignment of all or any portion of a Bank's
Commitments and related outstanding Obligations pursuant to Section 1.13 or this
Section 13.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10, 1.11 or 4.04 from those being charged by the
respective assigning Bank prior to such assignment, then the Borrower shall not
be obligated to pay such increased costs (although the Borrower shall be
obligated to pay any other increased costs of the type described above resulting
from changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any Bank from
pledging its Loans and Notes hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or delay on the
------------------------------
part of the Administrative Agent or any Bank or any holder of any Note in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower or any other Credit Party
and the Agent, the Syndication Administrative Agent or any Bank or the holder of
any Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any other Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights, powers and
remedies herein or in any other Credit Document expressly provided are
cumulative and not exclusive of any rights, powers or remedies which the
Administrative Agent or any Bank or the holder of any Note would otherwise have.
No notice to or demand on any Credit Party in any case shall entitle any Credit
Party to any other or further notice or demand in similar or other circumstances
or constitute a waiver of the rights of the Administrative Agent or any Bank or
the holder of any Note to any other or further action in any circumstances
without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise provided in this
-----------------
Agreement, the Administrative Agent agrees that promptly after its receipt of
each
-119-
<PAGE>
payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Banks (other than any Bank
that has consented in writing to waive its pro rata share of any such payment)
--- ----
pro rata based upon their respective shares, if any, of the Obligations with
- --- ----
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should receive any amount
hereunder (whether by voluntary payment, by realization upon security, by the
exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, Unpaid Drawings, Commitment Commission or Letter of Credit Fees,
of a sum which with respect to the related sum or sums received by other Banks
is in a greater proportion than the total of such Obligation then owed and due
to such Bank bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank receiving such
excess payment shall purchase for cash without recourse or warranty from the
other Banks an interest in the Obligations of the respective Party to such Banks
in such amount as shall result in a proportional participation by all the Banks
in such amount; provided that if all or any portion of such excess amount is
--------
thereafter recovered from such Bank, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained herein, the
provisions of the preceding Sections 13.06(a) and (b) shall be subject to the
express provisions of this Agreement which require, or permit, differing
payments to be made to Non-Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial statements to
--------------------------
be furnished to the Banks pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Banks); provided that, except as otherwise specifically provided herein, all
--------
computations of Excess Cash Flow and all computations determining compliance
with Sections 9.08 through 9.10, inclusive, shall utilize accounting principles
and policies in conformity with those used to prepare the financial statements
of Holdings for the fiscal year ended September 30, 1996 delivered to the Banks
pursuant to Section 7.05(a) (with the foregoing generally accepted accounting
principles, subject to the preceding proviso, herein called "GAAP").
(b) All computations of interest, Commitment Commission and Fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first day but excluding the last day (determined in
accordance with the terms hereof) occurring in the period for which such
interest, Commitment Commission or Fees are payable (except for interest payable
in respect of Base Rate
-120-
<PAGE>
Loans based on the Prime Lending Rate, which shall be computed on the bases of a
365/66 day year).
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
-----------------------------------------------------------
JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
- ----------
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH
AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE
DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS DESIGNEE,
APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS BEHALF,
AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF
FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO
ACT AS SUCH, EACH CREDIT PARTY AGREES TO DESIGNATE A NEW DESIGNEE, APPOINTEE AND
AGENT IN NEW YORK CITY ON THE TERMS AND FOR THE PURPOSES OF THIS PROVISION
SATISFACTORY TO THE AGENT UNDER THIS AGREEMENT. EACH OF HOLDINGS AND THE
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ANY CREDIT
PARTY AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT UNDER THIS AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER
JURISDICTION.
-121-
<PAGE>
(b) EACH OF HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN
CLAUSE (a) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and each of
the Agents.
13.10 Effectiveness. (a) This Agreement shall become effective on
-------------
the date (the "Effective Date") on which (i) Holdings, the Borrower, each
--------------
Subsidiary Guarantor, each of the Banks, the Required Banks (determined
immediately before the occurrence of the Effective Date) (or the consent of the
Required Banks is obtained) and each of the Agents shall have signed a
counterpart hereof (whether the same or different counterparts) and shall have
delivered (including by way of facsimile device) the same to the Administrative
Agent at its Notice Office and (ii) the conditions contained in Sections 5, 6
and 13.10(b) are met to the satisfaction of the Agents and the Required Banks
(determined immediately after the occurrence of the Effective Date). Unless the
Administrative Agent has received actual notice from any Bank that the
conditions contained in Sections 5 and 6 have not been met to its satisfaction,
upon the satisfaction of the condition described in clause (i) of the
immediately preceding sentence and upon the Agents good faith determination that
the conditions described in clause (ii) of the immediately preceding sentence
have been met, then the Effective Date shall have been deemed to have occurred,
regardless of any subsequent determination that one or more of the conditions
thereto had not been met (although the occurrence of the Effective Date shall
not release the Borrower, Holdings or any Subsidiary Guarantor from any
liability for failure to satisfy one or more of the applicable conditions
contained in Section 5 or 6). The Administrative Agent will give the Borrower
and each Bank prompt written notice of the occurrence of the Effective Date.
-122-
<PAGE>
(b) On the Effective Date, each Bank shall have delivered to the
Administrative Agent for the account of the Borrower an amount equal to the Term
Loans and Revolving Loans to be made by such Bank on the Effective Date.
Notwithstanding anything to the contrary contained in this Section 13.10(b), in
satisfying the foregoing condition, unless the Agent shall have been notified by
any Bank prior to the occurrence of the Effective Date that such Bank does not
intend to make available to the Administrative Agent such Bank's Term Loans and
Revolving Loans required to be made by it on such date, then the Administrative
Agent may, in reliance on such assumption, make available to the Borrower the
corresponding amounts in accordance with the provisions of Section 1.04, and the
making available by the Agent of such amounts shall satisfy the condition
contained in this Section 13.10(b).
13.11 Headings Descriptive. The headings of the several sections and
--------------------
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this Agreement nor any
------------------------
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Banks, provided that no such change, waiver, discharge or termination
--------
shall, without the consent of each Bank (other than a Defaulting Bank) (with
Obligations being directly affected in the case of following clause (i)), (i)
extend the Final Scheduled Maturity Dates of or extend the stated maturity of
any Letter of Credit beyond the Revolving Loan Maturity Date, or reduce the rate
or extend the time of payment of interest or Fees thereon, or reduce the
principal amount thereof (except to the extent repaid in cash), (ii) release (x)
the Guarantee of Holdings or a Subsidiary Guarantor or (y) all or substantially
all of the Collateral (except as expressly provided in the Security Documents in
connection with a sale otherwise permitted hereby), (iii) amend, modify or waive
any provision of this Section 13.12, (iv) reduce the percentage specified in the
definition of Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this Agreement may
be included in the determination of the Required Banks on substantially the same
basis as the extensions of Term Loans and Revolving Loan Commitments are
included on the Effective Date) or (v) consent to the assignment or transfer by
the Borrower or Holdings of any of its rights and obligations under this
Agreement; provided further, that no such change, waiver, discharge or
-------- -------
termination shall (u) increase the Commitments of any Bank over the amount
thereof then in effect without the consent of such Bank (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Commitment shall not
constitute an increase of the Commitment of any Bank, and that an increase in
the available portion of any Commitment of any Bank shall not constitute an
increase in the Commitment of such Bank), (v) without the consent of BTCo,
amend, modify or waive any provision of Section 2 or alter its rights or
obligations
-123-
<PAGE>
with respect to Letters of Credit, (w) without the consent of the Administrative
Agent, amend, modify or waive any provision of Section 12 as same applies to
such Administrative Agent or any other provision as same relates to the rights
or obligations of such Administrative Agent, (x) without the consent of the
Collateral Agent, amend, modify or waive any provision relating to the rights or
obligations of the Collateral Agent, (y) without the consent of the
Supermajority Banks of each Tranche which is being allocated a lesser
prepayment, repayment or commitment reduction as a result of the actions
described below (or without the consent of the Supermajority Banks of each
Tranche in the case of an amendment to the definition of Supermajority Banks),
amend the definition of Supermajority Banks or alter the required application of
any prepayments or repayments (or commitment reductions), as between the various
Tranches, pursuant to Section 4.01 or 4.02 (excluding Sections 4.02(c) and (d))
(although the Required Banks may waive, in whole or in part, any such
prepayment, repayment or commitment reduction, so long as the application, as
amongst the various Tranches, of any such prepayment, repayment or commitment
reduction which is still required to be made is not altered) or (z) without the
consent of the Supermajority Banks of the respective Tranche, amend, modify or
waive any Tranche A Scheduled Repayment or Tranche B Scheduled Repayment.
(b) If, in connection with any proposed change, waiver, discharge or
termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the consent of one or more of
such other Banks whose consent is required is not obtained, then the Borrower
shall have the right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either clauses (A) or (B) below,
to either (A) replace each such non-consenting Bank or Banks (or, at the option
of the Borrower if the respective Bank's consent is required with respect to
less than all Tranches of Loans (or related Commitments), to replace only the
respective Tranche or Tranches of Commitments and/or Loans of the respective
non-consenting Bank which gave rise to the need to obtain such Bank's individual
consent) with one or more Replacement Banks pursuant to Section 1.13 so long as
at the time of such replacement, each such Replacement Bank consents to the
proposed change, waiver, discharge or termination or (B) terminate such non-
consenting Bank's Revolving Loan Commitment (if such Bank's consent is required
as a result of its Revolving Loan Commitment) and/or repay each Tranche of
outstanding Term Loans of such Bank which gave rise to the need to obtain such
Bank's consent, in accordance with Sections 3.02(b) and/or 4.01(v); provided
--------
that, unless the Commitments are terminated, and Loans repaid, pursuant to
preceding clause (B) are immediately replaced in full at such time through the
addition of new Banks or the increase of the Commitments and/or outstanding
Loans of existing Banks (who in each case must specifically consent thereto),
then in the case of any action pursuant to preceding clause (B) the Required
Banks (determined before giving effect to the proposed action) shall
specifically consent thereto; provided further, that in any event the Borrower
-------- -------
shall not have the right to replace a Bank, terminate its Revolving Loan
-124-
<PAGE>
Commitment or repay its Loans solely as a result of the exercise of such Bank's
rights (and the withholding of any required consent by such Bank) pursuant to
the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth herein including,
--------
without limitation, in Sections 1.10, 1.11, 2.05, 4.04, 13.01 and 13.06 shall,
subject to Section 13.15 (to the extent applicable), survive the execution,
delivery and termination of this Agreement and the Notes and the making and
repayment of the Loans (it being understood and agreed that all such indemnities
shall also survive as to any Bank that has assigned all of its obligations
hereunder pursuant to Section 13.04(b) with respect to the period of time in
which such Bank was a "Bank" hereunder).
13.14 Domicile of Loans. Each Bank may transfer and carry its Loans
-----------------
at, to or for the account of any office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein, to the extent that a
transfer of Loans pursuant to this Section 13.14 would, at the time of such
transfer, result in increased costs under Section 1.10, 1.11, 2.05 or 4.04 from
those being charged by the respective Bank prior to such transfer, then the
Borrower shall not be obligated to pay such increased costs (although the
Borrower shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the respective
transfer).
13.15 Register. The Borrower hereby designates the Administrative
--------
Agent to serve as the Borrower's agent, solely for purposes of this Section
13.15, to maintain a register (the "Register") on which it will record the
Commitments from time to time of each of the Banks, the Loans made by each of
the Banks and each repayment in respect of the principal amount of the Loans of
each Bank. Failure to make any such recordation, or any error in such
recordation shall not affect the Borrower's obligations in respect of such
Loans. With respect to any Bank, the transfer of the Commitments of such Bank
and the rights to the principal of, and interest on, any Loan made pursuant to
such Commitments shall not be effective unless and until such transfer is
recorded on the Register maintained by the Agent with respect to ownership of
such Commitments and Loans and prior to such recordation all amounts owing to
the transferor with respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer of all or part of
any Commitments and Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall surrender the Note
evidencing such Loan, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the assigning or transferor Bank and/or the
new Bank. The Borrower agrees to indemnify the Administrative
-125-
<PAGE>
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its duties under this Section 13.15.
13.16 Confidentiality. (a) Subject to the provisions of clause (b)
---------------
of this Section 13.16, each Bank agrees that it will use its best efforts not to
disclose without the prior consent of Holdings or the Borrower (other than to
its employees, auditors, advisors or counsel or to another Bank if the Bank or
such Bank's holding or parent company in its sole discretion determines that any
such party should have access to such information; provided such Persons shall
--------
be subject to the provisions of this Section 13.16 to the same extent as such
Bank) any information with respect to Holdings or any of its Subsidiaries which
is now or in the future furnished pursuant to this Agreement or any other Credit
Document and which is designated by Holdings to the Banks in writing as
confidential; provided that any Bank may disclose any such information (a) as
--------
has become generally available to the public, (b) as may be required or
appropriate in any report, statement or testimony submitted to any municipal,
state or Federal regulatory body having or claiming to have jurisdiction over
such Bank or to the Federal Reserve Board or the Federal Deposit Insurance
Corporation or similar organizations (whether in the United States or elsewhere)
or their successors, (c) as may be required or appropriate in respect to any
summons or subpoena or in connection with any litigation, (d) in order to comply
with any law, order, regulation or ruling applicable to such Bank, (e) to the
Agent or the Collateral Agent and (f) to any prospective or actual transferee or
participant in connection with any contemplated transfer or participation of any
of the Notes or Commitments or any interest therein by such Bank; provided that
--------
such prospective transferee or participant agrees to be bound by the provisions
of this Section.
(b) Each of Holdings and the Borrower hereby acknowledge and agrees
that each Bank may share with any of its affiliates any information related to
Holdings or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of Holdings and
its Subsidiaries, provided such Persons shall be subject to the provisions of
this Section 13.16 to the same extent as such Bank).
SECTION 14. Guaranty.
--------
14.01 The Guaranty. In order to induce the Banks to enter into this
------------
Agreement and to extend credit hereunder and in recognition of the direct
benefits to be received by each Guarantor from the proceeds of the Loans and the
issuance of the Letters of Credit and to induce the Banks or any of their
respective Affiliates to enter into Interest Rate Protection Agreements, each
Guarantor hereby agrees with the Banks as follows: Each Guarantor hereby
unconditionally and irrevocably, jointly and severally, guarantees as primary
obligor and not merely as surety the full and prompt payment when due, whether
upon maturity, by acceleration or otherwise, of any and
-126-
<PAGE>
all of the Guaranteed Obligations of the Borrower to the Secured Creditors. If
any or all of the Guaranteed Obligations of the Borrower to the Secured
Creditors becomes due and payable hereunder, each Guarantor, jointly and
severally, unconditionally promises to pay such indebtedness to the Secured
Creditors, or order, on demand, together with any and all reasonable expenses
which may be incurred by the Agent or the Secured Creditors in collecting any of
the Guaranteed Obligations. If claim is ever made upon any Secured Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including the Borrower), then and in such event
each Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon such Guarantor, notwithstanding any revocation
of this Guaranty or any other instrument evidencing any liability of the
Company, and each other Guarantor shall be and remain jointly and severally
liable to the aforesaid payees hereunder for the amount so repaid or recovered
to the same extent as if such amount had never originally been received by any
such payee. This is a guaranty of payment and not of collection.
(a) Anything contained in this Guaranty to the contrary
notwithstanding, the obligations of each Guarantor hereunder shall be limited
to a maximum aggregate amount equal to the largest amount that would not render
its Obligations and/or the grant of security interests in Collateral to secure
its obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of the Bankruptcy Code or any applicable provisions
of comparable state law (collectively, the "Fraudulent Transfer Laws"), in each
------------------------
case after giving effect to all other liabilities of such Guarantor, contingent
or otherwise, that are relevant under the Fraudulent Transfer Laws (specifically
excluding, however, any liabilities of such Guarantor in respect of intercompany
Indebtedness to the Borrower or other Affiliates of the Borrower to the extent
that such Indebtedness would be discharged in an amount equal to the amount paid
by such Guarantor hereunder, and after giving effect (x) to the direct and
indirect benefits received by such Guarantor as a result of the Credit Documents
and the Loans and (y) as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of such Guarantor pursuant to
applicable law or pursuant to the terms or any agreement (including without
limitation any such right of contribution under Section 13.01(c)).
(b) Guarantors under this Guaranty together desire to allocate among
themselves in a fair and equitable manner their obligations arising under this
Guaranty. Accordingly, in the event any payment or distribution is made on any
date by any Guarantor under this Guaranty (a "Funding Guarantor") that exceeds
-----------------
its Fair Share (as defined below) as of such date, that Funding Guarantor shall
be entitled to a
-127-
<PAGE>
contribution from each of the other Guarantors in the amount of such other
Guarantor's Fair Share Shortfall (as defined below) as of such date, with the
result that all such contributions will cause each Guarantor's Aggregate
Payments (as defined below) to equal its Fair Share as of such date. "Fair
----
Share" means, with respect to a Guarantor as of any date of determination, an
- -----
amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors, multiplied by (ii) the aggregate
---------- --
amount paid or distributed on or before such date by all Funding Guarantors
under this Guaranty in respect of the obligations guarantied. "Fair Share
----------
Shortfall" means, with respect to a Guarantor as of any date of determination,
- ---------
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "Adjusted Maximum Amount" means, with respect to a
-----------------------
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guaranty, determined as of such date in
accordance with this Section 13.01; provided that, solely for purposes of
--------
calculating the "Adjusted Maximum Amount" with respect to any Guarantor for
purposes of this Section 13.01(b), any assets or liabilities of such Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Guarantor. "Aggregate Payments"
------------------
means, with respect to a Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this Section 13.01(b)) minus (ii) the
-----
aggregate amount of all payments received on or before such date by such
Guarantor from the other Guarantors as contributions under this Section
13.01(b). The amounts payable as contributions hereunder shall be determined as
of the date on which the related payment or distribution is made by the
applicable Funding Guarantor. The allocation among Guarantors of their
obligations as set forth in this Section 13.01(b) shall not be construed in any
way to limit the liability of any Guarantor hereunder.
14.02 Bankruptcy. Additionally, each Guarantor unconditionally and
----------
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Borrower to the Secured Creditors whether or not then due or payable by
the Borrower upon the occurrence in respect of the Borrower of any of the events
specified in Section 10.05, and unconditionally and irrevocably promises to pay
such Guaranteed Obligations to the Secured Creditors, or order, on demand, in
lawful money of the United States. If claim is ever made upon any Secured
Creditor for repayment or recovery of any amount or amounts received in payment
or on account of any of the Guaranteed Obligations and any of the aforesaid
payees repays all or part of said amount by reason of (i) any judgment, decree
or order of any court or administrative body having jurisdiction over such payee
or any of its property or (ii) any settlement or compromise of any such claim
effected by such payee with any such claimant (including the Borrower), then and
in such event each Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon such
-128-
<PAGE>
Guarantor, notwithstanding any revocation of this Guaranty or any other
instrument evidencing any liability of the Company, and each other Guarantor
shall be and remain jointly and severally liable to the aforesaid payees
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such payee. This is a guaranty
of payment and not of collection.
14.03 Nature of Liability. The liability of each Guarantor hereunder
-------------------
is exclusive and independent of any security for or other guaranty of the
Guaranteed Obligations of the Borrower whether executed by such Guarantor, any
other guarantor or by any other party, and the liability of each Guarantor
hereunder shall not be affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b) any other
continuing or other guaranty, undertaking or maximum liability of a guarantor or
of any other party as to the Guaranteed Obligations of the Borrower, or (c) any
payment on or in reduction of any such other guaranty or undertaking, or (d) any
dissolution, termination or increase, decrease or change in personnel by the
Borrower, or (e) any payment made to the Administrative Agent or the Secured
Creditors on the indebtedness which the Administrative Agent or such Secured
Creditors repay the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Guarantor waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.
14.04 Independent Obligation. The obligations of each Guarantor
----------------------
hereunder are independent of the obligations of any other guarantor or the
Borrower, and a separate action or actions may be brought and prosecuted against
each Guarantor whether or not action is brought against any other guarantor or
the Borrower and whether or not any other guarantor or the Borrower be joined in
any such action or actions. Each Guarantor waives, to the fullest extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to each Guarantor.
14.05 Authorization. Each Guarantor authorizes the Administrative
-------------
Agent and the Secured Creditors without notice or demand (except as shall be
required by applicable statute and cannot be waived), and without affecting or
impairing its liability hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter, any of
the Guaranteed Obligations (including any increase or decrease in the rate
of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made
shall apply to the Guaranteed Obligations as so changed, extended, renewed
or altered;
-129-
<PAGE>
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Banks;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Secured Creditors
regardless of what liability or liabilities of any Guarantor or the
Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements
referred to herein, or otherwise amend, modify or supplement this Agreement
or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
any Guarantor from its liabilities under this Section 14.
14.06 Reliance. It is not necessary for the Administrative Agent or
--------
the Secured Creditors to inquire into the capacity or powers of the Borrower or
its Subsidiaries or the officers, directors, partners or agents acting or
purporting to act on its behalf, and any Guaranteed Obligations made or created
in reliance upon the professed exercise of such powers shall be guaranteed
hereunder.
14.07 Subordination. Any of the indebtedness of the Borrower
-------------
relating to the Guaranteed Obligations now or hereafter owing to any Guarantor
is hereby subordinated to the Guaranteed Obligations of the Borrower owing to
the Agent and the Secured Creditors; and if the Administrative Agent so requests
at a time when an Event of Default exists, all such indebtedness relating to the
Guaranteed Obligations of the Borrower to any Guarantor shall be collected,
enforced and received by such Guarantor
-130-
<PAGE>
for the benefit of the Secured Creditors and be paid over to the Agent on behalf
of the Secured Creditors on account of the Guaranteed Obligations of the
Borrower to the Secured Creditors, but without affecting or impairing in any
manner the liability of any Guarantor under the other provisions of this
Guaranty. Prior to the transfer by any Guarantor of any note or negotiable
instrument evidencing any of the indebtedness relating to the Guaranteed
Obligations of the Borrower to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the same is subject to this
subordination.
14.08 Waiver. (a) Each Guarantor waives any right (except as shall
------
be required by applicable statute and cannot be waived) to require the
Administrative Agent or the Secured Creditors to (i) proceed against the
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Borrower, any other guarantor or any other
party or (iii) pursue any other remedy in the Administrative Agent's or the
Secured Creditors' power whatsoever. Each Guarantor waives any defense based on
or arising out of any defense of the Borrower, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other guarantor or any other
party, or the unenforceability of the Guaranteed Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Guaranteed Obligations. The Administrative
Agent and the Secured Creditors may, at their election, foreclose on any
security held by the Administrative Agent, the Collateral Agent or the Secured
Creditors by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and the Secured Creditors may have against the Borrower or
any other party, or any security, without affecting or impairing in any way the
liability of any Guarantor hereunder except to the extent the Guaranteed
Obligations have been paid. Each Guarantor waives any defense arising out of
any such election by the Administrative Agent and the Secured Creditors, even
though such election operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of such Guarantor against any Borrower
or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance,
protests and notices, including without limitation notices of nonperformance,
notices of protest, notices of dishonor, notices of acceptance of this Guaranty,
and notices of the existence, creation or incurring of new or additional
Guaranteed Obligations. Each Guarantor assumes all responsibility for being and
keeping itself informed of the Borrower's financial condition and assets, and of
all other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which each Guarantor
assumes and incurs hereunder, and agrees that the Administrative Agent and the
Secured Creditors shall have no duty to advise each Guarantor of information
known to them regarding such circumstances or risks.
-131-
<PAGE>
(c) Each Guarantor waives all rights of subrogation until all
Guaranteed Obligations have been paid in full in cash.
-132-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
Address:
- -------
55 Lumber Road COINMACH LAUNDRY CORPORATION
Roslyn, NY 11576
Attention:
By: /s/ ROBERT M. DOYLE
--------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
55 Lumber Road COINMACH CORPORATION
Roslyn, NY 11576
Attention:
By: /s/ ROBERT M. DOYLE
--------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
BANKERS TRUST COMPANY,
Individually and as Administrative Agent
By: /s/ PATRICIA HOGAN
--------------------------------
Name: Patricia Hogan
Title: Vice President
-133-
<PAGE>
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA,
Individually and as Syndication Agent
By: /s/ JORGE GONZALEZ
--------------------------------
Name: Jorge Gonzalez
Title: Senior Vice President
LEHMAN COMMERCIAL PAPER, INC.,
Individually and as Documentation Agent
By: /s/ DENNIS J. DEE
--------------------------------
Name: Dennis J. Dee
Title: Vice President
BANK OF BOSTON
By: /s/ TIMOTHY M. BARNES
--------------------------------
Name: Timothy M. Barnes
Title: Division Executive
BANK OF SCOTLAND
By: /s/ CATHERINE M. ONIFFREY
--------------------------------
Name: Catherine M. Oniffrey
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ATTILA KOC
--------------------------------
Name: Attila Koc
Title: Vice President
FLEET NATIONAL BANK
By: /s/ ERIC C. VANDER MEL
--------------------------------
Name: Eric C. Vander Mel
Title: Vice President
HELLER FINANCIAL
By: /s/ LINDA W. WOLF
--------------------------------
Name: Linda W. Wolf
Title: Senior Vice President
THE NIPPON CREDIT BANK, LTD.
By: /s/ CLIFFORD ABRAMSKY
--------------------------------
Name: Clifford Abramsky
Title: Senior Manager
-134-
<PAGE>
PRIME INCOME TRUST
By: /s/ RAFAEL SCOLARI
--------------------------------
Name: Rafael Scolari
Title: V.P. Portfolio Manager
THE ING CAPITAL SENIOR
SECURED HIGH INCOME FUND, L.P.
By: /s/ MICHAEL D. HATLEY
--------------------------------
Name: Michael D. Hatley
Title: V.P. & Portfolio Manager
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: /s/ ANTHONY R. CLEMENTE
--------------------------------
Name: Anthony R. Clemente
Title: Authorized Signatory
PILGRIM AMERICA PRIME RATE TRUST
By: /s/ MICHAEL J. BACEVICH
--------------------------------
Name: Michael J. Bacevich
Title: Vice President
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ MARK A. AHMED
--------------------------------
Name: Mark A. Ahmed
Title: Managing Director
-135-
<PAGE>
ANNEX 1
-------
COMMITMENTS
-----------
<TABLE>
<CAPTION>
Tranche A Term Tranche B Term
Loan Loan Revolving Loan
Bank Commitment Commitment Commitment
- ---- -------------- -------------- --------------
<S> <C> <C> <C>
Bankers Trust
Company $ 4,000,000 $ 39,250,000 $ 9,500,000
First Union National
Bank of North
Carolina $ 4,000,000 $ 3,250,000 $ 9,500,000
Lehman Commercial
Paper Inc. $ 3,750,000 $ 3,000,000 $ 9,000,000
Fleet National Bank $ 3,500,000 $ 2,750,000 $ 8,500,000
Heller Financial $ 3,500,000 $ 2,750,000 $ 8,500,000
The Nippon Credit
Bank, Ltd. $ 3,250,000 $ 1,500,000 $ 7,500,000
Credit Lyonnais New
York Branch $ 3,250,000 $ 0 $ 7,500,000
Bank of Scotland $ 2,375,000 $ 1,250,000 $ 5,000,000
Bank of Boston $ 2,375,000 $ 1,250,000 $ 5,000,000
Massachusetts Mutual
Life Insurance
Company $ 9,000,000
Pilgrim America
Prime Rate Trust $ 9,000,000
Prime Income
Trust $ 9,000,000
ING Capital Senior
Secured High Income
Fund, L.P. $ 9,000,000
Merrill Lynch Senior
Floating Rate Fund,
Inc. $ 9,000,000
TOTAL: $30,000,000 $100,000,000 $70,000,000
</TABLE>
<PAGE>
ANNEX II
--------
BANK ADDRESSES
--------------
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Thomas P. Prior
Telephone: (212) 250-7188
Telecopier: (212) 250-7200
First Union National Bank of
North Carolina
301 S. College Street, DC-5
Charlotte, North Carolina 28288
Attention: Bragg Comer
Telephone: 704-374-2610
Telecopier: 704-374-3300
Bank of Boston
100 Federal Street
Mail Stop: 01-09-01
Boston, MA 02106
Attention: Tim Burns
Telephone: 617-434-7976
Telecopier: 617-434-4929
Bank of Scotland
565 Fifth Avenue
New York, NY 10017
Attention: Cathy Oniffrey
Telephone: 212-450-0800
Telecopier: 212-557~9460
Credit Lyonnais New York Branch
1301 Avenue of the Americas
New York, NY 10019
Attention: Attila Koc
Telephone: 212-261-7358
Telecopier: 212-459-3176
<PAGE>
ANNEX II
Page 2
Prime Income Trust
Two World Trade Center
New York, NY 10048
Attention: Peter Gerwitz
Telephone: 212-392-9034
Telecopier: 212-392-5345
Fleet National Bank
One Federal Street
Mail Stop: MA OF DO3C
Boston, MA 02110
Attention: Eric Vandermal
Telephone: 617-346-3846
Telecopier: 617-346-4806
Heller Financial
500 West Monroe Street
Chicago, IL 66661
Attention: Linda Wolf
Telephone: 312-441-7000
Telecopier: 312-441-7367
ING Capital Senior Secured High
Income Fund, L.P. Advisors, Inc.
333 South Grand Avenue
Suite 400
Los Angeles, CA 90071
Attention: Mike Hatley
Telephone: 213-621-9061
Telecopier: 213-626-6552
<PAGE>
ANNEX II
Page 3
Lehman Brothers
Lehman Commerical Paper Inc.
3 World Financial Center
New York, NY 10285
Attention: Dennis Dee
Telephone: 212-526-4059
Telecopier: 212-528-0819
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, MA 01111
Attention: Steven Katz, Esq.
Telephone: 413-744-6125
Telecopier: 413-744-6210
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road
Plainsboro, NJ 08536
Attention: Anthony Clemente
Telephone: 609-282-2092
Telecopier: 609-282-2756
The Nippon Credit Bank, Ltd.
245 Park Avenue
New York, NY 10167
Attention: Cliff Abramsky
Telephone: 212-984-1238
Telecopier: 212-490-3895
<PAGE>
ANNEX II
Page 4
Pilgrim America Prime Rate Trust
Two Renaissance Square
Phoenix, AZ 85004-4424
Attention: Tim Hunt
Telephone: 602-417-8257
Telecopier: 602-417-8327
<PAGE>
SCHEDULE 2.01
EXISTING LETTERS OF CREDIT
1. See item 8 of Schedule 7.22.
<PAGE>
SCHEDULE 5.10
LEASES
See Attached Schedules.
<PAGE>
SCHEDULE 5.11
REAL PROPERTY
1. 4240 Bronze Way, Dallas, Texas.
2. 4322-4330 Bronze Way, Dallas, Texas.
<PAGE>
SCHEDULE 7.04
GOVERNMENTAL APPROVALS
None.
<PAGE>
SCHEDULE 7.05
FINANCIALS
None.
<PAGE>
SCHEDULE 7.07
TRUE AND COMPLETE DISCLOSURE
1. Part I. Selected Historical Consolidated Financial Data set forth in the
Confidential Memorandum, dated November 1996, of Holdings, Bankers Trust
Company, First Union Capital Markets, as Syndication Agent, and Lehman
Brothers, as Documentation Agent (the "Memorandum")
2. Part VII. Historical Financial Information set forth in the Memorandum
3. Part VIII. Projected Financial Information set forth in the Memorandum
4. Exhibit I. Financial Model set forth in the Memorandum
5. Audited financial statements for Solon Automated Services, Inc. ("Solon")
for 1992, 1993 and 1994.
6. Audited financial statements for CIC I Acquisition Corp. for 1992, 1993 and
1994.
7. Schedule of gross revenues by regional business unit for various periods
ended in 1993 through June 1996 for Borrower, Solon, Super Laundry
Equipment Corp. and Allied Laundry Equipment Company ("Allied").
8. Top 15 customers of Borrower based on gross revenues for the twelve months
ended August 1996.
9. Top 25 current laundry location contracts for Borrower based on gross
revenues for the twelve months ended September 1996.
10. Schedule on post acquisition cost savings for the Solon and Allied
acquisitions.
11. Audited financial statements for Kwik Wash for the years ended December 31,
1995 and 1994; and unaudited financial statements for the eight months
ended August 31, 1996 and 1995, and the nine months ended September 30,
1996 and 1995.
12. Schedule of gross revenues from routes, stores and other sources by branch
for Kwik Wash for the years ended December 31, 1995 and 1994 and the eight
months ended August 31, 1996 and 1995.
13. Top 15 customers for Kwik Wash based on gross revenues for the eight months
ended August 31, 1996.
<PAGE>
14. Schedule of Kwik Wash capital expenditures, including the number of washers
and dryers purchased, for the year ended December 31, 1995.
15. Detailed internal monthly management report (financial statements and
reports) for Kwik Wash for the eight months ended August 31, 1996 and 1995.
16. Schedule of the projected annual cost savings for the Kwik Wash
acquisition.
17. Schedule showing the number of machines on location by region for Solon as
of September 30, 1993, 1994 and 1995; March 31, 1995 and 1996; and June 30,
1995 and 1996.
<PAGE>
SCHEDULE 7.15
SUBSIDIARIES
1. Super Laundry Equipment Corp.
2. Grand Wash & Dry Launderette, Inc.
<PAGE>
SCHEDULE 7.19
ENVIRONMENTAL MATTERS
1. None.
<PAGE>
SCHEDULE 7.20
LABOR RELATIONS
1. On June 5, 1996, the International Union of Electrical Workers filed a
petition with the National Labor Relations Board ("NLRB") seeking to
represent a unit of approximately 55 of Borrower's employees based in
Elkridge, Maryland. The petition failed but the union could seek a new
election next year.
2. Borrower's employees in the New York region are members of the Local 966
International Brotherhood of Teamsters. The contract between Borrower and
the Teamsters is currently being negotiated.
<PAGE>
SCHEDULE 7.21
PATENTS, LICENSES, FRANCHISES AND FORMULAS
1. Borrower and each of its Subsidiaries have developed computer software
programs, formulae, routines and other processes in connection with the
conduct of their respective businesses, none of which have been registered
with the United States Copyright Office.
<PAGE>
SCHEDULE 7.22
INDEBTEDNESS
1. All indebtedness reflected in the financial statements described in Section
7.05(b) of the Credit Agreement.
2. Approximately $196.7 million face amount of issued and outstanding 11 3/4%
Senior Notes due 2005
3. $5.0 million face amount of issued and outstanding 12 3/4% Senior Notes due
2001
4. Promissory Note in the aggregate principal amount of $15.0 million, payable
by Coinmach Laundry Corporation to Richard F. Enthoven, as agent for and on
behalf of each of the individuals listed on Schedule A attached thereto
5. Note Payable in the aggregate principal amount of $437,000 payable by
Coinmach Corporation to Jan Sussman pursuant to the Consulting Agreement by
and between Jan R. Sussman, Carefree Capital Co. and Coinmach Corporation,
dated as of February 4, 1994
6. Contingent Obligations:
(a) Sebco Corporation v. Cross Bay Cooperative, Inc., et al. (Supreme
--------------------------------------------------------
Court, New York County, New York) This action commenced on or about
November 4, 1985 seeks damages against the owner and managing agent of
certain premises in the amount of $50,000, plus interest and
attorney's fees, for alleged breach of contract and breach of warranty
for allegedly preventing Sebco from installing laundry equipment in
certain premises. Borrower is not a defendant herein but its
potential liability arises from an indemnity agreement whereby
Borrower agreed to hold defendants harmless. This matter is still in
the discovery stage of litigation and has not been actively pursued by
plaintiff.
(b) Erwin Rosenfeld v. Jan Sussman, et al. (Supreme Court, County of New
--------------------------------------
York, New York). This action was commenced against Jan Sussman and
three other individual defendants on or about January 11, 1989.
Plaintiff seeks damages of $300,000 plus interest at a rate of 15% per
annum from July 22, 1986 arising out of a loan he made to the other
defendants which was to be secured by certain equipment. The
complaint alleges, among other things, fraud against the other
defendants and breach of fiduciary duty and a wrongful defeat of an
"equitable lien" in certain equipment against Sussman. Borrower has
agreed to indemnify Sussman against this claim. Sussman answered the
complaint,
<PAGE>
denying any liability thereunder and raising certain affirmative
defenses. Plaintiff moved for an order dismissing Sussman's
affirmative defenses. This motion was granted and affirmed on appeal.
The action, which was marked off the active calendar on March 6, 1992,
has been restored to the active calendar. Discovery has recommenced.
(c) Tax indemnity letter, dated February 4, 1994, executed by CIC I
Acquisition Corp. ("CIC") in favor of MCS Capital, Inc. and assumed by
The Coinmach Corporation.
7. In connection with the acquisition of substantially all of the assets of
Allied Laundry Equipment Company:
(a) The Borrower owes to Morrie Zimring $625,000.00, payable in five equal
annual installments of $125,000.00 each, beginning on the first day of
the first month after the first anniversary of April 1, 1996 and
continuing on the four succeeding annual anniversary dates.
(b) Borrower has assumed certain motor vehicle obligations as set forth on
the attached schedule.
8. Letters of Credit
<TABLE>
<CAPTION>
AMOUNT BENEFICIARY BANK
- ------ ----------- ----
<S> <C> <C>
$ 300,000.00 Reliance National Indemnity Company Chase
77 Water Street Manhattan
New York, NY 10005 Bank-New York
$1,200,000.00 National Union Fire Insurance Company Chase
of Pittsburgh, PA and American Manhattan
Home Assurance Company Bank-New York
The Insurance Company of the State of PA
Commerce and Industry Insurance Company
AIU Insurance Company
Birmingham Fire Insurance Company of PA
Illinois National Insurance Company
American Global Insurance Company
National Union Fire Insurance Company of LA
Landmark Insurance Company as their
interests may appear
70 Pine Street
New York, NY 10005
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
$1,432,000.00 National Union Fire Insurance Company Chase
of Pittsburgh, PA and American Manhattan
Home Assurance Company Bank-New York
The Insurance Company of the State of PA
Commerce and Industry Insurance Company
AIU Insurance Company
Birmingham Fire Insurance Company of PA
Illinois National Insurance Company
American Global Insurance Company
National Union Fire Insurance Company of LA
Landmark Insurance Company
as their interests may appear
80 Pine Street
New York, NY 10005
</TABLE>
9. Capital Lease Obligations as of September 27, 1996:
(a) Vehicles: $997.063
(b) IBM Computer Equipment: $153,622
10. Loan from Borrower to Stephen R. Kerrigan, dated August, 1996, in the
principal amount of $500,000.00
11. Loan from Borrower to Daniel Osborne, dated August, 1996, in the principal
amount of $50,000.00
<PAGE>
SCHEDULE 8.03
INSURANCE
1. See attached Schedule of Insurance Policies in force as of November 14,
1996.
<PAGE>
SCHEDULE 9.01
EXISTING LIENS
1. Kwik Wash Laundries L.P. has provided seller financing in connection with
six laundromat store locations (three in Austin, three in Dallas and one in
Houston, Texas). All such financings are secured by liens on such
laundromat stores.
2. Borrower's computer system and related equipment are pledged as security
under capital leases pursuant to a rollover agreement with IBM Credit
Corporation, Master Agreement Number HR11512, dated August 28, 1995.
3. The Inter-Tel 36 Telephone System including all substitutions,
modifications and proceeds thereof are covered by a UCC-1 Financing
statement which states that the property rental property and that the UCC-1
was filed only to make the rental a matter of public record. The secured
party was Inter-Tel Leasing, Inc. before assigned to Heller Financial, Inc.
4. The Tie Ultracom AT Telephone System including all substitutions,
modifications and proceeds thereof are covered by a UCC-1 Financing
statement which states that the property rental property and that the UCC-1
was filed only to make the rental a matter of public record. The secured
party was Inter-Tel Leasing, Inc.
5. Orix Credit Alliance, Inc., as Secured Party, UCC-1, File Number: 93-2920,
File Date: June 21, 1993
6. Yale Financial Services, Inc., as Secured Party, UCC-1, File Number: 94-
144, File Date: January 1, 1994
7. Associates Leasing, Inc., as Secured Party, UCC-1, File Number: 219142,
File Date: November 2, 1992
8. Orix Credit Alliance, Inc., as Secured Party, UCC-1, File Number 119466,
File Date: June 18, 1993
9. Hudson United Bank, as Secured Party, UCC-1, File Number 94-1030, File
Date: April 14, 1994 (Borrower will have this lien removed after the
Closing Date)
<PAGE>
SCHEDULE 9.05
ADVANCES, INVESTMENTS AND LOANS
1. Promissory Notes*, dated as of January 31, 1995, in favor of Borrower (as
successor in interest to TCC) by each of:
a. MCS Capital, Inc. (face amount $140,000)
b. Mitchell Blatt (face amount $140,000)
c. David Tulkop (face amount $11,666.80)
d. Robert M. Doyle (face amount $23,333.60)
e. Russell Harrison (face amount $5,833.40)
f. Charles Prato (face amount $17,500.20)
* On June 25, 1996, the first of the four annual installments of
indebtedness evidenced by such Promissory Notes was forgiven.
2. Promissory Notes*, dated as of July 26, 1995, in favor of SAS from each of:
a. MCS Capital, Inc. (face amount $52,369.52)
b. Mitchell Blatt (face amount $52,369.52)
c. Robert M. Doyle (face amount $26,184.80)
d. Michael E. Stanky (face amount $19,638.56)
* On July 23, 1996, the first of the eight annual installments of
indebtedness evidenced by such Promissory Notes was forgiven.
3. $21,794.96 Promissory Note, dated May 10, 1996, issued by Mitchell Blatt in
favor of Holdings together with the Stock Subscription Agreement, dated as
of May 10, 1996, by and between Blatt and Holdings in respect of the
purchase of 1,415 shares of Class B Common Stock, $.01 par value, of
Holdings
4. $9,226.28 Promissory Note, dated May 10, 1996, issued by Robert M. Doyle in
favor of Holdings together with the Stock Subscription Agreement, dated as
of May 10, 1996, by and between Doyle and Holdings in respect of the
purchase of 599 shares of Class B Common Stock, $.01 par value, of Holdings
5. $21,794.96 Promissory Note, dated May 10, 1996, issued by Stephen R.
Kerrigan in favor of Holdings together with the Stock Subscription
Agreement, dated as of May 10, 1996, by and between Kerrigan and Holdings
in respect of the purchase of 1,415 shares of Class B Common Stock, $.01
par value, of Holdings
6. Kwik Wash Laundries L.P. has provided seller financing in connection with
six laundromat store locations (three in Austin, three in Dallas and one in
Houston, Texas). All such financings are secured by liens on such
laundromat stores. The outstanding notes receivable in connection with
such laundromat stores was $139,267.14 as of December 5, 1996.
7. Loan from Borrower to Stephen R. Kerrigan, dated August, 1996, in the
principal amount of $500,000.00
8. Loan from Borrower to Daniel Osborne, dated August, 1996, in the principal
amount of $50,000.00
<PAGE>
SCHEDULE 7.01
CORPORATE STATUS
1. Coinmach Corporation is not in good standing in the State of New Jersey.
<PAGE>
SCHEDULE 7.06
LITIGATION
1. Perkinson v. Solon - Docket No. 42, 432-461 (District Court, Brozos County,
------------------
Texas; 361st Judicial District). EEOC charge dropped after Solon responded
to Texas Commission on Human Rights. Citation was issued to Solon on
September 1, 1995 charging Solon in violation of Texas Labor Code, Section
21.051 in discharging Perkinson because of his disability and age. Solon
has denied all charges. The case is in the pre-trial discovery stage.
2. Thorpe v. Solon - Charge No:15A950373, EEOC, Miami District Office. Notice
---------------
of discrimination was issued to Solon on July 12, 1995 on behalf of William
F. Thorpe. The cause cited was discrimination based on religion and
disability. Solon denies all charges. A response was submitted to the
EEOC on November 6, 1995 after an attempt at a negotiated settlement was
rejected by the claimant. The case is in the pre-trial discovery stage.
3. Listed below are certain legal actions, to Borrower's knowledge, that have
arisen against Borrower, Holdings and any of their respective Subsidiaries
which will exceed (i) $1,000,000 in the aggregate, or (ii) $250,000
individually, and which in each case are not adequately covered by
insurance.
(a) Superior Laundries, Inc. v. Coinmach Industries Corp., et al. This
-------------------------------------------------------------
action was commenced on or about February 18, 1986, by a commercial
laundry equipment leasing company against Coinmach Industries Corp.,
Opel On-Premises Equipment Leasing Corporation ("OPEL"), and certain
individual employees of OPEL, and an unrelated group of defendants
known as Borg-Warner defendants. The complaint seeks compensatory
damages of $592,889.78 and punitive damages of $3,600,000, based upon
various allegations of tortious interference with business relations,
wrongful filing of UCC financing statements, unfair competition,
conspiracy, and breach of an alleged agreement to sell, deliver and
service laundry equipment. The complaint also seeks a permanent
injunction and an accounting and imposition of a constructive trust on
the profits and proceeds from certain laundry service accounts.
Coinmach/OPEL vigorously defended the action and successfully defeated
the motion for preliminary injunction. Plaintiff has not pursued the
case since approximately 1987 or 1988, the date of the denial of the
preliminary injunction.
The following are not quantifiable:
(b) Assurance and Discontinuance Agreement between Solon and the State of
Maryland dated and approved on december 5, 1985.
(c) Final Judgment and Consent to Entry of Final Judgment By Solon
Automated Services, Inc., dated April 21, 1977, in SEC v. Solon, Civil
------------
Action No. 77-0705, United States District Court for the District of
Columbia.
<PAGE>
SCHEDULE 7.13
PROPERTIES
1. 3101 West Belvedere Avenue, Baltimore, Maryland.
<PAGE>
SCHEDULE 7.16
COMPLIANCE WITH STATUTES, ETC.
1. Certain of Borrower's multi-family sites are located in townships that
require licenses or permits. Borrower is not aware of any such expired
licenses or permits. Borrower also believes that the lapse of any of such
licenses or permits would not result in a Material Adverse Effect.
2. As disclosed in the Environmental Site Assessment prepared by Environ
Corporation, dated December 1994, regarding the facilities Coinmach
Industries and Selected Subsidiaries located in the State of New York. In
addition, according to such Assessment, Coinmach Industries Co., L.P. was
referred in 1991 to the Legal Department of the New York Department of
Environmental Conservation in connection with its former air permit.
Borrower has requested that the permit be updated and reissued based on
laboratory test performed on samples taken by Nassau County Department of
Health. Borrower was told in May 1996 that a permit would be issued but
has not received it yet.
3. As disclosed in the Environmental Site Assessment prepared by Environ
Corporation, dated January, 1996, regarding the facility located at 4430
Bronze Way, Dallas, Texas.
4. As disclosed in the Phase I Environmental Site Assessment prepared by KEI
for Kwik Wash Laundries, L.P., dated December 19, 1996, regarding the
facility located at 4330/4240 Bronze Way, Dallas, Texas.
<PAGE>
SCHEDULE 9.06
TRANSACTIONS WITH AFFILIATES
1. Tax indemnity letter, dated February 4, 1994, executed by CIC in favor of
MCS Capital, Inc. and assumed by The Coinmach Corporation ("TCC").
2. Agreement, dated as of November 30, 1995, among SAS Acquisitions Inc.
("SAS"), Solon, TCC and the signatories thereto (the "Omnibus Agreement").
3. Executive Stock Purchase Agreements, dated as of January 31, 1995, as
amended by the Omnibus Agreement, between Borrower as successor in interest
to TCC, Golder, Thoma, Cressey, Rauner Fund IV L.P. ("GTCR") and each of:
a. Charles Prato
b. Russell Harrison
c. David Tulkop
4. Investor Purchase Agreements, dated as of January 31, 1995, as amended by
the Omnibus Agreement, by and among Borrower (as successor in interest to
TCC), GTCR and each of:
a. Heller Financial, Inc.
b. Jackson National Life Insurance Company
c. Jackson National Life Insurance Company of Michigan
d. President and Fellows of Harvard College
e. James N. Chapman
f. Michael E. Marrus
g. MCS Capital, Inc.
h. MCS Capital Management, Inc.
i. Mitchell Blatt
5. Equity Purchase Agreement, dated as of January 31, 1995, as amended by the
Omnibus Agreement, between Borrower (as successor in interest to TCC) and
GTCR.
6. Promissory Notes*, dated as of January 31, 1995, as amended by the Omnibus
Agreement, in favor of Borrower (as successor in interest to TCC) by each
of:
a. MCS Capital, Inc.
b. Mitchell Blatt
c. David Tulkop
d. Robert M. Doyle
e. Russell Harrison
f. Charles Prato
* On June 25, 1996, the first of the four annual installments of
indebtedness evidenced by such Promissory Notes was forgiven.
7. Stock Pledge Agreements, dated as of January 31, 1995, between Borrower (as
successor in interest to TCC) and each of:
a. MCS Capital, Inc.
b. Mitchell Blatt
c. Robert M. Doyle
d. David Tulkop
e. Russell Harrison
f. Charles Prato
8. Equity Purchase Agreement, dated as of July 26, 1995, as amended by the
Omnibus Agreement, by and between GTCR and SAS.
<PAGE>
9. Investor Purchase Agreements, dated as of July 26, 1995, as amended by the
Omnibus Agreement, by and among SAS, GTCR and the Purchasers listed on the
signature page attached thereto.
10. Executive Stock Agreements, dated as of July 26, 1995, as amended by the
Omnibus Agreement, by and among SAS, GTCR and each of:
a. MCS Capital, Inc.
b. Mitchell Blatt
c. Robert M. Doyle
d. Michael E. Stanky
11. Promissory Notes*, dated as of July 26, 1995, as amended by the Omnibus
Agreement, in favor of SAS from each of:
a. MCS Capital, Inc. (including guaranty of Stephen Kerrigan)
b. Mitchell Blatt
c. Robert M. Doyle
d. Michael E. Stanky
* On July 23, 1996, the first of the eight annual installments of
indebtedness evidenced by such Promissory Notes was forgiven.
12. Stock Pledge Agreements, dated as of July 26, 1995, between SAS and each
of:
a. MCS Capital, Inc.
b. Mitchell Blatt
c. Robert M. Doyle
d. Michael E. Stanky
13. Amended and Restated Stockholders Agreement, dated as of November 30, 1995,
among SAS, GTCR and each of (collectively, the "Stockholders"):
a. Heller Financial, Inc.
b. Jackson National Life Insurance Company
c. Jackson National Life Insurance Company of Michigan
d. James N. Chapman
e. Michael E. Marrus
f. President and Fellows of Harvard College
g. MCS Capital, Inc.
h. Mitchell Blatt
i. Michael E. Stanky
j. Robert M. Doyle
k. Michael E. Stanky
l. Charles Prato
m. David Tulkop
n. Russell Harrison
o. MCS Capital Management, Inc.
14. Registration Agreement, dated as of July 26, 1995, as amended by the
Omnibus Agreement, among the Company and each of the Stockholders.
15. Option Agreements, dated July 23, 1996, and as amended by the Omnibus
Amendment to Option Agreements, dated September 27, 1996, by and between
Holdings and each of the following persons or entities,
a. MCS Capital, Inc.
b. James N. Chapman
c. Robert M. Doyle
d. Michael E. Stanky
e. David A. Siegel
f. R. Daniel Osborne
g. John E. Denson
h. James McDonnell
<PAGE>
16. Option Agreements, dated September 17, 1996, by and between Holdings and
each of Dr. Arthur B. Laffer and Mr. Stephen G. Cerri.
17. Grant of non-qualified options on August 8, 1996 to purchase up to 181,250
shares of Common Stock, par value $.01 per share pursuant to Borrower's
Second Amended and Restated 1996 Employee Stock Option Plan to certain
members of management and other employees of Borrower.
18. $21,794.96 Promissory Note, dated May 10, 1996, issued by Mitchell Blatt in
favor of Holdings together with the Stock Subscription Agreement, dated as
of May 10, 1996, by and between Blatt and Holdings in respect of the
purchase of 1,415 shares of Class B Common Stock, $.01 par value, of
Holdings
19. $9,226.28 Promissory Note, dated May 10, 1996, issued by Robert M. Doyle in
favor of Holdings together with the Stock Subscription Agreement, dated as
of May 10, 1996, by and between Doyle and Holdings in respect of the
purchase of 599 shares of Class B Common Stock, $.01 par value, of Holdings
20. $21,794.96 Promissory Note, dated May 10, 1996, issued by Stephen R.
Kerrigan in favor of Holdings together with the Stock Subscription
Agreement, dated as of May 10, 1996, by and between Kerrigan and Holdings
in respect of the purchase of 1,415 shares of Class B Common Stock, $.01
par value, of Holdings
21. Voting Agreement, dated as of July 23, 1996, by and among Holdings and the
shareholders of Holdings set forth on the signature pages thereto
22. Loan from Borrower to Stephen R. Kerrigan, dated August, 1996, in the
principal amount of $500,000.00
23. Loan from Borrower to Daniel Osborne, dated August, 1996, in the principal
amount of $50,000.00
24. Amendment to Investor Purchase Agreements, dated January, 1997, by and
among Holdings, GTCR, Borrower, Heller Financial, Inc., Jackson National
Life Insurance Company, individually and as successor by merger with
Jackson National Life Insurance Company of Michigan, President and Fellows
of Harvard College, James N. Chapman and Michael E. Marrus.
25. Amendment to Investor Purchase Agreements, dated January, 1997, by and
among Holdings, GTCR, Heller Financial, Inc., Jackson National Life
Insurance Company, individually and as successor by merger with Jackson
National Life Insurance Company of Michigan, President and Fellows of
Harvard College, MCS Capital, Inc., James N. Chapman, Michael E. Marrus,
Mitchell Blatt and Michael Stanky.
<PAGE>
EXHIBIT A
---------
[FORM OF NOTICE OF BORROWING]
_______________, 1997
Bankers Trust Company, as
Administrative Agent for the
Banks party to the
Credit Agreement
referred to below
One Bankers Trust Plaza
New York, New York 10006
Attention:
Gentlemen:
The undersigned, Coinmach Corporation (the "Borrower"), refers to the
Credit Agreement, dated as of January 8, 1997 (the "Credit Agreement", the terms
defined therein being used herein as therein defined), among Coinmach Laundry
Corporation, the Borrower, various Banks from time to time party thereto, First
Union National Bank of North Carolina, as Syndication Agent, Lehman Commercial
Paper, Inc., as Documentation Agent, and you, as Administrative Agent for such
Banks, and hereby gives you notice, irrevocably, pursuant to Section 1.03 of the
Credit Agreement, that the undersigned hereby requests a Borrowing under the
Credit Agreement, and in that connection sets forth below the information
relating to such Borrowing (the "Proposed Borrowing") as required by Section
1.03 of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________, 19__./1/
(ii) The aggregate principal amount of the Proposed Borrowing is
$___________.
(iii) The Proposed Borrowing is to consist of [Tranche A Term Loans]
[Tranche B Term Loans] [Revolving Loans].
- ----------
/1/ Shall be a Business Day at least three Business Days in the case of
Eurodollar Rate Loans after the date hereof.
<PAGE>
(iv) The Loans to be made pursuant to the Proposed Borrowing shall be
initially maintained as [Base Rate Loans] [Eurodollar Loans]./2/
(v) The initial Interest Period for the Proposed Borrowing is ___
month(s)./3/
The undersigned hereby certifies that the following statements are
true and correct on the date hereof, and will be true and correct on the date of
the Proposed Borrowing:
(A) the representations and warranties contained in the Credit
Documents are and will be true and correct in all material respects, both
before and after giving effect to the Proposed Borrowing and to the
application of the proceeds thereof, as though made on such date (it being
understood and agreed that any representation or warranty which by its
terms is made as of a specified date shall be required to be true and
correct in all material respects only as of such specified date); and
(B) no Default or Event of Default has occurred and is continuing, or
would result from such Proposed Borrowing or from the application of the
proceeds thereof.
Very truly yours,
COINMACH CORPORATION
By
----------------------------
Name:
Title:
- ----------
/2/ Eurodollar Loans may not be incurred prior to the earlier of (x) the 60th
day after the Initial Borrowing Date and (y) the Syndication Date.
/3/ To be included for a Proposed Borrowing of Eurodollar Loans.
<PAGE>
EXHIBIT B-1
Tranche A Term Notes
(See Exhibit 10.60 filed herewith)
<PAGE>
EXHIBIT B-2
Tranche B Term Notes
(See Exhibit 10.61 filed herewith)
<PAGE>
EXHIBIT B-3
Revolving Notes
(See Exhibit 10.62 filed herewith)
<PAGE>
EXHIBIT B-4
Swing Line Note
(See Exhibit 10.63 filed herewith)
<PAGE>
EXHIBIT C
---------
[FORM OF LETTER OF CREDIT REQUEST]
No. (1) Dated (2)
----- ---------
Bankers Trust Company, individually and as Administrative Agent
under the Credit Agreement (as amended, modified or supplemented from time
to time, the "Credit Agreement"), dated as of January 8, 1997, among
Coinmach Laundry Corporation, Coinmach Corporation, the Subsidiary
Guarantors named therein, the lenders from time to time party thereto,
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company,
as Administrative Agent
One Bankers Trust Plaza
New York, New York 10006
Dear Sirs:
We hereby request that [Name of Proposed Issuing Bank], in its
individual capacity, issue a [Standby] Letter of Credit for the account of the
undersigned on (3) (the "Date of Issuance") in the aggregate stated amount
-----
of (4) .
---------
For purposes of this Letter of Credit Request, unless otherwise
defined herein, all capitalized terms used herein which are defined in the
Credit Agreement shall have the respective meaning provided therein.
- ----------
(1) Letter of Credit Request Number.
(2) Date of Letter of Credit Request.
(3) Date of Issuance which shall be at least 2 Business Days (or, in each case
such shorter period as is acceptable to such Issuing Bank).
(4) Aggregate initial stated amount of Letter of Credit.
<PAGE>
The beneficiary of the requested Letter of Credit will be (5) ,
---------
and such Letter of Credit will be in support of (6) and will have a stated
-------
expiration date of (7) .
---------
We hereby certify that:
(1) The representations and warranties contained in the Credit
Documents will be true and correct in all material respects on the Date of
Issuance, both before and after giving effect to the issuance of the Letter
of Credit requested hereby (it being understood and agreed that any
representation or warranty which by its terms is made as of a specified
date shall be required to be true and correct in all material respects only
as of such specified date).
(2) No Default or Event of Default has occurred and is continuing
nor, after giving effect to the issuance of the Letter of Credit requested
hereby, would such a Default or Event of Default occur.
Copies of all documentation with respect to the supported transaction
are attached hereto.
COINMACH CORPORATION
By
------------------------------
Title:
- ----------
(5) Insert name and address of beneficiary.
(6) Insert description of L/C Supportable Indebtedness and describe obligation
to which it relates in the case of Standby Letters of Credit.
(7) Insert last date upon which drafts may be presented which may not be later
than 12 months after the Date of Issuance or 30 days prior to the Revolving
Loan Maturity Date, whichever is the earliest for Standby Letters of
Credit.
<PAGE>
EXHIBIT D
---------
[Form of Section 4.04(b)(ii) Certificate]
-----------------------------------------
Reference is hereby made to the Credit Agreement, dated as of January
8, 1997, among Coinmach Laundry Corporation, Coinmach Corporation, various
Banks, First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (the "Credit Agreement"). Pursuant to the provisions of
Section 4.04(b)(ii) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" as such term is used in Section 881(c)(3)(A) of the
Internal Revenue Code of 1986, as amended.
[NAME OF BANK]
By:
------------------------
Title:
<PAGE>
EXHIBIT E
January 8, 1997
To Bankers Trust Company, as Administrative Agent,
and each of the Banks party to the Credit Agreement
referred to below
c/o Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Re: Coinmach Corporation
--------------------
Ladies and Gentlemen:
We have acted as special counsel to Coinmach Corporation, a Delaware
corporation (the "Company"), and Coinmach Laundry Corporation, Delaware
-------
corporation ("CLC" together with the Company, the "Credit Parties"), in
--- --------------
connection with the negotiation, execution and delivery of, and the consummation
of the transactions contemplated by, that certain Credit Agreement, dated as of
even date herewith, among the Company, CLC, First Union National Bank of North
Carolina, as Syndication Agent, Lehman Commercial Paper, Inc., as Documentation
Agent, Bankers Trust Company, as Administrative Agent, and the Banks party
thereto (the "Credit Agreement"). Capitalized terms used herein without
----------------
definition shall have the meanings assigned to such terms in the Credit
Agreement.
Throughout this opinion, the term "Collateral" shall mean and refer
only to Collateral (as defined in the Credit Agreement), which Collateral is
located in the State of New York and is of a type in which a security interest
is perfected under the Uniform Commercial Code as enacted in the State of New
York (the "UCC") solely by filing a financing statement in the Filing Office (as
---
defined below), and shall not include fixtures of any kind or nature, any real
property, any patents, trademarks, copyrights or any other intellectual property
or the Securities (as defined in the Holdings Pledge Agreement and the Borrower
Pledge Agreement).
This opinion is delivered to each of you pursuant to Section 5.03 of
the Credit Agreement.
We have reviewed the Credit Agreement, the financing statements (the
"Financing Statements") to be filed by Agent (as defined below) in the Filing
- ---------------------
Office (as defined below), the
<PAGE>
January 8, 1997
Page 2
Notes, Security Agreement, Holdings Pledge Agreement, Borrower Pledge Agreement,
Assignment and Assumption Agreement, Collateral Assignment of Leases, and
Collateral Assignment of Location Leases, in each case, dated as of even date
herewith (collectively, the "Loan Documents").
--------------
We have also examined originals or copies, certified or otherwise,
identified to our satisfaction as being true copies, of Certificates of
Incorporation and bylaws of each of the Credit Parties and such certificates or
comparable documents of public officials and of officers and representatives of
each of the Credit Parties with respect to good standing or qualifications for
each of the Credit Parties, in each case in the respective states in which the
Credit Parties are qualified.
In our capacity as special counsel, we have made such legal and
factual examinations and inquiries, including an examination of originals or
copies certified to our satisfaction as being true copies, of such records,
documents or other instruments as in our judgment are necessary and appropriate
to enable us to render the opinions expressed below. We have also made such
inquiries of such officers and representatives as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
In rendering the opinions expressed below, we have been furnished
with, and, without independent investigation but with your consent have relied
upon, (i) certificates of officers, directors and representatives of the Credit
Parties with respect to certain factual matters, (ii) certificates, documents,
instruments and assurances of public officials as we have deemed appropriate or
advisable, and (iii) representations and warranties as to factual matters made
in the Loan Documents.
In addition, we have assumed, with your permission and without
independent verification:
(a) all signatures of all persons signing all documents in connection
with which this opinion is rendered are genuine and authorized (other than the
persons signing on behalf of the Credit Parties);
(b) all documents submitted to us as true copies, whether certified
or not, conform to authentic original documents;
(c) your corporate and regulatory power and authority to enter into
and perform your obligations relating to the Loan Documents to which you are a
party;
<PAGE>
January 8, 1997
Page 3
(d) the due authorization, execution and delivery by, and
enforceability against, you of the Loan Documents to which you are a party;
(e) each of the Credit Parties has "rights in the Collateral"
existing on the date hereof, as such phrase is used in Section 9-203(1)(c) of
the UCC, and will have rights in the Collateral arising after the date hereof;
(f) value (as defined in Section 1-201(44) of the UCC) has been given
by you to the Credit Parties for the security interests and other rights in and
assignments of Collateral and Securities described in or contemplated by the
Loan Documents; and
(g) the descriptions of Collateral in the Loan Documents reasonably
describe the property intended to be described as Collateral, and the
description of the Collateral in the Financing Statements is substantially the
same as that described in the applicable Loan Document, and the Holdings Pledge
Agreement and the Borrower Pledge Agreement accurately describe the Securities
pledged thereunder.
In rendering the opinions expressed below, we have made no independent
investigation with respect to any matter in connection with which we did not
represent the Credit Parties. Accordingly, any matter expressed as to our
knowledge is based solely on such actual knowledge as we have acquired in the
course of our representation of the Credit Parties. Our knowledge of the
business, records, transactions and activities of the Credit Parties is limited
to the information which has been brought to our attention by certificates
executed and delivered to us by officers of the Credit Parties in connection
with this opinion letter. Without limiting the generality of the foregoing, (i)
we have not made any search of the docket or other public records of any court
or administrative agency or governmental authority with respect to pending
suits, actions, claims, investigations, proceedings, orders or decrees or with
respect to assessments, or mortgages, and (ii) we have only made a search of the
public records with respect to security interests or encumbrances on personal
property in the jurisdictions and for the entities set forth on Schedule I
----------
attached hereto.
To render this opinion we have relied upon the actual knowledge of the
attorneys in our firm who have devoted substantive attention to the transactions
contemplated by the Loan Documents, and not to the knowledge of the firm
generally. All references in this opinion to the "knowledge" of this firm or
<PAGE>
January 8, 1997
Page 4
to matters with respect to which it is "aware" are subject to this limitation.
On the basis of and subject to the foregoing, and subject to the
limitations, qualifications, assumptions and exceptions hereinafter set forth,
we are of the opinion that as of the date hereof:
1. Each of the Credit Parties is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, except as set forth on Schedule II attached hereto.
-----------
2. Each of the Credit Parties has the corporate power and authority
to own, lease and operate its properties and conduct its business as presently
conducted.
3. Each of the Credit Parties has the corporate power and authority
to execute and deliver the Loan Documents to which each is a party, to perform
its respective obligations thereunder and to consummate the transactions
contemplated thereby. The execution, delivery and performance by each of the
Credit Parties of the Loan Documents to which it is a party and the consummation
by each such Credit Party of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of each such
Credit Party.
4. The Loan Documents have been duly and validly executed and
delivered by each of the Credit Parties party thereto, and assuming the due
authorization, execution and delivery of the Loan Documents by each of you, each
Loan Document constitutes a legal, valid and binding obligation of each
respective Credit Party party thereto enforceable against such Credit Party in
accordance with the terms thereof subject to the qualifications contained
herein.
5. The authorized, issued and outstanding capital stock of each of
the Credit Parties is as described on Schedule III attached hereto. All such
------------
issued and outstanding capital stock is validly issued, fully paid and
nonassessable.
6. To our knowledge, based solely upon the inquiries of officers of
the Credit Parties and other than as disclosed in the Loan Documents, there are
no judgments outstanding with respect to the Credit Parties nor is there now
pending any action, suit or proceeding before any court or any governmental or
regulatory authority with respect to the Credit Parties which would reasonably
be expected to result in any material adverse
<PAGE>
January 8, 1997
Page 5
change in the business or financial condition of the Credit Parties, taken as a
whole.
7. To our knowledge, no consent or waiver of, filing with,
authorization, approval or other action by any federal or New York State
governmental or regulatory authority, which has not already been obtained or
done (collectively, the "Consents"), is required in connection with the
--------
execution, delivery and performance by any Credit Party of any of the Loan
Documents to which such Credit Party is a party or the consummation by each
Credit Party of the transactions contemplated thereby or compliance by each
Credit Party with the provisions thereof pertaining to such party, except (i)
certain filings necessary to perfect the Liens of Bankers Trust Company, as
Administrative Agent, created by certain of the Loan Documents, (ii) those
required by federal and state securities and blue sky laws, as to which we
express no opinion, and (iii) for such Consents for which the failure to so do
or obtain would not have a material adverse effect on the business or financial
condition of the Credit Parties, taken as a whole.
8. The execution and delivery of the Loan Documents by each of the
Credit Parties to which it is a party and the consummation of the transactions
contemplated thereby will not: (a) violate any existing order or decree
applicable to any of the Credit Parties of any Federal or New York court or
governmental authority of which we are aware; (b) result in a breach or
violation of the certificates of incorporation or bylaws of each of the Credit
Parties as in effect on the date hereof; (c) to our knowledge, result in the
creation of any Lien on any of the Collateral, except as contemplated by the
Loan Documents or as otherwise disclosed on the schedules to the Credit
Agreement; or (d) to our knowledge, conflict with, constitute a default (with or
without notice or lapse of time or both) under, or result in a breach or
violation of the provisions of any material agreement under which any Credit
Party has incurred Indebtedness. In connection with the foregoing, we express
no opinion as to: (i) any agreement, the violation of which would not have any
material adverse effect on the Credit Parties, taken as a whole; (ii) any
agreement which might be violated by a misrepresentation or omission or a
fraudulent act; or (iii) any law, rule, order or agreement to which such Credit
Party may be subject as a result of your legal or regulatory status, the
syndication of Loans by you, or the involvement by you in any of the
transactions contemplated by the Loan Documents.
9. The Security Agreement creates a valid security interest for the
benefit of the secured parties named therein, in all of the Company's right,
title and interest in the Collateral
<PAGE>
January 8, 1997
Page 6
to the extent that a security interest therein can be created under Article 9 of
the UCC, and, to the extent provided in Section 9-306 of the UCC, all proceeds
thereof. Assuming that the Financing Statements as executed by the Credit
Parties have been duly filed in the office of the Secretary of State of the
State of New York (the "Filing Office") in the form reviewed by us, the security
-------------
interests of Bankers Trust Company, as Administrative Agent (the "Agent") on
-----
behalf of the Agents and Banks, in the Collateral, to the extent such Collateral
is located, or deemed located, in the State of New York, and based solely upon
the representations and warranties of each of the Credit Parties to us
concerning the nature and location of its assets and the location of its chief
executive office, will be perfected to the extent such security interests can be
perfected solely by filing a financing statement under the UCC, and, upon the
due filing thereof, no further filing of any document or instrument or other
action will be required to so perfect such security interests, except that:
(a) continuation statements with respect to each Financing
Statement must be filed within the period of six months prior to the
expiration of five years from the date of the original filings
thereof, and within like periods thereafter, in order to maintain the
effectiveness of such filings;
(b) additional filings may be necessary if either Credit Party
changes its name, identity, corporate structure or the jurisdiction in
which its places of business, its chief executive office or the
Collateral are located;
(c) we express no opinion as to the perfection of, or need for
further filings to perfect, such security interests in goods now or
hereafter located in any jurisdiction other than the jurisdictions in
which the Filing Office is located;
(d) although the filing of a UCC-1 Financing Statement will
perfect a security interest in chattel paper and instruments, the
perfected security interest therein is subject to the rights of
subsequent holders or purchasers (including secured parties) without
actual knowledge of Agent's security interest as provided in Sections
9-308 and 9-309 of the UCC;
(e) a perfected security interest in Collateral located in one
state may become unperfected:
<PAGE>
January 8, 1997
Page 7
(i) if the Collateral is removed from such state, and
appropriate steps are not taken by Agent in a timely fashion in
such other jurisdiction to which such Collateral is moved; or
(ii) if the Financing Statements become misleading, and
appropriate steps are not taken by Agent in a timely fashion to
file new Financing Statements or amendments thereto;
(f) the Agent's security interest, to the extent it secures
future advances, may be subject to the prior rights of a lien creditor
pursuant to Section 9-301(4) of the UCC;
(g) as provided in Sections 9-312 and 9-313 of the UCC, holders
of purchase money security interests created after the date hereof may
have rights in the Collateral subject thereto superior to Agent's
rights under certain circumstances;
(h) as provided in Section 9-310 of the UCC, persons who provide
materials or services with respect to the Collateral on or after the
date hereof may under certain circumstances obtain liens on such
Collateral prior to Agent's;
(i) the Agent's security interest in accessions and products is
subject to the limitations set forth in Sections 9-313, 9-314 and 9-
315 of the UCC;
(j) as provided in Section 9-318 of the UCC, the Collateral may
be subject to any rights, defenses or claims of an account debtor to
which the rights of an assignee would be subject; and
(k) the perfection of the Agent's security interests in the
Collateral will be terminated as to Collateral disposed of by the
Credit Parties in a manner authorized by Agent in the Credit Agreement
or otherwise.
10. Assuming (a) the continued exclusive possession within the State
of New York by the Agent ("Pledgee") of all stock certificates (the "Pledged
------- -------
Shares") listed on Part I of Annex A to each of the Holdings Pledge Agreement
- ------
and the Borrower Pledge Agreement (each a "Pledge Agreement"), each of which
----------------
Pledge Agreement was executed pursuant to the Credit Agreement, together with
stock powers properly executed in blank with
<PAGE>
January 8, 1997
Page 8
respect thereto and (b) that the Pledgee was without notice of any adverse claim
(as such term is used in Section 8-302 of the UCC) with respect to the Pledged
Shares, the Holdings Pledge Agreement and the Borrower Pledge Agreement,
together with the delivery of the certificates representing the Pledged Shares
thereunder to Agent in the State of New York, creates in Agent's favor a
perfected security interest under the UCC in such Pledged Shares. Assuming
Agent acquired Agent's interest in such Pledged Shares in good faith and without
notice of any adverse claims and that each such certificate is either in bearer
or registered form issued or endorsed in Agent's name or in blank, Agent will
acquire Agent's security interest in such Pledged Shares free of adverse claims.
Our opinions set forth above are subject to the following additional
qualifications:
(a) we express no opinion as to, or the effect or applicability
of, any laws other than the laws of the State of New York, the Federal
law of the United States of America and the General Corporation Law of
the State of Delaware; further, our security interest opinions in
paragraphs 9 and 10 are limited to Articles 8 and 9 of the UCC, and
therefore those opinion paragraphs do not address (i) laws of
jurisdictions other than that of the State of New York, except for
Articles 8 and 9 of the UCC, and (ii) collateral of a type not subject
to Articles 8 and 9 of the UCC, and (iii) under Section 9-103 of the
UCC what law governs perfection of the security interests granted in
the Collateral covered herein. We assume no responsibility with
respect to the application to the subject transactions, or the effect
thereon, of the laws of any other jurisdiction;
(b) we express no opinion regarding the perfection of security
interests with respect to collateral or transactions which are
excluded from Article 9 of the UCC, subject to opinion paragraph 10
above, including, without limitation, any item or transaction excluded
from the coverage of the UCC by Section 9-104 thereof;
(c) we express no opinion with respect to the perfection of any
security interests in any accounts, chattel paper, documents,
instruments or general intangibles with respect to which the account
debtor or obligor is the United States of America, any state, county,
city, municipality or other governmental body, or any department,
agency or instrumentality thereof,
<PAGE>
January 8, 1997
Page 9
unless the same has been assigned to Agent pursuant to the Assignment
of Claims Act of 1940, as amended, and all similar laws and
regulations relating to the assignment or pledge thereof;
(d) with respect to opinion paragraphs 4, 9 and 10, our opinion
is subject to the effect of bankruptcy, insolvency, reorganization,
arrangements for the benefit of creditors and remedies, preferential
transfer, moratorium, fraudulent conveyance or other similar laws and
rules, whether now or hereafter in effect, relating to or affecting
creditors and remedies generally or the effects of general principles
of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforceability thereof
is considered in a proceeding in equity or law), and except to the
extent that rights to indemnification hereunder may be limited by
federal or state securities laws or public policy relating thereto,
and by the discretion of the court before which any proceeding
therefor may be brought, including, without limitation, the effect of
such laws and rules, general principles or court discretion on the
legality, validity or enforceability of a guaranty of a subsidiary of
the obligations of its parent;
(e) any purported assignment of, or any transfer of any interest
in, any agreement, lease or governmental or regulatory approval,
license or permit may be subject to restrictions upon assignment or
transfer which, although not necessarily applicable to assignments
intended as security, will be required to be satisfied before Agent or
Agent's successor(s) or assign(s) will be treated as an assignee
thereof, except to the extent that consents to or approvals of such
assignment have been obtained from the appropriate governmental or
regulatory body or third party;
(f) we express no opinion with respect to the priority of any
Lien, the existence of any of the Collateral or other property of the
Credit Parties or the validity or condition of the title of the Credit
Parties thereto;
(g) our opinions are limited to the specific issues addressed
herein and are limited in all respects to laws and facts existing on
the date hereof, and, by rendering our opinion, we do not undertake to
advise
<PAGE>
January 8, 1997
Page 10
Agent of any changes in such laws or facts which may occur after the
date hereof;
(h) that Agent retain exclusive possession of the Securities
under the Holdings Pledge Agreement and the Borrower Pledge Agreement
(as defined in such agreements) at all times; as to any hereafter-
arising Securities thereunder as to which the UCC requires possession
in order to perfect Agent's security interest therein, that Agent are
in exclusive possession thereof at the time that Agent's security
interest therein attaches; the Pledged Shares are "certificated
securities" (as defined in Section 8-102(1)(a) of the UCC) and none of
the Pledged Shares now owned or hereafter arising are "uncertificated
securities" (as defined in Section 8-102(1)(b) of the UCC); when Agent
takes possession of any portion of such Securities which constitutes a
"security" (as defined by Section 8-102(1)(a) of the UCC) Agent shall
be a "bona fide purchaser" (as defined in Section 8-302(1) of the UCC)
---- ----
of the security; Section 8-302(4) of the UCC is inapplicable to Agent;
and further, the perfected security interest in the Securities is
subject to the rights of subsequent holders or purchasers (including
secured parties) as provided in Sections 8-301 and 8-302 of the UCC;
(i) we express no opinion as to the enforceability of provisions:
(i) to the effect that failure to exercise or delay in
exercising a right or remedy will not operate as a waiver of the right
or remedy;
(ii) indemnifying or prospectively releasing a creditor
against liability for its own wrongful or negligent acts or where the
release or indemnification is contrary to public policy;
(iii) purporting to preclude the modification of the Loan
Documents or any of the other agreements through conduct, custom, or
course of performance, action, or dealing;
(iv) requiring the payment or reimbursement of fees, costs,
expenses, or other amounts without regard to whether they are
reasonable in nature or amount;
<PAGE>
January 8, 1997
Page 11
(v) respecting various self-help or summary remedies,
particularly if their operation would work a substantial forfeiture,
impose a substantial penalty upon the burdened party, or result in a
breach of the peace, or which permit the appointment of a receiver
without notice and an opportunity for a hearing; and
(vi) due-on-lease, due-on-encumbrance, or due-on-sale
clauses;
(j) we express no opinion regarding the effect of statutory
rights of debtors to reinstate, redeem or cure defaults;
(k) with respect to the guaranty by Holdings as set forth in
Section 14 of the Credit Agreement (each a "Guaranty"), we express no
--------
opinion as to: (i) the effect of any failure to provide a guarantor
under the Loan Documents with written notice of any default under the
Loan Documents that would require a payment under the Loan Documents
and with an opportunity to cure the default; (ii) the effect of any
modification or amendments to the Notes or Credit Agreement that
materially affects a guarantor's obligations without the consent of
any guarantor under the Credit Agreement; or (iii) the possible
ineffectiveness of any waiver under a Guaranty that is too vague;
(l) with respect to each Guaranty our opinion is limited by the
substantial body of case law which treats guarantors as "debtors"
under the UCC thereby affording guarantors rights and remedies of
debtors established by the UCC; additionally, we express no opinion as
to the enforceability of guaranties by subsidiaries of parent
obligations or of cross-corporate guaranties by guarantors of common
corporate parents and the limiting effect of the substantial body of
case law with respect to such matters;
(m) since there has been no filing of the Collateral Assignment
of Leases and the Collateral Assignment of Location Leases, we express
no opinion as the perfection of any security interests or liens on the
leases subject to the Collateral Assignment of Leases or the location
contracts subject to the Collateral Assignment of Location Leases;
(n) to the extent the parties to the Credit Agreement have agreed
not to file a Financing Statement
<PAGE>
January 8, 1997
Page 12
in a certain location, we express no opinion as the perfection of any
security interests or liens on the Collateral located in such
location; and
(o) with respect to (i) federal tax liens accorded priority under
law and (ii) liens created under Title IV of the Employee Retirement
Income Security Act of 1974 which are properly filed after the date
hereof, we express no opinion as to the relative priority of such
liens and the security interests created by the Loan Documents;
(p) with respect to any claim (including for taxes) in favor of
any state or any of its respective agencies, authorities,
municipalities or political subdivisions which claim is given lien
status and/or priority under any law of such state, we express no
opinion as to the relative priority of such liens and the security
interests created by the Loan Documents;
(q) Agent's security interest in the "proceeds" of the Collateral
is subject to the limitations set forth in Sections 9-306 and 8-321(1)
of the UCC;
(r) as provided in Sections 8-301, 8-302, 9-306, 9-307, 9-308 and
9-309 of the UCC, buyers and purchasers of the Collateral may, in
certain circumstances, acquire the Collateral free of Agent's security
interest;
(s) Agent's security interest relating to the time of attachment
and perfection of a security interest in the items of Collateral in
which each Credit Party does not now have rights and of which it does
not now have possession is limited by Section 9-204 of the UCC; and
(t) Agent's security interest with respect to any Collateral
acquired by either Credit Party subsequent to the commencement of a
case against either Credit Party under Title 11 of the United States
Code is limited by Section 552 of such Code.
Additionally, the opinions expressed herein are qualified to the
extent that enforceability of any of the terms of the Loan Documents may be
limited by or otherwise affected by:
(a) compliance with, and limitations imposed by, procedural
requirements relating to the exercise of
<PAGE>
January 8, 1997
Page 13
remedies by Agent, but which requirements do not in our opinion make
Agent's remedies inadequate for the practical realization of the
benefits intended to be provided thereby;
(b) provisions of applicable law limiting a person's right to
waive the benefits or vary provisions of law, rules or regulations or
at common law; and
(c) limitations on the rights of a creditor to exercise rights
and remedies or impose penalties if it is determined that the defaults
are not material or the penalties bear no reasonable relation to the
damage suffered as a result of delinquencies or defaults or a
creditor's enforcement of covenants or provisions under circumstances
which would violate such creditor's implied covenant of good faith and
fair dealing.
This opinion is being issued to Agent for Agent's exclusive benefit
and is intended to be relied upon by Agent in connection with the transactions
contemplated by the Credit Agreement. This opinion may not be used for any
other purpose, or relied on by any other person, firm or entity, without our
express written consent.
Very truly yours,
ANDERSON KILL & OLICK, P.C.
By: ________________________________
Steven M. Manket, Esq.,
a Member of the Firm
<PAGE>
SCHEDULE I
UCC FINANCING STATEMENT SEARCHES
1. COINMACH CORPORATION
--------------------
Alabama - Secretary of State
Baldwin
Mobile
Montgomery
Russell
Arkansas - Secretary of State
Chicot
Desha
Lincoln
Jefferson
Connecticut - Secretary of State
Bridgeport
Stamford
Hamden
New Haven
District of Columbia
Delaware - Secretary of State
Kent
New Castle
Sussex
Florida - Secretary of State
Broward
Dade
Duval
Orange
Georgia - Cobb
Dodge
Fulton
Richmond
Illinois - Secretary of State
Champaign
Jackson
Macon
St. Clair
Indiana - Secretary of State
Marion
Iowa - Secretary of State
Iowa
<PAGE>
Linn
Polk
Scott
Kansas - Secretary of State
Atchison
Douglas
Johnson
Riley
Kentucky - Secretary of State
Bell
Whitley
Louisiana - East Baton Rouge
Jefferson
Lafayette
Orleans
St. Mary
Maryland - Secretary of State
Anne Arundel
Baltimore
Howard
Montgomery
Prince George's
Michigan - Secretary of State
Mississippi - Secretary of State
Harrison (1st and 2nd District)
Hinds
Jackson
Washington
Missouri - Secretary of State
St. Louis
Nebraska - Secretary of State
Douglas
Sarpy
New Jersey - Secretary of State
Atlantic
Camden
Cape May
Salem
<PAGE>
New York - Secretary of State
Bronx
Kings
New York
Queens
North Carolina - Secretary of State
Durham
Halifax
Mecklenberg
Wake
Ohio - Secretary of State
Cuyahoga
Lucas
Oklahoma - Oklahoma County Clerk
Pennsylvania - Secretary of the Commonwealth
Chester
Dauphin
Montgomery
Philadelphia
South Carolina - Secretary of State
Charleston
Greenville
Richland
Spartanburg
South Dakota - Secretary of State
Clay
Lincoln
Minnehaha
Tennessee - Secretary of State
Hamilton
Knox
Sullivan
Washington
Texas - Secretary of State
Dallas
Harris
Jefferson
Tarrant
Virginia - Secretary of State
Alexandria City
Fairfax
Norfolk City
Virginia Beach
<PAGE>
West Virginia - Secretary of State
Berkeley
Mercer
Mineral
Wisconsin - Secretary of State
Milwaukee
2. SOLON AUTOMATED SERVICES, INC.
-----------------------------
Alabama - Secretary of State
Baldwin
Mobile
Montgomery
Russell
Arizona - Secretary of State
Maricopa
Arkansas - Secretary of State
Chicot
Desha
Lincoln
Jefferson
California - Secretary of State
Los Angeles
Orange
San Diego
San Mateo
Connecticut - Secretary of State
Bridgeport
Stamford
Hamden
New Haven
District of Columbia
Delaware - Secretary of State
Kent
New Castle
Sussex
Florida - Secretary of State
Broward
Dade
Duval
Orange
Georgia - Cobb
Dodge
Fulton
Richmond
<PAGE>
Kentucky - Secretary of State
Bell
Whitley
Louisiana - East Baton Rouge
Jefferson
Lafayette
Orleans
Maryland - Secretary of State
Anne Arundel
Baltimore
Howard
Montgomery
Prince George's
Minnesota - Secretary of State
Hennepin
Ramsey
Mississippi - Secretary of State
Harrison
Hinds
Jackson
Washington
New Jersey - Secretary of State
Atlantic
Camden
Cape May
Salem
New York - Secretary of State
Bronx
Kings
New York
Queens
North Carolina - Secretary of State
Durham
Halifax
Mecklenberg
Wake
Ohio - Cuyoga
Lucas
Oklahoma - Oklahoma County Clerk
Pennsylvania - Secretary of the Commonwealth
Chester
Dauphin
Montgomery
Philadelphia
<PAGE>
South Carolina - Secretary of State
Charleston
Greenville
Richland
Spartanburg
Tennessee - Secretary of State
Hamilton
Knox
Sullivan
Washington
Texas - Secretary of State
Dallas
Harris
Jefferson
Tarrant
Virginia - Secretary of State
Alexandria City
Fairfax
Norfolk City
Virginia Beach
West Virginia - Secretary of State
Berkeley
Mercer
Mineral
3. ALLIED LAUNDRY EQUIPMENT COMPANY
--------------------------------
Illinois - Secretary of State
Champaign
Jackson
Macon
St. Clair
Indiana - Secretary of State
Marion
Iowa - Secretary of State
Iowa
Linn
Polk
Scott
Kansas - Secretary of State
Atchison
Douglas
Johnson
Riley
<PAGE>
Kentucky - Secretary of State
Bell
Whitley
Michigan - Secretary of State
Missouri - Secretary of State
St. Louis
Nebraska - Secretary of State
Douglas
Sarpy
Ohio - Secretary of State
Cuyahoga
Lucas
South Dakota - Secretary of State
Clay
Lincoln
Minnehaha
Tennessee - Secretary of State
Hamilton
Knox
Sullivan
Washington
Wisconsin - Secretary of State
Milwaukee
4. HI-RISE LAUNDRY EQUIPMENT COMPANY
---------------------------------
New York - Secretary of State
Nassau
5. COINMACH LAUNDRY CORPORATION
----------------------------
Delaware - Secretary of State
New York - Secretary of State
Nassau
6. GRAND WASH & DRY LAUNDERETTE, INC.
----------------------------------
New York - Secretary of State
Nassau
7. SUPER LAUNDRY EQUIPMENT CORP.
-----------------------------
<PAGE>
New York - Secretary of State
Nassau
Connecticut - Secretary of State
Maryland - Secretary of State
Baltimore
Carroll
Howard
New Jersey - Secretary of State
8. WASCO LAUNDRY EQUIPMENT COMPANY
-------------------------------
New Jersey - Secretary of State
New York - Secretary of State
Nassau
9. LUCA LAUNDRY EQUIPMENT COMPANY
------------------------------
New York - Secretary of State
Nassau
10. WASHRITE COMPANY
----------------
New York - Secretary of State
Dutchess
Rockland
New Jersey - Secretary of State
Bergen
Hudson
Connecticut - Secretary of State
Town of Fair Haven
11. JEFFREY ERNST (INDIVIDUAL)
--------------------------
New York - Secretary of State
Dutchess
Rockland
New Jersey - Secretary of State
Bergen
Hudson
Connecticut - Secretary of State
Town of Fair Haven
<PAGE>
12. KWL, INC.
---------
Nevada - Secretary of State
13. KWIK WASH LAUNDRIES (INC OR L.P.)
---------------------------------
Nevada - Secretary of State
Arkansas - Secretary of State
Craighead
Garland
Miller
Pulaski
Louisiana - Caddo
Calcasieu
East Baton Rouge
Jefferson
Mississippi - Secretary of State
Hancock
Jackson
Pearl River
Warren
Oklahoma County Clerk
Texas - Secretary of State
Bexar
Dallas
Harris County
Travis
<PAGE>
SCHEDULE II
Coinmach Corporation is not is good standing in the following states: New Jersey
and West Virginia.
<PAGE>
SCHEDULE III
CAPITALIZATION
1. The authorized capital stock of CLC consists of 15,000,000 shares of Class
A Common Stock, par value $.01 per share (the "CLC Class A Common Stock"),
1,000,000 shares of Class B Common Stock, par value $.01 per share (the "CLC
Class B Common Stock"), and 1,000,000 shares of series preferred stock, par
value $.01 per share, of which 1,000 shares have been designated "Series A
Preferred Stock" (the "CLC Preferred Stock"). As of the date hereof, there are
10,004,278 shares of Class A Common Stock issued and outstanding, 480,648 shares
of Class B Common Stock issued and outstanding, and no shares of CLC Preferred
Stock issued and outstanding.
2. The authorized capital stock of the Company consists of 1,000 shares of
common stock, par value $.01 per share (the "Company Common Stock"). As of the
date hereof, there are 100 shares of Company Common Stock issued and
outstanding.
<PAGE>
EXHIBIT F
OFFICER'S CERTIFICATE
---------------------
OF
COINMACH LAUNDRY CORPORATION
The undersigned, being the duly appointed and serving Senior Vice
President of Coinmach Laundry Corporation, a Delaware Corporation (the
"Corporation"), does hereby certify as follows:
- ------------
1. Attached hereto as Exhibit A is a true, correct and complete copy
---------
of the Third Amended and Restated Certificate of Incorporation and any
additional amendments (collectively, the "Certificates") of the Corporation as
------------
in effect on the date hereof. Such Certificates have not been amended, altered
or repealed and remain in full force and effect as of the date hereof.
2. Attached hereto as Exhibit B is a true, correct and complete copy
---------
of the Corporation's Bylaws. Such Bylaws have not been amended, altered or
repealed and remain in full force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete copy
---------
of resolutions duly adopted by a unanimous written consent of the Board of
Directors of the Corporation as of January __, 1997. Such resolutions have not
been amended, altered or repealed and remain in full force and effect as of the
date hereof.
4. Each of the persons set forth below are the duly elected and
qualified incumbents in the offices set forth below opposite his name and has
been and is duly authorized by the Board of Directors of the Corporation, in
conformity with the Corporation's Certificates and Bylaws, to execute, deliver
and perform all acts required by any certificate, instruction, notice or other
instrument, or to give oral instruction on behalf of the Corporation, including
without limitation, all Credit Documents to which the Corporation is a party (as
such term is defined in the Credit Agreement, dated as of January __, 1997, by
and among the Corporation, Coinmach Corporation, the Subsidiary Guarantors named
therein, the Banks listed therein, Bankers Trust Company, as Administrative
Agent, First Union National Bank of North Carolina, as Syndication Agent, and
Lehman Commercial Paper, Inc., as Documentation Agent) and all Transaction
Documents to which the Corporation is a party (as such term is defined in the
Stock Purchase Agreement, dated November 25, 1996, by and among each of the
parties listed on Schedule A attached thereto, KWL, Inc., Kwik-Wash Laundries,
Inc., Kwik Wash Laundries, L.P. and Coinmach Corporation), and the signatures
set forth opposite their names on any such documents are their authentic and
genuine signatures.
<TABLE>
<CAPTION>
Name Office Signature
- -------------------------- --------------------------- ---------
<S> <C> <C>
Stephen R. Kerrigan Chairman of the Board ____________________
and Chief Executive Officer
Mitchell Blatt President and Chief ____________________
Operating Officer
</TABLE>
<PAGE>
Robert M. Doyle Senior Vice President, __________________________
Chief Financial Officer,
Treasurer and Secretary
John E. Denson Senior Vice President __________________________
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Officer's Certificate as of the ___ day of ___________, 199_.
________________________________
John E. Denson
Senior Vice President
I, Robert M. Doyle, Secretary of Coinmach Laundry Corporation, a
Delaware corporation (the "Corporation"), certify that John E. Denson is the
duly appointed and acting Senior Vice President of the Corporation and that his
signature above is genuine.
_________________________
Robert M. Doyle
Secretary
<PAGE>
OFFICER'S CERTIFICATE
OF
COINMACH CORPORATION
The undersigned, being the duly appointed and serving Senior Vice
President of Coinmach Corporation, a Delaware Corporation (the "Corporation"),
-----------
does hereby certify as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy
---------
of the Restated Certificate of Incorporation and any additional amendments
(collectively, the "Certificates") of the Corporation as in effect on the date
------------
hereof. Such Certificates have not been amended, altered or repealed and remain
in full force and effect as of the date hereof.
2. Attached hereto as Exhibit B is a true, correct and complete copy
---------
of the Corporation's Bylaws. Such Bylaws have not been amended, altered or
repealed and remain in full force and effect as of the date hereof.
3. Attached hereto as Exhibit C is a true, correct and complete copy
---------
of resolutions duly adopted by a unanimous written consent of the Board of
Directors of the Corporation as of January __, 1997. Such resolutions have not
been amended, altered or repealed and remain in full force and effect as of the
date hereof.
4. Each of the persons set forth below are the duly elected and
qualified incumbents in the offices set forth below opposite his name and has
been and is duly authorized by the Board of Directors of the Corporation, in
conformity with the Corporation's Certificates and Bylaws, to execute, deliver
and perform all acts required by any certificate, instruction, notice or other
instrument, or to give oral instruction on behalf of the Corporation, including
without limitation, all Credit Documents to which the Corporation is a party (as
such term is defined in the Credit Agreement, dated as of January __, 1997, by
and among the Corporation, Coinmach Laundry Corporation, the Subsidiary
Guarantors named therein, the Banks listed therein, Bankers Trust Company, as
Administrative Agent, First Union National Bank of North Carolina, as
Syndication Agent, and Lehman Commercial Paper, Inc., as Documentation Agent)
and all Transaction Documents to which the Corporation is a party (as such term
is defined in the Stock Purchase Agreement, dated November 25, 1996, by and
among each of the parties listed on Schedule A attached thereto, KWL, Inc.,
Kwik-Wash Laundries, Inc., Kwik Wash Laundries, L.P. and the Corporation), and
the signatures set forth opposite their names on any such documents are their
authentic and genuine signatures.
<TABLE>
<CAPTION>
Name Office Signature
- -------------------------- --------------------------- ---------
<S> <C> <C>
Stephen R. Kerrigan Chairman of the Board ____________________
and Chief Executive Officer
Mitchell Blatt President and Chief ____________________
Operating Officer
</TABLE>
<PAGE>
Robert M. Doyle Senior Vice President, __________________________
Chief Financial Officer,
Treasurer and Secretary
John E. Denson Senior Vice President __________________________
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Officer's Certificate as of the ___ day of ___________, 199_.
________________________________
John E. Denson
Senior Vice President
I, Robert M. Doyle, Secretary of Coinmach Corporation, a Delaware
corporation (the "Corporation"), certify that John E. Denson is the duly
appointed and acting Senior Vice President of the Corporation and that his
signature above is genuine.
_________________________
Robert M. Doyle
Secretary
<PAGE>
EXHIBIT G
---------
[FORM OF INTERCOMPANY NOTE]
---------------------------
New York, New York
, 1997
FOR VALUE RECEIVED, [Name of Subsidiary] (the "Borrower"), hereby
promises to pay on demand to the order of Coinmach Corporation or its assigns
(the "Payee"), in lawful money of the United States of America in immediately
available funds, at such location in the United States of America as the Payee
shall from time to time designate, the unpaid principal amount of all loans and
advances made by the Payee to the Borrower.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
such rate per annum as shall be agreed upon from time to time by the Borrower
and Payee.
Upon the commencement of any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar proceeding of any jurisdiction relating to the Borrower, the unpaid
principal amount hereof shall become immediately due and payable without
presentment, demand, protest or notice of any kind in connection with this Note.
This Note evidences certain permitted intercompany Indebtedness
referred to in the Credit Agreement, dated as of January 8, 1997, among Coinmach
Laundry Corporation, the Payee, the Subsidiary Guarantors named therein, various
banks, First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as amended, modified or supplemented from time to time,
the "Credit Agreement"), and is subject to the terms thereof, and shall be
pledged by the Payee pursuant to the Security Documents (as defined in the
Credit Agreement). The Borrower hereby acknowledges and agrees that the
Collateral Agent pursuant to and as defined in the Security Documents, as in
effect from time to time, may exercise all rights provided therein with respect
to this Note.
The Payee is hereby authorized to record all loans and advances made
by it to the Borrower (all of which shall be evidenced by this Note), and all
repayments or prepayments thereof, in its books and records, such books and
records constituting prima facie evidence of the accuracy of the information
contained therein.
<PAGE>
EXHIBIT G
Page 2
All payments under this Note shall be made without offset,
counterclaim or deduction of any kind.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
[NAME OF SUBSIDIARY]
By___________________________
Title:
COINMACH CORPORATION
By_________________________
Title:
Pay to the order of
___________________________
<PAGE>
EXHIBIT H
---------
[FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT]
Date _______, 19__
Reference is made to the Credit Agreement described in Item 2 of Annex
I hereto (as such Credit Agreement may hereafter be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Unless defined
in Annex I hereto, terms defined in the Credit Agreement are used herein as
therein defined. ___________ (the "Assignor") and __________ (the "Assignee")
hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee without
recourse and without representation or warranty (other than as expressly
provided herein), and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and obligations
under the Credit Agreement as of the date hereof which represents the percentage
interest specified in Item 4 of Annex I hereto (the "Assigned Share") of all of
the outstanding rights and obligations under the Credit Agreement relating to
the facilities listed in Item 4 of Annex I hereto, including, without
limitation, [(v) in the case of any assignment of all or any portion of the
Total Tranche A Term Loan Commitment, all rights and obligations with respect to
the Assigned Share of such Total Tranche A Term Loan Commitment,]/1/ [(w) in the
case of any assignment of all or any portion of the Total Tranche B Term Loan
Commitment, all rights and obligations with respect to the Assigned Share of
such Total Tranche B Term Loan Commitment,]/2/ (x) in the case of any assignment
of outstanding Tranche A Term Loans, all rights and obligations with respect to
the Assigned Share of such Tranche A Term Loans, (y) in the case of any
assignment of outstanding Tranche B Term Loans, all rights and obligations with
respect to the Assigned Share of such outstanding Tranche B Term Loans and (z)
in the case of any assignment of all or any portion of the Total Revolving Loan
Commitment, all rights and obligations with respect to the Assigned Share of
such Total Revolving Loan Commitment and of any outstanding Revolving Loans and
Letters of Credit. After giving effect to such sale and assignment, the
Assignee's Revolving Loan Commitment[, Tranche A Term
- ----------
/1/ Delete bracketed language in Assignment and Assumption Agreements executed
after the termination of the Total Tranche A Term Loan Commitment.
/2/ Delete bracketed language in Assignment and Assumption Agreements executed
after the termination of the Total Tranche B Term Loan Commitment.
<PAGE>
EXHIBIT H
Page 2
Loan Commitment]/3/ [, Tranche B Term Loan Commitment]/4/ and the amount of the
outstanding Term Loans owing to the Assignee will be as set forth in Item 4 of
Annex I hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) 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 the other Credit Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or the
other Credit Documents or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or the performance or observance by the Borrower or any of its
Subsidiaries of any of their obligations under the Credit Agreement or the other
Credit Documents to which they are a party or any other instrument or document
furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of the
Credit Agreement and the other Credit Documents, together with copies of the
financial statements referred to therein and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Assumption Agreement; (ii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other Bank 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; (iii) confirms that it is an
Eligible Transferee under Section [13.04(b)] of the Credit Agreement; (iv)
appoints and authorizes the Agent and the Collateral Agent to take such action
as agent on its behalf and to exercise such powers under the Credit Agreement
and the other Credit Documents as are delegated to the Agent and the Collateral
Agent, as the case may be, by the terms thereof, together with such powers as
are reasonably incidental thereto; [and] (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank[; and (vi) to the
extent legally entitled to do so, attaches the forms described in Section
13.04(b) of the Credit Agreement]/5/.
- ----------
/3/ Delete bracketed language in Assignment and Assumption Agreements executed
after the termination of the Total Tranche A Term Loan Commitment.
/4/ Delete bracketed language in Assignment and Assumption Agreements executed
after the termination of the Total Tranche B Term Loan Commitment.
/5/ Include if the Assignee is organized under the laws of a jurisdiction
outside of the United States.
<PAGE>
EXHIBIT H
Page 3
4. Following the execution of this Assignment and Assumption
Agreement by the Assignor and the Assignee, an executed original hereof
(together with all attachments) will be delivered to the Agent. The effective
date of this Assignment and Assumption Agreement shall be the date of execution
hereof by the Assignor and the Assignee and the receipt of the consent of the
Agent and the Borrower to the extent required by Section 13.04(b) of the Credit
Agreement and receipt by the Agent of the administrative fee referred to in such
Section 13.04(b), unless otherwise specified in Item 5 of Annex I hereto (the
"Settlement Date").
5. Upon the delivery of a fully executed original hereof to the
Agent, as of the Settlement Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and Assumption
Agreement, have the rights and obligations of a Bank thereunder and under the
other Credit Documents and (ii) the Assignor shall, to the extent provided in
this Assignment and Assumption Agreement, relinquish its rights and be released
from its obligations under the Credit Agreement and the other Credit Documents,
provided that all indemnities of the Credit Parties under the Credit Agreement
and the other Credit Documents for the benefit of the Assignor shall survive in
accordance with the terms thereof.
6. It is agreed that the Assignee shall be entitled to (x) all
interest on the Assigned Share of the Loans at the rates specified in Item 6 of
Annex I; (y) all Commitment Commission (if applicable) on the Assigned Share of
the Total Revolving Loan Commitment, Total Tranche A Term Loan Commitment and/or
Total Tranche B Term Loan Commitment (if not theretofore terminated) at the rate
specified in Item 7 of Annex I hereto; and (z) all Letter of Credit Fees (if
applicable) on the Assignee's participation in all Letters of Credit at the rate
specified in Item 8 of Annex I hereto, which, in each case, accrue on and after
the Settlement Date, such interest and, if applicable, Commitment Commission and
Letter of Credit Fees, to be paid by the Agent directly to the Assignee. It is
further agreed that all payments of principal made on the Assigned Share of the
Loans which occur on and after the Settlement Date will be paid directly by the
Agent to the Assignee. Upon the Settlement Date, the Assignee shall pay to the
Assignor an amount specified by the Assignor in writing which represents the
Assigned Share of the principal amount of the respective Loans made by the
Assignor pursuant to the Credit Agreement which are outstanding on the
Settlement Date, net of any closing costs, and which are being assigned
hereunder. The Assignor and the Assignee shall make all appropriate adjustments
in payments under the Credit Agreement for periods prior to the Settlement Date
directly between themselves.
<PAGE>
EXHIBIT H
Page 4
7. THIS ASSIGNMENT AND ASSUMPTION AGREEMENT 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 their duly
authorized officers to execute and deliver this Assignment and Assumption
Agreement, as of the date first above written, such execution also being made
on Annex I hereto.
Accepted this 8th day [NAME OF ASSIGNOR]
of January, 1997 as Assignor
By_____________________________
Title:
[NAME OF ASSIGNEE]
as Assignee
By_____________________________
Title:
[Acknowledged and Agreed:
BANKERS TRUST COMPANY, as Agent]
By________________________
Title:/6/
- ----------
/6/ The consent of Bankers Trust Company is required for assignments pursuant
to Section 13.04(b)(y) of the Credit Agreement.
<PAGE>
ANNEX FOR ASSIGNMENT AND ASSUMPTION AGREEMENT
ANNEX I
1. Borrower: Coinmach Corporation
2. Name and Date of Credit Agreement:
Credit Agreement, dated as of January 8, 1997, among Coinmach Laundry
Corporation, Coinmach Corporation, the Subsidiary Guarantors named therein,
various Banks from time to time party thereto, First Union National Bank of
North Carolina, as Syndication Agent, Lehman Commercial Paper, Inc., as
Documentation Agent, and Bankers Trust Company, as Administrative Agent, as
amended to the date hereof.
3. Date of Assignment Agreement:
4. Amounts (as of date of item #3 above):
<TABLE>
<CAPTION>
[Tranche A [Tranche B Principal of Principal of Revolving
Term Loan Term Loan Tranche A Tranche B Loan
Commitment Commitment Term Loans Term Loans Commitment
---------------- --------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
a. Aggregate Amount $__________ $__________ $_________ $_________ $_________
for all Banks
b. Assigned Share __________% __________% _________% _________% _________%
c. Amount of $__________]/7/ $_________]/8/ $_________ $_________ $_________
Assigned Share
</TABLE>
5. Settlement Date:
- ----------
/7/ This column should be deleted in the case of Assignment and Assumption
Agreements executed after the termination of the Total Tranche A Term Loan
Commitment.
/8/ This column should be deleted in the case of Assignment and Assumption
Agreements executed after the termination of the total Tranche B Term Loan
Commitment.
<PAGE>
Annex I
Page 2
6. Rate of Interest As set forth in Section 1.08 of the Credit Agreement
to the Assignee: (unless otherwise agreed to by the Assignor and the
Assignee)/9/
7. Commitment Commission: As set forth in Sections 3.01(a) (unless otherwise
agreed to by the Assignor and the Assignee)/10/
8. Letter of Credit As set forth in Section 3.01(b) of the Credit
Fees to the Assignee: Agreement (unless otherwise agreed to by the
Assignor and the Assignee)/11/
- ----------
/9/ Coinmach Corporation and the Agent shall direct the entire amount of the
interest to the Assignee at the rate set forth in Section 1.08 of the
Credit Agreement, with the Assignor and Assignee effecting the agreed upon
sharing of the interest through payments by the Assignee to the Assignor.
/10/ Coinmach Corporation and the Administrative Agent shall direct the entire
amount of the Commitment Commission to the Assignee at the rate set forth
in Section 3.01(a) of the Credit Agreement, with the Assignor and the
Assignee effecting the agreed upon sharing of Commitment Commission through
payment by the Assignee to the Assignor.
/11/ Insert "Not Applicable" in lieu of text if no portion of the Total
Revolving Loan Commitment is being assigned. Otherwise, Desa International,
Inc. and the Agent shall direct the entire amount of the Letter of Credit
Fees to the Assignee at the rate set forth in Section 3.01(b) of the Credit
Agreement, with the Assignor and the Assignee effecting the agreed upon
sharing of Letter of Credit Fees through payment by the Assignee to the
Assignor.
<PAGE>
Annex I
Page 3
9. Notice:
ASSIGNOR:
_____________________
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
ASSIGNEE:
_____________________
_____________________
_____________________
_____________________
Attention:
Telephone:
Telecopier:
Reference:
Payment Instructions:
ASSIGNOR:
_____________________
_____________________
_____________________
_____________________
Attention:
Reference:
<PAGE>
Annex I
Page 4
ASSIGNEE:
_____________________
_____________________
_____________________
_____________________
Attention:
Reference:
Accepted and Agreed:
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By_______________________ By______________________
_______________________ ______________________
(Print Name and Title) (Print Name and Title)
<PAGE>
EXHIBIT I-1
Borrower Pledge Agreement
(See Exhibit 10.65 filed herewith)
<PAGE>
EXHIBIT I-2
Holders Pledge Agreement
(See Exhibit 10.64 filed herewith)
<PAGE>
EXHIBIT J
Security Agreement
(See Exhibit 10.66 filed herewith)
<PAGE>
EXHIBIT K
Deed of Trust, Security Agreement, Assignment of Leases, Rents and Profits,
Financing Statement and Fixture Filing.
(See Exhibit 10.72 filed herewith)
<PAGE>
EXHIBIT L
Collateral Assignment of Leases
(See Exhibit 10.67 filed herewith)
<PAGE>
EXHIBIT M
Collateral Assignment of Location Leases
(See Exhibit 10.68 filed herewith)
<PAGE>
Exhibit N
---------
[FORM OF LANDLORD CONSENT]
TO: BANKERS TRUST COMPANY
130 Liberty Street
New York, New York 10006
Coinmach Corporation, a Delaware corporation ("Tenant") and the
undersigned ("Landlord") have entered into a lease, dated as of January 8, 1997
(as amended, the "Lease"), demising the premises located in _______, _______ and
legally (or otherwise) described on Exhibit A attached hereto and made a part
---------
hereof (the "Leased Premises"). A copy of the Lease is attached hereto as
Exhibit B.
- ---------
Tenant and certain affiliates of tenant intend to enter into certain
financing arrangements with Bankers Trust Company ("Collateral Agent") and
certain other lending institutions (collectively, the "Lenders") evidenced by,
among other things, a credit agreement (the "Credit Agreement"). As a condition
to the Lenders making the loans and extending other financial accommodations to
Tenant, the Lenders require, among other things, that Tenant collaterally assign
its leasehold interest in the Lease to Collateral Agent pursuant to a Collateral
Assignment of Lease (the "Assignment"), in substantially the form attached
hereto as Exhibit C.
---------
To induce the Lenders to enter into such financing arrangements, and
for other good and valuable consideration, Landlord hereby agrees that:
1. Landlord consents to the execution by Tenant of the Assignment.
Landlord agrees that, notwithstanding anything to the contrary contained in the
Lease, the execution, delivery and performance by Tenant of the Assignment will
not constitute a default under the Lease.
2. The Lease is valid and is in full force and effect and has not
been assigned, modified, supplemented or amended in any way, except as described
on Exhibit B, and represents the entire agreement between the parties thereto.
---------
Tenant is the current owner of the leasehold interest in the Lease.
3. To the best knowledge of Landlord, neither Landlord nor Tenant
is in default under the terms of the Lease and no event has occurred which with
the giving of notice or the passage of time would constitute a default under the
Lease.
<PAGE>
- 2 -
4. None of Tenant's laundry machinery, laundry equipment, furniture,
trade fixtures, inventory or other personal property located on or about the
Leased Premises, including any additions, replacements or substitutions thereof
("Tenant's Personal Property") will be deemed by Landlord to be fixtures or to
constitute part of the Leased Premises.
5. Landlord will not assert, and hereby waives, any liens, whether
granted by the Lease, statute or otherwise (including, without limitation,
rights of levy or distraint for rent), against Tenant's Personal Property
located on the Leased Premises, including, without limitation, Tenant's
additions, replacements or substitutions therefor (collectively, the
"Property").
6. If Tenant defaults on its obligations to the Lenders, and as a
result, Collateral Agent exercises its rights under the Assignment, or otherwise
undertakes to enforce its security interest in Tenant's assets, Landlord will
permit Collateral Agent to enter and take possession of the Leased Premises
without terminating the Lease and Landlord will recognize Collateral Agent (or a
nominee of Collateral Agent) as the Tenant under the Lease, entitled to all of
the benefits thereof. Collateral Agent may cause the Leased Premises to be
leased or assigned to an entity designated by Collateral Agent whose financial
condition is reasonably acceptable to Landlord.
7. Collateral Agent may, at no expense to Landlord and in accordance
with the terms of the Credit Agreement and the other loan documents, enter onto
the Leased Premises at any time or times and take possession of, sever, or
remove the Property or any part thereof and said Property upon severance and/or
removal may be sold, transferred or otherwise disposed of free and clear of all
liens, claims, demands, rights or interests of Landlord.
8. Landlord: (a) will give copies of all notices of default sent to
Tenant under the Lease to Collateral Agent at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attn: Thomas P. Prior
or to such other address as Collateral Agent may designate from time to time by
notice given to Landlord at the address set forth after its signature hereto and
(b) prior to exercising any of Landlord's rights and remedies under the Lease or
at law or in
<PAGE>
- 3 -
equity, Collateral Agent shall have the right (but not the obligation) to cure
or cause to be cured such default within the following time periods from and
after receipt by Collateral Agent of notice of such default from Landlord: ten
(10) days with respect to monetary defaults and thirty (30) days with respect to
non-monetary defaults after the period of time granted to Tenant to cure such
defaults under the terms of the Lease; provided however, that if the nature of
-------- -------
any non-monetary default is such that the same cannot be cured within such
thirty (30) day period, Collateral Agent shall be given such additional period
of time as may be necessary to cure the default provided that Collateral Agent
commences the cure within such thirty (30) day period and proceeds diligently
thereafter to complete such cure.
9. Any acquisition of any interest in Tenant by Collateral Agent, in
accordance with the terms of the Credit Agreement, the Assignment or any other
loan documents, shall not create a default under, or require Landlord's consent
under, any applicable provisions of the Lease, if any, and shall be fully
effective notwithstanding any provision to the contrary contained in the Lease.
10. Landlord agrees to disclose this Landlord Consent to any
purchaser or successor to Landlord's interest in the Leased Premises.
11. The statements and agreements contained herein shall be binding
upon, and shall inure to the benefit of, Collateral Agent and Tenant, mortgagees
of the Leased Premises and the successors and assigns of all of the foregoing.
<PAGE>
- 4 -
Dated this 8th day of January, 1997.
LANDLORD:
---------------------------------
By:
------------------------------
LANDLORD'S ADDRESS:
---------------------------------
---------------------------------
<PAGE>
EXHIBIT 10.42
TRANCHE A TERM NOTE
$4,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANKERS TRUST COMPANY (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche A Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of FOUR MILLION DOLLARS ($4,000,000) or, if less, the then unpaid principal
amount of all Tranche A Term Loans (as defined in the Agreement) made by the
Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$4,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK OF
NORTH CAROLINA (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Tranche A Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of FOUR MILLION DOLLARS ($4,000,000) or, if less, the
then unpaid principal amount of all Tranche A Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$3,750,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of LEHMAN COMMERCIAL PAPER INC.
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche A Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of THREE MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($3,750,000) or, if less,
the then unpaid principal amount of all Tranche A Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$3,500,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of HELLER FINANCIAL (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche A Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of THREE MILLION FIVE HUNDRED THOUSAND DOLLARS ($3,500,000) or, if less, the
then unpaid principal amount of all Tranche A Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$3,250,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of THE NIPPON CREDIT BANK, LTD.
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche A Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($3,250,000) or, if less,
the then unpaid principal amount of all Tranche A Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$3,250,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of CREDIT LYONNAIS NEW YORK
BRANCH (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Tranche A Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($3,250,000) or, if less, the then unpaid principal amount of all Tranche A Term
Loans (as defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$2,375,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANK OF SCOTLAND (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche A Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of TWO MILLION THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($2,375,000) or, if
less, the then unpaid principal amount of all Tranche A Term Loans (as defined
in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE A TERM NOTE
$2,375,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANK OF BOSTON (the "Bank"),
in lawful money of the United States of America in immediately available funds,
at the office of Bankers Trust Company (the "Agent") located at One Bankers
Trust Plaza, New York, New York 10006 on the Tranche A Term Loan Maturity Date
(as defined in the Agreement referred to below) the principal sum of TWO MILLION
THREE HUNDRED SEVENTY FIVE THOUSAND DOLLARS ($2,375,000) or, if less, the then
unpaid principal amount of all Tranche A Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche A Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche A Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
Exhibit 10.43
-------------
TRANCHE B TERM NOTE
$39,250,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANKERS TRUST COMPANY (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of THIRTY NINE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($39,250,000) or, if
less, the then unpaid principal amount of all Tranche B Term Loans (as defined
in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$3,250,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK OF
NORTH CAROLINA (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Tranche B Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of THREE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS
($3,250,000) or, if less, the then unpaid principal amount of all Tranche B Term
Loans (as defined in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$3,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of LEHMAN COMMERCIAL PAPER INC.
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of THREE MILLION DOLLARS ($3,000,000) or, if less, the then unpaid principal
amount of all Tranche B Term Loans (as defined in the Agreement) made by the
Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$2,750,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of FLEET NATIONAL BANK (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of TWO MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($2,750,000) or, if less,
the then unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$2,750,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of HELLER FINANCIAL (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of TWO MILLION SEVEN HUNDRED FIFTY THOUSAND DOLLARS ($2,750,000) or, if less,
the then unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$1,500,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of THE NIPPON CREDIT BANK, LTD.
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) or, if less, the then
unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$1,250,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANK OF SCOTLAND (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of ONE MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($1,250,000) or, if less, the
then unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$1,250,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANK OF BOSTON (the "Bank"),
in lawful money of the United States of America in immediately available funds,
at the office of Bankers Trust Company (the "Agent") located at One Bankers
Trust Plaza, New York, New York 10006 on the Tranche B Term Loan Maturity Date
(as defined in the Agreement referred to below) the principal sum of ONE MILLION
TWO HUNDRED FIFTY THOUSAND DOLLARS ($1,250,000) or, if less, the then unpaid
principal amount of all Tranche B Term Loans (as defined in the Agreement) made
by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$9,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY (the "Bank"), in lawful money of the United States of America
in immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Tranche B Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of NINE MILLION DOLLARS ($9,000,000) or, if less, the
then unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$9,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of PILGRIM AMERICA PRIME RATE
TRUST (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Tranche B Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of NINE MILLION DOLLARS ($9,000,000) or, if less, the
then unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$9,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of PRIME INTEREST TRUST (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Tranche B Term Loan
Maturity Date (as defined in the Agreement referred to below) the principal sum
of NINE MILLION DOLLARS ($9,000,000) or, if less, the then unpaid principal
amount of all Tranche B Term Loans (as defined in the Agreement) made by the
Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$9,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of THE ING CAPITAL SENIOR
SECURED HIGH INCOME FUND, L.P. (the "Bank"), in lawful money of the United
States of America in immediately available funds, at the office of Bankers Trust
Company (the "Agent") located at One Bankers Trust Plaza, New York, New York
10006 on the Tranche B Term Loan Maturity Date (as defined in the Agreement
referred to below) the principal sum of NINE MILLION DOLLARS ($9,000,000) or, if
less, the then unpaid principal amount of all Tranche B Term Loans (as defined
in the Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
TRANCHE B TERM NOTE
$9,000,000 New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of MERRILL LYNCH SENIOR
FLOATING RATE FUND, INC. (the "Bank"), in lawful money of the United States of
America in immediately available funds, at the office of Bankers Trust Company
(the "Agent") located at One Bankers Trust Plaza, New York, New York 10006 on
the Tranche B Term Loan Maturity Date (as defined in the Agreement referred to
below) the principal sum of NINE MILLION DOLLARS ($9,000,000) or, if less, the
then unpaid principal amount of all Tranche B Term Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Tranche B Term Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
<PAGE>
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
Exhibit 10.44
-------------
REVOLVING NOTE
$5,000,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANK OF BOSTON (the "Bank"),
in lawful money of the United States of America in immediately available funds,
at the office of Bankers Trust Company (the "Agent") located at One Bankers
Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity Date (as
defined in the Agreement referred to below) the principal sum of FIVE MILLION
DOLLARS ($5,000,000) or, if less, the then unpaid principal amount of all
Revolving Loans (as defined in the Agreement) made by the Bank pursuant to the
Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$9,500,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANKERS TRUST COMPANY (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity
Date (as defined in the Agreement referred to below) the principal sum of NINE
MILLION FIVE HUNDRED THOUSAND DOLLARS ($9,500,000) or, if less, the then unpaid
principal amount of all Revolving Loans (as defined in the Agreement) made by
the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$9,500,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of FIRST UNION NATIONAL BANK OF
NORTH CAROLINA (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Revolving Loan Maturity Date (as defined in the Agreement referred to below) the
principal sum of NINE MILLION FIVE HUNDRED THOUSAND DOLLARS ($9,500,000) or, if
less, the then unpaid principal amount of all Revolving Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$9,000,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of LEHMAN COMMERCIAL PAPER INC.
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity
Date (as defined in the Agreement referred to below) the principal sum of NINE
MILLION DOLLARS ($9,000,000) or, if less, the then unpaid principal amount of
all Revolving Loans (as defined in the Agreement) made by the Bank pursuant to
the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$8,500,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of FLEET NATIONAL BANK (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity
Date (as defined in the Agreement referred to below) the principal sum of EIGHT
MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000) or, if less, the then unpaid
principal amount of all Revolving Loans (as defined in the Agreement) made by
the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$8,500,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of HELLER FINANCIAL (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity
Date (as defined in the Agreement referred to below) the principal sum of EIGHT
MILLION FIVE HUNDRED THOUSAND DOLLARS ($8,500,000) or, if less, the then unpaid
principal amount of all Revolving Loans (as defined in the Agreement) made by
the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$7,500,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of THE NIPPON CREDIT BANK, LTD.
(the "Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity
Date (as defined in the Agreement referred to below) the principal sum of SEVEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) or, if less, the then unpaid
principal amount of all Revolving Loans (as defined in the Agreement) made by
the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$7,500,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of CREDIT LYONNAIS NEW YORK
BRANCH (the "Bank"), in lawful money of the United States of America in
immediately available funds, at the office of Bankers Trust Company (the
"Agent") located at One Bankers Trust Plaza, New York, New York 10006 on the
Revolving Loan Maturity Date (as defined in the Agreement referred to below) the
principal sum of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($7,500,000) or, if
less, the then unpaid principal amount of all Revolving Loans (as defined in the
Agreement) made by the Bank pursuant to the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
REVOLVING NOTE
$5,000,000
New York, New York
January 8, 1997
FOR VALUE RECEIVED, COINMACH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of BANK OF SCOTLAND (the
"Bank"), in lawful money of the United States of America in immediately
available funds, at the office of Bankers Trust Company (the "Agent") located at
One Bankers Trust Plaza, New York, New York 10006 on the Revolving Loan Maturity
Date (as defined in the Agreement referred to below) the principal sum of FIVE
MILLION DOLLARS ($5,000,000) or, if less, the then unpaid principal amount of
all Revolving Loans (as defined in the Agreement) made by the Bank pursuant to
the Agreement.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid at
the rates and at the times provided in Section 1.08 of the Agreement.
This Note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of January 8, 1997, among Coinmach Laundry Corporation, the
Borrower, the lenders from time to time party thereto (including the Bank),
First Union National Bank of North Carolina, as Syndication Agent, Lehman
Commercial Paper, Inc., as Documentation Agent, and Bankers Trust Company, as
Administrative Agent (as from time to time in effect, the "Agreement"), and is
entitled to the benefits thereof and of the other Credit Documents (as defined
in the Agreement). This Note is secured by the Security Documents (as defined
in the Agreement). As provided in the Agreement, this Note is subject to
voluntary prepayment and mandatory repayment prior to the Revolving Loan
Maturity Date, in whole or in part.
In case an Event of Default (as defined in the Agreement) shall occur
and be continuing, the principal of and accrued interest on this Note may be
declared to be due and payable in the manner and with the effect provided in the
Agreement.
The Borrower hereby waives presentment, demand, protest or notice
of any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY
THE LAW OF THE STATE OF NEW YORK.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By_____________________________
Title: Senior Vice President
<PAGE>
Exhibit 10.45
-------------
SWING LINE NOTE
New York, New York
January 8, 1997
$5,000,000
FOR VALUE RECEIVED, Coinmach Corporation, a Delaware corporation
("Borrower"), promises to pay to BANKERS TRUST COMPANY or its registered assigns
("Payee"), on or before December 23, 2002, the lesser of (x) FIVE MILLION
DOLLARS ($5,000,000) or (y) the unpaid principal amount of all advances made by
Payee to the Company as Swing Line Loans under the Credit Agreement referred to
below.
The Company also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid in full at the rates and at the times
which shall be determined in accordance with the provisions of the Credit
Agreement dated as of January 8, 1997 (said agreement, as it may hereafter be
amended, modified or supplemented, the "Credit Agreement"; capitalized terms
used herein and not otherwise defined have the meanings assigned to such terms
in the Credit Agreement) among Borrower, Coinmach Laundry Corporation, the
Lenders named therein, First Union National Bank of North Carolina, as
Syndication Agent, Lehman Commercial Paper Inc., as Documentation Agent, and
Bankers Trust Company, as Administrative Agent.
This Note is the Company's Swing Line Note and is issued pursuant to and
entitled to the benefits of the Credit Agreement to which reference is hereby
made for a more complete statement of the terms and conditions under which the
Swing Line Loan evidenced hereby was made and is to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds to
Bankers Trust Company, as Administrative Agent, at its office located at One
Bankers Trust Plaza, New York, New York, or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Until notified in writing of the transfer of this Note and
the recordation thereof in the Register, the Company and the Administrative
Agent shall be entitled to deem Payee or such person in whose name this Note is
registered in the Register as the holder of this Note, as the owner and holder
of this Note. Each of Payee and any subsequent holder of this Note agrees, by
its acceptance hereof, that before disposing of this Note or any part hereof it
will make a notation hereon of all principal payments previously made hereunder
and of the date to which interest hereon has been paid; provided that the
--------
failure to make (or any error in the making of) a notation of any payment made
on this Note shall not limit or otherwise affect the obligation of the Company
hereunder with respect to payments of principal or interest on this Note.
<PAGE>
Page 2
This Note is subject to mandatory prepayment as provided in the Credit
Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued by unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
The registration of assignment or other transfer of all or part of this
Note shall be recorded by the Administrative Agent on the Register only upon the
acceptance by such Agent of a properly executed and delivered Registered
Transfer Supplement. Coincident with the delivery of such Registered Transfer
Supplement to the Administrative Agent for acceptance and registration of
assignment or sale of all or part of the Swing Line Loan, or as soon thereafter
as practicable, the assigning or transferor Lender shall surrender this Note,
and thereupon one or more new Swing Line Notes in the same aggregate principal
amount shall be issued to the assigning or transferor Lender and/or the new
Lender.
The Company promises to pay all costs and expenses including attorneys'
fees, all as provided in subsection 3.01 of the Credit Agreement, incurred in
the collection and enforcement of this Note. The Company and endorsers of this
Note hereby waive diligence, presentment, protest, demand and notice of every
kind and, to the full extent permitted by law, the right to plead any statute of
limitations as a defense to any demand hereunder.
<PAGE>
Page 3
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
COINMACH CORPORATION
/s/ ROBERT M. DOYLE
By:__________________________________
Name: Robert M. Doyle
Title: Senior Vice President
<PAGE>
TRANSACTIONS ON SWING LINE NOTE
<TABLE>
<CAPTION>
Amount of Outstanding
<S> <C> <C> <C> <C> <C>
Type of Amount of Principal Principal
Loan Made Loan Made Paid Balance Notation
Date This Date This Date This Date This Date Made By
- ------------- --------- --------- ----------- --------- -------
</TABLE>
<PAGE>
Exhibit 10.46
-------------
HOLDINGS PLEDGE AGREEMENT
-------------------------
PLEDGE AGREEMENT (as amended, modified or supplemented from time to
time, this "Agreement"), dated as of January 8, 1997, made by COINMACH LAUNDRY
CORPORATION (the "Pledgor"), to BANKERS TRUST COMPANY, as Collateral Agent
(together with any successor, the "Collateral Agent") for the benefit of (x) the
Banks (as hereinafter defined), the Administrative Agent (as hereinafter
defined), the Syndication Agent (as hereinafter defined), the Documentation
Agent (as hereinafter defined) and the Collateral Agent under, and any other
lenders from time to time party to, the Credit Agreement hereinafter referred to
(such Banks, the Administrative Agent, the Syndication Agent, the Documentation
Agent, the Collateral Agent and such other lenders, if any, are hereinafter
called the "Bank Creditors"), (y) if one or more Banks or any Affiliate of a
Bank enters into one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values and/or (iii) other types of hedging agreements from time to
time (collectively, the "Interest Rate Protection or Other Hedging Agreements"),
with, or guaranteed by, the Pledgor, any such Bank or Banks or Affiliate or
Affiliates (even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason) so long as any such Bank or Affiliate
participates in the extension of such Interest Rate Protection or Other Hedging
Agreements, and their subsequent assigns, if any (collectively, the "Other
Creditors"), and (z) each of the individuals listed on Schedule A, as payee
under that certain Promissory Note, in the amount of $15,000,000.00 dated
January 8, 1997 (the "Seller Promissory Note") made by Coinmach Laundry
Corporation to Richard F. Enthoven (the "Seller Agent"), as agent for each of
such individuals (collectively the "Seller Creditors"; together with the Other
Creditors and the Bank Creditors, the "Secured Creditors"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall be
used herein as so defined.
<PAGE>
Page 2
R E C I T A L S :
---------------
1. The Pledgor, Coinmach Corporation (the "Borrower"), the lenders
(the "Banks") from time to time party thereto, Bankers Trust Company, as
Administrative Agent (together with any successor, the "Administrative Agent"),
First Union National Bank of North Carolina as Syndication Agent (together with
any successor, the "Syndication Agent") and Lehman Commercial Paper, Inc., as
Documentation Agent (together with any successor, the "Documentation Agent")
have entered into a Credit Agreement, dated as of the date hereof, providing for
the making of Loans and the issuance of, and participation in, Letters of Credit
as contemplated therein (such agreement, as amended, modified, extended,
renewed, replaced, restated or supplemented from time to time, and including any
agreement extending the maturity of, or restructuring all or any portion of the
Indebtedness under such agreement or any successor agreement, the "Credit
Agreement").
2. The Pledgor, pursuant to Section 14 of the Credit Agreement, has
provided a guaranty (the "Holdings Guaranty") of the obligations and liabilities
of the Borrower under and in connection with (x) the Credit Documents and (y)
each Interest Rate Protection or Other Hedging Agreement with one or more Other
Creditors.
3. The Pledgor may at any time and from time to time enter into, or
guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection or Other Hedging Agreements with one or more Other Creditors.
4. The Pledgor has agreed to enter into this Agreement to secure its
obligations to the Seller Creditors pursuant to the Seller Promissory Note.
5. It is a condition to each of the above-described extensions of
credit to the Borrower and its Subsidiaries that the Pledgor shall have executed
and delivered this Agreement.
6. The Pledgor desires to enter into this Agreement in order to
satisfy the condition described in the preceding paragraphs.
<PAGE>
Page 3
A G R E M E N T:
---------------
NOW, THEREFORE, in consideration of the above-described extensions of
credit to be made to the Pledgor and other benefits accruing to the Pledgor, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
makes the following representations and warranties as of the date hereof to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
Section 1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise in accordance with the terms of the
Credit Agreement) of all obligations and indebtedness (including, without
limitation, indemnities, Fees and interest thereon) of the Pledgor to the
Bank Creditors (including, without limitation, the obligations of the
Pledgor under the Holdings Guaranty), whether now existing or hereafter
incurred under, arising out of, or in connection with the Credit Agreement
and the other Credit Documents and the due performance and compliance by
the Pledgor with all of the terms, conditions and agreements contained in
the Credit Agreement and the other Credit Documents (all such principal,
interest, obligations and liabilities described in this clause (i),
collectively the "Credit Agreement Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise in accordance with the terms of the
Credit Agreement) of all obligations and liabilities owing by the Pledgor
to the Other Creditors under, or with respect to, any Interest Rate
Protection or Other Hedging Agreement (including, without limitation, the
obligations of the Pledgor under the Holdings Guaranty), whether such
Interest Rate Protection or Other Hedging Agreement is now in existence or
hereafter arising in connection with the Credit Documents, and the due
performance and compliance by the Pledgor with all of the terms, conditions
and agreements contained therein (all such obligations and liabilities
described in this clause (ii) collectively, the "Other Obligations");
<PAGE>
Page 4
(iii) any and all sums advanced and not repaid by the Collateral Agent
in order to preserve the Collateral (as hereinafter defined) or preserve
its security interest in the Collateral in accordance with the terms hereof
and the other Credit Documents;
(iv) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations, or liabilities of the Pledgor referred to
in clauses (i) and (ii), after an Event of Default (as such term is defined
in the Security Agreement) shall have occurred and be continuing and the
Collateral Agent has given notice under Article X of the Credit Agreement,
the commercially reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs in
accordance with the terms hereof and the other Credit Documents; and
(v) the full and prompt payment when due (whether at stated maturity,
by acceleration or otherwise) of all principal, interest and expenses
(including reasonable attorney's fees and court costs) owing by the Pledgor
to the Seller Creditors under, or with respect to, the Seller Promissory
Note (the "Seller Obligations");
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 collectively, the "Obligations," it being
acknowledged and agreed that the "Obligations" shall include extensions of
credit of the types described above, whether outstanding on the date of this
Agreement or extended from time to time after the date of this Agreement.
Section 2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein, (i) the term "Stock" shall mean (x) with respect to corporations
incorporated under the laws of the United States or any State or territory
thereof (each a "Domestic Corporation"), all of the issued and outstanding
shares of capital stock at any time owned by the Pledgor of any Domestic
Corporation and (y) with respect to corporations not Domestic Corporations (each
a "Foreign Corporation"), all of the issued and outstanding shares of capital
stock at any time owned by the Pledgor of any Foreign Corporation, provided
--------
that, except as provided in the last sentence of this Section 2, the Pledgor
shall not be required to pledge hereunder more than 65% of the total combined
voting power of all
<PAGE>
Page 5
classes of capital stock of any Foreign Corporation entitled to vote and (ii)
the term "Notes" shall mean (x) all promissory notes at any time issued to the
Pledgor by any of its Subsidiaries or Affiliates and (y) except as provided in
the last sentence of this Section 2, the Pledgor shall not be required to pledge
hereunder any promissory notes issued to the Pledgor by any Subsidiary of the
Pledgor which is a Foreign Corporation. If and to the extent that the
Collateral Agent receives or holds stock certificates representing more than 65%
of the total combined voting power of all classes of capital stock of any
Foreign Corporation entitled to vote, the Collateral Agent agrees to act as
bailee and custodian for the benefit of the Pledgor with respect to any portion
of such capital stock representing more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled to
vote except as otherwise provided in the last sentence of this Section 2. As
used herein, the term "Securities" shall mean all of the Stock and Notes. The
Pledgor represents and warrants, as to the stock of corporations and promissory
notes owned by the Pledgor, that on the date hereof (a) the Stock consists of
the number and type of shares of the stock of the corporations as described in
Part I of Schedule A hereto; (b) such Stock constitutes that percentage of the
----------
issued and outstanding capital stock of the issuing corporation as is set forth
in Part I of Schedule A hereto; (c) the Notes consist of the promissory notes
----------
described in Part II of Schedule A hereto; and (d) the Pledgor is the holder of
----------
record and sole beneficial owner of the Stock and the Notes and there exist no
options or preemption rights in respect of any of the Stock. If following a
change in the relevant sections of the Code or the regulations, rules, rulings,
notices or other official pronouncements issued or promulgated thereunder which
would permit a pledge (x) of 66 2/3% or more (or would be adjusted to permit a
pledge of less than 66 2/3%) of the total combined voting power of all classes
of capital stock of any Foreign Corporation entitled to vote and (y) of any
promissory note issued by any Subsidiary of the Pledgor which is a Foreign
Corporation without causing the undistributed earnings of such Foreign
Corporation as determined for Federal income taxes to be treated as a deemed
dividend to the Pledgor for Federal income tax purposes, then the 65% limitation
set forth in clause (i)(y) and the limitation in the proviso of clause (ii) in
each case of this Section 2 shall no longer be applicable (or shall be adjusted
as appropriate) and the Pledgor shall duly pledge and deliver to the Collateral
Agent such of the Securities not theretofore required to be pledged
<PAGE>
Page 6
hereunder or the Collateral Agent shall return such Securities as applicable.
Section 3. PLEDGE OF SECURITIES, ETC.
Section 3.1. Pledge. To secure the Obligations and for the purposes
------
set forth in Section 1, the Pledgor (i) hereby grants to the Collateral Agent
for the benefit of (a) the Bank Creditors and the Other Creditors, a first
priority security interest in all of the Collateral (as hereinafter defined) and
(b) the Seller Creditors, a security interest (which security interest shall be
subject and subordinate in all respects to the security interest described in
clause (a) above) in all of the Collateral (ii) hereby pledges and deposits with
the Collateral Agent the Securities owned by the Pledgor on the date hereof, and
delivers to the Collateral Agent certificates therefor, duly endorsed in blank
in the case of promissory notes and accompanied by undated stock powers duly
executed in blank by the Pledgor (and accompanied by any transfer tax stamps
required in connection with the pledge of such Securities) in the case of
capital stock, or such other instruments of transfer as are reasonably
acceptable to the Collateral Agent and (iii) hereby collaterally assigns,
transfers, hypothecates and sets over to the Collateral Agent all of the
Pledgor's right, title and interest in and to such Securities (and in and to the
certificates or instruments evidencing such Securities), to be held by the
Collateral Agent as collateral security for the Obligations, upon the terms and
conditions set forth in this Agreement. The Pledgor and the Collateral Agent
acknowledge that all Collateral held by the Collateral Agent is held on behalf
of the Secured Creditors.
The Seller Creditors agree that, so long as any of the Obligations
owing to the Bank Creditors or the Other Creditors remain outstanding, the
security interest described in clause (i)(b) in the preceding paragraph shall
not entitle them to foreclosure or any other right or remedy in respect of the
Collateral without the consent of the Bank Creditors and the Other Creditors,
provided that the foregoing shall in no event limit the right of the Seller
Creditors to receive proceeds as described in Sections 7 and 9 hereof and, to
the extent required by applicable law, participate in any foreclosure or
enforcement proceeding; provided that such participation shall not confer any
rights (including any rights relating to the direction of or the providing of
consents in connection with any such proceeding) on the Seller Creditors other
than as set forth above. The Seller Creditors also agree that, so long as any
of the Obligations
<PAGE>
Page 7
owing to the Bank Creditors or the Other Creditors remain outstanding, the
Collateral Agent shall not, by reason of such security interest of the Seller
Creditors, have any duty, express or implied, to provide any notices to the
Seller Creditors in respect of the Collateral or their interests therein or to
take any other action not expressly set forth herein.
Section 3.2. Subsequently Acquired Securities. If the Pledgor shall
--------------------------------
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time to time after the date hereof, the Pledgor will promptly
thereafter pledge and deposit such Securities (or certificates or instruments
representing Securities) as security with the Collateral Agent and deliver to
the Collateral Agent certificates or instruments therefor, duly endorsed in
blank in the case of promissory notes, and accompanied by undated stock powers
duly executed in blank by the Pledgor (and accompanied by any transfer tax
stamps required in connection with the pledge of such Securities) in the case of
capital stock, or such other instruments of transfer as are reasonably
acceptable to the Collateral Agent, and will promptly thereafter deliver to the
Collateral Agent a certificate executed by a principal executive officer of the
Pledgor describing such Securities and certifying that the same has been duly
pledged with the Collateral Agent hereunder. Subject to the last sentence of
Section 2, the Pledgor shall not be required at any time to pledge hereunder any
promissory notes issued to the Pledgor by a Subsidiary which is a Foreign
Corporation or more than 65% of the total combined voting power of all classes
of capital stock of any Foreign Corporation entitled to vote.
Section 3.3. Uncertificated Securities. Notwithstanding anything to
-------------------------
the contrary contained in Sections 3.1 and 3.2, if any Securities (whether now
owned or hereafter acquired) are uncertificated securities, the Pledgor shall
promptly notify the Collateral Agent thereof, and shall promptly take all
actions reasonably required to perfect the security interest of the Collateral
Agent under applicable law (including, in any event, under Sections 8-313 and 8-
321 of the New York Uniform Commercial Code if applicable). The Pledgor further
agrees to take such actions as the Collateral Agent deems reasonably necessary
or desirable to effect the foregoing and to permit the Collateral Agent to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Collateral Agent with respect
to any such pledge of
<PAGE>
Page 8
uncertificated Securities promptly upon the reasonable request of the Collateral
Agent.
Section 3.4. Definitions of Pledged Stock; Pledged Notes; Pledged
----------------------------------------------------
Securities and Collateral. All Stock at any time pledged or required to be
- -------------------------
pledged hereunder is hereinafter called the "Pledged Stock;" all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes;" all Pledged Stock and Pledged Notes together are called the
"Pledged Securities;" and the Pledged Securities, together with all proceeds
thereof, including any securities and moneys received and at any time held by
the Collateral Agent hereunder, are hereinafter called the "Collateral."
Section 4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The
Collateral Agent shall have the right to appoint one or more sub-agents, at the
cost and expense of the Collateral Agent, for the purpose of retaining physical
possession of the Pledged Securities on behalf of the Collateral Agent, which
may be held (in the reasonable discretion of the Collateral Agent) in the name
of the Pledgor, endorsed or assigned in blank or in favor of the Collateral
Agent or any nominee or nominees of the Collateral Agent or a sub-agent
appointed by the Collateral Agent.
Section 5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default and the
Collateral Agent has given written notice to the Pledgor in accordance with
Article X of the Credit Agreement, the Pledgor shall be entitled to vote any and
all Pledged Securities owned by it, and to give consents, waivers or
ratifications in respect thereof, provided that no vote shall be cast or any
--------
consent, waiver or ratification given or any action taken which would violate,
result in breach of any covenant contained in this Agreement, the Credit
Agreement or any other Credit Document, or which is not permitted under any of
the Credit Documents and could reasonably be expected to have the effect of
materially impairing the value of the Collateral or any material part thereof or
the position or interests of the Collateral Agent or any Secured Creditor. All
such rights of the Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default has occurred and is
continuing and the Collateral Agent has given written notice to the Pledgor in
accordance with Article X of the Credit Agreement, and Section 7 hereof shall
become applicable.
<PAGE>
Page 9
Section 6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there
shall have occurred and be continuing an Event of Default and the Collateral
Agent has given written notice to the Pledgor in accordance with Article X of
the Credit Agreement, all cash dividends and distributions payable in respect of
the Pledged Stock and all payments in respect of the Pledged Notes shall be paid
to the Pledgor. The Collateral Agent shall be entitled to receive directly, and
to retain as part of the Collateral:
(a) all other or additional stock or securities (other than cash) paid
or distributed by way of dividend or otherwise, as the case may be, in
respect of the Pledged Stock;
(b) all other or additional stock or other securities paid (other than
cash) or distributed in respect of the Pledged Stock by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement; and
(c) all other or additional stock or other securities or property
(excluding cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Collateral Agent's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by the Pledgor contrary to the provisions of
this Section 6 and Section 7 shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of the
Pledgor and shall be forthwith paid or delivered over to the Collateral Agent as
Collateral in the same form as so received (with any necessary endorsement).
Section 7. REMEDIES IN CASE OF EVENTS OF DEFAULT. If there shall
have occurred and be continuing an Event of Default and the Collateral Agent has
given written notice to the Pledgor in accordance with Article X of the Credit
Agreement, then and in every such case, the Collateral Agent shall be entitled
to exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, any other Credit Document, any Interest Rate Protection or Other
Hedging Agreement or by law) for the protection and enforcement of its rights in
respect of the Collateral, and
<PAGE>
Page 10
the Collateral Agent shall be entitled to exercise all the rights and remedies
of a secured party under the Uniform Commercial Code and also shall be entitled,
without limitation, to exercise the following rights, which the Collateral Agent
agrees to exercise in a commercially reasonable manner:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 to the Pledgor;
(b) to transfer all or any part of the Collateral into the Collateral
Agent's name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect upon
any Pledged Note at such times and under the conditions set forth therein;
(d) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Collateral Agent) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto in a commercially reasonable manner as though it were
the outright owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Collateral Agent the proxy and attorney-in-fact of the
Pledgor, with full power of substitution to do so upon the occurrence and
during the continuance of an Event of Default provided that the Collateral
Agent has delivered written notice to the Pledgor in accordance with
Article X of the Credit Agreement); and
(e) to sell, assign and deliver, or grant options to purchase, all or
any part of the Collateral, or any interest therein, at any public or
private sale, without demand of performance, advertisement or notice of
intention to sell or of the time or place of sale or adjournment thereof or
to redeem or otherwise (all of which are hereby waived by the Pledgor), for
cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and on
such terms as the Collateral Agent may determine in a commercially
reasonable manner, provided that at least 10 days' written notice of the
--------
time and place of any such sale shall be given to the Pledgor. The
Collateral Agent shall not be obligated to make any such sale of Collateral
regardless of whether
<PAGE>
Page 11
any such notice of sale has theretofore been given. The Pledgor hereby
waives and releases to the fullest extent permitted by law any right or
equity of redemption with respect to the Collateral, whether before or
after sale hereunder other than the Pledgor's right to receive any excess
proceeds or Collateral remaining after payment in full of the Obligations,
and all rights, if any, of marshalling the Collateral and any other
security for the Obligations or otherwise. At any such sale, unless
prohibited by applicable law, the Collateral Agent on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so
sold free from any such right or equity of redemption. Neither the
Collateral Agent nor any Secured Creditor shall be liable for failure to
collect (except in such cases where the Collateral Agent bids for and
purchases all or part of the Collateral) or realize upon any or all of the
Collateral or for any delay in so doing nor shall any of them be under any
obligation to take any action whatsoever with regard thereto.
Section 8. REMEDIES, ETC., CUMULATIVE. Each and every right, power
and remedy of the Collateral Agent provided for in this Agreement, the other
Credit Documents, or the Interest Rate Protection or Other Hedging Agreements,
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by the Collateral
Agent or any Secured Creditor of any one or more of the rights, powers or
remedies provided for in this Agreement, the other Credit Documents or the
Interest Rate Protection or Other Hedging Agreements or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude the
simultaneous or later exercise by the Collateral Agent or any Secured Creditor
of all such other rights, powers or remedies, and no failure or delay on the
part of the Collateral Agent or any Secured Creditor to exercise any such right,
power or remedy shall operate as a waiver thereof except as required by
applicable law. Unless otherwise required by the Credit Documents, no notice to
or demand on the Pledgor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances or constitute a waiver of any
of the rights of the Collateral Agent or any Secured Creditor to any other or
further action in any circumstances without notice or demand.
Section 9. APPLICATION OF PROCEEDS. All moneys collected by the
Collateral Agent upon any sale or other
<PAGE>
Page 12
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all Obligations owing to the Collateral
Agent of the type described in clauses (iii) and (iv) of Section 1 of this
Agreement;
(ii) second, to the extent moneys remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations (as hereinafter defined) shall be paid to the Secured
Creditors (other than the Seller Creditors) as provided in Section 9(e),
with each Secured Creditor (other than the Seller Creditors) receiving an
amount equal to its outstanding Primary Obligations or, if the proceeds are
insufficient to pay in full all such Primary Obligations, its Pro Rata
Share of the amount remaining to be distributed;
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations (as hereinafter defined) shall be paid to
the Secured Creditors (other than the Seller Creditors) as provided in
Section 9(e), with each Secured Creditor (other than the Seller Creditors)
receiving an amount equal to its outstanding Secondary Obligations or, if
the proceeds are insufficient to pay in full all such Secondary
Obligations, its Pro Rata Share of the amount remaining to be distributed;
and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i), (ii) and (iii), an amount equal to
the outstanding Seller Obligations (as hereinafter defined) shall be paid
to the Seller Creditors as provided in section 9(e), with each Seller
Creditor receiving an amount equal to its outstanding Seller Obligations
or, if the proceeds are insufficient to pay in full all of the Seller
Obligations, its Pro Rata Share of the amount remaining to be distributed;
and
(v) fifth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) - (iv) and following the termination
of this Agreement, to the Pledgor or as required by applicable law.
<PAGE>
Page 13
(b) For purposes of this Agreement (w) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (x) "Primary Obligations" shall mean (i) in the case of the
Credit Agreement Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
the aggregate Stated Amounts of all Letters of Credit issued under the Credit
Agreement, and all Fees and (ii) in the case of the Interest Rate Protection
Obligations, all amounts due under the Interest Rate Protection or Other Hedging
Agreements (other than indemnities, fees (including, without limitation,
reasonable attorneys' fees) and similar obligations and liabilities), (y)
"Secondary Obligations" shall mean all Obligations other than Primary
Obligations and (z) "Seller Obligations" shall mean all principal, interest and
expenses (including reasonable attorney's fees and court costs) owing to any
Seller Creditor under the Seller Promissory Note.
(c) When payments to Bank Creditors or Other Creditors are based upon
their respective Pro Rata Shares, the amounts received by such Bank Creditors or
Other Creditors hereunder shall be applied (for purposes of making
determinations under this Section 9 only) (i) first, to their Primary
Obligations and (ii) second, to their Secondary Obligations. If any payment to
any Secured Creditor of its Pro Rata Share of any distribution would result in
overpayment to such Secured Creditor, such excess amount shall instead be
distributed in respect of the unpaid Primary Obligations, Secondary Obligations
or Seller Obligations, as the case may be, of the other Secured Creditors, with
each Secured Creditor whose Primary Obligations, Secondary Obligations or Seller
Obligations, as the case may be, have not been paid in full to receive an amount
equal to such excess amount multiplied by a fraction the numerator of which is
the unpaid Primary Obligations, Secondary Obligations or Seller Obligations, as
the case may be, of such Secured Creditor and the denominator of which is the
unpaid Primary Obligations, Secondary Obligations or Seller Obligations, as the
case may be, of all Secured Creditors entitled to such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a
<PAGE>
Page 14
distribution on account of undrawn amounts with respect to Letters of Credit
issued under the Credit Agreement (which shall only occur after all outstanding
Loans and Unpaid Drawings with respect to such Letters of Credit have been paid
in full), such amounts shall be paid to the Administrative Agent under the
Credit Agreement and held by it, for the equal and ratable benefit of the Bank
Creditors, as cash security for the repayment of Obligations owing to the Bank
Creditors as such. If any amounts are held as cash security pursuant to the
immediately preceding sentence, then upon the termination of all outstanding
Letters of Credit, and after the application of all such cash security to the
repayment of all Obligations owing to the Bank Creditors after giving effect to
the termination of all such Letters of Credit, if there remains any excess cash,
such excess cash shall be distributed by the Administrative Agent to the
Collateral Agent in accordance with Section 9(a) hereof.
(e) Except as set forth in Section 9(d) hereof, all payments required
to be made hereunder shall be made (i) if to the Bank Creditors, to the
Administrative Agent under the Credit Agreement for the account of the Bank
Creditors, (ii) if to the Other Creditors, to the trustee, paying agent or other
similar representative (each a "Representative") for the Other Creditors or, in
the absence of such a Representative, directly to the Other Creditors and (iii)
if to the Seller Creditors, to the Seller Agent under the Seller Promissory Note
for the benefit of the Seller Creditors.
(f) For purposes of applying payments received in accordance with
this Section 9, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement, (ii) the Seller Agent under the
Seller Promissory Note and (iii) the Representative for the Other Creditors or,
in the absence of such a Representative or Seller Agent, upon the Other
Creditors or the Seller Creditors, as the case may be, for a determination
(which the Administrative Agent, each Representative for any Secured Creditors,
the Seller Agent and the Secured Creditors agree (or shall agree) to provide
upon request of the Collateral Agent) of the outstanding Primary Obligations and
Secondary Obligations owed to the Bank Creditors or the Other Creditors and the
outstanding Seller Obligations owing to the Seller Creditors, as the case may
be. Unless it has actual knowledge (including by way of written notice from a
Bank Creditor or an Other Creditor) to the contrary, the Administrative Agent
and each Representative, in furnishing information pursuant to the preceding
sentence, and the Collateral Agent, in acting hereunder, shall be entitled to
assume that no
<PAGE>
Page 15
Secondary Obligations are outstanding. Unless it has actual knowledge
(including by way of written notice from an Other Creditor) to the contrary, the
Collateral Agent, in acting hereunder, shall be entitled to assume that no
Interest Rate Protection or Other Hedging Agreements are in existence.
(g) It is understood and agreed that the Pledgor shall remain liable
to the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of the sums referred to in clauses
(i), (ii), (iii) and (iv) of Section 9(a), except to the extent that such
proceeds are not applied by the Collateral Agent in accordance with this
Agreement and the Credit Agreement.
Section 10. PURCHASERS OF COLLATERAL. Upon any sale of the
Collateral by the Collateral Agent hereunder (whether by virtue of the power of
sale herein granted, pursuant to judicial process or otherwise), the receipt of
the Collateral Agent or the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold, and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such officer or
be answerable in any way for the misapplication or nonapplication thereof.
Section 11. INDEMNITY. The Pledgor agrees to indemnify and hold
harmless the Collateral Agent, the Seller Agent and each Secured Creditor and
their respective successors, assigns, employees, agents and servants (each, an
"Indemnitee"; collectively, the "Indemnities") from and against any and all
claims, demands, losses, judgments and liabilities (including liabilities for
penalties) of whatsoever kind or nature, and to reimburse each Indemnitee for
all costs and expenses, including reasonable attorneys' fees, growing out of or
resulting from this Agreement or the exercise by any Indemnitee of any right or
remedy granted to it hereunder or under the other Credit Documents or the
Interest Rate Protection and Other Hedging Agreements (but excluding any claims,
demands, losses, judgments and liabilities or expenses to the extent finally
judicially determined to have been incurred by reason of gross negligence or
willful misconduct of such Indemnitee). If and to the extent that the
obligations of the Pledgor under this Section 11 are unenforceable for any
reason, the Pledgor hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law.
<PAGE>
Page 16
Section 12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor
agrees that it will join with the Collateral Agent in executing and, at its own
expense, file and refile under the Uniform Commercial Code or other applicable
law such financing statements, continuation statements and other documents in
such offices as the Collateral Agent may deem reasonably necessary and wherever
required by law in order to perfect and preserve the Collateral Agent's security
interest in the Collateral and hereby authorizes the Collateral Agent to file
financing statements and amendments thereto relative to all or any part of the
Collateral without the signature of the Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Collateral Agent such additional conveyances, assignments, agreements and
instruments as the Collateral Agent may reasonably require or deem necessary to
carry into effect the purposes of this Agreement or to further assure and
confirm unto the Collateral Agent its rights, powers and remedies hereunder.
(b) The Pledgor hereby appoints the Collateral Agent the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the Pledgor or otherwise, from time to time after the occurrence
and during the continuance of an Event of Default and provided that the
Collateral Agent shall have delivered notice to the Pledgor in accordance with
Article X of the Credit Agreement, in the Collateral Agent's reasonable
discretion to take any action and to execute any instrument which the Collateral
Agent may reasonably deem necessary or advisable to accomplish the purposes of
this Agreement.
Section 13. THE PLEDGEE AS AGENT. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed by the parties
hereto and each Secured Creditor, by accepting the benefits of this Agreement,
each such person acknowledges and agrees that the obligations of the Collateral
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Collateral Agent shall act hereunder
on the terms and conditions set forth herein and in Section 12 of the Credit
Agreement.
Section 14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of
<PAGE>
Page 17
the Collateral or any interest therein (except as may be permitted in accordance
with the terms of the Credit Agreement).
15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The
Pledgor represents and warrants that as of the date hereof (a) it is, or at the
time when pledged hereunder will be, the legal, record and beneficial owner of,
and has (or will have) good title to, all Securities pledged hereunder, subject
to no Lien (except the Lien created by this Agreement); (b) it has full
corporate power, authority and legal right to pledge all the Securities pursuant
to this Agreement; (c) this Agreement has been duly authorized, executed and
delivered by the Pledgor and constitutes a legal, valid and binding obligation
of the Pledgor enforceable in accordance with its terms, except to the extent
that the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law); (d) except to the extent already obtained or
made, no consent of any other party (including, without limitation, any
stockholder or creditor of the Pledgor or any of its Subsidiaries) and no
consent, license, permit, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required to be obtained by the Pledgor in connection with (i) the
execution, delivery or performance of this Agreement, (ii) the validity or
enforceability of this Agreement, (iii) the perfection or enforceability of the
Collateral Agent's security interest in the Collateral or (iv) except for
compliance with or as may be required by applicable securities laws, the
exercise by the Collateral Agent of any of its rights or remedies provided
herein; (e) the execution, delivery and performance of this Agreement will not
violate any provision of any applicable law or regulation or of any order,
judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, applicable to the Pledgor, or of the Certificate
of Incorporation or By-Laws of the Pledgor or of any securities issued by the
Pledgor or any of its Subsidiaries, or of any material mortgage, indenture,
lease, loan agreement, credit agreement or other contract, agreement or
instrument or undertaking to which the Pledgor or any of its Subsidiaries is a
party or which purports to be binding upon the Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in the
creation or imposition of (or the obligation to create or impose) any lien or
encumbrance on any of the material assets of the
<PAGE>
Page 18
Pledgor or any of its Subsidiaries except as contemplated by this Agreement; (f)
all the shares of the Stock have been duly and validly issued, are fully paid
and non-assessable and are subject to no options to purchase or similar rights;
(g) each of the Pledged Notes to the extent executed by the Borrower or any of
its Subsidiaries constitutes, or when executed by the obligor thereof will
constitute, the legal, valid and binding obligation of such obligor, enforceable
in accordance with its terms, except to the extent that the enforceability
thereof may by limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors' rights and by
equitable principles (regardless of whether enforcement is sought in equity or
at law); and (h) the pledge, collateral assignment and delivery to the
Collateral Agent of the Securities (other than uncertificated securities)
pursuant to this Agreement creates (i) a valid and perfected first priority Lien
in the Securities, and the proceeds thereof in favor of the Collateral Agent for
the benefit of the Bank Creditors and the Other Creditors subject to no other
Lien or to any agreement purporting to grant to any third party a Lien on the
property or assets of the Pledgor which would include the Securities other than
the lien and security interest described in clause (h)(ii) below and (ii) a
valid and perfected security interest in favor of the Collateral Agent for the
benefit of the Seller Creditors, which Lien and security interest is subject and
subordinate to the Lien and security interest described in clause (h)(i) above.
The Pledgor covenants and agrees that it will take commercially reasonable steps
to defend the Collateral Agent's right, title and security interest in and to
the Securities and the proceeds thereof against the claims and demands of all
persons whomsoever; and the Pledgor covenants and agrees that it will have like
title to and right to pledge any other property at any time hereafter pledged to
the Collateral Agent as Collateral hereunder and will likewise take commercially
reasonable steps to defend the right thereto and security interest therein of
the Collateral Agent and the Secured Creditors.
Section 16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of
the Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from the Credit Documents, the Interest Rate Protection or Other
<PAGE>
Page 19
Hedging Agreements, the Seller Promissory Note or any other instrument or
agreement referred to therein, or any assignment or transfer of any thereof; (b)
any waiver, consent, extension, indulgence or other action or inaction under or
in respect of any such agreement or instrument including, without limitation,
this Agreement; (c) any furnishing of any additional security to the Collateral
Agent or its assignee or any acceptance thereof or any release of any security
by the Collateral Agent or its assignee; (d) any limitation on any party's
liability or obligations under any such instrument or agreement or any
invalidity or unenforceability, in whole or in part, of any such instrument or
agreement or any term thereof; or (e) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to the Pledgor or any Subsidiary of the Pledgor, or any
action taken with respect to this Agreement by any trustee or receiver, or by
any court, in any such proceeding, whether or not the Pledgor shall have notice
or knowledge of any of the foregoing.
Section 17. REGISTRATION, ETC. (a) If there shall have occurred and
be continuing an Event of Default and acceleration of the Notes then, and in
every such case, upon receipt by the Pledgor from the Collateral Agent of a
written request or requests that the Pledgor cause any registration,
qualification or compliance under any Federal or any state securities law or
laws to be effected with respect to all or any part of the Pledged Stock, the
Pledgor as soon as practicable and at its expense will use its commercially
reasonable efforts to cause such registration to be declared effective (and be
kept effective) and will use its commercially reasonable efforts to cause such
qualification and compliance to be declared effective (and be kept effective) as
may be so requested and as would permit or facilitate the sale and distribution
of such Pledged Stock, including, without limitation, registration under the
Securities Act of 1933, as then in effect (or any similar statute then in
effect), appropriate qualifications under applicable blue sky or other state
securities laws and appropriate compliance with any other government
requirements, provided that the Collateral Agent shall furnish to the Pledgor
--------
such information regarding the Collateral Agent as the Pledgor may request in
writing and as shall be required in connection with any such registration,
qualification or compliance. Any such registration shall be effected in
accordance with customary underwriting practices and in compliance with
applicable law. The Pledgor will cause the Collateral Agent to be kept advised
in writing as to the
<PAGE>
Page 20
progress of each such registration, qualification or compliance and as to the
completion thereof, will furnish to the Collateral Agent such number of
prospectuses, offering circulars or other documents incident thereto as the
Collateral Agent from time to time may reasonably request, and will indemnify
the Collateral Agent and all others participating in the distribution of such
Pledged Stock against all claims, losses, damages and liabilities caused by any
untrue statement (or alleged untrue statement) of a material fact contained
therein (or in any related registration statement, notification or the like) or
by any omission (or alleged omission) to state therein (or in any related
registration statement, notification or the like) a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same may have been caused by an untrue statement or
omission based upon information furnished in writing to the Pledgor by the
Collateral Agent expressly for use therein.
(b) If at any time when the Collateral Agent shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Collateral Agent may, in its sole and absolute
discretion, sell such Pledged Securities or part thereof by private sale in such
manner and under such circumstances as the Collateral Agent may deem reasonably
necessary or advisable in order that such sale may legally be effected without
such registration. Without limiting the generality of the foregoing, in any
such event the Collateral Agent, in its commercially reasonable discretion (i)
may proceed to make such private sale notwithstanding that a registration
statement for the purpose of registering such Pledged Securities or part thereof
shall have been filed under such Securities Act, (ii) may approach and negotiate
with a single possible purchaser to effect such sale, and (iii) may restrict
such sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a view to the
distribution or sale of such Pledged Securities or part thereof. In the event
of any such sale, the Collateral Agent shall incur no responsibility or
liability for selling all or any part of the Pledged Securities at a price which
the Collateral Agent, in its commercially reasonable discretion, in good faith
deems reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
<PAGE>
Page 21
Section 18. TERMINATION; RELEASE. (a) If the Seller Obligations
have been paid in full as of the Termination Date (as defined below), this
Agreement and the security interest created hereby shall terminate, and the
Collateral Agent, at the request and expense of the Pledgor, will execute and
deliver to the Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to the Pledgor (without recourse and without any representation or
warranty other than a representation that the Collateral Agent has not granted
any lien on or security interest in the Collateral) such of the Collateral as
may be in the possession of the Collateral Agent or any of its sub-agents and
has not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any moneys at the time held by the Collateral Agent or
any of its sub-agents hereunder. As used in this Agreement, "Termination Date"
shall mean the date upon which the Commitments and all Interest Rate Protection
or Other Hedging Agreements have been terminated, no Note under the Credit
Agreement is outstanding (and all Loans have been repaid in full), all Letters
of Credit have been terminated and all Obligations then owing have been paid in
full.
If any Seller Obligations remain outstanding as of the Termination
Date, (x) Bankers Trust Company or any successor thereto shall cease to be the
Collateral Agent and shall be relieved of all obligations hereunder, (y) the
Seller Agent shall become the Collateral Agent succeeding to all of the rights
and obligations of Bankers Trust Company or its successor and (z) Bankers Trust
company shall deliver to the Seller Agent the certificates and instruments
representing the Pledged stock and the Pledged Notes, together with any stock
powers or other instruments of transfer then in the Collateral Agent's
possession.
(b) Notwithstanding anything to the contrary contained above, upon the
presentment of satisfactory evidence to the Collateral Agent in its sole
discretion that all obligations evidenced by any Pledged Note have been repaid
in full, and that any payments received by the Pledgor were permitted to be
received by the Pledgor pursuant to Section 6 hereof, the Collateral Agent
shall, upon the request and at the expense of the Pledgor, duly assign, transfer
and deliver to the Pledgor (without recourse and without any representation or
warranty other than a representation that the Collateral Agent has not granted
any lien on or security interest in such Pledged Note) such Pledged Note if same
is then in the possession of the Collateral Agent or any of its
<PAGE>
Page 22
sub-agents and has not theretofore been sold or otherwise applied or released
pursuant to this Agreement.
(c) At any time that the Pledgor desires that Collateral be released
as provided in the foregoing sub-section (a) or (b), it shall deliver to the
Collateral Agent a certificate signed by its chief financial officer stating
that the release of the respective Collateral is permitted pursuant to such
subsection (a) or (b).
(d) The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 18.
Section 19. NOTICES ETC. All such notices and communications
hereunder shall be telecopied or delivered by messenger or overnight courier
service and all such notices and communications shall, when mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, be effective when
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier and when mailed shall be effective
three Business Days following deposit in the mail with proper postage, except
that notices and communications to the Collateral Agent shall not be effective
until received by the Collateral Agent. All notices and other communications
shall be in writing and addressed as follows:
(a) if to the Pledgor, at:
Coinmach Laundry Corporation
55 Lumber Road
Roslyn, New York 11576
Attention: Robert M. Doyle
with a copy to:
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020-1182
Attention: Ronald S. Brody
(b) if to the Collateral Agent, at:
<PAGE>
Page 23
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Thomas P. Prior
(c) if to any Bank Creditor, either (x) to the Administrative Agent,
at the address of the Administrative Agent specified in the Credit
Agreement or (y) at such address as such Bank Creditor shall have specified
in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other Creditor
shall have specified in writing to the Pledgor and the Collateral Agent;
(e) if to any Seller Creditor at such address as such Seller Creditor
shall have specified in writing to the Pledgor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to and received by the party required to give notice hereunder.
Section 20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Pledgor, the Collateral Agent
(with the written consent of the Required Banks or, to the extent required by
Section 13.12 of the Credit Agreement, with the consent of each of the Banks)
and the Seller Agent to the extent such change, waiver or modification affects
the rights of the Seller Creditors as described herein; provided, however, that
-------- -------
any change, waiver, modification or variance affecting the rights and benefits
of a single Class (as defined below) of Secured Creditors (and not all Secured
Creditors in a like or similar manner) shall require the written consent of the
Requisite Creditors (as defined below) of such affected Class. For the purpose
of this Agreement, the term "Class" shall mean each class of Secured Creditors,
i.e., whether (y) the Bank Creditors as holders of the Credit Agreement
- ----
Obligations or (z) the Other Creditors as the holders of the Other Obligations.
For the purpose of this Agreement, the term "Requisite Creditors" of any Class
shall mean each of (x) with respect to the Credit Agreement Obligations, the
Required Banks and (y) with respect to the Other Obligations, the holders of 51%
of all obligations outstanding from time to time under the Interest Rate
Protection Agreements or Other Hedging Agreements.
<PAGE>
Page 24
Section 21. MISCELLANEOUS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. The headings
in this Agreement are for purposes of reference only and shall not limit or
define the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
Section 22. RECOURSE. This Agreement is made with full recourse to
the Pledgor and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgor contained herein, in the
other Credit Documents, in the Interest Rate Protection or Other Hedging
Agreements, the Seller Promissory Note and otherwise in writing in connection
herewith or therewith.
<PAGE>
Page 25
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
COINMACH LAUNDRY CORPORATION
as Pledgor
By: /s/ Robert M. Doyle
--------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
BANKERS TRUST COMPANY, as
Collateral Agent
By: /s/ Patricia Hogan
--------------------------------
Name: Patricia Hogan
Title: Vice President
RICHARD F. ENTHOVEN, as
Seller Agent
By: /s/ Richard F. Enthoven
--------------------------------
Name: Richard F. Enthoven
Title:
<PAGE>
Page 26
SCHEDULE A
<TABLE>
<CAPTION>
Part I. Pledged Stock
-------------
<S> <C> <C> <C>
Percentage of
Outstanding Shares
Name of Issuing Corporation Type of Shares Number of Shares of Capital Stock
- ----------------------------- -------------- ---------------- ------------------
Coinmach Corporation Common Stock, 100 100%
par value
$.01 per Share
</TABLE>
Part II. Pledged Notes
-------------
NONE
<PAGE>
Exhibit 10.47
-------------
BORROWER PLEDGE AGREEMENT
-------------------------
PLEDGE AGREEMENT (as amended, modified or supplemented from time to
time, this "Agreement"), dated as of January 8, 1997 made by COINMACH
CORPORATION (the "Pledgor"), to BANKERS TRUST COMPANY, as Collateral Agent
(together with any successor, the "Collateral Agent"), for the benefit of (x)
the Banks (as hereinafter defined), the Administrative Agent (as hereinafter
defined), the Syndication Agent (as hereinafter defined), the Documentation
Agent (as hereinafter defined) and the Collateral Agent under, and any other
lenders from time to time party to, the Credit Agreement hereinafter referred to
(such Banks, the Administrative Agent, the Syndication Agent, the Documentation
Agent, the Collateral Agent and such other lenders, if any, are hereinafter
called the "Bank Creditors") and (y) if one or more Banks or any Affiliate of a
Bank enters into one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect against the fluctuations
in currency values and/or (iii) other types of hedging agreements from time to
time (collectively, the "Interest Rate Protection or Other Hedging Agreements"),
with, or guaranteed by, the Pledgor, any such Bank or Banks or Affiliate or
Affiliates (even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason) so long as any such Bank or Affiliate
participates in the extension of such Interest Rate Protection or Other Hedging
Agreements, and their subsequent assigns, if any (collectively, the "Other
Creditors"; together with the Bank Creditors, the "Secured Creditors"). Except
as otherwise defined herein, terms used herein and defined in the Credit
Agreement shall be used herein as so defined.
R E C I T A L S :
---------------
1. Coinmach Laundry Corporation, the Pledgor, the lenders (the
"Banks") from time to time party thereto, Bankers Trust Company, as
Administrative Agent (together with any successor, the "Administrative Agent"),
First Union National Bank of North Carolina, as Syndication Agent (together with
any successor, the "Syndication Agent") and
1
<PAGE>
Page 2
Lehman Commercial Paper, Inc., as Documentation Agent (together with any
successor, the "Documentation Agent") have entered into a Credit Agreement,
dated as of the date hereof, providing for the making of Loans and the issuance
of, and participation in, Letters of Credit as contemplated therein (such
agreement, as amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement, the "Credit Agreement");
2. The Pledgor may at any time and from time to time enter into, or
guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection or Other Hedging Agreements with one or more Other Creditors;
3. It is a condition to each of the above-described extensions of
credit that the Pledgor shall have executed and delivered this Agreement;
4. The Pledgor desires to enter into this Agreement in order to
satisfy the condition described in the preceding paragraph.
A G R E E M E N T :
------------------
NOW, THEREFORE, in consideration of the above-described extensions of
credit to be made to the Pledgor and other benefits accruing to the Pledgor, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby
makes the following representations and warranties as of the date hereof to the
Collateral Agent for the benefit of the Secured Creditors and hereby covenants
and agrees with the Collateral Agent for the benefit of the Secured Creditors as
follows:
Section 1. SECURITY FOR OBLIGATIONS. This Agreement is made by the
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise in accordance with the terms of the
Credit Agreement) of (x) the principal of and interest on the Notes issued,
and Loans made, under the Credit Agreement, and all reimbursement
obligations and Unpaid Drawings with respect to the Letters of Credit under
the Credit Agreement and
<PAGE>
Page 3
(y) all other obligations and indebtedness (including, without limitation,
indemnities, Fees and interest thereon) of the Pledgor to the Bank
Creditors now existing or hereafter incurred under, arising out of, or in
connection with the Credit Agreement and the other Credit Documents and the
due performance and compliance by the Pledgor with all of the terms,
conditions and agreements contained in the Credit Agreement and the other
Credit Documents (all such principal, interest, obligations and liabilities
described in this clause (i) collectively, the "Credit Agreement
Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise in accordance with the terms of the
Credit Agreement) of all obligations and liabilities owing by the Pledgor
to the Other Creditors under, or with respect to, any Interest Rate
Protection or Other Hedging Agreement, whether such Interest Rate
Protection or Other Hedging Agreement is now in existence or hereafter
arising in connection with the Credit Documents, and the due performance
and compliance by the Pledgor with all of the terms, conditions and
agreements contained therein (all such obligations and liabilities
described in this clause (ii) collectively, the "Other Obligations");
(iii) any and all sums advanced and not repaid by the Collateral
Agent in order to preserve the Collateral (as hereinafter defined) or
preserve its security interest in the Collateral in accordance with the
terms hereof and the other Credit Documents; and
(iv) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations, or liabilities of the Pledgor referred to
in clauses (i) and (ii), after an Event of Default (as such term is defined
in the Security Agreement) shall have occurred and be continuing and the
Collateral Agent has given notice under Article X of the Credit Agreement,
the commercially reasonable expenses of retaking, holding, preparing for
sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Collateral Agent of its rights
hereunder, together with reasonable attorneys' fees and court costs in
accordance with the terms hereof and the other Credit Documents;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (iv) of this Section 1
<PAGE>
Page 4
collectively, the "Obligations," it being acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types described above,
whether outstanding on the date of this Agreement or extended from time to time
after the date of this Agreement.
Section 2. DEFINITION OF STOCK, NOTES, SECURITIES, ETC. As used
herein, (i) the term "Stock" shall mean (x) with respect to corporations
incorporated under the laws of the United States or any State or territory
thereof (each a "Domestic Corporation"), all of the issued and outstanding
shares of capital stock at any time owned by the Pledgor of any Domestic
Corporation and (y) with respect to corporations not Domestic Corporations (each
a "Foreign Corporation"), all of the issued and outstanding shares of capital
stock at any time owned by the Pledgor of any Foreign Corporation, provided
--------
that, except as provided in the last sentence of this Section 2, the Pledgor
shall not be required to pledge hereunder more than 65% of the total combined
voting power of all classes of capital stock of any Foreign Corporation entitled
to vote and (ii) the term "Notes" shall mean (x) all promissory notes at any
time issued to the Pledgor by any of its Subsidiaries or Affiliates and (y)
except as provided in the last sentence of this Section 2, the Pledgor shall not
be required to pledge hereunder any promissory notes issued to the Pledgor by
any Subsidiary of the Pledgor which is a Foreign Corporation. If and to the
extent that the Collateral Agent receives or holds stock certificates
representing more than 65% of the total combined voting power of all classes of
capital stock of any Foreign Corporation entitled to vote, the Collateral Agent
agrees to act as bailee and custodian for the benefit of the Pledgor with
respect to any portion of such capital stock representing more than 65% of the
total combined voting power of all classes of capital stock of any Foreign
Corporation entitled to vote except as otherwise provided in the last sentence
of this Section 2. As used herein, the term "Securities" shall mean all of the
Stock and Notes. The Pledgor represents and warrants, as to the stock of
corporations and promissory notes owned by the Pledgor, that on the date hereof
(a) the Stock consists of the number and type of shares of the stock of the
corporations as described in Part I of Schedule A hereto; (b) such Stock
----------
constitutes that percentage of the issued and outstanding capital stock of the
issuing corporation as is set forth in Part I of Schedule A hereto; (c) the
----------
Notes consist of the promissory notes described in Part II of Schedule A hereto;
----------
and (d) the Pledgor is the holder of record and sole beneficial owner of the
Stock and the Notes and there exist no options or preemption rights in
<PAGE>
Page 5
respect of any of the Stock. If following a change in the relevant sections of
the Code or the regulations, rules, rulings, notices or other official
pronouncements issued or promulgated thereunder which would permit a pledge (x)
of 66 2/3% or more (or would be adjusted to permit a pledge of less than 66
2/3%) of the total combined voting power of all classes of capital stock of any
Foreign Corporation entitled to vote and (y) of any promissory note issued by
any Subsidiary of the Pledgor which is a Foreign Corporation without causing the
undistributed earnings of such Foreign Corporation as determined for Federal
income taxes to be treated as a deemed dividend to the Pledgor for Federal
income tax purposes, then the 65% limitation set forth in clause (i)(y) and the
limitation in the proviso of clause (ii) in each case of this Section 2 shall no
longer be applicable (or shall be adjusted as appropriate) and the Pledgor shall
duly pledge and deliver to the Collateral Agent such of the Securities not
theretofore required to be pledged hereunder or the Collateral Agent shall
return such Securities, as applicable.
Section 3. PLEDGE OF SECURITIES, ETC.
Section 3.1. Pledge. To secure the Obligations and for the purposes
------
set forth in Section 1, the Pledgor (i) hereby grants to the Collateral Agent a
security interest in all of the Collateral (as hereinafter defined), (ii) hereby
pledges and deposits with the Collateral Agent the Securities owned by the
Pledgor on the date hereof, and delivers to the Collateral Agent certificates
therefor, duly endorsed in blank in the case of promissory notes and accompanied
by undated stock powers duly executed in blank by the Pledgor (and accompanied
by any transfer tax stamps required in connection with the pledge of such
Securities) in the case of capital stock, or such other instruments of transfer
as are reasonably acceptable to the Collateral Agent and (iii) hereby
collaterally assigns, transfers, hypothecates and sets over to the Collateral
Agent all of the Pledgor's right, title and interest in and to such Securities
(and in and to the certificates or instruments evidencing such Securities), to
be held by the Collateral Agent as collateral security for the Obligations, upon
the terms and conditions set forth in this Agreement.
Section 3.2. Subsequently Acquired Securities. If the Pledgor shall
--------------------------------
acquire (by purchase, stock dividend or otherwise) any additional Securities at
any time or from time to time after the date hereof, the Pledgor will promptly
thereafter pledge and deposit such Securities (or
<PAGE>
Page 6
certificates or instruments representing Securities) as security with the
Collateral Agent and deliver to the Collateral Agent certificates or instruments
therefor, duly endorsed in blank in the case of promissory notes, and
accompanied by undated stock powers duly executed in blank by the Pledgor (and
accompanied by any transfer tax stamps required in connection with the pledge of
such Securities) in the case of capital stock, or such other instruments of
transfer as are reasonably acceptable to the Collateral Agent, and will promptly
thereafter deliver to the Collateral Agent a certificate executed by a principal
executive officer of the Pledgor describing such Securities and certifying that
the same has been duly pledged with the Collateral Agent hereunder. Subject to
the last sentence of Section 2, the Pledgor shall not be required at any time to
pledge hereunder any promissory notes issued to the Pledgor by a Subsidiary
which is a Foreign Corporation or more than 65% of the total combined voting
power of all classes of capital stock of any Foreign Corporation entitled to
vote.
Section 3.3. Uncertificated Securities. Notwithstanding anything to
-------------------------
the contrary contained in Sections 3.1 and 3.2, if any Securities (whether now
owned or hereafter acquired) are uncertificated securities, the Pledgor shall
promptly notify the Collateral Agent thereof, and shall promptly take all
actions reasonably required to perfect the security interest of the Collateral
Agent under applicable law (including, in any event, under Sections 8-313 and 8-
321 of the New York Uniform Commercial Code if applicable). The Pledgor further
agrees to take such actions as the Collateral Agent deems reasonably necessary
or desirable to effect the foregoing and to permit the Collateral Agent to
exercise any of its rights and remedies hereunder, and agrees to provide an
opinion of counsel reasonably satisfactory to the Collateral Agent with respect
to any such pledge of uncertificated Securities promptly upon the reasonable
request of the Collateral Agent.
Section 3.4. Definitions of Pledged Stock; Pledged Notes; Pledged
----------------------------------------------------
Securities and Collateral. All Stock at any time pledged or required to be
- -------------------------
pledged hereunder is hereinafter called the "Pledged Stock;" all Notes at any
time pledged or required to be pledged hereunder are hereinafter called the
"Pledged Notes;" all Pledged Stock and Pledged Notes together are called the
"Pledged Securities;" and the Pledged Securities, together with all proceeds
thereof, including any securities and moneys received and at any time held by
the Collateral Agent hereunder, are hereinafter called the "Collateral."
<PAGE>
Page 7
Section 4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. The
Collateral Agent shall have the right to appoint one or more sub-agents, at the
cost and expense of the Collateral Agent, for the purpose of retaining physical
possession of the Pledged Securities, which may be held (in the reasonable
discretion of the Collateral Agent) in the name of the Pledgor, endorsed or
assigned in blank or in favor of the Collateral Agent or any nominee or nominees
of the Collateral Agent or a sub-agent appointed by the Collateral Agent.
Section 5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default and the
Collateral Agent has given written notice to the Pledgor in accordance with
Article X of the Credit Agreement, the Pledgor shall be entitled to vote any and
all Pledged Securities owned by it, and to give consents, waivers or
ratifications in respect thereof, provided that no vote shall be cast or any
--------
consent, waiver or ratification given or any action taken which would violate,
result in breach of any covenant contained in this Agreement, the Credit
Agreement or any other Credit Document or which is not permitted under any of
the Credit Documents and could reasonably be expected to have the effect of
materially impairing the value of the Collateral or any material part thereof or
the position or interests of the Collateral Agent or any Secured Creditor. All
such rights of the Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default has occurred and is
continuing and the Collateral Agent has given written notice to the Pledgor in
accordance with Article X of the Credit Agreement, and Section 7 hereof shall
become applicable.
Section 6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there
shall have occurred and be continuing an Event of Default and the Collateral
Agent has given written notice to the Pledgor in accordance with Article X of
the Credit Agreement, all cash dividends and distributions payable in respect of
the Pledged Stock and all payments in respect of the Pledged Notes shall be paid
to the Pledgor. The Collateral Agent shall be entitled to receive directly, and
to retain as part of the Collateral:
(a) all other or additional stock or securities (other than cash) paid
or distributed by way of dividend or otherwise, as the case may be, in
respect of the Pledged Stock;
<PAGE>
Page 8
(b) all other or additional stock or other securities paid (other than
cash) or distributed in respect of the Pledged Stock by way of stock-split,
spin-off, split-up, reclassification, combination of shares or similar
rearrangement; and
(c) all other or additional stock or other securities or property
(excluding cash) which may be paid in respect of the Collateral by reason
of any consolidation, merger, exchange of stock, conveyance of assets,
liquidation or similar corporate reorganization.
Nothing contained in this Section 6 shall limit or restrict in any way the
Collateral Agent's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by the Pledgor contrary to the provisions of
this Section 6 and Section 7 shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds of the
Pledgor and shall be forthwith paid or delivered over to the Collateral Agent as
Collateral in the same form as so received (with any necessary endorsement).
Section 7. REMEDIES IN CASE OF EVENTS OF DEFAULT. If there shall
have occurred and be continuing an Event of Default and the Collateral Agent has
given written notice to the Pledgor in accordance with Article X of the Credit
Agreement, then and in every such case, the Collateral Agent shall be entitled
to exercise all of the rights, powers and remedies (whether vested in it by this
Agreement, any other Credit Document, any Interest Rate Protection or Other
Hedging Agreement or by law) for the protection and enforcement of its rights in
respect of the Collateral, and the Collateral Agent shall be entitled to
exercise all the rights and remedies of a secured party under the Uniform
Commercial Code and also shall be entitled, without limitation, to exercise the
following rights, which the Collateral Agent agrees to exercise in a
commercially reasonable manner:
(a) to receive all amounts payable in respect of
the Collateral otherwise payable under Section 6 to the Pledgor;
(b) to transfer all or any part of the Collateral
into the Collateral Agent's name or the name of its nominee or nominees;
<PAGE>
Page 9
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect upon
any Pledged Note at such times and under the conditions set forth therein;
(d) to vote all or any part of the Pledged Stock (whether or not
transferred into the name of the Collateral Agent) and give all consents,
waivers and ratifications in respect of the Collateral and otherwise act
with respect thereto in a commercially reasonable manner as though it were
the outright owner thereof (the Pledgor hereby irrevocably constituting and
appointing the Collateral Agent the proxy and attorney-in-fact of the
Collateral Agent, with full power of substitution to do so upon the
occurrence and during the continuance of an Event of Default provided the
Collateral Agent has delivered written notice to the Pledgor in accordance
with Article X of the Credit Agreement); and
(e) to sell, assign and deliver, or grant options to purchase, all or
any part of the Collateral, or any interest therein, at any public or
private sale, without demand of performance, advertisement or notice of
intention to sell or of the time or place of sale or adjournment thereof or
to redeem or otherwise (all of which are hereby waived by the Pledgor), for
cash, on credit or for other property, for immediate or future delivery
without any assumption of credit risk, and for such price or prices and on
such terms as the Collateral Agent may determine in a commercially
reasonable manner, provided that at least 10 days' written notice of the
--------
time and place of any such sale shall be given to the Pledgor. The
Collateral Agent shall not be obligated to make any such sale of Collateral
regardless of whether any such notice of sale has theretofore been given.
The Pledgor hereby waives and releases to the fullest extent permitted by
law any right or equity of redemption with respect to the Collateral,
whether before or after sale hereunder other than the Pledgor's right to
receive any excess proceeds or Collateral remaining after payment in full
of the Obligations, and all rights, if any, of marshalling the Collateral
and any other security for the Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Collateral Agent on behalf of the
Secured Creditors may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption.
Neither the Collateral Agent nor any Secured Creditor shall be liable for
failure to collect (except in such cases
<PAGE>
Page 10
where the Collateral Agent bids for and purchases all or part of the
Collateral) or realize upon any or all of the Collateral or for any delay
in so doing nor shall any of them be under any obligation to take any
action whatsoever with regard thereto.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and
remedy of the Collateral Agent provided for in this Agreement, the other Credit
Documents, or the Interest Rate Protection or Other Hedging Agreements, or now
or hereafter existing at law or in equity or by statute, shall be cumulative and
concurrent and shall be in addition to every other such right, power or remedy.
The exercise or beginning of the exercise by the Collateral Agent or any Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement, the other Credit Documents or the Interest Rate Protection or
Other Hedging Agreements or now or hereafter existing at law or in equity or by
statute shall not preclude the simultaneous or later exercise by the Collateral
Agent or any Secured Creditor of all such other rights, powers or remedies, and
no failure or delay on the part of the Collateral Agent or any Secured Creditor
to exercise any such right, power or remedy shall operate as a waiver thereof
except as required by applicable law. Unless otherwise required by the Credit
Documents, no notice to or demand on the Pledgor in any case shall entitle it to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of any of the rights of the Collateral Agent or any Secured
Creditor to any other or further action in any circumstances without notice or
demand.
Section 9. APPLICATION OF PROCEEDS. All moneys collected by the
Collateral Agent upon any sale or other disposition of the Collateral, together
with all other moneys received by the Collateral Agent hereunder, shall be
applied to the payment of the Obligations in the manner provided by Section 7.4
of the Security Agreement.
Section 10. PURCHASERS OF COLLATERAL. Upon any sale of the
Collateral by the Collateral Agent hereunder (whether by virtue of the power of
sale herein granted, pursuant to judicial process or otherwise), the receipt of
the Collateral Agent or the officer making the sale shall be a sufficient
discharge to the purchaser or purchasers of the Collateral so sold, and such
purchaser or purchasers shall not be obligated to see to the application of any
part of the purchase money paid over to the Collateral Agent or such
<PAGE>
Page 11
officer or be answerable in any way for the misapplication or nonapplication
thereof.
Section 11. INDEMNITY. The Pledgor agrees to indemnify and hold
harmless the Collateral Agent and each Secured Creditor and their respective
successors, assigns, employees, agents and servants (each an "Indemnitee,";
collectively, the "Indemnitees") from and against any and all claims, demands,
losses, judgments and liabilities (including liabilities for penalties) of
whatsoever kind or nature, and to reimburse each Indemnitee for all costs and
expenses, including reasonable attorneys' fees, growing out of or resulting from
this Agreement or the exercise by any Indemnitee of any right or remedy granted
to it hereunder or under the other Credit Documents or the Interest Rate
Protection and Other Hedging Agreements (but excluding any claims, demands,
losses, judgments and liabilities or expenses to the extent finally judicially
determined to have been incurred by reason of gross negligence or willful
misconduct of such Indemnitee). If and to the extent that the obligations of
the Pledgor under this Section 11 are unenforceable for any reason, the Pledgor
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under applicable law.
Section 12. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) The Pledgor
agrees that it will join with the Collateral Agent in executing and, at its own
expense, file and refile under the Uniform Commercial Code or other applicable
law such financing statements, continuation statements and other documents in
such offices as the Collateral Agent may deem reasonably necessary and wherever
required by law in order to perfect and preserve the Collateral Agent's security
interest in the Collateral and hereby authorizes the Collateral Agent to file
financing statements and amendments thereto relative to all or any part of the
Collateral without the signature of the Pledgor where permitted by law, and
agrees to do such further acts and things and to execute and deliver to the
Collateral Agent such additional conveyances, assignments, agreements and
instruments as the Collateral Agent may reasonably require or deem necessary to
carry into effect the purposes of this Agreement or to further assure and
confirm unto the Collateral Agent its rights, powers and remedies hereunder.
(b) The Pledgor hereby appoints the Collateral Agent the Pledgor's
attorney-in-fact, with full authority in the place and stead of the Pledgor and
in the name of the
<PAGE>
Page 12
Pledgor or otherwise, from time to time after the occurrence and during the
continuance of an Event of Default and provided that the Collateral Agent shall
have delivered notice to the Pledgor in accordance with Article X of the Credit
Agreement, in the Collateral Agent's reasonable discretion to take any action
and to execute any instrument which the Collateral Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement.
Section 13. THE PLEDGEE AS AGENT. The Collateral Agent will hold in
accordance with this Agreement all items of the Collateral at any time received
under this Agreement. It is expressly understood and agreed by the parties
hereto and each Secured Creditor, by accepting the benefits of this Agreement,
each such person acknowledges and agrees that the obligations of the Collateral
Agent as holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Collateral Agent shall act hereunder
on the terms and conditions set forth herein and in Section 12 of the Credit
Agreement.
Section 14. TRANSFER BY THE PLEDGOR. The Pledgor will not sell or
otherwise dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except as may
be permitted in accordance with the terms of the Credit Agreement).
Section 15. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR.
The Pledgor represents and warrants that as of the date hereof (a) it is, or at
the time when pledged hereunder will be, the legal, record and beneficial owner
of, and has (or will have) good title to, all Securities pledged hereunder,
subject to no Lien (except the Lien created by this Agreement); (b) it has full
corporate power, authority and legal right to pledge all the Securities pursuant
to this Agreement; (c) this Agreement has been duly authorized, executed and
delivered by the Pledgor and constitutes a legal, valid and binding obligation
of the Pledgor enforceable in accordance with its terms, except to the extent
that the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law); (d) except to the extent already obtained or
made, no consent of any other party (including, without limitation, any
stockholder or
<PAGE>
Page 13
creditor of the Pledgor or any of its Subsidiaries) and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority is required
to be obtained by the Pledgor in connection with (i) the execution, delivery or
performance of this Agreement, (ii) the validity or enforceability of this
Agreement, (iii) the perfection or enforceability of the Collateral Agent's
security interest in the Collateral or (iv) except for compliance with or as may
be required by applicable securities laws, the exercise by the Collateral Agent
of any of its rights or remedies provided herein; (e) the execution, delivery
and performance of this Agreement will not violate any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or foreign, applicable
to the Pledgor, or of the Certificate of Incorporation or By-Laws of the Pledgor
or of any securities issued by the Pledgor or any of its Subsidiaries, or of any
material mortgage, indenture, lease, loan agreement, credit agreement or other
contract, agreement or instrument or undertaking to which the Pledgor or any of
its Subsidiaries is a party or which purports to be binding upon the Pledgor or
any of its Subsidiaries or upon any of their respective material assets and will
not result in the creation or imposition of (or the obligation to create or
impose) any lien or encumbrance on any of the assets of the Pledgor or any of
its Subsidiaries except as contemplated by this Agreement; (f) all the shares of
the Stock have been duly and validly issued, are fully paid and non-assessable
and are subject to no options to purchase or similar rights; (g) each of the
Pledged Notes to the extent executed by Holdings or any of its Subsidiaries
constitutes, or when executed by the obligor thereof will constitute, the legal,
valid and binding obligation of such obligor, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may by limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws generally affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or at law); and (h) the
pledge, collateral assignment and delivery to the Collateral Agent of the
Securities (other than uncertificated securities) pursuant to this Agreement
creates a valid and perfected first priority Lien in the Securities, and the
proceeds thereof, subject to no other Lien or to any agreement purporting to
grant to any third party a Lien on the property or assets of the Pledgor which
would include the Securities. The Pledgor covenants and agrees that it will
take commercially reasonable steps to defend the Collateral
<PAGE>
Page 14
Agent's right, title and security interest in and to the Securities and the
proceeds thereof against the claims and demands of all persons whomsoever; and
the Pledgor covenants and agrees that it will have like title to and right to
pledge any other property at any time hereafter pledged to the Collateral Agent
as Collateral hereunder and will likewise take commercially reasonable steps to
defend the right thereto and security interest therein of the Collateral Agent
and the Secured Creditors.
Section 16. PLEDGOR'S OBLIGATIONS ABSOLUTE, ETC. The obligations of
the Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance or
occurrence whatsoever, including, without limitation: (a) any renewal,
extension, amendment or modification of or addition or supplement to or deletion
from the Credit Documents, the Interest Rate Protection or Other Hedging
Agreements or any other instrument or agreement referred to therein, or any
assignment or transfer of any thereof; (b) any waiver, consent, extension,
indulgence or other action or inaction under or in respect of any such agreement
or instrument including, without limitation, this Agreement; (c) any furnishing
of any additional security to the Collateral Agent or its assignee or any
acceptance thereof or any release of any security by the Collateral Agent or its
assignee; (d) any limitation on any party's liability or obligations under any
such instrument or agreement or any invalidity or unenforceability, in whole or
in part, of any such instrument or agreement or any term thereof; or (e) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to the Pledgor or any Subsidiary
of the Pledgor, or any action taken with respect to this Agreement by any
trustee or receiver, or by any court, in any such proceeding, whether or not the
Pledgor shall have notice or knowledge of any of the foregoing.
Section 17. REGISTRATION, ETC. (a) If there shall have occurred and
be continuing an Event of Default and acceleration of the Notes then, and in
every such case, upon receipt by the Pledgor from the Collateral Agent of a
written request or requests that the Pledgor cause any registration,
qualification or compliance under any Federal or any state securities law or
laws to be effected with respect to all or any part of the Pledged Stock, the
Pledgor as soon as practicable and at its expense will use its commercially
reasonable efforts to cause such registration to be declared
<PAGE>
Page 15
effective (and be kept effective) and will use its commercially reasonable
efforts to cause such qualification and compliance to be declared effective (and
be kept effective) as may be so requested and as would permit or facilitate the
sale and distribution of such Pledged Stock, including, without limitation,
registration under the Securities Act of 1933, as then in effect (or any similar
statute then in effect), appropriate qualifications under applicable blue sky or
other state securities laws and appropriate compliance with any other government
requirements, provided that the Collateral Agent shall furnish to the Pledgor
--------
such information regarding the Collateral Agent as the Pledgor may request in
writing and as shall be required in connection with any such registration,
qualification or compliance. Any such registration shall be effected in
accordance with customary underwriting practices and in compliance with
applicable law. The Pledgor will cause the Collateral Agent to be kept advised
in writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Collateral
Agent such number of prospectuses, offering circulars or other documents
incident thereto as the Collateral Agent from time to time may reasonably
request, and will indemnify the Collateral Agent and all others participating in
the distribution of such Pledged Stock against all claims, losses, damages and
liabilities caused by any untrue statement (or alleged untrue statement) of a
material fact contained therein (or in any related registration statement,
notification or the like) or by any omission (or alleged omission) to state
therein (or in any related registration statement, notification or the like) a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same may have been caused by an
untrue statement or omission based upon information furnished in writing to the
Pledgor by the Collateral Agent expressly for use therein.
(b) If at any time when the Collateral Agent shall determine to
exercise its right to sell all or any part of the Pledged Securities pursuant to
Section 7, and such Pledged Securities or the part thereof to be sold shall not,
for any reason whatsoever, be effectively registered under the Securities Act of
1933, as then in effect, the Collateral Agent may, in its sole and absolute
discretion, sell such Pledged Securities or part thereof by private sale in such
manner and under such circumstances as the Collateral Agent may deem reasonably
necessary or advisable in order that such sale may legally be effected without
such registration. Without limiting the generality of the foregoing, in any
such
<PAGE>
Page 16
event the Collateral Agent, in its commercially reasonable discretion (i) may
proceed to make such private sale notwithstanding that a registration statement
for the purpose of registering such Pledged Securities or part thereof shall
have been filed under such Securities Act, (ii) may approach and negotiate with
a single possible purchaser to effect such sale, and (iii) may restrict such
sale to a purchaser who will represent and agree that such purchaser is
purchasing for its own account, for investment, and not with a view to the
distribution or sale of such Pledged Securities or part thereof. In the event
of any such sale, the Collateral Agent shall incur no responsibility or
liability for selling all or any part of the Pledged Securities at a price which
the Collateral Agent, in its commercially reasonable discretion, in good faith
deems reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
Section 18. TERMINATION; RELEASE. (a) After the Termination Date
(as defined below), this Agreement and the security interest created hereby
shall terminate, and the Collateral Agent, at the request and expense of the
Pledgor, will execute and deliver to the Pledgor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty other than a representation that the
Collateral Agent has not granted any lien on or security interest in the
Collateral) such of the Collateral as may be in the possession of the Collateral
Agent or any of its sub-agents and has not theretofore been sold or otherwise
applied or released pursuant to this Agreement, together with any moneys at the
time held by the Collateral Agent or any of its sub-agents hereunder. As used
in this Agreement, "Termination Date" shall mean the date upon which the
Commitments and all Interest Rate Protection or Other Hedging Agreements have
been terminated, no Note under the Credit Agreement is outstanding (and all
Loans have been repaid in full), all Letters of Credit have been terminated and
all Obligations then owing have been paid in full.
(b) Notwithstanding anything to the contrary contained above, upon the
presentment of satisfactory evidence to the Collateral Agent in its sole
discretion that all obligations evidenced by any Pledged Note have been repaid
in full, and that any payments received by the Pledgor were permitted to be
received by the Pledgor pursuant to Section 6 hereof, the Collateral Agent
shall, upon the request and at
<PAGE>
Page 17
the expense of the Pledgor, duly assign, transfer and deliver to the Pledgor
(without recourse and without any representation or warranty other than a
representation that the Collateral Agent has not granted any lien on or security
interest in such Pledged Note) such Pledged Note if same is then in the
possession of the Collateral Agent or any of its sub-agents and has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement.
(c) In the event that any part of the Collateral is sold in connection
with a sale permitted by Section 9.02 of the Credit Agreement or otherwise
released at the direction of the Required Banks (or all Banks if required by
Section 13.12 of the Credit Agreement) and the proceeds of such sale or sales or
from such release are applied in accordance with the provisions of Section 4.02
of the Credit Agreement, to the extent required to be so applied, the Collateral
Agent, at the request and expense of the Pledgor, will duly assign, transfer and
deliver to the Pledgor (without recourse and without any representation or
warranty) such of the Collateral as is then being (or has been) so sold or
released and as may be in the possession of the Collateral Agent or any of its
sub-agents and has not theretofore been released pursuant to this Agreement.
(d) At any time that the Pledgor desires that Collateral be released
as provided in the foregoing sub-section (a), (b) or (c), it shall deliver to
the Collateral Agent a certificate signed by its chief financial officer stating
that the release of the respective Collateral is permitted pursuant to such
subsection (a), (b) or (c).
(e) The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as the result of any release of Collateral by it in accordance
with this Section 18.
Section 19. NOTICES ETC. All such notices and communications
hereunder shall be telecopied or delivered by messenger or overnight courier
service and all such notices and communications shall, when mailed, telegraphed,
telexed, telecopied, or cabled or sent by overnight courier, be effective when
delivered to the telegraph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier and when mailed shall be effective
three Business Days following deposit in the mail with proper postage, except
that notices and communications to the Collateral Agent shall not be effective
until received by the
<PAGE>
Page 18
Collateral Agent. All notices and other communications shall be in writing and
addressed as follows:
(a) if to the Pledgor, at:
Coinmach Corporation
55 Lumber Road
Roslyn, New York 11576
Attention: Robert M. Doyle
with a copy to:
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020-1182
Attention: Ronald S. Brody
(b) if to the Collateral Agent, at:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Thomas P. Prior
(c) if to any Bank Creditor, either (x) to the Administrative Agent,
at the address of the Administrative Agent specified in the Credit
Agreement or (y) at such address as such Bank Creditor shall have specified
in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other Creditor
shall have specified in writing to the Pledgor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to and received by the party required to give notice hereunder.
Section 20. WAIVER; AMENDMENT. None of the terms and conditions of
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Pledgor and the Collateral Agent
(with the written consent of the Required Banks or, to the extent required by
Section 13.12 of the Credit Agreement, with the consent of each of the Banks);
provided, however, that any change, waiver, modification or variance affecting
- -------- -------
the rights and benefits of a single Class (as defined below) of Secured
Creditors (and not all Secured Creditors in a like or similar manner) shall
require the written consent of the Requisite Creditors (as defined below) of
such affected Class. For the purpose of this Agreement, the term
<PAGE>
Page 19
"Class" shall mean each class of Secured Creditors, i.e., whether (y) the Bank
---
Creditors as holders of the Credit Agreement Obligations or (z) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (x)
with respect to the Credit Agreement Obligations, the Required Banks and (y)
with respect to the Other Obligations, the holders of 51% of all obligations
outstanding from time to time under the Interest Rate Protection Agreements or
Other Hedging Agreements.
Section 21. MISCELLANEOUS. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of and be enforceable by each of the parties hereto and its
successors and assigns. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK. The headings
in this Agreement are for purposes of reference only and shall not limit or
define the meaning hereof. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one instrument. In the event that any provision of this Agreement
shall prove to be invalid or unenforceable, such provision shall be deemed to be
severable from the other provisions of this Agreement which shall remain binding
on all parties hereto.
Section 22. RECOURSE. This Agreement is made with full recourse to
the Pledgor and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgor contained herein, in the
other Credit Documents, in the Interest Rate Protection or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
<PAGE>
Page 20
IN WITNESS WHEREOF, the Pledgor and the Collateral Agent have caused
this Agreement to be executed by their duly elected officers duly authorized as
of the date first above written.
COINMACH CORPORATION,
as Pledgor
By /s/ Robert M. Doyle
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
BANKERS TRUST COMPANY, as
Collateral Agent
By /s/ Patricia Hogan
-------------------------------
Name: Patricia Hogan
Title: Vice President
<PAGE>
Page 21
SCHEDULE A
<TABLE>
<CAPTION>
Part I. Pledged Stock
-------------
<S> <C> <C> <C>
Percentage of
Outstanding Shares
Name of Issuing Corporation Type of Shares Number of Shares of Capital Stock
- ----------------------------- -------------- ---------------- ------------------
Grand Wash & Dry Common Stock, 10 100%
Launderette, Inc. no par value
Super Laundry Equipment Common Stock, 10 100%
Corp. par value
$.01 per Share
</TABLE>
Part II. Pledged Notes
-------------
NONE
<PAGE>
Exhibit 10.48
-------------
SECURITY AGREEMENT
among
COINMACH CORPORATION
and
BANKERS TRUST COMPANY,
as Collateral Agent
Dated as of January 8, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
SECURITY INTERESTS.................. 2
Section 1.1. Grant of Security Interests.................. 2
Section 1.2. Power of Attorney............................ 3
ARTICLE II
GENERAL REPRESENTATIONS,
WARRANTIES AND COVENANTS................... 3
Section 2.1. Necessary Filings............................ 3
Section 2.2. No Liens..................................... 4
Section 2.3. Other Financing Statements................... 4
Section 2.4. Chief Executive Office; Records.............. 4
Section 2.5. Location of Inventory and Equipment.......... 5
Section 2.6. Recourse..................................... 5
Section 2.7. Trade Names; Change of Name.................. 6
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS...... 6
Section 3.1. Additional Representations and Warranties.... 6
Section 3.2. Maintenance of Records....................... 7
Section 3.3. Direction to Account Debtors; Contracting
Parties; etc............................... 7
Section 3.4. Modification of Terms; etc................... 8
Section 3.5. Collection................................... 8
Section 3.6. Instruments.................................. 9
Section 3.7. Further Actions.............................. 9
ARTICLE IV
SPECIAL PROVISIONS CONCERNING MARKS......... 9
Section 4.1. Additional Representations and Warranties.... 9
Section 4.2. Licenses and Assignments..................... 10
-i-
<PAGE>
Page
----
Section 4.3. Infringements................................ 10
Section 4.4. Preservation of Marks........................ 10
Section 4.5. Maintenance of Registration.................. 10
Section 4.6. Future Registered Marks...................... 10
Section 4.7. Remedies..................................... 11
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS................ 11
Section 5.1. Additional Representations and Warranties.... 11
Section 5.2. Licenses and Assignments..................... 12
Section 5.3. Infringements................................ 12
Section 5.4. Maintenance of Patents....................... 12
Section 5.5. Prosecution of Patent Application............ 12
Section 5.6. Other Patents and Copyrights................. 13
Section 5.7. Remedies..................................... 13
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL......... 13
Section 6.1. Protection of Collateral Agent's Security.... 13
Section 6.2. Warehouse Receipts Non-negotiable............ 14
Section 6.3. Further Actions.............................. 14
Section 6.4. Financing Statements......................... 14
ARTICLE VII
REMEDIES UPON OCCURRENCE OF
EVENT OF DEFAULT................... 15
Section 7.1. Remedies; Obtaining the Collateral Upon
Default.................................... 15
Section 7.2. Remedies; Disposition of the Collateral...... 16
Section 7.3. Waiver of Claims............................. 17
Section 7.4. Application of Proceeds...................... 18
Section 7.5. Remedies Cumulative.......................... 21
Section 7.6. Discontinuance of Proceedings................ 21
-ii-
<PAGE>
Page
----
ARTICLE VIII
INDEMNITY...................... 22
Section 8.1. Indemnity.................................... 22
Section 8.2. Indemnity Obligations Secured by Collateral;
Survival................................... 23
ARTICLE IX
DEFINITIONS..................... 24
ARTICLE X
MISCELLANEOUS.................... 29
Section 10.1. Notices...................................... 29
Section 10.2. Waiver; Amendment............................ 31
Section 10.3. Obligations Absolute......................... 31
Section 10.4. Successors and Assigns....................... 31
Section 10.5. Headings Descriptive......................... 32
Section 10.6. Severability................................. 32
Section 10.7. GOVERNING LAW................................ 32
Section 10.8. Pledgor's Duties............................. 32
Section 10.9. Termination; Release......................... 32
Section 10.10. Counterparts................................. 33
Section 10.11. The Collateral Agent......................... 33
ANNEX A Schedule of Permitted Filings
ANNEX B Schedule of Record Locations
ANNEX C Schedule of Inventory and Equipment Locations
ANNEX D Schedule of Trade, Fictitious and Other Names
ANNEX E Schedule of Marks
ANNEX F Schedule of License Agreements and Assignments
ANNEX G Schedule of Patents and Applications
ANNEX H Schedule of Copyrights and Applications
ANNEX I Assignments of Security Interest in United States
Trademarks and Patents
ANNEX J Assignment of Security Interest in United States
Copyrights
-iii-
<PAGE>
SECURITY AGREEMENT
------------------
SECURITY AGREEMENT (as amended, modified or supplemented from time to
time, this "Agreement"), dated as of January 8, 1997, by COINMACH CORPORATION
(the "Pledgor") a Delaware corporation having an office at 55 Lumber Road,
Roslyn, New York 11576, in favor of BANKERS TRUST COMPANY, as Collateral Agent
(the "Collateral Agent") for the benefit of (x) the Banks, the Administrative
Agent (as hereinafter defined), the Syndication Agent (as hereinafter defined),
the Documentation Agent (as hereinafter defined) and the Collateral Agent under,
and any other lenders from time to time party to, the Credit Agreement
hereinafter referred to (such Banks, the Administrative Agent, the Syndication
Agent, the Documentation Agent, the Collateral Agent and such other lenders, if
any, are hereinafter called the "Bank Creditors") and (y) if one or more Banks
(or any Affiliate thereof) enter into one or more (i) interest rate protection
agreements (including, without limitation, interest rate swaps, caps, floors,
collars and similar agreements), (ii) foreign exchange contracts, currency swap
agreements or other similar agreements or arrangements designed to protect
against the fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (collectively, the "Interest Rate Protection or
Other Hedging Agreements") with, or guaranteed by, the Pledgor, any such Bank or
Banks or any Affiliate of such Bank or Banks (even if the respective Bank
subsequently ceases to be a Bank under the Credit Agreement for any reason) so
long as any such Bank or Affiliate participates in the extension of such
Interest Rate Protection or Other Hedging Agreements and their subsequent
assigns, if any (collectively, the "Other Creditors"; together with the Bank
Creditors, the "Secured Creditors"). Except as otherwise defined herein, terms
used herein and defined in the Credit Agreement shall be used herein as so
defined.
R E C I T A L S :
---------------
1. Coinmach Laundry Corporation, the Pledgor, the lenders (the
"Banks") from time to time party thereto, Bankers Trust Company, as
Administrative Agent (together with any successor, the "Administrative Agent"),
First Union National Bank of North Carolina, as Syndication Agent (together with
any successor, the "Syndication Agent") and Lehman Commercial Paper, Inc., as
Documentation Agent (together with any successor, the "Documentation Agent")have
entered into a Credit Agreement, dated as of the date hereof, providing for the
making of Loans and the issuance of, and participation in, Letters of Credit as
contemplated therein (such agreement, as amended, modified, extended, renewed,
replaced, restated or supplemented from time to time, and including any
agreement extending the maturity of, or
<PAGE>
Page 2
restructuring all or any portion of the Indebtedness under such agreement or any
successor agreement, the "Credit Agreement").
2. The Pledgor may at any time and from time to time enter into, or
guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection or Other Hedging Agreements with one or more Other Creditors.
3. It is a condition to each of the above-described extensions of
credit to the Pledgor that the Pledgor shall have executed and delivered this
Agreement.
4. The Pledgor desires to enter into this Agreement in order to
satisfy the condition described in the preceding paragraph.
A G R E E M E N T :
-----------------
NOW, THEREFORE, in consideration of the extensions of credit to be
made to the Pledgor and other benefits accruing to the Pledgor, the receipt and
sufficiency of which are hereby acknowledged, the Pledgor hereby makes the
following representations and warranties to the Collateral Agent for the benefit
of the Secured Creditors and hereby covenants and agrees with the Collateral
Agent for the benefit of the Secured Creditors as follows:
ARTICLE I
SECURITY INTERESTS
Section 1.1. Grant of Security Interests. (a) As security for the
---------------------------
prompt and complete payment and performance when due of all of the Obligations,
the Pledgor does hereby collaterally assign and transfer unto the Collateral
Agent, and does hereby grant to the Collateral Agent for the benefit of the
Secured Creditors, a continuing security interest of first priority (subject to
Liens evidenced by Permitted Filings and other Permitted Liens) in, all of the
right, title and interest of the Pledgor in, to and under all of the following,
whether now existing or hereafter from time to time acquired: (i) each and
every Receivable, (ii) all Contracts, together with all Contract Rights arising
thereunder, (iii) all Inventory, (iv) the Cash Collateral Account established
for the Pledgor and all monies, securities and instruments deposited or required
to be deposited in such Cash Collateral Account, (v) all Equipment, (vi) all
Marks, together with the registrations and right to all renewals thereof, and
the goodwill of the business of the Pledgor
<PAGE>
Page 3
symbolized by the Marks, (vii) all Patents and Copyrights, and all reissues,
renewals or extensions thereof, (viii) all computer programs of the Pledgor and
all intellectual property rights therein and all other proprietary information
of the Pledgor, including, but not limited to, Trade Secrets, (ix) all other
Goods, General Intangibles, Chattel Paper, Documents and Instruments (other than
the Pledged Securities), and (x) all Proceeds and products of any and all of the
foregoing (all of the above, collectively, the "Collateral").
(b) The security interests of the Collateral Agent under this
Agreement extend to all Collateral of the kind which is the subject of this
Agreement which the Pledgor may acquire at any time during the continuation of
this Agreement.
Section 1.2. Power of Attorney. The Pledgor hereby constitutes and
-----------------
appoints the Collateral Agent its true and lawful attorney, irrevocably, with
full power after the occurrence of and during the continuance of an Event of
Default (in the name of the Pledgor or as otherwise provided herein), in the
Collateral Agent's reasonable discretion, to take any action and to execute any
instrument which the Collateral Agent may reasonably deem necessary or advisable
to accomplish the purposes of this Agreement, which appointment as attorney is
coupled with an interest.
ARTICLE II
GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS
The Pledgor represents, warrants and covenants, as of the date hereof,
which representations, warranties and covenants shall survive execution and
delivery of this Agreement, as follows:
Section 2.1. Necessary Filings. All filings, registrations and
-----------------
recordings necessary or appropriate to create, preserve, protect and perfect the
security interest granted by the Pledgor to the Collateral Agent hereby in
respect of the Collateral, to the knowledge of the Pledgor, have been filed or
concurrently herewith are being filed and the security interest granted to the
Collateral Agent pursuant to this Agreement in and to Collateral constitutes or
shall constitute upon the appropriate filing a perfected security interest
therein prior to the rights of all other Persons therein and subject to no other
Liens (except that the Collateral may be subject to the security interests
evidenced by the financing statements disclosed on Schedule A hereto, but only
----------
to the respective date, if any, set forth on Schedule A (the "Permitted
----------
Filings") and to any other
<PAGE>
Page 4
Permitted Liens, and is or shall be entitled to all the rights, priorities and
benefits afforded by the Uniform Commercial Code to the extent complied with or
other relevant law as enacted in any relevant jurisdiction to perfected security
interests.
Section 2.2. No Liens. The Pledgor is, and as to Collateral acquired
--------
by it from time to time after the date hereof the Pledgor will be, the owner of
all Collateral free from any Lien, security interest, encumbrance or other
right, title or interest of any Person (other than Liens created hereby,
Permitted Liens or Liens evidenced by the Permitted Filings), and the Pledgor
shall use its good faith efforts to defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein
adverse to the Collateral Agent.
Section 2.3. Other Financing Statements. As of the date hereof,
--------------------------
there is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) on file or of record in any
relevant jurisdiction covering or purporting to cover any interest of any kind
in the Collateral except as disclosed in Schedule A hereto and as may be filed
----------
in connection with Permitted Liens and so long as any Commitment has not been
terminated or any Letter of Credit or Note remains outstanding or any of the
Obligations remain unpaid or any Interest Rate Protection or Other Hedging
Agreement remains in effect or any obligations are owed with respect thereto,
the Pledgor shall not execute or authorize to be filed in any public office any
financing statement (or similar statement or instrument of registration under
the law of any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and covering the
security interests granted hereby by the Pledgor or in respect of the Permitted
Liens.
Section 2.4. Chief Executive Office; Records. As of the date hereof,
-------------------------------
the chief executive office of the Pledgor is located at the location indicated
on Schedule B hereto. The Pledgor will not move its chief executive office
----------
except to such new location as the Pledgor may establish in accordance with the
last sentence of this Section 2.4. The originals of all documents evidencing
all Receivables and Contract Rights and Trade Secrets of the Pledgor and the
only original books of account and records of the Pledgor relating thereto are,
and will continue to be, kept at the chief executive office of the Pledgor, at
such other locations shown on Schedule C hereto or at such new locations as the
----------
Pledgor may establish in accordance with the last sentence of this Section 2.4.
All Receivables and Contract Rights of the Pledgor are, and will continue to be,
maintained at, and controlled and directed (including, without
<PAGE>
Page 5
limitation, for general accounting purposes) from, the office locations
described above. The Pledgor will not establish a new location for such offices
until (i) it shall have given to the Collateral Agent not less than 30 days'
prior written notice of its intention so to do, clearly describing such new
location and providing such other information in connection therewith as the
Collateral Agent may reasonably request, (ii) with respect to such new location,
it shall have taken all action to maintain the security interest of the
Collateral Agent in the Collateral intended to be granted and perfected hereby
at all times fully perfected and in full force and effect, and (iii) the
Collateral Agent shall have received reasonably satisfactory evidence that all
other actions (including, without limitation, the payment of all filing fees and
taxes, if any, payable in connection with such filings) have been taken, in
order to perfect (and maintain the perfection and priority of) the security
interest granted hereby.
Section 2.5. Location of Inventory and Equipment. All Inventory and
-----------------------------------
Equipment held on the date hereof by the Pledgor is located at one of the
locations shown on Schedule D hereto. The Pledgor agrees that all Inventory and
----------
Equipment now held or subsequently acquired by it shall be kept at (or shall be
in transport to) one of the locations shown on Schedule D hereto or such new
----------
location as the Pledgor may establish in accordance with the last sentence of
this Section 2.5. The Pledgor shall not establish a new location for Inventory
and Equipment until (i) it shall have given to the Collateral Agent not less
than 30 days' prior written notice of its intention so to do, clearly describing
such new location and providing such other information in connection therewith
as the Collateral Agent may request, (ii) with respect to such new location, it
shall have taken all action satisfactory to the Collateral Agent to maintain the
security interest of the Collateral Agent in the Collateral intended to be
granted hereby at all times fully perfected and in full force and effect, and
(iii) the Collateral Agent shall have received evidence that all other actions
(including, without limitation, the payment of all filing fees and taxes, if
any, payable in connection with such filings) have reasonably been taken, in
order to perfect (and maintain the perfection and priority of) the security
interest granted hereby.
Section 2.6. Recourse. This Agreement is made with full recourse to
--------
the Pledgor and pursuant to and upon all the warranties, representations,
covenants and agreements on the part of the Pledgor contained herein, in the
other Credit Documents, in the Interest Rate Protection or Other Hedging
Agreements and otherwise in writing in connection herewith or therewith.
<PAGE>
Page 6
Section 2.7. Trade Names; Change of Name. The Pledgor does not have
---------------------------
or operate in any jurisdiction under, or in the preceding 12 months has not had
or has not operated in any jurisdiction under, any trade names, fictitious names
or other names (including, without limitation, any names of divisions or
operations) except its legal name and such other trade, fictitious or other
names as are listed on Schedule E hereto. The Pledgor shall not change its
----------
legal name or assume or operate in any jurisdiction under any trade, fictitious
or other name in any manner which might make any financing statement or
continuation statement filed in connection therewith seriously misleading within
the meaning of Section 9-402(7) of the UCC except those names listed on Schedule
--------
E hereto and new names (including, without limitation, any names of divisions or
- -
operations) established in accordance with the last sentence of this Section
2.7. The Pledgor shall not assume or operate in any jurisdiction under any new
trade, fictitious or other name that would make any financing statement or
continuation statement filed in connection therewith, seriously misleading
within the meaning of Section 9-402(7) of the UCC until (i) it shall have given
to the Collateral Agent not less than 30 days' prior written notice of its
intention so to do, clearly describing such new name and the jurisdictions in
which such new name shall be used and providing such other information in
connection therewith as the Collateral Agent may reasonably request and (ii)
with respect to such new name, it shall have taken all reasonable action to
maintain the security interest of the Collateral Agent in the Collateral
intended to be granted hereby at all times fully perfected and in full force and
effect.
ARTICLE III
SPECIAL PROVISIONS CONCERNING
RECEIVABLES; CONTRACT RIGHTS; INSTRUMENTS
Section 3.1. Additional Representations and Warranties. As of the
-----------------------------------------
time when each of its Receivables arises, the Pledgor shall be deemed to have
represented and warranted that such Receivable, and all records, papers and
documents relating thereto (if any) are genuine and in all material respects
what they purport to be, and that all papers and documents (if any) relating
thereto to the actual knowledge of the Pledgor (i) will represent the genuine,
legal, valid and binding obligation of the account debtor evidencing
indebtedness unpaid and owed by the respective account debtor arising out of the
performance of labor or services or the sale or lease and delivery of the
merchandise listed therein, or both, (ii) will be the only original writings
evidencing and embodying such obligation of the account debtor named therein
(other than copies
<PAGE>
Page 7
created for general accounting purposes), (iii) will evidence true and valid
obligations, enforceable in accordance with their respective terms and (iv) will
be in compliance and will conform in each case in all material respects with all
applicable federal, state and local laws and applicable laws of any relevant
foreign jurisdiction.
Section 3.2. Maintenance of Records. The Pledgor will keep and
----------------------
maintain at its own cost and expense satisfactory and complete records of its
Receivables and Contracts, including, but not limited to, the originals or
copies of all documentation (including each Contract) with respect thereto,
records of all payments received, all credits granted thereon, all merchandise
returned and all other dealings therewith, and the Pledgor will make the same
available on the Pledgor's premises to the Collateral Agent for inspection, at
the Pledgor's own cost and expense, at any and all reasonable times; provided,
--------
however, if no Event of Default has occurred and is then continuing, Collateral
- -------
Agent shall give the Pledgor reasonable prior written notice of any such
inspection. Upon the occurrence and during the continuance of an Event of
Default and upon the reasonable request of the Collateral Agent, the Pledgor
shall, at its own cost and expense, deliver all tangible evidence of its
Receivables and Contract Rights (including, without limitation, all documents
evidencing the Receivables and all Contracts) and such books and records to the
Collateral Agent or to its representatives (copies of which evidence and books
and records may be retained by the Pledgor). Upon the occurrence and during the
continuance of an Event of Default and the delivery by the Collateral Agent of
notice to the Pledgor in accordance with Article X of the Credit Agreement, if
the Collateral Agent so directs, the Pledgor shall legend, in form and manner
reasonably satisfactory to the Collateral Agent, its Receivables and the
Contracts, as well as all books, records and documents of the Pledgor evidencing
or pertaining to such Receivables and Contracts with an appropriate reference to
the fact that such Receivables and Contracts have been assigned to the
Collateral Agent and that the Collateral Agent has a security interest therein.
Section 3.3. Direction to Account Debtors; Contracting Parties; etc.
------------------------------------------------------
Upon the occurrence and during the continuance of an Event of Default and
delivery of notice to the Pledgor in accordance with Article X of the Credit
Agreement, and if the Collateral Agent so directs the Pledgor, to the extent
permitted by applicable law, the Pledgor agrees (x) to cause all payments on
account of the Receivables and Contracts to be made directly to the Cash
Collateral Account, (y) that the Collateral Agent may, at its option, directly
notify the obligors with respect to any Receivables and/or under any Contracts
to make payments with
<PAGE>
Page 8
respect thereto as provided in preceding clause (x), and (z) that the Collateral
Agent may enforce collection of any such Receivables and Contracts and may
adjust, settle or compromise the amount of payment thereof, in the same manner
and to the same extent as the Pledgor. Without notice to or assent by the
Pledgor, the Collateral Agent may apply any or all amounts then in, or
thereafter deposited in, the Cash Collateral Account which application shall be
effected in the manner provided in Section 7.4 of this Agreement. The
reasonable costs and expenses (including reasonable attorneys' fees) of
collection, whether incurred by the Pledgor or the Collateral Agent, shall be
borne by the Pledgor.
Section 3.4. Modification of Terms; etc. Except as otherwise
---------------------------
provided in the Credit Agreement, the Pledgor shall not rescind or cancel any
indebtedness evidenced by any Receivable or under any Contract, or modify any
term relating to such indebtedness or make any adjustment with respect thereto,
or extend or renew the same, or compromise or settle any material dispute,
claim, suit or legal proceeding relating thereto, or sell any Receivable or
Contract, or interest therein, without the prior written consent of the
Collateral Agent (not to be unreasonably withheld), except as permitted by
Section 3.5. Except as otherwise provided in the Credit Agreement, the Pledgor
will duly fulfill all obligations on its part to be fulfilled under or in
connection with the Receivables and Contracts and will do nothing to impair in
any material respect the rights of the Collateral Agent in the Receivables or
Contracts.
Section 3.5. Collection. The Pledgor shall endeavor to cause to be
----------
collected from the account debtor named in each of its Receivables or obligor
under any of its Contract, as and when due (including, without limitation,
amounts which are delinquent, such amounts to be collected in accordance with
generally accepted lawful collection procedures) any and all amounts owing under
or on account of such Receivable or Contract, and apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of such
Receivable or under such Contract, except that, unless an Event of Default has
occurred and is continuing and the Collateral Agent has delivered notice to the
Pledgor in accordance with Article X of the Credit Agreement, the Pledgor may
allow in the ordinary course of business as adjustments to amounts owing under
its Receivables and Contracts (i) an extension or renewal of the time or times
of payment, or settlement for less than the total unpaid balance, as the Pledgor
finds appropriate in accordance with sound business judgment and (ii) a refund
or credit due as a result of returned or damaged merchandise or improperly
performed services. The reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees) of collection, whether incurred by
<PAGE>
Page 9
the Pledgor or the Collateral Agent, shall be borne by the Pledgor.
Section 3.6. Instruments. If the Pledgor owns or acquires any
-----------
Instrument constituting Collateral in an amount in excess of $250,000, the
Pledgor will within ten days notify the Collateral Agent thereof, and upon
request by the Collateral Agent will promptly deliver such Instrument to the
Collateral Agent appropriately endorsed to the order of the Collateral Agent as
further security hereunder.
Section 3.7. Further Actions. The Pledgor will, at its own expense,
---------------
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of attorney,
certificates, reports and other assurances or instruments and take such further
steps relating to its Receivables, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.
ARTICLE IV
SPECIAL PROVISIONS CONCERNING MARKS
Section 4.1. Additional Representations and Warranties. The Pledgor
-----------------------------------------
represents and warrants that, as of the date hereof, it is the true and lawful
exclusive owner of its Marks listed in Schedule F hereto and that said listed
----------
Marks include all the United States federal registrations or applications
registered in the United States Patent and Trademark Office. The Pledgor
represents and warrants that, to the best of its knowledge, it owns or is
licensed to use or is not prohibited from using all Marks that it uses. The
Pledgor further warrants that it is aware of no third party claim that any
aspect of the Pledgor's present or contemplated business operations infringes or
will infringe any Mark. The Pledgor represents and warrants that it is the
owner of record of all United States registrations and applications listed in
Schedule F hereto and that said registrations are valid, subsisting, have not
- ----------
been cancelled and that the Pledgor is not aware of any third-party claim that
any of said registrations is invalid or unenforceable. The Pledgor hereby
grants to the Collateral Agent an absolute power of attorney to sign, upon the
occurrence and during the continuance of an Event of Default and delivery of
notice to the Pledgor in accordance with Article X of the Credit Agreement, any
document which may be required by the United States Patent and Trademark Office
in order to effect an absolute assignment of all right,
<PAGE>
Page 10
title and interest in each Mark and associated goodwill, and record the same.
Section 4.2. Licenses and Assignments. Other than the license
------------------------
agreements listed on Schedule G hereto and any extensions or renewals thereof,
----------
the Pledgor hereby agrees not to divest itself of any right under any
Significant Mark absent prior written consent of the Collateral Agent, which
consent shall not be unreasonably withheld.
Section 4.3. Infringements. The Pledgor agrees, promptly upon
-------------
learning thereof, to notify the Collateral Agent in writing of the name and
address of, and to furnish such pertinent information that may be available with
respect to, any party who may be infringing or otherwise violating any of the
Pledgor's rights in and to any Significant Mark, or with respect to any party
claiming that the Pledgor's use of any Significant Mark violates any property
right of that party, in each case to the extent that the Pledgor reasonably
believes that such infringement or violation is material to its business. The
Pledgor further agrees, if consistent with good business practice and unless
otherwise agreed by the Collateral Agent, diligently to prosecute any Person
infringing any Significant Mark to the extent that the Pledgor reasonably
believes that such infringement is material to its business.
Section 4.4. Preservation of Marks. The Pledgor agrees to use its
---------------------
Significant Marks in interstate commerce during the time in which this Agreement
is in effect, sufficiently to preserve such Significant Marks as trademarks or
service marks registered under the laws of the United States.
Section 4.5. Maintenance of Registration. The Pledgor shall, at its
---------------------------
own expense, diligently process all documents required by the Trademark Act of
1946, 15 U.S.C. (S)(S) 1051 et seq. to maintain trademark registration,
-- ----
including but not limited to affidavits of use and applications for renewals of
registration in the United States Patent and Trademark Office for all of its
Significant Marks pursuant to 15 U.S.C. (S)(S) 1058(a), 1059 and 1065, and shall
pay all fees and disbursements in connection therewith and shall not abandon any
such filing of affidavit of use or any such application of renewal prior to the
exhaustion of all reasonable administrative and judicial remedies without the
prior written consent of the Collateral Agent, which consent shall not be
unreasonably withheld.
Section 4.6. Future Registered Marks. If any Mark registration
-----------------------
issues hereafter to the Pledgor as a result of any application now or hereafter
pending before the United States Patent and Trademark Office, within thirty (30)
days of receipt
<PAGE>
Page 11
of such certificate the Pledgor shall deliver a copy of such certificate, and a
grant of security interest in such mark to the Collateral Agent, confirming the
grant thereof hereunder, the form of such confirmatory grant to be substantially
the same as the form hereof.
Section 4.7. Remedies. If an Event of Default shall occur and be
--------
continuing, the Collateral Agent may, upon delivery to the Pledgor of written
notice in accordance with Article X of the Credit Agreement, take any or all of
the following actions: (i) declare the entire right, title and interest of the
Pledgor in and to each of the Marks and the goodwill of the business associated
therewith, together with all trademark rights and rights of protection to the
same, vested, in which event such rights, title and interest shall immediately
vest, in the Collateral Agent for the benefit of the Secured Creditors, in which
case the Collateral Agent shall be entitled to exercise the power of attorney
referred to in Section 4.1 to execute, cause to be acknowledged and notarized
and record said absolute assignment with the applicable agency; (ii) take and
use or sell the Marks and the goodwill of the Pledgor's business symbolized by
the Marks and the right to carry on the business and use the assets of the
Pledgor in connection with which the Marks have been used; and (iii) direct the
Pledgor to refrain, in which event the Pledgor shall refrain, from using the
Marks in any manner whatsoever, directly or indirectly, and, if requested by the
Collateral Agent, change the Pledgor's corporate name to eliminate therefrom any
use of any Mark and execute such other and further documents that the Collateral
Agent may request to further confirm this and to transfer ownership of the Marks
and registrations and any pending trademark application in the United States
Patent and Trademark Office or any equivalent government agency or office in any
foreign jurisdiction to the Collateral Agent.
ARTICLE V
SPECIAL PROVISIONS CONCERNING
PATENTS AND COPYRIGHTS
Section 5.1. Additional Representations and Warranties. The Pledgor
-----------------------------------------
represents and warrants that to the best of its knowledge, as of the date
hereof, it is the true and lawful exclusive owner of all rights in its Patents
listed in Schedule H hereto and in the Copyrights listed in Schedule I hereto,
---------- ----------
that said Patents include all the United States patents and applications for
United States patents that the Pledgor now owns and that said Copyrights
constitute all the United States Copyrights registered with the United States
Copyright Office and
<PAGE>
Page 12
applications for United States copyrights that the Pledgor now owns. The
Pledgor represents and warrants that to the best of its knowledge, as of the
date hereof, it owns or is licensed to practice under all Patents and Copyrights
that it now uses or practices under. The Pledgor further warrants that it is
aware of no third party claim that any aspect of the Pledgor's present or
contemplated business operations infringes or will infringe any Patent or any
Copyright. The Pledgor hereby grants to the Collateral Agent an absolute power
of attorney to sign, upon the occurrence and during the continuance of any Event
of Default and delivery of notice to the Pledgor in accordance with Article X of
the Credit Agreement, any document which may be required by the United States
Patent and Trademark Office or the United States Copyright Office in order to
effect an absolute assignment of all right, title and interest in each Patent
and Copyright, and record the same.
Section 5.2. Licenses and Assignments. Other than the license
------------------------
agreements listed on Schedule F hereto and any extensions or renewals thereof,
----------
the Pledgor hereby agrees not to divest itself of any right under any
Significant Patent or Significant Copyright absent prior written consent of the
Collateral Agent, which consent shall not be unreasonably withheld.
Section 5.3. Infringements. The Pledgor agrees, promptly upon
-------------
learning thereof, to furnish the Collateral Agent in writing with all pertinent
information available to the Pledgor with respect to any infringement or other
violation of the Pledgor's rights in any Significant Patent or Significant
Copyright, or with respect to any claim that practice of any Significant Patent
or Significant Copyright violates any property right of that party, in each case
to the extent that the Pledgor reasonably believes that such infringement or
violation is material to its business. The Pledgor further agrees, consistent
with good business practice and absent direction of the Collateral Agent to the
contrary, diligently to prosecute any Person infringing any Significant Patent
or Significant Copyright to the extent that the Pledgor reasonably believes that
such infringement is material to its business, which consent shall not be
unreasonably withheld.
Section 5.4. Maintenance of Patents. At its own expense, the Pledgor
----------------------
shall make timely payment of all post-issuance fees required pursuant to 35
U.S.C. (S) 41 to maintain in force rights under each Significant Patent.
Section 5.5. Prosecution of Patent Application. At its own expense,
---------------------------------
the Pledgor shall diligently prosecute all applications for Significant Patents
listed in Schedule H hereto and shall not abandon any such application prior to
----------
exhaustion of
<PAGE>
Page 13
all reasonable administrative and judicial remedies, absent written consent of
the Collateral Agent, which consent shall not be unreasonably withheld.
Section 5.6. Other Patents and Copyrights. Within 30 days of
----------------------------
acquisition of a Patent or Copyright, or of filing of an application for a
Patent or Copyright, the Pledgor shall deliver to the Collateral Agent a copy of
such Patent or Copyright or such application, as the case may be, with a grant
of security as to such Patent or Copyright, as the case may be, confirming the
grant thereof hereunder, the form of such confirmatory grant to be substantially
the same as the form hereof.
Section 5.7. Remedies. If an Event of Default shall occur and be
--------
continuing and Collateral Agent has delivered notice to the Pledgor in
accordance with Article X of the Credit Agreement, the Collateral Agent may by
written notice to the Pledgor, take any or all of the following actions: (i)
declare the entire right, title, and interest of the Pledgor in each of its
Patents and Copyrights vested, in which event such right, title, and interest
shall immediately vest in the Collateral Agent for the benefit of the Secured
Creditors, in which case the Collateral Agent shall be entitled to exercise the
power of attorney referred to in Section 5.1 to execute, cause to be
acknowledged and notarized and record said absolute assignment with the
applicable agency; (ii) take and practice or sell the Patents and Copyrights;
and (iii) direct the Pledgor to refrain, in which event the Pledgor shall
refrain, from practicing the Patents and Copyrights directly or indirectly, and
the Pledgor shall execute such other and further documents as the Collateral
Agent may request further to confirm this and to transfer ownership of the
Patents and Copyrights to the Collateral Agent for the benefit of the Secured
Creditors.
ARTICLE VI
PROVISIONS CONCERNING ALL COLLATERAL
Section 6.1. Protection of Collateral Agent's Security. The Pledgor
-----------------------------------------
will not do anything to impair in any material respect the rights of the
Collateral Agent in the Collateral. The Pledgor will at all times keep its
Inventory and Equipment insured in favor of the Collateral Agent, at the
Pledgor's own expense to the extent and in the manner provided in the Credit
Agreement. If the Pledgor shall fail to insure its Inventory and Equipment in
accordance with the preceding sentence, or if the Pledgor shall fail to so
endorse and deposit all policies with respect thereto, the Collateral Agent
shall have the right (but shall be under no obligation), upon prior notice
<PAGE>
Page 14
to the Pledgor, to procure such insurance and the Pledgor agrees to promptly
reimburse the Collateral Agent for all reasonable costs and expenses of
procuring such insurance. The Collateral Agent shall, at the time such proceeds
of such insurance are distributed to the Secured Creditors, apply such proceeds
in accordance with Section 7.4 or as otherwise provided in the Credit Agreement.
The Pledgor assumes all liability and responsibility in connection with the
Collateral acquired by it and the liability of the Pledgor to pay the
Obligations shall in no way be affected or diminished by reason of the fact that
such Collateral may be lost, destroyed, stolen, damaged or for any reason
whatsoever unavailable to the Pledgor unless such loss or damage is finally
judicially determined to have been incurred by reason of the gross negligence or
willful misconduct of any Secured Creditor or any agent of any Secured Creditor
or the failure of a Secured Creditor, in exercising its remedies hereunder, to
act in a commercially reasonable manner.
Section 6.2. Warehouse Receipts Non-negotiable. The Pledgor agrees
---------------------------------
that if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued with respect to any of its Inventory, such warehouse receipt or receipt
in the nature thereof shall not be "negotiable" (as such term is used in Section
7-104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under other relevant law).
Section 6.3. Further Actions. The Pledgor will, at its own expense,
---------------
make, execute, endorse, acknowledge, file and/or deliver to the Collateral Agent
from time to time such lists, descriptions and designations of its Collateral,
warehouse receipts, receipts in the nature of warehouse receipts, bills of
lading, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, which the Collateral Agent
deems reasonably appropriate or advisable to perfect, preserve or protect its
security interest in the Collateral in accordance with the terms hereof.
Section 6.4. Financing Statements. The Pledgor agrees to execute and
--------------------
deliver to the Collateral Agent such financing statements, in form reasonably
acceptable to the Collateral Agent, as the Collateral Agent may from time to
time reasonably request or as are necessary in the reasonable opinion of the
Collateral Agent to establish and maintain a valid, enforceable, first priority
perfected security interest in the Collateral as provided herein and the other
rights and security contemplated hereby all in accordance with the Uniform
Commercial Code as
<PAGE>
Page 15
enacted in any and all applicable jurisdictions or any other applicable law.
The Pledgor will pay any applicable filing fees, recordation taxes and related
expenses. The Pledgor authorizes the Collateral Agent to file any such
financing statements without the signature of the Pledgor where permitted by
law.
ARTICLE VII
REMEDIES UPON OCCURRENCE OF EVENT OF DEFAULT
Section 7.1. Remedies; Obtaining the Collateral Upon Default. The
-----------------------------------------------
Pledgor agrees that, if any Event of Default shall have occurred and be
continuing and the Collateral Agent shall have delivered to the Pledgor notice
in accordance with Article X of the Credit Agreement, then and in every such
case, subject to any mandatory requirements of applicable law then in effect,
the Collateral Agent, in addition to any rights now or hereafter existing under
applicable law, shall have all rights as a secured creditor under the Uniform
Commercial Code in all applicable jurisdictions and may also (subject to laws
and regulations governing the national security of the United States):
(a) personally, or by agents or attorneys, immediately retake
possession of the Collateral or any part thereof, from the Pledgor or any
other Person who then has possession of any part thereof with or without
notice or process of law, and for that purpose may enter upon the Pledgor's
premises where any of the Collateral is located and remove the same and use
in connection with such removal any and all services, supplies, aids and
other facilities of the Pledgor; possession of machinery shall, however, be
subject to the terms of the Location Leases; and
(b) instruct the obligor or obligors on any agreement, instrument or
other obligation (including, without limitation, the Receivables and the
Contracts) constituting the Collateral to make any payment required by the
terms of such agreement, instrument or other obligation directly to the
Collateral Agent and may exercise any and all remedies of the Pledgor in
respect of such Collateral; and
(c) withdraw all monies, securities and instruments in the Cash
Collateral Account for application to the Obligations in accordance with
Section 7.4; and
(d) sell, assign or otherwise liquidate, or direct the Pledgor to
sell, assign or otherwise liquidate, any or all of its Collateral or any
part thereof, and take possession of the proceeds of any such sale or
liquidation; and
<PAGE>
Page 16
(e) take possession of the Collateral or any part thereof, by directing
the Pledgor in writing to deliver the same to the Collateral Agent at any
commercially reasonable place or places designated by the Collateral Agent,
in which event the Pledgor shall at its own expense:
(i) forthwith cause the Collateral pledged by it to be moved to
the place or places so designated by the Collateral Agent and there
delivered to the Collateral Agent, and
(ii) store and keep any Collateral so delivered to the Collateral
Agent at such place or places pending further action by the Collateral
Agent as provided in Section 7.2, and
(iii) while the Collateral shall be so stored and kept, provide
such guards and maintenance services as shall be necessary to protect
the same and to preserve and maintain them in good condition; and
(f) license or sublicense (to the extent not in violation of the
license), whether on an exclusive or nonexclusive basis, any Marks, Patents
or Copyrights included in the Collateral for such term and on such
conditions and in such manner as the Collateral Agent shall in its
commercially reasonable judgment determine;
it being understood that the Pledgor's obligation so to deliver the Collateral
is of the essence of this Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Collateral Agent shall be entitled to a
decree requiring specific performance by the Pledgor of said obligation.
Section 7.2. Remedies; Disposition of the Collateral. Any Collateral
---------------------------------------
repossessed by the Collateral Agent under or pursuant to Section 7.1 and any
other Collateral whether or not so repossessed by the Collateral Agent, may be
sold, assigned, leased or otherwise disposed of under one or more contracts or
as an entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine;
provided that such terms shall be commercially reasonable. Any of the
Collateral may be sold, leased or otherwise disposed of, in the condition in
which the same existed when taken by the Collateral Agent or after any
commercially reasonable overhaul or repair made by or at the direction of the
Collateral Agent. Any such disposition which shall be a private sale or other
private proceedings permitted by
<PAGE>
Page 17
such requirements shall be made upon not less than 10 days' written notice to
the Pledgor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the 10 days after the giving of such notice, to the right of the Pledgor or any
nominee of the Pledgor to acquire the Collateral involved at a price or for such
other consideration at least equal to the intended sale price or other
consideration so reasonably specified. Any such disposition which shall be a
public sale permitted by such requirements shall be made upon not less than 10
days' written notice to the Pledgor specifying the time and place of such sale
and, in the absence of applicable requirements of law, shall be by public
auction (which may, at the Collateral Agent's option, be subject to reserve),
after publication of notice of such auction not less than 10 days prior thereto
in two newspapers in general circulation in the City of New York. To the extent
permitted by any such requirement of law, the Collateral Agent and the Secured
Creditors may bid for and become the purchaser of the Collateral or any item
thereof, offered for sale in accordance with this Section without accountability
to the Pledgor. If, under mandatory requirements of applicable law, the
Collateral Agent shall be required to make disposition of the Collateral within
a period of time which does not permit the giving of notice to the Pledgor as
hereinabove specified, the Collateral Agent need give the Pledgor only such
notice of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law. The Pledgor agrees to do or cause to
be done all such other acts and things as may be reasonably necessary to make
such sale or sales of all or any portion of the Collateral valid and binding and
in compliance with any and all applicable laws, regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators or
governmental instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, all at the Pledgor's reasonable expense.
Section 7.3. Waiver of Claims. Except as otherwise provided in this
----------------
Agreement, THE PLEDGOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT'S TAKING
POSSESSION OR THE COLLATERAL AGENT'S DISPOSITION OF ANY OF THE COLLATERAL,
INCLUDING, WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH PLEDGOR WOULD OTHERWISE
HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE UNITED STATES OR OF ANY STATE,
and the Pledgor hereby further waives, to the extent permitted by law:
(a) all damages occasioned by such taking of possession except any
damages which are the direct result of the Collateral Agent's gross
negligence or willful
<PAGE>
Page 18
misconduct or failure to act, in exercising its remedies hereunder, in a
commercially reasonable manner;
(b) all other requirements as to the time, place and terms of sale or
other requirements with respect to the enforcement of the Collateral
Agent's rights hereunder; and
(c) all rights of redemption, appraisement, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in order
to prevent or delay the enforcement of this Agreement or the absolute sale
of the Collateral or any portion thereof, and the Pledgor, for itself and
all who may claim under it, insofar as it or they now or hereafter lawfully
may, hereby waives the benefit of all such laws unless such action or
threatened action is not commercially reasonable.
Any sale of, or the grant of options to purchase, or any other realization upon,
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Pledgor therein and thereto, and
shall be a perpetual bar both at law and in equity against the Pledgor and
against any and all Persons claiming or attempting to claim the Collateral so
sold, optioned or realized upon, or any part thereof, from, through and under
the Pledgor other than any Collateral remaining after payment in full of the
Obligations.
Section 7.4. Application of Proceeds. (a) All moneys collected by
-----------------------
the Collateral Agent (or, to the extent the Pledge Agreement or the Mortgage to
which the Pledgor is a party requires proceeds of Collateral under such
agreement to be applied in accordance with the provisions of this Agreement, the
Pledgee or Mortgagee under such other agreement) upon any sale or other
disposition of the Collateral, together with all other moneys received by the
Collateral Agent hereunder, shall be applied as follows:
(i) first, to the payment of all amounts owing the Collateral Agent of
the type described in clauses (iii) and (iv) of the definition of
"Obligations";
(ii) second, to the extent proceeds remain after the application
pursuant to the preceding clause (i), an amount equal to the outstanding
Primary Obligations shall be paid to the Secured Creditors as provided in
Section 7.4(f), with each Secured Creditor receiving an amount equal to
such outstanding Primary Obligations or, if the proceeds are insufficient
to pay in full all such Primary Obligations, its Pro Rata Share of the
amount remaining to be distributed;
<PAGE>
Page 19
(iii) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) and (ii), an amount equal to the
outstanding Secondary Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(f), with each Secured Creditor receiving an amount
equal to its outstanding Secondary Obligations or, if the proceeds are
insufficient to pay in full all such Secondary Obligations, its Pro Rata
Share of the amount remaining to be distributed; and
(iv) fourth, to the extent proceeds remain after the application
pursuant to the preceding clauses (i) through (iii), inclusive, and
following the termination of this Agreement pursuant to Section 10.9(a)
hereof, to the Pledgor or to whomever may be lawfully entitled to receive
such surplus.
(b) For purposes of this Agreement (x) "Pro Rata Share" shall mean,
when calculating a Secured Creditor's portion of any distribution or amount,
that amount (expressed as a percentage) equal to a fraction the numerator of
which is the then unpaid amount of such Secured Creditor's Primary Obligations
or Secondary Obligations, as the case may be, and the denominator of which is
the then outstanding amount of all Primary Obligations or Secondary Obligations,
as the case may be, (y) "Primary Obligations" shall mean (i) in the case of the
Credit Agreement Obligations, all principal of, and interest on, all Loans, all
Unpaid Drawings theretofore made (together with all interest accrued thereon),
and the aggregate Stated Amounts of all Letters of Credit issued (or deemed
issued) under the Credit Agreement, and all Fees and (ii) in the case of the
Other Obligations, all amounts due under the Interest Rate Protection or Other
Hedging Agreements (other than indemnities, fees (including, without limitation,
reasonable attorneys' fees) and similar obligations and liabilities) and (z)
"Secondary Obligations" shall mean all Obligations other than Primary
Obligations.
(c) When payments to Secured Creditors are based upon their respective
Pro Rata Shares, the amounts received by such Secured Creditors hereunder shall
be applied (for purposes of making determinations under this Section 7.4 only)
(i) first, to their Primary Obligations and (ii) second, to their Secondary
Obligations. If any payment to any Secured Creditor of its Pro Rata Share of
any distribution would result in overpayment to such Secured Creditor, such
excess amount shall instead be immediately distributed in respect of the unpaid
Primary Obligations or Secondary Obligations, as the case may be, of the other
Secured Creditors, with each Secured Creditor whose Primary Obligations or
Secondary Obligations, as the case may be, have
<PAGE>
Page 20
not been paid in full to receive an amount equal to such excess amount
multiplied by a fraction the numerator of which is the unpaid Primary
Obligations or Secondary Obligations, as the case may be, of such Secured
Creditor and the denominator of which is the unpaid Primary Obligations or
Secondary Obligations, as the case may be, of all Secured Creditors entitled to
such distribution.
(d) Each of the Secured Creditors agrees and acknowledges that if the
Bank Creditors are to receive a distribution on account of undrawn amounts with
respect to Letters of Credit issued (or deemed issued) under the Credit
Agreement (which shall only occur after all outstanding Loans and Unpaid
Drawings with respect to such Letters of Credit have been paid in full), such
amounts shall be paid to the Administrative Agent under the Credit Agreement and
held by it, for the equal and ratable benefit of the Bank Creditors, as cash
security for the repayment of Obligations owing to the Bank Creditors as such.
If any amounts are held as cash security pursuant to the immediately preceding
sentence, then upon the termination of all outstanding Letters of Credit, and
after the application of all such cash security to the repayment of all
Obligations owing to the Bank Creditors after giving effect to the termination
of all such Letters of Credit, if there remains any excess cash, such excess
cash shall be distributed by the Collateral Agent in accordance with Section
7.4(a) hereof.
(e) Except as set forth in Section 7.4(d), all payments required to be
made hereunder shall be made (x) if to the Bank Creditors, to the Administrative
Agent under the Credit Agreement for the account of the Bank Creditors, and (y)
if to the Other Creditors, to the trustee, paying agent or other similar
representative (each a "Representative") for the Other Creditors or, in the
absence of such a Representative, directly to the Other Creditors.
(f) For purposes of applying payments received in accordance with this
Section 7.4, the Collateral Agent shall be entitled to rely upon (i) the
Administrative Agent under the Credit Agreement and (ii) the Representative for
the Other Creditors or, in the absence of such a Representative, upon the Other
Creditors for a determination (which the Administrative Agent, each
Representative for any Secured Creditors and the Secured Creditors agree (or
shall agree) to provide upon request of the Collateral Agent) of the outstanding
Primary Obligations and Secondary Obligations owed to the Bank Creditors or the
Other Creditors, as the case may be. Unless it has actual knowledge (including
by way of written notice from a Bank Creditor or an Other Creditor) to the
contrary, the Administrative Agent and each Representative, in furnishing
information pursuant to the
<PAGE>
Page 21
preceding sentence, and the Collateral Agent, in acting hereunder, shall be
entitled to assume that no Secondary Obligations are outstanding. Unless it has
actual knowledge (including by way of written notice from an Other Creditor) to
the contrary, the Collateral Agent, in acting hereunder, shall be entitled to
assume that no Interest Rate Protection or Other Hedging Agreements are in
existence.
(g) It is understood and agreed that the Pledgor shall remain liable
to the extent of any deficiency between the amount of the proceeds of the
Collateral hereunder and the aggregate amount of the sums referred to in clauses
(i) through (iii), inclusive, of Section 7.4(a), except to the extent that such
proceeds are not applied by the Collateral Agent in accordance with this
Agreement and the Credit Agreement.
Section 7.5. Remedies Cumulative. Each and every right, power and
-------------------
remedy hereby specifically given to the Collateral Agent shall be in addition to
every other right, power and remedy specifically given under this Agreement, the
Interest Rate Protection or Other Hedging Agreements, the other Credit Documents
or now or hereafter existing at law or in equity, or by statute and each and
every right, power and remedy whether specifically herein given or otherwise
existing may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by the Collateral Agent. All such
rights, powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the right to
exercise of any other or others. No delay or omission of the Collateral Agent
in the exercise of any such right, power or remedy, renewal or extension of any
of the Obligations and no course of dealing between the Pledgor and the
Collateral Agent or any holder of any of the Obligations shall impair any such
right, power or remedy or shall be construed to be a waiver of any Default or
Event of Default or an acquiescence therein. No notice to or demand on the
Pledgor in any case shall entitle it to any other or further notice or demand in
similar or other circumstances or constitute a waiver of any of the rights of
the Collateral Agent to any other or further action in any circumstances without
notice or demand. In the event that the Collateral Agent shall bring any suit
to enforce any of its rights hereunder and shall be entitled to judgment, then
in such suit the Collateral Agent may recover expenses, including reasonable
attorneys' fees, and the amounts thereof shall be included in such judgment.
Section 7.6. Discontinuance of Proceedings. In case the Collateral
-----------------------------
Agent shall have instituted any proceeding to enforce any right, power or remedy
under this Agreement by foreclosure, sale, entry or otherwise, and such
proceeding shall
<PAGE>
Page 22
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the Pledgor, the
Collateral Agent and each holder of any of the Obligations shall be restored to
their former positions and rights hereunder with respect to the Collateral
subject to the security interest created under this Agreement, and all rights,
remedies and powers of the Collateral Agent shall continue as if no such
proceeding had been instituted.
ARTICLE VIII
INDEMNITY
Section 8.1. Indemnity. (a) The Pledgor agrees to indemnify,
---------
reimburse and hold the Collateral Agent, each Secured Creditor and their
respective successors, assigns, employees, agents and servants (hereinafter in
this Section 8.1 referred to individually as "Indemnitee," and collectively as
"Indemnities") harmless from any and all liabilities, obligations, damages,
injuries, penalties, claims, demands, actions, suits, judgments and any and all
costs, expenses or disbursements (including reasonable attorneys' fees and
expenses) (for the purposes of this Section 8.1 the foregoing are collectively
called "expenses") of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnities arising out of this Agreement, [any Interest
Rate Protection or Other Hedging Agreement,] any other Credit Document or any
other document executed in connection herewith and therewith or in any other way
connected with the administration of the transactions contemplated hereby and
thereby or the enforcement of any of the terms of, or the preservation of any
rights under any thereof, or in any way relating to or arising out of the
manufacture, ownership, ordering, purchase, delivery, control, acceptance,
lease, financing, possession, operation, condition, sale, return or other
disposition, or use of the Collateral (including, without limitation, latent or
other defects, whether or not discoverable), any contract claim or, to the
maximum extent permitted under applicable law, the violation of the laws of any
country, state or other governmental body or unit, or any tort (including,
without limitation, claims arising or imposed under the doctrine of strict
liability, or for or on account of injury to or the death of any Person
(including any Indemnitee), or property damage); provided that no Indemnitee
shall be indemnified pursuant to this Section 8.1(a) for expenses to the extent
finally judicially determined to have been incurred by reason of the gross
negligence or willful misconduct of such Indemnitee. The Pledgor agrees that
upon written notice by any Indemnitee of the assertion of such a liability,
obligation, damage, injury, penalty, claim, demand, action, suit or judgment,
the Pledgor
<PAGE>
Page 23
shall assume full responsibility for the defense thereof. Each Indemnitee
agrees to use its best efforts to promptly notify the Pledgor of any such
assertion of which such Indemnitee has knowledge.
(b) Without limiting the application of Section 8.1(a), the Pledgor
agrees to pay, or reimburse the Collateral Agent for any and all reasonable
fees, costs and expenses of whatever kind or nature incurred in connection with
the creation, preservation or protection of the Collateral Agent's Liens on, and
security interest in, the Collateral, including, without limitation, all
reasonable fees and taxes in connection with the recording or filing of
instruments and documents in public offices, payment or discharge of any taxes
or Liens upon or in respect of the Collateral, premiums for insurance with
respect to the Collateral and all other fees, costs and expenses in connection
with protecting, maintaining or preserving the Collateral and the Collateral
Agent's interest therein, whether through judicial proceedings or otherwise, or
in defending or prosecuting any actions, suits or proceedings arising out of or
relating to the Collateral as set forth herein and in the Credit Agreement.
(c) Without limiting the application of Section 8.1(a) or (b), the
Pledgor agrees to pay, indemnify and hold each Indemnitee harmless from and
against any loss, costs, damages and expenses which such Indemnitee may suffer,
expend or incur in consequence of or growing out of any material
misrepresentation by the Pledgor in this Agreement, any Interest Rate Protection
or Other Hedging Agreement, any other Credit Document or in any writing
contemplated by or made or delivered pursuant to or in connection with this
Agreement, any Interest Rate Protection or Other Hedging Agreement or any other
Credit Document as set forth herein and in the Credit Agreement.
(d) If and to the extent that the obligations of the Pledgor under
this Section 8.1 are unenforceable for any reason, the Pledgor hereby agrees to
make the maximum contribution to the payment and satisfaction of such
obligations which is permissible under applicable law.
Section 8.2. Indemnity Obligations Secured by Collateral; Survival.
-----------------------------------------------------
Any amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement shall constitute Obligations secured by the Collateral. The
indemnification obligations of the Pledgor contained in this Article VIII shall
continue in full force and effect notwithstanding the full payment of all the
Notes issued under the Credit Agreement, the termination of all Interest Rate
Protection or Other Hedging Agreements and the payment of all other Obligations
and notwithstanding the discharge thereof.
<PAGE>
Page 24
ARTICLE IX
DEFINITIONS
The following terms shall have the meanings herein specified. Such
definitions shall be equally applicable to the singular and plural forms of the
terms defined.
"Administrative Agent" shall have the meaning provided in the first
paragraph of this Agreement.
"Agreement" shall mean this Security Agreement as the same may be
modified, supplemented or amended from time to time in accordance with its
terms.
"Bank Creditor" shall have the meaning provided in the first paragraph
of this Agreement.
"Banks" shall have the meaning provided in the first WHEREAS clause of
this Agreement.
"Cash Collateral Account" shall mean a non-interest bearing cash
collateral account maintained with __________________ for the benefit of the
Secured Creditors.
"Chattel Paper" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.
"Class" shall have the meaning provided in Section 10.2 of this
Agreement.
"Collateral" shall have the meaning provided in Section 1.1(a) of this
Agreement.
"Contract Rights" shall mean all rights of the Pledgor (including,
without limitation, all rights to payment) under each Contract.
"Contracts" shall mean all contracts between the Pledgor and one or
more additional parties (including, without limitation, (i) each partnership
agreement to which the Pledgor is a party and (ii) any Interest Rate Protection
or Other Hedging Agreements), but excluding (x) licenses to the extent that the
terms thereof prohibit the assignment of, or granting of a security interest in,
such licenses and (y) location contracts which have not, with the Collateral
Agent's approval, been assigned to the Collateral Agent.
<PAGE>
Page 25
"Copyrights" shall mean any United States copyright which the Pledgor
now or hereafter has registered with the United States Copyright Office, as well
as any application for a United States copyright registration now or hereafter
made with the United States Copyright Office by the Pledgor.
"Credit Agreement" shall have the meaning provided in the first
paragraph of this Agreement.
"Credit Agreement Obligations" shall have the meaning provided in the
definition of "Obligations" in this Article IX.
"Default" shall mean any event which, with notice or lapse of time, or
both, would constitute an Event of Default.
"Documents" shall have the meaning provided in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.
"Equipment" shall mean any "equipment," as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by the Pledgor and, in any event, shall include,
but shall not be limited to, all machinery, equipment, furnishings and movable
trade fixtures now or hereafter owned by the Pledgor and any and all additions,
substitutions and replacements of any of the foregoing, wherever located,
together with all attachments, components, parts, equipment and accessories
installed thereon or affixed thereto.
"Event of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement and shall in any event, without limitation,
include any payment default on any of the Obligations, after the expiration of
any applicable grace and cure periods.
"General Intangibles" shall have the meaning provided in the Uniform
Commercial Code as in effect on the date hereof in the State of New York and
shall in any event include all of the Pledgor's claims, rights, powers,
privileges, authority, options, security interests, liens and remedies under any
partnership agreement to which the Pledgor is a party or with respect to any
partnership of which the Pledgor is a partner.
"Goods" shall have the meaning provided in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.
"Indemnitee" shall have the meaning provided in Section 8.1 of this
Agreement.
<PAGE>
Page 26
"Instrument" shall have the meaning provided in Article 9 of the
Uniform Commercial Code as in effect on the date hereof in the State of New York
but shall not include any Location Leases.
"Interest Rate Protection or Other Hedging Agreements" shall have the
meaning provided in the first paragraph of this Agreement.
"Inventory" shall mean merchandise, inventory and goods, and all
additions, substitutions and replacements thereof, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manufacturing, processing, packaging or
shipping same; in all stages of production -- from raw materials through work-
in-process to finished goods -- and all products and proceeds of whatever sort
and wherever located and any portion thereof which may be returned, rejected,
reclaimed or repossessed by the Collateral Agent from the Pledgor's customers,
and shall specifically include all "inventory" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by the Pledgor.
"Marks" shall mean any trademarks and service marks now held or
hereafter acquired by the Pledgor, which are registered in the United States
Patent and Trademark Office or in any similar office or agency of the United
States or any state thereof or any political subdivision thereof and any
application for such trademarks and service marks, as well as any unregistered
marks used by the Pledgor in the United States and trade dress including logos,
designs, trade names, company names, business names, fictitious business names
and other business identifiers in connection with which any of these registered
or unregistered marks are used in the United States.
"Obligations" shall mean (i) (x) the principal of and interest on the
Notes issued, and Loans made, under the Credit Agreement, and all reimbursement
obligations and Unpaid Drawings with respect to the Letters of Credit under the
Credit Agreement and (y) all other obligations and indebtedness (including,
without limitation, indemnities, Fees and interest thereon) of the Pledgor to
the Bank Creditors now existing or hereafter incurred under, arising out of, or
in connection with the Credit Agreement and the other Credit Documents and the
due performance and compliance by the Pledgor with all of the terms, conditions
and agreements contained in the Credit Agreement and the other Credit Documents
(all such principal, interest, obligations and liabilities being herein
collectively called the "Credit Agreement Obligations"); (ii) all obligations
and liabilities owing by the Pledgor to the Other Creditors under, or with
<PAGE>
Page 27
respect to, any Interest Rate Protection or Other Hedging Agreement, whether
such Interest Rate Protection or Other Hedging Agreement is now in existence or
hereafter arising, and the due performance and compliance by the Pledgor with
all of the terms, conditions and agreements contained therein (all such
obligations and liabilities described in this clause (ii) being herein
collectively called the "Other Obligations"); (iii) any and all sums reasonably
advanced by the Collateral Agent in order to preserve the Collateral or preserve
its security interest in the Collateral in accordance with the terms hereof and
the other Credit Documents; (iv) in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
the Pledgor referred to in clauses (i) and (ii), after an Event of Default shall
have occurred and be continuing and the Collateral Agent has given notice under
Article X of the Credit Agreement, the commercially reasonable expenses of re-
taking, holding, preparing for sale or lease, selling or otherwise disposing of
or realizing on the Collateral, or of any exercise by the Collateral Agent of
its rights hereunder, together with reasonable attorneys' fees and court costs
in accordance with the terms hereof and the other Credit Documents; and (v) all
amounts paid by any Indemnitee as to which such Indemnitee has the right to
reimbursement under Section 8.1 of this Agreement. It is acknowledged and
agreed that the "Obligations" shall include extensions of credit of the types
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.
"Other Creditors" shall have the meaning provided in the first
paragraph of this Agreement.
"Other Obligations" shall have the meaning provided in the definition
of "Obligations" in this Article IX.
"Patents" shall mean any United States patent now or hereafter owned
by the Pledgor, as well as any application for a United States patent now or
hereafter owned by the Pledgor.
"Permitted Filings" shall have the meaning provided in Section 2.1 of
this Agreement.
"Permitted Liens" shall have the meaning provided in the Credit
Agreement.
"Pledgor" shall have the meaning provided in the first paragraph of
this Agreement.
"Primary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
<PAGE>
Page 28
"Pro Rata Share" shall have the meaning provided in Section 7.4(c) of
this Agreement.
"Proceeds" shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York on the date hereof or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
the Collateral Agent or the Pledgor from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and
payable to the Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental authority (or any person acting under color of
governmental authority) and (iii) any and all other amounts from time to time
paid or payable under or in connection with any of the Collateral.
"Receivables" shall mean any "account" as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York, now or hereafter owned by the Pledgor and, in any event, shall include,
but shall not be limited to, all of the Pledgor's rights to payment for goods
sold or leased or services performed by the Pledgor, whether now in existence or
arising from time to time hereafter, including, without limitation, rights
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness or security, together with (i) all security
pledged, assigned, hypothecated or granted to or held by the Pledgor to secure
the foregoing, (ii) all of the Pledgor's right, title and interest in and to any
goods, the sale of which gave rise thereto, (iii) all guarantees, endorsements
and indemnifications on, or of, any of the foregoing, (iv) all powers of
attorney for the execution of any evidence of indebtedness or security or other
writing in connection therewith, (v) all books, records, ledger cards, and
invoices relating thereto, (vi) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(vii) all credit information, reports and memoranda relating thereto, and (viii)
all other writings related in any way to the foregoing.
"Representative" shall have the meaning provided in Section 7.4 of
this Agreement.
"Required Secured Creditors" shall mean (i) the Required Banks (or, to
the extent required by Section 13.12 of the Credit Agreement, all of the Banks)
under the Credit
<PAGE>
Page 29
Agreement so long as any Credit Agreement Obligations remain outstanding and
(ii) in any situation not covered by the preceding clause (i), the holders of a
majority of the outstanding principal amount of the Other Obligations.
"Requisite Creditors" shall have the meaning provided in Section 10.2.
"Secondary Obligations" shall have the meaning provided in Section
7.4(b) of this Agreement.
"Significant Copyrights" shall mean those Copyrights which the Pledgor
believes in its reasonable judgment to be material to its business.
"Secured Creditors" shall have the meaning provided in the first
paragraph of this Agreement.
"Significant Marks" shall mean those Marks which the Pledgor believes
in its reasonable judgment to be material to its business.
"Significant Patents" shall mean those Patents which the Pledgor
believes in its reasonable judgment to be material to its business.
"Termination Date" shall have the meaning provided in Section 10.9 of
this Agreement.
"Trade Secrets" shall mean any material know-how, technology, product
formulations, procedures and product and manufacturing specifications or
standards now or hereafter utilized in the Pledgor's business.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices. All such notices and communications hereunder
-------
shall be telecopied or delivered by messenger or overnight courier service and
all such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective when delivered
to the telegraph company, cable company or overnight courier, as the case may
be, or sent by telex or telecopier and when mailed shall be effective three
Business Days following deposit in the mail with proper postage, except that
notices and communications to the Collateral Agent shall not be effective until
received by the Collateral Agent. All notices,
<PAGE>
Page 30
requests, demands or other communications shall be in writing and addressed as
follows:
(a) if to the Pledgor, at:
Coinmach Corporation
55 Lumber Road
Roslyn, New York 11576
Attention:
with a copy to:
Coinmach Corporation
-------------------------
Charlotte, North Carolina
Attention:
______________
with a copy to:
Anderson Kill & Olick, P.C.
1251 Avenue of the Americas
New York, New York 10020-1182
Attention: Ronald S. Brody
(b) if to the Collateral Agent:
Bankers Trust Company
130 Liberty Street
New York, New York 10006
Attention: Thomas P. Prior
(c ) if to any Bank Creditor, either (x) to the Administrative Agent,
at the address of the Administrative Agent specified in the Credit
Agreement or (y) at such address as such Bank Creditor shall have specified
in the Credit Agreement;
(d) if to any Other Creditor, either (x) to the Representative for the
Other Creditors, at such address as such Representative may have provided
to the Pledgor and the Collateral Agent from time to time, or (y) directly
to the Other Creditors at such address as the Other Creditors shall have
specified in writing to the Pledgor and the Collateral Agent;
or at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder.
<PAGE>
Page 31
Section 10.2. Waiver; Amendment. None of the terms and conditions of
-----------------
this Agreement may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Pledgor and the Collateral Agent
(with the written consent of the Required Banks, or to the extent required by
Section 13.12 of the Credit Agreement, all the Banks); provided, however, that
-------- -------
any change, waiver, modification or variance affecting the rights and benefits
of a single Class of Secured Creditors (and not all Secured Creditors in a like
or similar manner) shall require the written consent of the Requisite Creditors
of such affected Class. For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Creditors, i.e., whether (y) the Bank Creditors
----
as holders of the Credit Agreement Obligations or (z) the Other Creditors as the
holders of the Other Obligations; and the term "Requisite Creditors" of any
Class shall mean each of (x) with respect to the Credit Agreement Obligations,
the Required Banks and (y) with respect to the Other Obligations, the holders of
51% of all obligations outstanding from time to time under the Interest Rate
Protection Agreements or Other Hedging Agreements.
Section 10.3. Obligations Absolute. The obligations of the Pledgor
--------------------
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by, (a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of the Pledgor; (b) any
exercise or non-exercise, or any waiver of, any right, remedy, power or
privilege under or in respect of this Agreement, any other Credit Document [or
any Interest Rate Protection or Other Hedging Agreement] except as specifically
set forth in a waiver granted pursuant to Section 10.2 hereof; or (c) any
amendment to or modification of any Credit Document or any Interest Rate
Protection or Other Hedging Agreement or any security for any of the
Obligations; whether or not the Pledgor shall have notice or knowledge of any of
the foregoing.
Section 10.4. Successors and Assigns. This Agreement shall be
----------------------
binding upon the parties hereto and their respective successors and assigns and
shall inure to the benefit of the Collateral Agent, each Secured Creditor and
the Pledgor and their respective successors and assigns, provided that the
Pledgor may not transfer or assign any or all of its rights or obligations
hereunder without the written consent of the Required Secured Creditors and no
Secured Creditor shall assign its rights hereunder except in accordance with the
Credit Agreement. All agreements, statements, representations and warranties
made by the Pledgor herein or in any certificate or other instrument delivered
by the Pledgor or on its behalf under this Agreement shall be considered to have
been relied upon by the Secured Creditors and shall survive the execution and
delivery of this
<PAGE>
Page 32
Agreement, the other Credit Documents and the Interest Rate Protection or Other
Hedging Agreements regardless of any investigation made by the Secured Creditors
or on their behalf.
Section 10.5. Headings Descriptive. The headings of the several
--------------------
sections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
Section 10.6. 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.
SECTION 10.7. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
-------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
Section 10.8. Pledgor's Duties. It is expressly agreed, anything
----------------
herein contained to the contrary notwithstanding, that the Pledgor shall remain
liable to perform all of the obligations, if any, assumed by it with respect to
the Collateral and the Collateral Agent shall not have any obligations or
liabilities with respect to any Collateral by reason of or arising out of this
Agreement, nor shall the Collateral Agent be required or obligated in any manner
to perform or fulfill any of the obligations of the Pledgor under or with
respect to any Collateral except to the extent directly resulting from the
Collateral Agent's gross negligence or willful misconduct or failure to act, in
exercising its remedies hereunder, in a commercially reasonable manner.
Section 10.9. Termination; Release. (a) After the Termination Date,
--------------------
this Agreement shall terminate and the Collateral Agent, at the request and
expense of the Pledgor, will promptly execute and deliver to the Pledgor a
proper instrument or instruments (including Uniform Commercial Code termination
statements on form UCC-3) acknowledging the satisfaction and termination of this
Agreement, and will duly assign, transfer and deliver to the Pledgor (without
recourse and without any representation or warranty) such of the Collateral of
the Pledgor as may be in the possession of the Collateral Agent and as has not
theretofore been sold or otherwise applied or released pursuant to this
Agreement. As used in this Agreement, "Termination Date" shall mean the date
upon which the Commitments and all Interest Rate Protection or Other Hedging
Agreements have
<PAGE>
Page 33
been terminated, no Note under the Credit Agreement is outstanding (and all
Loans have been repaid in full), all Letters of Credit have been terminated and
all Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in connection
with a sale permitted by Section 9.02 or in connection with an investment made
by the Pledgor in accordance with Section 9.05(j) of the Credit Agreement or is
otherwise released at the direction of the Required Banks (or all Banks if
required by Section 13.12 of the Credit Agreement) and the proceeds of such sale
or sales or from such release are applied in accordance with, and to the extent
required by, the provisions of Section 4.02 of the Credit Agreement, to the
extent required to be so applied, such Collateral will be sold free and clear of
the Liens created by this Agreement and the Collateral Agent, at the request and
expense of the Pledgor, will duly assign, transfer and deliver to the Pledgor
(without recourse and without any representation or warranty) such of the
Collateral as is then being (or has been) so sold or released and as may be in
the possession of the Collateral Agent and has not theretofore been released
pursuant to this Agreement.
(c) At any time that the Pledgor desires that the Collateral Agent
take any action to acknowledge or give effect to any release of Collateral
pursuant to the foregoing Section 10.9(b), it shall deliver to the Collateral
Agent a certificate signed by its chief financial officer stating that the
release of the respective Collateral is permitted pursuant to Section 10.9(a) or
(b).
(d) The Collateral Agent shall have no liability whatsoever to any
Secured Creditor as a result of any release of Collateral by it in accordance
with this Section 10.9.
Section 10.10. Counterparts. This Agreement may be executed in any
------------
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument. A set
of counterparts executed by all the parties hereto shall be lodged with the
Pledgor and the Collateral Agent.
Section 10.11. The Collateral Agent. The Collateral Agent will hold
--------------------
in accordance with this Agreement all items of the Collateral at any time
received under this Agreement. It is expressly understood and agreed by the
parties hereto and each Secured Creditor, by accepting the benefits of this
Agreement acknowledges and agrees that the obligations of the Collateral Agent
as holder of the Collateral and interests therein and with
<PAGE>
Page 34
respect to the disposition thereof, and otherwise under this Agreement, are only
those expressly set forth in this Agreement. The Collateral Agent shall act
hereunder on the terms and conditions set forth in Section 12 of the Credit
Agreement.
<PAGE>
Page 35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
COINMACH CORPORATION,
as Pledgor
By:/s/ Robert M. Doyle
_____________________________
Name: Robert M. Doyle
Title: Senior Vice President
BANKERS TRUST COMPANY,
as Collateral Agent
By:/s/ Patricia Hogan
_____________________________
Name: Patricia Hogan
Title: Vice President
<PAGE>
SCHEDULE A
PERMITTED FILINGS
1. Kwik Wash Laundries L.P. has provided seller financing in connection with
six laundromat store locations (three in Austin, three in Dallas and one in
Houston, Texas). All such financings are secured by liens on such
laundromat stores.
2. Borrower's computer system and related equipment are pledged as security
under capital leases pursuant to a rollover agreement with IBM Credit
Corporation, Master Agreement Number HR11512, dated August 28, 1995.
3. The Inter-Tel 36 Telephone System including all substitutions,
modifications and proceeds thereof are covered by a UCC-1 Financing
statement which states that the property rental property and that the UCC-1
was filed only to make the rental a matter of public record. The secured
party was Inter-Tel Leasing, Inc. before assigned to Heller Financial, Inc.
4. The Tie Ultracom AT Telephone System including all substitutions,
modifications and proceeds thereof are covered by a UCC-1 Financing
statement which states that the property rental property and that the UCC-1
was filed only to make the rental a matter of public record. The secured
party was Inter-Tel Leasing, Inc.
5. Hudson United Bank, as Secured Party, UCC-1, File Number 94-1030, File
Date: April 14, 1994 (Borrower will have this lien removed after the
Closing Date)
<PAGE>
SCHEDULE B
CHIEF EXECUTIVE OFFICES
1. 55 Lumber Road
Roslyn, New York 11576
2. 521 East Morehead Street
Charlotte, North Carolina 28202
<PAGE>
SCHEDULE C
RECORD LOCATIONS
1. 55 Lumber Road
Roslyn, New York 11576
2. 521 East Morehead Street
Charlotte, North Carolina 28202
<PAGE>
SCHEDULE D
LOCATIONS OF INVENTORY AND EQUIPMENT
Alabama
Arizona
Arkansas
California
Connecticut
Delaware
District of Columbia
Florida
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maryland
Michigan
Minnesota
Mississippi
Missouri
Nebraska
New Jersey
New York
North Carolina
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Tennessee
Texas
Virginia
West Virginia
Wisconsin
<PAGE>
SCHEDULE E
TRADE NAMES, FICTITIOUS NAMES OR OTHER NAMES
1. Coinmach Corporation uses the following names:
(a) Hi-Rise Laundry Equipment Company or any variation thereof
(b) Allied Laundry Equipment Company or any variation thereof
(c) Solon Automated Services, Inc. or any variation thereof
(d) Kwik-Wash Laundries, L.P. or any variation thereof
2. The Coinmach Corporation was incorporated in the State of Delaware on
January 19, 1995. On January 31, 1995, The Coinmach Corporation purchased
all of the partnership interests of Coinmach Industries Co., L.P. and Super
Laundry Equipment Co., L.P. from CIC I Acquisition Corp. and Coinmach
Holding Corp. Coinmach Corporation is the surviving and renamed
corporation resulting from the merger of The Coinmach Corporation with and
into Solon Automated Services, Inc. on November 30, 1995. Certain of the
names of the foregoing entities may be used or referenced to in the
operations of Coinmach Corporation.
3. Coinmach Corporation has the following two subsidiaries:
(a) Super Laundry Equipment Corp. which does business as Wasco Laundry
Equipment Company and Luca Laundry Equipment Company
(b) Grand Wash & Dry Launderette, Inc.
<PAGE>
SCHEDULE F
MARKS
1. The service mark "Flexivend"
<PAGE>
SCHEDULE G
LICENSE AGREEMENTS
None.
<PAGE>
SCHEDULE H
PATENTS AND APPLICATIONS
None.
<PAGE>
SCHEDULE I
COPYRIGHTS
None.
<PAGE>
ANNEX J
to
Security Agreement
------------------
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES TRADEMARKS AND PATENTS
---------------------------------------------
FOR GOOD AND VALUABLE CONSIDERATION, receipt and sufficiency of which
are hereby acknowledged, Coinmach Corporation, a corporation with principal
offices at 55 Lumber Road, Roslyn, New York 11576, ("the Assignor"), hereby
assigns and grants to Bankers Trust Company, as Collateral Agent, with principal
offices at 130 Liberty Street, New York, New York 10006 (the "Assignee"), a
security interest in (i) all of Assignor's right, title and interest in and to
the United States trademarks, trademark registrations and trademark applications
(the "Marks") set forth on Schedule A attached hereto, (ii) all of Assignor's
----------
right, title and interest in and to the United States patents (the "Patents")
set forth on Schedule B attached hereto, in each case together with (iii) all
----------
Proceeds (as such term is defined in the Security Agreement referred to below)
and products of the Marks and Patents, (iv) the goodwill of the businesses
symbolized by the Marks and (v) all causes of action arising prior to or after
the date hereof for infringement of any of the Marks and Patents or unfair
competition regarding the same.
THIS ASSIGNMENT is made to secure the full and prompt performance and
payment of all the Obligations of Assignor, as such term is defined in the
Security Agreement between Assignor, Assignee and certain other entities party
thereto, dated as of January 8, 1997 (as amended from time to time, the
"Security Agreement"). Upon the occurrence of the Termination Date (as defined
in the Security Agreement), the Assignee shall, upon such satisfaction, execute,
acknowledge, and deliver to Assignor an instrument in writing releasing the
security interest in the Marks and Patents acquired under this Assignment.
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the 8th day of January, 1997.
COINMACH CORPORATION, as Assignor
By:__________________________________
Name:
Title:
BANKERS TRUST COMPANY, as
Collateral Agent, Assignee
By:__________________________________
Name:
Title:
-2-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of January, 1997, before me personally came
_________________ who, being by me duly sworn, did state as follows: that he is
_______________ of Coinmach Corporation, that he is authorized to execute the
foregoing Assignment on behalf of said corporation and that he did so by
authority of the Board of Directors of said corporation.
_________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of January, 1997, before me personally came
_____________________ who, being by me duly sworn, did state as follows: that
he is __________________ of Bankers Trust Company, that he is authorized to
execute the foregoing Assignment on behalf of said corporation and that he did
so by authority of the Board of Directors of said corporation.
____________________________
Notary Public
<PAGE>
SCHEDULE A
----------
MARK REG. NO. REG. DATE
- ---- -------- ---------
<PAGE>
SCHEDULE B
----------
PATENT PATENT NO. ISSUE DATE
- ------ ---------- ----------
<PAGE>
ANNEX K
to
Security Agreement
------------------
ASSIGNMENT OF SECURITY INTEREST
IN UNITED STATES COPYRIGHTS
WHEREAS, Coinmach Corporation, a Delaware corporation, having its
chief executive office at 55 Lumber Road, Roslyn, New York 11576, (the
"Assignor") is the owner of all right, title and interest in and to the United
States copyrights and associated United States copyright registrations and
applications for registration set forth in Schedule A attached hereto;
----------
WHEREAS, BANKERS TRUST COMPANY, as Collateral Agent, having its
principal offices at 130 Liberty Plaza, New York, NY 10006 (the "Assignee"),
desires to acquire a security interest in, and lien on, said copyrights and
copyright registrations and applications therefor and the goodwill of the
business symbolized by said copyrights; and
WHEREAS, Assignor is willing to assign to the Assignee, and to grant
to the Assignee a security interest in and lien upon the copyrights and
copyright registrations and applications therefor described above;
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and subject to the terms and conditions of the
Security Agreement, dated as of January 8, 1997, between Assignor, the Assignee
and certain other entities party thereto (as amended from time to time, the
"Security Agreement"), Assignor hereby assigns to the Assignee, and grants to
the Assignee a security interest in and a lien upon, the copyrights and
copyright registrations and applications therefor set forth in Schedule A
----------
attached hereto and the goodwill of the business symbolized by said copyrights.
This Assignment has been granted in conjunction with the security
interest granted to the Assignee under the Security Agreement. The rights and
remedies of the Assignee with respect to the security interest granted herein
are without prejudice to, and are in addition to those set forth in the Security
Agreement, all terms and provisions of which are incorporated herein by
reference. In the event that any provisions of this Assignment are deemed to
conflict with the Security Agreement, the provisions of the Security Agreement
shall govern.
<PAGE>
Executed at New York, New York, the 8th day of January, 1997.
COINMACH CORPORATION, as Assignor
By__________________________
Name:
Title:
BANKERS TRUST COMPANY, as
Collateral Agent,
Assignee
By__________________________
Name:
Title:
-2-
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of January, 1997 before me personally came
_______________, who being duly sworn, did depose and say that he is
___________________ of Coinmach Corporation, that he is authorized to execute
the foregoing Assignment on behalf of said corporation and that he did so by
authority of the Board of Directors of said corporation.
_________________________
Notary Public
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of January, 1997 before me personally came
_______________, who being duly sworn, did depose and say that he is
___________________ of Bankers Trust Company, that he is authorized to execute
the foregoing Assignment on behalf of said corporation and that he did so by
authority of the Board of Directors of said corporation.
_________________________
Notary Public
<PAGE>
SCHEDULE A
----------
U.S. COPYRIGHTS
---------------
REGISTRATION PUBLICATION
NUMBERS DATE COPYRIGHT TITLE
-------------- ---------------- ---------------
<PAGE>
EXHIBIT 10.49
COLLATERAL ASSIGNMENT OF LEASES
COLLATERAL ASSIGNMENT OF LEASES ("Assignment") dated as of January
8, 1997 by COINMACH CORPORATION, a Delaware corporation ("Assignor") in favor
of BANKERS TRUST COMPANY, a New York banking corporation, having an office at
130 Liberty Street, New York, New York 10006, in its capacity as collateral
agent (in such capacity and together with any successor in such capacity, the
"Collateral Agent") for the Secured Creditors (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Assignor, Coinmach Laundry Corporation, certain subsidiaries
of Assignor, the lenders (the "Banks") from time to time party thereto,
Bankers Trust Company, as Administrative Agent (together with any successor,
the "Administrative Agent"), First Union Corporation, as Syndication Agent
(together with any successor, the "Syndication Agent") and Lehman Commercial
Paper, Inc., as Documentation Agent (together with any successor, the
"Documentation Agent") have entered into a Credit Agreement, dated as of the
date hereof, providing for the making of loans and the issuance of and
participation in, letters of credit, as contemplated therein (such agreement,
as amended, modified, extended, renewed, replaced, restated or supplemented
from time to time, and including any agreement extending the maturity of, or
restructuring all or any portion of the indebtedness under such agreement or
any successor agreement, the "Credit Agreement"). Except as otherwise
defined herein, terms used herein and defined in the Credit Agreement shall
be used herein as so defined.
B. Assignor is, or is the successor in interest to, the lessee
under those certain leases (individually, a "Lease"; collectively, the
"Leases"), copies of which are attached as Exhibit A hereto, with the
---------
respective lessors (individually, a "Lessor"; collectively, the "Lessors")
thereto. The Leases pertain to the properties (the "Premises") which are
described on Exhibit B hereto.
---------
C. Assignor may at any time and from time to time enter into, or
guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection or other Hedging Agreement (each as hereinafter defined) with one
or more Other Creditors (as hereinafter defined).
<PAGE>
-2-
D. It is a condition to each of the above-described extensions of
credit to the Assignor that the Assignor shall have executed and delivered
this Assignment.
E. This Assignment is made by Assignor in favor of the Collateral
Agent for the benefit of (x) the Banks, the Administrative Agent, the
Syndication Agent, the Documentation Agent, the Collateral Agent and any
other lenders from time to time party to the Credit Agreement (collectively,
the "Bank Creditors") and (y) if one or more Banks or any Affiliate of a Bank
enters into one or more (i) interest rate protection agreements (including,
without limitation, interest rate swaps, caps, floors, collars and similar
agreements), (ii) foreign exchange contracts, currency swap agreements or
other similar agreements or arrangements designed to protect against the
fluctuations in currency values and/or (iii) other types of hedging
agreements from time to time (collectively, the "Interest Rate Protection or
Other Hedging Agreements"), with, or guaranteed by Assignor, any such Bank or
Banks or Affiliate or Affiliates (even if the respective Bank subsequently
ceases to be a Bank under the Credit Agreement for any reason) so long as any
such Bank or Affiliate participates in the extension of such Interest Rate
Protection or Other Hedging Agreement and their subsequent assigns, if any,
(collectively, the "Other Creditors"; together with the Bank Creditors, the
"Secured Creditors"). This Assignment is given to Collateral Agent to secure
the Obligations (as defined in the Security Agreement).
A G R E E M E N T :
- - - - - - - - -
Assignor and Collateral Agent hereby agree as follows:
1. Assignment. Assignor hereby transfers and assigns to
----------
Collateral Agent all of Assignor's right, title and interest, whether now
owned or hereafter acquired, in and to each of the Leases. This assignment
of the Leases is made as collateral security for the payment and performance
of the Secured Obligations.
2. No Assumption of Obligations or Duties of the Assignor. This
------------------------------------------------------
Assignment is an assignment only of all right, title and interest of the
Assignor in the Leases, and Assignor covenants and agrees to perform and
observe all of all material obligations imposed upon Assignor under the
Leases as if this Assignment had not been made. Assignor agrees that the
Secured Creditors have not assumed and will not be deemed to have assumed
any of the obligations or duties of Assignor under or with
<PAGE>
-3-
respect to the Leases unless and until the Secured Creditors shall have given
the parties to the Leases written notice that the Secured Creditors have
affirmatively assumed such obligations and duties as the result of an Event
of Default under the Credit Agreement or the Leases.
3. Representations, Warranties and Covenants of Assignor.
-----------------------------------------------------
Assignor represents, warrants and covenants to Collateral Agent:
a. (i) That the copy of the Leases attached hereto as Exhibit A
---------
is a true and correct copy thereof as in effect on the date hereof, (ii) that
Assignor is the sole owner of the entire leasehold interest in each Lease,
free and clear and of all Liens, except for the Liens created in favor of the
Collateral Agent pursuant to, or in connection with, the Credit Agreement,
(iii) each Lease is valid and enforceable, subject to the effect of this
Assignment and bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and similar laws, and has not been altered, modified or amended in
any manner, except as shown on Exhibit A, (iv) to Assignor's knowledge,
---------
neither Assignor nor the Lessor under any Lease is in default under such
Lease nor, to the knowledge of Assignor, has any event occurred (other than
pursuant to this Assignment) which with the passage of time or the giving of
notice would constitute a default under such Lease and (v) no rent reserved
in any Lease has been assigned or prepaid except for prepaid rent for the
current month and applicable security deposits.
b. Assignor agrees (i) to observe and perform all material
obligations imposed upon Assignor as the lessee under each Lease and not to
do, or permit to be done, anything to materially impair Assignor's rights
thereunder; (ii) not to assign Assignor's interest under any Lease or sublet
all or any part of the Premises, (iii) other than upon the expiration of the
term of the respective Leases in accordance with their terms, not alter,
modify or change the terms of any Lease in any material respect, or cancel or
terminate any Lease, or surrender possession of the Premises, or any part
thereof, without the prior written consent of Collateral Agent, which consent
shall not be unreasonably withheld and (iv) to use reasonable efforts to
enforce the performance by the Lessor under each Lease of all of such
Lessor's obligations under such Lease.
c. Assignor has full power and authority to execute, deliver and
perform its obligations under this Assignment.
d. Upon receipt of a written landlord's consent from
<PAGE>
-4-
the Lessors under the Leases, this Assignment shall be a legal, valid and
binding obligation of Assignor, enforceable in accordance with its terms.
e. Assignor agrees that Collateral Agent shall have the right,
exercisable at any time that the Collateral Agent believes in its
commercially reasonable business judgment, that there is a substantial risk
that the Assignor will not be able to perform its obligations under the
Credit Agreement and the other Credit Documents, to notify the Lessor under
any or all of the Leases that the Assignor has executed and delivered this
Assignment to the Collateral Agent.
4. Appointment of the Collateral Agent as Attorney-in-Fact.
-------------------------------------------------------
Assignor hereby irrevocably constitutes and appoints Collateral Agent as its
attorney-in-fact to demand, receive and enforce the respective rights and
interests of Assignor with respect to the Leases at any time after the
occurrence and during the continuance of an Event of Default under the Credit
Agreement and the delivery to Assignor of notice in accordance with Article X
of the Credit Agreement, and give appropriate notices for and on behalf of
and in the name of Assignor or either of them or, at the option of Collateral
Agent in the name of Collateral Agent, with the same force and effect as
Assignor could do if this Assignment had not been made.
5. Effect of Assignment; Remedies for Default. The Assignment
------------------------------------------
shall constitute an absolute and present assignment; provided, however, that
-------- -------
Collateral Agent shall have no right under this Assignment to enforce the
provisions of any Lease unless there shall occur and be continuing an Event
of Default under the Credit Agreement. Upon the occurrence and during the
continuance of any such Event of Default, Collateral Agent may, without
affecting any of its or the Secured Creditors rights or remedies against
Assignor under any other instrument, document or agreement, exercise its
rights under this Assignment as attorney-in-fact of Assignor in any manner
permitted by law, and Collateral Agent shall have the right to exercise and
enforce any or all rights and remedies available after default to a secured
party under the applicable Uniform Commercial Code. If notice to Assignor of
any intended disposition of collateral or any other intended action is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given at least ten day's prior to the date of
intended disposition. During the continuance of an Event of Default,
Collateral Agent may (i) either in person or by agent, with or without
bringing any action or proceeding, or by a receiver appointed by a court,
take
<PAGE>
-5-
possession of any or all of the Premises and have, hold, manage, lease and
operate the same, on such terms, and for such period of time, as Collateral
Agent may deem proper (but in no event beyond the stated term of the Lease,
including any options to extend) and (ii) in connection with the exercise of
its rights under clause (i) above, terminate all of Assignor's right to
retain, use and enjoy all rights under any Lease.
6. Indemnification. After the occurrence, and during the
---------------
continuance, of an Event of Default, Collateral Agent may, but shall not be
obligated to, perform or discharge any obligation, duty or liability under
any Lease or under or by reason of this Assignment. Furthermore, Assignor
shall, and hereby agrees to, indemnify, defend and hold Collateral Agent
harmless from, and against, any and all liability, loss, cost, damage or
expense which may, or might be, incurred by Collateral Agent, directly, or
indirectly, under any Lease or under or by reason of this Assignment and from
any and all claims and demands whatsoever which may be asserted against
Collateral Agent by reason of any alleged obligations or undertakings on its
part to perform or discharge any of the covenants or agreements contained in
any Lease other than any such liability, loss, cost or expense incurred as a
result of the gross negligence or willful misconduct of Collateral Agent. If
Collateral Agent incurs any such liability under any Lease or under or by
reason of this Assignment or in defense of any such claims or demands, the
amount thereof, including all costs, expenses and reasonable attorneys' fees,
shall be added to the Secured Obligations and Assignor shall reimburse
Collateral Agent therefor immediately upon demand, and, upon the failure of
Assignor to reimburse Collateral Agent within 10 days of demand, Collateral
Agent, at its option, may declare all of the Secured Obligations immediately
due and payable. The parties hereto understand further that this Assignment
shall not operate to place responsibility for the control, care, management
or repair of any of the Premises upon Collateral Agent (except as provided in
the Lease for matters first arising after Collateral Agent has taken physical
possession of the Premises, except for possession solely for the purpose of
disposing of the assets of Assignor), or for the carrying out of any of the
terms or conditions of any Lease (except for matters first arising after
Collateral Agent has taken physical possession of the Premises, except for
possession solely for the purpose of disposing of the assets of Assignor),
and it shall not operate to make Collateral Agent responsible or liable for
any waste committed on any of the Premises by Assignor or any of the Premises
or for any negligence in the management, upkeep, repair or control of any of
the Premises, resulting in loss, injury or death to any lessee, sublessee,
invitee,
<PAGE>
-6-
licensee, employee, stranger or any other Person.
7. Remedies Cumulative. No right or remedy of Collateral Agent
-------------------
hereunder is exclusive of any other right or remedy hereunder or now or
hereafter existing at law or in equity or under the Credit Agreement, the
Notes or the other Credit Documents, but is cumulative and in addition
thereto and Collateral Agent may recover judgment thereon, issue execution
therefor, and resort to every other right or remedy available at law or in
equity or under the Credit Agreement, the Notes or the other Credit
Documents, without first exhausting or affecting or impairing the security or
any right or remedy afforded under this Assignment. No delay in exercising,
or omission to exercise, any such right or remedy will impair any such right
or remedy or will be construed to be a waiver of any default by Assignor
hereunder, or acquiescence therein, nor will it affect any subsequent default
hereunder by Assignor of the same or different nature. Every such right or
remedy may be exercised independently or concurrently, and when and so often
as may be deemed expedient by Collateral Agent. No term or condition
contained in this Assignment may be waived, altered or changed except as
evidenced in writing signed by Assignor and Collateral Agent. In case
Collateral Agent shall have proceeded to enforce any right under this
Assignment and such proceedings shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to Collateral Agent,
then, and in every such case, Assignor and Collateral Agent shall be restored
to their former positions with respect to the Leases, and all rights,
remedies, and powers of Collateral Agent shall continue as though no such
proceedings had been taken.
8. Costs and Expenses. Assignor hereby agrees to pay all
------------------
reasonable costs and expenses (including, without limitation, reasonable
attorney's fees and expenses) which Collateral Agent or the Secured Creditors
may incur in exercising and enforcing any of their rights and remedies under
this Assignment after the occurrence and during the continuance of an Event
of Default.
9. Successors and Assigns. Subject to the limitations on further
----------------------
assignment of the Leases by Assignor contained herein, this Assignment shall
be binding upon Assignor and its successors and assigns, and shall inure to
the benefit of Collateral Agent and its successors and assigns. Collateral
Agent may assign its right, title and interest in the Leases upon notice to
the Assignor, but without any requirements for the consent of Assignor.
10. Amendment. This Assignment can be waived,
---------
<PAGE>
-7-
modified, amended, terminated or discharged only explicitly in a writing
signed by Collateral Agent. A waiver signed by Collateral Agent shall be
effective only in the specific instance and for the specific purpose given.
11. Termination. This Assignment shall terminate and be of no
-----------
further force and effect as of the date upon which the Commitments of the
Banks and all Interest Rate Protection and Other Hedging Agreements have been
terminated, no Note under the Credit Agreement is outstanding (and all Loans
have been repaid in full), all Letters of Credit have been terminated and all
Secured Obligations then owing have been paid in full. Upon such
termination, at the request of Assignor, Collateral Agent shall provide
written confirmation of such termination to Assignor in form reasonably
requested by Assignor, at Assignor's cost and expense.
12. Governing Law. This Assignment shall be governed by, and
-------------
shall be construed and enforced in accordance with the laws of the State of
New York, without regard to principles of conflicts of law.
13. Notices. Any notice delivered by Assignor or Collateral Agent
-------
hereunder shall be delivered in the manner provided in the Credit Agreement.
<PAGE>
-8-
IN WITNESS WHEREOF, Assignor and Collateral Agent have executed
this Assignment as of the date first set forth above.
COINMACH CORPORATION,
as Assignor
By: /s/ Robert M. Doyle
----------------------------
Name: Robert M. Doyle
Title: Senior Vice President
BANKERS TRUST COMPANY,
as Collateral Agent,
By: /s/ Patricia Hogan
----------------------------
Name: Patricia Hogan
Title: Vice President
<PAGE>
Exhibit 10.50
-------------
COLLATERAL ASSIGNMENT OF LOCATION LEASES
COLLATERAL ASSIGNMENT OF LEASES ("Assignment") dated as of January 8,
1997 by COINMACH CORPORATION, a Delaware corporation ("Assignor") in favor of
BANKERS TRUST COMPANY, a New York banking corporation, having an office at 130
Liberty Street, New York, New York 10006, in its capacity as collateral agent
(in such capacity and together with any successor in such capacity, the
"Collateral Agent") for the Secured Creditors (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Assignor, Coinmach Laundry Corporation, certain subsidiaries of
Assignor, the lenders (the "Banks") from time to time party thereto, Bankers
Trust Company, as Administrative Agent (together with any successor, the
"Administrative Agent"), First Union Corporation, as Syndication Agent (together
with any successor, the "Syndication Agent") and Lehman Commercial Paper, Inc.,
as Documentation Agent (together with any successor, the "Documentation Agent")
have entered into a Credit Agreement, dated as of the date hereof, providing for
the making of loans and the issuance of and participation in, letters of credit,
as contemplated therein (such agreement, as amended, modified, extended,
renewed, replaced, restated or supplemented from time to time, and including any
agreement extending the maturity of, or restructuring all or any portion of the
indebtedness under such agreement or any successor agreement, the "Credit
Agreement"). Except as otherwise defined herein, terms used herein and defined
in the Credit Agreement shall be used herein as so defined.
B. Assignor is, or is the successor in interest to, the lessee under
those certain leases (individually, a "Lease"; collectively, the "Leases"), a
complete list of which is attached as Exhibit A hereto, with the respective
---------
lessors (individually, a "Lessor"; collectively, the "Lessors") thereto. The
Leases pertain to the properties (the "Premises") which are described on Exhibit
-------
B hereto.
- -
C. Assignor may at any time and from time to time enter into, or
guarantee obligations of its Subsidiaries under, one or more Interest Rate
Protection or other Hedging Agreement (each as hereinafter defined) with one or
more Other Creditors (as hereinafter defined).
<PAGE>
-2-
D. It is a condition to each of the above-described extensions of
credit to the Assignor that the Assignor shall have executed and delivered this
Assignment.
E. This Assignment is made by Assignor in favor of the Collateral
Agent for the benefit of (x) the Banks, the Administrative Agent, the
Syndication Agent, the Documentation Agent, the Collateral Agent and any other
lenders from time to time party to the Credit Agreement (collectively, the "Bank
Creditors") and (y) if one or more Banks or any Affiliate of a Bank enters into
one or more (i) interest rate protection agreements (including, without
limitation, interest rate swaps, caps, floors, collars and similar agreements),
(ii) foreign exchange contracts, currency swap agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values and/or (iii) other types of hedging agreements from time to time
(collectively, the "Interest Rate Protection or Other Hedging Agreements"),
with, or guaranteed by Assignor, any such Bank or Banks or Affiliate or
Affiliates (even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason) so long as any such Bank or Affiliate
participates in the extension of such Interest Rate Protection or Other Hedging
Agreement and their subsequent assigns, if any, (collectively, the "Other
Creditors"; together with the Bank Creditors, the "Secured Creditors"). This
Assignment is given to Collateral Agent to secure the Obligations (as defined in
the Security Agreement).
A G R E E M E N T :
- - - - - - - - -
Assignor and Collateral Agent hereby agree as follows:
1. Assignment. Assignor hereby transfers and assigns to Collateral
----------
Agent all of Assignor's right, title and interest, whether now owned or
hereafter acquired, in and to each of the Leases. This assignment of the Leases
is made as collateral security for the payment and performance of the Secured
Obligations.
2. No Assumption of Obligations or Duties of the Assignor. This
------------------------------------------------------
Assignment is an assignment only of all right, title and interest of the
Assignor in the Leases, and Assignor covenants and agrees to perform and observe
all of all material obligations imposed upon Assignor under the Leases as if
this Assignment had not been made. Assignor agrees that the Secured
<PAGE>
-3-
Creditors have not assumed and will not be deemed to have assumed any of the
obligations or duties of Assignor under or with respect to the Leases unless and
until the Secured Creditors shall have given the parties to the Leases written
notice that the Secured Creditors have affirmatively assumed such obligations
and duties as the result of an Event of Default under the Credit Agreement or
the Leases.
3. Representations, Warranties and Covenants of Assignor. Assignor
-----------------------------------------------------
represents, warrants and covenants to Collateral Agent:
a. (i) That Schedule A attached hereto contains a complete list as of
----------
the date hereof of the Leases, (ii) that Assignor is the sole owner of the
entire leasehold interest in each Lease, free and clear and of all Liens, except
for the Liens created in favor of the Collateral Agent pursuant to, or in
connection with, the Credit Agreement, (iii) each Lease is valid and
enforceable, subject to the effect of this Assignment and bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and similar laws,
and has not been altered, modified or amended in any manner, except as shown on
Exhibit A, (iv) to Assignor's knowledge, neither Assignor nor the Lessor under
- ---------
any Lease is in default under such Lease nor, to the knowledge of Assignor, has
any event occurred (other than pursuant to this Assignment) which with the
passage of time or the giving of notice would constitute a default under such
Lease and (v) no rent reserved in any Lease has been assigned or prepaid except
for prepaid rent for the current month and applicable security deposits.
b. Assignor agrees (i) to observe and perform all material
obligations imposed upon Assignor as the lessee under each Lease and not to do,
or permit to be done, anything to materially impair Assignor's rights
thereunder; (ii) not to assign Assignor's interest under any Lease or sublet all
or any part of the Premises, (iii) other than upon the expiration of the terms
of the respective Leases in accordance with their terms, not alter, modify or
change the terms of any Lease in any material respect, or cancel or terminate
any Lease, or surrender possession of the Premises, or any part thereof, without
the prior written consent of Collateral Agent, which consent shall not be
unreasonably withheld and (iv) to use reasonable efforts to enforce the
performance by the Lessor under each Lease of all of such Lessor's obligations
under such Lease.
<PAGE>
-4-
c. Assignor has full power and authority to execute, deliver and
perform its obligations under this Assignment.
d. In the event that Assignor receives a written landlord consent
from the Lessors under the Leases, this Assignment shall be a legal, valid and
binding obligation of Assignor, enforceable in accordance with its terms with
respect to those Leases.
e. Assignor agrees that Collateral Agent shall have the right,
exercisable at any time that the Collateral Agent believes in its commercially
reasonable business judgment, that there is a substantial risk that the Assignor
will not be able to perform its obligations under the Credit Agreement and the
other Credit Documents, to notify the Lessor under any or all of the Leases that
the Assignor has executed and delivered this Assignment to the Collateral Agent.
4. Appointment of the Collateral Agent as Attorney-in-Fact. Assignor
-------------------------------------------------------
hereby irrevocably constitutes and appoints Collateral Agent as its attorney-in-
fact to demand, receive and enforce the respective rights and interests of
Assignor with respect to the Leases at any time after the occurrence and during
the continuance of an Event of Default under the Credit Agreement and the
delivery to Assignor of notice in accordance with Article X of the Credit
Agreement, and give appropriate notices for and on behalf of and in the name of
Assignor or either of them or, at the option of Collateral Agent in the name of
Collateral Agent, with the same force and effect as Assignor could do if this
Assignment had not been made.
5. Effect of Assignment; Remedies for Default. The Assignment shall
------------------------------------------
constitute an absolute and present assignment; provided, however, that
-------- -------
Collateral Agent shall have no right under this Assignment to enforce the
provisions of any Lease unless there shall occur and be continuing an Event of
Default under the Credit Agreement. Upon the occurrence and during the
continuance of any such Event of Default, Collateral Agent may, without
affecting any of its or the Secured Creditors rights or remedies against
Assignor under any other instrument, document or agreement, exercise its rights
under this Assignment as attorney-in-fact of Assignor in any manner permitted by
law, and Collateral Agent shall have the right to exercise and enforce any or
all rights and remedies available after default to a secured party under the
applicable Uniform Commercial Code. If notice to Assignor of any intended
disposition of collateral or any
<PAGE>
-5-
other intended action is required by law in a particular instance, such notice
shall be deemed commercially reasonable if given at least ten day's prior to the
date of intended disposition. During the continuance of an Event of Default,
Collateral Agent may (i) either in person or by agent, with or without bringing
any action or proceeding, or by a receiver appointed by a court, take possession
of any or all of the Premises and have, hold, manage, lease and operate the
same, on such terms, and for such period of time, as Collateral Agent may deem
proper (but in no event beyond the stated term of the Lease, including any
options to extend) and (ii) in connection with the exercise of its rights under
clause (i) above, terminate all of Assignor's right to retain, use and enjoy all
rights under any Lease.
6. Indemnification. After the occurrence, and during the
---------------
continuance, of an Event of Default, Collateral Agent may, but shall not be
obligated to, perform or discharge any obligation, duty or liability under any
Lease or under or by reason of this Assignment. Furthermore, Assignor shall,
and hereby agrees to, indemnify, defend and hold Collateral Agent harmless from,
and against, any and all liability, loss, cost, damage or expense which may, or
might be, incurred by Collateral Agent, directly, or indirectly, under any Lease
or under or by reason of this Assignment and from any and all claims and demands
whatsoever which may be asserted against Collateral Agent by reason of any
alleged obligations or undertakings on its part to perform or discharge any of
the covenants or agreements contained in any Lease other than any such
liability, loss, cost or expense incurred as a result of the gross negligence or
willful misconduct of Collateral Agent. If Collateral Agent incurs any such
liability under any Lease or under or by reason of this Assignment or in defense
of any such claims or demands, the amount thereof, including all costs, expenses
and reasonable attorneys' fees, shall be added to the Secured Obligations and
Assignor shall reimburse Collateral Agent therefor immediately upon demand, and,
upon the failure of Assignor to reimburse Collateral Agent within 10 days of
demand, Collateral Agent, at its option, may declare all of the Secured
Obligations immediately due and payable. The parties hereto understand further
that this Assignment shall not operate to place responsibility for the control,
care, management or repair of any of the Premises upon Collateral Agent (except
as provided in the Lease for matters first arising after Collateral Agent has
taken physical possession of the Premises, except for possession solely for the
purpose of disposing of the assets of Assignor), or for
<PAGE>
-6-
the carrying out of any of the terms or conditions of any Lease (except for
matters first arising after Collateral Agent has taken physical possession of
the Premises, except for possession solely for the purpose of disposing of the
assets of Assignor), and it shall not operate to make Collateral Agent
responsible or liable for any waste committed on any of the Premises by Assignor
or any of the Premises or for any negligence in the management, upkeep, repair
or control of any of the Premises, resulting in loss, injury or death to any
lessee, sublessee, invitee, licensee, employee, stranger or any other Person.
7. Remedies Cumulative. No right or remedy of Collateral Agent
-------------------
hereunder is exclusive of any other right or remedy hereunder or now or
hereafter existing at law or in equity or under the Credit Agreement, the Notes
or the other Credit Documents, but is cumulative and in addition thereto and
Collateral Agent may recover judgment thereon, issue execution therefor, and
resort to every other right or remedy available at law or in equity or under the
Credit Agreement, the Notes or the other Credit Documents, without first
exhausting or affecting or impairing the security or any right or remedy
afforded under this Assignment. No delay in exercising, or omission to
exercise, any such right or remedy will impair any such right or remedy or will
be construed to be a waiver of any default by Assignor hereunder, or
acquiescence therein, nor will it affect any subsequent default hereunder by
Assignor of the same or different nature. Every such right or remedy may be
exercised independently or concurrently, and when and so often as may be deemed
expedient by Collateral Agent. No term or condition contained in this
Assignment may be waived, altered or changed except as evidenced in writing
signed by Assignor and Collateral Agent. In case Collateral Agent shall have
proceeded to enforce any right under this Assignment and such proceedings shall
have been discontinued or abandoned for any reason, or shall have been
determined adversely to Collateral Agent then, and in every such case, Assignor
and Collateral Agent shall be restored to their former positions with respect to
the Leases, and all rights, remedies, and powers of Collateral Agent shall
continue as though no such proceedings had been taken.
8. Costs and Expenses. Assignor hereby agrees to pay all reasonable
------------------
costs and expenses (including, without limitation, reasonable attorney's fees
and expenses) which Collateral Agent or the Secured Creditors may incur in
exercising and enforcing any of their rights and remedies under this Assignment
after the occurrence and during the continuance of an Event of Default.
<PAGE>
-7-
9. Successors and Assigns. Subject to the limitations on further
----------------------
assignment of the Leases by Assignor contained herein, this Assignment shall be
binding upon Assignor and its successors and assigns, and shall inure to the
benefit of Collateral Agent and its successors and assigns. Collateral Agent
may assign its right, title and interest in the Leases upon notice to the
Assignor, but without any requirements for the consent of Assignor.
10. Amendment. This Assignment can be waived, modified, amended,
---------
terminated or discharged only explicitly in a writing signed by Collateral
Agent. A waiver signed by Collateral Agent shall be effective only in the
specific instance and for the specific purpose given.
11. Termination. This Assignment shall terminate and be of no
-----------
further force and effect as of the date upon which the Commitments of the Banks
and all Interest Rate Protection and Other Hedging Agreements have been
terminated, no Note under the Credit Agreement is outstanding (and all Loans
have been repaid in full), all Letters of Credit have been terminated and all
Secured Obligations then owing have been paid in full. Upon such termination,
at the request of Assignor, Collateral Agent shall provide written confirmation
of such termination to Assignor in form reasonably requested by Assignor, at
Assignor's cost and expense.
12. Governing Law. This Assignment shall be governed by, and shall
-------------
be construed and enforced in accordance with the laws of the State of New York,
without regard to principles of conflicts of law.
13. Notices. Any notice delivered by Assignor or Collateral Agent
-------
hereunder shall be delivered in the manner provided in the Credit Agreement.
<PAGE>
-8-
IN WITNESS WHEREOF, Assignor and Collateral Agent have executed this
Assignment as of the date first set forth above.
COINMACH CORPORATION,
as Assignor
By: /s/ Robert M. Doyle
-------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
BANKERS TRUST COMPANY,
as Collateral Agent,
By: /s/ Patricia Hogan
-------------------------------
Name: Patricia Hogan
Title: Vice President
<PAGE>
EXHIBIT 10.51
TCC
AMENDMENT TO INVESTOR PURCHASE AGREEMENTS
THIS AMENDMENT TO INVESTOR PURCHASE AGREEMENTS (the "Amendment") is made as
of January __, 1997 by and among Coinmach Laundry Corporation ("CLC"), a
Delaware corporation, formerly known as SAS Acquisitions, Inc., Golder, Thoma,
Cressey, Rauner Fund IV, L.P. ("GTCR"), Coinmach Corporation ("Coinmach"), a
Delaware corporation, formerly known as Solon Automated Services, Inc. and
successor by merger with The Coinmach Corporation, Heller Financial, Inc.
("Heller"), Jackson National Life Insurance Company ("JNL"), individually and as
successor by merger with Jackson National Life Insurance Company of Michigan,
President and Fellows of Harvard College ("Harvard"), James N. Chapman
("Chapman") and Michael E. Marrus ("Marrus").
R E C I T A L S
WHEREAS, CLC, Coinmach, GTCR and each of Heller, JNL (individually and
as successor by merger with Jackson National Life Insurance Company of
Michigan), Harvard, Chapman and Marrus are parties to Investor Purchase
Agreements, each dated as of January 31, 1995, as amended by that certain
Omnibus Agreement, dated as of November 30, 1995 (as amended, collectively, the
"Investor Purchase Agreements");
WHEREAS, the parties hereto desire to amend each of the Investor Purchase
Agreements on the terms and conditions set forth herein.
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 Amendment agree as follows:
1. Amendment. Effective as of July 18, 1996 and without further action by
---------
the parties hereto, (a) each of the Investor Purchase Agreements is hereby
amended by deleting Sections 3B and 3C in their entirety, and (b) each of the
Investor Purchase Agreements to which Harvard, Chapman or Marrus is a party is
hereby amended by deleting Section 3D in its entirety.
2. Counterparts. This Amendment may be executed in multiple counterparts,
------------
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
3. Successors and Assigns. This Amendment shall bind each of the parties
----------------------
hereto and their respective successors and permitted assigns and inure to the
benefit of and be enforceable by each of the parties hereto and their respective
successors and permitted assigns.
4. Amendment and Waiver. The provisions of this Amendment may be amended
--------------------
or modified only by written agreement of the parties hereto. No course of
dealing between the parties or third party beneficiaries hereof or any delay in
exercising any rights hereunder shall operate as a waiver of any rights of any
such person.
5. Descriptive Headings. The descriptive headings of this Amendment are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date first written above.
COINMACH LAUNDRY CORPORATION
(formerly known as SAS Acquisitions, Inc.)
By: /s/ Robert M. Doyle
------------------------------------
Robert M. Doyle
Senior Vice President
COINMACH CORPORATION
(formerly known as Solon Automated Services,
Inc.)
By: /s/ Robert M. Doyle
------------------------------------
Robert M. Doyle
Senior Vice President
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR, L.P., its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
its General Partner
By: /s/ Bruce V. Rauner
------------------------------------
Bruce V. Rauner
Principal
HELLER FINANCIAL, INC.
By: /s/ Ellen T. Cook
------------------------------------
Name: Ellen T. Cook
Title: Assistant Vice President
2
<PAGE>
JACKSON NATIONAL LIFE INSURANCE COMPANY
(individually and as successor by merger to
Jackson National Life Insurance Company of
Michigan)
By: PPM America, Inc., its agent
By: /s/ William T. Considine
--------------------------------------
Name: William T. Considine
Title: Vice President
PRESIDENT AND FELLOWS OF HARVARD COLLEGE
By: Harvard Management Company, Inc.
By: Timothy Peterson
--------------------------------------
Name: Timothy Peterson
Authorized Signatory
By: /s/ Jack R. Meyer
--------------------------------------
Name: Jack R. Meyer
Authorized Signatory
/s/ James N. Chapman
__________________________________________
James N. Chapman
/s/ Michael E. Marrus
__________________________________________
Michael E. Marrus
3
<PAGE>
EXHIBIT 10.52
SAS
AMENDMENT TO INVESTOR PURCHASE AGREEMENT
THIS AMENDMENT TO INVESTOR PURCHASE AGREEMENT (the "Amendment") is made as
of January __, 1997 by and among Coinmach Laundry Corporation ("CLC"), a
Delaware corporation, formerly known as SAS Acquisitions, Inc., Golder, Thoma,
Cressey, Rauner Fund IV, L.P. ("GTCR") and the persons listed on the signature
pages hereto (each a "Purchaser" and collectively the "Purchasers").
R E C I T A L S
WHEREAS, CLC, GTCR and the Purchasers are parties to an Investor Purchase
Agreement, dated as of July 26, 1995, as amended by that certain Omnibus
Agreement, dated as of November 30, 1995 (as amended, the "Investor Purchase
Agreement");
WHEREAS, the parties hereto desire to amend the Investor Purchase Agreement
on the terms and conditions set forth herein.
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 Amendment agree as follows:
1. Amendment. Effective as of July 18, 1996, and without further action
---------
by the parties hereto, the Investor Purchase Agreement is hereby amended by
inserting directly after Section 3D on page 8 a new Section 3E, which shall read
as follows:
"3E. Limitation on Restrictions. Notwithstanding any term or
--------------------------
provision to the contrary in this Section 3, the terms and
provisions of Sections 3B, 3C and 3D hereof shall not apply in
any respect and shall have no force and effect on or against
James N. Chapman, Michael E. Marrus, Heller Financial, Inc.,
Jackson National Life Insurance Company, Jackson National Life
Insurance Company of Michigan or President and Fellows of Harvard
College."
2. Counterparts. This Amendment may be executed in multiple
------------
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
3. Successors and Assigns. This Amendment shall bind each of the parties
----------------------
hereto and their respective successors and permitted assigns and inure to the
benefit of and be enforceable by each of the parties hereto and their respective
successors and permitted assigns.
4. Amendment and Waiver. The provisions of this Amendment may be amended
--------------------
or modified only by written agreement of the parties hereto. No course of
dealing between the parties or third party beneficiaries hereof or any delay in
exercising any rights hereunder shall operate as a waiver of any rights of any
such person.
<PAGE>
5. Descriptive Headings. The descriptive headings of this Amendment are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
date first written above.
COINMACH LAUNDRY CORPORATION
(formerly known as SAS Acquisitions, Inc.)
By: /s/ Robert M. Doyle
----------------------------------------
Name: Robert M. Doyle
Title: Senior Vice President
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR, L.P., its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
its General Partner
By: /s/ Bruce V. Rauner
----------------------------------------
Name: Bruce V. Rauner
Principal
HELLER FINANCIAL, INC.
By: /s/ Ellen T. Cook
----------------------------------------
Name: Ellen T. Cook
Title: Assistant Vice President
JACKSON NATIONAL LIFE INSURANCE COMPANY
(individually and as successor by merger to
Jackson National Life Insurance Company of Michigan)
By: PPM America, Inc., its agent
By: /s/ William T. Considine
----------------------------------------
Name: William T. Considine
Title: Vice President
2
<PAGE>
PRESIDENT AND FELLOWS OF HARVARD COLLEGE
By: Harvard Management Company, Inc.
By: /s/ Timothy Peterson
-------------------------------------
Name: Timothy Peterson
Authorized Signatory
By: /s/ Jack R. Meyer
-------------------------------------
Name: Jack R. Meyer
Authorized Signatory
MCS CAPITAL, INC.
By: /s/ Stephen R. Kerrigan
-------------------------------------
Stephen R. Kerrigan
President
/s/ James N. Chapman
-----------------------------------------
James N. Chapman
/s/ Michael E. Marrus
___________________________________________
Michael E. Marrus
/s/ Mitchell Blatt
___________________________________________
Mitchell Blatt
/s/ Michael Stanky
___________________________________________
Michael Stanky
3
<PAGE>
EXHIBIT 10.53
DEMAND PROMISSORY NOTE
----------------------
$80,000 March 24, 1997
For value received, John E. Denson ("Maker"), promises to pay on
demand at any time on or after March 25, 1997 to the order of Coinmach
Corporation, a Delaware corporation, the aggregate principal amount of $80,000.
No interest shall accrue on the outstanding principal amount of this
promissory note (the "Note").
This Note is secured by certain real property owned by Maker and
located at 111 Cove Lane, Media, Pennsylvania 19063.
In the event Maker fails to pay any amounts due hereunder when due (an
"Event of Default"), Maker shall pay to the holder hereof, in addition to such
amounts due, all costs of collection, including reasonable attorneys' fees and
court costs.
Maker or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and non-
payment 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 Maker hereunder. Maker also waives all
rights to notice and hearing of any kind upon the occurence of an Event of
Default and prior to the exercise by the holder of this Note of its rights to
repossess the Collateral without judicial process or to replevy, attach or levy
upon the Collateral without notice or hearing.
This Note shall be governed by and construed in all respects according
to the internal laws of the State of New York without regard to conflicts of law
provisions.
By: /s/ John E. Denson
------------------------
John E. Denson
<PAGE>
EXHIBIT 10.54
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES, RENTS AND PROFITS,
FINANCING STATEMENT AND FIXTURE FILING
made by
COINMACH CORPORATION,
as Grantor,
to
CHICAGO TITLE INSURANCE COMPANY,
as Trustee,
for the benefit of
BANKERS TRUST COMPANY,
as Collateral Agent,
as Beneficiary
THIS DEED OF TRUST SECURES FUTURE ADVANCES
PREPARED BY AND WHEN RECORDED RETURN TO:
CHICAGO TITLE
INSURANCE CO.
350 N. St. Paul Ste. 250 Main Office
Dallas, Texas 75201 214/720-4000
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
RECITALS................................................. 1
GRANTING CLAUSES......................................... 2
ARTICLE I CERTAIN DEFINITIONS........................... 4
ARTICLE II PARTICULAR COVENANTS OF THE GRANTOR.......... 6
2.1 Payment of Obligations......................... 6
2.2 Warranty of Title.............................. 6
2.3 Due Authorization and Binding Effect........... 7
2.4 To Pay Impositions............................. 7
2.5 To Insure...................................... 11
2.6 To Comply with Laws............................ 12
2.7 Limitation on Disposition of the Mortgaged
Premises....................................... 13
2.8 To Maintain Priority of Liens.................. 13
2.9 Maintenance of Mortgaged Premises;
Covenant Against Waste......................... 14
2.10 After-Acquired Property........................ 14
2.11 Further Assurances............................. 14
2.12 Recorded Instruments........................... 15
2.13 Hazardous Material............................. 15
2.14 Asbestos....................................... 17
ARTICLE III LEASES; ASSIGNMENT AS FURTHER SECURITY, ETC. 18
3.1 Assignment of Leases, Rents, Issues and
Profits........................................ 18
3.2 Entry upon Default............................. 18
3.3 The Grantor's Covenants Regarding Leases....... 19
ARTICLE IV SECURITY AGREEMENT UNDER THE UNIFORM
COMMERCIAL CODE.............................. 20
4.1 Security Agreement............................. 20
4.2 Assignment of Non-Code Collateral.............. 22
4.3 Conflict with the Security Agreement........... 22
4.4 Termination.................................... 22
ARTICLE V EVENTS OF DEFAULT AND REMEDIES 22
5.1 "Events of Default"............................ 22
5.2 Remedies....................................... 22
5.3 Sale; No Marshalling of Assets;
Appointment of Receiver........................ 25
- i -
<PAGE>
Page
----
5.4 Indemnification by the Grantor................. 27
5.5 Remedies Cumulative; No Waiver; Etc............ 28
5.6 No Merger...................................... 28
ARTICLE VI PROVISIONS OF GENERAL APPLICATION 29
6.1 Waiver; Amendment.............................. 29
6.2 Notices........................................ 29
6.3 Additional Sums Payable by the Grantor......... 30
6.4 Captions....................................... 30
6.5 Successors and Assigns......................... 30
6.6 Gender and Number.............................. 30
6.7 Severability................................... 30
6.8 Subrogation.................................... 30
6.9 Usury.......................................... 31
6.10 Counterparts................................... 31
6.11 Controlling Law................................ 31
6.12 Entire Agreement............................... 31
6.13 Release........................................ 31
6.14 Additional Advances............................ 32
6.15 Fixture Filing................................. 32
6.16 Financing Statement............................ 32
6.17 Actions of Beneficiary......................... 33
6.18 Deed of Trust Secures Line of Credit........... 33
6.19 Date and Maturity of Obligations............... 33
6.20 Concerning Trustee............................. 33
6.21 Beneficiary's Authority........................ 33
Schedule I - Permitted Encumbrances
Exhibit A - Description of Premises
- ii -
<PAGE>
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES, RENTS AND PROFITS,
FINANCING STATEMENT AND FIXTURE FILING
-----------------------------------------
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES, RENTS AND
PROFITS, FINANCING STATEMENT AND FIXTURE FILING (this "Deed of Trust"), made as
of this ____ day of _________, 1997 by COINMACH CORPORATION, a corporation
organized and existing under the laws of the State of Delaware and having an
office at 55 Lumber Road, Roslyn, New York 11576, as grantor (the "Grantor"), in
favor of CHICAGO TITLE INSURANCE COMPANY (the "Trustee"), having an address at
350 N. St. Paul, Suite 250, Dallas, Texas 75201, for the use and benefit of
BANKERS TRUST COMPANY, having an office and post office address at 130 Liberty
Street, New York City, New York County, New York 10006, as beneficiary, in its
capacity as Collateral Agent (the "Beneficiary") for its benefit and the benefit
of the Secured Creditors (as defined below). Except as otherwise defined
herein, terms used herein and defined in the Credit Agreement (as defined below)
shall be used herein as therein defined.
R E C I T A L S :
- - - - - - - -
1. Coinmach Laundry Corporation, the Grantor and various financial
institutions listed in Annex I attached thereto (the "Banks") , Bankers Trust
Company, as Administrative Agent (together with any successors, the
"Administrative Agent"), First Union National Bank of North Carolina, as
Syndication Agent (together with any successors, the "Syndication Agent") and
Lehman Commercial Paper, Inc., as Documentation Agent (together with any
successors, the "Documentation Agent") have entered into a Credit Agreement,
dated as of the date hereof providing for the making of Loans and the issuance
of, and participation in, Letters of Credit, as contemplated therein (such
agreement, as amended, modified, extended, renewed, replaced, restated or
supplemented from time to time, and including any agreement extending the
maturity of, or restructuring all or any portion of the Indebtedness under such
agreement or any successor agreement, the "Credit Agreement").
2. The Grantor may from time to time be party to one or more
interest rate agreements, interest rate cap agreements, interest rate collar
agreements or other similar agreements or arrangements (each such agreement or
arrangement with an Interest Rate Protection Creditor (as hereinafter defined),
an "Interest Rate Protection Agreement"), with a Bank or an affiliate of a Bank
(each such Bank or affiliate, even if the respective Bank subsequently ceases to
be a Bank under the Credit Agreement for any reason, together with such Bank's
or affiliate's successors and assigns, collectively, the "Interest Rate
Protection Creditors", and the Interest Rate Protection Creditors together with
the Bank
<PAGE>
Creditors, hereinafter collectively being called the "Secured Creditors").
3. The Grantor is the owner of the fee simple interest in and to the
Premises and the Improvements (each as hereinafter defined).
4. It is a condition precedent to each of the above-described
extensions of credit that the Grantor shall have executed and delivered this
Deed of Trust to the Beneficiary.
5. The Grantor desires to execute this Deed of Trust to satisfy the
conditions described in the preceding paragraph.
6. This Deed of Trust is given pursuant to the Credit Agreement.
A G R E E M E N T :
-----------------
NOW, THEREFORE, in consideration of the benefits accruing to the
Grantor, the receipt and sufficiency of which are hereby acknowledged, and to
secure the prompt and complete payment and performance when due of all of the
Obligations (as hereinafter defined),
THE GRANTOR HEREBY GIVES, GRANTS, BARGAINS, SELLS, TRANSFERS, CONVEYS AND
ASSIGNS TO THE TRUSTEE, in trust, with powers of sale, for the use and benefit
of beneficiary IN FEE SIMPLE all of its right, title and interest, whether now
owned or hereafter acquired, in the hereinafter described property, whether now
owned or hereafter acquired, and, insofar as such property consists of
equipment, accounts, accounts receivable, contract rights, general intangibles,
inventory, fixtures, proceeds of collateral or any other personal property of a
kind or character defined in or subject to the applicable provisions of the
Uniform Commercial Code (as in effect in the State of Texas), the Grantor hereby
grants to the Beneficiary a security interest in all of the Grantor's right,
title and interest therein, namely:
I. All those certain lots, pieces or parcels of land described in
Exhibit A annexed hereto and hereby made a part hereof, including all and
- ---------
singular easements, rights, privileges, tenements, hereditaments and
appurtenances thereunto belonging or in any way appertaining thereto, and the
reversion and remainder thereof (herein collectively called the "Land"); and all
of the estate, right, title, interest, claim or demand whatsoever of the Grantor
therein and in and to any land lying in the bed of any street, road or avenue,
open or proposed, in front of or adjoining or adjacent to the Land, to the
center line thereof, either in law or in possession or expectancy, now or
hereafter acquired (all of the foregoing collectively herein called the
"Premises");
- 2 -
<PAGE>
II. All right, title and interest of the Grantor in and to (i) all
buildings and other improvements and additions thereto now erected or hereafter
constructed or placed upon the Premises or any part thereof, including but not
limited to site improvements and infrastructure improvements (collectively, the
"Improvements"); (ii) except as otherwise provided herein or in the Credit
Agreement, all machinery, devices, fixtures, apparatus, interior improvements,
appurtenances and equipment of every kind and nature whatsoever (other than
rolling stock and motor vehicles) owned by the Grantor and now or hereafter
attached to or placed in or upon the Premises or the Improvements, or any part
thereof, and used or procured for use in connection with the operation of the
Premises or any business conducted thereon (collectively, the "Equipment");
III. All right, title and interest of the Grantor in and to all
insurance or other proceeds for damage done to the Improvements or the Equipment
and all awards hereafter to be made to or for the account of the Grantor for the
permanent or temporary taking by eminent domain of the whole or any part of the
Premises, the Improvements or the Equipment, or any lesser estate therein, or
easement appurtenant thereto (including, without limitation, any awards for
change of grade of streets), all of which proceeds and awards are hereby
assigned to the Beneficiary, subject to the further provisions of this Deed of
Trust;
IV. Except as otherwise provided herein or in the Credit Agreement,
all right, title and interest of the Grantor in and to all of the rents, income,
receipts, revenues, issues, benefits and profits of the Premises, including all
Leases (as hereinafter defined) now or hereafter entered into covering any part
of the Premises, all renewals, extensions, subleases or assignments thereof, all
other occupancy agreements, by concession, license or otherwise, all guaranties
of the obligations of any tenant thereunder and all amendments, extensions,
renewals and modifications of the foregoing, including all interest of the
Grantor as landlord in and to the same, all of which are hereby assigned to the
Beneficiary, subject, however, to the right of the Grantor to receive and use
the same to the extent hereinafter set forth; and
V. All right, title and interest of the Grantor in and to all water,
water rights, mineral rights, oil, gas, ditches, ditch rights, reservoirs and
reservoir rights, if any, appurtenant to, located on or used in connection with
the Premises or the Improvements, whether existing now or hereafter acquired
(all of the foregoing Premises, Improvements, Equipment, appurtenances, estates,
rights, privileges, interests and franchises hereby mortgaged, or intended so to
be, being hereinafter collectively referred to as the "Mortgaged Premises").
TO HAVE AND TO HOLD the Mortgaged Premises now or hereafter owned by
the Grantor, unto (i) the Trustee, his
- 3 -
<PAGE>
substitutes or successors, forever, to the extent the same constitutes real
property or an interest therein and (ii) Beneficiary, to the extent the same
does not constitute real property or an interest therein, in either case for the
benefit of Beneficiary and Beneficiary's successors and assigns forever, for the
purposes set forth herein.
ARTICLE I
CERTAIN DEFINITIONS
-------------------
In addition to other definitions contained herein, the following terms
shall have the meanings set forth below, unless the context of this Deed of
Trust otherwise requires.
1.1 "due and payable" when used with reference to any and all sums
secured by this Deed of Trust shall mean due and payable, whether at the date of
payment or at the date of maturity specified in the Credit Agreement or other
Credit Documents after giving effect in all cases to applicable grace periods;
or by acceleration or call for payment as provided in the Credit Agreement or
other Credit Documents or this Deed of Trust; or, in the case of Impositions,
the last day upon which any charge may be paid without penalty and/or interest.
1.2 "Events of Default" shall mean any Event of Default under, and as
defined in, the Credit Agreement, and in any event shall include any payment
default on any of the Obligations after the expiration of any applicable grace
period provided in the Credit Agreement.
1.3 "Governmental Authorities" shall mean all federal, state, county,
municipal and local governments and all departments, commissions, boards,
bureaus and offices thereof, having or claiming jurisdiction over the Mortgaged
Premises or any part thereof.
1.4 "Impositions" shall mean all duties, taxes, water and sewer rents,
rates and charges, assessments (including, but not limited to, all assessments
for public improvements or benefits), charges for public utilities, excises,
levies, license and permit fees and other charges, ordinary or extraordinary,
whether foreseen or unforeseen, of any kind and nature whatsoever, which prior
to or during the term of this Deed of Trust will have been or may be laid,
levied, assessed or imposed upon or become due and payable out of or in respect
of, or become a lien on the Premises, the Improvements, the Equipment or any
other property or rights included in the Mortgaged Premises, or any part thereof
or appurtenances thereto, or which are levied or assessed against the rent and
income received by the Grantor therefrom, by virtue of any present or future
law, order or ordinance of the United States of
- 4 -
<PAGE>
America or of any state, county or local government or of any department, office
or bureau thereof or of any other Governmental Authority, but shall expressly
not include income or franchise taxes or similar taxes based upon or measured by
income, assessed by any Governmental Authority and imposed on the Trustee,
Beneficiary or their respective successors or assigns by reason of the ownership
of this Deed of Trust or the obligations or the receipt of interest.
1.5 "Involuntary Rate" shall mean the rate of interest described in
Section 1.08(c) of the Credit Agreement.
1.6 "Legal Requirements" shall mean all present and future laws,
ordinances, rules, regulations and requirements of all Governmental Authorities,
and all orders, rules and regulations of any national or local board of fire
underwriters or other body exercising similar functions, foreseen or unforeseen,
ordinary or extraordinary, which are applicable to the Mortgaged Premises or any
part thereof, or to the sidewalks, alleyways, passageways, curbs and vaults
adjoining the same, or to the use or manner of use of any of the foregoing, or
to the owners, tenants, or occupants thereof, whether or not any such law,
ordinance, rule, regulation or requirement shall necessitate structural changes
or improvements or shall interfere with the use or enjoyment of any of the
foregoing, and shall also mean and include all requirements of the policies of
public liability, fire and all other insurance at any time in force with respect
to any of the foregoing.
1.7 "Deed of Trust" shall mean this instrument as originally executed or,
if hereafter amended, modified or supplemented, as so amended, modified or
supplemented.
1.8 "Beneficiary" shall mean at any given time the Beneficiary herein
named and its successors and assigns.
1.9 "Grantor" shall mean at any given time the Grantor herein named and
any subsequent owner or owners of the Mortgaged Premises, and its or their
respective heirs, executors, administrators, successors and assigns.
1.10 "Obligations" shall mean (a) (x) the principal of and interest on
the Notes issued, including all renewals and extensions thereof, and Loans made
to the Grantor under the Credit Agreement, and (y) all other obligations and
indebtedness (including, without limitation, Indemnities, fees and interest
thereon) of the Grantor to the Bank Creditors now existing or hereafter incurred
under or arising out of or in connection with the Credit Agreement, the other
Credit Documents and the due performance and compliance by the Grantor with all
of the terms, conditions and agreements contained in the Credit Agreement and
the other Credit Documents (all such principal, interest, obligations and
liabilities being herein collectively called the "Credit Agreement
Obligations"); (b)
- 5 -
<PAGE>
all obligations and liabilities owing by the Grantor to the Interest Rate
Protection Creditors under, or with respect to, any Interest Rate Protection or
Other Hedging Agreement, whether such Interest Rate Protection or Other Hedging
Agreement is now in existence or hereafter arising, and the due performance and
compliance by the Grantor with all of the terms, conditions and agreements
contained therein (all such obligations and liabilities described in this clause
(b) being herein collectively called the "Interest Rate Protection Agreement
Obligations"); (c) any and all sums reasonably advanced by the Beneficiary in
order to preserve the Mortgaged Premises or preserve its security interest or
priority thereof in the Mortgaged Premises pursuant to the terms and provisions
of this Deed of Trust; (d) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations, or liabilities referred to in
clauses (a) and (b) after an Event of Default shall have occurred and be
continuing, the reasonable expenses of re-taking, holding, preparing for sale or
lease, selling or otherwise disposing of or realizing on the Mortgaged Premises,
or of any exercise by the Beneficiary of its rights hereunder, together with
reasonable attorneys' fees and court costs; and (e) all amounts paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement under
Section 5.4 of this Deed of Trust. It is acknowledged and agreed that the
"Obligations" shall include extensions of credit of the types described above,
whether outstanding on the date of this Deed of Trust or extended from time to
time after the date of this Deed of Trust.
1.11 "State" shall mean the State of Texas.
1.12 "Trustee shall mean at any given time the Trustee herein named and
its successors and assigns.
ARTICLE II
PARTICULAR COVENANTS OF THE GRANTOR
-----------------------------------
The Grantor represents, warrants, covenants and agrees as follows:
2.1 Payment of Obligations. The Grantor shall pay and perform all of the
----------------------
Obligations as and when due and payable and without offset or counterclaim, and
shall observe and comply (including, where applicable, after notice and the
expiration of any grace period) in all respects with all of the terms,
provisions, conditions, covenants and agreements to be observed and performed by
it under this Deed of Trust and any other Credit Document to which it is a
party.
2.2 Warranty of Title. The Grantor warrants that as of the date hereof
-----------------
(a) (i) it is the lawful owner of and has fee simple
- 6 -
<PAGE>
title to the Land and the Improvements and (ii) it is the lawful owner of and
has good and merchantable title to all of the Equipment, except that Equipment
which is leased by the Grantor, in which instance it is the lawful owner of a
valid leasehold interest in such Equipment, in each instance subject only to
Permitted Encumbrances and Permitted Liens; (b) the Mortgaged Premises are as of
the date hereof free and clear of all liens and encumbrances other than
Permitted Encumbrances and, with respect to the Equipment, Permitted Liens; (c)
this Deed of Trust is and will remain a valid and enforceable first mortgage
lien on the Mortgaged Premises, subject only to Permitted Encumbrances; (d) the
Grantor has all necessary right, power and lawful authority to mortgage and
convey the Mortgaged Premises in the manner and form herein provided; (e) there
are no defenses or offsets to this Deed of Trust or to the Obligations which it
secures; and (f) the Grantor does now and will forever warrant and defend unto
the Trustee and Beneficiary the title to the Mortgaged Premises and the validity
and priority of the lien hereof thereon against all claims and demands
whatsoever other than Permitted Encumbrances and Permitted Liens.
2.3 Due Authorization and Binding Effect. The execution and delivery by
------------------------------------
the Grantor of this Deed of Trust and its performance hereunder have been duly
authorized by all necessary legal action and will not, to Grantor's knowledge,
(a) require any consent or approval of any other party which has not already
been obtained; (b) violate any applicable provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Grantor; or (c) result in a
breach of or constitute a default under any material indenture, mortgage, deed
of trust, credit agreement, loan agreement or any other material agreement or
instrument to which the Grantor is a party or by which it or its properties
(including, without limitation, the Mortgaged Premises) may be bound or
affected. This Deed of Trust constitutes the legal, valid and binding
obligations of the Grantor, enforceable against the Grantor in accordance with
its terms, except as the enforceability hereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and by general equitable principles (regardless of
whether the issue of enforceability is considered in a proceeding in equity or
at law).
2.4 To Pay Impositions.
------------------
2.4.1 The Grantor will pay or cause to be paid, as and when due and
payable, all Impositions levied upon the Mortgaged Premises or any part thereof.
Notwithstanding the foregoing, if any Imposition may at the option of the payer
be paid in installments (whether or not interest shall accrue on the unpaid
balance thereof), the Grantor shall have the right, provided that no Event of
Default shall have occurred and be continuing, to exercise such option and to
cause to be paid or to pay the same
- 7 -
<PAGE>
(and any accrued interest on the unpaid balance of such Imposition) in
installments prior to the imposition of any fine, penalty or cost. The Grantor
will not claim any deduction from the Obligations nor shall any deduction be
made from the Obligations secured hereby by reason of the payment of taxes
assessed against the Mortgaged Premises.
2.4.2 Upon the occurrence and during the continuance of an Event of
Default upon demand of the Beneficiary, the Grantor shall deposit with the
Beneficiary a sum which bears the same relation to the insurance premiums for
all insurance required by the terms hereof in respect of the Mortgaged Premises
and/or real estate taxes and assessments assessed against the Mortgaged Premises
for the insurance period or tax year then in effect, as the case may be, as the
number of months elapsed as of the date of such demand since the last preceding
installment of said premiums or taxes or assessments shall have become due and
payable bears to 12. For the purpose of this computation, the month in which
such last preceding installment of premiums or real estate taxes or assessments
became due and payable and the month in which such demand is given shall be
included and deemed to have elapsed. On the first day of the month next
succeeding the month in which such demand is given, and thereafter on the first
day of each and every month during the term of this Deed of Trust, at
Beneficiary's option after the occurrence and during the continuance of an Event
of Default, the Grantor shall deposit with the Beneficiary a sum equal to one-
twelfth of such insurance premiums and/or such taxes and assessments for the
then-current insurance period and tax year, so that as each installment of such
premiums and taxes and assessments shall become due and payable, the Grantor
shall have deposited with the Beneficiary a sum sufficient to pay the same. All
such deposits shall be received and held by the Beneficiary in good faith, and
shall be applied to the payment of each installment of such premiums and taxes
and assessments as the same shall become due and payable. The Beneficiary shall
promptly furnish evidence of the making of each such payment to the Grantor. If
the amount of such premiums and taxes and assessments has not been definitely
ascertained at the time when any such monthly deposits are herein required to be
made, the Grantor shall make such deposits based upon the amount of such
premiums and taxes and assessments for the preceding year, subject to adjustment
as and when the amount of such premiums and taxes and assessments is
ascertained. If at any time when any installment of such premiums and such
taxes and assessments becomes due and payable the Grantor shall not have
deposited a sum sufficient to pay the same, the Grantor shall, within fifteen
(15) days after demand, deposit any deficiency with the Beneficiary and if the
Grantor shall have deposited a sum at least sufficient to pay such installment,
such excess shall be applied toward the deposits next required to be made
hereunder. After the Termination Date (as hereinafter defined), any amount on
deposit with the Beneficiary shall be promptly repaid to the Grantor. Upon
request of the Beneficiary, the Grantor shall
- 8 -
<PAGE>
deliver to the Beneficiary all insurance and tax bills promptly upon receipt
during any period when such monthly deposits are made with the depository.
2.4.3 The Grantor will pay the whole of any tax imposed directly or
indirectly on this Deed of Trust in lieu of a tax on the Mortgaged Premises or
any part thereof, whether by reason of (a) the passage after the date of this
Deed of Trust of any law of the State deducting from the value of real property
for the purposes of taxation any lien thereon; (b) any change in the laws for
the taxation of mortgages, deeds of trust or debts secured by mortgages or deeds
of trust for state or local purposes; or (c) a change in the means of collection
of any such tax or otherwise, unless such payment would result in the imposition
of interest beyond the maximum amount permitted by law. Within a reasonable
time after payment of any Imposition, tax or governmental charge, the Grantor
will, upon request of the Beneficiary, deliver to the Beneficiary reasonably
satisfactory proof of payment thereof, subject, however, to the right of the
Grantor to contest Impositions as set forth in Section 2.4.4 below.
2.4.4 The Grantor shall have the right to contest the amount or
validity, in whole or in part, of any Imposition, or to seek a reduction in the
valuation of the Mortgaged Premises or any part thereof, as assessed for real
estate or personal property tax purposes by appropriate proceedings diligently
conducted in good faith, and upon request by the Grantor, the Beneficiary shall
postpone or defer payment of such Imposition if:
(a) neither the Mortgaged Premises nor any part thereof would by
reason of such postponement or deferment be in imminent danger of being
forfeited or lost;
(b) neither the Trustee nor the Beneficiary shall be in danger of
being subjected to civil or criminal liability or penalty by reason of such
postponement or deferment;
(c) the Grantor, at the Grantor's option, shall either have
deposited with the Beneficiary the amount so contested and unpaid (unless
the amount being contested was previously paid under protest), together
with all interest and penalties in connection therewith and all charges
that may or might be assessed against or become a charge on the Mortgaged
Premises, or any part thereof, in such proceeding or in lieu thereof, or
the Grantor shall have posted with the Beneficiary a bond by a surety
company licensed to do business in the State selected by Grantor and
reasonably acceptable to Beneficiary, whereby such surety undertakes to pay
such Imposition, interest, penalties and charges in the event that the
Grantor shall fail to pay the same upon the final disposition of the
contest (including appeals) or in the event that the Mortgaged Premises or
any part thereof is in imminent
- 9 -
<PAGE>
danger of being forfeited or lost during the pendency of such contest or if
the Grantor fails to increase the amount of such bond as hereinafter
provided. The initial deposit or bond shall be in an amount equal to 100%
of the amount so contested and unpaid. In determining the amount of such
deposit or bond, the Grantor shall be credited with any amounts theretofore
deposited with the Beneficiary in respect of the Imposition being
contested. Any deposit made by the Grantor under the provisions of this
subsection 2.4.4(c), together with any additions thereto made pursuant to
this Section 2.4 earned thereon, shall be held in trust in an interest
bearing account and disposed of as hereinafter provided. Upon the
termination of any such proceeding (including appeals), or, if the Grantor
should so elect, at any time prior thereto, the Grantor shall pay the
amount of such Imposition or part thereof as finally determined in such
proceeding (or appeal), the payment of which may have been deferred during
the prosecution of such proceeding (or appeal), together with any costs,
fees, interest, penalties or other liabilities in connection therewith.
Upon such payment the Beneficiary shall return any amount deposited with it
together with all interest earned thereon (and not previously applied by it
as hereinafter provided) with respect to such Imposition. Such payment, at
the request of the Grantor, shall be made by the Beneficiary out of the
amount deposited with it with respect to such Imposition, to the extent
that such amount is sufficient therefor, and any balance due shall be paid
by the Grantor. If, at any time during the continuance of such proceeding,
the Beneficiary shall reasonably and in good faith deem the amount
deposited with it or provided by bond insufficient, the Grantor shall,
within 15 days of demand, make an additional deposit of, or increase the
amount of its bond by, such additional amount as the Beneficiary may
reasonably request to cover payment of the items set forth in this
subsection 2.4.4(c). If at any time during the continuance of such
proceeding the Mortgaged Premises or any part thereof is, in the reasonable
judgment of the Beneficiary, in substantial danger of being forfeited or
lost, the Beneficiary may, upon prior written notice to Grantor, apply the
amount theretofore deposited with it to the payment of such Imposition (or
the Beneficiary may require application of the bonded amount by the surety
company, if a bond has been furnished) in the manner provided in the
preceding sentence. Notwithstanding anything contained herein to the
contrary, no such deposit held by the Beneficiary, or any part thereof,
shall be returned to the Grantor so long as any Event of Default shall
occur and be continuing; and
(d) such postponement shall not affect the Gran tor's obligation
to make required deposits pursuant to subsection 2.4.2 or the Beneficiary's
right to require the same if such escrows are not then being maintained.
- 10 -
<PAGE>
2.4.5 The certificate or bill of the appropriate official designated
by law to make or issue the same or to receive payment of any imposition
indicating the nonpayment of such Imposition shall be prima facie evidence of
the amount of the Imposition payable.
2.5 To Insure.
---------
2.5.1 The Grantor shall at its own expense at all times maintain or
cause to be maintained on all of the Premises, Improvements and Equipment
policies of property, hazard and liability insurance which provide at least the
coverage required by the Credit Agreement, together with statutory workers'
compensation insurance or other statutory program with respect to any work to be
performed on or about the Mortgaged Premises; and such other insurance against
loss or damage with respect to the Mortgaged Premises and the Equipment
incorporated therein of the kinds from time to time as is consistent and in
accordance with the Credit Agreement.
2.5.2 All insurance required in subsection 2.5.1 above shall be
evidenced by valid and enforceable policies, in form and substance satisfactory
to the Beneficiary, and issued by and distributed among insurers of recognized
responsibility having a Best's rating of "A-1" or better, a financial size
category of Class 12 or above (or having a comparable rating pursuant to some
other commonly accepted insurance company rating system). Such insurers shall
be authorized to do business in the State. Upon request made by the
Beneficiary, the Grantor shall also deliver to Beneficiary, concurrently with
the execution and delivery hereof, a letter from the Grantor's insurance broker
outlining the terms of all insurance policies relating to the Mortgaged Premises
or, in lieu thereof, a certificate of insurance describing such coverages.
Thereafter, all renewal or replacement policies, or duplicate copies or
certificates thereof, shall, upon request, be so delivered to the Beneficiary
not less than ten (10) Business Days prior to the expiration date of the policy
or policies to be renewed or replaced, in each case accompanied by evidence
satisfactory to the Beneficiary that all premiums currently payable with respect
to such policies have been paid in full by or at the direction of the Grantor.
2.5.3 All such insurance policies shall (a) except for any liability
and workmen's compensation policy required hereunder, contain a standard
noncontributory form of mortgagee clause (in favor of and entitling the
Beneficiary to collect proceeds payable under such insurance as and to the
extent provided in the Credit Agreement) as well as a standard waiver of
subrogation endorsement, all to be in form and substance reasonably satisfactory
to the Beneficiary; (b) provide that such policies may not be canceled or
amended without at least thirty (30) days' prior written notice to the
Beneficiary; and (c) provide that no act, omission or
- 11 -
<PAGE>
negligence of the Grantor, except for gross negligence or willful misconduct of
the Grantor, or its agents, servants or employees, or of any tenant under any
lease which might otherwise result in a forfeiture of such insurance or any part
thereof shall in any way affect the validity or enforceability of such insurance
insofar as the Beneficiary is concerned; and (d) not be subject to a deductible
in excess of $100,000. Each liability policy required hereunder shall name the
Beneficiary as an additional insured on the liability policy. Notwithstanding
anything to the contrary in any such insurance policies or endorsements thereto,
the conditions and circumstances under which the proceeds of any such insurance
are payable to the Beneficiary shall be governed by this Deed of Trust and the
Credit Agreement. The Grantor shall not carry separate insurance, concurrent in
form or kind or contributory in the event of loss with any insurance required
under this Section 2.5. The Grantor may, however, provide any of the insurance
coverage required hereunder through blanket policies carried by the Grantor and
covering more than one (1) location and if such coverage is provided under such
a blanket policy, the Grantor shall furnish the Beneficiary with a certificate
of insurance on the date hereof setting forth the coverage as to the Mortgaged
Premises, the limits of liability as to the Mortgaged Premises, the name of the
carrier, the policy number and the expiration date.
2.5.4 If the Beneficiary shall by any manner acquire the title or
estate of the Grantor in or to any portion of the Mortgaged Premises, it shall
thereupon become the sole and absolute owner of all insurance policies affecting
the Mortgaged Premises and to the extent applicable to such portion held by or
required hereunder to be delivered to the Beneficiary, with the sole right to
collect and retain all unearned premiums thereon, provided that any excess after
satisfaction of the Obligations shall be promptly returned to the Grantor to the
extent provided in the Security Agreement. The Grantor agrees, immediately upon
demand, to execute and deliver such assignments or other authorizations or
instruments as may be necessary or desirable to effectuate the foregoing.
2.5.5 If any of the Improvements or Equipment shall be materially
damaged or destroyed, in whole or a material part thereof, by fire or other
casualty, or any part of the Mortgaged Premises shall be taken as a result of
any condemnation proceeding or by the exercise of the power of eminent domain,
the Grantor shall give prompt notice thereof to the Beneficiary, and shall take
all actions required by the terms of the Credit Agreement in respect of the net
insurance proceeds from such Recovery Event.
2.6 To Comply with Laws.
-------------------
2.6.1 The Grantor, at its own expense, will promptly cure all
material violations of law affecting the Mortgaged Premises and the use and
operation thereof and will comply with, or cause to be complied with, in all
material respects all present and
- 12 -
<PAGE>
future Legal Requirements, all to the extent required by the Credit Agreement.
2.6.2 The Grantor will use and permit the use of the Mortgaged
Premises only in accordance with any applicable licenses and permits issued by
Governmental Authorities, all to the extent required by the Credit Agreement.
2.6.3 The Grantor will procure, pay for and maintain all material
permits, licenses and other authorizations required to be procured and/or
maintained by the owners and/or operators of the Mortgaged Premises for any use
of the Mortgaged Premises, or any part thereof, then being made and for the
lawful and proper operation and maintenance thereof, all to the extent required
by the Credit Agreement.
2.7 Limitation on Disposition of the Mortgaged Premises. Except as
---------------------------------------------------
otherwise permitted in the Credit Agreement, the Grantor shall not, during the
term hereof, sell, assign, mortgage, pledge, encumber, or hypothecate or
otherwise transfer or dispose of the Mortgaged Premises or any part thereof or
any interest therein, or any of the rents, profits and income to be generated
thereby without the Beneficiary's prior written consent.
2.8 To Maintain Priority of Lien.
----------------------------
2.8.1 The Grantor will keep and maintain the Mortgaged Premises, and
every part thereof, free from all liens of persons supplying labor and materials
in connection with the construction, alteration, repair, improvement or
replacement of the Improvements or of the Equipment except Permitted Liens. If
any such liens shall be filed against the Mortgaged Premises, or any part
thereof, the Grantor agrees that, within thirty (30) days after the Grantor
receives notice of the filing thereof, it shall either (i) discharge the same of
record or (ii) post with the Beneficiary a bond by a surety company licensed to
do business in the State selected by Grantor and reasonably acceptable to
Beneficiary whereby such surety undertakes to pay such lien in the event the
Grantor fails to pay and discharge the same, such bond to be in an amount equal
to 100% of the lien. The Grantor shall exhibit to the Beneficiary, upon
request, all receipts or other reasonably satisfactory evidence of the payment
of taxes, assessments, charges, claims, liens or any other item which may cause
any such lien to be filed against the Mortgaged Premises.
2.8.2 In no event shall the Grantor do or permit to be done, or omit
to do or permit the omission of, any act or thing the doing or omission of which
would materially adversely impair the security of this Deed of Trust.
- 13 -
<PAGE>
2.9 Maintenance of Mortgaged Premises; Covenant Against Waste. The
---------------------------------------------------------
Grantor will not commit or permit waste on the Mortgaged Premises and will keep
and maintain at its own expense the Improvements and the Equipment in working
condition and repair. The Grantor will neither do nor permit to be done
anything to the Mortgaged Premises that materially adversely impairs the value
thereof or which may violate any material covenant, condition or restriction
affecting the same, or any part thereof, or any material change therein or in
the condition thereof which will increase materially the danger of fire or other
hazard arising out of the operation thereof.
2.10 After-Acquired Property. All right, title and interest of the
-----------------------
Grantor in and to all improvements, betterments, renewals, substitutes and
replacements of, and all additions and appurtenances to, the Mortgaged Premises
hereafter acquired, constructed, assembled or placed by the Grantor on the
Premises, and all conversions of the security constituted thereby, immediately
upon such acquisition, construction, assembly, placement or conversion, as the
case may be, and in each such case without any further mortgage, conveyance or
assignment or other act of the Grantor, shall become subject to the lien of this
Deed of Trust as fully and completely, and with the same effect, as though now
owned by the Grantor and specifically described in the granting clauses hereof,
but at any time and all times the Grantor, on demand, will execute, acknowledge
and deliver to the Beneficiary any and all such further assurances, deeds,
conveyances or assignments thereof as the Beneficiary may reasonably require for
the purpose of expressly and specifically subjecting the same to the lien of
this Deed of Trust.
2.11 Further Assurances. The Grantor shall, at its sole cost and
------------------
without expense to the Beneficiary, on demand, do, execute, acknowledge and
deliver all and every such further acts, and all documents necessary to continue
or perfect the lien of this Deed of Trust, including, without limitation,
mortgages, as the Beneficiary shall from time to time reasonably require for
better assuring, conveying, assigning, transferring, confirming and perfecting
unto the Beneficiary the property and rights hereby mortgaged or assigned or
intended now or hereafter so to be, or which the Grantor may be or may hereafter
become bound to mortgage or assign to the Beneficiary, or for carrying out the
intention or facilitating the performance of the terms of this Deed of Trust, or
for filing, registering or recording this Deed of Trust. In addition, the
Grantor shall make, execute and deliver or cause to be made, executed and
delivered to the Beneficiary and, where appropriate, shall cause to be recorded
or filed and from time to time thereafter re-recorded or refiled at such time
and in such offices and places as shall be deemed reasonably necessary by the
Beneficiary, all acts and instruments set forth in this section, together with
all security agreements and financing statements as the Beneficiary may consider
reasonably necessary or desirable in
- 14 -
<PAGE>
order to effectuate, complete, create, or perfect, or to continue and preserve
unto the Beneficiary, the property and rights hereby mortgaged or assigned or
intended now or hereafter so to be. Upon any failure by the Grantor to do so
within 15 days of Beneficiary's request, the Beneficiary may make, execute,
record, file, re-record or refile any and all such instruments and take such
acts, for and in the name of the Grantor, and the Grantor hereby irrevocably
appoints the Beneficiary the agent and the attorney-in-fact of the Grantor to do
so. Beneficiary shall provide Grantor with a copy of all such documents. This
power of attorney is coupled with an interest and is irrevocable.
2.12 Recorded Instruments. The Grantor will promptly perform and
--------------------
observe, or cause to be performed and observed, all of the terms, covenants and
conditions of all instruments of record affecting the Mortgaged Premises. The
Grantor shall do or cause to be done all things reasonably required to preserve
intact and unimpaired and to renew any and all rights-of-way, easements, grants,
appurtenances, privileges, licenses, franchises and other interests and rights
in favor of or constituting any material portion of the Mortgaged Premises. The
Grantor will not, without the prior written consent of the Beneficiary, which
shall not be unreasonably withheld or delayed, initiate, join in or consent to
any private restrictive covenant or other public or private restriction as to
the use of the Mortgaged Premises, except for such covenants or restrictions
entered into in the ordinary course of business which do not materially impair
the value of the Mortgaged Premises or have a material adverse effect on the
Grantor's use and occupancy of the Mortgaged Premises or where such covenants or
restrictions are necessary for the continued operation of the Mortgaged
Premises. The Grantor shall, however, comply with all lawful restrictive
covenants and zoning ordinances and shall remain in compliance with other public
or private restrictions affecting the Mortgaged Premises to the extent required
by the Credit Agreement.
2.13 Hazardous Material.
------------------
2.13.1 Grantor represents and warrants that (i) it is in compliance
in all material respects with all Environmental Laws and with all material terms
and conditions of the permits, licenses and authorizations required under any
Environmental Laws, including, without limitation, all other material
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws in
connection with its business at, and the use and occupancy of, the Mortgaged
Premises, (ii) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter pending or threatened against it or any subsidiary under the
Environmental Laws in connection with its business at, and the use and occupancy
of, the Mortgaged Premises which could reasonably be
- 15 -
<PAGE>
expected to result in a material fine, penalty or other cost or expense and
(iii) there are no events, conditions, circumstances, activities, practices,
incidents, actions or plans which may interfere with or prevent compliance in
all material respects with the Environmental Laws, or which may give rise to any
common law or legal liability, including, without limitation, liability under
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, or any other Environmental Law or related common law theory or
which otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing or notice of violation, study or investigation, based on or related to
the manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Materials which could
result in a fine, penalty or other cost or expense except for such events,
conditions, circumstances, activities, practices, incidents, actions or plans
which, individually or in the aggregate, could not reasonably be expected to
result in a material adverse effect on Grantor or the Mortgaged Premises.
2.13.2 Grantor shall (i) comply in all material respects with any and
all present and future Environmental Laws applicable to the Mortgaged Premises,
(ii) not release, store, treat, handle, generate, discharge or dispose of any
Hazardous Materials on, under or from the Mortgaged Premises in violation of or
in a manner that could result in any material liability under any present and
future Environmental Law and (iii) take all necessary steps to initiate and
expeditiously complete all legally required remedial, corrective and other
action to eliminate any such effect. In the event Grantor fails to comply with
the covenants in the preceding sentence, Beneficiary may, in addition to any
other remedies set forth herein, as agent for and at Grantor's sole cost and
expense, upon 30 days written notice to Grantor, cause any legally required
remediation, removal or response action relating to Hazardous Materials to be
taken and Grantor shall provide to Beneficiary and its agents and employees
access upon reasonable notice and during business hours to the Mortgaged
Premises for such purpose. Any reasonable costs or expenses incurred by
Beneficiary for such purpose shall be immediately due and payable by Grantor
and, if not paid within 15 days after demand, shall bear interest at the
Involuntary Rate. Beneficiary shall have the right at any time that the
Obligations are outstanding but only after a default by Grantor in the
performance of any of its obligations contained in this Section 2.13, which
Grantor has not remedied within 30 days after notice, at the sole cost and
expense of Grantor, to conduct an environmental audit of the Mortgaged Property
by such persons or firms appointed by Beneficiary, and Grantor shall cooperate
in all respects in the conduct of such environmental audit, including, without
limitation, upon reasonable notice and during business hours by providing access
to the Mortgaged Premises and to all records relating thereto. To the extent
that any environmental
- 16 -
<PAGE>
audit identifies conditions which violate in any material respect, or could be
expected to give rise to any material liability or obligations under
Environmental Laws, Grantor agrees to expeditiously correct any such violation
or respond to conditions giving rise to such liability or obligations in a
manner which complies with Environmental Laws and mitigates associated health
and environmental risks consistent with legal requirements. Grantor shall
indemnify and hold Trustee, Beneficiary and each Bank harmless from and against
all loss, cost, damage (including, without limitation, consequential damages) or
expense (including, without limitation, reasonable attorneys' and consultants'
fees and disbursements and the allocated costs of staff counsel) that Trustee,
Beneficiary or such Bank may sustain by reason of the assertion against Trustee,
Beneficiary or such Bank by any party of any claim relating to such Hazardous
Materials on, under or from the Mortgaged Premises or actions taken with respect
thereto as authorized hereunder except those finally judicially determined to
have been incurred by reason of the willful misconduct or gross negligence of
Trustee, Beneficiary or such Lender. The foregoing indemnification shall
survive repayment of all Obligations and any release or assignment of this Deed
of Trust.
2.14 Asbestos. Grantor shall not install nor permit to be installed
--------
in or removed from the Mortgaged Premises, asbestos or any asbestos-containing
material (collectively, "ACM") except in compliance in all material respects
with all Environmental Laws, and with respect to any ACM currently present in
the Mortgaged Premises, Grantor shall promptly either (i) remove or encapsulate
any ACM which such Environmental Laws require to be removed or encapsulated or
(ii) otherwise comply in all material respects with such Environmental Laws with
respect to such ACM, all at Grantor's sole cost and expense. If Grantor shall
fail to so remove or encapsulate any ACM or otherwise comply in all material
respects with such Environmental Laws, Beneficiary may, upon 30 days notice to
Grantor in addition to any other remedies set forth herein, take whatever steps
it deems reasonably necessary to eliminate or encapsulate any ACM from the
Mortgaged Premises or otherwise comply in all material respects with
Environmental Laws and Grantor shall provide to Beneficiary and its agents and
employees access upon reasonable notice and during business hours to the
Mortgaged Premises for such purpose. Any reasonable costs or expenses incurred
by Beneficiary for such purpose shall be immediately due and payable by Grantor
and if not paid within 15 days after demand, shall bear interest at the
Involuntary Rate. Grantor shall indemnify and hold Trustee, Beneficiary and
each Bank harmless from and against all loss, cost, damage (including, without
limitation, consequential damages) and expense (including, without limitation,
reasonable attorneys' and consultants' fees and disbursements and the allocated
costs of staff counsel) that Trustee, Beneficiary or such Bank may sustain, as a
result of the presence of any ACM in or upon the Mortgaged Premises and any
removal thereof or compliance in all material respects with all Environmental
Laws relating to
- 17 -
<PAGE>
ACM in or upon the Mortgaged Premises except those finally judicially determined
to have been incurred by reason of the willful misconduct or gross negligence of
Trustee, Beneficiary or such Bank. The foregoing indemnification shall survive
repayment of all Obligations and any release or assignment of this Deed of
Trust.
ARTICLE III
LEASES; ASSIGNMENT AS FURTHER SECURITY, ETC.
-------------------------------------------
3.1 Assignment of Leases, Rents, Issues and Profits. As further
-----------------------------------------------
security for the payment and performance of the Obligations secured hereby, the
Grantor hereby transfers, assigns and sets over unto the Beneficiary all leases,
if any, now or hereafter entered into by the Grantor with respect to all or any
part of the Mortgaged Premises, and all renewals, extensions, subleases or
assignments thereof, and all other occupancy agreements (written or oral), by
concession, license or otherwise (individually, a "Lease" and collectively, the
"Leases"), together with all of the Grantor's right, title and interest in and
to all of the following (collectively, the "Rents"): the rents, income,
receipts, revenues, issues and profits arising therefrom, such assignment of
Rents to be absolute and not only collateral, subject to the license to collect,
use and enjoy such Rents granted pursuant to subsection 3.2.1 hereof. This
assignment shall automatically terminate upon the release of the lien of this
Deed of Trust; provided, however, that if requested by the Grantor, the
-------- -------
Beneficiary, at Grantor's cost and expense, shall promptly execute and deliver
to Grantor a termination or release of mortgage in recordable form.
3.2 Entry upon Default.
------------------
3.2.1 So long as no Event of Default shall have occurred and be
continuing, the Grantor shall have the license to collect (but not more than one
month in advance (except for any security deposit)) all of the Rents and other
payments, if any, from the Leases and from the Mortgaged Premises generally and
to use and enjoy the same in the manner provided herein.
3.2.2 If an Event of Default shall have occurred and be continuing,
after the expiration of the applicable cure period, if any, in addition to its
rights and remedies set forth in Article V, the Beneficiary may, as attorney-in-
fact of the Grantor, make, enforce, or modify any of the Leases; obtain tenants
for and evict tenants from the Mortgaged Premises; demand, fix and modify the
Rents from the Mortgaged Premises; institute all legal proceedings (including
summary proceedings) for collection of all Rents; obtain possession of the
Mortgaged Premises or any part thereof, or enforce any other rights theretofore
exercisable by the Grantor; do
- 18 -
<PAGE>
any and all other acts which the Beneficiary, in its sole and absolute
discretion, deems proper to protect the security hereof; and, with or without
taking possession of the Mortgaged Premises, in the Grantor's own name, sue for
or otherwise collect and receive all Rents, including those past due and unpaid,
and apply the same, less the costs and expenses of operation and collection,
including reasonable attorneys' fees, to the Obligations secured hereby, whether
then matured or not, until the same shall have been paid in full; provided,
--------
however, that any balance remaining after the indebtedness secured hereby shall
- -------
have been paid in full shall be turned over to the Grantor or such other person
as may lawfully be entitled thereto. Neither the entry upon and taking
possession of the Mortgaged Premises, nor the collection and application of the
Rents or other charges thereof as aforesaid, nor any other action taken by the
Beneficiary in connection therewith, shall cure or waive any default hereunder
or waive or modify any notice thereof or notice of acceleration of the
Obligations theretofore given by the Beneficiary.
3.2.3 If an Event of Default shall have occurred and be continuing,
notice in writing by the Beneficiary to the tenants under the Leases advising
them that the Grantor has defaulted hereunder and requesting that all future
Rents under the Leases be made to the Beneficiary (or its agent) shall be
construed as conclusive authority to such tenants that such payments are to be
made to the Beneficiary (or its agent). Such tenants shall be fully protected
in making such payments to the Beneficiary (or its agent); and the Grantor
hereby irrevocably constitutes and appoints the Beneficiary the attorney-in-fact
and agent of the Grantor, coupled with an interest, for the purpose of endorsing
the consent of the Grantor on any such notice and for taking any actions
provided for in subsection 3.2.2.
3.3 The Grantor's Covenants Regarding Leases.
----------------------------------------
3.3.1 The Grantor will use reasonable efforts to enforce the terms,
covenants and conditions to be performed by all tenants and other parties to any
Lease or other agreement pertaining to the Mortgaged Premises and will not,
without the prior written consent of the Beneficiary, receive or collect rent
from any tenant for a period of more than one month in advance other than a
security deposit.
3.3.2 At any reasonable time, and from time to time (but not more
often than once each year), on notice from the Beneficiary, the Grantor shall
deliver within 15 days to the Beneficiary a schedule of all Leases then in
effect, which schedule shall include the following: (a) the name of the tenant;
(b) a description of the location of the leased space including but not limited
to the approximate number of square feet so leased and the type of activity
performed under such lease; (c) the rental rate, including escalations, if any;
(d) the term of the Lease; and (e)
- 19 -
<PAGE>
such other information as the Beneficiary may reasonably request. If requested
by the Beneficiary (but not more than once each year), the Grantor shall also
deliver photocopies of all Leases accompanied by the certificate of the Grantor
that such copies are true, complete and accurate.
3.3.3 Upon the occurrence and during the continuance of an Event of
Default, in the event of enforcement by the Beneficiary of the remedies provided
for by law or by this Deed of Trust, each tenant shall, at the option of the
Beneficiary, attorn to any Person succeeding to the interest of the Grantor as a
result of such enforcement and shall recognize such successor in interest as
landlord (or sub-landlord, as the case may be) under such Lease without change
in the terms or other provision thereof (or with respect to Leases in effect as
of the date hereof the Grantor shall use its reasonable efforts to cause the
tenants thereunder to so attorn and recognize such successor); provided,
--------
however, that such successor shall not be bound by any payment of rent or
- -------
additional rent for more than one month in advance (other than any security
deposit received by the Grantor, possession of which was actually transferred to
such successor) or any material amendment or material modification of any such
Lease made without the Beneficiary's consent or that of such successor in
interest. Each such tenant shall, upon request of such successor in interest,
execute and deliver instrument(s) confirming such attornment.
3.3.4 Upon the occurrence and during the continuance of an Event of
Default, the Beneficiary, at its option, is authorized to foreclose or cause the
foreclosure of this Deed of Trust in accordance with the provisions of Article V
hereof, such foreclosure to be subject to the rights of any tenants, and the
failure to make any such tenants parties defendant in any such foreclosure
proceedings and to foreclose their rights will not be, nor be asserted by the
Grantor to be, a defense to any proceedings instituted by the Beneficiary to
collect the sums secured hereby or to collect any deficiency remaining unpaid
after the foreclosure sale of the Mortgaged Premises.
ARTICLE IV
SECURITY AGREEMENT UNDER THE UNIFORM COMMERCIAL CODE
----------------------------------------------------
4.1 Security Agreement. It is the intent of the parties hereto that
------------------
this Deed of Trust shall constitute a Security Agreement within the meaning of
the Uniform Commercial Code of the State (the "Code") and the Grantor hereby
transfers, assigns, delivers and grants unto the Beneficiary a security interest
in, to and with respect to (a) the leases and rents assigned by the Grantor to
the Beneficiary hereunder; (b) except as otherwise provided herein or in the
Credit Agreement, so much of the Equipment as is considered or as shall be
determined to be personal
- 20 -
<PAGE>
property or "fixtures" (as defined in the Code), together with all replacements
thereof, substitutions therefor or additions thereto; (c) all casualty insurance
policies required to be maintained by Grantor hereunder, together with all
general intangibles, contract rights and accounts arising therefrom; (d) all
Proceeds in any Condemnation, together with all general intangibles, contract
rights and accounts arising therefrom; (e) all cash and non-cash proceeds of the
above-mentioned items; and (f) all right, title and interest in and to so much
of the remainder of the Mortgaged Premises as is considered or shall be
determined to be personal property other than records, documents and other items
owned by customers of the Grantor and stored on the Mortgaged Premises (said
property described in clauses (a) through (f) above being sometimes hereinafter
referred to as the "Collateral"), and the Grantor further agrees that a security
interest shall attach thereto for the benefit of the Beneficiary to secure the
Obligations. Such security interest shall extend to all collateral of the kind
which is the subject of this Article IV which the Grantor may acquire at any
time during the continuation of this Deed of Trust. Upon the occurrence of and
during the continuance of an Event of Default, after the expiration of the
applicable cure period, if any, the Beneficiary may elect to treat the fixtures
constituting a part of the Mortgaged Premises as either real property collateral
or Collateral and then proceed to exercise such rights as apply to such type of
collateral. The Grantor hereby authorizes the Beneficiary to file financing and
continuation statements with respect to the Collateral without the signature of
the Grantor, if same is lawful; otherwise the Grantor agrees to execute such
financing and continuation statements as the Beneficiary may reasonably request.
If there shall exist and be continuing an Event of Default under this Deed of
Trust, the Beneficiary, pursuant to the appropriate provisions of the Code and
to the extent permitted by applicable law, shall have all remedies available to
it under the Code and shall have the option of proceeding as to both real and
personal property in accordance with its rights and remedies in respect of the
real property, in which event the default provisions of the Code shall not
apply. Upon the occurrence and during the continuance of any Event of Default,
the Beneficiary will have all rights and remedies granted by law, and
particularly by the Code, including, without limitation, the right to take
possession of all personal property constituting a part of the Mortgaged
Premises, and for this purpose the Beneficiary may enter upon any premises on
which any or all of such personal property is situated and take possession of
and operate such personal property (or any portion thereof) or remove it
therefrom. The Beneficiary may require the Grantor to assemble such personal
property and make it available to the Beneficiary at a place to be designated by
the Beneficiary which is reasonably convenient to all parties. The Beneficiary
will give the Grantor reasonable notice of the time and place of any public sale
or of the time after which any private sale or other disposition of such
Collateral is to be made and, in any event, as required by law. This
requirement of
- 21 -
<PAGE>
sending reasonable notice will be met, and the Grantor and the Beneficiary
acknowledge that such notice will be commercially reasonable within the meaning
of the Code if not otherwise defined in the Uniform Commercial Code as in effect
in the State of Texas, if the notice is given to the Grantor as herein provided
at least ten (10) days before the time of the sale or disposition. The expenses
of retaking, holding, preparing for sale, selling and the like incurred by the
Beneficiary shall be assessed against the Grantor and shall include but not be
limited to the reasonable legal expenses incurred by the Beneficiary. The
Grantor agrees that it will not remove or permit to be removed from the
Mortgaged Premises any of the Collateral except as permitted by the Security
Agreement and/or the Credit Agreement. All replacements, renewals,
substitutions and additions to the Collateral shall be and become immediately
subject to the security
interest of this Deed of Trust and the provisions of this Article IV.
4.2 Assignment of Non-Code Collateral. To the extent that any of the
---------------------------------
Collateral is not subject to the Code, the Grantor hereby collaterally assigns
to the Beneficiary all of the Grantor's right, title and interest in and to the
Collateral to secure the Obligations secured hereby, together with the right of
set-off with regard to such Collateral (or any part thereof). Release of the
lien of this Deed of Trust shall automatically terminate this assignment.
4.3 Conflict with the Security Agreement. Not withstanding anything
------------------------------------
to the contrary contained herein, if any provision of this Deed of Trust
relating to the Collateral conflicts with the provisions of the Security
Agreement, the terms of the Security Agreement shall control.
4.4 Termination. If requested by Grantor, Beneficiary shall execute
-----------
UCC-3 termination statements upon release of the lien of this Deed of Trust or
as otherwise provided in the Credit Agreement or the Security Agreement.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
------------------------------
5.1 "Events of Default". Subject to the provisions of Section 5.2
-----------------
below, all of the Obligations shall become due, at the option of the
Beneficiary, upon the occurrence of any Event of Default (as defined in the
Credit Agreement).
5.2 Remedies. During the continuance of any Event of Default, after
--------
the expiration of the applicable cure period, if any, the Beneficiary (acting at
the direction of (x) the Required Banks pursuant to the terms of the Credit
Agreement or (y) after all Credit Agreement Obligations have been paid, the
holders of at
- 22 -
<PAGE>
least a majority of all obligations outstanding from time to time under the
Interest Rate Protection Agreements), at its option, may:
5.2.1 by notice to the Grantor, but without the requirement of any
formal demand, presentment, notice of intention to accelerate or of
acceleration, protest or notice of protest, all of which are hereby waived by
the Grantor, declare all of the Obligations secured hereby to be immediately due
and payable, and upon such declaration all of such Obligations shall become and
be immediately due and payable;
5.2.2 after such proceedings as may be required by any applicable law
or ordinance, either in person, or by its agents or attorneys, or by a court-
appointed receiver, as permitted by applicable laws, enter into and upon all or
any part of the Mortgaged Premises and each and every part thereof and exclude
the Grantor, its agents and servants wholly therefrom; and having and holding
the same, use, operate, manage and control the Mortgaged Premises and conduct
the business thereof, either personally or by its superintendents, managers,
agents, servants, attorneys or the receiver; and upon every such entry, at the
expense of the Grantor, from time to time, either by purchase, repairs or
construction, maintain and restore the Mortgaged Premises and, likewise make all
necessary or proper repairs, renewals and replacements and such alterations,
betterments, additions and improvements thereto and thereon as to it may seem
reasonably advisable; and in every such case the Beneficiary shall have the
right to manage and operate the Mortgaged Premises and to carry on the business
thereof and exercise all rights and powers of the Grantor as its attorney-in-
fact, or otherwise, as it shall deem best; and the Beneficiary shall be entitled
to collect and receive all Rents of the Mortgaged Premises; and, after deducting
the expenses of conducting the business thereof and all maintenance, repairs,
renewals, replacements, alterations, additions, betterments and improvements and
amounts necessary to pay for taxes, assessments, insurance and prior or other
proper charges upon the Mortgaged Premises or any part thereof, as well as just
and reasonable compensation for the services of the Beneficiary and Trustee and
for all attorneys, counsel, agents, clerks, servants and other employees engaged
or employed by it, the Beneficiary shall apply the monies arising as aforesaid
in the manner specified in the Security Agreement;
5.2.3 with or without entry, personally or by its agents or attorneys
insofar as applicable:
(a) proceed at law or in equity to foreclose fully or partially this
Deed of Trust, any statute or rule of law at any time existing to the
contrary notwithstanding. The Beneficiary may sell the Mortgaged Premises
either as a whole or in separate parcels, as Beneficiary may reasonably
determine, and shall have the right to direct the order in which separate
parcels shall be sold to the extent permitted
- 23 -
<PAGE>
by the law of the State. The Beneficiary may postpone sale of all or any
portion of the Mortgaged Premises by public announcement at such time and
place of sale, and from time to time thereafter may postpone such sale by
public announcement at the time fixed by the preceding postponement. The
recitals in such deed of any matters or facts shall be conclusive proof of
the truthfulness thereof. The Beneficiary may purchase the Mortgaged
Premises or any part thereof at such sale in accordance with the laws of
the State and the provisions hereof (including, without limitation, any
power of sale or foreclosure procedure contained herein or allowed by the
Code), for the Obligations secured hereby or for any portion thereof or any
other sums secured hereby which are then due and payable, subject to the
continuing lien of this Deed of Trust for the balance of the Obligations
not then due; or
(b) take such reasonable steps to protect and enforce its rights
whether by action, suit or proceeding in equity or at law for the specific
performance of any covenant, condition or agreement in the Security
Agreement or in this Deed of Trust, or in aid of the execution of any power
herein granted, or for any foreclosure hereunder, or for the enforcement of
any other appropriate legal or equitable remedy or otherwise as the
Beneficiary shall elect;
5.2.4 To the extent permitted by law, proceed with foreclosure in
satisfaction of any part of the Obligations without declaring the whole of the
Obligations as immediately matured, and such foreclosure may be made subject to
the unmatured part of the Obligations, and it is agreed that such foreclosure,
if so made, shall not in any manner affect the unmatured part of the
Obligations, but as to such unmatured part this Deed of Trust, as well as the
other related loan documents, shall remain in full force and effect just as
though no foreclosure had been made. To the extent permitted by law, several
foreclosures may be made without exhausting the right of foreclosures of any
unmatured part of the Obligations, it being the purpose to provide for a
foreclosure of the security for any matured portion of the Obligations without
exhausting the power of foreclosure respecting the Mortgaged Premises for any
other part of the Obligations; or
5.2.5 Upon ten (10) days' written notice after the expiration of any
applicable notice period as provided in Section 5.1 hereof to the Grantor (or
without prior notice in case of emergency) the Beneficiary (or any receiver of
the Mortgaged Premises) shall have the right, but not the obligation, to make
any payment, or to perform any other act or take any appropriate action,
including, without limitation, entry on the Mortgaged Premises and performance
of work thereat, as it, in its sole discretion, may deem necessary to cause such
other term, covenant, condition or obligation to be promptly performed or
observed on behalf of the Grantor or to protect the security of this Deed of
- 24 -
<PAGE>
Trust. All monies reasonably expended by the Beneficiary in exercising its
rights under this Section 5.2.5 (including, but not limited to, reasonable legal
expenses and disbursements), together with interest thereon at the Involuntary
Rate from the date of each such expenditures shall be paid by the Grantor to the
Beneficiary forthwith upon demand by the Beneficiary and shall be secured by
this Deed of Trust.
5.3 Sale; No Marshalling of Assets; Appointment of
----------------------------------------------
Receiver.
- --------
5.3.1 In case of a foreclosure, all of the Mortgaged Premises may be
sold in one parcel notwithstanding that the proceeds of such sale exceed or may
exceed the total amount of the Obligations. Moreover, the Beneficiary shall not
be required to proceed hereunder before proceeding against any other security,
shall not be required to proceed against other security before proceeding
hereunder, and shall not be precluded from proceeding against any or all of any
security in any order or at the same time. The sale of a part of the Mortgaged
Premises shall not exhaust the power of sale, but sale may be made from time to
time until the Obligations secured hereby are paid and performed in full.
5.3.2 The Beneficiary, in any action to foreclose this Deed of Trust,
shall be entitled as a matter of strict right (and, to the extent permitted
under the laws of the State, without notice, without regard to the adequacy of
any security for the obligations and without regard to the solvency of any
person, partnership or entity liable for the payment thereof) to the appointment
of a receiver for the Mortgaged Premises and of the Rents thereof, and the
Grantor hereby expressly consents to any such appointment provided that
Beneficiary provides at least 10 days' written notice to the Grantor prior to
such appointment.
5.3.3 The Grantor agrees, to the full extent that it may lawfully do
so, that in any foreclosure or other action brought by the Beneficiary
hereunder, it will not at any time insist upon or plead or in any way take
advantage of any appraisement, valuation, stay, marshalling of assets,
extension, redemption or moratorium law now or hereafter in force and effect so
as to prevent, hinder or delay the enforcement of the provisions of this Deed of
Trust or any rights or remedies the Beneficiary may have hereunder or by law and
the Grantor hereby expressly waives all rights of the Grantor with respect
thereto.
5.3.4 If an Event of Default shall occur and be continuing and the
Beneficiary shall, subject to the provisions hereof, elect to accelerate the
Obligations secured hereby, the Grantor, within fifteen (15) days after demand,
will pay over to the Beneficiary, or any receiver appointed in connection with
the foreclosure of this Deed of Trust, any and all amounts then held as
- 25 -
<PAGE>
security deposits under all Leases; provided, however, that the Beneficiary
-------- -------
shall thereupon indemnify the Grantor against all claims of tenants for the
deposits so paid over.
5.3.5 Upon the occurrence of any Event of Default hereunder and
during the continuance thereof, and in addition to all other rights of the
Beneficiary provided herein or by law, the Grantor shall, on demand, surrender
possession of the Mortgaged Premises to the Beneficiary, and the Grantor hereby
consents that the Beneficiary may exercise any or all of the rights specified in
Section 5.2 above. In the event that the Grantor is an occupant of the
Mortgaged Premises, it agrees to surrender possession of the part of the
Mortgaged Premises which it occupies to the Beneficiary immediately upon any
acceleration event or Event of Default hereunder, and if the Grantor remains in
possession, such possession shall be as tenant of the Beneficiary, and the
Grantor agrees to pay monthly in advance to the Beneficiary such rent for the
premises so occupied as the Beneficiary may reasonably demand consistent with
the fair rental value thereof, and in default of so doing, the Grantor may also
be dispossessed by summary proceedings or otherwise. In case of the appointment
of a receiver of the rents and profits of the Mortgaged Premises, the covenants
of this subsection 5.3.5 may be enforced by such receiver. The Grantor for
itself and for all persons claiming under it or who may become holders of liens
junior to the lien hereof hereby waives and releases, to the extent permitted by
applicable law, all rights to direct the order in which any of the Mortgaged
Premises can be sold at any sale or sales pursuant hereto.
5.3.6 Any court-appointed receiver of all or any part of the
Mortgaged Premises, to the extent permitted by applicable law, shall be an agent
of the court appointing such receiver and not an agent of the Beneficiary, and
no acts of such receiver shall be deemed to be acts of the Beneficiary.
5.3.7 Upon any foreclosure sale, the Beneficiary may, after allowing
for the portion of the total purchase price to be paid in cash and for the cost
and expenses of the sale, compensation and other charges, in paying the purchase
price apply any portion of or all sums secured hereby, in lieu of cash, to the
amount which shall, upon distribution of the net proceeds of such sale, be
payable thereon. All proceeds of any sale pursuant to this Article V shall be
applied in the manner specified in the Security Agreement.
5.3.8 The Grantor agrees that the Beneficiary or any court having
jurisdiction to foreclose the lien of this Deed of Trust may sell the Mortgaged
Premises in part or as an entirety.
5.3.9 Upon the occurrence and during the continuance of any Event of
Default, and to the extent permitted by applicable law, the Beneficiary may
proceed to sell the Mortgaged Premises and
- 26 -
<PAGE>
any and every part thereof, at public venue, to the highest bidder at the
customary place of sale in the county in which such Mortgaged Premises are
located, for cash, first giving notice as required by law of the time, terms and
place of sale, and of the property to be sold, by advertisement made as required
by law, and upon such sale shall execute and deliver a deed of conveyance of the
property sold to the purchaser or purchasers thereof, and any statement or
recital of fact in such deed shall be prima facie evidence of the truth of such
----- -----
statement or recital; and the Beneficiary shall receive the proceeds of such
sale, out of which it shall pay: first, the cost and expense of executing such
sale, including publication fees, mailing charges, title charges and reasonable
attorneys' fees of the Beneficiary; next to the payment of the Obligations as
provided in the Security Agreement; and the remainder, if any, shall be paid to
the Grantor or such other parties as maybe entitled thereto.
5.4 Indemnification by the Grantor.
------------------------------
5.4.1 The Grantor will pay to the Beneficiary on demand all
reasonable costs, charges and expenses (including, without limitation,
reasonable attorneys' fees) incurred or paid at any time by the Beneficiary
because of the failure of the Grantor to perform, comply with or abide by any of
the stipulations, agreements, conditions or covenants contained herein or in the
Obligations secured hereby, together with interest on each such payment made by
the Beneficiary at the Involuntary Rate from the date each such payment is made.
5.4.2 If any action or proceeding be commenced in which the
Beneficiary, the Trustee, any Secured Creditor or any of their respective
successors, assigns, employees, agents and servants (each, an "Indemnitee",
collectively, the "Indemnitees") is made a party, or in which it becomes
necessary to defend or uphold the lien of this Deed of Trust, or the
construction, operation or occupancy of the Improvements by the Grantor or
anyone else, the Grantor shall indemnify, defend and hold such Indemnitees
harmless from all liability by reason of said litigation, including reasonable
attorneys' fees and expenses incurred by such Indemnitees in any such
litigation, whether or not any such litigation is prosecuted to judgment, and
all sums paid by the Trustee or Beneficiary for the expense of any litigation to
prosecute or defend the title, rights and lien created by this Deed of Trust
(including, without limitation, reasonable attorneys' fees) shall be paid by the
Grantor to the Trustee or Beneficiary on demand, together with interest thereon
at the Involuntary Rate from the date each such payment is made, and all such
sums and the interest thereon shall be a lien on the Mortgaged Premises, prior
to any right, title or interest in or claim upon the Mortgaged Premises
attaching or accruing subsequent to the lien of this Deed of Trust, and shall be
deemed to be secured by this Deed of Trust. In any action or proceeding to
foreclose this Deed of Trust, or to
- 27 -
<PAGE>
recover or collect the Obligations, the provisions of law respecting the
recovery of costs, disbursements and allowances, if inconsistent with the
foregoing, shall prevail unaffected by this covenant; provided, however, that
the Grantor shall not be responsible for any such liability resulting from the
Indemnitees' gross negligence or willful misconduct.
5.5 Remedies Cumulative; No Waiver; Etc.
-----------------------------------
5.5.1 No remedy herein conferred upon or reserved to the Beneficiary
is intended to be exclusive of any other remedy or remedies, and each and every
such remedy shall be cumulative, and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute.
No delay or omission of the Beneficiary or Trustee to exercise any right or
power accruing upon any Event of Default shall impair any such right or power,
or shall be construed to be a waiver of any such Event of Default or any
acquiescence therein; and every power and remedy given by this Deed of Trust to
the Beneficiary or Trustee may be exercised from time to time as often as may be
deemed expedient by the Beneficiary or Trustee.
5.5.2 A waiver in one or more instances of any of the terms,
covenants, conditions or provisions hereof or of the Security Agreement shall
apply to the particular instance or instances and at the particular time or
times only, and no such waiver shall be deemed a continuing waiver, but all of
the terms, covenants, conditions and other provisions of this Deed of Trust and
of the Security Agreement shall survive and continue to remain in full force and
effect; and no waiver shall be cumulative unless in writing, dated and signed by
the Beneficiary.
5.5.3 To the extent permitted by applicable law, the Grantor hereby
waives and renounces all homestead and similar exemption rights with respect to
the Mortgaged Premises provided for by the Constitution and Laws of the United
States and/or the State as against the collection of any of the Obligations; and
the Grantor agrees that where, by the terms of this Deed of Trust or the
Security Agreement secured hereby, a day is named or a time fixed for the
payment of any sum of money or the performance of any agreement, the day and
time stated enters into the consideration and is of the essence of the whole
agreement between the Grantor and the Beneficiary. This Section 5.5.3 shall not
limit, however, the applicability of grace periods provided for herein.
5.6 No Merger. It is the intention of the parties hereto that if the
---------
Beneficiary or Trustee shall at any time hereafter acquire title to all or any
portion of the Mortgaged Premises, then, and until the indebtedness secured
hereby has been paid in full, the interest of the Beneficiary hereunder and the
lien of this Deed of Trust shall not merge or become merged in or with the
estate and interest of the Beneficiary or Trustee as the
- 28 -
<PAGE>
holder and owner of title to all or any portion of the Mortgaged Premises and
that, until such payment, the estate of the Beneficiary or Trustee in the
Mortgaged Premises and the lien of this Deed of Trust and the interest of the
Beneficiary and Trustee hereunder shall continue in full force and effect to the
same extent as if the Beneficiary and Trustee had not acquired title to all or
any portion of the Mortgaged Premises.
ARTICLE VI
PROVISIONS OF GENERAL APPLICATION
---------------------------------
6.1 Waiver; Amendment. (a) None of the terms and conditions of this
-----------------
Deed of Trust may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Grantor and the Beneficiary
(with the consent of either (x) the Required Banks or, to the extent required by
Section 13.12 of the Credit Agreement, all of the Banks or (y) after all
Obligations (as defined in the Credit Agreement) have been paid in full, the
holders of at least a majority of all obligations outstanding from time to time
under the Interest Rate Protection Agreements); provided that any change,
--------
waiver, modification or variance affecting the rights and benefits of a single
Class (as defined below) of Secured Creditors (and not all Secured Creditors in
a like or similar manner) shall require the written consent of the Requisite
Creditors (as defined below) of such Class of Secured Creditors. For the
purpose of this Deed of Trust the term "Class" shall mean each class of Secured
Creditors, i.e., whether (x) the Bank Creditors as holders of the Credit
---
Agreement Obligations or (y) the Interest Rate Protection Creditors as the
holders of the Interest Rate Protection Obligations. For the purpose of this
Deed of Trust, the term "Requisite Creditors" of any Class shall mean each of
(x) with respect to the Credit Agreement Obligations, the Required Banks and (y)
with respect to the Interest Rate Protection Obligations, the holders of at
least a majority of all obligations outstanding from time to time under the
Interest Rate Protection Agreements.
(b) No delay on the part of the Beneficiary or Trustee in exercising
any of its rights, remedies, powers and privileges hereunder or partial or
single exercise thereof shall constitute a waiver thereof. No notice to or
demand on the Grantor in any case shall entitle it to any other or further
notice or demand in similar or other circumstances or constitute a waiver of any
of the rights of the Beneficiary or Trustee to any other or further action in
any circumstances without notice or demand.
6.2 Notices. Except as otherwise specified herein, all notices,
-------
requests, demands or other communications hereunder shall be deemed to have been
duly given or made when delivered in the manner provided in Section 13.03 of the
Credit Agreement, addressed
- 29 -
<PAGE>
to such party at its address hereinabove set forth and any other copies required
pursuant to the Credit Agreement, or at such other address as such party may
hereafter notify the other in writing.
6.3 Additional Sums Payable by the Grantor. All sums which, by the
--------------------------------------
terms of this Deed of Trust, are payable by the Grantor to the Beneficiary or
Trustee shall, together with the interest thereon provided for herein, be
secured by this Deed of Trust and added to and deemed part of the Obligations
secured hereby whether or not the provision which obligates the Grantor to make
any such payment to the Beneficiary or Trustee specifically so states.
6.4 Captions. The captions herein are inserted only as a matter of
--------
convenience and for reference, and in no way define, limit, enlarge or describe
the scope or intent of this Deed of Trust nor in any way shall affect this Deed
of Trust or the con struction of any provision hereof.
6.5 Successors and Assigns. The covenants and agreements contained
----------------------
in this Deed of Trust shall run with the land and bind the Grantor, the heirs,
executors, administrators, principals, legal representatives, successors and
assigns of the Grantor and each person constituting the Grantor and all
subsequent owners, encumbrancers and tenants of the Mortgaged Premises, or any
part thereof, and shall inure to the benefit of and bind the Beneficiary, its
successors and assigns and all subsequent beneficial owners of this Deed of
Trust.
6.6 Gender and Number. Wherever the context of this Deed of Trust so
-----------------
requires, the neuter gender includes the masculine and/or feminine gender and
the singular number includes the plural.
6.7 Severability. In case any one or more of the provisions
------------
contained in this instrument shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions hereof, but this Deed of Trust shall be
construed as if such invalid, illegal or unenforceable provision had never been
included.
6.8 Subrogation. It is understood and agreed that any proceeds of
-----------
the Obligations, to the extent that the same are utilized to pay or renew or
extend any indebtedness of the Grantor, or any other indebtedness, or take up or
release any outstanding liens against the Mortgaged Premises, or any portion
thereof, have been advanced by the Beneficiary or Trustee at the Grantor's
request. The Beneficiary or Trustee, as the case may be, shall be subrogated to
any and all rights and liens owned or claimed by any owner or mortgagee of said
outstanding rights and liens, however, remote, regardless of whether said rights
and liens are acquired by assignment or are released by the beneficiary thereof
upon payment.
- 30 -
<PAGE>
6.9 Usury. Notwithstanding anything contained in this Deed of Trust
-----
to the contrary, the Beneficiary shall never be deemed to have contracted for or
be entitled to receive, collect or apply as interest on the Obligations secured
hereby, any amount in excess of the amount permitted and calculated at the
highest lawful rate, and, in the event the Beneficiary ever receives, collects
or applies as interest any amount in excess of the amount permitted and
calculated at the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance of
the Obligations secured hereby, and, if the principal balance of the Obligations
secured hereby is paid in full, any remaining excess shall forthwith be paid to
the Grantor, together with all interest earned thereon. In determining whether
or not the interest paid or payable under any specific contingency exceeds the
amount of interest permitted and calculated at the highest lawful rate, the
Grantor and the Beneficiary shall, to the maximum extent permitted under
applicable law, (i) characterize any non-principal payment (other than payments
which are expressly designated as interest payments hereunder) as an expense,
fee or premium, rather than as interest, and (ii) spread the total amount of
interest throughout the entire contemplated term of the indebtedness secured
hereby.
6.10 Counterparts. This Deed of Trust may be simulta neously
------------
executed in a number of identical counterparts, each of which, for all purposes,
shall be deemed an original.
6.11 Controlling Law. THIS DEED OF TRUST AND THE RIGHTS AND
---------------
OBLIGATIONS OF THE PARTIES UNDER THIS DEED OF TRUST SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE.
6.12 Entire Agreement. This Deed of Trust along with the Credit
----------------
Documents embodies the entire agreement and understanding between the parties
relating to the subject matter hereof.
6.13 Release. (a) After the Termination Date (as defined below),
-------
this Deed of Trust shall be discharged and satisfied or assigned at the
Grantor's option by the Beneficiary (without recourse and without any
representation or warranty) at the expense of the Beneficiary upon Grantor's
written request (provided that all indemnities set forth herein, which are
expressly agreed to survive, shall survive such discharge and satisfaction).
Concurrently with such satisfaction and discharge or assignment of this Deed of
Trust, the Beneficiary, on written request and at the expense of the Grantor,
will execute and deliver such proper instruments of release and satisfaction or
assignment as may reasonably be requested to evidence such release or assignment
and any such instrument when duly executed by the Beneficiary and duly recorded
by the Grantor in the places where this Deed of Trust is recorded shall
conclusively evidence the
- 31 -
<PAGE>
release or assignment of this Deed of Trust. As used in this Deed of Trust,
"Termination Date" shall mean the date upon which the Commitments and all
Interest Rate Protection Agreements are terminated, no Note or Letter of Credit
is outstanding (and all Loans have been repaid in full), all Letters of Credit
have been terminated and all Obligations then owing have been paid in full.
(b) The Beneficiary shall, at the request of the Gran tor, release
(without recourse and without any representation or warranty) the Mortgaged
Premises, or any part thereof, provided that (x) either the sale of all or part
--------
of the Mortgaged Premises is permitted under Section 9.02 of the Credit
Agreement or such release has been approved in writing by the Required Banks and
(y) the proceeds of such sale of the Mortgaged Premises or portion thereof are
applied as, and to the extent, required pursuant to the Credit Agreement.
6.14 Additional Advances. This Deed of Trust shall secure not only
-------------------
the Obligations but also any and all other Obligations now owing or which may
hereafter be owing by the Grantor to the Secured Creditors pursuant to the
Borrower Security Agreement. The lien of this Deed of Trust shall be valid as
to all Obligations secured hereby, including future advances made by the
Beneficiary to or on behalf of or for the benefit of the Grantor and future
obligations, from the time of its filing for record in the office of the county
clerk of the county in which the Mortgaged Premises are located. The total
principal amount of the Obligations secured hereby may increase or decrease from
time to time, but the total unpaid balance of Obligations secured hereby at any
one time outstanding shall not exceed $200,000,000, including interest thereon
and any disbursements which the Beneficiary may make under this Deed of Trust,
the Credit Documents and the Interest Rate Protection Agreements, or any other
document with respect hereto (e.g., for payment of Impositions or insurance on
---
this Property) and interest on such disbursements (all such indebtedness being
hereinafter referred to as the "maximum amount secured hereby"). This Deed of
Trust is intended to and shall, to the extent permitted by law, be valid and
have priority over all subsequent liens and encumbrances, including statutory
liens, to the extent of the maximum amount secured hereby.
6.15 Fixture Filing. This Deed of Trust shall also con stitute a
--------------
"fixture filing" for purposes of the Code. Portions of the Collateral are or
may become fixtures.
6.16 Financing Statement. The Beneficiary shall have the right at
-------------------
any time to file this Deed of Trust as a financing statement, but the failure to
do so shall not impair the validity and enforceability of this Deed of Trust in
any respect whatsoever. A carbon, photographic or other reproduction of this
Deed of Trust, or any financing statement relating to this Deed of Trust, shall
be sufficient as a financing statement.
- 32 -
<PAGE>
6.17 Actions of Beneficiary. It is expressly understood and agreed
----------------------
that the obligations of the Beneficiary with respect to the Mortgaged Premises
and all interests therein and with respect to the disposition thereof, and
otherwise under this Deed of Trust, are only those expressly set forth in this
Deed of Trust. The Beneficiary shall act hereunder on the terms and conditions
set forth in Article 12 of the Credit Agreement. Neither the Beneficiary nor
any of its officers, directors, employees or agents shall be liable for any
action taken or omitted by it or them in respect of this Deed of Trust or the
Mortgaged Premises unless caused by its or their gross negligence or willful
misconduct, and the Beneficiary, its officers, directors and employees shall be
entitled to refrain from acting in accordance with this Deed of Trust unless it
has, or they have, received from the Required Banks written instructions and if
requested, appropriate indemnification, in respect of actions to be taken. In
no event shall the Beneficiary be required to take any action in contravention
of applicable law or any of the Credit Documents. The actions of the
Beneficiary with respect to the Mortgaged Premises shall be mechanical and
administrative in nature and the Beneficiary shall not have, by reason of this
Deed of Trust, any fiduciary relationship with respect to any Secured Creditor.
6.18 Deed of Trust Secures Line of Credit. The Grantor and the
------------------------------------
Beneficiary intend that this Deed of Trust shall secure the line of credit
established under the Credit Agreement. The maximum principal amount of credit
which may be extended under such line of credit, which may be outstanding at any
one time or times and which shall be secured by this Deed of Trust, is
$70,000,000.
6.19 Date and Maturity of Obligations. The date and maturity date of
--------------------------------
the Obligations secured hereby is June 30, 2004.
6.20 Concerning Trustee. Trustee may resign by an instrument in
------------------
writing addressed to Beneficiary or be removed at any time with or without cause
by instrument in writing duly executed by Beneficiary. In case of the death,
resignation or removal of Trustee, a successor (each, a "Successor Trustee") may
be appointed by Beneficiary by instrument of substitution complying with any
applicable requirements of law, and in the absence of any such requirement
without other formality than appointment and designation in writing. Such
appointment and designation shall be full evidence of the right and authority to
make the same and of all facts therein recited, and upon the making of any such
appointment and designation this conveyance shall vest in the Successor Trustee
all the estate and title of its predecessor in all the Mortgage Property, and
such Successor Trustee shall thereupon succeed to all the rights, powers,
privileges, immunities and duties hereby conferred upon the prior Trustee.
Except for gross negligence or willful misconduct, Trustee shall not be liable
for any act or omission or error of judgment. Trustee may rely on any document
believed by him in good faith to be genuine. All
- 33 -
<PAGE>
money received by Trustee shall, until used or applied as herein provided, be
held in trust.
Section 6.21 Beneficiary's Authority. Notwithstanding anything to
-----------------------
the contrary contained in this Deed of Trust, Grantor may rely on and/or comply
with any writing or notice executed by the Beneficiary. Grantor may assume the
genuineness and due authorization of any such writing or notice and shall have
no obligation to confirm the genuineness or due authorization of any such
writing, including, without limitation, the receipt by Beneficiary of the
consent or approval of any of the Banks.
IN WITNESS WHEREOF, the Grantor has duly executed this Deed of Trust
as of the day and year first above written.
[Seal]
COINMACH CORPORATION
By: /s/ ROBERT M. DOYLE
-------------------------
Name: Robert M. Doyle
Title: Senior Vice President
- 34 -
<PAGE>
STATE OF NEW YORK )
-------------
: ss.:
COUNTY OF WESTCHESTER )
------------
On this 27 day of March, 1997 before me appeared Robert M. Doyle, to
---- ----- ---------------
me personally known, who being by me duly sworn, did say that he is the Senior
------
V.P. of Coinmach Corporation, a Delaware corporation, and that the seal affixed
- ----
to the foregoing instrument is the corporate seal of said corporation and that
said instrument was signed and sealed in behalf of said corporation by authority
of its Board of Directors, and said Robert M. Doyle acknowledged said instrument
---------------
to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunder set my hand and affixed my
notarial seal at my office in New York County, New York, the day and year last
above written.
[NOTARY SEAL] /s/ Vincent Paciariello
------------------------
Notary Public in and for
The State of New York and
--------
County of Westchester
-----------
My Comission Expires: Notary's Printed Name:
12-31-97 ------------------------------
Vincent Paciariello
Notary Public, State of New York
No. 4700973
Qualified in Westchester County
Commission Expires Dec. 31, 1997
<PAGE>
SCHEDULE I
-------- -
Permitted Encumbrances
-----------------------
1. The following restrictive covenants of record:
Volume 421, page 842, Deed Records, Dallas County, Texas (Tracts 1 and 2),
and Volume 67167, page 2511, Deed Records, Dallas County, Texas (Tract 2).
2. Any discrepancies, conflicts, or shortages in area or boundary lines of
any encroachments, or protrusions, or any overlapping of improvements.
3. Standby fees, taxes and assessments by any taxing authority for the year
1997 and subsequent years, a lien not yet due and payable, and subsequent
taxes and assessments by any taxing authority for prior years due to
change in land usage or ownership.
4. Thirty five foot building setback line over the front of subject property,
as shown on the plat recorded in Volume 354, page 1722, Map Records,
Dallas County, Texas. (Tracts 1 and 2)
5. Easement granted by Red Bird Industrial Park Inc., a Texas corporation to
Gulf, Colorado & Santa Fe Railway Company, dated August 21, 1964, filed
for record on October 12, 1964 and recorded in Volume 419, Page 954, Deed
Records, Dallas County, Texas and as shown on plat recorded in Volume 354,
Page 1722, Map Records, Dallas County, Texas. (Tracts 1 and 2)
6. Easement granted by Paul B. Merrifield, et al. to Texas Power & Light
Company, dated September 16, 1947, filed for record on January 20, 1948
and recorded in Volume 2934, Page 580, Deed Records, Dallas County, Texas.
(Tract 1)
7. Easement granted by W. J. Merrifield, et al. to Texas Power & Light
Company, dated April 17, 1945, filed for record on January 22, 1946 and
recorded in Volume 2608, Page 560, Deed Records, Dallas County, Texas.
(Tract 1)
<PAGE>
- 2 -
8. Easement granted by Richard F. Ford, et al. to Dallas Power & Light
Company, dated August 18, 1980, filed for record on September 8, 1980 and
recorded in Volume 80177, Page 0934. Deed Records, Dallas County, Texas.
(Tract 1)
9. Easement granted by Red Bird Industrial Park, Inc., to Dallas Power &
Light Company, dated June 8, 1966, filed for record on June 21, 1966 and
recorded in Volume 848, page 0286, Deed Records, Dallas County, Texas.
(Tract 2)
10. Easement granted by Trammell Crow & George A. Shutt to Dallas Power &
Light Company and Southwestern Bell Telephone Company, dated May 15, 1967,
filed for record on May 31, 1967 and recorded in Volume 67108, page 0069,
Deed Records, Dallas County, Texas. (Tract 2)
11. Easement granted by Trammell Crow & George A. Shutt to Dallas Power &
Light Company and Southwestern Bell Telephone Company, dated November 1,
1968, filed for record on December 5, 1968 and recorded in Volume 68237,
Page 2855, Deed Records, Dallas County, Texas. (Tract 2)
12. Thirty five foot building setback line over the West of subject property,
as shown on the plat recorded in Volume 354, Page 1722, Map Records,
Dallas County, Texas. (Tract 2)
<PAGE>
EXHIBIT "A"
Legal Description
GF# 478693
Commitment No.44-903-80-478693
DESCRIPTION
Tract 1:
All that certain lot, tract or parcel of land lying and being situated in the
County of Dallas, the State of Texas, to-wit:
BEING located in City Block 6953, First Section Red Bird Industrial Park, as
recorded in Volume 354, Page 1722 of the Deed Records of Dallas County, Texas,
and being more particularly described as follows:
BEGINNING at a point IN THE South line of Bronze Way, said point being 392.32
feet East of the East line of Cockrell Hill Road;
THENCE North 89 degrees 52 minutes 50 seconds East along the South line of
Bronze Way, 400.0 feet to corner;
THENCE South 0 degrees 07 minutes 10 seconds East along the West line of the
A.H. Robins Tract, 250.0 feet to corner;
THENCE South 89 degrees 52 minutes 50 seconds West along the North line of the
34 foot railroad easement, 400.0 feet to corner;
THENCE North 0 degrees 07 minutes 10 seconds West, 250.0 feet to the PLACE OF
BEGINNING.
Tract 2:
Part of City Block 6953, First Section Red Bird Industrial Park, an addition to
the City of Dallas, Texas, according to the plat thereof recorded in Volume 354,
at Page 1722 of the Deed Records of Dallas county, Texas, and being more
particularly described as follows:
Beginning at the intersection of the South line of Bronze Way with the new East
line of Cockrell Hill Road;
Thence North 89 degrees 52 minutes 50 seconds East along the South line of
Bronze Way 392.32 feet to corner;
Thence South 0 degrees 07 minutes 10 seconds East 250.0 feet to corner;
Thence South 89 degrees 52 minutes 50 seconds West along the North line of the
34 foot easement conveyed to the Atchison Topeka & Santa Fe Railway Company
392.85 feet to corner;
Thence North along the new East line of Cockrell Hill Road 250.0 feet to place
of beginning.
<PAGE>
EXHIBIT 21.1
LIST OF SUBSIDIARIES
--------------------
NAME DOMESTIC JURISDICTION
---- ---------------------
Grand Wash & Dry Launderette, Inc. New York
Super Laundry Equipment Corp. New York
Coinmach Laundromat GP Corp. New York
Coimnach Laundromat LP Corp. New York
Coimnach Laundromat Holding, LP New York
Maquilados Automaticos SA de CV Mexico
Automatica SA de CV Mexico
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-K
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> MAR-28-1997 MAR-29-1996
<PERIOD-START> MAR-30-1996 SEP-30-1995
<PERIOD-END> MAR-28-1997 MAR-29-1996
<CASH> 10,110 19,723
<SECURITIES> 0 0
<RECEIVABLES> 6,894 5,260
<ALLOWANCES> 0 0
<INVENTORY> 7,959 4,443
<CURRENT-ASSETS> 0 0
<PP&E> 154,133 102,208
<DEPRECIATION> 42,017 19,509
<TOTAL-ASSETS> 467,550<F1> 248,167
<CURRENT-LIABILITIES> 0 0
<BONDS> 329,278<F2> 201,655
0 0
0 0
<COMMON> 41,391 18,104
<OTHER-SE> (29,418) (20,252)
<TOTAL-LIABILITY-AND-EQUITY> 467,550<F3> 248,167
<SALES> 0 0
<TOTAL-REVENUES> 206,852<F4> 89,070
<CGS> 0 0
<TOTAL-COSTS> 139,446<F5> 60,536
<OTHER-EXPENSES> 52,604<F6> 20,236
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,417 11,830
<INCOME-PRETAX> (12,615) (3,532)
<INCOME-TAX> (2,307)<F7> (998)
<INCOME-CONTINUING> (10,308) (2,534)
<DISCONTINUED> 0 0
<EXTRAORDINARY> (296) (8,925)
<CHANGES> 0 0
<NET-INCOME> (10,604)<F8> (11,459)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
<FN>
<F1>Includes Advance Rental Payments of $38,472 and $20,320, Contract Rights of
$180,557 and $59,745 and Goodwill of $95,771 and $44,071 each net of
accummulated amortization, for the year ended March 28, 1997 and the six months
ended March 29, 1996, respectively.
<F2>Includes $196,655 of 11 3/4% senior notes for the year ended March 28, 1997 and
the six months ended March 29, 1996 as well as debt outstanding under a credit
facility of $130,000 for the year ended March 28,, 1997.
<F3>Includes Accrued Commissions of $10,573 and $7,380 and Accrued Interest of
$9,712 and $7,745, for the period ended March 28, 1997 and the six months ended
March 29, 1996, respectively.
<F4>Total Revenues include Sales of laundromats and equipment of $20,712 and $8,625
for the year ended March 28, 1997 and the six months ended March 29, 1996,
respectively.
<F5>Total Costs include Cost of Goods Sold of $14,766 and $6,011, for the year
ended March 28, 1997 and the six months ended March 29, 1996, respectively.
<F6>Other Expenses include stock based compensation charges of $1,768 for the year
ended March 28, 1997.
<F7>The provision (benefit) for income taxes consists of $200 and $50 currently
payable and ($2,507) and ($1,048) deferred, for the year ended March 28, 1997 and
the six months ended March 29, 1996, respectively.
<F8>In addition, EDITDA (earnings before interest, income taxes, depreciation and
amortization) of $62,886 (before the deduction for the stock-based compensation
charge) and $26,510 was generated for the reported periods. EDITDA is a meaningful
measure of a company's ability to service debt.
</FN>
</TABLE>
