EXHIBIT 10.4
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LOAN AND SECURITY AGREEMENT
_____________________________
DATED AS OF MAY 5, 1998
______________________________
ALLIANCE LAUNDRY RECEIVABLES WAREHOUSE LLC
THE LENDERS PARTY HERETO
AND
LEHMAN COMMERCIAL PAPER INC.
AS AGENT
LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS................................. 1
1.01. Certain Defined Terms................................................... 1
1.02. Accounting Terms and Determinations..................................... 26
SECTION 2. LOANS, NOTE AND PREPAYMENTS........................................ 26
2.01. Loans................................................................... 27
2.02. Note.................................................................... 27
2.03. Procedure for Borrowing................................................. 28
2.04. Repayment of Loans; Interest............................................ 28
2.05. Optional Prepayments.................................................... 29
2.06. Mandatory Prepayment or Pledge.......................................... 29
2.07. Indemnity............................................................... 31
2.08. Purpose of Loans........................................................ 31
2.09. Fees.................................................................... 31
2.10. Inability to Determine Interest Rate.................................... 31
2.11. Requirements of Law..................................................... 32
2.12. Taxes................................................................... 33
2.13. Illegality.............................................................. 35
2.14. Conversions Pursuant to Sections 2.10 and 2.13.......................... 35
SECTION 3. PAYMENTS; COMPUTATIONS; ETC........................................ 36
3.01. Payments................................................................ 37
3.02. Computations............................................................ 37
3.03. Extension Fee........................................................... 37
SECTION 4. COLLATERAL SECURITY................................................ 37
4.01. Collateral; Security Interest........................................... 37
4.02. Further Assurances...................................................... 39
4.03. Changes in Locations, Name, etc......................................... 39
4.04. Agent's Appointment as Attorney-in-Fact................................. 39
4.05. Performance by Agent of Borrower's Obligations.......................... 41
4.06. Remedies................................................................ 41
4.07. Limitation on Duties Regarding Presentation of Collateral............... 42
4.08. Powers Coupled with an Interest......................................... 42
4.09. Release of Security Interest............................................ 42
4.10. Trade Receivable Lockbox Accounts....................................... 43
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4.11. Equipment Loan Lockbox Accounts..........................................44
4.12. Excess Spread Account....................................................46
4.13. Legending of Chattel Paper...............................................47
SECTION 5. CONDITIONS PRECEDENT..................................................47
5.01. Initial Loan.............................................................47
5.02. Initial and Subsequent Loans.............................................49
SECTION 6. REPRESENTATIONS AND WARRANTIES........................................50
6.01. Financial Condition......................................................50
6.02. No Change................................................................50
6.03. Existence; Compliance with Law...........................................51
6.04. Power; Authorization; Enforceable Obligations............................51
6.05. No Legal Bar.............................................................51
6.06. No Litigation............................................................52
6.07. No Default...............................................................52
6.08. Collateral; Collateral Security..........................................52
6.09. Chief Executive Office...................................................52
6.10. Location of Books and Records............................................53
6.11. No Burdensome Restrictions...............................................53
6.12. Taxes....................................................................53
6.13. Margin Regulations.......................................................53
6.14. Investment Company Act; Other Regulations................................53
6.15. Subsidiaries.............................................................53
6.16. Eligible Assets..........................................................53
6.17. Origination and Collections of Assets....................................53
6.18. No Adverse Selection.....................................................54
6.19. Equipment Loans..........................................................54
6.20. Borrower Solvent.........................................................54
6.21. ERISA....................................................................54
6.22. Other Agreements.........................................................55
6.23. Ownership of Borrower....................................................55
SECTION 7. COVENANTS OF THE BORROWER.............................................55
7.01. Financial Reporting......................................................55
7.02. Existence, etc...........................................................56
7.03. Insurance................................................................56
7.04. Prohibition of Fundamental Changes.......................................57
7.05. Notices..................................................................57
7.06. Periodic Due Diligence Review............................................57
7.07. Limitation on Liens on Collateral........................................58
7.08. Underwriting Guidelines..................................................58
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7.09. Limitation on Transactions with Affiliates...............................58
7.10. Limitation on Changes in Fiscal Year.....................................58
7.11. Limitations on Modifications, Waivers and Extensions of Assets...........58
7.12. Further Identification of Collateral.....................................59
7.13. Limitation on Collection Account.........................................59
7.14. No Transfer..............................................................59
7.15. Repayment of Loans if Asset is Found Defective...........................59
7.16. Borrowing Base Certificate...............................................60
7.17. Monthly Officer's Certificate............................................60
7.18. Data Pool Report.........................................................60
7.19. Net Worth................................................................60
7.20. Limitation on Guarantee Obligations......................................60
7.21. Letter of Credit.........................................................61
7.22. Limitation on Dividends..................................................62
7.23. Limitation on Investments, Loans and Advances............................63
7.24. Limitation on Optional Payments and Modifications of Debt Instruments....63
7.25. Limitation on Sales and Leasebacks.......................................63
7.26. Limitations on Negative Pledge Clauses...................................63
7.27. Limitation on Lines of Business; Subsidiaries............................63
7.28. Limitation on Indebtedness...............................................63
7.29. Other Agreements.........................................................64
7.30. Currency Protection......................................................64
7.31. Purchase of Receivables from the Originators.............................65
7.32. Payment of Taxes, etc....................................................65
7.33. Maintenance of Approvals, Filings and Registrations......................65
7.34. Change in Payment Instructions to Obligors...............................65
7.35. Separate Corporate Existence.............................................65
SECTION 8. EVENTS OF DEFAULT.....................................................67
SECTION 9. REMEDIES UPON DEFAULT.................................................70
SECTION 10. NO DUTY ON LENDERS' PART.............................................70
SECTION 11. THE AGENT............................................................71
11.01. Appointment.............................................................71
11.02. Delegation of Duties....................................................71
11.03. Exculpatory Provisions..................................................71
11.04. Reliance By Agent.......................................................72
11.05. Notice of Default.......................................................72
11.06. Non-Reliance on Agent and Other Lenders.................................72
11.07. Indemnification.........................................................73
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11.08. Agent, in Its Individual Capacity.......................................73
11.09. Successor Agent.........................................................73
SECTION 12. MISCELLANEOUS........................................................74
12.01. Waiver..................................................................74
12.02. Notices.................................................................74
12.03. Indemnification and Expenses............................................74
12.04. Amendments..............................................................75
12.05. Successors and Assigns..................................................76
12.06. Survival................................................................76
12.07. Captions................................................................77
12.08. Counterparts............................................................77
12.09. Loan Agreement Constitutes Security Agreement; Governing Law............77
12.10. Submission To Jurisdiction; Waivers.....................................77
12.11. Waiver of Jury Trial....................................................78
12.12. Acknowledgments.........................................................78
12.13. Hypothecation or Pledge of Loans........................................78
12.14. Servicing...............................................................78
12.15. Sharing.................................................................79
12.16. Third Party Beneficiary Rights..........................................80
12.17. Confidentiality.........................................................80
12.18. Integration.............................................................81
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SCHEDULES
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SCHEDULE 4.10 Trade Receivable Lockbox Banks
SCHEDULE 4.11 Equipment Loan Lockbox Banks
SCHEDULE 6.08 Filing Jurisdictions and Offices
SCHEDULE 6.16 Representations and Warranties with respect to Equipment
Loans and Trade Receivables
EXHIBITS
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EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Request for Borrowing
EXHIBIT C Form of Underwriting Letter Agreement
EXHIBIT D-1 Form of Trade Receivable Lockbox Assignment Agreement
EXHIBIT D-2 Form of Equipment Loan Lockbox Assignment Agreement
EXHIBIT E Form of Funding Date Data Pool Report
EXHIBIT F Form of Equipment Loan Monthly Data Pool Report
EXHIBIT G Form of Trade Receivables Monthly Data Pool Report
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LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT, dated as of May 5, 1998, between ALLIANCE
LAUNDRY RECEIVABLES WAREHOUSE LLC, a Delaware limited liability company (the
"Borrower"), the financial institutions party hereto as lenders (the "Lenders")
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and LEHMAN COMMERCIAL PAPER INC., a New York corporation, as agent for the
Lenders (the "Agent").
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RECITALS
The Borrower wishes to obtain financing from time to time to provide
(i) interim funding to enable the Borrower to purchase Equipment Loans (as
defined below) from the Originators (as defined below), which Equipment Loans
are to be warehoused prior to their transfer to one or more trusts or other
securitization vehicles to be sponsored by the Borrower or an Affiliate thereof
and (ii) funding to enable the Borrower to purchase Trade Receivables (as
defined below) from the Originators, which Equipment Loans and Trade Receivables
shall, directly or indirectly, secure the Loans (as defined herein) to be made
by the Lenders hereunder.
The Lenders have agreed, subject to the terms and conditions of this
Loan Agreement, to provide such funding, with the proceeds of the sale of all
equipment loan asset-backed securities issued by any such trust or other
vehicle, together with other funds of the Borrower, being used to repay any
Loans made hereunder.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.
1.01. Certain Defined Terms.
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As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1.01 or in other provisions of this
Loan Agreement in the singular to have the same meanings when used in the plural
and vice versa):
"ACAF" shall mean Alliance Commercial Appliances Finance LLC, a
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Delaware limited liability company, the surviving company of the merger of
Raytheon Commercial Appliances Finance Corporation with and into ACAF.
"ACAF Receivables Purchase Agreement" shall mean that certain
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Receivables Purchase Agreement, dated as of March 26, 1997, among ACAF, Falcon
Asset Securitization Corporation, certain financial institutions parties thereto
and The First National Bank of Chicago, as agent, as amended from time to time.
"ACAR" shall mean Alliance Commercial Appliances Receivables LLC, a
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Delaware limited liability company, the surviving company of the merger of
Raytheon
Commercial Appliances Receivables Corporation with and into ACAR.
"ACAR Receivables Purchase Agreement" shall mean that certain
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Receivables Purchase Agreement, dated as of December 27, 1997, among ACAR,
Preferred Receivables Funding Corporation, certain financial institutions
parties thereto and The First National Bank of Chicago, as agent, as amended
from time to time.
"Affected Loan" shall have the meaning specified in Section 2.14.
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"Affiliate" shall mean, with respect to any Person, any other Person
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which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" (together
with the correlative meanings of "controlled by" and "under common control
with") shall mean possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agent" shall have the meaning specified in the preamble to this Loan
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Agreement.
"Agent Account" shall have the meaning specified in Section 3.01
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hereof.
"Allotted Period" shall mean, with respect to an Eligible Equipment
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Loan, the period ending on the last day of the twenty-fourth month following the
date on which such Eligible Equipment Loan was first included in the Borrowing
Base; provided, that upon the payment of the Extension Fee described in Section
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3.03 hereof with respect to such Equipment Loan, such period shall be extended
for an additional six months; provided, further, that in no case shall an
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Eligible Equipment Loan have an Allotted Period in excess of thirty-six months
from the date on which such Eligible Equipment Loan was first included in the
Borrowing Base.
"ALS" shall mean Alliance Laundry Systems LLC, a Delaware limited
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liability company.
"Amana" shall mean Amana Company, L.P., a Delaware limited
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partnership.
"Amana Trigger Event" shall mean the occurrence of any one of the
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following events:
(a) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Amana is equal to or greater than 5.0%
of the aggregate Collateral Value of all Eligible Trade Receivables included in
the Borrowing Base, the average for the most recently completed fiscal month and
the immediately preceding fiscal month of the product of (i) the aggregate
outstanding balance of Trade Receivables included in the Borrowing Base due from
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Amana which became Delinquent Receivables during such fiscal month as a
percentage of the aggregate outstanding balance of Trade Receivables included in
the Borrowing Base due from Amana at the end of each such fiscal month and (ii)
a fraction, the numerator of which is the number of days in the corresponding
calendar month and the denominator of which is the number of days in each such
fiscal month shall exceed 5.5%; or
(b) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Amana is equal to or greater than 5.0%
of the aggregate Collateral Value of all Eligible Trade Receivables included in
the Borrowing Base, the average for the most recently completed fiscal month and
the immediately preceding fiscal month of the product of (i) the aggregate
amount of Dilutions for such fiscal month with respect to Trade Receivables
included in the Borrowing Base due from Amana as a percentage of the aggregate
outstanding balance of Trade Receivables included in the Borrowing Base due from
Amana at the end of each such fiscal month (other than August, September,
October or November) and (ii) a fraction, the numerator of which is the number
of days in the corresponding calendar month and the denominator of which is the
number of days in each such fiscal month shall exceed 6.0% or, for August,
September, October or November, shall exceed 8.0%; or
(c) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Amana is equal to or greater than 5.0%
of the aggregate Collateral Value of all Eligible Trade Receivables included in
the Borrowing Base, the average for the most recently completed fiscal month and
the immediately preceding fiscal month of the product of (i) the aggregate
outstanding balance of Trade Receivables included in the Borrowing Base due from
Amana which became Defaulted Receivables during such fiscal month as a
percentage of the aggregate outstanding balance of Trade Receivables included in
the Borrowing Base due from Amana at the end of each such fiscal month and (ii)
a fraction, the numerator of which is the number of days in the corresponding
calendar month and the denominator of which is the number of days in each such
fiscal month shall exceed 4.0%.
"Applicable Margin" shall mean, for each type of Loan, the rate per
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annum set forth under the relevant column heading below:
Federal Funds Rate Loans LIBOR Loans
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1.00% 1.00%
"Approved Affiliate" shall mean ACAF, ACAR, Alliance Laundry Holdings
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LLC (formerly known as Raytheon Commercial Laundry LLC) and any other Affiliate
of the Borrower approved in writing by the Agent.
"Asset" shall mean any (i) Trade Receivable or (ii) Equipment Loan.
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"Asset Schedule" shall mean a schedule of Assets setting forth the
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following
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applicable information as to each Asset pledged to the Agent for the benefit of
the Lenders hereunder:
(a) with respect to any Asset:
(i) the Asset identifying number, if any;
(ii) the Obligor's name and relationship, if any, to other Obligors;
and
(iii) the paid-through date;
(b) with respect to any Equipment Loan:
(i) the street address where the Equipment is in use (including the
city, state and zip code);
(ii) if such Equipment Loan is a finance lease, the Discounted
Present Value of the remaining payments;
(iii) the original number of months to maturity and the number of
months remaining to maturity from the date of such Asset Schedule;
(iv) the Contract Rate;
(v) the interest rate basis (whether a fixed or floating rate of
interest) and, if a floating rate of interest, the interest rate index, the
margin above such index and the interest rate adjustment dates;
(vi) the amount of the current monthly payment;
(vii) the original amount funded under such Asset;
(viii)the closing date of such Asset;
(ix) the first payment date; and
(x) the month and year the Equipment was purchased; and
(c) with respect to any Trade Receivable:
(i) the outstanding amount of such Trade Receivable;
(ii) whether such Trade Receivable is an Interest Bearing Receivable
or a Trade Receivable the Obligor of which is a Foreign Obligor; and
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(iii) the payment terms with respect to such Trade Receivable.
"Available Letter of Credit Amount" shall mean, with respect to any
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Letter of Credit on any date of determination, an amount equal to the amount
available to be drawn under such Letter of Credit on such date of determination.
"Bain Investors" shall mean, collectively, Bain/RCL, L.L.C., BCIP
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Associate, II, BCIP Associates II-B, Bain Capital Fund V, L.P., Bain Capital
Fund V-B, L.P., BCIP Trust Associates II, and BCIP Trust Associate, II-B.
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
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1978, as amended from time to time.
"Board" shall mean the Board of Governors of the Federal Reserve
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System of the United States (or any successor).
"Borrower" shall have the meaning specified in the heading hereof.
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"Borrowing Base" shall mean the sum of (i) 100% of the aggregate
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Collateral Value of all Eligible Assets and (ii) the value of all additional
Collateral pledged to the Agent pursuant to Section 2.06(b). Solely for the
purpose of determining the value of all additional Collateral (to the extent
such additional Collateral is not an Eligible Trade Receivable or an Eligible
Equipment Loan), "value" shall mean, as of any date of determination with
respect to such additional Collateral, the price at which such additional
Collateral could be sold as of such date, as determined by the Agent in its
commercially reasonable discretion.
"BRS" shall mean Bruckner, Rosser, Sherrill and Co., Inc.
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"Business Day" shall mean any day (i) on which banks are not
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authorized or required to close in New York, New York, (ii) on which the Agent
is not authorized or required to close in New York and (iii) if the applicable
Business Day relates to any computation or payment to be made with respect to
the LIBOR Rate, on which dealings in dollar deposits are carried on in the
London interbank market.
"Canadian Dollars" shall mean lawful money of Canada.
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"Capital Lease", as applied to any Person or entity, shall mean any
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lease of any property (whether real, personal or mixed) by that Person or entity
as lessee that, in conformity with GAAP, is accounted for as a capital lease on
the balance sheet of that Person or entity.
"Capital Stock" shall mean (i) in the case of a corporation,
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corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or
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limited liability company, partnership or membership interests (whether general
or limited) and (iv) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Collateral Account" shall have the meaning specified in Section
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7.21(b) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
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time to time.
"Coinmach" shall mean Coinmach Laundry Corporation, a Delaware
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corporation.
"Coinmach Trigger Event" shall mean the occurrence of any one of the
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following events:
(a) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Coinmach is equal to or greater than
5.0% of the aggregate Collateral Value of all Eligible Trade Receivables
included in the Borrowing Base, the average for the most recently completed
fiscal month and the immediately preceding fiscal month of the product of (i)
the aggregate outstanding balance of Trade Receivables included in the Borrowing
Base due from Coinmach which became Delinquent Receivables during such fiscal
month as a percentage of the aggregate outstanding balance of all Trade
Receivables included in the Borrowing Base due from Coinmach at the end of each
such fiscal month and (ii) a fraction, the numerator of which is the number of
days in the corresponding calendar month and the denominator of which is the
number of days in each such fiscal month shall exceed 5.5%; or
(b) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Coinmach is equal to or greater than
5.0% of the aggregate Collateral Value of all Eligible Trade Receivables
included in the Borrowing Base, the average for the most recently completed
fiscal month and the immediately preceding fiscal month of the product of (i)
the aggregate amount of Dilutions for such fiscal month with respect to Trade
Receivables included in the Borrowing Base due from Coinmach as a percentage of
the aggregate outstanding balance of all Trade Receivables included in the
Borrowing Base due from Coinmach at the end of each such fiscal month (other
than August, September, October or November) and (ii) a fraction, the numerator
of which is the number of days in the corresponding calendar month and the
denominator of which is the number of days in each such fiscal month shall
exceed 6.0% or, for August, September, October or November, shall exceed 8.0%;
or
(c) if the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base due from Coinmach is equal to or greater than
5.0% of the aggregate Collateral Value of all Eligible Trade Receivables
included in the Borrowing Base, the average for the most recently completed
fiscal month and the immediately preceding fiscal month of the
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product of (i) the aggregate outstanding balance of Trade Receivables due from
Coinmach included in the Borrowing Base which became Defaulted Receivables
during such fiscal month as a percentage of the aggregate outstanding balance of
all Trade Receivables included in the Borrowing Base due from Coinmach at the
end of each such fiscal month and (ii) a fraction, the numerator of which is the
number of days in the corresponding calendar month and the denominator of which
is the number of days in each such fiscal month shall exceed 4.0%.
"Collateral" shall have the meaning specified in Section 4.01(a)
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hereof.
"Collateral Value" shall mean, as of any date of determination, in
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respect of (a) an Eligible Equipment Loan, the lesser of (i) (A) with respect to
Eligible Equipment Loans which are not finance leases, 90% of the outstanding
principal balance of such Eligible Equipment Loan as of such date and (B) with
respect to Eligible Equipment Loans which are finance leases, 90% of the
Discounted Present Value of such Eligible Equipment Loans, and (ii) 90% of the
Market Value with respect to such Eligible Equipment Loan as of such date, and
(b) an Eligible Trade Receivable, 85% of the outstanding amount of such Eligible
Trade Receivable as of such date; provided, however, that the "Collateral Value"
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with respect to the outstanding amount of Eligible Trade Receivables included in
the Borrowing Base in respect of which (A) Amana (and its Affiliates) is the
Obligor which outstanding amount exceeds the greater of (x) 5% of the
outstanding amount of Trade Receivables and (y) $4,000,000 (but are less than
the concentration limit set forth in clause (b)(iii) below) and (B) Coinmach
(and its Affiliates) is the Obligor which outstanding amount exceeds the greater
of (x) 5% of the outstanding amount of Trade Receivables and (y) $4,000,000 (but
are less than the concentration limit set forth in clause (b)(iv) below) shall
equal 75% of the outstanding amount of such Eligible Trade Receivables as of
such date; provided, further, that the "Collateral Value" with respect to (u)
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any Eligible Equipment Loan which is greater than ninety (90) days Past Due, (v)
any Eligible Trade Receivable which is greater than sixty (60) days Past Due,
(w) any Eligible Equipment Loan which has been included in the Borrowing Base
for more than the Allotted Period, (x) any Eligible Asset in respect of which
there is a breach of a representation and warranty set forth on Schedule 6.16
(assuming each representation and warranty is made as of the date Collateral
Value is determined) and (y) any Eligible Equipment Loan which has an original
term of more than eighty-four (84) months, shall in each of the foregoing cases
equal zero; provided, further, that:
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(a) with respect to Eligible Equipment Loans:
(i) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base in respect of which the same Person (or its
Affiliates) is the Obligor shall not exceed $9,000,000 at any time;
(ii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base due from the three Obligors (or their
respective Affiliates) with the greatest outstanding principal balance of
Equipment Loans
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shall not exceed $10,000,000 at any time when the sum of the aggregate
outstanding principal balance of the Loans is $50,000,000 or less;
(iii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base due from the two Obligors (or their
respective Affiliates) with the greatest outstanding principal balance of
Equipment Loans shall not exceed $16,000,000 at any time;
(iv) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base due from the five Obligors (or their
respective Affiliates) with the greatest outstanding principal balance of
Equipment Loans shall not exceed $27,000,000 at any time;
(v) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base which are greater than sixty (60) days Past
Due but equal to or less than ninety (90) days Past Due shall not at any
time exceed 1.0% of the aggregate Collateral Value of all Eligible
Equipment Loans included in the Borrowing Base at such time;
(vi) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base in respect of which the Equipment was, on
the date of origination of such Eligible Equipment Loan, used or
reconditioned shall not at any time exceed 20% of the aggregate Collateral
Value of all Eligible Equipment Loans included in the Borrowing Base at
such time;
(vii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base which are payable in Canadian Dollars shall
not at any time exceed the greater of (x) $5,000,000 (or the equivalent
thereof in Canadian Dollars) and (y) 5.0% of the aggregate Collateral Value
of all Eligible Equipment Loans included in the Borrowing Base at such
time;
(viii) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base in respect of which an employee of any
Originator is the Obligor shall not at any time exceed the greater of (x)
$2,000,000 and (y) 1.0% of the aggregate Collateral Value of all Eligible
Equipment Loans included in the Borrowing Base at such time; and
(ix) the aggregate Collateral Value of Eligible Equipment Loans
included in the Borrowing Base which provide for any "balloon" or other
form of lump sum payment at the end of their respective term shall not at
any time exceed the greater of (x) $2,000,000 and (y) 1.0% of the aggregate
Collateral Value of all Eligible Equipment Loans included in the Borrowing
Base at such time; and
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(b) with respect to Eligible Trade Receivables:
(i) the aggregate Collateral Value of Eligible Trade Receivables
(other than Eligible Trade Receivables the Obligor of which is Amana or
Coinmach) included in the Borrowing Base in respect of which the same
Person (or its Affiliates) is the Obligor shall not exceed the greater of
(x) $4,000,000 and (y) 5.0% of the aggregate Collateral Value of all
Eligible Trade Receivables included in the Borrowing Base at such time;
(ii) the aggregate Collateral Value of Eligible Trade Receivables
(other than Eligible Trade Receivables the Obligor of which is Amana or
Coinmach) included in the Borrowing Base due from the three Obligors (or
their respective Affiliates) with the greatest outstanding amount of Trade
Receivables shall not exceed $10,000,000 at any time;
(iii) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which Amana (or its
Affiliates) is the Obligor shall not exceed 10% of the aggregate Collateral
Value of all Eligible Trade Receivables included in the Borrowing Base at
any time;
(iv) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which Coinmach (or its
Affiliates) is the Obligor shall not exceed 15% of the aggregate Collateral
Value of all Eligible Trade Receivables included in the Borrowing Base at
any time;
(v) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are greater than thirty (30) days Past
Due but equal to or less than sixty (60) days Past Due shall not at any
time exceed 10.0% of the aggregate Collateral Value of all Eligible Trade
Receivables included in the Borrowing Base at such time;
(vi) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base the Obligors in respect of which are Foreign
Obligors and are located in the same country shall not exceed $3,000,000 at
any time;
(vii) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which the Obligors are Foreign
Obligors shall not at any time exceed 35.0% of the aggregate Collateral
Value of all Eligible Trade Receivables included in the Borrowing Base at
such time;
(viii) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are Interest Bearing Receivables shall
not
9
exceed the greater of (1) $9,000,000 and (2) 15% of the aggregate
Collateral Value of all Eligible Trade Receivables included in the
Borrowing Base at any time;
(ix) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are Interest Bearing Receivables in
respect of which the same Person (or its Affiliates) is the Obligor and
which have payment terms which do not exceed 150 days after the billing
date therefor shall not exceed $750,000 at any time;
(x) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base which are not required to be paid in full
until a date between 121 days and 150 days, inclusive, after the billing
date therefor shall not exceed 2.0% of the aggregate Collateral Value of
all Eligible Trade Receivables included in the Borrowing Base at any time;
and
(xi) the aggregate Collateral Value of Eligible Trade Receivables
included in the Borrowing Base in respect of which an agency, a department,
an instrumentality or a political subdivision of the United States or of
any state or local government is the Obligor shall not exceed 5.0% of the
aggregate Collateral Value of all Trade Receivables included in the
Borrowing Base at such time.
"Collections" shall mean, with respect to any Asset, the sum of all
-----------
amounts, whether in the form of cash, checks, drafts, or other instruments,
received by the Borrower, an Originator, the Servicer or in a Trade Receivable
Lockbox Account or Equipment Loan Lockbox Account in payment of, or applied to,
any amount owed by an Obligor on account of such Asset (including but not
limited to all amounts received on account of any Defaulted Receivable or
Defaulted Equipment Loan), including, without limitation, all amounts in respect
of fees with respect to such Asset.
"Commitment" shall mean, with respect to a Lender, an amount equal to
----------
the product of (i) such Lender's Commitment Percentage and (ii) the Maximum
Credit.
"Commitment Percentage" shall mean, with respect to a Lender, the
---------------------
percentage set forth opposite its signature hereto (as such percentage may be
changed to give effect to any assignment by such Lender).
"Contract Rate" shall mean, with respect to an Equipment Loan, the
-------------
interest rate on such Equipment Loan as determined in accordance with the
Borrower's customary practices in effect as of the date hereof.
"Contractual Obligation" shall mean as to any Person, any provision of
----------------------
any security issued by such Person or of any agreement, instrument or other
undertaking to which
10
such Person is a party or by which it or any of its property is bound.
"Control Investment Affiliates" shall mean, as to any Person, any
-----------------------------
other Person which directly or indirectly, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, to direct or cause the direction
of the management and policies of such Person, whether by contract, or
otherwise.
"Credit Agreement" shall mean the Credit Agreement among Alliance
----------------
Laundry Holdings LLC, ALS, Lehman Brothers Inc., as Arranger, Lehman Commercial
Paper Inc., as Syndication Agent, and General Electric Capital Corporation, as
administrative agent.
"Default" shall mean an Event of Default or an event that with notice
-------
or lapse of time or both would become an Event of Default.
"Default Ratio" shall mean, for any fiscal month, the product of (x) a
-------------
percentage equal to (i) the aggregate outstanding balance of Trade Receivables
(whether or not Eligible Trade Receivables) which first became Defaulted
Receivables during such fiscal month divided by (ii) the aggregate outstanding
balance of all Trade Receivables (whether or not Eligible Trade Receivables) at
the end of such fiscal month and (y) a fraction, the numerator of which is the
number of days in the corresponding calendar month and the denominator of which
is the number of days in such fiscal month.
"Default Ratio - Equipment Loans" shall mean, for any calendar month,
-------------------------------
a percentage equal to (i) the aggregate outstanding balance of Equipment Loans
(whether or not Eligible Equipment Loans) which first became Defaulted Equipment
Loans during such calendar month divided by (ii) the aggregate outstanding
balance of all Equipment Loans (whether or not Eligible Equipment Loans) at the
end of such calendar month.
"Defaulted Equipment Loan" shall mean an Equipment Loan (a) which, in
------------------------
the reasonable judgment of the related Originator, has become uncollectible or
has been written off the books of such Originator by reason of the related
Obligor's inability to pay or (b) which is more than ninety (90) days Past Due.
"Defaulted Receivable" shall mean a Trade Receivable (a) which, in the
--------------------
reasonable judgment of the related Originator, has become uncollectible or has
been written off the books of such Originator by reason of the related Obligor's
inability to pay or (b) which is more than ninety (90) days Past Due.
"Delinquency Ratio" shall mean, for any fiscal month, the product of
-----------------
(x) a percentage equal to (i) the aggregate outstanding balance of Trade
Receivables (whether or not Eligible Trade Receivables) which first became
Delinquent Receivables during such fiscal month divided by (ii) the aggregate
outstanding balance of all Trade Receivables (whether or not
11
Eligible Trade Receivables) at the end of such fiscal month and (ii) a fraction,
the numerator of which is the number of days in the corresponding calendar month
and the denominator of which is the number of days in such fiscal month.
"Delinquency Ratio - Equipment Loans" shall mean, for any calendar
-----------------------------------
month, a percentage equal to (i) the aggregate outstanding balance of Equipment
Loans (whether or not Eligible Equipment Loans) which first became Delinquent
Equipment Loans during such calendar month divided by (ii) the aggregate
outstanding balance of all Equipment Loans (whether or not Eligible Equipment
Loans) at the end of such calendar month.
"Delinquent Equipment Loan" shall mean an Equipment Loan as to which
-------------------------
any payment, or part thereof, remains unpaid for 31 days or more from the
original due date thereof.
"Delinquent Receivable" shall mean a Trade Receivable as to which any
---------------------
payment of the principal thereof and, in the case of an Interest Bearing
Receivable, the interest with respect thereto, or part thereof, remains unpaid
for sixty-one (61) days or more from the original due date thereof.
"Demand Deposit Account" shall have the meaning specified in Section
----------------------
4.10(a) hereof.
"Dilution" shall mean, for any fiscal month, a reduction of the
--------
outstanding balance of a Trade Receivable first granted to an Obligor during
such fiscal month other than as a result of a Collection or such Trade
Receivable becoming a Defaulted Receivable.
"Dilution Ratio" shall mean, for any fiscal month, the product of (i)
--------------
a percentage equal to (i) the aggregate dollar amount of Dilutions (including,
without limitation, non-cash credits) first occurring in such fiscal month
divided by (ii) the aggregate outstanding balance of all Trade Receivables
(whether or not Eligible Trade Receivables) at the end of such fiscal month and
(ii) a fraction, the numerator of which is the number of days in the
corresponding calendar month and the denominator of which is the number of days
in such fiscal month.
"Discount Rate" shall mean a rate equal to the sum of (i) the rate
-------------
announced by Citibank, N.A. from time to time as its "prime rate", as published
in The Wall Street Journal, Northeastern Edition plus (ii) 2.0%.
"Discounted Present Value" shall mean, for any Equipment Loan which is
------------------------
a finance lease, as of any date of determination, the present value of the then
remaining payments under such Equipment Loan, discounted at the Discount Rate,
as determined by the Borrower and set forth in an Asset Schedule or a Borrowing
Base Certificate, as the case may be.
"Dollars" and "$" shall mean lawful money of the United States of
------- -
America.
12
"Drawing Amount" shall have the meaning specified in Section 2.06(c)
--------------
hereof.
"Effective Date" shall mean the date upon which the conditions
--------------
precedent set forth in Section 5.01 shall have been satisfied.
"Eligible Assets" shall mean Eligible Equipment Loans and Eligible
---------------
Trade Receivables.
"Eligible Deposit Account" shall mean either (a) a segregated account
------------------------
with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the states thereof or the District
of Columbia (or any domestic branch of a foreign bank) or, with respect to
Foreign Receivables, under the laws of Canada or any province thereof, having
corporate trust powers and acting as trustee or depository for funds deposited
in such account, so long as any of the securities of such depository institution
shall have a long-term unsecured debt rating of A by Standard & Poor's and by
Moody's Investors Service, Inc. (or its equivalent) (and if neither Standard &
Poor's nor Moody's Investors Service, Inc. rates securities of such depository
institution, then so long as such depository institution is otherwise acceptable
to the Agent).
"Eligible Equipment Loan" shall mean an Equipment Loan as to which the
-----------------------
applicable representations and warranties on Schedule 6.16 hereof are correct.
"Eligible Institution" shall mean a depository institution organized
--------------------
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank) or, with
respect to Eligible Equipment Loans which are payable in Canadian Dollars, under
the laws of Canada or any province thereof, (i) which has either (A) a long-term
unsecured debt rating of AA by Standard & Poor's and Aa by Moody's Investors
Service, Inc. (or its equivalent) or (B) short-term unsecured debt rating or
certificate of deposit rating of A-1+ by Standard & Poor's and Prime-1 by
Moody's Investors Service, Inc. (or its equivalent) (and if neither Standard &
Poor's nor Moody's Investors Service, Inc. rates such depository institution,
then which is otherwise acceptable to the Agent) and (ii) whose deposits are
insured by the Federal Deposit Insurance Corporation (or any successor) (or,
with respect to Eligible Equipment Loans which are payable in Canadian Dollars,
an organization performing a similar function).
"Eligible Letter of Credit Issuer," which shall initially be ABN AMRO
--------------------------------
Bank N.V., shall mean a Qualifying Financial Institution that is acceptable to
the Agent and the Borrower.
"Eligible Trade Receivable" shall mean a Trade Receivable as to which
-------------------------
the applicable representations and warranties on Schedule 6.16 hereof are
correct.
"Equipment" shall mean equipment that conforms with the Underwriting
---------
13
Guidelines (including, without limitation, renewals and replacements thereof and
additions thereto).
"Equipment Loan" shall mean a loan or finance lease secured by
--------------
Equipment, which loan or finance lease was (i) originated by an Originator, (ii)
purchased by the Borrower from such Originator or otherwise conveyed to the
Borrower by such Originator pursuant to the Transfer Agreement and (iii)
approved by such Originator in accordance with the Underwriting Guidelines in
effect at the time of such origination in the ordinary course of such
Originator's business, including without limitation, the obligation to pay any
finance, interest, late payment or similar charges with respect thereto.
"Equipment Loan Documents" shall mean, with respect to an Equipment
------------------------
Loan, the following documents:
(a) original counterparts of the related loan agreement, executed by a
duly authorized representative of the Obligor and the related Originator;
(b) if received, the acknowledgment copy of each UCC-1 Financing
Statement filed or recorded in connection with such Equipment Loan, with
evidence of filing or recording thereon, or if not yet received, a copy of each
such UCC-1 Financing Statement, if any;
(c) if received, the acknowledgment copy of each filed or recorded
intervening UCC-3 assignment, showing a chain to the Borrower, of each UCC-1
Financing Statement, or if not yet received, a copy of each such UCC-3
assignment, if any;
(d) a copy of an insurance certificate or other evidence satisfactory
to the Agent that all Insurance Policies required to be maintained by the
related Obligor with respect to the related Equipment are in full force and
effect; and
(e) all documents (if any) evidencing or relating to recourse or
support obligations, guarantees, indemnities or security, and all letters of
credit relating thereto (if any).
"Equipment Loan Lockbox" shall have the meaning specified in Section
----------------------
4.11(a) hereof.
"Equipment Loan Lockbox Accounts" shall have the meaning specified in
-------------------------------
Section 4.11(a) hereof.
"Equipment Loan Lockbox Assignment Agreement" shall have the meaning
-------------------------------------------
specified in Section 4.11(a) hereof.
"Equipment Loan Lockbox Banks" shall have the meaning specified in
----------------------------
Section 4.11(a) hereof.
14
"Equipment Loan Lockbox Notice" shall have the meaning specified in
-----------------------------
Section 4.11(e) hereof.
"Equipment Loan Monthly Data Pool Report" shall mean, with respect to
---------------------------------------
any calendar month, a computer diskette or direct modem electronic transmission,
containing (i) a complete data profile report in Excel format substantially in
the form of Exhibit F hereto (including an updated Asset Schedule with respect
to Eligible Equipment Loans at the end of the calendar month most recently
completed), and (ii) any other information with respect to Eligible Equipment
Loans reasonably requested by the Agent.
"Equipment Loan Monthly Report Date" shall mean the tenth Business Day
----------------------------------
following the end of any calendar month.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
---------------
incorporated) which, together with the Borrower, is treated as single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
-----------
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA upon the termination of any Plan or the withdrawal or partial
withdrawal of the Borrower or any ERISA Affiliates from any Plan or
Multiemployer Plan; (f) the receipt by the Borrower or any ERISA Affiliate from
the Pension Benefit Guaranty Corporation of any notice relating to the intention
to terminate any Plan or to appoint a trustee to administer any Plan; (g) the
receipt by the Borrower or any ERISA Affiliate of any notice concerning the
imposition of withdrawal liability or a determination that a Multiemployer Plan
is, or is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; and (h) the occurrence of a "prohibited transaction" with
respect to which the Borrower is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which the Borrower could otherwise
be liable.
"Eurocurrency Reserve Requirements" shall mean, for any day as applied
---------------------------------
to a LIBOR Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic,
15
supplemental, marginal and emergency reserves under any regulations of the Board
or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Event of Default" shall have the meaning specified in Section 8
----------------
hereof.
"Excess Spread Sweep Event" shall mean the occurrence of any one of
-------------------------
the following events:
(a) the average of the Delinquency Ratio - Equipment Loans for any two
consecutive calendar months shall exceed 4.0%; or
(b) the average of the Default Ratio - Equipment Loans for any two
consecutive calendar months shall exceed 2.5%; or
(c) the average of the Delinquency Ratio - Trade Receivables for any
two consecutive fiscal months shall exceed 4.0%; or
(d) the average of the Default Ratio - Trade Receivables for any two
consecutive fiscal months shall exceed 3.0%.
For purposes of this Loan Agreement, an Excess Spread Sweep Event
shall be deemed to be continuing during the period beginning on the date of the
occurrence of such Excess Spread Sweep Event and ending on the date which is
four months after the date such Excess Spread Sweep Event is cured.
"Existing Purchase Agreements" shall mean the ACAF Receivables
----------------------------
Purchase Agreement and the ACAR Receivables Purchase Agreement.
"Extension Fee" shall have the meaning specified in Section 3.03
-------------
hereof.
"FCIA" shall mean the Foreign Credit Insurance Agency, and its
----
successors.
"FCIA Insurance" shall mean credit insurance issued by FCIA.
--------------
"Federal Funds Rate" shall mean, for any day, the weighted average of
------------------
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for the day of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
16
"Federal Funds Rate Loan" shall mean a Loan the rate of interest
-----------------------
applicable to which is based upon the Federal Funds Rate.
"Foreign Obligor" shall mean any Obligor that is not a resident of the
---------------
United States.
"Funding Date" shall mean the date on which a Loan is made hereunder.
------------
"Funding Date Data Pool Report" shall mean, with respect to any
-----------------------------
Funding Date, a computer diskette or direct modem electronic transmission,
containing (i) a complete data profile report in Excel format substantially in
the form of Exhibit E hereto (including an updated Asset Schedule at the end of
the calendar month (in the case of Equipment Loans) or fiscal month (in the case
of Trade Receivables) most recently completed), and (ii) any other information
reasonably requested by the Agent.
"GAAP" shall mean generally accepted accounting principles in the
----
United States as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and the statements and pronouncements of the
Financial Accounting Standards Board and the rules and regulations of the
Securities and Exchange Commission, or in such other statements by such other
entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances of the Borrower as of the
date of determination.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator having jurisdiction over the Borrower,
any of its Affiliates or any of its properties.
"Guarantee Obligation" shall mean a guarantee, an endorsement, a
--------------------
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an agreement
to purchase, sell or lease (as lessee or lessor) property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of such debtor's obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other similar instrument
for the benefit of another Person, but excluding endorsements for collection or
deposit in the ordinary course of business.
"Indebtedness" shall mean, for any Person: (a) obligations created,
------------
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of property to another Person
subject to an understanding or agreement,
17
contingent or otherwise, to repurchase such property from such Person); (b)
obligations of such Person to pay the deferred purchase or acquisition price of
property or services, other than trade accounts payable (other than for borrowed
money) arising, and accrued expenses incurred, in the ordinary course of
business so long as such trade accounts payable are payable within ninety (90)
days of the date the respective goods are delivered or the respective services
are rendered; (c) Indebtedness of others secured by a Lien on the property of
such Person, whether or not the respective indebtedness so secured has been
assumed by such Person; (d) obligations of such Person in respect of letters of
credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Leases of such Person; and
(f) Indebtedness of others guaranteed by such Person.
"Indemnified Parties" shall have the meaning specified in Section
-------------------
12.03(a).
"Independent Manager" shall have the meaning specified in Section
-------------------
7.35(vi).
"Insurance Policy" shall mean, with respect to an Equipment Loan, any
----------------
insurance policy benefiting the holder of such Equipment Loan providing coverage
with respect to the related Equipment and/or the related Obligor.
"Intercreditor Agreement" shall mean that certain Intercreditor
-----------------------
Agreement dated as of May 4, 1998 among The First National Bank of Chicago, as
agent, the Agent, ALS, ACAR and the Borrower, as amended, supplemented or
otherwise modified from time to time.
"Interest Bearing Receivable" shall mean a Trade Receivable with
---------------------------
respect to which interest (at short-term interest rates agreed to by such
Obligor and the related Originator and not for this purpose meaning default
interest with respect to amounts due on such Trade Receivable if it is Past Due)
accrues on the outstanding balance thereof.
"Interest Payment Date" shall mean the first (1st) Business Day of
---------------------
each calendar month.
"Interest Period" shall mean with respect to any Loan: (a) initially,
---------------
the period commencing on the Funding Date with respect to such Loan to but
excluding the first Business Day of the next succeeding calendar month; and (b)
thereafter, each period commencing on the first Business Day of a calendar month
to but excluding the first Business Day of the next succeeding calendar month;
provided, that the foregoing provisions relating to Interest Periods are subject
- --------
to the provision that any Interest Period that would otherwise extend beyond the
Termination Date shall end on the Termination Date.
"Investment" shall mean, with respect to any Person, any investment
----------
made by such Person by stock purchase, option or warrant purchase, capital
contribution, loan, advance, acquisition of Indebtedness, Guarantee Obligations
or otherwise.
18
"L/C Replacement Date" shall have the meaning specified in Section
--------------------
7.21(b).
"Lender" shall have the meaning specified in the preamble to this Loan
------
Agreement.
"Letter of Credit" shall mean an irrevocable letter of credit in favor
----------------
of the Agent delivered by an Eligible Letter of Credit Issuer pursuant to the
terms of a Reimbursement Agreement. The initial Letter of Credit shall have an
expiration date one year from the date of issuance thereof, which expiration
date shall be automatically extended until the first anniversary of the then
current expiration date (but in no event shall the expiration date be later than
May 5, 2003) unless either (i) ALS and the Borrower provide written notice to
the Agent and the issuer of such Letter of Credit on or before the close of
business on the 15th day of the calendar month preceding the calendar month in
which the expiration date is then scheduled to occur that they wish to terminate
the Letter of Credit on the next expiration date thereof or (ii) the issuer of
the Letter of Credit notifies ALS and the Borrower on or before the 60th day
preceding the then-current expiration date of the Letter of Credit that it will
not automatically extend the expiration date of the Letter of Credit.
"Letter of Credit Deficiency Event" shall mean, at any time of
---------------------------------
determination, the Available Letter of Credit Amount (or, if applicable, the
amount on deposit in the Cash Collateral Account) at such time is less than the
Required Letter of Credit Amount at such time; provided, that, a Letter of
--------
Credit Deficiency Event shall be deemed not to exist if the Agent determines, in
its reasonable discretion, that such Letter of Credit Deficiency Event has
occurred solely as the result of the failure to exist sufficient availability
under the Reimbursement Agreement (other than as a result of the occurrence of
an event of default or an event which, with the passage of time or the giving of
notice or both, would become an event of default) to reinstate the amount
available to be drawn thereunder to an amount equal to the Required Letter of
Credit Amount.
"Letter of Credit Issuer" shall mean, with respect to any Letter of
-----------------------
Credit, the bank, banks or other similar institution or institutions party to
the related Reimbursement Agreement.
"LIBOR Base Rate" shall mean, with respect to each day during each
---------------
Interest Period pertaining to a LIBOR Loan, the rate per annum determined on the
basis of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on Page
3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate Service (or otherwise on such service),
the "LIBOR Base Rate" for purposes of this definition shall be determined by
reference to such other comparable publicly quoted service for displaying
eurodollar rates as may be reasonably selected by the Lender or, in the absence
of such availability, by reference to the arithmetic average (rounded upwards to
the nearest 1/100th of 1%) of the rates at which deposits in United States
dollars are offered by four reference banks reasonably selected by the Agent in
the interbank eurodollar market at or about 11:00 A.M. (London time), two
Business Days prior to the beginning of such
19
Interest Period for delivery on the first day of such Interest Period for the
number of days comprised therein.
"LIBOR Loan" shall mean a Loan the rate of interest applicable to
----------
which is based upon the LIBOR Rate.
"LIBOR Rate" shall mean, with respect to each day during each Interest
----------
Period pertaining to a LIBOR Loan, a rate per annum, expressed as a percentage
(rounded upward to the nearest 1/100th of 1%), determined for such day, equal to
the LIBOR Base Rate divided by 1.00 minus the Eurocurrency Reserve Requirements.
"Lien" shall mean any mortgage, lien, encumbrance, charge or other
----
security interest, whether arising under contract, by operation of law, judicial
process or otherwise.
"Loan" shall have the meaning specified in Section 2.01(a) hereof.
----
"Loan Agreement" shall mean this Loan and Security Agreement, as same
--------------
may be amended, supplemented or otherwise modified from time to time.
"Loan Documents" shall mean, collectively, this Loan Agreement, the
--------------
Note, the Lockbox Assignment Agreements, the Intercreditor Agreement, the
Transfer Agreement and the Reimbursement Agreement.
"Majority Lenders" shall mean, at any time, Lenders holding at least a
----------------
majority of the then aggregate unpaid principal balance of the Loans, or, if no
such principal amount is then outstanding, Lenders having at least a majority of
the total Commitments; provided that, for purposes hereof, neither the Borrower
--------
nor any of its Affiliates shall be included in (i) the Lenders holding such
amount of the Loans or having such amount of the Commitments or (ii) determining
the aggregate unpaid principal amount of the Loans or the total Commitments.
"Market Value" shall mean, as of any date of determination with
------------
respect to an Eligible Asset, the price at which such Eligible Asset could be
sold as of such date, as determined by the Agent, in its commercially reasonable
discretion.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, assets, property, condition (financial or otherwise) or prospects
of the Borrower, or (b) the validity or enforceability of (i) this Loan
Agreement, the Note or the other Loan Documents or (ii) the rights or remedies
of the Agent or the Lenders hereunder or thereunder.
"Maximum Credit" shall mean $250,000,000.
--------------
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
------------------
as defined in Section 4001(a) of ERISA.
20
"Non-Excluded Taxes" shall have the meaning specified in Section
------------------
2.12(a).
"Non-U.S. Lender" shall have the meaning specified in Section 2.12(d).
---------------
"Note" shall mean a promissory note provided for by Section 2.02(a)
----
hereof for Loans made by the Lenders and any promissory note delivered in
substitution or exchange therefor, in each case as the same shall be modified
and supplemented and in effect from time to time.
"Obligations" shall mean the unpaid principal of and interest on the
-----------
Note and all other obligations and liabilities of the Borrower to the Lenders
(including, without limitation, interest accruing after the maturity of the
Loans and interest accruing after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred, which
may arise under, out of, or in connection with, the Loan Agreement, the Note or
the other Loan Documents and any other document made, delivered or given in
connection therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without limitation,
all reasonable fees and disbursements of counsel to the Agent and the Lenders)
or otherwise.
"Obligor" shall mean, with respect to an Asset, the Person who owes
-------
payments under such Asset.
"Operating Agreement" shall mean that certain Limited Liability
-------------------
Company Agreement dated as of May 4, 1998 adopted, executed , and agreed to by
ALS.
"Originator" shall mean ALS and each Approved Affiliate.
----------
"Originator Entity" shall have the meaning specified in Section 7.35.
-----------------
"Other Taxes" shall mean any and all present or future stamp or
-----------
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, the Loan Agreement.
"Past Due" shall mean, with respect to any Equipment Loan or Trade
--------
Receivable, the condition in which any payment thereof, or part thereof, then
due and payable is unpaid, commencing on the day after the original due date
thereof.
"Permitted Investment" shall mean any of the following Investments:
--------------------
21
(a) any book-entry securities, negotiable instruments or securities
represented by instruments in bearer or registered form which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
full and timely payment by, the full faith and credit of the United States
of America;
(ii) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America or any state thereof (or any domestic branch
of a foreign bank) and subject to supervision and examination by Federal or
state banking or depository institutions authorities; provided, however,
-------- -------
that at the time of the investment or contractual commitment to invest
therein the commercial paper or other short-term unsecured debt obligations
(other than such obligations the rating of which is based on the credit of
a Person other than such depository institution or trust company) thereof
shall be rated at least A-1 by Standard & Poor's, P-1 by Moody's Investors
Service, Inc. or F-1 by Fitch Investors Service, Inc.;
(iii) commercial paper, at the time of the investment or contractual
commitment to invest therein, rated at least A-1 by Standard & Poor's or P-
1 by Moody's Investors Service, Inc.;
(iv) investments in money market funds having, at the time of the
investment or contractual commitment to invest therein, ratings of at
least A-1 by Standard & Poor's or P-1 by Moody's Investors Service, Inc.
(including funds for which the Agent or the Lenders or any of their
respective affiliates is investment manager or advisor);
(v) bankers' acceptances issued by any depository institution or
trust company referred to in clause (iii) above;
(vi) any other investment permitted by Moody's Investors Service,
Inc. or Standard & Poor's for short-term investment of funds supporting
securities with a rating of A-1/P-1 or better; or
(vii) any other investment agreed to in writing by the Borrower and
the Agent;
(b) deposits in cash into accounts with any Eligible Institution;
and
(c) Investments by the Borrower in a Special Purpose Entity in
connection with a Permitted Securitization.
"Permitted Co-Investors" shall mean, BRS or any Person which acquires
----------------------
BRS's interest in Alliance Laundry Holdings LLC with the consent of Bain/RCL,
L.L.C.
"Permitted Investors" shall mean the collective reference to Bain
-------------------
Capital, Inc., the
22
Bain Investors and their respective Control Investment Affiliates.
"Permitted Lien" shall mean (i) any Lien to be released simultaneously
--------------
with the pledge to the Agent hereunder, (ii) any Lien or ownership arising under
the Loan Documents, (iii) liens for taxes, assessments or charges of any
governmental authority (other than liens arising under Section 6321 of the
Internal Revenue Code or Section 302(f) or 4068 of ERISA) and liens of
landlords, carriers, warehousemen, mechanics and materialmen imposed by law in
the ordinary course of business, in each case (a) for amounts not yet due or (b)
which are being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP, provided that the aggregate amount secured
by all liens referred to in this clause (b) does not exceed $500,000, (iv) any
Liens arising solely as a result of any action taken by the Agent or the Lenders
under the Loan Documents, (v) with respect to Trade Receivable Lockbox Accounts,
liens in favor of The First National Bank of Chicago, as agent, under the
Existing Purchase Agreements, the Trade Receivable Lockbox Assignment Agreements
and any related agreements; provided, that such liens shall cease to be
--------
Permitted Liens on July 31, 1998, and (vi) with respect to any Equipment, liens
in favor of Borrower arising under the applicable Equipment Loan Documents, and
mechanics' liens, landlords' liens and similar statutory liens or encumbrances
on the applicable Obligor's interest in the Equipment.
"Permitted Refinancing Indebtedness" shall mean Indebtedness incurred
----------------------------------
by the Borrower in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund any Indebtedness permitted
to be incurred under this Loan Agreement; provided, that the principal amount
--------
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued and unpaid interest on, the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus the amount of reasonable expenses
incurred in connection therewith).
"Permitted Securitization" shall mean any transaction or series of
------------------------
related transactions for the sale or financing of receivables or similar assets
(the "Sold Assets") owned by the Borrower pursuant to which the Sold Assets are
held by or transferred to a special purpose entity structured in a manner which
enhances the credit or diminishes the bankruptcy risks attendant upon creditors
of such entity (any such entity so structured, a "Special Purpose Entity").
"Person" shall mean any individual, corporation, company, voluntary
------
association, partnership, joint venture, limited liability company, trust,
unincorporated association or government (or any agency, instrumentality or
political subdivision thereof).
"Plan" shall mean any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
112 of the Code or Section 307 of ERISA and in respect of which the Borrower or
any ERISA Affiliate is (or if such plan were
23
terminated would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Post-Default Rate" shall mean a rate per annum equal to 2.0% plus the
-----------------
interest rate then applicable to the Loans.
"Principal Collections" shall mean, with respect to an Equipment Loan,
---------------------
that portion of Collections attributable, in accordance with the Servicer's
customary practices, to principal payments on such Equipment Loan.
"Qualifying Financial Institution" shall mean a financial institution
--------------------------------
(i) with capital and surplus in excess of $100,000,000 having a long-term
unsecured and senior debt credit rating of at least A (or the equivalent
thereof) by Moody's Investors Service, Inc. and Standard & Poor's or (ii) whose
obligations are guaranteed by its parent company if such parent company has
credit ratings at least equal to the credit ratings referred to in clause (i)
above.
"Regulations G, T, U and X" shall mean Regulations G, T, U and X of
-------------------------
the Board of Governors of the Federal Reserve System (or any successor), as the
same may be modified and supplemented and in effect from time to time.
"Reimbursement Agreement" shall mean the Credit Agreement, or such
-----------------------
other the agreement between ALS and the related Letter of Credit Issuer
containing reimbursement provisions with respect to a Letter of Credit.
"Request for Borrowing" shall have the meaning specified in Section
---------------------
2.03(a) hereof.
"Required Excess Spread Amount" shall mean (x) at any time (i) when
-----------------------------
the aggregate principal amount of Loans outstanding exceeds $125,00,000 and (ii)
during which an Excess Spread Sweep Event has occurred and is continuing, 5% of
the aggregate principal amount of Loans outstanding at such time, and (y) at any
other time, zero.
"Required Letter of Credit Amount" shall mean (i) at any time when the
--------------------------------
aggregate principal amount of Loans outstanding is less than or equal to
$125,000,000, an amount equal to 10.0% of the aggregate principal amount of
Loans outstanding at such time, and (ii) at any time when the aggregate
principal amount of Loans outstanding is greater than $125,000,000, an amount
equal to 5.0% of the aggregate principal amount of Loans outstanding at such
time.
"Requirement of Law" shall mean as to any Person, any law, treaty,
------------------
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
24
"Responsible Officer" shall mean, as to any Person, the chief
-------------------
executive officer, or, with respect to financial matters, the chief financial
officer, treasurer or a director of financial services.
"Secured Obligations" shall have the meaning specified in Section
-------------------
4.01(b) hereof.
"Servicer" shall mean ALS, as servicer of the Assets under the
--------
Transfer Agreement, and any successor thereto approved by the Agent.
"Servicing Agreement" shall have the meaning specified in Section
-------------------
12.14(c) hereof.
"Servicing Records" shall have the meaning specified in Section
-----------------
12.14(b) hereof.
"Sold Assets" shall have the meaning specified in the definition of
-----------
Permitted Securitization.
"Special Purpose Entity" shall have the meaning specified in the
----------------------
definition of Permitted Securitization.
"Stated Amount" shall mean, with respect to a Letter of Credit, the
-------------
"Stated Amount" as defined in such Letter of Credit.
"Subordinated Debt" shall have the meaning specified in Section 8(y)
-----------------
hereof.
"Subsidiary" shall mean, as to any Person, a corporation, partnership
----------
or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Tangible Net Worth" shall mean, with respect to any Person, without
------------------
duplication, as of any date of determination, the aggregate amount of
shareholders' equity of such Person determined in conformity with GAAP as set
forth in the financial statements of the such Person.
"Termination Date" shall mean May 5, 2003.
----------------
"Trade Receivable" shall mean any indebtedness and other obligations
----------------
(other than an Equipment Loan) owed to an Originator (prior to giving effect to
any sale or other transfer to the Borrower under the Transfer Agreement or any
transfer or conveyance hereunder) whether constituting an account, chattel paper
or a general intangible, arising in connection with the sale of goods or
merchandise or the rendering of services by such Originator, which includes,
without limitation, the obligation to pay any finance, interest, late payment or
similar charges with respect
25
thereto, which was purchased by the Borrower from such Originator or otherwise
conveyed to the Borrower by such Originator pursuant to the Transfer Agreement.
Indebtedness and other rights and obligations arising from any one transaction,
including, without limitation, indebtedness and other rights and obligations
represented by an individual invoice, shall constitute a Trade Receivable
separate from a Trade Receivable consisting of the indebtedness and other rights
and obligations arising from any other transaction. Restructurings and
extensions of such indebtedness and other rights and obligations including,
without limitation, a restructuring in which a new Obligor is permitted to
assume the obligations of an existing Obligor, shall not be deemed to give rise
to the creation of new Trade Receivables.
"Trade Receivable Collections" shall mean, with respect to any Trade
----------------------------
Receivable comprising Collateral for the Loan, the sum of all amounts, whether
in the form of cash, checks, drafts, or other instruments, received by the
Borrower, the related Originator, the Servicer or in a Trade Receivable Lockbox
Account in payment of, or applied to, any amount owed by an Obligor on account
of such Trade Receivable (including but not limited to all amounts received on
account of any Defaulted Receivable).
"Trade Receivable Lockbox" shall have the meaning specified in Section
------------------------
4.10(a) hereof.
"Trade Receivable Lockbox Accounts" shall have the meaning specified
---------------------------------
in Section 4.10(a) hereof.
"Trade Receivable Lockbox Assignment Agreement" shall have the meaning
---------------------------------------------
specified in Section 4.10(a) hereof.
"Trade Receivable Lockbox Banks" shall have the meaning specified in
------------------------------
Section 4.10(a) hereof.
"Trade Receivable Lockbox Notice" shall have the meaning specified in
-------------------------------
Section 4.10(e) hereof.
"Trade Receivables Monthly Data Pool Report" shall mean, with respect
------------------------------------------
to any fiscal month, a computer diskette or direct modem electronic
transmission, containing (i) a complete data profile report in Excel format
substantially in the form of Exhibit G hereto (including an updated Asset
Schedule with respect to Eligible Trade Receivables at the end of the fiscal
month most recently completed), and (ii) any other information with respect to
Eligible Trade Receivables reasonably requested by the Agent.
"Trade Receivables Monthly Report Date" shall mean the tenth Business
-------------------------------------
Day following the end of any fiscal month.
"Transfer Agreement" shall mean that certain Receivables Purchase
------------------
Agreement
26
dated as of May 5, 1998 between the Borrower, as buyer, and each Originator, as
seller, as amended, supplemented or otherwise modified from time to time.
"Underwriting Guidelines" shall mean the Underwriting Guidelines and
-----------------------
Policies and Procedures Manual (as defined in the Transfer Agreement).
"Underwriting Letter Agreement" shall mean that certain letter
-----------------------------
agreement dated as of the date hereof by and between the Borrower and the Agent
with respect to its right of first refusal to provide certain investment banking
services through its Affiliates to the Borrower and its Affiliates,
substantially in the form attached to this Loan Agreement as Exhibit C.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
-----------------------
effect on the date hereof in the State of New York; provided, that if by reason
--------
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in effect in
such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
1.02. Accounting Terms and Determinations.
------------------------------------
Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Agent or any
Lender hereunder shall be prepared, in accordance with GAAP.
27
SECTION 2. LOANS, NOTE AND PREPAYMENTS.
- -------------------------------------------
2.01. Loans.
-----
(a) Subject to the terms and conditions of this Loan Agreement, each
Lender hereby severally and not jointly shall from time to time make loans
(individually, a "Loan" and collectively, the "Loans") to the Borrower in
---- -----
Dollars, on any Business Day from and including the Effective Date to but
excluding the Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the lesser of (i) such Lender's Commitment
and (ii) such Lender's Commitment Percentage of the Borrowing Base; provided,
--------
however, that (x) the aggregate principal amount of Loans secured by Equipment
- -------
Loans at any time outstanding made by such Lender shall not exceed such Lender's
Commitment Percentage of the aggregate Collateral Value of Eligible Equipment
Loans and (y) the aggregate principal amount of Loans secured by Trade
Receivables at any time outstanding made by such Lender shall not exceed such
Lender's Commitment Percentage of the aggregate Collateral Value of Eligible
Trade Receivables. All Loans shall be made by the Lenders proportionately to
their respective Commitment Percentages, it being understood that no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Loan hereunder nor shall the Commitment of any Lender be
increased or decreased as a result of any such failure. A Lender shall not be
obligated to make a Loan pursuant to this Section 2.01 on any date to the extent
that (i) the aggregate principal amount of all outstanding Loans immediately
after the making of such requested Loan and all other Loans to be made on such
date would exceed the Maximum Credit, (ii) the aggregate principal amount of all
outstanding Loans secured by Equipment Loans immediately after the making of
such requested Loan and all other Loans to be made on such date would exceed
$200,000,000, or (iii) the aggregate principal amount of all outstanding Loans
secured by Trade Receivables immediately after the making of such requested Loan
and all other Loans to be made on such date would exceed $100,000,000. Subject
to the terms and conditions of this Loan Agreement, during the term of this Loan
Agreement the Borrower may borrow, repay and reborrow hereunder.
(b) In no event shall a Loan be made on a Funding Date when (i) any
Default or Event of Default has occurred and is continuing or would exist after
the making of such Loan on such Funding Date or (ii) a Letter of Credit
Deficiency Event has occurred; provided, that if a Letter of Credit Deficient
--------
Event is no longer continuing, the Lenders may, in their sole discretion, make
Loans to the Borrower. In no event shall a new Loan secured by Trade
Receivables due from Amana or Coinmach be made on a Funding Date when an Amana
Trigger Event or a Coinmach Trigger Event, as the case may be, has occurred and
is continuing or would exist after the making of such new Loan on the Funding
Date.
2.02. Note.
----
(a) Each Loan made by a Lender shall be evidenced by a single
promissory
28
note of the Borrower substantially in the form of Exhibit A hereto (the "Note"),
----
dated the date of the initial Loan, payable to the Agent for the benefit of the
Lenders in a principal amount equal to the Maximum Commitment and otherwise duly
completed. The Agent may, and shall at the request of the Majority Lenders,
require the Borrower to subdivide the Note by exchange for promissory notes of
lesser denominations payable to each Lender in a principal amount equal to the
Commitment of such Lender.
(b) The date, amount and interest rate of each Loan made by a Lender
to the Borrower, and each payment made on account of the principal thereof,
shall be recorded by such Lender on its books and, prior to any transfer of such
Lender's Note, endorsed by such Lender on the schedule attached to such Note or
any continuation thereof; provided, that the failure of a Lender to make any
--------
such recordation or endorsement shall not affect the obligations of the Borrower
to make a payment when due of any amount owing hereunder or under such Lender's
Note in respect of Loans.
2.03. Procedure for Borrowing.
-----------------------
(a) The Borrower may request one or more borrowings hereunder, on
any Business Day during the period from and including the Effective Date to but
excluding the Termination Date, by delivering to the Agent, with respect to each
such borrowing, an irrevocable written request for borrowing, substantially in
the form of Exhib it B (a "Request for Borrowing"), which request must be
---------------------
received by the Agent no later than 11:00 a.m., New York City time, one (1)
Business Day prior to the requested Funding Date. Such Request for Borrowing
shall (i) attach an Asset Schedule (and a computer readable diskette or
collateral tape) in respect of the Eligible Assets that the Borrower proposes to
pledge to the Lenders and include in the Borrowing Base in connection with such
Loan, (ii) specify the requested Funding Date, which shall be at least one (1)
Business Day after the date of such Request for Borrowing, (iii) specify whether
such Loan shall be secured by Equipment Loans or Trade Receivables and (iv)
attach an officer's certificate signed by a Responsible Officer of the Borrower
certifying that the statements set forth in Sections 5.02(a) and (b) hereof are
true and correct as of the date of such Request for Borrowing and will be true
and correct as of the requested Funding Date. Promptly after receipt of a
Request for Borrowing, the Agent shall notify the Lenders of the proposed
borrowing.
(b) Notwithstanding anything to the contrary in this Loan
Agreement, the Lenders shall have no obligation to make any Loans hereunder if
there shall have occurred any material adverse change in the financial condition
of the Borrower. The Agent shall promptly notify the Borrower of any
determination by the Agent of the foregoing.
2.04. Repayment of Loans; Interest.
----------------------------
(a) Each outstanding Loan shall mature, and the principal amount
thereof shall be payable, on the Termination Date.
29
(b) Each Loan made by the Lenders shall be a LIBOR Rate Loan
(unless converted to a Federal Funds Rate Loan in accordance with Section 2.14)
and shall bear interest on the unpaid principal amount thereof for the period
from and including the Funding Date with respect to such Loan to but excluding
the date such Loan shall be paid in full. Each LIBOR Loan shall bear interest
for each day during each Interest Period with respect thereto at a rate per
annum equal to the LIBOR Rate determined for such day plus the Applicable
Margin, and each Federal Funds Rate Loan shall bear interest for each day during
each Interest Period with respect thereto at a rate per annum equal to the
Federal Funds Rate plus the Applicable Margin. Notwithstanding the foregoing,
the Borrower hereby promises to pay to each Lender interest at the applicable
Post-Default Rate on any principal of any Loan and on any other amount payable
by the Borrower hereunder or under any Note or any other Loan Document that
shall not be paid in full when due (whether at stated maturity, by acceleration
or by mandatory prepayment or otherwise), for the period from and including the
due date thereof to but excluding the date the same is paid in full (both before
and after judgment).
(c) Accrued interest on each Loan shall be payable on each Interest
Payment Date, on the date of any prepayment of any Loan (other than a Loan
secured by Trade Receivables prepaid in accordance with Section 4.10(d)) and on
the Termination Date, except that interest payable at the Post-Default Rate
shall be payable from time to time on demand.
2.05. Optional Prepayments
--------------------
The Loans are repayable at any time without premium or
penalty, in whole or in part, but subject to Section 2.07. Any amounts prepaid
shall be applied to repay the outstanding principal amount of any Loans
(together with interest thereon) until paid in full. If the Borrower intends to
repay a Loan, the Borrower shall give two (2) Business Days' prior written
notice thereof to the Agent. If such notice is given, the amount specified in
such notice shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid. Except as otherwise
provided in this Loan Agreement to the contrary, all payments received by the
Agent hereunder shall be remitted to each Lender pro rata based on such Lender's
Commitment Percentage. If the due date of any payment hereunder or under a Note
would otherwise fall on a day which is not a Business Day, such due date shall
be extended to the next succeeding Business Day and interest shall be payable
for any principal so extended for the period of such extension. Partial
prepayments shall be in an aggregate principal amount of $100,000 or more.
Amounts prepaid may be reborrowed in accordance with the terms of this Loan
Agreement. Notwithstanding the provisions of this Loan Agreement to the
contrary, the provisions of this Section 2.05 (other than the immediately
preceding sentence and the first sentence of this Section 2.05) shall not be
applicable to the prepayment in accordance with Section 4.10(d) of Loans secured
by Trade Receivables.
2.06. Mandatory Prepayment or Pledge.
------------------------------
30
(a) In the event the Borrower sells or otherwise disposes of an Asset,
whether through a Permitted Securitization or otherwise, the Borrower shall
simultaneous with the closing thereof prepay the Loans in an amount equal to the
lesser of (i) the net proceeds (after payment of all reasonable costs and
expenses incurred in connection therewith) received by the Borrower from any
such transaction and (ii) an amount designated by the Borrower in its sole
discretion, provided, that after giving effect to such repayment (A) the
--------
aggregate outstanding amount of Loans secured by Equipment Loans shall not
exceed the aggregate Collateral Value of Eligible Equipment Loans included in
the Borrowing Base and (B) the aggregate outstanding amount of Loans secured by
Trade Receivables shall not exceed the aggregate Collateral Value of Eligible
Trade Receivables included in the Borrowing Base.
(b) If at any time (i) the Borrowing Base with respect to Equipment
Loans, as determined by the Agent with notice given by the Agent to the Borrower
on any Business Day, is less than the aggregate amount of outstanding Loans
secured by Equipment Loans or (ii) the Borrowing Base with respect to Trade
Receivables, as determined by the Agent with notice given by the Agent to the
Borrower on any Business Day, is less than the aggregate amount of outstanding
Loans secured by Trade Receivables (in each case, with respect to all Assets in
which the Agent retains a security interest pursuant to this Loan Agreement),
the Borrower shall no later than five (5) Business Days after receipt of such
notice, either prepay the applicable Loans in part or in whole or pledge
additional Collateral to the Agent (which Collateral shall be in all respects
acceptable to the Agent; provided, that such Collateral shall be deemed to be in
--------
all respects acceptable to the Agent if such Collateral is Eligible Equipment
Loans or Eligible Trade Receivables, as applicable), such that after giving
effect to such prepayment or pledge the applicable Borrowing Base is not less
than the outstanding principal amount of the related Loans.
(c) In the event the Borrower fails to prepay the Loans or pledge
additional Collateral pursuant to subsection (a) or (b) above, the Agent shall
make a drawing on the Letter of Credit in an amount (up to the lesser of (x) the
Available Letter of Credit Amount on the date of such drawing and (y) the
positive result, if any, of (1) the Required Letter of Credit Amount on the date
of such drawing minus (2) the aggregate amount drawn on the Letter of Credit
prior to the date of such drawing with respect to which the Letter of Credit has
not been reinstated) (such amount drawn, the "Drawing Amount") equal to (i) in
--------------
the case of subsection (a) above the net proceeds received by the Borrower in
connection with the sale or other disposition of Assets or (ii) in the case of
subsection (b) above, the amount which when applied to the payment of the
outstanding principal amount of the Loans would cause the Borrowing Base to be
equal to the outstanding principal amount of the Loans. Any Drawing Amount
shall be applied by the Lenders to the payment of the outstanding principal
amount of the Loans.
(d) Notwithstanding the provisions of subsections (a) and (b) of this
Section 2.06, if (i) as the result of the sale or other disposition of an
Equipment Loan or a Trade Receivable the Borrowing Base with respect to Eligible
Equipment Loans or Eligible Trade Receivables, as the case may be, is less than
the aggregate outstanding principal amount of Loans
31
secured by Eligible Equipment Loans or Eligible Trade Receivables, as the case
may be, or (ii) the Agent gives the Borrower notice in accordance with
subsection (b) of this Section 2.06, the Borrower may, in lieu of or in addition
to the payments or pledges contemplated by subsections (a) and (b) of this
Section 2.06, convert Loans of one type into Loans of another type in an amount
designated by the Borrower in its sole discretion, provided, that after giving
--------
effect to such conversion, repayment and/or pledge (A) the aggregate outstanding
amount of Loans secured by Equipment Loans shall not exceed the aggregate
Collateral Value of Eligible Equipment Loans included in the Borrowing Base and
(B) the aggregate outstanding amount of Loans secured by Trade Receivables shall
not exceed the aggregate Collateral Value of Eligible Trade Receivables included
in the Borrowing Base
2.07. Indemnity
---------
Upon demand by a Lender, the Borrower shall indemnify such Lender
and hold such Lender harmless from any net loss or expense (not to include any
lost profit or opportunity) which such Lender sustains or incurs as a
consequence of (i) default by the Borrower in making any prepayment after the
Borrower has given a notice in accordance with Section 2.05 of a prepayment of a
Loan, (ii) any optional prepayment in accordance with Section 2.05 (other than
any prepayment in accordance with Section 4.10(d) of Loans secured by Trade
Receivables) or mandatory prepayment required pursuant to Section 2.06 (other
than a mandatory prepayment through a Permitted Securitization) on any day other
than the last day of an Interest Period (including, without limitation, in each
case, any such loss or expense arising from the reemployment of funds obtained
by such Lender to maintain its Loans hereunder or from fees payable to terminate
the deposits from which such funds were obtained) or (iii) default by the
Borrower in making a borrowing of LIBOR Loans after the Borrower has given a
notice thereof in accordance with the provisions of this Loan Agreement. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, for the period from the date of such prepayment or of such failure to
borrow to the last day of such Interest Period (or, in the case of a failure to
borrow, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. A certificate (providing reasonable support as to any amounts due) as to
any amounts payable pursuant to this Section 2.07 submitted to the Borrower by
such Lender shall be conclusive in the absence of manifest error. This Section
2.07 shall survive termination of this Loan Agreement and payment of the Note.
2.08. Purpose of Loans
----------------
32
Each Loan shall be used to finance the Eligible Assets
identified to the Agent in writing on each Asset Schedule, as such Asset
Schedule may be amended from time to time.
2.09. Fees
----
The Borrower agrees to pay to the Agent and the Lenders such fees
at such times as set forth in a separate letter agreement between the Borrower
and the Agent.
2.10. Inability to Determine Interest Rate
------------------------------------
If prior to the first day of any Interest Period:
(a) a Lender shall have reasonably determined (which determination
shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate for such Interest Period, or
(b) the LIBOR Rate determined or to be determined for such
Interest Period will not adequately and fairly reflect the cost to a Lender (as
reasonably determined and certified by such Lender) of making or maintaining
their affected Loans during such Interest Period,
such Lender shall give facsimile or telephonic notice thereof to the Borrower as
soon as practicable thereafter. If such notice is given (x) any LIBOR Loans
requested to be made on the first day of such Interest Period shall be made as
Federal Funds Rate Loans, (y) any Loans that were to have been converted on the
first day of such Interest Period to LIBOR Loans in accordance with Section 2.14
shall be continued as Federal Funds Rate Loans and (z) any outstanding LIBOR
Loans shall be converted on the last day of the then current Interest Period to
Federal Funds Rate Loans in accordance with Section 2.14. Until such Lender
provides notice to the Borrower pursuant to Section 2.14 that the circumstances
which gave rise to the original notice under this Section no longer exist, no
further LIBOR Loans shall be made or continued as such.
2.11. Requirements of Law.
-------------------
(a) If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof or compliance by any Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made subsequent to the date hereof:
33
(i) shall subject such Lender to any tax of any kind whatsoever
with respect to this Loan Agreement or any LIBOR Loan made by it, or change
the basis of taxation of payments to the Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.12 and changes in the rate of
tax on the overall net income of the Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the LIBOR Rate hereunder; or
(iii) shall impose on the Lender any other condition,
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, continuing or
maintaining LIBOR Loans, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender for
such increased cost or reduced amount receivable. If such Lender becomes
entitled to claim any additional amounts pursuant to this Section 2.11, it shall
promptly notify the Borrower of the event by reason of which it has become so
entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's or such corporation's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material in its commercially reasonable discretion, then from time to time,
after submission by such Lender to the Borrower of a written request therefor,
the Borrower shall promptly pay to such Lender such additional amount or amounts
as will compensate such Lender for such reduction.
(c) A certificate (providing reasonable support as to the amounts
requested) as to any additional amounts payable pursuant to this Section 2.11
submitted by such Lender to the Borrower shall be conclusive in the absence of
manifest error. The obligations of the Borrower pursuant to this Section 2.11
shall survive the termination of this Loan Agreement and the payment of the
Loans and all other amounts payable hereunder.
34
2.12. Taxes.
-----
(a) All payments made by the Borrower under this Loan Agreement
shall be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority, excluding
net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on any Lender as a result of a present or former connection between such
Lender and the jurisdiction of the Governmental Authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced, this Loan
Agreement or any other Loan Document). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
------------
Taxes") or Other Taxes are required to be withheld from any amounts payable to a
Lender hereunder, the amounts so payable to such Lender shall be increased to
the extent necessary to yield to such Lender (after payment of all Non-Excluded
Taxes and Other Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Loan Agreement, provided, however,
-------- -------
that the Borrower shall not be required to increase any such amounts payable to
a Lender with respect to any Non-Excluded Taxes (i) that are attributable to
such Lender's failure to comply with the requirements of paragraph (d) or (e) of
this Section 2.12 or (ii) that are United States withholding taxes imposed on
amounts payable to such Lender at the time such Lender becomes a party to this
Loan Agreement, except to the extent that such Lender's assignor (if any) was
entitled, at the time of assignment, to receive additional amounts from the
Borrower with respect to such Non-Excluded Taxes pursuant to Section 2.12(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, as promptly as possible thereafter the Borrower shall send to the
affected Lender a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the affected Lender the required receipts or other required documentary
evidence, the Borrower shall indemnify such Lender for any incremental taxes,
interest or penalties that may become payable by such Lender as a result of any
such failure. The agreements in this Section 2.12 shall survive the termination
of this Loan Agreement and the payment of the Loans and all other amounts
payable hereunder.
(d) Each Lender that is not a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States (or any jurisdiction thereof), or any estate
or trust that is subject to federal income taxation
35
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
---------------
the Borrower two copies of either U.S. Internal Revenue Service Form 1001 or
Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S.
federal withholding tax under Section 871(h) or 881(c) of the Code with respect
to payments of "portfolio interest", a Form W-8, or any subsequent versions
thereof or successors thereto properly completed and duly executed by such Non-
U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal
withholding tax on all payments by the Borrower under this Loan Agreement and
the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Loan Agreement. In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-
U.S. Lender shall promptly notify the Borrower at any time it determines that it
is no longer in a position to provide any previously delivered certificate to
the Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
Section 2.12(d), a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.12(d) that such Non-U.S. Lender is not legally able
to deliver.
(e) Without limiting the requirements of Section 2.12(d), a Lender
that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under
this Loan Agreement shall deliver to the Borrower, at the time or times
prescribed by applicable law or reasonably requested by the Borrower, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate,
provided that such Lender is legally entitled to complete, execute and deliver
- --------
such documentation and in the Lender's reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender.
(f) If a Lender receives a refund in respect of Non-Excluded Taxes
paid by the Borrower, which in the good faith judgment of such Lender is
allocable to such payment, it shall promptly pay such refund, together with any
other amounts paid by the Borrower in connection with such refunded Non-Excluded
Taxes, to the Borrower, net of all out-of-pocket expenses of such Lender
incurred in obtaining such refund, provided that the Borrower agrees to promptly
--------
return such refund to such Lender if it receives notice from such Lender that
such Lender is required to repay such refund.
2.13. Illegality
----------
Notwithstanding any other provision herein, if the adoption of or
any change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for a Lender to make or maintain LIBOR Loans as
contemplated by this Loan Agreement, (a) the commitment of such Lender hereunder
to make LIBOR Loans shall forthwith be suspended until
36
such time as such Lender may again make and maintain LIBOR Loans and (b)
the Loans then outstanding as LIBOR Loans, if any, shall be converted into
Federal Funds Rate Loans in accordance with Section 2.14. If any such conversion
of a LIBOR Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 2.07.
2.14. Conversions Pursuant to Sections 2.10 and 2.13
----------------------------------------------
If the LIBOR Loans (such LIBOR Loans being herein called "Affected
Loans") are to be converted pursuant to Section 2.10 or 2.13, such Affected
Loans shall be automatically converted into Federal Funds Rate Loans on the last
day(s) of the then current Interest Period(s) for such Affected Loans (or, in
the case of a conversion required by Section 2.13, on such earlier date as the
affected Lender may specify to the Borrower). Unless and until the affected
Lenders give notice that the circumstances specified in Section 2.10 or 2.13, as
the case may be, which gave rise to such conversion no longer exist, to the
extent that the Affected Loans have been so converted, all payments and
prepayments of principal which would otherwise be applied to the Affected Loans
shall be applied instead to the applicable Federal Funds Rate Loans into which
such Affected Loans were converted. The affected Lenders shall give such notice
as soon as practicable thereafter, but in no event later than the last day(s) of
the then current Interest Period(s) for the Affected Loans if such circumstances
cease to exist at any time prior to the last day(s) of such Interest Period(s).
Upon notice from the affected Lenders that the circumstances specified in
Section 2.10 or 2.13, as the case may be, which gave rise to such conversion no
longer exist, to the extent that the Affected Loans have been converted to
Federal Funds Rate Loans, the Affected Loans shall be automatically converted
into LIBOR Loans on the last day(s) of the then current Interest Period(s) for
the Affected Loans.
37
SECTION 3. PAYMENTS; COMPUTATIONS; ETC.
3.01. Payments
--------
Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by the Borrower under this Loan
Agreement and the Note shall be made in Dollars, in immediately available funds,
without deduction, set-off or counterclaim, to the Agent at the following
account maintained by the Agent (the "Agent Account"): Citibank N.A., for the
account of Lehman Commercial Paper Inc., for the benefit of the Lenders party to
the Loan and Security Agreement, Account # 40615659, ABA # 021000089, Reference:
Alliance Laundry Receivables Warehouse LLC (with instructions to please confirm
to Christopher Czako at (201) 524-4494), not later than 2:00 p.m., New York City
time, on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day).
3.02. Computations
------------
Interest on the Loans shall be computed on the basis of a 360-day
year for the actual days elapsed (including the first day but excluding the last
day) occurring in the period for which payable.
3.03. Extension Fee
-------------
The Borrower may, upon two Business Days' prior written notice to
the Agent, extend the Allotted Period with respect to any Eligible Equipment
Loan which is not Past Due or is not a Defaulted Equipment Loan by the payment
of a fee (the "Extension Fee") in an amount equal to 0.35% of the Collateral
Value of such Eligible Equipment Loan as the close of business on the last day
of the then current Allotted Period. The Extension Fee shall be payable on or
prior to the last Business Day of the then current Allotted Period in accordance
with Section 3.01 hereof. Notwithstanding anything to the contrary contained
herein, the Allotted Period with respect to any Equipment Loan shall not exceed
thirty-six (36) months.
SECTION 4. COLLATERAL SECURITY.
4.01. Collateral; Security Interest.
-----------------------------
(a) All of the Borrower's right, title and interest in, to
and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, for
so long as the Agent retains its security interest in the same and excluding the
portion of the Collateral in which the Agent has released its security interest
hereunder pursuant to Section 4.09 below, is hereinafter referred to as the
"Collateral":
----------
(i) all Assets;
38
(ii) Equipment Loan Documents related thereto;
(iii) all rights, remedies, powers and privileges of the Borrower
under such Equipment Loan Documents (including, without limitation, all
rights of the Borrower in and to the Equipment and other interests that are
the subject of the Equipment Loans) and such Trade Receivables;
(iv) all Servicing Records and other books and records (including,
without limitation, computer programs, tapes and other computer storage
media) relating to any of the foregoing;
(v) all recourse or support obligations, surety bonds, guarantees,
indemnities and security relating to any of the foregoing and all letters
of credit relating thereto;
(vi) all insurance policies covering the related Equipment and any
proceeds with respect thereto and all FCIA Insurance covering Trade
Receivables the Obligors with respect to which are not resident in the
United States;
(vii) to the extent not included in the foregoing, all "accounts,"
"chattel paper," "instruments," "goods" and "general intangibles" (as
defined in the Uniform Commercial Code) relating to or constituting any and
all of the foregoing in whole or in part;
(viii) all lockboxes, bank accounts or cash collateral accounts, any
rights in and to any escrow assets or any similar accounts or assets
relating to, or containing or constituting Collections or proceeds of or
distributions on, any of the foregoing (including, without limitation, the
Equipment Loan Lockbox Account, the Trade Receivable Lockbox Accounts and,
if applicable, the Cash Collateral Account) and all cash or other property
on deposit therein;
(ix) all other property of the Borrower of any nature whatsoever
(including, without limitation, all "documents," "equipment" and
"inventory" (as defined in the Uniform Commercial Code);
(x) all rights of the Borrower against the Originators under the
Transfer Agreement; and
(xi) any and all replacements, substitutions, distributions on or
proceeds of any and all of the foregoing.
(b) The Borrower hereby assigns, pledges and grants a security
interest in the Collateral to the Agent for the benefit of the Lenders to secure
the repayment of principal of and
39
interest on all Loans and all other amounts owing to the Lenders hereunder,
under the Note and under the other Loan Documents (collectively, the "Secured
-------
Obligations"). The Borrower agrees to mark its computer programs and tapes to
- -----------
evidence the interests granted to the Agent hereunder.
4.02. Further Assurances
------------------
At any time and from time to time, upon the written request of the
Agent or any Lender, and at the sole expense of the Borrower, the Borrower will
promptly and duly execute and deliver, or will promptly cause to be executed and
delivered, such further instruments and documents and take such further action
as the Agent or such Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby and the termination
of the Liens conveyed to The First National Bank of Chicago under the Existing
Purchase Agreements with respect to Trade Receivables and any related assets
upon the satisfaction in full of all obligations secured thereby. The Borrower
also hereby authorizes the Agent to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03. Changes in Locations, Name, etc.
--------------------------------
The Borrower shall not (i) change the location of its chief
executive office or chief place of business from that specified in Section 6
hereof or (ii) change its name, identity or corporate structure (or the
equivalent) or change the location where it maintains its records with respect
to the Collateral unless it shall have given the Agent at least 30 days prior
written notice thereof and shall have delivered to the Agent all Uniform
Commercial Code financing statements and amendments thereto as the Agent or any
Lender shall request and shall have taken all other actions deemed necessary by
the Agent or any Lender to continue its perfected status in the Collateral with
the same or better priority.
4.04. Agent's Appointment as Attorney-in-Fact.
---------------------------------------
(a) The Borrower hereby irrevocably constitutes and appoints the
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the Borrower or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Loan Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Loan Agreement, and,
without limiting the generality of the foregoing, the Borrower hereby gives the
Agent the power and right, on behalf of the Borrower,
40
without assent by, but with notice to, the Borrower, to do the following:
(i) in the name of the Borrower or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
insurance or with respect to any other Collateral and to file any claim or
to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of collecting any
and all such moneys due under any such insurance or with respect to any
other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral; and
(iii) (A) to direct any party liable for any payment under any
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Agent or as the Agent shall direct; (B) to ask
or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, assignments, verifications, notices and other documents in
connection with any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against the Borrower with respect to any
Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Agent may deem appropriate; and (G)
subject to the Uniform Commercial Code and other applicable law, generally,
to sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though
the Agent were the absolute owner thereof for all purposes, and to do, at
the Agent's option and the Borrower's expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to protect,
preserve or realize upon the Collateral and the Agent's Liens thereon and
to effect the intent of this Loan Agreement, all as fully and effectively
as the Borrower might do.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Notwithstanding the foregoing, the power of attorney hereby granted
may be exercised only after the occurrence and during the continuance of any
Event of Default hereunder.
(b) The Borrower also authorizes the Agent, at any time after the
occurrence and during the continuance of any Event of Default hereunder, to
execute, in connection with the
41
sale provided for in Section 4.06 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Agent are solely to protect the
Agent's and each Lender's interests in the Collateral and shall not impose any
duty upon the Agent to exercise any such powers. The Agent shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Agent nor any of its officers, directors, or employees
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
4.05. Performance by Agent of Borrower's Obligations
----------------------------------------------
If the Borrower fails to perform or comply with any of its
agreements contained in the Loan Documents and the Agent shall itself perform or
comply, or otherwise cause performance or compliance, with such agreements, the
expenses of the Agent incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to the
Post-Default Rate, shall be payable by the Borrower to the Agent on demand and
shall constitute Secured Obligations.
4.06. Remedies
--------
If an Event of Default shall occur and be continuing, the Agent,
on behalf of the Lenders, may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Agent without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice otherwise required by this Loan Agreement or
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, advertisements and notices, except for
those specifically provided for elsewhere in this Loan Agreement are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give an option or options to purchase, or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of the Agent or elsewhere
upon such terms and conditions as it may deem advisable and at such prices as it
may deem commercially reasonable under the circumstances, for cash or on credit
or for future delivery without assumption of any credit risk. Each Lender shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Borrower, which right or equity is hereby waived or released. The Borrower
further agrees, at the Agent's request, to assemble the Collateral and make it
available to the Agent at places which
42
the Agent shall reasonably select, whether at the Borrower's premises or
elsewhere. The net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or relating to the Collateral or the rights of the
Agent or the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, shall be applied to the payment in whole or
in part of the Secured Obligations, in such order as the Agent may elect, and
only after such application and after the payment by the Lender of any other
amount required or permitted by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Uniform Commercial Code, need the Lenders
account for the surplus, if any, to the Borrower. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Agent or the Lenders arising out of the exercise by the
Agent or the Lenders of any of their respective rights hereunder, other than
those claims, damages and demands arising from the gross negligence or willful
misconduct of the Agent or a Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least ten (10) days before such sale or other
disposition. The Borrower shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay the
Secured Obligations and the reasonable fees and disbursements of any attorneys
employed by the Agent or a Lender to collect such deficiency.
4.07. Limitation on Duties Regarding Presentation of Collateral
---------------------------------------------------------
The Agent's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Agent deals with similar property for its own account.
Neither the Agent nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
43
4.08. Powers Coupled with an Interest
-------------------------------
All authorizations and agencies herein contained with respect to
the Collateral are irrevocable and powers coupled with an interest.
4.09. Release of Security Interest.
----------------------------
(a) Upon termination of this Loan Agreement and repayment to
the Lenders of all Secured Obligations and the performance of all then existing
obligations under the Loan Documents, the Agent shall release its security
interest in any remaining Collateral. In addition, from time to time, upon
request of the Borrower, the Agent shall release its security interest in the
Collateral referred to in such request, provided, that, at the time of and
--------
following any such release there shall not have occurred a Default under this
Loan Agreement; provided, further, that following any such release, (i) the
-------- -------
aggregate amount of Loans outstanding secured by Equipment Loans shall not
exceed the Borrowing Base with respect to Equipment Loans and (ii) the aggregate
amount of Loans outstanding secured by Trade Receivables shall not exceed the
Borrowing Base with respect to Trade Receivables (in each case, with respect to
all Assets in which the Agent retains a security interest pursuant to this Loan
Agreement). The preparation and filing of any documents in order to release the
Agent's security interest in the Collateral pursuant to this Section shall be at
the expense of the Borrower.
(b) If the Borrower desires to make any sale or other
disposition of property permitted by Section 7.14, whether through a Permitted
Securitization or otherwise, the Borrower shall (i) provide the Agent not less
than five (5) Business Days notice of such intention and (ii) make any
prepayment of the Loans or delivery of additional Collateral required pursuant
to Section 2.06 concurrently with such sale or other disposition. Upon or
concurrently with the satisfaction by the Borrower of the provisions set forth
in clauses (i) and (ii) of the preceding sentence, the Agent shall release its
security interest in such property so sold or ot herwise disposed of; provided,
--------
that the Agent shall not be obligated to deliver any such release unless after
giving effect to such sale or other disposition (after giving effect to any
application of the proceeds received upon such sale or other disposition), (x)
the aggregate principal amount of Loans outstanding shall not exceed the
Borrowing Base, (y) the aggregate amount of Loans outstanding secured by
Equipment Loans shall not exceed the Borrowing Base with respect to Equipment
Loans and (z) the aggregate amount of Loans outstanding secured by Trade
Receivables shall not exceed the Borrowing Base with respect to Trade
Receivables (in each case, with respect to all Assets in which the Agent retains
a security interest pursuant to this Loan Agreement). Any such release shall be
evidenced by a written instrument and a Uniform Commercial Code termination
statement or amendment executed by Agent delivered to the Borrower. The Borrower
shall be responsible for the preparation of such instruments and termination
statements or amendments.
4.10. Trade Receivable Lockbox Accounts.
---------------------------------
44
(a) The Borrower and, pursuant to the ACAR Receivables Purchase
Agreement, ACAR have established with the banks listed on Schedule 4.10 (the
"Trade Receivable Lockbox Banks") the lockboxes described on Schedule 4.10 (such
- -------------------------------
lockboxes and each additional or substitute lockbox, a "Trade Receivable
----------------
Lockbox"), the related demand deposit accounts and the other accounts described
on Schedule 4.10 (such demand deposit accounts, other accounts and each
additional or substitute account, a "Trade Receivable Demand Deposit Account")
---------------------------------------
(all such Trade Receivable Lockboxes together with their related Trade
Receivable Demand Deposit Accounts being referred to herein as the "Trade
-----
Receivable Lockbox Accounts"). On or prior to the initial Funding Date, the
- ---------------------------
Borrower shall collaterally assign to the Agent for the benefit of the Lenders
its interest in each Trade Receivable Lockbox Account pursuant to one or more
lockbox and deposit account assignment agreements, substantially in the form of
Exhibit D-1 attached to this Loan Agreement or in other form satisfactory to the
Agent (as amended, supplemented or otherwise modified from time to time, the
"Trade Receivable Lockbox Assignment Agreement"). The Borrower may from time to
- ----------------------------------------------
time designate additional or substitute Trade Receivable Lockbox Accounts by
written notice to the Agent and delivery of a Trade Receivable Lockbox
Assignment Agreement with respect thereto, and such Trade Receivable Lockbox
Accounts shall thereupon constitute "Trade Receivable Lockbox Accounts" for all
purposes hereof. The terms and conditions of each Trade Receivable Lockbox
Account shall be in all respects satisfactory to the Agent. Unless otherwise
approved by the Agent, the Borrower shall instruct each Obligor with respect to
a Trade Receivable comprising Collateral for the Loan (i) to make all payments
with respect thereto to a Trade Receivable Lockbox or a Trade Receivable Demand
Deposit Account and (ii) to cause all account debtors and other obligors with
respect to any obligations securing any such Trade Receivable comprising
Collateral for the Loan to make all payments with respect thereto to the related
Obligor or a Trade Receivable Lockbox. Pursuant to the Trade Receivable Lockbox
Assignment Agreement, the Trade Receivable Lockbox Bank shall be instructed to
deposit all payments in respect of Trade Receivables received in any Trade
Receivable Lockbox into the related Trade Receivable Demand Deposit Account. In
the case of any remittances received in any Trade Receivable Lockbox Accounts
that shall have been identified, to the satisfaction of the Servicer, to not
constitute remittances in respect of Trade Receivables, the Servicer shall
promptly remit such items to the Person identified to it as being the owner of
such remittances. The Borrower shall have the right to withdraw remittances
from the Trade Receivable Lockbox Accounts which are not attributable to Trade
Receivables.
(b) All Trade Receivables Collections received directly by the
Borrower without deposit into a Trade Receivable Lockbox or a Trade Receivable
Demand Deposit Account shall be promptly deposited by the Borrower in the exact
form received, except for any endorsement by the Borrower to the Agent, if
required, in the appropriate Trade Receivable Lockbox Account, and until so
deposited, shall be deemed to be held in trust by the Borrower for and as the
Agent's property and shall not be commingled with the Borrower's other funds.
(c) The Borrower will not, nor will it permit or allow others on its
behalf to, establish a collection account for the receipt of payments with
respect to the Trade Receivables
45
with a financial institution other than the Trade Receivable Lockbox Accounts
provided for herein.
(d) The Borrower shall direct the Trade Receivable Lockbox Bank to
cause all Trade Receivables Collections deposited in the Trade Receivable
Lockbox Accounts, if any, to be remitted to the Agent Account on a daily basis.
All such Trade Receivables Collections shall be applied by the Lenders to the
payment of the principal amount of the Loans secured by Trade Receivables on the
Business Day of receipt in the Agent Account. For purposes of this Section
4.10(d), any proceeds deposited in the Agent Account after 12:00 p.m., New York
City time, on any Business Day shall be deemed to have been deposited therein on
the next succeeding Business Day.
(e) Upon the occurrence of an Event of Default, the Agent may take
control of the Trade Receivable Lockbox Accounts by delivering to the related
Trade Receivable Lockbox Banks notice in substantially the form attached to the
Trade Receivable Lockbox Assignment Agreement (the "Trade Receivable Lockbox
------------------------
Notice"). From and after the delivery of the Trade Receivable Lockbox Notice,
- ------
the related Trade Receivable Lockbox Accounts shall be under the exclusive
dominion and control of the Agent and the Borrower shall have no right of
withdrawal from such Trade Receivable Lockbox Accounts.
4.11. Equipment Loan Lockbox Accounts.
-------------------------------
(a) The Borrower has established with the banks listed on Schedule
4.11 (the "Equipment Loan Lockbox Banks") the lockboxes described on Schedule
----------------------------
4.11 (such lockboxes and each additional or substitute lockbox, an "Equipment
---------
Loan Lockbox"), the related demand deposit accounts and the other accounts
- ------------
described on Schedule 4.11 (such demand deposit accounts, other accounts and
each additional or substitute account, a "Equipment Loan Demand Deposit
-----------------------------
Account") (all such Equipment Loan Lockboxes together with their related
Equipment Loan Demand Deposit Accounts being referred to herein as the
"Equipment Loan Lockbox Accounts"). On or prior to the initial Funding Date,
- --------------------------------
the Borrower shall deliver to the Agent with respect to each Equipment Loan
Lockbox Account a lockbox and deposit account assignment agreement,
substantially in the form of Exhibit D-2 attached to this Loan Agreement or in
other form satisfactory to the Agent (as amended, supplemented or otherwise
modified from time to time, the "Equipment Loan Lockbox Assignment Agreement")
-------------------------------------------
executed by the Borrower and the related Equipment Loan Lockbox Bank. The
Borrower may from time to time designate additional or substitute Equipment Loan
Lockbox Accounts by written notice to the Agent and delivery of an Equipment
Loan Lockbox Assignment Agreement with respect thereto, and such Equipment Loan
Lockbox Accounts shall thereupon constitute "Equipment Loan Lockbox Accounts"
for all purposes hereof. The terms and conditions of each Equipment Loan
Lockbox Account shall be in all respects satisfactory to the Agent. Unless
otherwise approved by the Agent, the Borrower shall instruct each Obligor with
respect to an Equipment Loan to make all payments with respect thereto to an
Equipment Loan Lockbox or an Equipment Loan Demand
46
Deposit Account. In the case of any remittances received in any Equipment Loan
Lockbox Accounts that shall have been identified, to the satisfaction of the
Servicer, to not constitute remittances in respect of Equipment Loans, the
Servicer shall promptly remit such items to the Person identified to it as being
the owner of such remittances. The Borrower shall have the right to withdraw
remittances from the Equipment Loan Lockbox Accounts which are not attributable
to Equipment Loans.
(b) All proceeds of Equipment Loans received directly by the Borrower
without deposit into an Equipment Loan Lockbox or an Equipment Loan Demand
Deposit Account shall be promptly deposited by the Borrower in the exact form
received, except for any endorsement by the Borrower to the Agent, if required,
in the appropriate Equipment Loan Lockbox Account, and until so deposited, shall
be deemed to be held in trust by the Borrower for and as the Agent's property
and shall not be commingled with the Borrower's other funds.
(c) The Borrower will not, nor will it permit or allow others on its
behalf to, establish a collection account for the receipt of payments with
respect to the Equipment Loans with a financial institution other than the
Equipment Loan Lockbox Accounts provided for herein.
(d) Funds on deposit in any Equipment Loan Lockbox Account shall be
invested in Permitted Investments selected in writing by the Borrower; provided,
--------
that following the occurrence of an Event of Default, the Agent may select such
Permitted Investments; provided, further, that it is understood and agreed that
-------- -------
the Agent shall not be liable for any loss arising from such investments in
Permitted Investments. All such Permitted Investments shall be held for the
benefit of the Agent, for the benefit of the Lenders, and the Borrower. Funds
on deposit in the Equipment Loan Lockbox Accounts shall be invested in Permitted
Investments that will mature so that such funds will be available on each
Interest Payment Date.
(e) Upon the occurrence of an Event of Default, the Agent may take
control of the Equipment Loan Lockbox Accounts by delivering to the related
Equipment Loan Lockbox Banks notice in substantially the form attached to the
Equipment Loan Lockbox Assignment Agreement (the "Equipment Loan Lockbox
----------------------
Notice"). From and after the delivery of the Equipment Loan Lockbox Notice, the
related Equipment Loan Lockbox Accounts shall be under the exclusive dominion
and control of the Agent and the Borrower shall have no right of withdrawal from
such Equipment Loan Lockbox Accounts.
(f) On each Interest Payment Date, (i) Principal Collections on
deposit in the Equipment Loan Lockbox Account shall be paid to the Agent,
for the benefit of the Lenders, to be applied by the Lenders to the payment
of the principal on the Loans secured by Equipment Loans and (ii) the other
amounts on deposit in the Equipment Loan Lockbox Accounts shall be applied
as follows:
first, to the Agent, for the benefit of the Lenders, interest on the
-----
Loans accrued
47
through such day and not previously paid,
second, in the event an Excess Spread Sweep Event shall have occurred
------
and is continuing, to the Excess Spread Account in an amount equal to the
lesser of (x) remaining available funds and (y) the amount which after such
deposit in the Excess Spread Account shall cause the amount on deposit
therein to equal the Required Excess Spread Amount, and
third, to the Borrower in an amount equal to remaining available
-----
funds; provided, that if a Default or an Event of Default has occurred and
--------
is continuing such remaining funds shall be paid to the Agent at the Agent
Account for the benefit of the Lenders to be applied to the payment of the
Obligations on the Business Day of receipt in the Agent Account.
4.12. Excess Spread Account.
---------------------
(a) The Borrower has established an excess spread account (the
"Excess Spread Account") in the name of the Agent for the benefit of the
---------------------
Lenders. The Excess Spread Account will be funded in accordance with Section
4.11(f) of this Loan Agreement.
(b) Funds on deposit in the Excess Spread Account shall be
invested in Permitted Investments selected in writing by the Borrower;
provided, that following the occurrence of a Default, the Agent may select such
- --------
Permitted Investments; provided, further, that it is understood and agreed that
-------- -------
the Agent shall not be liable for any loss arising from such investments in
Permitted Investments. All such Permitted Investments shall be held for the
benefit of the Agent, for the benefit of the Lenders.
(c) Except as otherwise provided for herein, the Excess Spread
Account shall be under the sole dominion and control of the Agent. If, at any
time, the Excess Spread Account ceases to be an Eligible Deposit Account, then
the Borrower (or the Agent on its behalf) shall within twenty (20) Business Days
(or such longer period as to which the Agent may consent) establish a new Excess
Spread Account (which shall be an Eligible Deposit Account) and shall transfer
any cash and/or any investments to such new Excess Spread Account. In connection
with the foregoing, the Borrower agrees that the Borrower shall notify the Agent
in writing promptly upon the Excess Spread Account ceasing to be an Eligible
Deposit Account.
(d) If the amount on deposit in the Excess Spread Account on any
Interest Payment Date (after giving effect to any deposits therein and
withdrawals therefrom) is greater than the Required Excess Spread Amount, such
excess shall be paid to the Borrower; provided, that if a Default or an Event of
--------
Default has occurred and is continuing such excess shall be paid to the Agent at
the Agent Account for the benefit of the Lenders to be applied to the payment of
the Obligations on the Business Day of receipt in the Agent Account.
48
4.13. Legending of Chattel Paper
--------------------------
All original chattel paper that is not held by the Agent or its agent
and that constitutes part of the Collateral shall be stamped or otherwise marked
with the following legend:
"This is the original of this instrument, and a security interest has
been granted in this instrument to Lehman Commercial Paper Inc., as
agent for the benefit of the lenders party to that certain Loan and
Security Agreement dated as of May 5, 1998 among Alliance Laundry
Receivables Warehouse LLC, such lenders and Lehman Commercial Paper
Inc."
Each original of any chattel paper that is retained by the Borrower shall be
stamped or otherwise marked as an "Original."
SECTION 5. CONDITIONS PRECEDENT.
- ---------- ---------------------
5.01. Initial Loan
------------
The agreement of each Lender to make the initial Loan requested to be
made by it hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the following conditions
precedent:
(a) Loan Documents. The Agent shall have received (i) this Loan
--------------
Agreement and the other Loan Documents, executed and delivered by a duly
authorized officer of the Borrower and/or by the other parties thereto, and (ii)
a Note payable to the order of the Agent for the benefit of the Lenders,
executed and delivered by a duly authorized officer of the Borrower, in each
case conforming to the requirements hereof.
(b) Corporate Proceedings. The Agent shall have received a
---------------------
certificate of the Secretary or Assistant Secretary of each of the Borrower and
ALS, dated as of a date reasonably satisfactory to the Agent, certifying (A) (i)
that attached thereto is a true, complete and correct copy of resolutions duly
adopted by the Board of Directors of the Borrower or ALS, as the case may be,
authorizing (1) the execution, delivery and performance of the Loan Documents to
which it is a party, and (2) the transactions contemplated thereunder, and (ii)
that such resolutions have not been amended, modified, revoked or rescinded, and
(B) as to the incumbency and specimen signature of each officer executing any
Loan Documents on behalf of the Borrower or ALS, as the case may be, and such
certificate and the resolutions attached thereto shall be in form and substance
satisfactory to the Agent.
(c) Corporate Documents. The Agent shall have received true and
-------------------
complete copies of the Operating Agreement and by-laws of the Borrower and ALS,
certified as such as of the Closing Date by the Secretary or an Assistant
Secretary of the Borrower and ALS,
49
respectively.
(d) Legal Opinions. The Agent shall have received the executed
--------------
legal opinion of Kirkland & Ellis, counsel to the Borrower and ALS, in form and
substance satisfactory to the Agent and its counsel.
(e) Fees and Expenses. The Agent and the Lenders shall have received
-----------------
all fees and expenses required to be paid by the Borrower on or prior to the
initial Funding Date.
(f) Underwriting Guidelines. The Agent and the Borrower shall have
-----------------------
agreed upon the Underwriting Guidelines for the Assets.
(g) Underwriting Letter Agreement. The Agent shall have received the
-----------------------------
Underwriting Letter Agreement, executed by a duly authorized officer of the
Borrower.
(h) Reimbursement Agreement. The Agent shall have received an
-----------------------
executed copy of the Reimbursement Agreement, which shall be in form and
substance satisfactory to the Agent.
(i) Filings, Registrations, Recordings. Any documents required to be
----------------------------------
filed, registered or recorded in order to create, in favor of the Agent for the
benefit of the Lenders, a perfected, first priority security interest in the
Collateral, subject to no Liens other than Permitted Liens, shall have been
properly prepared for filing, registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are required
to perfect such first priority security interest (including, without limitation,
a financing statement on Form UCC-1 naming the Borrower as the debtor and the
Agent as secured party and describing the Collateral, and proceeds thereof, as
the collateral).
(j) UCC Searches. The Agent shall have received the results of
------------
Uniform Commercial Code searches made at Borrower's expense with respect to the
Borrower in the state in which its chief executive office is located and all
other states in which filings are required to be made pursuant to Section
5.02(f), together with copies of financing statements disclosed by such searches
and such searches shall disclose no Liens on any assets encumbered by this Loan
Agreement (other than Permitted Liens) or, if Liens other than Permitted Liens
are disclosed, the Agent shall have received satisfactory evidence of release of
such Liens.
(k) Lockbox Agreement. The Agent shall have received an agreement, or
-----------------
an amendment to or assignment of an existing agreement, which shall be in form
and substance satisfactory to the Agent, executed by duly authorized officers of
the Borrower, the Servicer and each of the Equipment Loan Lockbox Banks and the
Trade Receivable Lockbox Banks.
(l) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments and other legal matters in connection with the
transactions contemplated
50
by this Loan Agreement and the other Loan Documents shall be reasonably
satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents and legal opinions in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it or any
Lender may reasonably request.
5.02. Initial and Subsequent Loans
----------------------------
The agreement of each Lender to make any Loan requested to be made by
it on any date (including the initial Loan) is subject to the satisfaction of
the following conditions precedent:
(a) No Default. No Default shall have occurred and be continuing
----------
on such date or after giving effect to the Loans requested to be made on such
date.
(b) Representations and Warranties. Each of the representations and
------------------------------
warranties made by the Borrower in or pursuant to the Loan Documents shall be
true and correct in all material respects (in the case of the representations
and warranties in Section 6.16 and Schedule 6.16, solely with respect to Assets
included in the Borrowing Base) on and as of such date as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
(c) Borrowing Base. The aggregate outstanding principal amount of the
--------------
Loans shall not exceed the Borrowing Base on such date and would not exceed the
Borrowing Base after giving effect to the Loans requested to be made on such
date.
(d) Due Diligence Review. The Agent shall have completed its due
--------------------
diligence review, if any, of the Equipment Loan Documents relating to the
Equipment Loans being pledged in connection with the Loans being made on such
Funding Date, the results of which are satisfactory to the Agent. The Agent
may, upon receipt of a Request for Borrowing with respect to a Loan secured by
Equipment Loans, request the Borrower to provide to the Agent copies of
Equipment Loan Documents relating to such Equipment Loans. If, within one
Business Day of the Agent's receipt of copies of such Equipment Loan Documents,
the Agent does not notify the Borrower that the results of the Agent's due
diligence review of such Equipment Loan Documents are not satisfactory, the
condition precedent contained in this subsection (d) shall be deemed to be
satisfied.
(e) Letter of Credit. The Agent shall have received an executed
----------------
Letter of Credit, which shall be in form and substance satisfactory to the
Agent. The Letter of Credit, together with the Stated Amount of all other
outstanding Letters of Credit issued to the Agent, shall have a Stated Amount
equal to the Required Letter of Credit Amount.
The Borrower may, in lieu of delivering a Letter of Credit or Letters
of Credit to the Agent, establish a Cash Collateral Account in the name of the
Agent for the benefit of the
51
Lenders and deposit, or cause to be deposited, in the Cash Collateral Account an
amount equal to the Required Letter of Credit Amount. If the Borrower
establishes such Cash Collateral Account and makes the required deposit therein,
all references in this Loan Agreement to the Letter of Credit and the Drawing
Amount shall be deemed to refer to such Cash Collateral Account and withdrawals
therefrom, respectively, and the provisions of Section 7.21 (other than
subsections (a) and (b) thereof) shall be applicable to such Cash Collateral
Account.
Each Request for Borrowing by the Borrower hereunder shall constitute
a certification by the Borrower to the effect set forth in paragraphs (a), (b)
and (c) of this Section 5.02 (both as of the date of such Request for Borrowing
and, unless the Borrower otherwise notifies the Agent prior to the date of such
borrowing, as of the date of such borrowing).
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender that throughout
the term of this Loan Agreement:
6.01. Financial Condition.
-------------------
(a) The Borrower had, at the date of its most recent balance
sheet, no Guarantee Obligation, contingent liability or liability for taxes, or
any long-term lease or unusual forward or long-term commitment (including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, or other financial derivative), which is not reflected in the
foregoing statements or in the notes thereto.
(b) No statement of fact made by or on behalf of Borrower in this
Loan Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading.
6.02. No Change
---------
Since January 1, 1998, there has been no development or event nor any
prospective development or event, which has had or could reasonably be expected
to have a Material Adverse Effect.
6.03. Existence; Compliance with Law
------------------------------
The Borrower (a) is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware,
(b) has the power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee, to carry on its business
as now being or as proposed to be conducted, to originate, acquire and own
Assets, and to finance such Assets pursuant to this Loan Agreement, the lack of
which would be
52
reasonably likely to have a Material Adverse Effect, (c) is duly qualified to do
business and is in good standing under the laws of each jurisdiction in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify would be reasonably likely (either individually
or in the aggregate) to have a Material Adverse Effect, and (d) is in compliance
in all material respects with all Requirements of Law (including environmental
law).
6.04. Power; Authorization; Enforceable Obligations.
---------------------------------------------
(a) The Borrower has the power and authority, and the legal right,
to make, deliver and perform this Loan Agreement, the Note and each other Loan
Document to which it is a party, and to borrow and to grant Liens hereunder, and
has taken all necessary action to authorize the borrowings and the granting of
Liens on the terms and conditions of this Loan Agreement, the Note and each
other Loan Document to which it is a party, and the execution, delivery and
performance of this Loan Agreement, the Note, and each other Loan Document to
which it is a party.
(b) No consent or authorization of, approval by, notice to, filing
with or other act by or in respect of, any Governmental Authority or any other
Person is required or necessary in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of this
Loan Agreement or the Note or any other Loan Document, except (i) for filings
and recordings in respect of the Liens created pursuant to this Loan Agreement,
and (ii) as previously obtained and currently in full force and effect.
(c) This Loan Agreement has been duly and validly executed and
delivered by the Borrower and constitutes, and the Note and each other Loan
Document when executed and delivered on behalf of the Borrower will constitute,
a legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
6.05. No Legal Bar.
------------
The execution, delivery and performance of this Loan Agreement and the
Note, the borrowings hereunder and the use of the proceeds thereof will not
violate any Requirement of Law or Contractual Obligation of the Borrower and
will not result in, or require, the creation or imposition of any Lien on any of
its properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
6.06. No Litigation.
-------------
There are no actions, suits, arbitrations, investigations or
proceedings of or before any arbitrator or Governmental Authority pending or, to
the knowledge of the Borrower,
53
threatened against the Borrower or against any of its properties or revenues,
(i) with respect to this Loan Agreement or the Note or any of the transactions
contemplated hereby, or (ii) which could reasonably be expected to have a
Material Adverse Effect.
6.07. No Default
----------
. The Borrower is not in default under or with respect to any
of its Contractual Obligations in any respect which could reasonably be expected
to have a Material Adverse Effect. No Default has occurred and is continuing.
6.08. Collateral; Collateral Security.
-------------------------------
(a) The Borrower has not assigned, pledged, or otherwise
conveyed or encumbered any of the Collateral to any other Person (other than
pursuant to the Existing Purchase Agreements), and immediately prior to the
pledge of such Collateral, the Borrower was the sole owner of the Collateral and
had good and marketable title thereto, free and clear of all Liens, in each case
except for Permitted Liens.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Agent for the benefit of the Lenders a valid security
interest in all right, title and interest of the Borrower in, to and under the
Collateral.
(c) Upon the filing of financing statements on Form UCC-1 naming
the Agent as "Secured Party" and the Borrower as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 6.08
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected first priority security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
54
6.09. Chief Executive Office.
----------------------
The Borrower's chief executive office on the Effective Date is located
at Shepard and Hall Street, Ripon, Wisconsin 54971.
6.10. Location of Books and Records
-----------------------------
The location where the Borrower keeps its books and records,
including all computer tapes and records relating to the Collateral, is its
chief executive office.
6.11. No Burdensome Restrictions
--------------------------
No Requirement of Law or Contractual Obligation of the Borrower has a
Material Adverse Effect.
6.12. Taxes
-----
The Borrower has filed all Federal income tax returns and all other
material tax returns that are required to be filed by it and has paid all taxes
due pursuant to such returns or pursuant to any assessment received by it,
except for any such taxes or assessments, if any, that are being appropriately
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves in conformity with GAAP have been provided.
No tax Lien has been filed, and, to the knowledge of the Borrower, no claim is
being asserted, with respect to any such tax or assessment.
6.13. Margin Regulations
------------------
Neither the making of any Loan hereunder, nor the use of the proceeds
thereof, will violate or be inconsistent with the provisions of Regulation G, T,
U or X.
6.14. Investment Company Act; Other Regulations
-----------------------------------------
The Borrower is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended. The Borrower is not subject to regulation under any Federal or
state statute or regulation which limits its ability to incur indebtedness.
6.15. Subsidiaries
------------
At the date hereof, the Borrower has no Subsidiaries.
6.16. Eligible Assets
---------------
With respect to every Asset included or to be included in the
Borrowing Base,
55
the representations and warranties set forth on Schedule 6.16 hereto are true
and correct in all material respects.
6.17. Origination and Collections of Assets.
-------------------------------------
(a) The Assets were acquired by the Borrower from an Originator
pursuant to the Transfer Agreement, and the origination and collection practices
used by such Originator with respect to each Asset originated by such Originator
have been in all respects legal, proper, prudent and customary in the equipment
financing and servicing business. All such Assets are in conformity with the
Underwriting Guidelines.
(b) With respect to each Asset sold by an Originator to the
Borrower, the Borrower shall have paid or promised to pay to such Originator at
the time of such sale an amount not less than the outstanding balance of such
Asset.
(c) The Transfer Agreement is effective to, and shall, sell to the
Borrower (and the Borrower shall acquire) from each Originator all right, title
and interest of such Originator in each such Asset originated by such Originator
and Collections with respect thereto free and clear of any Lien other than Liens
released simultaneously with the Borrower's purchase of such Asset.
6.18. No Adverse Selection
--------------------
Subject to the limitations and requirements set forth in this Loan
Agreement, the Borrower used no selection procedures that identified the Assets
as being less desirable or valuable than other comparable equipment loans or
trade receivables owned by the Borrower.
6.19. Equipment Loans
---------------
Except with respect to Equipment Loans whose outstanding principal
balance is less than or equal to $10,000, the Borrower has a perfected first
priority Lien in the Equipment that is subject to the Equipment Loans.
6.20. Borrower Solvent
----------------
As of the date hereof and immediately after giving effect to each
Loan, the fair value of the property of the Borrower is greater than the fair
value of the liabilities (including, without limitation, contingent liabilities)
of the Borrower and the Borrower is and will be solvent, is and will be able to
pay its debts as they mature and does not and will not have unreasonably small
capital to engage in the business in which it is engaged and proposes to engage.
6.21. ERISA
-----
56
As of the date hereof and as of the Effective Date and each
Funding Date: (a) each of Borrower and its ERISA Affiliates is in compliance in
all material respects with the applicable provisions of ERISA and the Code and
regulations and published interpretations thereunder, and (b) no ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in liability of
the Borrower which would be material to the Borrower.
6.22. Other Agreements
----------------
The Borrower is not a party to, or bound by, any contract,
agreement or instrument other than the Loan Documents and other contracts,
agreements or instruments executed in connection with the transactions
contemplated by the Loan and copies of which have been delivered to the Agent.
6.23. Ownership of Borrower
---------------------
ALS is the registered owner of all of the issued and outstanding
Capital Stock of the Borrower, all of which Capital Stock has been validly
issued, is fully paid and nonassessable and is owned of record by ALS.
57
SECTION 7. COVENANTS OF THE BORROWER.
The Borrower covenants and agrees with the Lender that, so long as
any Loan is outstanding and until payment in full of all Secured Obligations:
7.01. Financial Reporting
-------------------
The Borrower shall deliver or cause to be delivered to the Agent:
(a) as soon as available and in any event within sixty (60) days
after the end of each of the first three quarterly fiscal periods of each fiscal
year of the Servicer, the consolidated and consolidating balance sheets of the
Servicer and its consolidated Subsidiaries as at the end of such period and the
related unaudited consolidated and consolidating statements of income and
retained earnings for the Servicer and its consolidated Subsidiaries for such
period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, accompanied by a certificate of a Responsible Officer of the Servicer,
which certificate shall state that said consolidated financial statements fairly
present the consolidated and consolidating financial condition and results of
operations of the Servicer and its Subsidiaries in accordance with GAAP,
consistently applied, as at the end of, and for, such period (subject to normal
year-end audit adjustments and the omission of footnotes);
(b) as soon as available and in any event within ninety (90) days
after the end of each fiscal year of the Servicer, the consolidated and
consolidating balance sheets of the Servicer and its consolidated Subsidiaries
as at the end of such fiscal year and the related consolidated and consolidating
statements of income and retained earnings and of cash flows for the Servicer
and its consolidated Subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated and consolidating financial
statements fairly present the consolidated and consolidating financial condition
and results of operations of the Servicer and its consolidated Subsidiaries as
at the end of, and for, such fiscal year in accordance with GAAP;
(c) promptly upon transmission or receipt thereof, copies of any
filings and registrations with, and reports to or from, the Securities and
Exchange Commission or any national securities exchange, or any successor
agency, and copies of all financial statements, proxy statements, notices and
reports as the Servicer or any of its Subsidiaries shall send to its
shareholders generally or to a holder of any Indebtedness owed by the Servicer
or any of its Subsidiaries; and
58
(d) from time to time such other information regarding the
financial condition,
59
operations, or business of the Servicer, the Borrower and any Subsidiary of the
Servicer as the Agent may reasonably request.
The Borrower will furnish to the Agent, at the time it furnishes each set of
financial statements pursuant to paragraphs (a) and (b) above, a certificate of
a Responsible Officer of the Borrower to the effect that, to the best of such
Responsible Officer's knowledge, the Borrower during such fiscal period or year
has observed or performed in all material respects all of its covenants and
other agreements, and satisfied every condition, contained in this Loan
Agreement and the other Loan Documents to be observed, performed or satisfied by
it, and that such Responsible Officer has obtained no knowledge of any Default
except as specified in such certificate (and, if any Default has occurred and is
continuing, describing the same in reasonable detail and describing the action
the Borrower has taken or proposes to take with respect thereto).
7.02. Existence, etc.
---------------
The Borrower will:
-----------------
(a) preserve and maintain its legal existence and all of its
material rights, privileges, licenses and franchises;
(b) comply with the requirements of all applicable laws, rules,
regulations and orders of Governmental Authorities (including, without
limitation, all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect; and
(c) keep adequate records and books of account, in which complete
entries will be made in accordance with GAAP consistently applied.
7.03. Insurance
---------
The Borrower shall maintain insurance with financially sound and
reputable insurance companies, and with respect to property and risks of a
character usually maintained by entities engaged in the same or similar business
similarly situated, against loss, damage and liability of the kinds and in the
amounts customarily maintained by such entities. In addition, the Borrower shall
obtain and maintain at its own expense and keep in full force and effect
throughout the term of this Loan Agreement (i) a blanket fidelity bond and an
errors and omissions insurance policy covering its officers in an amount at
least equal to $1,000,000 per occurrence and $2,000,000 in aggregate and (ii)
FCIA Insurance with respect to Trade Receivables owed by Foreign Obligors, which
insurance policies shall be obtained from insurance companies which are
acceptable to the Agent in its reasonable discretion.
7.04. Prohibition of Fundamental Changes
----------------------------------
60
The Borrower shall not (a) enter into any transaction of merger or
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation, winding up or dissolution), (b) sell all or
substantially all of its assets, (c) change its name, identity or organizational
structure, or (d) change its chief executive office or its principal place of
business.
7.05. Notices
-------
The Borrower shall give notice to the Lender, promptly upon the
Borrower obtaining notice thereof, of:
(a) the occurrence of any Default;
(b) any default related to any Collateral, any Material Adverse
Effect and any event or change in circumstances which could reasonably be
expected to have a Material Adverse Effect;
(c) with respect to any Equipment Loan pledged to the Agent
hereunder, if the underlying Equipment has been damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, or
otherwise damaged so as to affect materially and adversely the value as
collateral of such pledged Equipment Loan; and
(d) the occurrence of any event of default, or any event that
with notice or lapse of time or both would become an event of default, under the
Reimbursement Agreement.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
7.06. Periodic Due Diligence Review
-----------------------------
The Borrower acknowledges that the Agent and each Lender has the
right to perform continuing due diligence reviews with respect to the Assets,
for purposes of verifying compliance with the representations, warranties and
covenants made hereunder, or otherwise, and the Borrower agrees that upon
reasonable prior notice to the Borrower, the Agent, any Lender or their
respective authorized representatives will be permitted during normal business
hours to examine, inspect, make copies of, and make extracts of, the Equipment
Loan Documents and any and all documents, records, agreements, instruments or
information relating to the Assets in the possession, or under the control, of
the Borrower. The Borrower further agrees that the Borrower shall reimburse the
Agent and each Lender for any and all out-of-pocket costs and expenses incurred
by the Agent or such Lender in connection with the Agent's or such Lender's
activities pursuant to this Section 7.06; provided, that so long as no Event of
Default has occurred and is continuing, such costs and $10,000 during any period
of twelve (12) consecutive months.
61
7.07. Limitation on Liens on Collateral
---------------------------------
The Borrower will not, nor will it permit or allow others to, create,
incur or permit to exist any Lien on the Collateral, other than Permitted Liens.
The Borrower will defend the Collateral against, and will take such other action
as is necessary to remove, any Lien on the Collateral, other than Permitted
Liens, and the Borrower will defend the right, title and interest of the Agent
and Lenders in and to any Collateral.
7.08. Underwriting Guidelines
-----------------------
Without the prior written consent of the Agent, the Borrower shall not
amend or otherwise modify, or permit the amendment or modification of, the
Underwriting Guidelines.
7.09. Limitation on Transactions with Affiliates
------------------------------------------
The Borrower shall not enter into any transaction (including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service), with any Affiliate except to the extent that such transaction
is (a) otherwise permitted under this Loan Agreement, (b) in the ordinary course
of the Borrower's business and (c) upon fair and reasonable terms no less
favorable to the Borrower than it would obtain in a comparable arm's length
transaction with a Person which is not an Affiliate.
7.10. Limitation on Changes in Fiscal Year
------------------------------------
The Borrower shall not permit its fiscal year to end on a day other
than December 31.
7.11. Limitations on Modifications, Waivers and Extensions of Assets
--------------------------------------------------------------
The Borrower shall not, nor shall it permit or allow others to, amend,
modify, terminate or waive any provision of any Asset in any manner which could
reasonably be expected to materially adversely affect the value of such Asset
as Collateral; provided, however, that the Borrower may, in accordance with the
-------- -------
Underwriting Guidelines, extend the maturity of any Asset or adjust the
outstanding balance of any Asset as the Borrower may determine to be appropriate
to maximize collections thereof. The Borrower shall (i) exercise promptly and
diligently each and every material right which the Borrower may have under each
Asset (other than any right of termination, but including the enforcement of
warranty, servicing and other obligations of manufacturers and other parties)
except where the failure to so act could not reasonably be expected to
materially adversely affect the value of such Asset as Collateral and (ii)
deliver to the Agent a copy of each material demand, notice or document received
by it relating in any way to any Asset.
7.12. Further Identification of Collateral
------------------------------------
62
The Borrower shall furnish to the Agent from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Agent or any Lender may
reasonably request, all in reasonable detail.
7.13. Limitation on Collection Account
--------------------------------
The Borrower shall not, nor shall it permit or allow others on its
behalf to, establish an Equipment Loan Lockbox Account, a Trade Receivable
Lockbox Account or other collection account for the receipt of payments pursuant
to the Assets with a financial institution other than one acceptable to the
Agent in the exercise of its reasonable discretion and upon such terms as
reasonably required by the Agent.
7.14. No Transfer
-----------
The Borrower shall not sell, lease, transfer, assign or otherwise
dispose of any Collateral, except in accordance with the procedures and
conditions set forth in Section 2.06 of this Loan Agreement.
7.15. Repayment of Loans if Asset is Found Defective.
----------------------------------------------
(a) Upon discovery by the Borrower, the Agent or a Lender of any
breach of any representation or warranty listed on Schedule 6.16 hereto, the
party discovering such breach shall promptly give notice of such discovery to
the other.
(b) The Agent may, and upon the request of the Majority Lenders
shall, require the Borrower to prepay the amount of any Loan made in respect of
any Asset (i) which breaches one or more of the representations and warranties
listed on Schedule 6.16 hereto or (ii) with respect to any Equipment Loan, which
is determined by the Agent to be unacceptable for inclusion in a Permitted
Securitization (which condition shall continue unremedied for a period of ten
(10) Business Days) (in each case, a "Defective Asset"), in each case no
later than five (5) Business Days after notice from the Agent to the Borrower;
provided, however, that the Borrower shall not be required to prepay the
- -------- -------
amount of any Loan in respect of a Defective Asset if, at the time such Asset
first becomes a Defective Asset, (a) the aggregate amount of Loans outstanding
secured by Equipment Loans does not exceed the Borrowing Base with respect to
Equipment Loans (excluding the Defective Asset) and (b) the aggregate amount of
Loans outstanding secured by Trade Receivables does not exceed the Borrowing
Base with respect to Trade Receivables (excluding the Defective Asset). If the
Borrower fails to prepay any such Loan it is required to prepay, the Agent may
make a drawing on the Letter of Credit in an amount (up to the lesser of (x) the
Available Letter of Credit Amount on the date of such drawing and (y) the
positive result, if any, of (1) the Required Letter of Credit Amount on the date
of such drawing minus (2) the aggregate amount drawn on the Letter of Credit
prior to the date of such drawing with respect to which the Letter of Credit has
not been reinstated) equal to the amount of the Loan made in
63
respect of the affected Asset. The drawing shall be applied by the Lenders to
prepay the amount of such Loan.
64
7.16. Borrowing Base Certificate
--------------------------
The Borrower shall deliver to the Agent on each Interest Payment Date
a certificate in a form acceptable to the Agent setting forth the Borrowing Base
(including the Borrowing Base with respect to Equipment Loans and Trade
Receivables separately) as at the last Business Day of the prior calendar month.
When calculating the Borrowing Base with respect to an Eligible Equipment Loan
which is not a finance lease, the Borrower may assume that the Collateral Value
of such Eligible Equipment Loan is 90% of the outstanding principal balance of
such Eligible Equipment Loan. When calculating the Borrowing Base with respect
to an Eligible Equipment Loan which is a finance lease, the Borrower may assume
that the Collateral Value of such Eligible Equipment Loan is 90% of the
Discounted Present Value of such Eligible Equipment Loan.
7.17. Monthly Officer's Certificate
-----------------------------
The Borrower shall deliver to the Lender, no later than 30 days after
the last day of each calendar month, a certificate of the Borrower's Director of
Financial Services, Chief Financial Officer or Treasurer certifying that, to the
best of each such officer's knowledge, as of the last day of such calendar
month, (i) the Borrower was in compliance in all material respects with all of
the terms, conditions and requirements of this Loan Agreement (including the
financial covenant set forth in Section 7.19 of this Loan Agreement)
(accompanied by supporting documentation and calculations showing such
compliance), and (ii) no Event of Default exists.
7.18. Data Pool Report
----------------
At least one Business Day prior to a Funding Date, the Borrower shall
deliver to the Agent, a Funding Date Data Pool Report. On each Monthly Report
Date with respect to Eligible Equipment Loans and Eligible Trade Receivables,
the Borrower shall deliver to the Agent, an Equipment Loan Monthly Data Pool
Report and a Trade Receivables Monthly Data Pool Report.
7.19. Net Worth
---------
The Borrower shall have at all times Tangible Net Worth in an amount
equal to or greater than $250,000.
7.20. Limitation on Guarantee Obligations
-----------------------------------
The Borrower shall not become or be liable for any Guarantee
Obligation in respect of the Indebtedness of another Person.
7.21. Letter of Credit.
----------------
65
(a) If a Letter of Credit Issuer ceases to be a Qualifying Financial
Institution, the Borrower shall, within thirty (30) days, deliver to the Agent a
replacement letter of credit, or other comparable form of credit enhancement
reasonably acceptable to the Agent, which shall replace the Letter of Credit
issued by such Letter of Credit Issuer for all purposes of this Loan Agreement,
and upon such delivery, the Agent shall return such Letter of Credit to such
Letter of Credit Issuer for cancellation and all references to such Letter of
Credit and such Letter of Credit Issuer shall thereafter be deemed to refer to
such replacement letter of credit or other form of credit enhancement and the
issuer thereof, respectively; provided that the following conditions are
--------
satisfied:
(i) The replacement letter of credit or other form of credit
enhancement shall be irrevocable and issued by an Eligible Letter of Credit
Issuer and shall be on substantially the same terms and in substantially
the same form as such Letter of Credit, provided that the Stated Amount of
--------
the replacement letter of credit or other form of credit enhancement,
together with the Stated Amount of any other Letter of Credit which will be
in effect following such replacement, shall be at least equal to the
Required Letter of Credit Amount. The replacement letter of credit and the
Reimbursement Agreement relating thereto or such other form of credit
enhancement and the reimbursement agreement relating thereto shall be in
form and substance reasonably satisfactory to the Agent.
(ii) The Borrower shall have delivered the proposed form of the
replacement letter of credit and the applicable Reimbursement Agreement or
such other form of credit enhancement and the reimbursement agreement
relating thereto to the Agent at least five (5) days prior to the proposed
date on which such Letter of Credit is to be replaced.
(iii) The Borrower shall have caused to be delivered to the Agent a
certificate of a Responsible Officer and an incumbency certificate, duly
executed by an officer of the replacement letter of credit issuer, together
with an opinion of counsel to the replacement letter of credit issuer, all
in substantially the same form as the certificates and opinion delivered to
the Agent in connection with the issuance of such Letter of Credit, or in
such other form as may have been approved by the Agent.
(b) If the Borrower does not deliver a replacement letter of credit or
other form of credit enhancement as described above when required, the Borrower
shall establish a cash collateral account (the "Cash Collateral Account") in the
-----------------------
name of the Agent for the benefit of the Lenders and the Borrower, and the Agent
shall on the day such replacement letter of credit was required to be delivered
(the "L/C Replacement Date") make a drawing on the current Letter of Credit in
--------------------
an amount equal to the lesser of (x) the Available Letter of Credit Amount on
the date of such drawing and (y) the positive result, if any, of (1) the
Required Letter of Credit Amount
66
on the date of such drawing minus (2) the aggregate amount drawn on the Letter
of Credit prior to the date of such drawing with respect to which the Letter of
Credit has not been reinstated, which amount shall be deposited in the Cash
Collateral Account. From and after the L/C Replacement Date, the Borrower shall
cause to be on deposit at all times in the Cash Collateral Account an amount
equal to or greater than the Required Letter of Credit Amount; provided, that
--------
the failure to cause such amount to be on deposit therein shall not be an
Event of Default under this Loan Agreement, but shall constitute a Letter of
Credit Deficiency Event. All references in this Loan Agreement to the Letter of
Credit and the Drawing Amount shall, from and after the deposit in the Cash
Collateral Account as set forth in this paragraph, be deemed to refer to such
Cash Collateral Account and withdrawals therefrom, respectively.
(c) Funds on deposit in the Cash Collateral Account shall be invested
in Permitted Investments selected in writing by the Borrower; provided, that
--------
following the occurrence of an Event of Default, the Agent may select such
Permitted Investments; provided, further, that it is understood and agreed that
-------- -------
the Agent shall not be liable for any loss arising from such investments in
Permitted Investments. All such Permitted Investments shall be held for the
benefit of the Lenders and the Borrower.
(d) Except as otherwise provided for herein, the Cash Collateral
Account shall be under the sole dominion and control of the Agent for the
benefit of the Lenders and the Borrower. If at any time, the Cash Collateral
Account ceases to be an Eligible Deposit Account, then the Borrower (or the
Agent on its behalf) shall within twenty (20) Business Days (or such longer
period as to which the Agent may consent) establish a new Cash Collateral
Account as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Cash Collateral Account. In connection with the
foregoing, the Borrower agrees that the Borrower shall notify the Agent in
writing promptly upon the Cash Collateral Account ceasing to be an Eligible
Deposit Account.
(e) If the amount on deposit in the Cash Collateral Account on any
Interest Payment Date is greater than the Required Letter of Credit Amount, such
excess shall be paid to the Borrower. If the Borrower delivers a replacement
Letter of Credit or other form of credit enhancement as described in subsection
(a) of this Section 7.21 after the L/C Replacement Date, the amount on deposit
in the Cash Collateral Account shall be paid to the Borrower.
7.22. Limitation on Dividends
-----------------------
If a Default or an Event of Default has occurred and is continuing,
the Borrower shall not declare or pay any dividend (other than dividends payable
solely in Capital Stock of the Borrower) on, or make any payment on account of,
or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any shares of any
class of Capital Stock of the Borrower or any warrants or options to purchase
any such Capital Stock, whether now or hereafter outstanding, or make any other
distribution in
67
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of the Borrower.
7.23. Limitation on Investments, Loans and Advances
---------------------------------------------
The Borrower shall not make any advance, loan, extension of credit or
capital contribution to, purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in, any Person other than Special Purpose Entities.
7.24. Limitation on Optional Payments and Modifications of Debt Instruments
---------------------------------------------------------
The Borrower shall not (a) make any optional payment or prepayment on or
redemption or purchase of any Indebtedness (other than the Loans), or (b) amend,
modify or change, or consent or agree to any amendment, modification or change
to any of the terms of any Indebtedness (other than any such amendment,
modification or change which would extend the maturity or reduce the amount of
any payment of principal thereof or which would reduce the rate or extend the
date for payment of interest thereon).
7.25. Limitation on Sales and Leasebacks
----------------------------------
The Borrower shall not enter into any arrangement with any Person providing
for the leasing by the Borrower of real or personal property which has been or
is to be sold or transferred by the Borrower to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower.
7.26. Limitations on Negative Pledge Clauses
--------------------------------------
The Borrower shall not enter into with any Person any agreement, other than
this Loan Agreement, which prohibits or limits the ability of the Borrower to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired.
7.27. Limitation on Lines of Business; Subsidiaries
---------------------------------------------
The Borrower shall not enter into any business, either directly or through
any Subsidiary, except for those businesses in which the Borrower is engaged on
the date of this Loan Agreement. The Borrower shall not create any Subsidiaries
other than Special Purpose Entities.
7.28. Limitation on Indebtedness
--------------------------
The Borrower shall not be liable for or create, assume, incur, guarantee, or
in any
68
manner become liable, contingently or otherwise, in respect of any Indebtedness,
except:
(a) the Loans;
(b) other Indebtedness to the Agent and the Lenders arising under
this Loan Agreement and the other Loan Documents and to the Servicer arising
under the Transfer Agreement;
(c) debt of the Borrower in favor of the Originators under the
Transfer Agreement and other Loan Documents, which debt is evidenced by a
promissory note of the Borrower under which the Borrower's payment obligations
shall be subordinated to all Obligations of the Borrower under the Loan
Documents;
(d) the Letter of Credit;
(e) obligations in connection with operating expenses arising in the
ordinary course of the Borrower's business;
(f) indebtedness or other liability on account of incidentals or
services supplied or furnished to the Borrower (including accountants' and
attorneys' fees), provided, that such other indebtedness is incurred in
--------
connection with the transactions contemplated hereby and the aggregate amount of
the indebtedness or liabilities described in this clause (f) shall not exceed
$10,000 at any one time outstanding; and
(g) with the prior written consent of the Agent, which consent may be
withheld at the Agent's sole discretion, indebtedness incurred in respect of
interest rate swap agreements, interest rate cap agreements, interest rate
collar agreements and other agreements or arrangements designed to protect the
Borrower against fluctuations in interest rates entered into in order to fix or
cap the interest rate on Indebtedness permitted to be incurred by this Loan
Agreement, which such agreements or arrangements shall be satisfactory to the
Agent in its sole discretion.
7.29. Other Agreements
----------------
The Borrower shall duly and punctually pay and perform each of its
obligations under the Loan Documents. The Borrower shall not amend the Transfer
Agreement. or replace the Servicer under the Transfer Agreement, without the
consent of the Agent, except for such amendments which shall not adversely
affect the Lenders. The Borrower shall enforce the obligations of the
Originators under the Transfer Agreement.
7.30. Currency Protection
-------------------
On any date on which the aggregate Collateral Value of Eligible
Equipment Loans which are payable in Canadian Dollars included in the Borrowing
Base exceeds 3.0% of
69
the aggregate Collateral Value of all Eligible Equipment Loans included in the
Borrowing Base on such date, the Borrower shall have in effect, unless otherwise
waived in writing by the Agent in its sole discretion, currency hedging
agreements reasonably acceptable to with the Agent, which agreements shall be
with the Agent or an Affiliate thereof if such agreements are on market terms
and conditions or, if not with the Agent or an Affiliate thereof, with a
counterparty reasonably acceptable to the Agent.
7.31. Purchase of Receivables from the Originators
--------------------------------------------
With respect to any Asset sold by an Originator to the Borrower, the
Borrower shall have paid or promised to pay to such Originator the purchase
price therefor set forth in the Transfer Agreement.
7.32. Payment of Taxes, etc.
----------------------
The Borrower shall pay and discharge all taxes, assessments, and
governmental charges or levies imposed upon it or upon its income or profits,
prior to the date on which penalties attach thereto, and all lawful claims,
which, if unpaid, might become a Lien or charge upon any of its assets.
7.33. Maintenance of Approvals, Filings and Registrations
---------------------------------------------------
The Borrower shall at all times maintain in effect, renew and comply
with all the terms and conditions of all consents, licenses, approvals and
authorizations as may be necessary or appropriate under any applicable law or
regulation for the execution, delivery and performance of the Loan Documents and
to make the Loan Documents legal, valid, binding and enforceable against the
Borrower.
7.34. Change in Payment Instructions to Obligors
------------------------------------------
Except as otherwise permitted by Section 7.11, the Borrower shall not
make any change in its instructions to Obligors regarding the payments to be
made to the Borrower unless the Agent and the Lenders shall have received, at
least 10 days before the proposed effective date therefor, written notice of
such change; provided, however, that the Borrower may, without notice to the
-------- -------
Agent and the Lenders, make a change in its instructions to a particular Obligor
with respect to a particular payment not exceeding $1,000,000 on a Delinquent
Equipment Loan or a Delinquent Receivable if the Borrower determines in its
reasonable discretion that such change is appropriate to maximize collections,
or the timeliness thereof, with respect to such Obligor.
7.35. Separate Corporate Existence
----------------------------
The Borrower hereby acknowledges that the Agent and the Lenders are
entering into the transactions contemplated by this Loan Agreement in reliance
upon the Borrower's
70
identity as a separate legal entity from the Originators or any Originator
Entity (as defined below). Therefore, from and after the date of execution and
delivery of this Loan Agreement, the Borrower shall take all reasonable steps
including, without limitation, all steps that the Agent and a Lender may from
time to time reasonably request to maintain the Borrower's identity as a
separate legal entity and to make it manifest to third parties that the Borrower
is an entity with assets and liabilities distinct from those of the Originators
and any Affiliates (other than the Borrower) thereof (each of the Originators
and their respective Affiliates (other than the Borrower) shall be referred to
herein as an "Originator Entity"), and not just a division of any Originator
Entity. Without limiting the generality of the foregoing and in addition to and
consistent with the covenant set forth in Section 7.02, the Borrower shall:
(i) require that all full-time employees of the Borrower identify
themselves as such and not as employees of any Originator Entity
(including, without limitation, by means of providing appropriate employees
with business or identification cards identifying such employees as the
Borrower's employees);
(ii) compensate all employees, consultants and agents directly, from
the Borrower's bank accounts, for services provided to the Borrower by such
employees, consultants and agents and, to the extent any employee,
consultant or agent of the Borrower is also an employee, consultant or
agent of any Originator Entity, allocate the compensation of such employee,
consultant or agent between the Borrower and such Originator Entity on a
basis which reflects the services rendered to the Borrower and such
Originator Entity;
(iii) clearly identify its offices (by signage or otherwise) as its
offices, and all such offices will occupy space that is separate and
distinct from any space occupied by ALS or any Originator Entity even if
such office space is leased or subleased from, or is on or near premises
occupied by ALS or any Originator Entity;
(iv) have a separate telephone number, which will be answered only in
its name;
(v) allocate all overhead expenses (including, without limitation
telephone and other utility charges) for items shared between the Borrower
and any Originator Entity on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on a
basis reasonably related to actual use;
(vi) at all times have at least one member of its Board of Managers
(an "Independent Manager") who is not (A) a director, officer or employee
-------------------
of any Originator Entity, (B) a person related to any officer or director
of any Originator
71
Entity, (C) a holder (directly or indirectly) of any voting securities of
any Originator Entity, or (D) a person related to a holder (directly or
indirectly) of any voting securities of any Originator Entity;
(vii) maintain the Borrower's books and records separate from those
of any Originator Entity;
(viii) prepare its financial statements separately from those of
other Originator Entities and insure that any consolidated financial
statements of ALS that include the Borrower have detailed notes clearly
stating that the Borrower is a separate corporate entity and that its
assets will be available first and foremost to satisfy the claims of its
creditors;
(ix) other than in connection with an Originator Entity's capacity
as a servicer of the Assets, not commingle funds or other assets of
Borrower with those of any other Originator Entity and not maintain bank
accounts or other depository accounts to which any Originator Entity is
also an account party, into which any Originator Entity makes deposits or
from which any Originator Entity has the power to make withdrawals;
(x) not permit any Originator Entity to pay any of the Borrower's
operating expenses except pursuant to allocation arrangements that comply
with the requirements of subparagraph (ii) of this Section 7.35; and
(xi) not permit the Borrower to be named as an insured on the
insurance policy covering the property of any Originator Entity, or enter
into an agreement with the holder of such policy whereby in the event of a
loss in connection with such property, proceeds are paid to the Borrower.
SECTION 8. EVENTS OF DEFAULT.
Each of the following events shall constitute an event of default (an
"Event of Default") hereunder:
----------------
(a) the Borrower shall default in the payment of any principal of or
interest on any Loan when due (whether at stated maturity, upon acceleration or
otherwise), provided, that, with respect to any optional prepayment, such
--------
default have continued unremedied for five (5) Business Days; or
(b) the Borrower shall default in the payment of any other amount
payable by it hereunder or under any other Loan Document after notification by
the Agent of such default, and such default shall have continued unremedied for
ten (10) Business Days; or
72
(c) any representation, warranty or certification made or deemed made
herein (other than any representation or warranty contained on Schedule 6.16
with respect to an Asset) or in any other Loan Document by the Borrower or any
certificate furnished to the Agent or any Lender pursuant to the provisions
thereof, shall prove to have been false or misleading in any material respect as
of the time made or furnished, and continues to be incorrect in any material
respect for a period of thirty (30) days after the earlier of (i) the date on
which written notice of the breach, requiring the same to be remedied, shall
have been given to the Borrower by the Agent and (ii) the date on which the
Borrower reasonably should have known of the breach; or
(d) the Borrower shall fail to comply with or shall fail to observe or
perform any agreement (other than as described in clause (a) or (b) above)
contained in this Loan Agreement or any other Loan Document, which failure
continues unremedied for a period of thirty (30) days after the earlier of (i)
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Borrower by the Agent and (ii) the date
on which the Borrower reasonably should have known of such failure; or
(e) a final judgment or judgments for the payment of money in excess
of $100,000 in the aggregate shall be rendered against the Borrower or the
Servicer by one or more courts, administrative tribunals or other bodies having
jurisdiction over them and the same shall not be discharged (or provision shall
not be made for such discharge) or bonded, or a stay of execution thereof shall
not be procured, within 60 days from the date of entry thereof and the Borrower
or the Servicer shall not, within said period of 60 days, or such longer period
during which execution of the same shall have been stayed or bonded, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(f) the Borrower or the Servicer shall admit in writing its inability
to pay its debts as such debts become due; or
(g) the Borrower, the Servicer or the Letter of Credit Issuer shall
(i) apply for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee, examiner or liquidator of itself or of all or a
substantial part of its property, (ii) make a general assignment for the benefit
of its creditors, (iii) commence a voluntary case under the Bankruptcy Code,
(iv) file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding-up, or composition or readjustment of debts, (v) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code or any other law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts or (vi) take
any corporate or other action for the purpose of effecting any of the foregoing;
or
(h) a proceeding or case shall be commenced, without the application
or consent of the Borrower, the Servicer or the Letter of Credit Issuer, in any
court of competent
73
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of the Borrower, the Servicer or the Letter of Credit Issuer or of all or
any substantial part of its property, or (iii) similar relief in respect of the
Borrower, the Servicer or the Letter of Credit Issuer under any law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment
of debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be entered
and continue unstayed and in effect, for a period of 60 or more days; or a final
order for relief against the Borrower, the Servicer or the Letter of Credit
Issuer shall be entered in an involuntary case under the Bankruptcy Code or any
other law relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement or winding-up, or composition or readjustment of debts;
or
(i) the Letter of Credit shall for whatever reason be terminated or
cease to be in full force and effect, or the enforceability thereof shall be
contested by any party thereto (other than the Lenders), and a replacement
letter of credit acceptable to the Agent or a Cash Collateral Account shall not
have been provided or established, as the case may be, in accordance with this
Loan Agreement; or
(j) the Borrower or the Servicer grants, or suffers to exist, any Lien
on any Collateral other than as permitted by this Loan Agreement or the Transfer
Agreement, or the Liens on the Collateral contemplated hereby cease to be first
priority perfected Liens on any Collateral in favor of the Agent for the benefit
of the Lenders; or
(k) any materially adverse change in the properties, business,
condition (financial or otherwise) or prospects of the Borrower or the Servicer,
in each case as determined by the Agent in its sole discretion, or the existence
of any other condition which, in the Agent's sole discretion, constitutes a
material impairment of the Borrower's ability to perform its obligations under
this Loan Agreement, the Note or any other Loan Document or has or could have a
Material Adverse Effect; provided, that a material adverse change in the
--------
Collateral Value of any Asset shall not result in Event of Default under this
subsection (k); or
(l) the Borrower or the Servicer shall fail to perform or shall
violate any other material agreement or instrument between either of them and a
Lender or any of its Affiliates and such failure or violation continues
unremedied after any applicable grace period therefor, or the Borrower or the
Servicer shall fail to pay when due or within any applicable grace period
therefor any portion of any single obligation constituting Indebtedness of the
Borrower in excess of $100,000 or of the Servicer in excess of $5,000,000; or
any default or other event shall occur under or with respect to any agreement
under which any single obligation constituting Indebtedness of the Borrower in
excess of $100,000 or of the Servicer in excess of $5,000,000 was created or is
governed, the effect of which is to cause, or to permit the holder or holder of
such Indebtedness to cause, such Indebtedness to become due prior to its stated
maturity; or any
74
single obligation constituting Indebtedness of Borrower in excess of $100,000 or
of the Servicer in excess of $5,000,000 shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled payment), prior
to the stated maturity thereof; or
(m) (i) ALS shall not own 100% of the Borrower, or (ii) any Person or
entity or any group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934) of Persons and/or entities (in each case, other than
Permitted Investors, Permitted Co-Investors and/or current management of ALS and
Alliance Laundry Holdings LLC), shall have acquired beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934), directly or indirectly, in one or more
transactions, of securities of ALS (or other securities convertible into such
securities) representing 51% or more of the combined voting power of all
securities of ALS entitled to vote in the election of the Board of Managers of
ALS (other than the Person or entities owning such securities on the Effective
Date); or
(n) the occurrence of an event of default, or an event that with
notice or lapse of time or both would become an event of default, under the
Reimbursement Agreement; or
(o) the average of the Delinquency Ratio for any two consecutive
fiscal months shall exceed 5.5%; or
(p) the average of the Dilution Ratio for any two consecutive fiscal
months (other than August, September, October or November) shall exceed 6.0% or
the average of the Dilution Ratio for any two consecutive fiscal months during
August, September, October and November shall exceed 8.0%; or
(q) the average of the Default Ratio for any two consecutive fiscal
months shall exceed 4.0%.
SECTION 9. REMEDIES UPON DEFAULT.
(a) Upon the occurrence of one or more Events of Default other than
those referred to in Section 8(g) or (h), the Agent may and shall, upon the
request of the Majority Lenders, immediately declare the principal amount of
the Loans then outstanding under the Note to be immediately due and payable,
together with all interest thereon and fees and expenses accruing under this
Loan Agreement; provided, that upon the occurrence of an Event of Default
--------
referred to in Section 8(g) or (h), such amounts shall immediately and
automatically become due and payable without any further action by any Person.
Upon such declaration or such automatic acceleration, the balance then
outstanding on the Note shall become immediately due and payable, without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
(b) Upon the occurrence of one or more Events of Default, the Agent
shall
75
have the right to obtain physical possession of the Servicing Records and all
other files of the Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the Borrower or any third party acting for the Borrower and the
Borrower shall deliver to the Agent such assignments as the Agent or any Lender
shall request. The Agent shall be entitled to specific performance of all
agreements of the Borrower contained in this Loan Agreement.
SECTION 10. NO DUTY ON LENDERS' PART.
The powers conferred on the Lenders hereunder are solely to protect
the Lenders' interests in the Collateral and shall not impose any duty upon any
of them to exercise any such powers. Each Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act hereunder, except for
its or their own gross negligence or willful misconduct.
SECTION 11. THE AGENT.
11.01. Appointment
-----------
Each Lender hereby irrevocably designates and appoints the Agent as
the agent of such Lender under this Loan Agreement and the other Loan Documents,
and each such Lender irrevocably authorizes the Agent, in such capacity, to take
such actions on its behalf under the provisions of this Loan Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Loan Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Loan Agreement, the Agent shall have no duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Loan Agreement or any other Loan Document or
otherwise exist against the Agent.
11.02. Delegation of Duties
--------------------
The Agent may execute any of its duties under this Loan Agreement and
the other Loan Documents by or through agents or attorneys-in-fact and shall be
entitled to the advice of counsel concerning all matters pertaining to such
duties. The Agent shall be responsible for the negligence or misconduct of any
agents or attorneys in-fact selected by it.
11.03. Exculpatory Provisions
----------------------
Neither the Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be
76
taken by it or such Person under or in connection with this Loan Agreement or
any other Loan Documents (except for its or such Person's own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the Borrower
or any officer thereof contained in this Loan Agreement or any other Loan
Document or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Loan Agreement or any other Loan Document or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Loan Agreement
or any other Loan Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Loan Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Borrower.
11.04. Reliance By Agent
-----------------
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent, certificate,
affidavit, letter, facsimile, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Loan Agreement or any other
Loan Document unless it shall first receive such advice or concurrence of the
Majority Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Loan Agreement and the other Loan Documents in accordance
with a request of the Majority Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Loans.
11.05. Notice of Default
-----------------
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless the Agent has
received notice from a Lender or the Borrower referring to this Loan Agreement,
describing such Default or Event of Default and stating that such notice is a
'notice of default'. In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Lenders. The Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Majority Lenders; provided that unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with
77
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
11.06. Non-Reliance on Agent and Other Lenders
---------------------------------------
Each Lender expressly acknowledges that neither the Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representations or warranties to it and that no act by the Agent
hereafter taken, including any review of the affairs of the Borrower, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrower and made its own decision to make
its Loans hereunder and enter into this Loan Agreement. Each Lender also
represents that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Loan Agreement and the
other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrower. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrower which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.
11.07. Indemnification.
---------------
The Lenders agree to indemnify the Agent in its capacity as such (to
the extent not reimbursed by the Borrower and without limiting the obligation of
the Borrower to do so), ratably according to their respective Commitments in
effect on the date on which indemnification is sought, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of, the Commitments, this Loan Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
- --------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Agent's gross
negligence or willful misconduct. The agreements in this subsection shall
survive the payment of the Loans Instrumentsand all other amounts
78
payable hereunder.
11.08. Agent, in Its Individual Capacity
---------------------------------
The Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with the Borrower as though the
Agent was not acting in such capacity hereunder and under the other Loan
Documents. With respect to the Loans made or renewed by it and the Note issued
to it, the Agent shall have the same rights and powers under this Loan Agreement
and the other Loan Documents as any Lender and may exercise the same as though
it were not the Agent, and the terms "Lender" and "Lenders" shall include the
Agent in its individual capacity.
11.09. Successor Agent
---------------
The Agent may resign as Agent upon 30 days' notice to the Lenders. If
the Agent shall resign as Agent under this Loan Agreement and the other Loan
Documents then the Majority Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall succeed to the
rights, powers and duties of the Agent hereunder. Effective upon such
appointment and approval, the term "Agent" shall mean and include such successor
agent, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent, any of the parties to this Loan Agreement or any holders of the Loans.
After any retiring Agent's resignation as Agent, the provisions of this Article
XI shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Loan Agreement and the other Loan Documents.
SECTION 12. MISCELLANEOUS.
12.01. Waiver
------
No failure on the part of the Agent or a Lender to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under any
Loan Document preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
12.02. Notices
-------
Except as otherwise expressly permitted by this Loan Agreement, all
notices, requests and other communications provided for herein (including,
without limitation, any modifications of, or waivers, requests or consents
under, this Loan Agreement) shall be delivered or sent by registered, certified
or express mail, postage prepaid, return receipt requested, or given or made by
facsimile, in each case, to the intended recipient at the "Address for Notices"
79
specified below its name on the signature pages hereof; or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement, all such
notices, requests and other communications shall be deemed to have been duly
given (i) in the case of facsimile transmission, when transmitted if on a
Business Day and during business hours in the place of receipt, otherwise notice
shall be deemed to have been given at 10:00 a.m. on the next Business Day in the
place of receipt, (ii) in the case of personal delivery, on the date of delivery
if on a Business Day and during business hours in the place of receipt,
otherwise notice shall be deemed to have been given at 10:00 a.m. on the next
Business Day in the place of receipt and (iii) in the case of a mailed notice,
upon receipt if on a Business Day, otherwise on the next Business Day, in each
case given or addressed as aforesaid.
12.03. Indemnification and Expenses.
----------------------------
(a) The Borrower agrees to hold the Agent, each Lender and their
respective parents, subsidiaries, Affiliates, directors, officers, employees,
representatives, agents, successors, assigns and attorneys (collectively, the
"Indemnified Parties") harmless from and indemnify the Indemnified Parties
- --------------------
against all liabilities, losses, damages, judgments, costs and expenses of any
kind which may be imposed on, incurred by, or asserted against the Indemnified
Parties, relating to or arising out of, this Loan Agreement, the Note, any other
Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby or the use or proposed use of the
proceeds thereof, excluding, however, (i) any liabilities, losses, damages,
judgments, costs or expenses of any kind to the extent resulting from (w) the
Indemnified Parties' gross negligence or willful misconduct, (x) any act or
omission of the Servicer (if not the Borrower, an Originator or an Affiliate of
either thereof), (y) the failure of the Letter of Credit Issuer to honor a
drawing on the Letter of Credit, or (z) the failure of a Permitted Investment to
be paid on time or any reduction in the value thereof, or (ii) any liabilities,
losses, damages, judgments, costs or expenses (except as otherwise provided in
this Loan Agreement) to the extent resulting from any default or delinquency of
any Asset. In any suit, proceeding or action brought by any Indemnified Party
in connection with any Asset for any sum owing thereunder, or to enforce any
provisions of any Asset, the Borrower shall save, indemnify and hold such
Indemnified Party harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction of
liability whatsoever of the account debtor or obligor thereunder, arising out of
a breach by the Borrower of any obligation thereunder or arising out of any
other agreement, indebtedness or liability at any time owing to or in favor of
such account debtor or obligor or its successors from the Borrower. The
Borrower also agrees to reimburse the Agent and each Lender for all costs and
expenses incurred in connection with the enforcement or the preservation of the
Agent's and such Lender's rights under this Loan Agreement, the Note, any other
Loan
80
Document or any transaction contemplated hereby or thereby and with any
amendment, supplement or modification to, this Loan Agreement, the Note, any
other Loan Document or any other documents prepared in connection herewith or
therewith requested by Borrower (including, without limitation, the fees and
disbursements of its counsel). The Borrower hereby acknowledges that,
notwithstanding the fact that the Note is secured by the Collateral, the
obligation of the Borrower under the Note is a recourse obligation of the
Borrower.
(b) The Borrower agrees to pay as and when billed by the Lender the
reasonable out-of-pocket costs and expenses incurred by the Agent and each
Lender in connection with the development, preparation and consummation of the
transactions contemplated hereby and by the other Loan Documents, including,
without limitation, (i) all the reasonable fees, disbursements and expenses of
Latham & Watkins, counsel to the Agent and any local counsel to the Agent, and
(ii) all the reasonable due diligence, inspection, testing and review costs and
expenses incurred by the Lender with respect to Collateral under this Loan
Agreement (including, but not limited to, those costs and expenses incurred by
the Agent pursuant to Section 12.13 hereto).
12.04. Amendments.
----------
(a) Except as provided in Section 12.04(b), this Loan Agreement and
the Note may be amended or supplemented with the consent of the Borrower and the
Majority Lenders and any existing default or compliance with any provision of
this Loan Agreement or the Note may be waived with the consent of the Majority
Lenders. A Note held by the Borrower or any of its Affiliates shall not be
deemed to be outstanding for purposes of this Section 12.04.
(b) Without the consent of the Borrower and each Lender affected, an
amendment or waiver may not: (i) reduce the principal amount of any Loan, (ii)
change the fixed maturity of any Loan, (iii) reduce the rate of or change the
time for payment of interest on any Loan, (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Loans or any other amounts payable under any of the Loan Documents, (v) make any
Loan payable in money other than that stated in the applicable Loan, (vi) make
any change in the provisions of this Loan Agreement relating to the rights of
Lenders to receive payments of principal of, premium, if any, or interest on the
Loans or (vii) make any change in the foregoing amendment and waiver provisions.
(c) The Borrower shall not and shall not permit an Originator or any
Subsidiary of an Originator to, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Lender
for or as an inducement to any consent, waiver or amendment permitted by Section
12.04(a) unless such consideration is offered to be paid or is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents applicable to such consent, waiver or agreement.
12.05. Successors and Assigns
----------------------
81
This Loan Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. The
Borrower may not sell, assign or transfer any interest in the Loan Documents or
any portion thereof (including, without limitation, the Borrower's right, title,
interest, remedies, powers and duties hereunder and thereunder) without the
prior written consent of the Agent. Each Lender shall have the right to sell,
assign or participate, in whole or in part, this Loan Agreement, its Note and/or
any of the other Loan Documents and the obligations hereunder to any Person. In
the event that a Lender shall determine to make any such sale, assignment or
participation, the Borrower shall cooperate with such Lender in consummating the
same in all respects, including by executing and delivering any substitute Notes
in such denominations as such Lender may request in its sole discretion.
12.06. Survival
--------
The obligations of the Borrower under Sections 2.07 and 12.03 hereof
shall survive the repayment of the Loans and the termination of this Loan
Agreement. In addition, each representation and warranty made, or deemed to be
made by a Request for Borrowing, herein or pursuant hereto shall survive the
making of such representation and warranty, and the Lenders shall not be deemed
to have waived, by reason of making any Loans, any Default that may arise by
reason of such representation or warranty proving to have been false or
misleading, notwithstanding that the Lenders may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such Loan was made.
12.07. Captions
--------
The table of contents and captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Loan Agreement.
12.08. Counterparts
------------
This Loan Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Loan Agreement by signing any such
counterpart.
82
12.09. Loan Agreement Constitutes Security Agreement; Governing Law.
------------------------------------------------------------
This Loan Agreement shall be governed by and construed in accordance
with New York law, and shall constitute a security agreement within the meaning
of the Uniform Commercial Code.
12.10. Submission To Jurisdiction; Waivers
-----------------------------------
The Borrower hereby irrevocably and unconditionally:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT
THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK, THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) AGREES THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT, TO THE EXTENT PERMITTED BY LAW, SERVICE OF PROCESS IN
ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL),
POSTAGE PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT SUCH
OTHER ADDRESS OF WHICH THE LENDERS SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION.
12.11. Waiver of Jury Trial
--------------------
EACH OF THE BORROWER, THE AGENT AND EACH LENDER HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS LOAN
AGREEMENT, ANY
83
OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.12. Acknowledgments
---------------
The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Loan Agreement, the Note and the other Loan Documents;
(b) neither the Agent nor any Lender has a fiduciary relationship to
the Borrower, and the relationship between the Borrower and the Lenders is
solely that of debtor and creditor; and
(c) no joint venture exists between the Agent and the Lenders, on the
one hand, and the Borrower, on the other hand.
12.13. Hypothecation or Pledge of Loans
--------------------------------
The Agent for the benefit of the Lenders shall have free and
unrestricted use of all Collateral and nothing in this Loan Agreement shall
preclude the Agent from engaging in repurchase transactions with the Lender's
interest in the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Lender's interest in the Collateral.
Nothing contained in this Loan Agreement shall obligate the Agent to segregate
any Collateral delivered to the Agent by the Borrower.
12.14. Servicing.
---------
(a) The Borrower shall, or shall cause the Servicer to, service and
administer the Assets in accordance with the Underwriting Guidelines and with
due care and customary and prudent servicing procedures for trade receivables,
equipment leases, security agreements and installment sale contracts of a
similar type and, prior to the occurrence of an Event of Default, shall have
full power and authority to do any and all things not inconsistent with the
provisions of this Loan Agreement which it may deem necessary or desirable in
connection with such servicing and administration. In the event that the
preceding language is interpreted as constituting one or more servicing
contracts, each such servicing contract shall terminate automatically upon the
earliest of (i) the date on which the Agent delivers a notice to the Servicer
that an Event of Default has occurred and such servicing contract shall
terminate, or (ii) the date on which all the Secured Obligations have been paid
in full, or (iii) the transfer of servicing approved by the Borrower and the
Agent.
(b) If the Assets are serviced by the Borrower, an Originator or an
Affiliate of either thereof, all servicing records, including, but not limited
to, any and all servicing
84
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, other closing
documentation, payment history records, and any other records relating to or
evidencing the servicing of Assets (the "Servicing Records") shall be held for
-----------------
the benefit of the Agent and the Lenders. The Borrower covenants to safeguard
such Servicing Records and to deliver them promptly to the Agent or its designee
at the Agent's request after an Event of Default.
(c) If the Assets are serviced by a Servicer other than the Borrower
or ALS, the Borrower (i) shall provide a copy of the related servicing agreement
to the Agent (the "Servicing Agreement"); and (ii) hereby irrevocably assigns to
-------------------
the Agent for the benefit of the Lenders and the Agent's successors and assigns
all right, title, interest in and the benefits of the Servicing Agreement with
respect to the Assets, which assignment shall terminate when the outstanding
principal amount of the Loans, together with all interest accrued thereon, and
all other amounts due to the Lenders under this Loan Agreement have been paid in
full and the Lenders' obligations to make Loans under this Loan Agreement has
terminated.
(d) The Borrower shall provide to the Agent a letter from the Servicer
to the effect that upon the occurrence of an Event of Default, the Agent may
replace the Servicer, terminate any servicing agreement and transfer such
servicing to its designee, at no cost or expense to the Agent or the Lenders, it
being agreed that the Borrower will pay any and all fees required to be paid in
connection with the foregoing.
12.15. Sharing
-------
The Lenders agree among themselves that if any Lender shall obtain
payment (whether through the exercise of a right of banker's lien, set-off or
otherwise) in respect of the obligations of the Borrower hereunder to such
Lender and as a result thereof such Lender shall have received an amount in
excess of its ratable share of such payment, such Lender shall promptly purchase
from the other Lenders such participations, or make such other adjustments, as
may be equitable to the end that the Lenders shall share the benefit of such
payment pro rata in accordance with their Commitment Percentages hereunder;
provided, however, that if all or a portion of such payment is thereafter
- -------- -------
rescinded or must otherwise be restored, such purchase or adjustment shall be
pro tanto rescinded and the purchase price restored (without interest). The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender so purchasing a participation may exercise any and all rights of banker's
lien.
12.16. Third Party Beneficiary Rights
------------------------------
The Borrower hereby assigns to the Agent for the benefit of the
Lenders all rights of the Borrower against the Originators under the Transfer
Agreement and agrees that the Agent and the Lenders shall be third party
beneficiaries of the Borrower's rights under the Transfer Agreement and shall be
entitled to enforce such rights against the Originators as if the
85
Agent and the Lenders had been parties to the Transfer Agreement.
12.17. Confidentiality
---------------
For the purposes of this Section 12.17, "Confidential Information"
------------ -----------
means information delivered to the Agent or a Lender by or on behalf of the
Borrower in connection with the transactions contemplated by or otherwise
pursuant to this Loan Agreement that is proprietary in nature; provided, that
--------
such term does not include information that:
(a) was publicly known prior to the time of such disclosure;
(b) subsequently becomes publicly known through no act or omission by
the Agent or a Lender or any Person acting on its behalf;
(c) otherwise becomes known to the Agent or a Lender other than
through disclosure by the Borrower or a Person who has a confidential
relationship with the Borrower; or
(d) constitutes financial statements delivered under Section 7 that
are otherwise publicly available.
The Agent and each Lender will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by the Agent and
such Lender in good faith to protect confidential information of third parties
delivered to it; provided, that the Agent and such Lender may deliver or
--------
disclose Confidential Information to:
their respective directors, officers, partners, employees, agents,
attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the Loans);
their respective financial advisors and other professional advisors
who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this Section 12.17;
any other holder of any Loan;
any institutional investor to which such Lender sells or offers to
sell any Loan or any part thereof or any participation therein
(if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of
this Section 12.17);
any Person from whom the Agent or such Lender offers to purchase any
security of the Borrower (if such Person has agreed in writing
prior to its receipt
86
of such Confidential Information to be bound by the provisions of this
Section 12.17);
(i) any federal or state regulatory authority having jurisdiction over the
Agent or such Lender;
the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that
requires access to information about such Lender's investment
portfolio; or
any other Person to which such delivery or disclosure may be necessary or
appropriate (w) to effect compliance with any law, rule,
regulation or order applicable to the Agent or such Lender, (x)
in response to any subpoena or other legal process, (y) in
connection with any litigation to which the Agent or such Lender
is a party, or (z) if a Default or Event of Default has occurred
and is continuing, to the extent the Agent or such Lender may
reasonably determine such delivery and disclosure to be necessary
or appropriate in the enforcement or for the protection of the
rights and remedies under the Loans, this Loan Agreement and
other Loan Documents.
12.18. Integration
-----------
This Agreement and the other Loan Documents contain a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and thereof and shall together constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof, superseding all prior oral or written understandings.
87
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
ALLIANCE LAUNDRY RECEIVABLES
WAREHOUSE LLC
By: _________________________
Name:
Title:
Address for Notices:
Shepard and Hall Streets
Ripon, Wisconsin 54971
Attention: John Adams
Facsimile No.: (920) 748-4477
Telephone No.: (920) 748-1649
LEHMAN COMMERCIAL PAPER INC., as
Agent
By: _________________________
Name:
Title:
Address for Notices:
Three World Financial Center
New York, New York 10285
Attention: Mr. Vincent Primiano
Facsimile No.: 212-526-5484
Telephone No.: 212-526-5840
88
Commitment Percentage: 100% LEHMAN COMMERCIAL PAPER INC., as
Lender
By: _________________________
Name:
Title:
Address for Notices:
Three World Financial Center
New York, New York 10285
Attention: Mr. Vincent Primiano
Facsimile No.: 212-526-5484
Telephone No.: 212-526-5840
89
SCHEDULE 4.10
TRADE RECEIVABLE LOCKBOX BANKS
BANK LOCKBOX ADDRESS DEMAND DEPOSIT ACCOUNT #
---- --------------- ------------------------
Bank of America National Trust P.O. Box 91117 77-05484
and Savings Association Chicago, Illinois 60693
Firstar Bank Milwaukee, N.A. N.A. 112-520-473
90
SCHEDULE 4.11
EQUIPMENT LOAN LOCKBOX BANKS
BANK LOCKBOX ADDRESS DEMAND DEPOSIT ACCOUNT #
---- --------------- ------------------------
Mellon Bank, N.A. Lockbox No. 10173 006-8427
Dept. CH10173
Palatine, Illinois 60055-0173
91
SCHEDULE 6.08
FILING JURISDICTIONS AND OFFICES
Jurisdiction Office
State of Wisconsin Secretary of State
92
SCHEDULE 6.16
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
IN RESPECT OF THE ASSETS
As to each Asset included in the Borrowing Base on a Funding Date
(and, with respect to Equipment Loans, the related Equipment), the Borrower
shall be deemed to make the following representations and warranties to the
Agent and the Lenders as of such date and as of each date the Collateral Value
is determined:
(i) All information in respect of such Asset set forth in the Asset
Schedule is true and correct in all material respects and such Asset and all
accompanying documents are complete and authentic and all signatures thereon are
genuine;
(ii) Such Asset arose from a bona fide loan or sale of merchandise or
rendering of services to an Obligor having the legal capacity to contract,
complying with all applicable State and Federal laws and regulations and is not
subject to any counterclaim, defense or contractual right of set-off;
(iii) All amounts represented to be payable on such Asset are, in
fact, payable in Dollars or, in the case of Equipment Loans, Canadian Dollars
and in accordance with the provisions of such Asset;
(iv) Any property subject to any security interest given in
connection with such Asset is not subject to any encumbrance other than such
security interest and Permitted Liens;
(v) The Borrower holds good and indefeasible title to, and is the
sole owner (or assignee) of, such Asset, and such Asset is not subject to any
Liens, other than Permitted Liens;
(vi) Prior to a purchase pursuant to the Transfer Agreement, an
Originator was the legal and beneficial owner of the Assets sold to the Borrower
by such Originator pursuant to the Transfer Agreement free and clear of any
Lien, other than Permitted Liens;
(vii) Such Asset conforms to the description thereof as set forth
on the related Asset Schedule;
(viii) Such Asset, at the time of purchase by the Borrower from an
Originator, was not a Defaulted Receivable and, unless the Borrower has notified
the Agent to the contrary, was not otherwise excluded from another warehouse
facility or securitization;
(ix) (A) Each such Asset which is an Equipment Loan contains
provisions requiring the user to maintain appropriate liability insurance with
respect thereto, and making the
93
user absolutely and unconditionally liable for all payments required to be made
thereunder, without any right of set-off for any reason whatsoever, subject only
to the user's right of quiet enjoyment, (B) such Equipment Loan may not be
prepaid unless the amount required to be paid by or on behalf of a user in
respect of such prepayment is at all times equal to or in excess of the
principal balance and accrued interest at the Contract Rate and (C) the rights
with respect to such Equipment Loan are assignable by the Borrower without the
consent of any Person;
(x) All requirements of applicable Federal, state and local laws,
and regulations thereunder, including, without limitation, usury laws, if any,
in respect of such Asset have been complied with in all material respects;
(xi) Such Asset represents the legal, valid and binding payment
obligation of the related Obligor, enforceable in accordance with its terms,
subject to bankruptcy, insolvency and other laws (including, but not limited to,
principles of equity) affecting the rights of creditors;
(xii) No instrument of release or waiver has been executed in
connection with such Asset, and the Obligor in respect of such Asset has not
been released from its obligations thereunder, in whole or in part, and, with
respect to Equipment Loans, no action has been taken by the Borrower to release
any Equipment from the lien granted by the related Equipment Loan, in whole or
in part;
(xiii) Except as otherwise permitted by Section 7.11, such Asset
has not been amended after the date on which such Asset is listed on such Asset
Schedule and pledged to the Agent hereunder in any material respect or such that
the amount of any monthly payment or the total number of the monthly payments is
increased or decreased;
(xiv) No right of rescission, set-off, counterclaim or defense has
been asserted with respect to such Asset;
(xv) There are no proceedings or investigations pending, or, to the
best of Borrower's knowledge, threatened, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality (A)
asserting the invalidity of such Asset, (B) asserting the bankruptcy or
insolvency of a user, (C) seeking to prevent payment and performance of such
Asset, or (D) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of such Asset;
(xvi) Each of the Borrower and the related Originator has duly
fulfilled all obligations in all material respects on its part to be fulfilled
under or in connection with such Asset originated by such Originator and has
done nothing to impair the rights of the Lenders in such Asset or payments with
respect thereto;
(xvii) There is no default, breach, violation or event of
acceleration existing under such Asset, and no event has occurred which, with
the passage of time or with notice, would
94
constitute a default, breach, violation or event of acceleration;
(xviii) Each Asset which is an Equipment Loan has been duly and
properly executed by the parties thereto;
(xix) Such Asset was not selected by the Borrower on any basis
intended to adversely affect the value of the Agent's security interest therein;
(xx) Such Asset was not originated in, nor is it subject to the
laws of, any jurisdiction the laws of which would make unlawful the pledge,
transfer or assignment of such document under this Loan Agreement, including any
sale in accordance with this Loan Agreement;
(xxi) Immediately after the pledge, assignment and transfer to the
Agent as herein contemplated, all necessary action will have been taken to grant
a valid and enforceable first priority perfected security interest in such Asset
in favor of Agent (including the filing or amendment of UCC financing statements
in all applicable jurisdictions, except as set forth in Section 6.19) and all
payments to become due thereunder and, with respect to an Equipment Loan, all
rights of the Borrower in the Equipment that is the subject of such Equipment
Loan, except for those subsequent Liens which, by operation of law, take
priority over a previously perfected security interest;
(xxii) (A) Such Asset has not been sold, transferred, assigned or
pledged by the Borrower to any Person other than the Agent and (B) upon
execution and delivery hereof by the Borrower, the Agent will have a first
priority perfected security interest in all of the right, title and interest of
the Borrower in and to such Asset and the payments to become due thereunder,
free and clear of all Liens (except Permitted Liens);
(xxiii) The Borrower's computer records have been marked to indicate
that such Asset has been pledged, assigned and transferred to the Agent pursuant
to this Loan Agreement;
(xxiv) All insurance policies required to be maintained by each
Equipment Loan are in full force and effect and such insurance policies are of a
type customary for the Equipment covered thereby;
(xxv) The credit standing of the Obligor under such Asset was
approved by the related Originator using its customary practices and procedures;
to the best of the Borrower's knowledge, the Obligor is not insolvent or in
bankruptcy and the Borrower has no knowledge of any circumstances or condition
with respect to such Asset, the Equipment or the Obligor's credit standing that
could reasonably be expected to cause the Agent to regard such Asset as an
unacceptable security, cause such Asset to become a Delinquent Receivable, with
respect to a Trade Receivable, or a Delinquent Equipment Loan, with respect to
an Equipment Loan, or adversely affect the value or marketability of such Asset;
95
(xxvi) The Equipment securing such Equipment Loan was properly
delivered to the user in good repair, without defects and in satisfactory order
and, to the best of the Borrower's knowledge, is in proper working order as of
the date on which such Equipment Loan was pledged to the Agent and listed on the
related Asset Schedule;
(xxvii) The Asset was originated without any fraud or
misrepresentation on the part of the related Originator;
(xxviii) No action has been taken by the Borrower to convey any right
to any Person that would result in such Person having a right to payments due
under the Asset that is senior to, or equal with, that of the Lenders;
(xxix) All taxes of any nature or description whatsoever relating
to the Asset that are due and owing have been paid in full;
(xxx) To the best of the Borrower's knowledge, no Obligor is an
Affiliate of the Borrower or any Originator;
Such Asset is an "account", "chattel paper" or a "general intangible"
within the meaning of Section 9-105 or Section 9-106 of the UCC of all
applicable jurisdictions and is freely transferable without the consent of the
related Obligor or any other Person; and
If such Asset constitutes "chattel paper" for purposes of Sections 9-
105(1)(b) and 9-308 of the Uniform Commercial Code as in effect in any
applicable jurisdiction, there is only one original executed counterpart.
96
EXHIBIT A
[FORM OF PROMISSORY NOTE]
$ 250,000,000________ __, 19__
New York, New York
FOR VALUE RECEIVED, ALLIANCE LAUNDRY RECEIVABLES WAREHOUSE LLC, a
Delaware limited liability company (the "Borrower"), hereby promises to pay to
--------
the order of LEHMAN COMMERCIAL PAPER INC. (the "Agent"), for the benefit of the
-----
Lenders (as defined below), at the principal office of the Agent at Three World
Financial Center, New York, New York, 10285, in lawful money of the United
States, and in immediately available funds, the principal sum of TWO HUNDRED
FIFTY MILLION DOLLARS ($250,000,000) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lenders to the
Borrower under the Loan Agreement referred to below), on the dates and in the
principal amounts provided in the Loan Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Loan
Agreement.
The date, amount and interest rate of each Loan made by the Lenders to
the Borrower, and each payment made on account of the principal thereof, shall
be recorded by the Agent on its books and, prior to any transfer of this Note,
endorsed by the Agent on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Agent to make any such recordation or
--------
endorsement shall not affect the obligations of the Borrower to make a payment
when due of any amount owing under the Loan Agreement or hereunder in respect of
the Loans made by the Lenders.
This Note is the Note referred to in the Loan and Security Agreement
dated as of May 5, 1998 (as amended, supplemented or otherwise modified and in
effect from time to time, the "Loan Agreement") among the Borrower, the lenders
--------------
party thereto (the "Lenders") and the Agent, and evidences Loans made by the
-------
Lenders thereunder. Terms used but not defined in this Note have the respective
meanings assigned to them in the Loan Agreement.
The Borrower agrees to pay all the Agent's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Agent's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges,
97
admits and agrees that the Borrower's obligations under this Note are recourse
obligations of the Borrower to which the Borrower pledges its full faith and
credit.
The Borrower, and any endorsers or guarantors hereof, (a) severally
waive diligence, presentment, protest and demand and also notice of protest,
demand, dishonor and nonpayments of this Note, (b) expressly agree that this
Note, or any payment hereunder, may be extended from time to time, and consent
to the acceptance of further Collateral, the release of any Collateral for this
Note, the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Agent or a Lender, in
order to enforce payment of this Note, to first institute or exhaust the Agent's
or such Lender's remedies against the Borrower or any other party liable hereon
or against any Collateral for this Note. No extension of time for the payment
of this Note, or any installment hereof, made by agreement by the Agent or a
Lender with any person now or hereafter liable for the payment of this Note,
shall affect the liability under this Note of the Borrower, even if the Borrower
is not a party to such agreement; provided, however, that the Lenders and the
-------- -------
Borrower, by written agreement between them, may affect the liability of the
Borrower.
Any reference herein to the Agent shall be deemed to include and
apply to each Lender and every subsequent holder of this Note. Reference is
made to the Loan Agreement for provisions concerning optional and mandatory
prepayments, Collateral, acceleration and other material terms affecting this
Note.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF NEW YORK WHOSE LAWS THE BORROWER EXPRESSLY ELECTS TO APPLY TO THIS
NOTE. THE BORROWER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT TO ENFORCE OR
ARISING OUT OF THIS NOTE MAY BE COMMENCED IN THE SUPREME COURT OF THE STATE OF
NEW YORK, BOROUGH OF MANHATTAN, OR IN THE DISTRICT COURT OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK.
ALLIANCE LAUNDRY RECEIVABLES
WAREHOUSE LLC
By: _______________________________
Name:
Title:
98
SCHEDULE OF LOANS
This Note evidences Loans made under the within-described Loan
Agreement to the Borrower, on the dates, in the principal amounts and bearing
interest at the rates set forth below, and subject to the payments and
prepayments of principal set forth below:
Principal Amount Interest Amount Paid Unpaid Principal Notation
Date Made of Loan Rate or Prepaid Amount Made by
- --------- ---------------- --------- ----------- ---------------- ---------
99
EXHIBIT B
[FORM OF REQUEST FOR BORROWING]
REQUEST FOR BORROWING
[insert date]
Lehman Commercial Paper Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285-0800
Attention: Vincent Primiano
Request for Borrowing No. :_____________________
Ladies/Gentlemen:
Reference is made to the Loan and Security Agreement, dated as of
May 5, 1998, as the same may from time to time be amended, modified or
supplemented (the "Loan Agreement"; capitalized terms used but not
--------------
otherwise defined herein shall have the meaning given them in the Loan
Agreement), between Alliance Laundry Receivables Warehouse LLC, the lenders
party thereto (the "Lenders") and you, as agent for the Lenders.
-------
In accordance with Section 2.03(a) of the Loan Agreement, we hereby
request that the Lenders make a Loan to us on ____________________ [insert
requested Funding Date, which must be at least two (2) Business Days from the
date of the request], in connection with which we propose to pledge to you for
the benefit of the Lenders as Collateral the Assets set forth on the Asset
Schedule attached hereto.
Very truly yours,
ALLIANCE LAUNDRY RECEIVABLES
WAREHOUSE LLC
By: ________________________
Name:
Title:
100
SCHEDULE I TO REQUEST FOR BORROWING
ASSETS PROPOSED TO BE PLEDGED
-----------------------------
ON FUNDING DATE
---------------
[attach Asset Schedule]
101
EXHIBIT C
[FORM OF UNDERWRITING LETTER AGREEMENT]
102
EXHIBIT D-1
[FORM OF TRADE RECEIVABLE LOCKBOX ASSIGNMENT AGREEMENT]
103
EXHIBIT D-2
[FORM OF EQUIPMENT LOAN LOCKBOX ASSIGNMENT AGREEMENT]
104
EXHIBIT E
[FORM OF FUNDING DATE DATA POOL REPORT]
105
EXHIBIT F
[FORM OF EQUIPMENT LOAN MONTHLY DATA POOL REPORT]
106
EXHIBIT G
[FORM OF TRADE RECEIVABLES MONTHLY DATA POOL REPORT]
107